Business Today

Occupancy, room rates to see strongest growth in a decade in 2019, says Ankur Bhatia of Bird Group

'Unfortunately, the hotel industry is also the most heavily taxed with multiple cascading taxes like VAT, service tax, luxury tax, etc. It affects operational costs adversely and reduces profits,' says Ankur Bhatia

twitter-logoManu Kaushik | April 23, 2019 | Updated 17:09 IST
Occupancy, room rates to see strongest growth in a decade in 2019, says Ankur Bhatia of Bird Group
Ankur Bhatia, Executive Director of the Bird Group.

A significant player in the travel technology and ground handling space, the Bird Group is expanding its hospitality portfolio in India and UK. The hotel chain has a mix of city and leisure properties and is looking at Middle Eastern market as its next destination. In an interaction with Business Today, Ankur Bhatia, Executive Director of the Bird Group talks about the outlook for the hospitality sector and plans for The Roseate brand. Edited excerpts:

Business Today: What is the idea behind starting a luxury property in Rishikesh? Is there enough demand for luxury properties in Uttarakhand?

Ankur Bhatia: We acquired our newly launched property, The Roseate Ganges in Rishikesh 15 years ago. It has been uplifted to 16 cottages, a spa and food and beverage offerings. The resort is nestled on a cliff and offers private access to a beach by the Ganges. We will add 34 keys by 2020. This hotel redefines design, architecture and services in the luxury space of the Himalayan region. Guests can indulge in a range of curated culinary, lifestyle and adventure experiences like rafting, treks in jungles, visits to Ashrams, aarti by the Ganges in the evening and organic farm walks, among others.

Rishikesh has been attracting tourism making it an emerging favourite destination for Indian and foreign tourists alike. Famous for its lifestyle, spiritual and adventure offerings, Uttarakhand has grown exponentially in last few years with luxury properties mushrooming in the region.

BT: What' is your pipeline of hotel properties? What is the break-up between city and leisure hotels?

Bhatia: We offer a collection of luxury hotels consisting of six properties across India and the UK with more under development. We have projects coming up in Goa and Jaipur with over 20 acres of land, which will take next few years to complete. Goa will offer 200-plus keys while Jaipur will see a collection of splendid villas and rooms. We are also looking at expansion in the Middle East, besides adding more assets in the UK.

BT: What has been the effect of high GST rates on the overall room demand?

Bhatia: Indian tourism and hospitality industry is a key driver of the economy. Currently, the industry accounts for 7.5 per cent of the country's GDP, with a promised growth of about 16.1 per cent by 2022, as reported by KPMG. Unfortunately, the hotel industry is also the most heavily taxed with multiple cascading taxes like VAT, service tax, luxury tax, etc. It affects operational costs adversely and reduces profits. The revision of GST rates from 28 per cent to 18 per cent has brought some semblance of relief with good news for hoteliers.

As per CARE Ratings, an overall economic growth and consistently rising middle class with a considerable disposable income will boost tourism. There is a steady demand for meetings, incentives, conferences and exhibitions (MICE) segment, and the enthusiasm among millennial to travel, which will result in an overall growth in room tariffs.

The government should ideally levy a flat 18 per cent GST or reduce it to 12 per cent in order to benefit the hospitality sector.

BT: What is your outlook for occupancies and ARRs (average room rates) over the next few years?

Bhatia: We feel that the next few years could see a critical development in rates across most key cities. The pan-India ARRs are probably going to see an improvement of 8-9 per cent this year, the strongest growth in the last one decade. Hotel room occupancy across the nation has recorded a nine-year high in the financial year ending March 2018, touching over 67 per cent. Occupancy and room rates will see the strongest growth this year as compared to the last decade though it would take another four-five years to touch its peak ARR level of Rs 7,500 recorded before 2008. Delhi has not seen major developments of hotels; hence ARRs will majorly show a flat graph. 

BT: What are big trends for the hospitality this year?

Bhatia: The hospitality industry has been undergoing tremendous changes and disruptions over the last two decades. Last year witnessed an emergence of some offbeat and unusual trends -- from keto menus to hyper-local sourcing restaurants. In the hospitality industry, customer experience and satisfaction have a big impact in the success or failure of our hotels. Be it the new methods of on-boarding or adding seamless payments, the hospitality industry is truly experiencing groundbreaking developments. We feel 2019 will be led by themes like urgency of seamless technologies, going green, healthy menus, brand magic and the influx of international visitors.

BT: Do you think it is important to build scale in a competitive hospitality market like India?

Bhatia: The tourism and hospitality industry is witnessing a change in the psychographic and demographic profiles of travellers. There is a fresh influx of millennials, whose expectations and lifestyle are setting completely different standards for industry performance.

Customer experience is currently the most dominant brand differentiator. To meet different customer expectations, hotels are offering more targeted, personalised, and intricate loyalty schemes than ever before. Experience and localisation will drive customer loyalty and referrals. Sustainability, organic food and beverage palate, creative architecture and design are becoming the biggest differentiating factors among brands.

For instance, in The Roseate Ganges (Rishikesh), the villas have been conceptualised with classic elegance in natural colour palettes complementing the surreal surroundings. Guests can also enjoy access to the private white sand beach next to pristine waters of the Ganges. The well-defined cuisine is designed by Kainaz Contractor and Rahul Dua, chef-partners specialising in curating bespoke food and beverage concepts.

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