Exclusive: IHG Hotels to bring high-end luxury formats like Regent to India

Haitham Mattar, MD (MEA & South west Asia), IHG Hotels, has been regularly visiting India since 2011 - the distinct change he has noticed in over a decade is the evolution of the hospitality industry in India. “The first time I came to Mumbai was in 2011, and we struggled to find a decent restaurant outside of the Taj Mahal Palace, where we stayed. Today, there are a large number of international food and beverage options available which are of high quality and enhanced quality of services. Five years ago, if you asked a waiter what you can eat, he wouldn’t have tasted the food on the menu so how would he recommend it? Today, they will tell you their favourite dish on the menu, which explains the standard of skills and capability of talent has improved dramatically. India has exported a lot of talent who have been exposed to a higher rate of luxury. Not only are many of them coming back, hotel chains are also cross-pollinating.”

Mattar, who is currently in India, talks about dining at the Mukesh Nita Ambani Cultural Centre. “I felt I was in Dubai,” he says. India Inc’s growing appetite to consume luxury has led hospitality companies such as IHG Hotels to not just double up its existing luxury and premium portfolio (InterContinental, Six Senses, Crowne Plaza) in India but also get premium formats such as Voco into the country. “Almost 25% of our hotels are in the luxury segment. We are looking for an opportunity to bring Regent, Kimpton, Indigo, and our other luxury lifestyle brands to come to the country. We plan to bring in Vignette Collection, an entry-level luxury brand and also our newly launched brand, Garner. It’s a great soft brand which allows for quick conversions.”

IHG opened the first Voco in Jim Corbett National Park earlier this year and the plan is to take this brand to leisure and spiritual destinations like Srinagar and Amritsar. The hospitality major currently has 46 hotels operating across five brands (InterContinental, Six Senses, Crowne Plaza, Holiday Inn and Holiday Inn Express) in India. It has a pipeline of 58 hotels in the next three-five years. Though the luxury portfolio is expanding rapidly, IHG’s bread and butter comes from the two Holiday Inn formats. “Two-thirds of our hotels are Holiday Inn and Holiday Inn Express. In India, the growth of hospitality is coming from the hinterlands, hence the economics of Holiday Inn (22 hotels) and Holiday Inn Express (16) works,” explains Mattar. The Holiday Inn chain includes entry-level premium to budget hotels, priced at ₹3,500-₹12,000.

Don’t luxury formats generate higher margins? “Both make money, but investment in luxury is large. The margins vary. I have luxury hotels which deliver $50 GOP and Holiday Inn also delivers 50% GOP. But luxury needs double investments, if you are prepared to do it, it certainly pays back. However, it usually takes longer for a luxury brand to pay back versus a Holiday Inn or Holiday Inn Express,” explains Mattar.

He says that the company has off-late been spending inordinately long time with developers to ensure that the right brand fits the right market. “Nine out of ten times, the owner has a mindset and they know which brand they want. However, if they choose a brand which doesn’t fit into the location, then it’s our job to do the research for that market and look at what is the demand for that market, how does this hotel complement and compete. Both of us need to succeed, and we don’t want to put up a brand because they wanted it. If they fail with a brand and we blame them, it is not a healthy partnership. Therefore, we always encourage a feasibility study.”

IHG world over has an asset-light model and works on management contract deals. “We provide our distribution, loyalty, know-how, and teams,” says Mattar. The $4.6 billion hospitality company is looking at doubling its presence in India in the next five years.