Hotel companies need to plan on how to bring back pre-Covid levels of operations in it: President & CEO, InterGlobe Hotels

JB Singh

A seasoned professional and an astute leader, JB Singh holds 33 years of rich experience across leading hotels, airlines and distribution technology companies. He is currently the President and CEO of InterGlobe Hotels (IGH), a joint venture between InterGlobe Enterprises and Accor Asia Pacific established in 2004, to develop a network of ‘ibis’ hotels throughout India, Nepal, Sri Lanka and Bangladesh.

In his current role at InterGlobe Hotels, JB Singh is responsible for running the business including development, financing and asset management functions. Under his leadership, InterGlobe Hotels saw a pivotal change management program with deep cultural impact which has translated to significant efficiencies in the investment and operating benchmarks for the organization.

In an exclusive interaction with CPO Innovation, JB Singh, President & CEO, InterGlobe Hotels shares the long-term impact of covid19 on hotel industry, his strategy to garner businesses post-pandemic and his key learning from this current crisis.

Here are the excerpts of the interview.

CPO Innovation: What has been the effect of Covid-19 on business?

JB Singh: The Indian hospitality sector has been heavily impacted by the Covid-19 pandemic, especially with the countrywide lockdown over the last few months. The sector is still struggling with low room sales, demand downturn and uncertain future bookings as hotels strive to secure future business due to cancellations and fall in occupancies.

During this time, there has been a significant impact in travel sentiments of people. Even though there has been relaxation in certain sectors, corporate travel has come to a halt, along with several impacts on leisure demand and MICE. The economic downturn caused by the pandemic has impacted all sectors and have led to lay-offs and salary cuts which in general has affected the overall mood of the country.

As of January 2020, the total industry debt outstanding across the organised hotel space in India was over INR 45,000 crores. Just the monthly obligation of principal and interest repayments, therefore, runs into thousands of crores and the expected revenue loss is expected between US$12 Bn to US$14.5 Bn (INR 90,000 Cr to INR 1,10,000 Cr) for the entire financial year. In fact, from April to early June in the upcoming year, the Indian tourism industry is expected to book a revenue loss of INR 69,400 crores, denoting a year-on-year loss of 30%. So, it definitely is a very tough period for the tourism and hospitality industry not only in India but globally as well. 

CPO Innovation: Do you think the domestic market will be able to shore you up once the crisis blows over?

JB Singh: Yes, definitely! In fact, for our hotel portfolio over 70% of our guests are domestic travelers and our whole F&B, marketing and promotional content and look and feel of public areas has a local flavor which helps us connect better with our guests.

According to an ICRA estimate, 77% of the total hotel guests travel within the country. India also witnesses close to 10 Mn foreign tourists a year. The 1850 million domestic tourists provide testimony to the fact that there is huge potential of this sector to be explored even further and there exactly lies a potent way for recovery of the badly affected tourism sector.

The pandemic is expected to be in control from October onwards. Coincidentally, this period also marks the start of the peak tourism season of the winters post Diwali. This hopefully should be able to boost the travel sentiments of people after months of a down cycle. Many states like Rajasthan, Kerala, Goa, North East have done a fantastic job of controlling the pandemic. We are optimistic of a good year-end demand, especially for these areas that have been traditionally clean and are popular destinations among tourists. We could potentially see new markets opening up and opportunities for adventure sports, boutique destinations to finally have their coming-of-age moment.

To further illustrate this point, the hospitality sector had a strong opening this year in January and February which suggests a strong inherent demand. We believe that during next year or so, many travelers with a preference for outbound destinations would also become travel cautious. They would prefer moving within the country as the transportation service will still be impacted for a while and people will need to find areas of recreation and stepping out. Having said that, we do not expect an immediate growth in travel and tourism after the lockdown is lifted as is the case now but once the business movement begins, the travel sentiments will eventually improve thereby growing the domestic travel numbers. This timeline is just a few months away, but we consider this to be a realistic scenario.

CPO Innovation: What do you think will be the long-term effect of COVID-19 on the industry?

