Binod Chaudhary remains confident of India as a business opportunity and envisages healthy growth in the mid-market and upscale segment of hotels. He also batted for constant introspection to remain relevant in a highly disruptive marketspace.
CHAIRMAN,
CG CORP. GLOBAL
Nirupa: You have a massive portfolio of hotels across various brands. What do you plan to do with it in the future?Do you want to continue investing in more hotels, do you plan to hold them, IPO it separately, or create a REIT?
We are a serious player in the hotel space and started some 20 years ago. Our first joint venture was with the Taj, which we are very fond of even now. Over the years, the portfolio has become very pre-diversified. While we continue to grow with Taj in the high-end resort segment, we are also in the safari segment. We have now grown in to putting together a new outfit under the aegis of CG Hotels which is actually a combination of pulling in the mid-scale, upper mid-scale and upper scale properties, under different brands, in to one single portfolio. I am happy to say that now we are a company with 74 hotels under management. We are here in a serious way. We do not have any plans for an IPO as such and I think we need to allow it to grow. We want to be a much bigger player in India. Actually, we want to put together an investment platform as everybody tells me this is the right time to invest but I do not see deals happening. So, let us wait and see what the future holds for us.
Nirupa: It is always interesting to hear entrepreneurial stories and you started your career in Kathmandu with fabrics and now it has grown in to a massive empire with multiple verticals. What has been the hardest part about expanding and working in so many countries? Where do you think the challenge lies in the future?
We are a family who has been in Nepal for 130 years now. My grandfather came from Rajasthan but my father was born in Nepal and so was I. I call myself a hardcore Nepali of Indian origin. You are right when you say that we have grown into a company which has multiple verticals. It was a conscious decision to be headquartered in Nepal and build the first Nepali multi-national. The last thing people will think about when you talk about Nepal would be business and that too creating a corporate structure which has dreams and visions of going global. But, comes with it a set of issues with regard to political stability, managing resources etc. It has been a tough but a very interesting journey and I am happy to say that today we are actually present in more than 30 countries. The set of issues has been finding good talent and building successful projects in the most difficult of places, Nepal being one such place. I think that has sort of become our USP.
Nirupa: Have you come across any exciting, disruptive and technology focussed ideas that can be applied to the hospitality or food and beverage space?
We are in for a serious disruption in the hotel business. We can already see what platform like Airbnb are doing. What took us years to build that process is happening overnight. The whole way you do business is changing. Majority of the customers are reaching out to the properties directly and it is creating a completely new format of doing business and that is going to grow. As a matter of fact, I see a situation where everybody needs to look at their business model. Whether it is sustainable in the next 5-10 years time. The operators, investors, sales and marketing teams, all intermediaries need to look at it. I think we are in for some very interesting times.
Nirupa: You have ventures in various different businesses. Which is the industry where you are seeing maximum growth?
It all depends on how you look at it. I see a lot of money being put in to hotels which never seems to come back. The value increases only for those who can emotionally disassociate with projects. I have learnt in the last 20 years time that in the hotel business, the only time you make money is when you sell. If you want to stay in it, it is virtually like a bottomless pit where everybody including the operators, management teams etc. all want you to go on pumping in the money and you also sometimes find out reasons to put in more money. Having said that, this is one business I would never give up even at the cost of cannibalising other business opportunities. I think we will have to learn how to be less emotional and start generating cash flow.
Nirupa: A trend currently emerging in the hotel space?
I definitely think that people are realising that there is great business to be done by opening new destinations for leisure. In fact, India has a huge shortage of good quality resort destinations and properties. But at the same time, I feel the whole landscape of the mid-scale to upper mid-scale is changing. Because of the influx of international brands, I think the local companies are gearing up to put together the right setup, product parameters, element of style, costs etc. I see huge growth prospects in that segment and I do not think that it is wrong to say that majority of the operators, including those international ones are eyeing this segment.
Nirupa: One key lesson that you have learnt in the past that you plan to implement in the future?
I think as far as possible one should refrain from getting in to greenfield ventures. Call the assets distressed, or misplaced, or whatever but try to find a space in that segment and then reposition it. I think that is the best and the most comfortable position to be in.
Nirupa: What drives you and what kind of impact would you want to leave on the hospitality world.
When we started 20 years ago, we wanted to start with the Taj in Nepal but my destiny took me to Sri Lanka. I have always felt that sometimes you are led by events which are not under your control. After having done pretty well in other spaces to do a hotel was a dream without realising that there is a lot of hard work that has to go in to it. The glamour factor that is associated with the hotel business is a very tiny little component when it comes to the brass tags. It is a sector which is capable of pulling the whole system down if you do not know how to manage it well. So, I would say that after coming through the hardships, today when I look back, I think if you manage this space well, it is a great industry to be in but just do not venture in to it because of the glamour factor. In every entrepreneur, there is a dreamer and when you see that dream taking shape and when you are able to put together the building blocks, it is a great feeling to be in that space. That is what drove me.
