Taj Hotel's grand plans to be India's best

The grand cantilever staircase and the iconic red dome were singed by flames and pockmarked with gunfire when terror struck Mumbai a little more than 18 months ago.

So when Tata Group Chairman Ratan Tata told the Taj Mahal Hotel employees looking over the wrought-iron balustrades last week that the venerable old lady will reopen with the splendour that it has enjoyed for over a century, it was more than just symbolic.

The century-old Heritage wing, popularly known as the Palace wing, reopened last Sunday in a new avatar. Indian Hotels, promoters of the Taj, has been reopening the hotel in phases, starting with the restaurants and then the Tower wing.

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Analysts say along with the economic downturn, the closure of the luxury arm of the hotel, a huge revenue generator, contributed to a certain extent to the shoddy performance of Indian Hotels in the last fiscal year when net profit dipped 34.5 per cent.

That the Tatas mean business was evident when the reopening of the Palace wing coincided with an offer of free nights in suites - a first by Indian Hotels. The Taj is aiming to win back customers with a complimentary night for every night spent in its suites and a third night free for every two nights at the Luxury Grande rooms in the restored wing.

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The number of suites has been brought down from 45 to 42, mainly to increase the size of the rooms and to provide a feel of space.

For example, the 5,000 square feet Tata Suite, which will be the country's most expensive, will be available for Rs 6-7 lakh a night, from September. Indian Hotels MD Raymond N Bickson says that the suite will occupy an entire wing on the sixth floor.

There is more. A black-and-white photo on the Tata Group website recalls the time the Beatles' George Harrison checked in under an assumed name to study the sitar under Ravi Shankar. Shankar donated one of his sitars for a new duplex suite named after him, which will open in September this year.

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A stay in the luxury suite includes 24-hour personalised butler service and airport transfers by Jaguars and Bentleys.

The 285-room Palace wing will include 42 suites of which 19 are themed, such as the Coral, Maratha, Dutch and Dolphin. Grand Luxury Suites are priced at Rs 1.7 lakh a night, while the Luxury and Executive suites will cost Rs 1.2 lakh and Rs 95,000 respectively.

In contrast, the Oberois' 868 square-feet Premier Suite with ocean views has a rack rate of Rs 90,000 a night and offers a separate living room. The Nariman Point-based hotel's Presidential suites are priced at Rs 3 lakh a night.

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The base rooms at the Taj Palace wing will start at Rs 20,000 and the suites will start at Rs 75,000.

Bickson says the extensive restoration work for which the world's best architects and designers were appointed, cost Rs 200 crore (Rs 2 billion).

The Taj took the 18-month forced break as an opportunity to go in for a complete makeover that included even the 100-year old pipes and other fittings. "But the foundation of the building is very strong and hasn't seen any damage. Some of the walls are up to two feet thick," Bickson says.

The hotel has tried to retain the basic d cor of the rooms, so that the 'Tajness' of the hotel can be retained.

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The New Business Model

Bickson says the full restoration of the Taj is a crowning glory for the group's new brand architecture. While all the five-stars are Taj, four star is Vivanta, slightly upscale is Gateway and the two-star economy is Ginger.

Reason: competition from global chains such as Marriot, Starwood, Hyatt etc, which have 18-20 brands. These hotels which are coming in with huge loyalty programmes, may put the Taj's 25 per cent market share in jeopardy.

That partly explains why the hotel chain is aggressively building its footprint overseas which is expected to contribute a third of its revenue (from 28 per cent now), mostly through management contracts. "You need to have a more diversified portfolio which helps you to escape the adversities of the market," Bickson says.

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Eight years ago, the Taj group had 61 hotels and 8,000 rooms. The number has gone up to 110 hotels and around 14,000 rooms, as it opened one hotel every six weeks for the last seven years. That tempo will continue.

While the Taj will also continue to grow overseas, the other three brands will be India-specific. The hotel chain says in five-star luxury, Taj competes with Four Seasons, Mandarin Orient hotels and Peninsula and in four-star, Vivanta competes with chains such as Hyatt, JWT Marriot etc.

The bottom line is simple: in every brand, in the market segment that it competes in, Indian Hotels wants to be number one, two or three and nothing less would do. That explains why the group has closed down a few properties Seychelles, Mauritius etc.

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In a departure from the ownership model it has been following for decades, Indian Hotels is now looking at all options - joint ventures, associate companies, management contracts etc. The company plans to spend around Rs 1,000 crore over the next couple of years for new projects.

While the Vivanta will see addition of 10 new properties, Gateway will add five more and Ginger is expected to double its presence from 30.

Indian Hotels hardly has any other option as even domestic competitors such as ITC, the Oberoi group, The Lalit Group etc are fast catching up. It is estimated that nearly 100,000 branded rooms would be added to the Indian market over the next four years.

So the "Grand Old Lady" has quite a task on hand.