JB Singh: The long-term impact is particularly hard to predict. While we have been working on plans to survive over the last few months; we have already shifted focus and started working towards the revival in the medium term. However, we can only expect any guest turn ups once the pandemic threat is contained. We strongly believe that the situation will be contained over the next few months and the market should inch towards normalcy thereafter. Hopefully, there would be improvement in travel sentiments, corporate travel and social events, provided the crisis is not extended beyond the stipulated timelines.

As far as this year is concerned, a recovery phase starting October onwards would only help offset the major losses incurred during the first half of the year due to the pandemic. Considering the worst-case scenario too, the recovery might take another 18-24 months.  During this time, hotel companies would need to re-focus on many aspects of evolution of the hospitality sector and plan accordingly on how to bring back pre-Covid levels of operations in it.

In the long term, most hotels in India will be focused on health and safety measures, tech-driven platforms, compliances and licensing, and most important operational efficiency and cost-effective value service offerings. These are some basic yet important business decisions to be taken and implemented by all hotel companies to improve the customer confidence. When you look at these aspects at a macro level; you may notice that this makes the whole hospitality sector more structured and sorted in terms of business readiness. This itself is a big and encouraging step towards a safer and organized hospitality sector.

CPO Innovation: What will be your strategy to garner business once you open?

JB Singh: Once businesses reopen and travel resumes in the country, we will re-look our hotels with a fresh assessment overlooking the whole market scenario. We will be treating each hotel as a new opening and will reposition them accordingly during the relaunch as we aim to ensure a safe, hygienic and responsible way of working businesses. Furthermore, we are already working on a detailed sales, marketing and PR plan along these lines. 

Even in these testing times, we are pleased to say that we haven’t lost our focus on the future. We want to be ready to take on the first wave of business as the situation improves and travel recommences. While the business in hand is driven by the Vande Bharat Program and the Quarantine guests and healthcare staff, we have also been reconnecting with our accounts and corporate groups to understand the business sentiments going forward. The corporates are our main business segment and even during the lockdown, we successfully hosted a few long stay groups from the IT/ITES companies who wanted to ensure their staff are safely kept. All requirements from the business point of view have been arranged, we have gained good confidence and while also using this as a base to assure all companies of the best amenities and services are arranged for the guests. At the same time, we are under the process of finalizing a few smaller groups for the banquet space for later this year.

We strongly believe that currently the whole pandemic is expected to be under control towards the end of this year and this should coincide with the peak tourism season for the domestic market. We potentially see good opportunities for staycations and even for our hotels in states that have done a decent job with the handling of the situation like Rajasthan, Kerala, Goa to mention a few. We are assuming that people by then would be keen to step out and use the time to explore our domestic tourist destinations. We are working on all fronts to be able to gain volumes from all segments, when the business and travel sentiments improve. Till then our efforts continues to maintain efficiency on the cost front and maintain the properties so we are ready for the business uptake and work towards normalcy.

CPO Innovation: What have InterGlobe Hotels done to support the community within which the hotel is located and your employees?

JB Singh: When the lockdown was announced, we were amongst one of the first hotel companies to work with the government to offer our hotels for guests undergoing quarantine. This offering was first introduced at Ibis Delhi Aerocity as a service for international visitors where we had dedicated 149 rooms, but we have now extended this service to our properties in Bengaluru, Kochi and Navi Mumbai with varying room numbers across the hotels. If there is a requirement or a government advisory for any other region, we would be willing to consider extending this to other locations as well. Our hotels have offered the best available rates to these guests and from quarantine services we have extended these facilities further to healthcare workers, Vande Bharat travelers, foreign embassy staff members and even corporates who were not able to travel back during the lockdown at three other hotels in Jaipur, Mumbai and Gurgaon as well.   

We are monitoring this situation very carefully and ensuring that all the necessary hygiene measures as per the directives are executed within a quick turnaround time. Our staff has been well trained to handle the situation carefully and additionally all health and safety procedures are being followed, with the highest measures for security and sanitization being undertaken to keep all people safe. InterGlobe Hotels have remained committed to continuing this facility till the pandemic is managed and we are informed that the state and private healthcare facilities can handle the situation and take it forward. Therefore, at our organisation, we strive to continue our engagement with the government officials and all authorities and we aim to stay in constant contact with the authorities in case they require any further assistance.

