Friday, September 23, 2011

At India's Le Cirque-- A conversation beyond food.

Checking into Chanakyapuri

Vishakha Talreja

Financial Express

Posted online: 2011-09-21 02:42:20+05:30

Leela Hotels’ vice-chairman tells Vishakha Talreja that room rates in India are higher than in Southeast Asia because we have a shortage of rooms. We’ll need to fix this to meet the 10m foreign tourists by 2015 target—as compared to 5.8m now With incessant rains and a bomb blast at the Delhi High Court, it’s a gloomy day when I meet Leela Hotels’ vice-chairman and managing director Vivek Nair at the new hip address of south Delhi, The Leela Palace, Chanakyapuri. But a businessman’s optimism and passion can perk up even the most dull of days. The optimistic hotelier points out that notwithstanding the Euro crisis or the fear of a US recession or a bomb blast in our country’s capital, his outlook for the Indian hotel and travel industry is quite positive. “We are, in fact, expecting a 13-15% increase in bookings from Europe and the UK the coming season,” he says.

I meet Nair at the newly launched and highly anticipated restaurant on the 10th floor of his Delhi hotel. Le Cirque, a popular US-based restaurant, serves Italian food in French style. Interestingly, we are accompanied by Mauro Maccioni, son of restaurateur and founder of Le Cirque, Sirio Maccioni, who dazzled New York with his fine dining restaurant. Mauro is visiting India for the restaurant’s official launch. It’s past lunchtime, so all of us settle for tea, coffee and cookies, though Nair mentions his favourite dish at the restaurant is the classic lobster risotto.

The opening of the highly rated Le Cirque, Nair says, is already creating ripples, especially among bureaucrats and the diplomatic circles of Delhi, thanks to its location. It is a joyous moment for him and, therefore, he is not really in a mood to talk about the issues (read burgeoning debt) the hotel chain is facing. But then candid and media-friendly is how Nair is, so he says that this year they will cut the hotel group’s R3,800-crore debt (as of fiscal ending March 2011) by R750 crore. The group recently sold its Kovalam property to NRI industrialist Ravi Pillai for R500 crore, though the hotel will continue being managed by the Leela Group as part of its asset-light strategy. Another R250 crore will come from the sale of Chennai Business Park, which is a non-core asset.

Perplexed by the debt discussion, Maccioni finally says the only numbers he understands are the numbers of wine or scotch bottles in the restaurant bar. We laugh and the discussion returns to food and the restaurant business. The clanking of plates in the background, as the restaurant is getting ready for dinner time, makes for perfect background music. When asked if Le Cirque will allow only residents or will welcome guests as well, Nair says promptly, “Of course, we are in the business of making money. We want guests from outside to come and experience our restaurants too—unlike our friendly neighbours in Udaipur who don’t allow walk-in guests and let go off the food and beverage (F&B) revenue that they can generate.” (The Oberoi’s celebrated Udaivilas doesn’t serve F&B to non-guests.) Nair adds that 45% of a hotel’s revenues comes from F&B.

Nair is confident that Le Cirque will do well and not be adversely impacted by inflation or the slowing stock markets. Maccioni tells us that during the slowdown of 2008-09, his Las Vegas restaurant was impacted more as compared to the New York one, adding that 2010 has thankfully been a resilient year. When I ask how expensive it is to eat at the Le Cirque, Nair does his maths and says the average cost per person at the restaurant is R4,200, excluding alcohol! Regarding the arrangement between Le Cirque and Leela, Nair tells us that they will be paying the US brand a royalty on turnover.

The word ‘cost’ reminds me that the the land alone for the Leela Chanakyapuri property costs more than R600 crore, and I ask about the business prospects of this hotel in particular. Nair maintains that it’s still early days for the hotel, but they expect it to clock the highest RevPAR (revenue per room) in the NCR, just like their property in Bangalore which clocks the highest RevPAR in that city. The Bangalore property, in fact, registered the highest average room rate (ARR) in India in the heydays of 2007-08, commanding an ARR of R25,000.

But it’s not just his own hotel chain Nair talks about, or worries about, for that matter. Nair has always been at the helm of industry body meetings and lobby groups addressing various issues. He strongly feels that there is still a demand-supply mismatch of hotels in the country, and the hotel industry needs some sops. Nair, who is also chairman of the World Travel and Tourism Council, India Initiative (WTTCII), and vice-president of the Federation of Hotel & Restaurant Association of India (FHRAI), says they have appealed to the government to include hotels in the central banks’ infrastructure lending list. He is hopeful that easier lending norms and an increased outlay in the 12th Plan for the tourism sector will help the hotel industry, which is grappling with various issues. “We are often asked why room rates are so exorbitant in India, as compared to Southeast Asian countries. Well, that’s because there is a shortage of hotel rooms and we clearly need more sops for the industry to fast-track growth. And that’s how our target of getting 10 million foreign tourists to India by 2015 as compared to just 5.8 million as of now will be met,” he explains.

We are seated near a window and the view from the tenth floor of the hotel is mesmerising. The restaurant is divided into five parts, and there is a boardroom too, where long drab corporate meetings can turn out to be a culinary delight, with food being served from the restaurant. It’s, of course, for big ‘close-door’ meetings, and we are already guessing that many future deals and treaties will be signed over risotto and wine here. The restaurant walls are adorned with exclusive pictures of various celebrities—like Paris Hilton and other bigwigs being hosted by Maccioni at their US restaurants. Looking at those pictures, one feels how the two families—the Nairs and the

Maccionis—are similar in their values, traditions and business sense, and were meant to come together. Nair, of course, seconds that. When he sees Mauro and Sirio Maccioni interacting, it reminds him of his father Captain Nair and how they do business together.

On a gloomy day, not a bad idea to let the debt be.

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