Alan Watts, executive vice president and regional president Asia-Pacific for Hilton hotels, says the group is looking to double the number of hotels in India, from the current 17, in the next three years
Image: Aditi Tailang
Investment Conference-South Asia (HICSA), an annual forum for industry players in the region, held in Mumbai this year, Forbes India
caught up with Alan Watts, executive vice president and regional president Asia-Pacific (APAC) for Hilton hotels. Edited excerpts:Q. Globally, the growth rate (by revenues) for Hilton hotels is 6-7 percent, whereas for APAC it is double that, at 15 percent. What are the key drivers of this growth?
Every one in four hotels being opened in the [APAC] region is a Hilton branded hotel; in China it’s one in every three. Three things are fuelling this growth—rapid urbanisation, the rising wealth of the middle class and low-cost air travel. You not only have domestic travellers, but also those generating huge outbound demand. China will see about 100 million outbound trips by 2025, while India already has 30 million people travelling out. All of this has an inter-regional play. It is the golden age of travel in APAC. As a result, we’re seeing the growth rates for us as well as our competitors in the region top the charts.
Q. You currently have 17 Hilton-branded hotels in India, which is much less than some of your competitors. How do you plan to increase your footprint in the country?
For us, India has never been a ‘should-we-be-here’ market. We’ve always looked at it as a ‘when-is-the-right-time-to-be-here’ market. When are we going to see a growth explosion? How do we invest here ahead of the curve? This is the one market where we are in a challenging position. We don’t have the same portfolio that our competitors have. It’s a strange place for Hilton to find itself in and we have to make sure that we are as powerful a brand as we are in North America and APAC proper. We’ve recently put in place a strong team here, led by Navjit Ahluwalia [country head] and have re-invested in a national sales structure platform. We’re now ready to grow. In fact, we finished last year with double-digit RevPAR [revenue per available room] growth and this year we’re forecasting 14 percent RevPAR growth. That is up there with the world’s strongest growing markets. That’s the reason we’re investing so heavily in India. We plan to double from 17 hotels currently, over the next three years.Q. There is now a 28 percent GST for hotels with room rentals above ₹5,000, compared with 20 percent in the pre-GST era. Moreover, countries like Thailand, Singapore, Indonesia levy just 5-10 percent tax. Will this dampen your growth plans?
To me, India has shown the most positive signs in the last 24 months than it has in the last 10 years. And I take GST as a sign of that. GST has meant that for travellers it’s easier to understand India, instead of getting confused by various state taxes. It also gives us strength of direction and makes it easier to do business. Foreign players can better understand India and the regime in which we work. That said, as an industry, we feel we are being unfairly taxed on GST and we are lobbying with the government. We’re saying that it’s not necessarily a luxury offering. If you want tourists to come to India, even domestic travellers doing business in India, then the [current] level of taxation, which is among the highest in the world, needs to be revised. As an industry we are making a presentation to the government.
If you want tourists to come, even domestic travellers, the current level of taxation needs to be revisedQ. Do you feel threatened by the Airbnb kind of offerings?
Airbnb has been in the market for almost a decade; and that was Hilton’s most successful growth decade. What Airbnb has done is consolidate the homestay segment, which international branded hotel companies weren’t playing. Hilton has never been in the homestay business and we have no intention either. It’s a very difficult business to scale. Now that Airbnb has consolidated the homestay market, they’re trying to figure out how to continue to get the same growth rates they once had. That’s seen them looking at apartments that masquerade as hotels. It’s been an interesting space to watch, but it hasn’t affected our business. Third party consolidators versus physical product sales are two different things. Airbnb is a marketing platform that connects one stranger to another, and takes a fee for doing so. It’s certainly successful and I like it as a product from a homestay perspective. However, we’re in the branded hotels business, which means we have a physical product to sell. We stand beside our product and make sure the safety and security of our hotels mean something. Q. Today millennials are seeking out unique, customised experiences. What are you doing to attract them to your hotels?
What I love about millennials is that they are 70 percent more likely to share their data with you. They want customisation and unique experiences. One of the things we’re doing is to make our guests feel at home when they check in. Through our ‘connected rooms’ technology, you can not only control the lighting, heating, air-conditioning etc., but some of the more exciting things you can do is customise the artwork in your room. You can upload photos of family and friends on our portal and press the ‘cast’ button [on our app] when you check in and it’ll cast the photos on to the photo frames. So the room feels like your own room.