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MPW 2015: How Deepika Arora has helped Wyndham Hotels grow using franchisee model

Manu Kaushik     September 11, 2015

Friends and colleagues were most surprised when Deepika Arora quit the Hilton Hotel chain, where she was Director (Development) for India, to join Wyndham Hotels Group as its Vice President (International Development) for India in 2010. She was offered the job at a hospitality conference in Mumbai that year which both she and the top management of the Wyndham chain attended. Wyndham is the world's largest hotel company, specialising in mid-market and budget hotels, but though it entered the country around 2000, it had only eight hotels in India till then.

Arora had been doing well at Hilton, where she played a key role in the 75-hotel joint venture the chain signed with DLF, as well as in bringing such brands as Double Tree by Hilton and Conrad into India. "People told me I was making a blunder by joining a company which had absolutely no recall value in India," she says. "But I asked myself why a chain that's globally so strong cannot do well in India. It was a challenge I wanted to take up."

Arora studied architecture, but has preferred a career in the hospitality sector. In her five years with Wyndham, she has trebled the number of its hotels in India to 24, 13 of them in new cities. When she joined, Wyndham had only one brand in India, Ramada, and though 19 of the 24 are still Ramada hotels, three new brands have been introduced - Ramada Encore, Days Hotel and Howard Johnson. Another 43 properties are being developed and will be ready in two to three years.

Wyndham is the 12th biggest hotel chain in the country in terms of rooms, ahead of The Leela, The Lalit and Hilton chains, according to hospitality consultancy HVS's 2014 report. Arora's efforts got her promoted to Regional Vice President, Eurasia, this year, which put her in charge of Wyndham properties in 14 other countries as well, including high potential markets such as Sri Lanka, Maldives, Seychelles, Bangladesh and Kazakhstan. "The company believes I have the capacity to expand the brand beyond India," she says.

{blurb}One of the early dilemmas Arora faced was the expansion model to adopt - whether to manage properties directly on behalf of a developer, or appoint franchisees. Most of the well known, global chains in India, such as Marriott, Hyatt or Starwood, have chosen the first option, but worldwide Wyndham has largely pursued the second. Arora had been empowered by Wyndham to decide what would best suit Indian conditions, and she ultimately plumped for the global Wyndham franchisee trend. "It was a conscious decision to go against the prevailing trend in the Indian hotel industry," she says.

It proved a wise decision, especially because of the mid-market segment Wyndham mainly operates in. (The Ramada brand, for instance, has Radisson, Park Plaza, Country Inn and Suites, Crowne Plaza and Holiday Inn as its main rivals. The Days Hotel brand, which is a shade cheaper, competes with Accor's Ibis.) "The economy was favouring mid-market and budget brands at that time," she says.

{quote}Franchisee hotels are typically charged much lower fees by the brand provider than managed ones - three to four per cent of earnings against around 12 per cent. "Mid-market hotel owners are more cost conscious," says Arora. "They are more interested in return on investment than flaunting a brand. They want to tie up with chains which will not rip them apart with high fees, while providing support and a central reservation system." The fees are paid to get access to online reservation platform, global sales network and global brand initiatives. Almost, 60-70 per cent of the hotels' revenues are generated by loyalty guests. Wyndham's loyalty guest members are over 40 million across the world who drive a large amount of traffic for its brands in India.

The model also enables Wyndham to keep its own costs down. "I have six people running 24 hotels while other chains have 60 people managing six hotels," says Arora.

Franchisee hotels are also not as rigidly standardized as their managed counterparts, enabling them to adapt more easily to the market. Most Wyndham brands, for instance, do not allow banquet halls within the hotel premises, yet the Days Hotel opened in Jalandhar in June 2014 has been permitted one. Most Days Hotels (a mid-market, rooms-driven brand) have only one all day restaurant, but the Jalandhar one has two, plus a separate bar. The exception has been made because Punjab is known to have a large food and beverages market. "Franchisee hotels enjoy greater flexibility and can customise to meet local needs," says Arora.

The downside of this model is a greater likelihood of standards falling at such hotels due to comparatively less supervision - affecting the brand's image. To prevent this, Wyndham insists on two annual audits at all hotels - one of them by an external auditor. If a hotel fails the external audit for three consecutive years, its contract is terminated. Hotels are also trained to conduct monthly self assessments.

As with all hotel chains, Wyndham's primary goal - and Arora's key mandate - is to add volumes. But the properties added have to deliver as well. "There is no point having a pipeline of 100 hotels which are not delivering because the brand's standards are too high and entail great expenditure," she says. "It is much better to have fewer hotels and get more out of them."

Arora's rivals in the trade acknowledge her achievement. "Deepika started with a bit of a handicap since Wyndham was not as well known in India as many other global brands, but has still managed to develop a good base of hotel owners," says Ashish Jakhanwala, MD and CEO of hotel asset company SAMHI Hotels. Equally impressed is Ajay Bakaya, Executive Director, Sarovar Hotels and Resorts. "She is sharp and doing a good job," he says.

The challenges are not over. Wyndham will be introducing more brands in India soon, such as Wyndham Garden and Super 8. And while the franchise model will remain its mainstay, other ones, including acquisitions and managed model are also being looked at. "We could acquire some local hotel group," says Arora. She points to the example of Europe where Wyndham's growth had stalled for some years, till it bought the brand Tryp in 2010, which brought in 99 more hotels at a single stroke. "My aim is to take Wyndham from challenger position to leader position," she says.

The past one year has been eventful for Arora. In India, Wyndham Hotel Group added seven new cities, 13 properties to its existing pipeline and spearheaded the launch of Howard Johnson brand. On the personal front too, the past year has been momentous for Arora - she became a mother for the first time and ran her first half-marathon.


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