Turning tables with focus on ARR/ ADR
At BW HOTELIER’s latest webBlast series, The GM Show, on Lifting ARR/ADR - Occupancy is no Brainer - It’s the Pricing Mate, hospitality industry experts deliberated on the plans and strategies to lift ARR/ ADR and get back to high numbers
The last two years have rather been challenging for hotel businesses around the world. The grind for getting occupancy while battling with the costs and rates sums up this period. But now that the world is getting back to normal, hoteliers have started thinking about ARRs/ ADRs which are essential for survival. A wish to increase ARRs/ ADRs is irresistible from the perspective of hoteliers to strike a fine balance between high operational costs and revenues. A mindful and well thought-out strategy is thus impertinent to get back at the crunching high numbers in terms of occupancy which, in turn, will lead to increased ADRs/ ARRs.
In another brand-new episode of BW HOTELIER’s webBLAST series titled Lifting ARR/ADR - Occupancy is no Brainer - It’s the Pricing Mate yet another group of discrete panellists from the hospitality industry united to discuss the subject. Industry stalwarts who voiced their opinions in the discussion included Nicholas Dumbell, GM, The St Regis Mumbai; Bhagwan Balani, GM, ITC Grand Central - A Luxury Collection Hotel; Vikas Kapai, GM, Sofitel Mumbai BKC; Sharad Dutta, GM, The Westin Mumbai Garden City; Randhir Tanwar, VP, Ramada Plaza Palm Grove, Juhu, Mumbai; Ravi Ramachandran, GM, Radisson Mumbai Andheri MIDC and Taljinder Singh, Sr VP- Mumbai & SeleQtions Hotels who also acted as the moderator of the event.
Comparing the past scenario with the current one, Nicholas Dumbell, GM, St Regis Mumbai, opined that keeping 2019 figures as an example is not justified just because the pandemic was hard on the industry. He said, “While we have all been fighting to drive our business forward, I’m not of the belief that 2019 was an acceptable ADR for us anyway. I think it was on the low side. If you look at the Mumbai luxury market, the ADR was hovering just about Rs 10,500 in 2019. That’s still 30 per cent down on 2007 and also way lower than other cities around the world. I think we all know that the amazing Indian hospitality deserves a much higher rate.”
Elaborating on the cost-cutting measures undertaken during this period to get the business going without effecting the services, Randhir Tanwar, VP, Ramada Plaza Grove, added, “Without compromising on the guest experience and following all the Covid-19 protocols, we have taken some hard decisions. In terms of salary, we started multitasking which means the front office people started to assist in housekeeping activities and vice-versa. That brought our wages under control. While renewing the contracts of the AMC services’ firms during Covid-19 period, we increased the periodicity by three to six months but kept the cost same as they were not ready to reduce the annual charges.”
Expanding on this thought, Taljinder Singh explained how he used the hotel’s restaurant to come to their rescue during the difficult times. “We created our own food delivery platform, Qmin which got food from luxury restaurants of people’s homes. We created our own platform with our digital and cross functional teams to launch an app. It helped us continue to run and operate our restaurants. Even when the rooms were shut down, Qmin gave us a lot of breathing space and generated revenues to help us survive,” he said.
Sharad Dutta, GM, The Westin Mumbai Garden City, was of the opinion that the hotels need to discover their thresholds and be more flexible in terms of pricing. “At hotels, we’ll need to test our rate thresholds across all segments. I don’t know how many hotels in have pushed it and see where the threshold lies. The strategy around lifting ADR would have to be pushing those boundaries and probably being a little braver than we've been on that front. In 2020 we may not have had the occupancy working hand-in-hand with the ADR but this year we probably had a bit of a lift which is a good sign. So, it should give us a little more strength and courage to drive our ADRs,” feels Dutta.
Expanding on the importance and role of OTAs in hotels, Ravi Ramachandran, GM, Radisson Mumbai Andheri MIDC, remarked, "I think this opportunity was godsend at that time. I strongly believe that OTAs can be used to hotels' benefits. Any branded hotel would like to leverage on the loyalty and the subscriber base the OTAs have. Just that the rates are visible to everyone including your competitors as the same platform shows other hotels too. More viable to the customers but another challenge for us. But then I feel OTAs are here to stay."
Resonating with him was Bhagwan Balani, GM, ITC Grand Central, who said, “We would indeed value and follow a balance between the segmentation and the positioning approach while the rates are slightly muted but not compromised as a strategy. We would continue to strike a fine balance between lifting revenues and rationalising the costs. Our first priority has been to ensure that our guest experience is seamless.”
Concluding the discussion, Vikas Kapai, GM, Sofitel Mumbai BKC, added, “In future, most of the travellers’ decision would be based on the weighted equilibrium of need versus the desire to travel. I would say that international traveller would still be some distance away coming in while domestic travel would look at the option of going out. In addition, staycations have increased in the country. This segment was started off post-pandemic but is pacing up while the wedding segment that picked up a big way with us would continue to hold its ground.”
The show culminated with Bhuvanesh Raj Khanna, CEO, BW Communities, thanking the esteemed panellists for sharing their thoughts and views on the subject and informing about the next GM Show at 5 pm on December 9, 2021 on Tech, Manufacturing & Precision Engineering Giant, South Must Go Big On Hospitality, Travel & Tourism.
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