IHCL CEO Puneet Chhatwal says India with innumerable leisure locations and strong domestic tourism makes for a viable market for homestays.
The changing paradigms since the pandemic have led to sudden change of gear, with homestays becoming the favoured option. How well do you think can IHCL ride the wave, considering amã is still a fledgling enterprise?
We launched amã Stays & Trails in 2019 with bespoke properties, including heritage bungalows and cottages, at off-beat locations across India. Within 18 months of its launch, amã has grown its portfolio to 44 bungalows in 18 locations. We accelerated the growth of this emerging brand during the pandemic as we saw consumer sentiment and behaviour gravitating towards “bubble holidays”, with a strong preference for private stays and experiences, factoring in safety and social distancing measures, and amã has evolved to meet those demands.
Though still nascent, homestays are a growing concept in India. We identified the need for a branded and differentiated product in this unstructured market and have built a clear vision and plan for amã’s growth with a target portfolio of 500 bungalows over the next few years. This growth will come from management contracts without any capital deployment.
How do you position and differentiate yourself, in terms of experience to pricing, in a very crowded homestay market where competition ranges from individuals and other brands to aggregators?
amã is the first brand to offer the same service philosophy and customer experience as IHCL. For customers, regardless of which amã property they decide to vacation in, it will feel like a home away from home. One big differentiator is our ability to create opportunities for many Tata companies to monetise heritage properties that they own, often in off-beat locations like coffee estates and tea gardens. For many customers, these are experiences that are not on offer elsewhere or are very rare. We feel that our ability to create such properties will continue to be a strong reason for customers to choose amã. In addition, there are many distinctive advantages for consumers as well as the owners.
Being from the stable of IHCL, it enjoys enormous trust of customers and amã can also leverage the vast footprint of IHCL in India using a hub-and-spoke model of operations for our bungalows, which are strategically located in the proximity of our hotels. This model offers customers access to more experiences, from dining to sports and excursions, during their holidays. All amã locations offer dedicated on-site chef and highly trained service staff, besides use of IHCL hotel facilities like restaurants, spas, gyms and pools. Another advantage is that all amã bungalows are pet-friendly.
Homestays offer a different level of customisation and pace than hotels. Do you think this could be an inflection point for the tourism industry, where people get accustomed to the ‘do-your-own-thing’ model? And what does that portend for the industry?
The value proposition of a homestays is very different from that of a hotel. There is a market for both concepts as they are used for different reasons. There will always be more services at hotels and more elaborate experiences possible for guests. With a marginal area of overlap, they both cater to a different segment and, therefore, do not impinge on each other in any significant way. The homestay segment will experience strong growth in the coming decade as India’s infrastructure of roads and highways is further developed and amã is well poised to participate in that growth journey.
Will a focus on homestays divert your energies and attention from hotels, and how?
IHCL has transformed from being a hotel-only business to a hospitality ecosystem with multiple brands and businesses, each having their own identity and USP. Each of these brands also has dedicated teams to manage operations and growth. Taj has been rated as the world’s strongest hotel brand and strongest hospitality brand in India by Brand Finance in 2021, reiterating the fact that we have remained focused on each of our brands while continuing to enhance value for our stakeholders. amã complements our hotel business very well and provides a great product for guests looking for exclusivity and a home-like feel. We have a strong strategy with amã.
amã is mostly located in the south. Why is this, given that homestays are flourishing in Himachal and Leh and Uttarakhand? Do you have plans to expand nationwide, and to which locations? Could you share any targets please?
We launched amã with nine heritage bungalows in the coffee estates of Tata Coffee in Coorg and Chikmagalur and since then have expanded across the country. We have seven bungalows across Goa. We added bungalows in Lonavala, Madh Island, Khadakvasla, and Alibaug in Maharashtra. We recently opened seven tea estate bungalows in Munnar. Our pipeline of bungalows includes many new destinations like Himachal Pradesh, Uttarakhand, Assam, Darjeeling, Rajasthan, Gujarat and Tamil Nadu.
Any plans to take the brand to international locations?
Our focus is to expand the national footprint first. We are also looking at extending this offering across the Indian subcontinent in countries like Sri Lanka. We will look at other international markets once we have achieved significant scale in India.
Considering that homestays for a brand like amã are like a recycling project, where existing infrastructure is put to use, will this investment-friendly characteristic allow you to scale up exponentially?
The asset-light model of amã allows us to scale quickly. The brand offers complete management and operation of the bungalows by earning management fees on it. It is a win-win situation for both the brand as well as the owners, who get the opportunity to monetise their idle assets. We believe that the brand has great potential to grow.
And how big a revenue generator can homestays become for you, especially with no end in sight to the pandemic?
India with its innumerable leisure locations, and strong domestic tourism potential makes for an attractive and viable market for homestays.