Financial Daily from THE HINDU group of publications
Saturday, Jul 03, 2004
Leela Hotels chief sees room for hiking tariffs
Tunia Cherian George
Mumbai , July 2
THE recently-appointed President of the Leela group of hotels, Mr Peter J. Leitgeb, takes over at a time when the group is setting itself ambitious growth and expansion targets in an increasingly competitive market.
According to Mr Leitgeb, who will focus on "bottomline-driven" growth, there is a need to re-look pricing policy within the group's hotels and in the sector as a whole.
"The average room rents in the country should increase and come on a par with rates ruling in five-star properties overseas," says, the Mr Leitgeb, an Austrian national who has previously served on the board of the Kempinski group.
According to him, the Leela Palace, Bangalore, with the highest room rent in the country at Rs 11,000 per night, was a benchmark, but there was scope to raise the rates further at the property.
When converted, the average room rent worked out to around $250, which was the rate available in a two or three-star hotel in Europe or the US, he says.
"This is a throw-away price for a top-of-the-line property and service," says Mr Leitgeb.
According to him, the international traveller, who formed 80 per cent of the clientele in five-star deluxe hotels, paid up to $750 per night for a room in a five-star property in the West.
He adds that at the Leela Palace in Bangalore, the room to employee ratio was nearly 1:4. There was a need to change the perception that in India, a quality product and service could be had at a massive discount.
The immediate task before Mr Leitgeb is to reposition the Leela Kempinski in Mumbai as a premier business hotel. "Though it is located near the airport, the hotel cannot be categorised as an airport hotel," he says.
And the company is undertaking a phased enhancement of its rooms, restaurants and other facilities in an effort to drive home the image change.
In the first phase, which will be completed by September at a cost of $3 million, the hotel has taken up the refurbishment of 130 rooms, the pool area and the bar, besides two restaurants.
According to him, the Leela hoped to score over its competitors with its uniquely Indian ambience, which was being marketed as the "Essence of India" in its ad campaign.
His aim was to see the Leela Kempinski emerge among the top three hotels in the city on three key parameters, namely, occupancy, average room rents, and yields.
In the medium-term, he has targeted a "challenging but feasible" 15-20 per cent improvement in the hotel's bottomline.
Towards this end, the hotel has come up with the `Weekend Escape' for the residents of the city. This family-driven programme aims to rev up traffic during the weekends. According to him, it has received a good response in Europe and the US and provided good value at Rs 4,999 for a couple over the weekend.
Apart from a free room for two children below 10 years, the package includes a complimentary pick-up and drop, a bottle of wine and free entry to the hotel night club, among others.
Similarly, the hotel has designed the Corporate Monsoon Offer, which will be available till September-end, and is focussed on corporate clients. According to Mr Leitgeb, more than 1,100 room nights have been sold since the package was launched on June 15.
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