The role of a guest editor is to identify what the agenda of the channel that day would be, so I am taking it very easy today because you are the guest editor and whatever you decide today would be scaled up. So, let us look at the headlines here. Number of airports, they have surged from 74 to 140. Travel and tourism has added 5.8 crore jobs in India. We talk about unemployment, but this is a number which everybody should know that how much job is actually travel industry or tourism industries are adding and this is something which I am sure is very close to heart, right? Indian Hotels’ market cap is up 11x from COVID lows. It is a CAGR return of 82%, which means in last five years, it has managed to beat even TCS. Let us start with the importance of this headline, according to you.
Yes, I think the airports is just one dimension. I think the increase in the number of kilometres of six lane highways is immense. The number of train stations that are undergoing renovations, I like to call it the renaissance of train stations in India. And all this constitutes infrastructure development which is the single largest catalyst for the growth of tourism because it provides a seamless mobility from one point to the other.
On the second one, travel and tourism to add 5.8 crore jobs, I think the potential is far higher than 5.8 crores. And what this number does not reflect is the multiplication of jobs in other sectors. So, yes, there may be an employment of so many crores in tourism, but the number of jobs it creates in other sectors across the globe is proven that this is the largest catalyst of jobs.
And finally, yes, I think we should not talk so much about the market cap, it is a consequence of many things which maybe I am not a professional at.
But everybody is curious to perhaps understand that for the hotel or the hospitality sector, achche din aa gaye hain. And since it is election time, I will use that line, achche din aa gaye hain, magar achche din ki guarantee kya hai?
Achche din ki sabse badi guarantee hai the growth in the GDP. So, India having reached fifth largest economy status and all the pundits and all the gurus from IMF to investment houses to all the economists predict that India will be number three in a very short duration of time. And if things keep going this way, and it is anybody’s guess, I know that there is a new book coming out in the market which predicts India at 47, with more than 50 trillion economy and there are others that are predicting at 27 or 28.
So, let us say the truth lies somewhere in between. If that is the case, then this sector is at the beginning of a very long cycle. Of course, there will be some headwinds in some quarters, whether it is because of extreme heat, as we are experiencing now, or because during election period every five years the business drops temporarily, but over longer-term demand will remain strong, thanks to the economy and the direct correlation to the economy and supply will take a long time to catch up with the demand.
So, because of the renaissance in train station, airport connectivity, six lane highway, sab ka saath, sab ka vikas, are we in for next three years better than last three years?
Definitely, I think, we must always work towards what we did yesterday was good, what we are doing today is better, and the best is yet to come. At least that is our style of working and definitely the way our sector has positioned itself, look at the hotel sector, 30 years ago, 20 years ago, look at it today.
There was a time India started only with luxury hotels and otherwise, it was government guest houses or some other accommodation where we used to go and stay with our relatives is passé. Today, less than 10% of the total supply in the market is driven by luxury, 90% is non-luxury, and everybody likes to go for long weekend and have a good time and also travel on business. It is a fundamental business need, when you travel, you have to stay somewhere. So, I think we are in for a very good run.
And from 2017, from Rs 60, the world was normal, when Mr Chhatwal took over, the world was normal, then came the COVID crack, the stock plummeted, it was existential crisis for the global hospitality industry and from there, it has actually become a case study. It is a case study in Harvard, the turnaround in Indian Hotels and it is a business which I say has survived, revived because of leadership, the tailwinds which are there in the sector, the ability of the Tata Group and the leadership of Indian Hotel to really think differently and more than Harvard, it is hard work, right?
Yes, there is no substitute for hard work. But as you rightly said, if you have the support of as wonderful a group as Tata Group is and the board level leadership at management level and down till your last connect from the dishwasher in the hotel to all the associates which has gone up from almost 25,000 to 40,000 today, so almost 15,000 new jobs have been created just with us. I think it has been a nice innings, despite a very big blow of six quarters during COVID.
It never bothered you that time, then six quarters, there was virtually no business. I mean, forget about margins, revenue, there was no business. How did you deal with that?
