A new brand has been launched by Marriott International, born in India with Fern Hotels, to be labelled ‘Fern Series by Marriott’. This marks a new chapter in India’s hospitality industry, a first, where an international chain, the world’s biggest, has scripted an India led brand. Here, we speak with Rahul Chaudhary, MD and CEO, CG Hospitality Holdings, on the significance of this new arrangement.
Navin: Congratulations, what indeed, is the bigger significance of this tie-up with Marriott International?
Rahul: I’ll also share some of the numbers. What this will mean is that you see CG hospitality as of today is about 195 hotels in 12 countries and close to 12,000 keys. And out of that, Fern has about 120 operating and about 40 hotels already in the pipeline. And Concept has close to 8000 keys.
And the idea here is that 85 hotels out of this 120 will transition over a period of time. The Fern Hotels will transition into the Marriott portfolio. And so, we will be contributing 6000 keys immediately.
Navin: When you say you will be transferring them to the Marriott portfolio, it’s only a branding exercise.
Rahul: Well, yes, it is. They are also taking an equity stake in the company, in Concept. They are taking an equity stake, now what is going to happen is that the brand is going to become Fern Series by Marriott. Re-branding and integration is going on. That will happen over the next 2-3 months because you have to understand that this has become an even bigger global play than what we had envisaged before. Because earlier we were just talking about Fern. Now what they have done is they have created their 38th brand, which is Series by Marriott. It’s like a soft brand and they have done the global launch of that brand on the backdrop of Fern. Which is quite amazing because Fern has become the first brand into this entire series and we have an exclusivity for this brand in India, so they cannot do this soft brand like they cannot go to any other hotel chain within India.
This brand will be featured in all websites and part of Marriott’s brand booklet. For example, let’s say that there are a lot of Indians that come to India for Dubai. Someone out here says that I want to do Fern because I will get mileage for both India and Dubai. So now it is a stepping stone for Fern to go global.
Navin: I see but you don’t have exclusivity on that.
Rahul: No, in India we do. We have exclusivity in the sense for India in terms of a soft brand – Series by Marriott. They are taking a minority stake in the company and they will be on the board and committees of course. They are going to be shareholders. But the whole idea here is with the global machinery that you have of Marriott, we obviously want to take this company to 500 hotels within the next 4 to 5 years.
Navin: And where do you envisage these new hotels?
Rahul: All India, this is only India. Nepal and Sri Lanka strategy we will do parallelly but we have not put a number there in terms of how many properties here because our focus is right now India and if we get other markets and opportunities, of course, we will go for them, too. There is no way we are going to say no.
Navin: But let us not overlook the fact that CG hospitality is probably one of the bigger partners for IHCL.
Rahul: Correct. We have about 17 hotels now operating and in the pipeline with IHCL as we speak. So, we are one of the larger partners of IHCL.
Navin: Right, so how does that overplay with Marriott?
Rahul: Marriott is a different strategy and IHCL is a different strategy because you see Marriott is in a space where Marriott did not have a brand in that space in India. And whereas IHCL, they have their own brands of Selection, they have Vivanta, they have Ginger and now Gateway, which in some way or the other, falls into all of these brands. They have their own strategy.
Navin: Has Marriott discussed with you what their plans may be with Series?
Rahul: No. They have not discussed it with us. I know that they are probably in different countries going to get more brands and ownership to come up with such series as well. But right now, they have not. Right now, it’s just Fern. The brand is not owned by them, no sir? The brand is still owned by us.
For example, they recently bought the City Express in Mexico. They bought the brand. But because they bought the brand it’s not a soft brand. It is a hard scape brand meaning City Express becomes a City Express by Marriott. So, it becomes a hard brand in their portfolio.
Soft brand is something that they are not operating. It’s us who’s going to operate. The brand is owned by Concept itself. So, what we do is that we plug in their entire, our entire properties and we plug into their GDS, into their operating systems, HRMS, everything. PMS into their system and we get access to 237 million Marriott loyalty program holders. Hard brand means they own the brand.
Navin: When you say the ‘brand’ you mean the hotel or the property?
Rahul: No, they own the brand. They own the brand and they also manage that brand. For example, the City Express. This was owned by someone else in Mexico. Now, there are about 100 properties of City Express. They didn’t buy the properties. What they did is they paid a huge sum to buy the brand. So, they owned the brand 100% and they all, may be majority or 100% and they are managing the properties.
Navin: So, now what kind of advantage do you see Fern deriving in terms of numbers?
Rahul: Huge. In our own humble way, we were opening almost 25-30 hotels a year. And you can imagine with our team itself, we had 120 hotels plus 40 in the pipeline. Now with a huge machinery like Marriott, I don’t see why we should not get to that 500 number in the next four years.
Navin: But will the Marriott development teams be also working to augment the number?
Rahul: Yes, we have already integrated. We have already started integrating their development team with our team. In fact, we both are going to work closely to drive the business development.
Navin: And, the Fern Hotels ownership? It’s shared between you and the Kanampilly family. And now Marriott also. So, does it dilute their share or your share when Marriott comes in?
Rahul: Both proportionately. We were the majority. We are still the majority. We are 51% and Kannampily family 49%. We have diluted proportionately.
Navin: Now what about the rest of your hospitality business? How is that going?
Rahul: That will continue to grow. We have our strategy with IHCL. We are opening two more hotels of IHCL in September this year. We are also starting the construction of a third one in Bhutan, Punakha, at the end of the year. So that strategy is going to proceed forward.
Navin: So, which are these two hotels which you opened in September?
Rahul: The Taj in Paro and Gangthey, both in Bhutan. These are luxury Taj properties.
Navin: And, the recent hostilities that we had between India and Pakistan, how has that affected your businesses?
Rahul: No, all our businesses of course in the region, all our businesses were affected to some extent because travels were halted but I think it’s all coming back again. I think it was a temporary issue luckily like in most of our hotels people were not cancelling. They were willing to change the dates. So, it was okay.
Navin: And how is the hotel in Dubai doing?
Rahul: It’s doing well. Occupancies are picking up. Occupancies are good. We are working on the rates to pick up. Recently we are doing a huge refurb of all our F&Bs. Because as you know, Dubai is a huge F&B market and one has to keep evolving the F&B. We are also going to do a property in Dubai Island for which we are right now in discussions with various brands. There are going to be branded residences to sell.
Navin: And what is happening in Sri Lanka?
Rahul: In Sri Lanka, we already have hotels. The market is turning back. It’s turning back and things are going well. We are also now upgrading and renovating all our properties under the Ceylon Hotels, CHC Rest Houses portfolio.
So we are doing that also. CG hospitality strategy is going to evolve simultaneously with all other brands. We are partners with Fairmont in Kenya; we are partners with Taj; we are now partners with Marriott; we have a DoubleTree by Hilton in JFK. All these strategies will move simultaneously. And while we move forward with Marriott in this strategy, we also signed with Marriott for the Autograph Collection of The Farm, as you know, about a month back in the Philippines. So now there is a strategy which we are discussing with them to make The Farm also global. Because you see, Marriott does not have a wellness brand.
CG’s vision is that we want to take this partnership with Marriott to at least 500 hotels by 2030 and CG Hospitality’s portfolio to at least 650. We obviously want to be a large regional player. I think we are getting there.