Now is the time to reset the rates because COVID-19 has taught us many lessons, said Chief Operating Officer (COO) of The Leela Palaces, Hotels & Resorts Anuraag Bhatnagar.
“When I look at the luxury properties and luxury assets, I definitely believe that there is a lot of headroom for the value that we offer and the asset quality that we have,” he said.
Earlier this week, the Managing Director and CEO of Indian Hotels Company Ltd (IHCL) Puneet Chhatwal said that the firm wanted to benchmark its hotel rates to global levels. "We have to benchmark rates of trophy assets in comparison to those in the West," he had said, adding that to get that kind of quality, location, and of views, India must have the ability to charge higher rates, and the industry needs to think about it collectively as a fraternity.
Bhatnagar told CNBCTV18.com that compared to the rest of the world, South Asia has been submissive in terms of rate positioning and he believed that it is time to reset the rates now. However, he said one needs to be mindful that the price increase matches the services, offerings and has a value proposition. “We don’t want to be seen as opportunistic, but we want to offer value,” he said.
Also read: Indian Hotels wants to open 1.5 hotels a month and benchmark rates to global levels: Puneet Chhatwal
Bhatnagar said that 'Atiti Devo Bhava' is a part of Leela Hotels’ core DNA. “The service is from the soul and there is more headroom for us to grow our rates,” he said.
Leela Palaces, Hotels & Resorts has 12 properties under its umbrella. Of them, four properties are wholly owned by them, one is a joint venture and seven properties are managed by them.
Average room rates & occupancy
Talking about average room rates, Bhatnagar said taking 2019 as a base year, Leela Hotels has increased its rates by almost 18 percent till 2022. “We are further forecasting a rate increase of another 14 percent overall for the entire portfolio and we are looking at taking our growth over 2019 to almost 31 percent on an average rates,” he said.
Bhatnagar felt that the services, products and experiences that Leela offers can play on the aspirations of travellers. “To me, it cannot just be an algorithm or exercise like year-on-year to grow rates. I think rates have to be a factor of creating that aspiration and generating that demand for people to aspire to stay in, be happily willing to pay that pricing because they see value in the overall offering,” he said.
At present, Leela Hotels' has a range of services on offer such as Tishya, its fragrance programme, and Aujasya, its wellness programme, among others.
Bhatnagar, who took over as COO just three months before the COVID-19 pandemic hit India, said for this year, the group’s revenue is expected to increase more than 26 percent over 2019, despite Omicron spoiling the beginning of 2022.
“And not just rooms and occupancy, we have also seen great strides in the food and beverages segment as well, whether it is footfall at our restaurants or an uptake in our banquets as well as our hotels as wedding destinations," he said.
He added that on the retail side, there has been an uptake in staycations and domestic business. “We saw city hotels converting to resorts over the weekends. So overall, I think the occupancy is already back. The rates are higher than in 2019. And we expect this momentum to continue deep and beyond 2023,” he said.
Expansion plans
At present Leela has three hotels in the pipeline, which are in various stages of pre-opening. Two of them are in Kerala — The Leela Kovalam and Leela Ashtamudi.
“Right now, we are conducting various stages of enhancements and upgrades, just to make sure they are the true representation of the brand Leela,” he said.
Bhatnagar said they also have a pipeline of hotels they are evaluating right now. “Our strategic intention is yes, we are definitely using capital to expand our growth and footprint in the market,” he said.
He said they are looking at Gulf Cooperation Council (GCC) and the Middle East, Maldives and also at Central London. “These are early-stage discussions, but over the next 12-15 months, we should have specifics,” he said.
International bookings rising
Foreign travel is increasing between six to 10 percent month-on-month, over the last few months, he said. “On our direct bookings and on our websites, almost 45 percent are now international. It is a mix of business and leisure, with more of the former,” he said.
He said the US remains a big market for them, followed by the UK and the GCC. “So currently, we see a run rate of six to eight percent business growing year-on-year. We have some global events that Leela is partnering with such as the G20 Summit towards the end of this year. So we are optimistic the numbers will really amplify,” he said.
Hiring strategy
Bhatnagar said the company also focuses on greater diversity and inclusion across both leadership and other levels.