The good thing was that we kept doing innovation. We created mind space for new businesses, like we did the homestays with Ama. We started home delivery with Qmin. We started hospitality at home. We were doing meals to smile, providing meals to all the frontline workers in all the government hospitals in Mumbai, some in Delhi, some in Bangalore, even in Coimbatore.
We hosted more than 120,000 bed nights for the frontline workers. We call it bed nights because they are coming from hospitals.
We started using Taj Public Service Welfare Trust, which was formed in the aftermath of 26/11. We reactivated that. We were raising funds in it to support all these activities. So, there was no idle moment. The only lowest point that I experienced during this COVID period was the fear that was inculcated in all our customers’ minds and the minds of humanity, that if you go to a hotel or if you go to a restaurant, the likelihood that you get a COVID is very high.
Now, how to fight that psychological fear, that was a big challenge. So, we came up, all the entire sector came up with those protocols, how to smile behind a mask. So, I think it is a very different kind of a journey. And I think that was possibly the lowest point, how to keep the show on when everything works against you.
Your revenue is zero. You are not allowed to open. You are looking after all your staff. You are looking after the frontline workers and you do not know when things will open up.
A typical management playbook would be how to deal with slowdown, how to bring in operational efficiency, how to make customers more happy, but how do you deal with a situation like COVID because there is no playbook for it? This situation never existed. So, at a management level, how did you deal with it?
Well, one thing which I think in hindsight, we did very well was as management, we got together every day digitally. So, the top management met every day, the top 50 met every Tuesday and Thursday.
And every Tuesday and Thursday, we had a guest speaker either from within the group or from outside the group and covering all areas.
It included like a famous Bollywood personality, to group head of HR, to the chairman of Tata Sons who is also chairman of Indian Hotels. So, we had a diverse range of expertise talking to us and helping us look at things the way we should and not look at it only through the lens of COVID.
And you have managed to turn around that threat into an opportunity for yourself given the kind of innovations that you have done. But let us talk about the present. We have talked about the past. In terms of the situation right now, how is the overall demand trend or the way people are consuming luxury, consuming this travel has changed over the course of last three to four years?
Although you have asked the question, but a lot of times, in this discussion I tend to agree with Nikunj that the sector is transitioning slowly, yet steadily into a consumption sector. This is not a discretionary sector anymore. As India grows, India’s GDP grows, India’s economy grows, you become fifth largest, third largest, 30 trillion, 40 trillion, the likelihood that this sector grows is close to 100%. It is not 80%, 90%, 95%. And travel, and tourism will not just be leisure. It is a basic fundamental business need that needs to be satisfied at all touch points. It is not just at luxury level, whether it is upscale, upper upscale, mid-scale, budget.
So, I think depending on the level of the executives traveling and also, as it moves towards consumption sector, there will be more and more consumption of leisure and the terms that were coined, pleasure, which became bizcation are actually coming into practice now.
So, are you are you saying that there is a structural shift in the way hotels and hospitality is being seen or being absorbed by consumers? Earlier, it was a cyclical space on the side, but now it is a more structural and mainstay sector of the economy.
Absolutely, that whole dependence on October to March is gone. People want to be or companies want to be profitable even in Q1 and Q2, that is at least what is evident when companies announce results. India is no more like six-month destination. It is being promoted. Actually, as we speak, by the tourism ministry, as it is also a great summer destination because there are places to go to. It has the highest level among the highest level of mountain ranges in India, so there is tourism opportunity on the mountain ranges. It has so many beaches, which are still unexplored. It has highest sea mass available in Southeast Asia. And not to forget the opportunity on medical and spiritual tourism which is gaining more and more importance as the amount of Indian diaspora keeps increasing, especially outside of India where families want to bring their children and make them experience the spirituality, the culture where they are coming from.
So, I think all in all, India is very well poised to benefit from all these three great opportunities coming. And also, if you look at the MICE, there was no Jio, there was no Yashobhoomi, there was no Bharat Mandapam. Imagine if there are two events happening at the same time in Yashobhoomi and Bharat Mandapam, I do not think there will be a room available till Agra.