Gurgaon as a destination has little to do with the traditional concept of tourism, if that is meant to denote sightseeing as the major activity. Destination Gurgaon has everything going in terms of activity. From its world-class golf courses, modern shopping malls with all the major brands, happening eateries and some of the best commercial spaces for offices and retail. We catch up with Sanjay Sharma, Area General Manager, Starwood Hotels who has been witnessing this dynamic growth over the last five years.
How would you define Gurgaon as a destination today?
My take on Destination Gurgaon is that today’s modern tourism has nothing to do with sightseeing alone, tourism today such as in Dubai – no one is going to Dubai only to see the sand dunes, or go to the beach or to see the culture or to shop. All these are elements of the experience when you go there. So today’s tourist does not go for any one specific reason. If you talk about tourism in Gurgaon, on one hand Gurgaon today offers you the status of being the Millennium City in India – but what all do we have in this Millennium City – do we have any sights, any cultural events such as sound and lights show – the answer is no. So what does Gurgaon today thrive on? It thrives on projecting the modern lifestyle and the modern culture of a common man. So in Gurgaon apart from the white collar job where all the people are working in multi-nationals they give you the modern way of doing business in the country. Therefore, it also projects a picture of modern India.
Are you saying that they are coming to see this lifestyle or are they coming to work?
Both. In my opinion after having worked in Gurgaon for over five years now and having seen the business grow I think people who come to do business in Gurgaon are only about 60-70%. The rest coming to Gurgaon are people who are looking for business opportunities, who actually don’t have established businesses yet.
So that means everyone is coming for business?
They are. But at the same time, when they come over here they may have a specific business in mind, but after seeing the city, they do another business.
But do you think that the appeal of Gurgaon has developed now to the extent that people want to come and experience a happening lifestyle?
There are reasons for it and there are examples for it. For instance five years ago no one could think that you could come to Gurgaon and have the lifestyle and nightlife that you get today. On the weekends, I don’t think the occupancy in the hotels declines like it used to do 5 years ago being a business city. Despite being a business city, hotels are still running 50-60% occupancy over the weekends, five years ago, it would not even have been 30%. This is an industry phenomenon. Today you will find every world cuisine in Gurgaon and some world class nightlife. Even safety has improved. If today you want to head out to spend an evening there are more options here than in most other cities within a radius of 10kms.
Do you see this trend growing?
Yes, currently we are at 4 on a scale of 10. This trend will grow. Our current facilities are good but I don’t think we have marketed Gurgaon well as an exciting destination.
What about other attractions? Such as you mentioned Kingdom of Dreams, the business environment, you also have some of the best hospitals, how much of your tourist is here for medical tourism?
Medical tourism is huge in Gurgaon. Any good private medical hospital today, about 30-35% of the business is coming from foreigners. Some even offer special integration patient services and this happens when you have the want to develop these services. I did not see that five years ago, hospitals were sending their speciality doctors to Africa and Middle East to market their services and bring in patients. But it is happening today. The opportunity of Gurgaon lies in marketing Gurgaon as a hub which provides you good medical facilities. If you go today on Sohna road, it now has several schools and universities. Educational and medical hub is big.
As far as infrastructure is concerned, do you see things improving also?
It is happening but at a very slow pace. The intensity of the thrust that it deserves is not being given. The reason being that by the time we finish one job, we need 10 times more the infrastructure in place. So the growth of Gurgaon today, we are talking about development of at least two to three million square feet of office spaces and residential apartments.
From your understanding is the demand also increasing for hotels?
If you go back to 1982 when the Asian Games took place, there was a splurge of hotels in India, especially in Delhi. Almost every hotel in Delhi, opened in 1982 and so Delhi got a hospitality boom. But after that, everything stood still for another 10-15 years. Now things are happening again and will continue for the next two years. But already the hotels which have opened in the last two-three years including DIAL, Gurgaon, there is not a single hotel in Gurgaon that is running an occupancy that is less than 50%.
So you are saying that business is also growing?
There is 28% growth of business in hotels every year in Gurgaon, this is documented by the Haryana Government. This is in terms of number of nights. This 28% growth that has happened has been surpassed, because in the last three years, the supply has almost grown by 52%. Supply has outperformed the growth in the market but now it is just getting to a level where the supply will meet the demand.
Is there any fresh supply in the pipeline?
There is. In DIAL there are still three to four more hotels that are yet to open – Aloft, Dusit, Novotel, Pride, Andaaz are coming in. Then another three to four hotels are coming in the vicinity of Gurgaon. So in the next three years, we can expect another 2000-2500 rooms coming in. So today if I take the availability of the total number of five star hotels in Gurgaon, we are already talking about 4000 rooms existing. If another 2500 come, that is a 50% growth.
How do see the economy of Gurgaon growing?
That is one concern. Like in every big city, the land cost is going up. For instance all the premium pieces, such as Cyber Hub, Cyber City, Unitech City, Unitech Park have become expensive real estate. So all these buildings, that were in the bracket of 80-100 rupees are now touching 150-200 rupees per square feet in rental cost. Now a lot of new and established companies are finding this difficult resulting in migration within Gurgaon. So Gurgaon is growing and is growing towards Manesar.
From an hotelier’s point of view, you would also like to see MG Road and Cyber City not lose its importance.
It will never, because the airport is still on this side.
So you see it also acquiring some premium value?
Yes, it will. What will ultimately happen is that it will become more premium as Gurgaon moves onto the other side.
Is there any data that you have about your clients in the hotel as a percentage from let’s say five years ago to now. How many of them are using your hotel restaurants?
40% of our hotel guests dine within the hotel, 60% of them either don’t dine in the evenings or are taken out by locals or they prefer to head out. In comparison to five years ago, people have started eating more in the hotel. The reason being, when you go out, and you see traffic, you don’t want to waste time. So people today are becoming more and more time conscious. Today it is becoming more location centric business.
How do you envisage Gurgaon growing as a conference destination?
It will never grow into a mega conference destination, you will never see 4000 people conferences because that infrastructure does not exist. But when you talk about smaller conferences, Gurgaon will take over any other city in the country today. For this we have better infrastructure in comparison.
Is there room to have at this time to have some sort of a convention centre?
We all are actually waiting. The Haryana Government has announced a 10 acres convention centre that is already on the drawing board. I think that one of the best things the government can do is to look at a public private partnership (PPP) to make a world class convention centre.
Coming to your hotel specifically, all the optimism you talk of, how is it reflected in your own business?
We have seen 18% growth in food and beverage year on year in the last five years on an average. Room revenue has grown year on year by 8%. Of course, our expenses have also grown. So when you talk about gross operating profits, we are consistently growing by at least 12% every year. So there is definite business.
Is your group going to invest more in hotels?
Definitely. But at the same time, the market is currently very volatile in terms of what are the right spots. It is becoming more and more difficult to identify that what are the long term decisions and the impacts of those decisions. We need more clarity in terms of our growth areas.