November 2015 | Christabelle Noronha
'People are our most important asset'
Since taking charge as chief executive of Indian Hotels in September 2014, Rakesh Sarna has been concentrating his attention on making the Taj Group — the company’s more recognisable name — financially profitable and enhance its global reputation. Mr Sarna, who has more than three decades of experience in the industry, talks about the challenges of being in the hot seat, his focus areas and about creating sustainable stakeholder value. Edited excerpts:
After a year at the helm, what has been your experience with Indian Hotels? How different are the challenges from those you faced in your previous assignments?
Last year was extraordinary. The Taj is one of the finest examples of the nobility of Indian hospitality. For me, it is a transition from one great culture to another great culture with tremendous heritage. Over the past 112 years, we have striven to uphold the belief of our founder, Jamsetji Tata, that the purpose of business is rooted in the advancement of the society in which it thrives. The Hyatt (Mr Sarna worked with The Hyatt before joining IHCL) and the Taj differ in environment, geography, scale and aspiration — however, there is no better or worse; they are just different. We are not aspiring to be a globally present brand but, rather, a globally reputable one.
What are your focus areas for the development of the Taj Hotels?
I realistically see three focus areas. The first is to get the best out of the portfolio of assets we have, in terms of performance; and to maintain the quality, physical and otherwise, of those assets, considering that we have had to bear the brunt of a severe downturn over the past decade or so. The second is growth. We need to build a pipeline of quality projects because you cannot expect your customers to patronise you if you do not have a distribution footprint that will allow you to scale up your operations. Moreover, without development you cannot get the best talent to work with you and stay with you. Growth is imperative for survival and sustenance.
The third and most important focus area is human capital. Work-life balance, gender diversity, compensation and equity are key issues, but the most significant one is about developing a second line of leadership, so as to secure the organisation’s future and its culture. In an ideal scenario, I should be able to suggest to the board two-three names that, I believe, are ready to step into my shoes if I were not there tomorrow. You need to build organisational capability for the present and future, and this can be done only by grooming potential leaders, people who can take over, who can not just carry on the legacy but do a better job with it.
How will you go about this?
You need a pipeline of assets to expand your business and strategic talent to enhance business value. Above all, the task is how and what you do to make the corporate culture that you have inherited reap greater business results and stay competitive in the future. My job now is to make sure that we work hard to live up to this culture, which is not just about managing a hotel and making beds and having beautiful lobbies; it is about delivering value with nobility, agility and modest confidence.
|The Taj Mahal Palace hotel in Mumbai, which Rakesh Sarna believes 'is a fabulous hotel'|
You were quoted in April this year as saying it would take Indian Hotels about two years to return to profitability. What is the fine print in this assessment?
Profitability is a matrix of combinations, starting from growth and revenues, to reviewing our cost structures at the operating levels to improving margins. In our context, general managers are the most critical functionaries. They should be given resources, the authority and the freedom to operate, because they know their markets best. Sitting in Mumbai one cannot claim to be an expert in every market; the person at the scene of the action is better aware of ground realities. We need to delegate authority, without abdicating it, for better and sustainable business results.
Is Indian Hotels on track with its debt-restructuring initiatives? What are the hurdles and how do they square with the company’s objective of finding fresh capital for expansion?
We are, indeed, restructuring and reducing our debt. I believe in progress and we have taken several initiatives that will place us in a better position from where we are now. Our position is much better now than it was a year ago. In another year we will be in the middle of a massive restructuring of our subsidiaries, as well as recalibrating our financial instruments. I believe that in nine to twenty one months we will be on track.
There has been a fair bit of reporting in the media about changes afoot at Indian Hotels — in strategy, personnel and organisational structure, with immediate objectives and long-term vision. Can you give us a clearer picture?
I can see only three-four years down the road. First, I need to ensure that we become globally reputable, and that we exist in the markets that matter to us and to the guests who stay with us. In this regard, we need to build assets that bring value holistically and financially.
The initial step in this direction was organisational restructuring. The Taj Group has 15 hotels outside India and 116 in India. Under the regional restructuring, each region head is in charge of 20-30 hotels, which include hotels across categories, luxury, leisure and business, and across brands. On the human capital front, we need to ensure gender diversity along with work-life balance and mutual respect.
Do you seriously believe in a work-life balance?
I most certainly believe in a work-life balance, but each person has his or her own way of interpreting it. For some people it means that if I am going away for a week, I am shutting off from the work world. For me it is a little different. I don’t want to be disconnected from my world. I am at ease and at peace knowing that I am available for people. Of course, I slow down a bit.
Work-life balance has meaning only when you have work. I don’t mind sitting on a Sunday to complete unfinished work; it makes me happy because I don’t look at it as work. In fact, this part of my life gives me everything I have: the clothes on my back and the comforts my family enjoys. Of course, I need a day off, but that does not mean that I should be cut off totally from the world. I go on holidays but work for a couple of hours in the morning and evening. I feel better for staying in touch.
What role do you see for government policies and initiatives in the present environment, particularly with respect to tourism?
The government has taken several measures to make India a global tourism hub. In India we have a diverse portfolio of tourism products, such as cruises, adventure, medical, wellness, sports, eco-tourism, world heritage sites and religious tourism. We need to encourage tourists and business travellers to come to ‘Incredible India’ and be our guests at the Taj. Towards this, our marketing team has launched several initiatives, including digital, to strengthen the Taj brand.
We are also members of the ‘Experience India Society’ and other such associations that promote and market India as a preferred tourism destination.
How will Indian Hotels address the needs of its Indian customers? Are changes in the offing? How do you see the Gateway and Ginger brands evolving?
Domestic tourism contributes three-fourths of India’s tourism economy. Domestic tourists are usually more discerning when it comes to the types of destinations and the range and quality of product offerings. Moreover, they are looking for value for money.
Gateway Hotels & Resorts is a full-service, upscale hospitality brand for business and leisure seekers. Its hallmark is the comfort, familiarity and flexibility it offers to travellers seeking contemporary and refreshing experiences.
Most of our new pipeline actually comes through Gateway and the one in Chennai is a fabulous hotel. Ginger, on the other hand, is for the value segment. It is targeted mainly at travellers who are looking for simplicity and self-service.
Where do you see Indian Hotels by the end of 2020 and beyond?
By 2020 Indian Hotels should have a stable pipeline in terms of assets and talent. It is not going to be a smooth ride. We have to take some tough decisions to streamline our portfolio. On the other hand, we need funds for some of our hotels that need renovation.
In spite of all these impediments, our people remain our most important asset. The 26,000-strong Taj family is passionate, committed and driven to make sure their world begins and ends with our guests. I often tell my senior colleagues that our people — the bellman, laundry attendant and others — who interact with our guests are our true brand custodians, because they make all the difference when they take care of our guests with sincerity.