Indian Hotels to exit from Vivanta and Gateway brands

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Mumbai: Tata Group firm Indian Hotels Company Ltd (IHCL) will bring its Vivanta and Gateway hotels under the ‘Taj’ brand and exit the other two brands as part of a major rebranding exercise, a top company official said.

Under this new initiative, the company is upgrading all the 53 premium hotels of Vivanta and Gateway in India and abroad, and migrating them into Taj brand. These hotels will now be divided into four sub-categories—Taj Hotels, Palaces, Resorts and Safaris depending upon the location and nature of the properties. Both these brands have existed for almost a decade. While Gateway was launched in 2008, Vivanta was introduced in 2010.

IHCL’s strategy to upgrade and leverage on the Taj brand comes as at a time when the company is seeing growing threats from major international hotels in India in the recent past. After the merger between Starwood Hotels and Resorts, and Marriott International in September, Taj Hotels is no longer the largest hotel chain in India in terms of the number of rooms.

“We wanted to turn the clock back and get back into full-blooded Taj hotels but this time, we resisted the temptation of saying luxury, upper upscale or upscale. We said let’s abolish the word luxury and speak of world-class hotels. So, we made our decision that we will exit Gateways and Vivantas, define them as world class hotels and tag them as Taj Hotels,” IHCL managing director and chief executive officer (CEO) Rakesh Sarna said in an interview with Mint.

Sarna said this exercise would also lead to exiting some of the properties if the company feels it is no longer relevant or not contributing to its revenues. However, he did not disclose details on the kind and number of hotels that may shutdown in the process.

At present, Taj Hotels is placed under the luxury segment while Vivanta and Gateway hotels are marketed as upscale and premium brands. All the three brands put together, the total number of properties currently stands at 101, with about 13,505 rooms, located both in India and overseas.

Most of the existing Vivanta and Gateway hotels will undergo renovation and their services upgraded within the next one year. Last year, the company had also launched a ‘Tajness’ campaign to reinvent itself and revamped its services.

Sarna also expects that the initiative will help improve its sales which has been suffering for the last few years. For the last two years, IHCL has been undergoing a debt restructuring exercise where it is looking at reducing its debt by cutting down operational expenses and selling weak assets. Last year, it sold its Taj Boston hotel for around Rs850 crore to a group of US-based investors.

“First of all it (the branding exercise) rationalises our footprint; secondly, it brings a sense of authenticity to our products where we are redoing and recalibrating it. We believe that over time these hotels will get premium and it would translate into higher flow to our bottomline,” he said.

The company also expects that the initiative will help differentiate the hotel chain in the market which has seen aggressive push from some of the global companies like Mariott Ltd, Intercontinental Hotels and Resorts in the luxury segment while AccorHotels in the mid and premium segment.

“We are very cognizant of what’s happening in the market. …Our game basically is to ensure that our leading position in terms of brand recall perspective continues to stay. For that, we have to identify certain plans which will completely differentiate ourselves,”said Chinmai Sharma, chief revenue officer, Taj Resorts and Palaces.

In the quarter ended 31 December, IHCL’s consolidated net profit jumped to Rs93 crore from Rs13 crore in the year-ago period, helped particularly by lower finance costs and better earnings from its joint ventures and associates. However, total income fell 2.8% to Rs1,129 crore in the reporting quarter.

At 11.08am, Indian Hotels Was trading at Rs115 on BSE, down 0.3% from its previous close while benchmark Sensex index was down .0.17% to 28242 points.