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3rd Annual Business Travel Intelligence Summit
Anil Malik is general manager at the ITC Maratha, Mumbai, a Luxury Collection hotel. He talks about old Bombay and new Mumbai...
People call Mumbai the city of dreams. Why?
Whether it's an auto-rickshaw driver in the suburbs, or the stewards in the restaurants, they've come from all over the country. Whether it's for a job, or for starting up a business, or for expanding the business and opening a corporate office, or for a product launch, Bombay is the location. It is the city where you get opportunities. For anybody who wants to get on in the professional route, and seek larger opportunities, Bombay is the key.
It is its character. It's culture of business. The outlook is that you pay for what you get - and you can buy anything. The facilities are available. The business pportunities are available. Jobs are available. And there is a thriving market. Whether it's Tata or Birla, or other industry names... they all live in Bombay. Their corporate offices are in Bombay. ITC's offices are in Calcutta because the company is 100 years' old, so we will not move our offices from there for traditional reasons, but otherwise the Tatas or Birlas, they all have their offices in Mumbai. It is an integral destination and it's the commercial capital.
And of course it also includes the celluloid world of Bollywood. Dreams come true for afew of them. This means a lot of money to the city. Today we have entire expat community stationed in Bombay, who just come here to perform in films. Whether they're extas or character roles, or adding to the crowd for a western shoot, instead of them taking the whole shoot to London, they can recreate some shots here. We have a lot of english speaking people in Mumbai.
Mumbai has a very cosmopolitan culture, a mix of people from Bengal, Delhi, Chennai, Kerala, Maharashtra. All of them work together. They may have political parties speaking a different language, but in reality, in the work force everyone tolerates each other. That's how life goes on in Mumbai.
How has the recession affected Mumbai?
It affected all of us. It affected India and the world. The effect was high in certain industries. For instance, the premium hotel buisiness got affected the most, I would say. But if you see the number of footfalls, occupancy, from two years ago to now we are doing better. We've had to lower rates, by 25-30% over three years. The bottom line has been badly affected. With costs going up and rates going down, the overall difference to the bottom line may be as much as 40-50%.
You have to learn to live with these realities of life. We have to learn to live with lesser profitabilities. But business is still going on. It's showing good opportunities and growth. The number of people [visiting hotels now] is definitely increasing.
Are you increasing rates?
Not as yet. It's too early right now. By September or October of this year, you might see a favourable change, but as of now they are quite stagnant for the last year and a half.
How did the terrorist attacks in November 2008 affect Mumbai?
It dramatically affected Mumbai. In one week the city virtually cleared out. There was no business left. It went on for two to three months. It happened at the end of November, and normally until December 20 it's peak occupancy. From December 1 it went down and down, to as low as 25% occupancy. There were domestic people travelling, but no foreigners. We have a foreign domestic mix of 70-30. If the number of foreign visitors goes down to 10%, you can imagine what the business will be like. It took us four to five months to reach the off season business as usual, because by the time we recovered, it was April. And so, practically, we lost 9 months of business.
But people are coming back now...
Gradually, it's grown up. From last year to this year, it's a 16% growth.
The recession started before 26/11. It started in 2007. In 2008 it was at its peak, and at the end of 2008 the bombings took place. When you put the things together, it took away about 3 years of growth from this industry.
What have been the lasting effects?
Every organisation which was large and had a global footprint sent in-house or outsourced evaluators to check the security of the hotels they were going to use. The situation where you could use any hotel in town as long as it was in this bracket or that bracket is past tense. It's all about hotel security. Practically every large emergency company who was doing business with us went back and revisited the hotels. It took about six months for this process to get to work.
Everybody who normally used us came back to us [only] after approvals from their security agencies. They came in cognito, they came announced, they came unannounced, and they did various checks.
What were these checks?
Starting from the location of the hotel - whether it's a hazardous location. At that point of time whether you were a seafacing hotel was also important, because the attack was from the sea. So the seabound hotels were naturally on a very high alert at that time. This has died down to some extent. Otherwise it's about how far you are from the main road, whether you have baggage scanners, metal detectors, bomb device evalutors - we check every car and package that comes into the hotel. Also, closed circuit tv cameras can now be viewed from anywhere in the world today, so if somebody attacks my control room, it's not all gone for a six.
That must have meant spending a lot of money?
Humongous money. And it's still continuing. Whatever we've spent in the last year we're going to spend that much more this year.
We're building concrete walls around the hotel, as well as popup bollards, and we're shifting the in and out gates of the htoel, so that they are not in the front of the htoel. If a vehicle is not able to penetrate inside, but is standing outside of the gate and it explodes, it will have minimal impact to the hotel.
It's been a difficult year, but Mumbai seems to be regnerating. The Bandra-Worli Sea Link seems to have become a new symbol of the city.
Yes, and that is expanding. In 10 years it will become four times the size it is now. It will connect non-stop from the north to the south without a redlight. When you enter the outskirts of the city, it takes you two hours to reach the endpoint. [The plan is] that you will do that in 45 minutes maximum, in the next four to five years.
The city is also becoming quite highrise...
Thank god it's not another Dubai! The government is restrictng high rise to large tracts of land. This is good because there is no space to expand, you can only go upwards.
The government has taken a couple of decisions in the last few months, which are very important. First is along the seafront they are allowing very high rise buildings. Mainly for 4 sectors: for rehousing the poor people, for education instutions, for medical facilities and for the hotel industry. That is a great decision they've taken.
Second they've allowed the coverage to go up in the centre of the city by a little bit. It will be a little higher in the city centre, a little lower as you go out of the city. The concentration of land is really not available. Still people want to come to work, to create new offices and add hotels. In south munbai you can't add a second hotel. Now hotels in south Bombay are only allowed to add capacity.
Is there a shortage of hotel rooms?
I think the requirement of rooms will continue in various segments. I don't thin the top end segment will grow much. Which means for four-star hotels, the scope is higher.
Whilst the scope for three-star hotels is also high, in today's conditions where you have to buy land from the market, it's extremely difficult to break even in three-star hotels in a city like Mumbai. It just doesn't give you the opportunity to break even. People can't by design invest in such ventures.
Mumbai has to expand beyond its boundaries now. The government is trying to put infrastructure in place, for things like air conditioned buses and a monorail to cross the city - not just north-south, but east-west also has to be connected. For that they're bringing in monorails, which is a great endeavour. Over the next few years you'll see the ast and west connections become very well established. The city will expand phenomenally, there's no doubt about that.