India’s Big Growth on Course, there is Plenty to Bet on!

Mandeep Lamba: We have one of the best leaders from our country on the global platform, Rajeev Menon, who now heads the Marriott Hotels for Asia Pacific, other than greater China, and someone who’s been a dear friend and someone that I’ve looked up to for many, many years. 

But before we get into India, Raj, can we talk a little bit about Asia? You know, the region that you sort of look after. Give us a bit of an overview of what’s happening in Asia in general.

Rajeev Menon: Talking about Asia-Pacific, for a number of years I’ve been saying that if you look at our continent, 60% of world’s population is here in Asia Pacific. We are now over the last few years really seeing tremendous growth in the world of travel and hospitality. In fact, when you think about just a few years ago, China became the number one outbound market for the world. India is fast going in that same direction. Southeast Asia that has about half a billion people living in it. The intra Asia travel story is truly tremendous. 

On the side of Marriott, we have been on a rapid growth trajectory over the last, I would say at least eight to nine years, particularly since we acquired Starwood, back at the end of 2016. To put it into perspective, start of 2017, in my world of Asia Pacific ex-China, we had 250 open hotels. And we’re gonna close this year with 700 open hotels and another 400 in the pipeline, clearly becoming the largest player in the region with some 22 countries across Asia Pacific, ex-China. And you start adding China to that equation, it is a whole continent of its own. 

So, from my perspective, Asia truly represents decades long growth story, the emergence of middle class, almost everyday people in Asia Pacific becoming millionaires, rapidly growing middle class. As I said, it’s really fueling this desire to travel and this is going to stay here for decades to come. And amongst that, India is truly shining. 

Mandeep Lamba: Let’s talk about India where we are and where most people in this room would be more interested in. We’re obviously leading the inventory charge, in India with the growth that we are sort of seeing and we can sense that there’s a lot of people betting on India. We’ve seen that happen in the past, but I’m seeing now with far more conviction that people are betting on India. So, talk us through this sort of momentum that India has gathered and what’s changing in your view?

Rajeev Menon: When you looked at India over the last 25 years and particularly, I’ve been very closely involved because I joined Marriott nearly 25 years ago and was sent back home to open the second hotel in Mumbai and really been part of the Marriott story but more importantly also part of the India story. Investors and global professionals have been hot and cold on India. Marriott, on the other hand, has strategically always viewed India as a long-term growth market and remained very committed to that growth story. What has changed in the last few years in simple terms is really three specific things. 

One, I give the government a lot of credit for making considerable amount of infrastructure investment. And as this infrastructure investment comes to life, you see the ability for people to travel, access places that were very difficult to get to, and that is what is allowing this considerable growth that we are seeing in secondary tertiary markets. The number of airports that are coming online, the amount of road infrastructure that’s being deployed every single day by the government and so on and so forth. That’s the first thing that’s playing out. 

The second thing, as India transitions to being the third largest economy in the world in the next few years, you are seeing tremendous growth of middle class that I talked about from a broader Asia perspective. India is really at the credit card spends; people are more focused on spending on experiences and travel versus buying goods. 

And you then look at India, that’s exactly what’s playing out with the growth in economy, growth in rising income, all of that bodes really well for our industry from a long-term perspective. And then finally what you’re starting to see is a little bit of the post-COVID net effect that people decided to first travel through their own backyard.

You are seeing with the infrastructure investments, real rise in religious tourism and this ability and people saying, yes I’m willing to go to all these different places within India, while I’m also happy traveling overseas. And those three factors are not something that’s going to be short-term trends. I believe they’re here to stay. And India, in comparison to the rest of the world, has an incredible opportunity to add more infrastructure when it comes to travel and tourism assets. All you’ve got to do is just look at the numbers in terms of number of rooms in India branded or otherwise which are in a few hundred thousand. 

Japan with a population of 130 million has 1.8 million hotel rooms. China is well north of you know three, three and a half million hotel rooms. US is 5 million plus. So, there is incredible opportunity for India to grow. 

Mandeep Lamba: And which brings me to my next question that what seems to be happening is that we are now chasing this X brands, hotel companies, everyone’s chasing this really exponential growth and it’s becoming a numbers game and there was what you said that today’s traveler is looking for a more experiential travel experience when he goes to hotels. How do you draw that balance when brands and hotels are sort of racing ahead to sort of grow inventory with the experience that the traveler must have inside their hotels? 

Rajeev Menon: So, each company has to decide on their strategy. From our perspective at Marriott, we clearly believe that there is opportunity for growth in every segment within hospitality, particularly luxury through mid-scale, which is kind of where we are focused on. Now, when you look at even within that segment, there is lifestyle and classic brands. People tend to be more gravitating towards lifestyle brands depending on the generation particularly Generation Z and Millennials. So, what you can do is you can really create and deliver experiences through every segment, but there are always gonna be certain segments, particularly luxury and lifestyle, that would be able to deliver a little higher, put a little higher focus on experiences, whereas certain brands like select service or mid-scale become known or should be known for delivering consistent quality and service. So, from our perspective, when you think about brands like Ritz Carlton or St. Regis, we see incredible opportunity, not only just city hotels, but more so in resorts to deliver these incredible experiences. And we’ve got some beautiful hotels open and number of others that we’re opening over the next few months or years to come. 

