Micro Markets & The Future of Hotels in New Normal
By ITB Community and Prashanth Rao Aroor, Board Director at IntelliStay Hotels and Founder at The Avatar Hotel
It cannot be denied that leading any part of a hotel business in 2021 is going to be very different than ever before. The impact of COVID-19 has required all hotels to reassess their processes, innovate and adapt to a new world order.
As we look to the year ahead, ITB Community had a conversation with Prashanth Rao Aroor, Board Director at IntelliStay Hotels and Founder at The Avatar Hotel, to explore how he and his team will run the the hotel business differently in the context of Indian travel market, and what he expects from the years ahead.
How do you think the travel landscape in India and South Asia has changed at this time?
Like everywhere, India and South Asia at large have been among the most affected countries. India went into a very long lockdown. Considering international travel has been more or less decimated, I think this whole region is depending on India’s domestic market to feed them. Thanks to the few travel bubble arrangements between India and its neighbours, we have been able to send tourists to countries like Maldives, Sri Lanka Nepal and Bhutan. India itself after this lockdown has seen a recovery as far as leisure is concerned from this large domestic market. People who would typically go abroad have tried new domestic destinations or gone back to their favourite destinations. Leisure at least has recovered well, but I think business travel is quite a bit off.
As a hospitality leader in 2021, where do you see hotels go from here?
I don’t think we can paint all hotels with one brush. In certain market segments, leisure, for example, is almost back with hotels reaching around 80 to 120 percent of the pre-pandemic revenues / occupancies. For city and business hotels on the other hand, it is a different story. A lot of these are built into micro markets which are not doing very well; so they are having to reinvent themselves. I think for these hotels, it is going to be all about the story and how they handle these micro markets.
You make a good point. So going back to what you said about the ‘story’ and micro markets, what’s different about the hotel of 2020 and the one of 2021?
The single biggest difference would be that the hotel of 2021 has to be a ‘citizen’ of the city where it is located. When I say this, what I mean is, hotels somehow are seen as an oasis for travellers.
I think the hotel of 2021 has to be a refuge for the locals. Like this hotel we are sitting in right now, the whole service is designed for a localization of 70 percent which means that the 70 percent of the revenue for this hotel will come from the 2-3 km radius of this hotel.
We got to entertain this micro market with things like workshops, delivery, demonstrations, family parties, mixology, etc. We have to be a destination that cannot just depend on stay as the biggest business.
I don’t think business travel that typically drove these city hotels is coming back with any speed. So hotels need to find other ways to engage and create experiences for their community.
On more positive note, what part of hotels do you see being busy or even busier post this pandemic?
Traditionally I think we look at hotels as an asset that is fixed in one place with its resources like plants, fit-outs, equipment kitchens, manpower, etc.
I think what we need to come to terms with is that a hotel can pop-up anywhere.
For example, last week we took our ‘Artisan Bakery’ to the beach and we had such a great time engaging with and people who came to have a taste. They did not even know we were open, and it was a great interaction.
I think we have to learn to project our hotel ‘virtually’, as something that we can take to the action.
So if we know there are fun things happening and the crowds are gathering, the hotel must find a way to make an appearance – that is key to a lot of business on the catering and delivery side. This means a business for ‘do it yourself’ kits that people can do at home: a mixology kit, a gourmet cooking kit, etc. – that’s the stuff. Food and beverage can really be a hero for a time like this. People need an avenue for enjoyment and a hotel has the infrastructure to meet that requirement.
That’s great. So this brings us to the final question to you. A lot of people believe that India is going to emerge much stronger from this. It’s been an opportunity for us to rethink, reinvent and reimagine across the entire sector. What do you think is going to be the most positive outcome?
For me, the biggest tragedy of the pandemic is that hospitality, travel and tourism is one of the largest employers in India. We employ something like close to 10 percent of the working population. Depending on whose numbers you believe, there are several hundreds of thousands of people out of work right now: either unemployed or under employed.
On the other hand, we have this huge domestic market with local people looking for new opportunities to travel, new experiences, new destinations, and many other new different stuff.
This whole generation of emerging travellers are very experimental. They do not like packaged tours. They like to do things on their own. They like offbeat, they like ‘do it yourself’. So I think the great opportunity for former hoteliers—or ‘out of work’ hoteliers and other travel related people—is to create these new experiences.
It could be things like adventure sports, hiking trails, farm stays or homestays. These are the micro tourism projects that do not take much investment, and they are not very complicated either. The planning cycle is indeed much faster, and the investment is reasonable. A few people can get some money together and put up something very quickly. Thanks to the likes of Instagram, it is easy to draw the attention of their target audience. I think therefore the greatest opportunity, as far as travel is concerned and for this now having happened, is that we may see a wave of entrepreneurship in micro tourism. I think that is good because it helps local communities: it employs the local people, and it also gives financial freedom to people who are very qualified, already understand guest expectations and have all the ingredients and training to express themselves. It is a great creative time to create new products that can delight people.