To further add other initiatives recently, all Ibis properties across India came together to lend their support to distribute food ration packets to the needy and underprivileged. A total of 5.3 tons of raw food material was distributed among communities across India with the support of NGOs like World Hope Foundation (New Delhi), Project Rescue Pune (Pune), Child In Need India (Kolkata), Headway Foundation (Chennai), and Robin Hood Army (Jaipur). In Coimbatore, Nashik, Hyderabad, Goa and Kochi, food packets were distributed in local underprivileged areas. The food packets included items like wheat flour, pulses, refined oil, salt, and sugar. Conscious of the risks involved in distributing food in public such as a breach of social distancing norms, the hotel teams sought help of local police officials and NGOs.

The teams at Ibis New Delhi Aerocity, Ibis Pune Viman Nagar & Hinjewadi, Ibis Coimbatore, Ibis Kochi, Ibis Kolkata Rajarhat, Ibis Chennai Sipcot & City Centre, Ibis Jaipur Civil Lines, Ibis Nashik, Ibis Hyderabad Hitec City and Ibis Styles Goa made this initiative a success while ensuring strict safety and hygiene measures and not only goes for the guests but even the staff members who have been kept safely in the hotel. We consider them as real warriors who have ensured business continuity in these tough times.

CPO Innovation: What measures have you taken to cut cost of operations?

We at InterGlobe hotels have been following the situation from early January even before it affected India. By February, we were aware that this could start impacting us as bookings had slowed down and business on hand was low. At that point of time, we sat with our teams at the operational level, our JV partner Accor and our projects team and over the next month we planned how to ensure cost optimization and ensure that we are prepared for a tough road ahead.

During this crisis, we came up with some effective steps and by the time lockdown was imposed, we were able to save close to 65% of the costs both on the operational and capital sides. 

Some of the most basic steps done were shutting down the F&B buffets and all guests were provided menus to avail in-room service. We decided to limit all guests to 1-2 floors to save up on energy costs. We also renegotiated all our contracts with our vendors, consultants and service providers with the best available rates so that our vendors are retained and continue working us in such tough times. This was a good example of our great stakeholder relationship. Other steps included putting all our refurbishments and renovations on hold to ensure cash availability, discontinuation of all our staff activities till the business improves, etc. Our staff has been very appreciative of these steps as they are completely aligned with the situation. All these have always been regular business decisions which have seen a degree of success giving us the opportunity to streamline operations.

CPO Innovation: Every crisis has its learning for the industry. What has been your learning from this crisis?

JB Singh: In such tough times, many companies are under a serious threat of winding up with limited government fiscal support and low business opportunities. This is exactly where the challenge begins where one has to take tough decisions. Going forward, the expectations from the market and the customers is not going to be what was achieved in the past, but basis how aligned you are to the new situation. 

So, as a hotel company, we firmly believe that the travelers and new corporate accounts will demand strong health and hygiene measures and a strong proof of necessary compliances and certifications. These are important ways to showcase our focus on the safety and security of our immediate stakeholders. For our hotels, we believe that we have a certain responsibility towards our guests in terms of the hotel room pricing, our service offerings, guest relations that we maintain, our commitment towards compliances, health, hygiene, safety and security only demonstrate the InterGlobe virtues that we incorporate in our daily functioning and decision making as well. A business model for us can only thrive if we have these aspects in place and work with the dedication as if it is the only way of ensuring business continuity and growth especially during such challenging times.

Our key learning has been that when a company works with responsibility and ensures transparency in its ways of working in terms of approvals, licenses and necessary permits, it has successfully been able to gain resiliency in its business and future proofing the organization holistically. These are some steps we have always followed and even now while the government had listed out some stringent SOP procedures, we ensured all steps were followed and this was not a tough task for us. Even while we spoke of cost optimization, we could ensure business continuity for us and our vendors while discussing fair terms. We as an organization, have ensured empowerment and growth for everyone and this is a key trait not only for business but from a leadership point of view also where you create capacity and build competency for all interested stakeholders.