Keshav Baljee, President, Co-Promoter, Royal Orchid Hotels Limited, He is involved in driving the expansion process of the group, to achieve its immediate goal of a pan-India presence by 2010. He not only designed the group’s ambitious expansion strategy, he is also instrumental in turning the group into a hotel development company from an operating one. His involvement in expansion extends to include evaluating and selecting from the funding sources in the market. His role in the company diversified when he recently took on the role of directing various PR, HR and marketing initiatives within the organization. An alumnus of the Wharton School, USA and the Indian School of Business (ISB), Hyderabad, Keshav has a strong academic background in finance and corporate strategy. He has a background as an Investment Banker, and has worked with Lehman Brothers and UBS in the mergers and acquisitions department prior to returning to India.
Royal Orchid Hotels is one of the fastest growing hospitality chains, in India. The group currently operates 13 hotels - Bangalore, Mysore, Pune, Jaipur, Goa, Ahmedabad and Navi Mumbai. The group is present across three different categories of hotels enabling it to target top, middle and junior management of corporate. Royal Orchid Hotels limited bagged the award for the "Best Regional Hotel Chain" at the sixth edition of the annual Galileo Express Travel World Awards, organised by The Express Group in 2008. The hotel chain also plans to have an international presence by 2012 with their properties coming up in key locations across India and in Dar–se-lam. Started in the seventies by Chender K Baljee, the Baljee Group (re-branded as Royal Orchid Hotels) will soon become one of India’s most recognized names in hospitality. The hotel also operates the Presidency College of hotel management in Bangalore, which provides easy access to a ready pool of trained talent for keeping pace with the growing needs of the industry.
Replying to Anurag More of IIFL, Keshav Baljee says "We are looking forward to a revenue growth of 20% in FY11".
How do you see overall hotel industry in India in near future?
India has seen an addition in supply by 10% in recent times which resulted in decline in the Average Room Rates (ARR’s) by 22 %. Many hotel chains and realtors who had declared additions of rooms either have shelved their projects or the projects have not taken off due to adverse business conditions. This was the primary reason which has helped the ball rolling for the existing players in the business.
The last financial year saw a decline in the revenues as compared to earlier years, but the last quarter of the financial year saw the growth. Although the Average Room Rates (ARRs) remained constant there was a substantial mprovement in the occupancies.
India is a desired destination as the industry and market is growing in India at a rapid speed. As per various research it is likely that in the near future the demand for hotel rooms will rise by 13% in the couple of years and so will the supply. Last year has not been very attractive due to various reasons of recession and terror attacks. The market has improved and is expected to improve further with visible growth.
Infrastructure in India is improving, how do you see this affecting hotel business?
The rest of the world has faced a severe shortage of capital; India has seen a surge in fund inflows and a fairly robust investment in infrastructure. Investment in tourist infrastructure adds to economic growth, catalyses generation of income and employment, which in turn, leads to further growth in demand for tourism. Hotel business is likely to see a rise in occupancy levels and the country will witness a growth in the number of hotels. It is estimated that the requirement of hotel accommodation in the country is likely to grow by 13% during the period 2009-10 to 2011-12 and the supply of rooms is likely to grow at 10% during the period. In view of the upcoming common wealth games, the Ministry of Tourism is very closely involved in monitoring the creation of additional accommodation for the games.
Industry in India is eroding its competitiveness as a cost effective destination. Your take on this?
India still is a cost effective destination compared to America and other European countries. The quality in terms of the English spoken manpower is very good as compared to many of India’s competitors viz China, South Asian countries. The cost of operation of Hotel industry in India is still cheaper than its competition. You get quality manpower at a cheaper cost in India as compared to other European or American countries.
Being a cost effective destination has made India a land of opportunities. India still sees a flood of business houses wanting to invest. The Global Investor meet in Karnataka itself is evidence to this fact. India’s hospitality industry has enjoyed robust growth over the past few years, buoyed by a benign economic and political environment. There is still a shortage of 150,000 hotel rooms in India fueling hotel room rates across India. With tremendous opportunity, India is now the hot destination for hotel chains looking for growth.
Were you impacted by the slowdown and the Mumbai attacks?
Yes, like any other industry global recession and Mumbai attacks did impact the Hotel industry.
Were your occupancies affected? Comment on your occupancy?
Yes. The occupancies went down in the first half of the last fiscal year but from the third quarter onwards occupancies saw a correction and have gradually improved.
How well are you prepared for the Commonwealth Games?
Our products and services are at par with the international standards and we have also taken measures to beef up the security of our hotels. We will have good occupancies during the period due to influx of tourists. We are looking forward to the Commonwealth games
Many international budget hotel chains are foraying into India, so how do you see the scenario of Indian Hotel Industry? How do you plan to face the competition?
The demand in rooms is exceeding the supply in the hospitality sector. The overseas interest is a reflection of this short supply as well as the existing growth rate of the industry in the country. The hospitality industry is seeing a lot of international budget hotel chains foraying into India.
At Royal Orchid Hotels, we provide luxury that is affordable. Our products and services are at par with the best in the industry but at costs which is - value for money and hence we will always fetch a premium.
Please brief us about your expansion plan? How much are you investing for the same? How will you be raising the funds?
Presently, we have three greenfield projects at Hyderabad, Jaipur and Mumbai. Out of which the projects at Hyderabad and Jaipur are at final stages of constructions. We have pumped in our equity into these two projects and the debt also is tied up.
As far as Mumbai project is concerned we have invested in the land and have put in our equity. We are in the process of finalizing the debt and we do not see any issues there. We are also going very fast as far as the management contracts are concerned and we shall be opening three hotels under management contracts in the current fiscal year after the newly opened hotel in Navi Mumbai.
Any plans for more hotels in India? Any plans to add more rooms in your existing hotels? If so then how much funds are you tying up for the same? And by when will they be completed?
We have been expanding very aggressively in the last few years. In the last financial year we have started the operations of our fully owned property at Ahmedabad in the name of Royal Orchid Central, Ahmedabad which is a 104 keys hotel.
We have also started operations of our new property at Vashi, Navi Mumbai in April 2010, which is a 67 key hotel named Royal Orchid Central Grazia.
In the current financial year 2010-11 our new 5 Star hotels at Hyderabad and Jaipur will be operational with 233 and 139 keys respectively. We will also be adding few properties under management contracts in Mussoorie, Shimoga and Hospet which will add about 300 keys.
Brief us about your geographic presence?
Royal Orchid Hotels Limited is presently operating 13 hotels across 7 major cities in India which include five hotels in Bangalore, two in Mysore, two in Pune, one each in Jaipur, Goa, Ahmedabad and Mumbai.
The chain is expanding rapidly in India with upcoming hotels in Shimoga and Hyderabad in the South, Mussourie, Jaipur and Shimla in the North and Powai (Mumbai) in the west. The group will make its international foray by establishing a beach Resort in a key location overseas by 2012.