InterGlobe is better known as the parent company of India’s largest airline, Indigo. But the firm, which got off the block as a travel agent, today straddles anything from logistics to hotels. In the latter, the company has a tie-up with Accor, the world’s second biggest hotel chain (after Marriott) to run its brands like ibis and Novotel.
THE WEEK caught up with InterGlobe Hotels president & CEO JB Singh on the sidelines of the glitzy launch of the group’s latest property, the very vacay-vibed ibis Styles in Vagator, Goa. Excerpts from an exclusive interview:
How did InterGlobe get into hotels?
In the early 2000s, we found that there was a big gap in the market — there weren’t many solid structured (hotels) in the mid-market space. We believe it’s a new area of growth. We’ve done a Pullman, Novotels etc, (with other partners) but our main focus has been on the ibis brand. The effort has been to stay put and perfect it.
InterGlobe is now focusing on sustainable initiatives
Compliance to statutory and sustainable norms, that’s one thing. But sustainability for us is (about being) future ready. AI is used to optimally manage electricity usage and even food wastage.
Coming to the older hotels, when the hotels go in for renovation, they are being retrofitted. We have started doing that.
Is sustainability a major issue? Probably with foreign travellers, but do domestic customers enquire about it?
There is enough research now that people are now looking at sustainable products. Are people walking into hotels asking “is all this eco-friendly?”, I would say the number would be very low. But one thing for sure, if you are a compliant building and you tick all the boxes, you have better chances of attracting responsible citizens into your property, as opposed to non-compliant buildings.
And sustainability will be one that people understand and talk about, and tend to relate with, like their eating and shopping habits. And the trend will catch on.
We started retrofitting our hotels in 2014-15 with our Navi Mumbai hotel. It’s been on our radar since.
Globally there is definitely awareness, but do domestic guests enquire?
Yes, but not to that level. But there is enough research that says especially if you look at the younger demographics — some researchers say up to 70 per cent of that age group want to use sustainable products. But in numbers may be fragmented but in corporate contracts now we are seeing this (being increasingly asked for)
Is there a breakup between your business hotels and leisure ones
I haven’t done the math, but we have four hotels that are leisure (Nashik, Jaipur and two ibis Styles hotels in Goa).
What’s been the recovery graph for your hotels post-Covid, particularly towards the latter part, the last one year.
Post-Covid, we recovered faster than the market. If over ’19 the industry grew 20 per cent, we grew 50 per cent. Our bounceback straight out of Covid, we were the fastest out of the gate — we kept our hotels running, we were responsible in how we managed our people etc.
After that, if you were to compare last year and this year, we’ve grown 30 per cent just in pure revenue.
That’s overall. But if you compare business hotels compared to leisure properties, business hotels probably would have recovered later, right?
No, in fact it’s been fairly equal. The only market that’s been a bit soft — and that’s an industry thing, has been Bengaluru, which is so IT dependent.
Otherwise, it’s been pretty strong. Delhi today is performing so strong for us, as does Mumbai. Business travel anyway has been very good — we are city centric by product, by design, and we have almost 60 per cent repeat customers.
Beyond Goa which is having bumper bookings, is high occupancy generally the scene this festive season?
If you look at industry performance even before the ‘season’, say August or September , the industry is far outstripping the performance in the previous years, There is strong growth across the country the economy is strong, business travel is up, consumption is up.
Any kind of speed bumps along the way? Something we should be careful about?
Every market comes with certain risk factors. More eminent risk factor for our industry is rising development costs. Post-Covid development costs have gone up by 20 per cent plus. That’s a big bump in two years. Which means there should be lot of focus on policy and how development needs to be more efficient on a capital perspective. Inflation has stabilised, but it did affect interest rates a bit. And whatever geopolitics is going on, that’s the other thing.
Thirdly, a shortage of skilled manpower.
You mean there is a short supply of manpower in India?
Skilled manpower, yes. Lack of skilling.
India will also participate very extensively in the global imbalance of manpower. You don’t have enough skilled manpower in Europe, the US etc so you are already seeing people moving out. You will feel that in the next three to five years. You need to wake up and understand how quickly skilling needs to happen. Global displacement of manpower is going to be around for a while.
You are saying that we will see the same scenario in the domestic market also?
We will see an outflow of manpower. Skilled manpower.
Will that be sector specific? For example, I know it is true for aviation.
Hospitality and service industry will be the fastest. The western world has outsourced manufacturing, so that won’t be an issue.
That is an interesting trend that we are not talking (about).
What’s the way forward for ibis Styles? You say you are looking at major leisure markets
We are constantly evaluating (new) markets. We have some criteria — there should be clear and present demand, we need to get the right sizing of the land, the right pricing which will fit into our investment criteria, (the right) location, that’s how we evaluate.
And of course, when you talk of clear and present demand, six-seven markets come to mind. But that doesn’t mean we are not open to other leisure destinations, as long as these ticks come.
To answer your question, InterGlobe Hotels is committed to growing the portfolio. And we will keep going to places that fit our investment criteria effectively.
You use the term ‘smart economy’, but today a value conscious society like India is suddenly going in for premiumisation. Have you spotted this, and would there be any policy tweaks because of this?
ibis has been received very well. People use it, and they keep coming back. It’s at the right price point. Everything you see in (an ibis hotel) is no different from that at a luxury hotel. Product, materials, air-conditioning, everything, you get the same experience, (except for space). That is how we drive value.
This is perfect for a high dense market like India. 38 million people in Delhi, you’re not gonna get that space, and even if you do, it’s not gonna be efficient. Massive young population of 400 million — they love products like this.
Festive season demand you expect?
We’re operating at 70 per cent till date. This demand is going to grow. It is going to get bumped up 10-20 per cent for the rest of the year. Forward bookings are very strong. Also, more than a festive season focussed (hotel industry), we are moving towards an event based thing, with conference centres coming up. Those are the big drivers, like the (ongoing) Cricket World Cup
What kind of seamless interface do you see between the airline (Indigo) and the hotel, beside the obvious like the crew staying at the hotel? Does having an airline help you, say in hotels or in the logistics business.
One thing we have done well at InterGlobe is that every business is at an arms length. Every business has to stack up on its own feet. That’s how it works. Frankly, we don’t have any Indigo crew staying with us at our hotels, except at one hotel in Delhi Aerocity. We sometimes have more crews of other airlines staying with us than Indigo!
The point I’m trying to make is that all our businesses have to stand up on its feet. They have different investors, and every investor’s aspirations are different. They are all credible businesses. By default, the way an outsider sees it, they come in the travel (space), but we are a travel company, that’s the space we understand very well. I don’t think we are going to go and start a business in Pharma, we don’t understand it. This is closest to us. By default we are in this area, but we are partnering with some of the best in the world. They all stand on their own feet, they are all board-governed, with significant investments in all of them, and all of them are investing significantly with us in the future of India. Everything runs on its own.
