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Exclusive Interview | Prashanth Rao Aroor; MD & CEO at Intellistay Hotels P Ltd - Mango.Hotels

Editor: Tell us about your journey. How did it all start? 
Being from a small town family business that was in construction and real estate, back in 2007 it was remarkable how commercial real estate was in low demand in smaller towns while hotel rates were through the roof.

The first cut of our business plan intended to solve both problems by converting commercial space on upper floors into hotel rooms with a minimal landing space on ground. Armed with an MBA from SPJIMR, my co-founder Rohan D'Silva and I incorporated the company and started up in 2008. But somewhere along the journey, there were so many existing independently owned hotels that seemed to need so many basic services that good hotel management companies do and since we understood most independents are small when it comes to Inventory, we put together a plan of 'Shared Services' that would make the load of common departments so low that small hotels would get optimized at a cost that does not burden them.

At the same time they could collectively spend effectively on marketing and distribution. Think of Mango.Hotels as a Union of Curated Independent hotels in India that give them the advantage in a maturing and competitive marketplace.

Editor: What do you think it takes to succeed in this industry? 
Being one of the oldest industries, the Hospitality Business or Inn keeping has changed very little in the last 200 years while the world around has completely changed at least three times over. In a connected world where all information is available live and at the fingertips, the four critical factors to succeed are Reputation, People, Revenue Penetration and Profits.

Any brand that needs to succeed should only have to 'Work' to make a guest visit once and then ensure the experience is such that the person is ready to return even at a premium if possible for the 'experience'. The people that run this business have more face time with guests and impact on the experience than many other businesses.

While this makes it hard to train and empower, it is an opportunity to outperform your peers and make the playing field uneven and avoid commoditization. Your direct distribution as a brand, and note that I do not use the words sales & Marketing and Digital etc. because today, the backbone of good hotel occupancy is still field sales teams in a country like India where corporate business is robust, personal and dependable and takes a one time effort in locking it in for many repeats. Profits in this industry are a challenge from the fact that 80% of the hotel's costs are fixed and hence larger number of keys have always been a way of ensuring profits.

But we have several existing independents and several small and satellite markets where a larger inventory can turn the numbers against you. In a country with high borrowing costs, building too much for the future can knock your legs out. Multiple small hotels are a flexible way to penetrate markets incrementally and on the back of heavy demand so you don't have to burn cash in the early days. Hence our 'shared services' platforms make hotels viable at 30 keys and up if ARRs are over 2000 which gives Mango the ability to spread wide for network as well as become invaluable to our hotel partners.

Editor: What are the near term and long term plans for Intellistay Hotels / Mango Hotels? 
We believe the Market potential for Mango.Hotels just within India is huge and I fear to hazard a number. While we are hungry for growth, we have only just turned profitable after 5 start up years as a company and given that quality and scale have to go side by side in this business, we are reining in the urge to scale up in more exponential numbers although it can be done if one was willing to burn some moderate cash.

Our targets are on track for 100 operating Mango Hotels by March 2019 and we started prototyping an upscale destination/resort brand called 'Apodis' named after our parent company and we would like to link up 30 visually spectacular locations across India by choosing unique properties that each have their independent identities with very soft touch points from 'Apodis'.

We will do a lot of work with personalization and wow with these locations.

Editor: What in your opinion will be key to win in the Budget / Smart/ Business category? 
No one person is going to win it. It is a space that thrives from having some variety. There is fatigue for the same kind of experience and the new Millenial users are driven by 'unique experience' than 'what money cant buy'. But in order to be a leader, flexibility of product design and planning, market driven approach to service design, technology to personalize, performance track record of reaching targets, peer to peer referrals by owners and guests. Execution. These will decide how far a brand can penetrate this land of the big hotel opportunity.

Editor: What innovation can we look forward to from Intellistay / Mango.  What is new in the pipeline? 
We are doing a fair amount with technology. But a lot of this is in the back and not customer facing. A lot of it is in Beta awaiting full integration between the various modules. But you will see later this year that we create this direct linkage to our customers to understand better their needs, likes, habits, and what delights them and keeps them coming back. The key for us is to be that hotel that 'Gets' you better than others. To be living breathing hotels that respond dynamically to your changing needs and moods. Hotels As Alive As you.
Can we personalize for many so everyone feels like the one? that's what technology can do and it's very exciting. Look forward to a great loyalty program as well. 80% of our business will eventually come from our B2B and B2C loyalty programs but we need a bit more scale before we formally roll it out. Q3 16-17 looks like the time to do it when we become one of the larger inventory owners in the affordable space.

