‘Industry Has Forgotten Why It Is In Business’

Eric Swanson, general manager, Leela Palace Bangalore, talks to Vyas Sivanand about the hospitality industry’s tendency to overreact, his competition, latest trends and expansion plans

EH&C:It's been two years since you came to India and Leela Bangalore. How does the work environment here compare to your earlier experiences?
Eric Swanson:I was with the Ritz Carlton group before joining Leela Palace, Bangalore. At Ritz, we had a corporate culture, where the processes were standardised and the company knew which direction to take. We had a lot of corporate infrastructure that supported the operation. It is sometimes easier to work in such an environment.

Coming from a corporate environment to an owner-driven company, you tend to lose a lot of that structure. The owner makes a lot of decisions. So managing that relationship and ensuring predominance of the owner's satisfaction makes you successful in such an environment.

In my case, I have been very lucky. The owners have really empowered me to run the hotel. Their inputs and experience in the market is something I really appreciate. I would be naïve to think that translation of my core expertise with Carlton could work in India. Of course I have taken a lot of components from there, but in many cases the owners know much better than I do, with respect to the market.

What is your opinion of the current phase of Indian hospitality? How prepared is the Indian industry for contingencies?
I feel there is lot of room for improvement and when I say that, I mean they need to be focused on providing genuine excellent service. I think we do a good job providing service but I don't think it comes from a desire to provide the good service.

Within the overall Indian hospitality sector, they need a kind of grassroot approach to do justice to what the country is known for - hospitality. The whole industry is buoyant, has a lot of potential.

Now because of 9/11, SARS and the Iraq war, the industry is so focussed on returns that they have forgotten as to why they are in the business. All around the world, nobody was prepared for such disasters. However, the industry has to be more focused in order to adapt to the situation. I have noticed that in the Indian market, people tend to overreact. They overreact by dropping prices, providing huge discounts, thinking they will induce travellers to come to India. But the fact of the matter is that by doing so they are discounting business that is coming to town anyway and driving the market down for the future. But again, who would have thought that such disasters would happen. You just have to adapt, be ready to change quickly. I think the only way we could be prepared for the worse is by keeping our operations as lean as possible, so that you could adjust quickly.

The Indian luxury market is presently in the doldrums. Where does Leela stand as a luxury chain?
Perception plays a major role in such thinking. It was very prevalent in the West and has trickled down to India. Mumbai is a tough market to leverage the luxury brand because of the abundance of luxury brands there. There are enough upscale business travellers in Delhi and when we talk about upscale travellers we are talking about five per cent of the top-end traveller. In Bangalore, there is nothing but the upside as there are just three properties on the higher-end scale – Taj West End, The Oberoi and Leela Palace. Once additional inventory comes to the market, Bangalore will be happening.

With inbound tourists taking a beating, are you falling back on the domestic segment?
It is known to be like that. Whenever there is a worldwide scare, the domestic market is the only one which is resilient to the external factors. Definitely the focus today is more on the domestic market. As for me, I look at the occupancy rate and the RevPAR (revenue per available room). I am more tactical and focused on the type of business that I want so I tend to pick and choose more.

You have had international experience in the hotel industry. How do you find the Indian market with respect to service, infrastructure and human resource?
Indians have a natural desire to be warm, welcoming and hospitable. That in itself lends to world-class service. Facilities here are comparable to any part of the world. Infrastructure is fundamental and speaking about Bangalore, it is still weak and will be like that for about five to ten years. But massive development is happening and I think we should really give credit to the government for keeping up with it.

As far as human resource is concerned, getting good people has become very competitive, especially for a comparatively smaller brand like Leela. I do not have as much reach as a Taj or an Oberoi and so obviously I do not have the opportunity to develop my people. That is definitely a downside for me. But unfortunately, Leela also has the reputation of training very good people. So most of our employees are targeted by my competitors, cruises, call centres, overseas market etc.

What are your strategies?
The strategies were not set on stone when I joined the group. But since then, our core strategy has remained the same, which is to position ourselves as a luxury product, where quality and value for money are core components. We wanted to come into the market as a market leader and we have accomplished that. We measure the market leadership by average rate and quality service.

On a long-term basis, the core remains the same. The question that we ask ourselves now is what next…how high is high? How high can we go now? We have definitely one of the highest rates in the country and we have already established ourselves as market leaders. So the future strategy would be to augment it. To see as to how much higher can we push our average room rate, occupancy, F&B etc.

How do you handle competition?
I will never sit back and say that I am not afraid of my competitors. But in all honesty, I think their approach and marketing strategy is archaic and not in line with how hotel marketing is meant to be. Hotels here since 9/11 are going on with very low rates and keeping the market down. The difference in average room rate between Leela Palace and its nearest competitor is about Rs 2000. Today, I know where I am, but I want them to push their rates higher so that I can go even higher. The gap as of now is quite wide. Of course my product and its quality defines it, but at some point the customer will surely feel that there is something amiss. I feel Bangalore is a place where you can push rates and it is high time for my competition to move in that direction.

Leela Palace is a unique property in more ways than one. What exactly sets it apart?
I would describe the property as a business resort. What really sets it apart is the facility. We have a huge property with world-class restaurants. We have the reputation of having the best F&B in town. We have shopping malls and commercial complexes. Our main focus is on guest comfort and the core emotion is to serve from the heart. It has a mix of Indian and Asian architecture, which gives our guests a feel of India.

You have such a huge property…the largest in Bangalore. Wasn't cost cutting important, when the industry keeps talking about it?
When the hotel was being built, there was no compromise made in terms of expenditure. Now when the hotel is operational, of course, saving costs is important and I would not be the general manager if I am not able to do that, but I also make sure that my compromise does not affect our quality.

What are the group's expansion plans?
Further to my discussions with the management, I feel the focus would be to consolidate our property in Bangalore, leverage the property in Goa, and take the Mumbai one to renovation because of the tough competition there. After that we will be looking at Kerala and Hyderabad, apart from a few other cities in the country. We are not planning to expand overseas, since at present we do not have the right resources.