At one of the hoteliers’ conference I attended at Leela Ambience Gurgaon a few months ago, I happened to attend a panel discussion where Sonica Malhotra, joint MD of MBD Group, a hospitality and publishing firm that has recently tied up with Steigenberger to open 20 hotels in 15 years, was a panelist. When the moderator or someone asked her views about the massive investment required for the new 5-star hotels and what their plans might be after running the Radisson MBD in Noida and Ludhiana, she was unfazed and said that they were contemplating expansion at their own pace and that they did not believe in ego as the return of investment like some chains did. She said they were conservative but looking for opportunities.
She is correct when she brags about Prime Minister Narendra Modi staying in Hotel Frankfurter Hof (a Steigenberger property) during his visit to Germany. "It is a well known brand in Europe. For luxury travellers, if they go to Germany, they would like to stay in Steigenberger,” she says. Not only does the statement indicate that PM Modi does not necessarily spend money in the super-luxury hotels and burn tax-payers money, but also that the luxury can also come at affordable prices.
Subhash Arora has been an international judge at Mundusvini, held every year in Aug-Sept (though during the last 2 years they have also added a summer edition in February/March). The hotel at Deidesheim is close to Neustadt where the tasting is carried out, with around 150 jury members staying in Steigenberger Hotel, about 15 minutes from the venue. The location is excellent and so is the service and food (though Lunches are not what Mr Modi enjoys-in any case that is not a problem for him to worry about.) Prices are reasonable and it is a value-for-money proposition, but a very comfortable hotel. Hopefully, the same level of pricing will be available in India, giving them a price competitive edge.
For a brand-conscious domestic luxury traveller, Steigenberger Hotels and Resorts is a fairly unknown brand, claims the report in Business Today. If not Arora’s stay for 10 consecutive years, PM Modi’s visit would certainly enhance the luxury quotient to quite an extent. It is noteworthy that the jury at Mundusvini consists of some powerful and influential journalists and if they were not satisfied, they would be highly critical and would tear apart the reputation of the hotel.
Before finalising the deal with Steigenberger, Malhotra was talking to two more brands, she says. "One of them is already operating in India but they have goofed up big time. Then, Steigenberger approached us. In terms of branding and positioning, they gel well with our expansion plans," according to the report.
The property owned by MBD in Bangalore is under construction. The first Steigenberger hotel in India will be opened there in three years. This is a JV in which MBD owns 51 per cent and Steigenberger owns the rest. MBD will have four directors and CMD while Steigenberger will have 3 directors.
The JV would predominantly do management contracts where MBD will handle the entire management, training, sales and marketing for the Indian region, and the entire pre-opening assistance such as design and construction and hiring.
Steigenberger will handle international sales and marketing, online marketing and global distribution system. Initially, Steigenberger will be involved in the entire brand standard formulation, which will be customised to suit the needs of the domestic market. "The intent is to go asset-light. In terms of top line, we will be able to garner over Rs 2,000 crore of revenues from assets under management," she says.
Things are looking up after a long time in the Indian hospitality space. The market is picking up slowly with occupancy rates crossing 60 per cent in 2014-15, and even RAR (revenue per available room) has registered growth in the past four years. The timing of Steigenberger may be apt. But the report points out that there are various gaps that it has to plug to become a serious competition to the existing players.