HONG KONG—Taj Hotels, Resorts & Palaces will continue to expand its Taj brand around the globe while focusing on growing its other three brands only in India.
Raymond Bickson, Taj’s managing director and CEO, said the Mumbai-based company has spent the past seven years developing its corporate architecture and is now poised to aggressively add to the 110 properties it has in its system. The company plans to grow primarily through management contracts but won’t be afraid to contribute equity to get a deal done as it tries to reach 150 hotels on its roster by 2014, he said during an interview held in conjunction with the Hotel Investment Conference Asia Pacific last month in Hong Kong.
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Hotels operated by Taj are located in India, the United States, Australia, Dubai, Maldives, Malaysia, Sri Lanka, the United Kingdom, Yemen and Zambia. “The growth will continue to be same model we’ve had,” Bickson said. “We’ve taken an asset-light strategy and have taken on more management contracts recently than we had in the last 25 years.”
Taj owns about 20% of its portfolio, according to Bickson. The company has sliver-equity positions in about 45% of the properties and the other 35% are management contracts.
The fast track
When Bickson joined the company in 2003, it had 61 hotels. It now has 110 with 47 projects in the pipeline. It has 13,200 rooms open with 12,000 set to open during the next 48 months, Bickson said, adding that the company has been opening a hotel every six weeks for the past seven years.
“Those would be big dots,” he said. “Management contracts would be the preferred route, but if required we could come in with sliver equity.”
Building brands
The company in September launched Vivanta by Taj in India, a brand that Bickson said has great growth potential. He said it is a direct competitor to Trident Hotels in India and will compete in the upper-upscale segment. Taj rebranded 19 properties to the Vivanta flag, opened three more and has 12 on the anvil, Bickson said.
“We will have nearly 30 Vivantas within the next 12 months,” he said. “That will be the cornerstone of launching the brand.”
Bickson said the company launched Vivanta by Taj to satisfy the incredible growth of many cities in India.
“Primary and secondary cities have seen an abundance of new (central business districts) popping up. … We want to position our brands for share of wallet, so it might not be uncommon to have 15 or 20 of our hotels in one city where there are four or five CBDs in those cities,” he said. “We would plant the best brand for that location, and Vivanta by Taj gives us that brand stretch to fill certain locations.”
Taj is determined to maintain its 25% market share within India, according to Bickson.
The company also owns The Gateway Hotel (full-service) and Ginger (economy) brands in India. Bickson said Ginger is the key to rapid growth for the company in India. Bickson hopes to fast-track the brand’s expansion.
“If we can find a better model of building those budget hotels in the secondary and tertiary markets, we could probably ramp up to about 200 hotels in the next five years. That would be our goal,” he said.
Taj Hotels, Resorts & Palaces is the collective name for the Indian Hotel Company Limited and its subsidiaries and is owned by the Tata Sons Limited (also known as the Tata Group). View the “family tree.”
But Taj is at the mercy of the government to grow inside its home country.
“The issues with India are that the infrastructure plays a big role,” Bickson said. “There’s so much growth in the infrastructure that the main drive to upgrade roads, airports and all of the other infrastructure is so mammoth so that they still have a long way to go.
“We can grow as fast as the infrastructure can grow.”
By Bickson’s count there are 47 international brands entering India. With 65,000 of the 100,000 hotel rooms in the country branded, there’s plenty of room for all.
“The country needs that (outside) investment to grow the travel and tourism industry,” he said. “Only about 4% of the country’s GDP is generated by travel and tourism. The gap with where we are and where we want to be is quite tremendous. The country needs 400,000 (hotel) rooms.”
Taj’s growth has been organic. Bickson said the company tried to acquire the Fairmont brand in 2003 but was foiled by Raffles Hotels & Resorts.
“We always keep an eye open for acquisition opportunities,” Bickson said. “This phase of the global economy has many opportunities. Cash is king, and financing is tough.”
