Ex-Taj hand on a journey to build a hotel brand, with Keys Hotel
Entrepreneurship is all about taking the plunge. And we have read many stories of those who have done that. Internet has been the favourite playing ground for most entrepreneurs, because of the low entry barriers and costs involved. But many are doing the same in brick-and-mortar businesses.
One such entrepreneur, who is toiling hard, is Sanjay Sethi, Managing Director and CEO of Berggruen Hotels. Berggruen Hotels is the parent brand to Keys Hotels, a chain of business hotels in India. Keys already boasts of 35 properties in India including under development. Of the total current portfolio of Keys Hotels, 14 properties are in operations with 6 owned and 8 hotels under management contract – in all they have an inventory of over 1,300 rooms. Other 21 properties are in various stages of development and slated to open in due course of time. Keys Hotels currently has presence in Aurangabad, Bengaluru, Chennai, Ludhiana, Mumbai, Pune, Delhi and Thiruvananthapuram with the Keys Business hotels. While Mahabaleshwar, Goa and Delhi have Keys Resorts and there are also the Keys serviced apartments in Whitefield, Bengaluru.
Building a brand
Sanjay has in the past worked with Taj Group of Hotels and before he ventured out on his own, he was the area director for Taj in Hyderabad and was involved in the development of luxury palace hotel, The Falaknuma Palace. While he was in developing the Palace hotel, he met officials from Berggruen Holdings who were looking to enter India and set up a hotel chain. One thing led to the other and Sanjay was ready for his new innings as an entrepreneur. “Setting up a hotel is a very capital-intensive, so even if I wanted to do something on my own, without the backing of good amount of capital it was not going to be possible,” says Sanjay matter-of-factly. So Berggruen Holdings brought the capital needed to start the business and Sanjay brought in his decade-plus hospitality experience to the table.
One of the first things he did was to put together his core team. “I spoke to mostly industry leaders in the business and we had a near 100% strike rate. So we brought them on, not as employees but as partners who had stake in the business and were aligned to the growth needs of the business,” says Sanjay. Once he had his team in place, Sanjay set out on the next task, which was to get the right location and the right product. Therefore, be it entering places like Aurangabad or Thiruvananthapuram, the Keys Hotel team did a lot of due diligence before making their decision.
For developing the product, what they did was to talk to the customer. A multicity focus group discussions, which included frequent travelers, single ladies group and 3-star hotel visitors formed part of the group that gave the seed inputs. This exercise was done in 5 focus groups across 3 cities. “Their feedback was literally integrated into the product we developed. In fact, once we had the shell of the first hotel ready, we went back to the customers to understand if it met their demands,” explains Sanjay. This resulted in positioning of Keys Hotel in the mid-segment space, as customer feedback pointed in that direction. “Right till the end we went back to the customers to get their feedback,” says Sanjay.From building their own assets, to getting into management contracts, Keys Hotels covered much ground as they grew. They took to the ‘asset-light’ model as they call it, in 2009, and forayed into Keys resorts in the year 2011; earlier this month, they announced their latest offering -- Keys Klub – an upscale hotel brand. Keys Klub is positioned in the 4 and 5 star category to service the affluent class of business travelers. While Keys Hotel has limited room service, Keys Klub would have 24/7 in room dining, an all-day global cuisine restaurant, a specialty restaurant, a lounge bar, banquets and conference halls.
Sanjay has been very focused on building the brand right from day one and has paid a lot of attention in carving out its identity. The Keys brand therefore he says is all about being stylish, cheerful, urbane, contemporary, personalized, international and cutting edge. “The way we deliver on these brand attributes may differ from property to property, but you will find the same underlying qualities across properties,” he says.
Sanjay says Keys hotel has been focused on building a strong sales team and today has one of the largest teams in the country – 13 sales offices in the country and a 75 member strong sales team. 2008-09 was tough times for the business, because of the global slowdown, however their due diligence done in starting right, helped Keys get a good share of the market, which Sanjay says was higher than fair market share in those times.
Most clients of Keys hotels are corporates, who have partnerships with the brand for the employee travel. Upto 75% of their business comes from corporate tie-ups. A good relation with the corporates has also translated into employees viewing them favorably and today a fair share of retails customers also use Keys Hotels. The hotel has consecutively won awards from Trip Advisor for a number of their properties. In 2012, Keys Hotel Trivandrum was chosen by travelers in Trip Advisor as the 10th most trendiest hotel in India. And six Keys Hotels received ‘Certificate of Excellence’ by Trip Advisor in the same year.
The venture has received $62 million from Berggruen Holdings and has raised Rs 183 crore as debt. The entity currently has 21 hotels under various stages of development as on date.
Keys Hotel continues to expand into newer cities like Kochi, Vizag, Shirdi, Amritsar, Vrindawan and Haridwar to name a few. Sanjay says most of their properties are doing well, except for some locations like Ludhiana which have not yet come up to their expectation. “Our oldest property was opened in 2009. The company is targeting an overall turnover of Rs 170 crore for the next fiscal and is growing at 100% rate YOY. Our average occupancy rate is 72%,” shares Sanjay.
He says the entity will be cash positive in the next year and should register profit before tax by 2014. Sanjay is bullish about the hospitality sector and says they want to be a complete hotel company – with owned assets, own brands, a strong management team, an extensive sales and marketing reach and distribution, technical advisory services for hospitality projects, human resource capabilities and material procurement capabilities. “We want to be a full-service brand, and the go-to place for any requirements in the hospitality space,” says Sanjay about his ambitions.
While his immediate plans are to expand in India, he says they have received enquiries from Maldives, Middle East, Sri Lanka, Bangladesh and Africa. “There is still a lot of opportunity in India. Entrepreneurial ventures will drive the economic boom in the country, and we are happy to be in that space,” says Sanjay. With an employee strength of 1,770, Keys Hotel is probably one of the biggest startups in terms of employment and if all goes according to plans, they will have a workforce of 4,000 by 2016.
We wish Sanjay and Keys Hotel all the best in their ambitions. As well-entrenched businesses go through job cuts, it’s good to see an entrepreneur providing employment to so many.