Deepika Arora, Regional Vice President (Eurasia) of Wyndham Hotel Group, has been spearheading the growth of the hotel chain for the past five years. In a conversation with Manu Kaushik of Business Today, she explains the brand philosophy, business model and dynamics of the Indian hospitality market.
Q. Wyndham is one of the lesser-known brands compared to others like Marriott or Hilton. What is your India strategy? Do you want to expand or you want to become a more known brand in India first and then expand?
A. If you look from a brand perspective, we have been here for more than 10 years. Ramada was a brand which has been here for 10-plus years and we acquired it from Marriott. If you compare us in terms of awareness perspective, we are not as popular as probably other brands. In terms of strategy, it is how fast we can grow our footprint in the country and how effectively that footprint performs and delivers. We decided to come to India and do franchise model. It didn't really favour us with Ramada as our key brand. But then five years back, the company thought of restructuring the team in India and that's when I joined the company and one of the tasks was whether we stick to franchisee [model] or do what other brands were doing-management [model]. I think for me it was a critical decision, I chose franchisee versus managed.
Q. Was Wyndham following the franchisee model before you joined?
A. Wyndham was always following the franchisee policy. I had a choice to make that decision whether I should go the franchise way or the managed way. When I looked at India, there was a certain upsurge of the mid-market segment. The whole upsurge of [mid-market] airlines. That's when I thought that it is a good time to get into this model because now my owners will be little more educated than the owners which were there 10 years ago. They will now really understand what should be the return on investment. I think my decision was wise because we were able to grow literally from five operating properties to now 24 properties, close to about 2,584 rooms and my pipeline was zero five years back and now I have 41 properties with close to about 4,000-plus rooms under construction. Also what was brought in our favour was the consumer. [Our] user is upper-middle class who has purchasing power to go out in the market and explore leisure or business destinations, and they are able to buy into these hotel.
Q. How many rooms do you have per hotel right now?
A. I would keep it at an average of 100 rooms.
Q. How many brands do you operate in the country?
A. We have currently five operating brands but in the overall portfolio we have 16 brands. I think 80 per cent of my portfolio is Ramada because it has been the most visible brand but apart from that I have Encore, Days Hotel, Howard Johnson and Wyndham Grand.
Q. You are saying that level of maturity is coming and that's why you have gone for franchisee model.
A. I particularly chose to go with the franchise model because globally we want to grow fast. They (developers) didn't want to spend Rs 1 crore or Rs 80 lakh per key, they said they have a budget close to Rs 30-40 lakh a key. Apart from just doing the product, they were looking at flexibility in the product. We are flexible. For example, if my Ramada in a resort destination like Udaipur would want a larger spa area or would want a large back court area because it's also a wedding destination, I would allow that.
Q. How much of your brand specifications are adhered to by the owners? Do you give flexibility to the owners?
A. You have to define some basic brand standards. The general look, feel and the basic essence of the brand should be intact. However, we allow the customer to customize it as per the market needs.
Q. How do you make sure that flexibility doesn't lead to compromising of brand standards?
A. I am saying that we are not cutting corners but we are customising the product to meet the consumers' and the owners' desire. I am not pushing for a certain mattress just because it's a brand standard that costs about $75,000. I am not prescribing [owners] that this is my vendor and this is my product.
Q. How do you make money in the franchisee model?
A. We get a royalty for our trademarks. We also get a fee for the marketing support which we give to the owners. [We give them] access to online reservation platform, access to the global sales network and the market initiatives which do across the globe so we get fee for that.
Q. What is in it for a developer to come to you rather than a known brand?
A. I always tell my owners that when you are going out, there are a few criteria you should evaluate and then can compare each of the brands accordingly. One is you should look at what is its (brand's) existing strength in the country. Today, that [measure] is very important because domestic drives almost 80 per cent of the business. Then, look beyond the country into regions, and then maybe into global perspective. We are 7,560 hotels across 70 countries and with 6 lakh-plus rooms. That's when I have over other brands.
The other thing I always tell my owners that they should look at why they are coming to a brand. Are they coming to a brand because that brand gives them access to an online reservation system? They should look at how strong is that online reservation system and look at what's the system contribution in terms of revenue to their hotel.
Thirdly, almost 60-70 per cent of the revenue in hotels are driven by loyalty customers. I think we have the largest loyalty program today in the world with close to about 40 million active users. Not just the customer base, the flexibility of the loyalty program is also important.