Editor: Are hotel aggregators friends or foes? What is your take on the oyos/zos of the world?
Given that aggregators account for 20% of our business we certainly have to consider them friends. They spend silly numbers on marketing to a non-sticky audience that we would never do and hence if we get away by paying a small percentage for those bookings as our share of the spend, it should be welcome. We dont differentiate between the older aggregators and the new kids on the block. They are exactly the same from where we are and our contracts with all of them in fact are almost identical. They all give us room nights at an agreed price or an agreed commission.

I think some of the huge go to market spends and light branding of some other independent assets which is more of an OOH strategy have created a sense that something new has happened while it has not. I have said earlier that in a hotel there are several touch points between the guest and the brand and there are many ways that a stay can be desirable or disappointing. Unlike in the taxi business where a car comes from a standard producer and the drivers do a highly predictable task with little room for delight or distress, the hotel business needs Curation and a lot of it.

Every day we work to improve quality and we do it more now than when we started out. However a recent disturbing trend is that aggregators are talking about commoditizing hotels and becoming the brand. So far hotels have watched with curious interest but if push comes to shove I have no doubt that affordable hotel brands in India will put their direct distribution efforts under their control and collaborate with each other and simply withdraw inventory from partners like Airlines did in the past. How will an aggregator work if the best hotels are not on it? No one wants to let their brands become irrelevant. Partnerships only work when both partners allow each other to be the best version of themselves.

I think we saw this recently with OTAs of old taking off the new ones from their inventory. If hotel marketers start swallowing the brands while standing on the hotels shoulders, It's an easy move to counter it and withdraw inventory from the established markets. In this business the inventory owner is still king because in the end you have to come in and occupy the room unlike retail where you can buy shoes off your phone and never go into a physical space. It's an evolving space and if it disrupts destructively, there will be counter disruptions to disrupt the disruptor.
Hotel associations and brands are already talking informally about what to do if things get to a stage where the partnerships stop being healthy.

Editor: What are the attributes you look for while selecting or hiring? 
Given that we are expected to hire over a 1000 people a year at a hotel level we dont get to be picky. We have linked up with partners who work with the governments skill development program to give us access to reasonably well groomed/trained freshers and we put them through the grind on the job. Those who stay tend to have respect for process, like to be around and work with other people. They are hungry for more responsibility.

At our pace of growth we have a unique opportunity to ensure everyone is promoted so often that they do not do the same job for more than two years. At a corporate level we look for people with prior experience in good process backgrounds and ability to think commercially about their decisions and have a genuine liking for making other people happy. Our top guys today joined us 5 years ago and they had a 20 year career in just 5 years. They are some of the brightest minds in hospitality and they are still learning. It's surprising how hard it is to teach someone to be their own boss. But once you do the magic happens.

Today there is an 80% plus average occupancy across the Mango.Hotels portfolio and the only contribution I made to that was approving the Annual Operating plan last February. So our people need to make a plan and make it happen on the ground. Execution is everything and it is a culture with us. It's very hard for new hires sometimes to keep up with the frenetic pace of IntelliStay.

Editor: Tell us a little about your average day: 
I actually do a lot less work wise than one would think. I am a new father with a 2 year old girl so my early mornings tend to be with her. Once she is off to school I take a walk on the beach and I come into work in the mid-morning at around 10.30 am. My first hour is for my guests and I spend it responding to reviews, feedback and highlighting any process failures to the team. This also gives ideas for hotel innovations.

Rest of the day I work on new hotels coming into the chain, speaking with and managing our hotel owners and development partners.
Late in the evening I review operating numbers and alliances. Once a week we like to all get in for 'Mango Mondays' to remove any gaps and roadblocks in the plan.

Everyone is always traveling and it's essential to plan and all stay back at work at least one day a week. This last year I would have traveled for over a 100 days. It's great to understand cities, their streets and their drivers of growth. There is no substitute to primary research and I can confidently say today I know what makes 80 Indian cities tick and most of them I can navigate with no help from Google.
On weekends as a family we get one meal out and it's nice to try one of the many new restaurants which are going through a mini renaissance in India. I try and watch movies to catch up for the lack of TV otherwise and I like to read business articles and blogs relating to the startup and hospitality worlds.
I also use weekends to mentor younger or earlier entrepreneurs for TiE Mumbai or directly. Three or four times a year I teach at my Alma mater SPJIMR for the Executive MBA, Start Your Business or Family Managed Business programs.