When you think about where India is going to be in a few years from now and the growth in the secondary, tertiary, fourth-tier cities, there is incredible opportunity in mid-scale. So, when you think about our partnership with Fern through Series by Marriott, which was a global launch that we just did a few months ago, within that signing of that partnership, we doubled our presence from being in 42, 43 cities across the country to over 90 cities across the country. And again, when you think about the growth opportunity, for most folks, I remember back in 2007, 2008, opening a Courtyard in Ahmedabad or Bhopal or some of these secondary markets, for the folks in that market, the Courtyard by Marriott was the social hub of the city, was the Marriott of the city. So when you think today of a fourth-tier city in India, a Fern or a Series by Marriott ends up becoming that social hub.

And as that market then grows, people start to travel. That obviously there’s opportunity to do a lot more. So there is opportunity across the board in every segment. It’s how you focus in each of these segments and make sure that what you’re offering the customer, the value proposition is very clear and it’s delivered consistently. 

Mandeep Lamba: Interesting that you should bring up Series by Marriott because that was my next question. Raj, this tie up with Concept Hospitality and the launch of Series by Marriott, which is a global brand. And for the first time, we’ve seen a global hotel company launch a global brand with its entry in India. Can you simplify the relationship now that you have with Concept Hospitality and a little bit about what the Series by Marriott is going to be. 

Rajeev Menon: What we were looking at for some time was to enter into the mid-scale space and grow through either existing brands or a new brand and as we were talking to a number of partners around the world, particularly in this space, we saw lots of smaller companies that had really established themselves with great reputation, great distribution in their respective markets and were growing in that space, were known for being able to deliver consistent quality and experience. So, from our perspective, we had launched our brands like City Express or Four Points Flex, which one calls hard brands. But in other segments, we have brands that is Luxury Collection, Autograph, Tribute, which we call a soft brands or brands that you know really drive affiliation. We saw incredible opportunity to launch a soft brand in the mid-scale space and Concept was the perfect partner. 

Now what we did do was make a small equity investment in Concept Hospitality with the view that we would partner and as this partnership comes together, we are going to be able to grow this brand exponentially across the country. And that’s exactly what is playing out. So, we have obviously signed the partnership, we’ve had a number of meetings with existing owners, we are seeing for growth in this space. So in fact, I’m back in India on the 11th of August and meeting with a number of partners and our partners at Concept have already told us that they are going to be either signed or signing a number of more deals because the interest levels are so high, particularly in Fern as Series by Marriott. Now the idea is that Series is like an extension, we would take the same brand into places like Indonesia or maybe Japan, but the company or the partner there could be different, right? 

And they are known for a very well-established brand in that country with repute and deliver consistent service that we will partner with them and bring a global distribution strength and Marriott Bonvoy, which today has almost 250 million members globally, thereby giving them the opportunity to scale up and and drive more growth. 

Mandeep Lamba: So, you had a record year last year, which was an all-time high for India and then I met with Kiran very recently and obviously he had higher numbers to deliver this year and then he told me that in the first six months of the current calendar year, he’s already done his budget for the year. That’s the speed at which it’s growing and I said, so Kiran you can take a holiday and go home now and he said, no I can’t because ‘Raj Mange More’. So, I’m keen to understand very quickly, Raj, so you’ve got over 150 hotels, more than 30,000 keys today operational, I think another 112 with about 20,000 keys in the pipeline, that’s a significant amount of hotels that are, you know, either operational or coming soon. How do you see growth? Where is the growth going to come from in India? Because in a lot of the bigger markets, you’re likely to get locked out now because all your brands are already there, area of protection, etc. will start playing. So where do you see this growth now? How are you going to keep up with this space?

Rajeev Menon: Again, Mandeep, when we were signing 3,000 rooms a year, the common belief was that we were growing at a better pace than anybody else, and there was little opportunity to do better. Last year, we signed 7,000 rooms, which was a high watermark and again the belief was this is as good as it gets. You heard from Kiran, we’ve already got pretty close to that number and this excludes Series by Marriott. So, when you start to bring that into play the numbers are much higher. From my perspective, when you think about what’s playing out in India, there are going to be hotel companies where we would have 500-600,000 hotels across the country. There are some 750, call them councils or provinces across the country. There is tremendous opportunity. Some of the volume may come from mid-scale, but when you think about resorts, when you think about urban resorts, city hotels, convention-style hotels, the opportunity is immense. 

Next year, we will open the Marriott Marquis and the St. Regis in Delhi, which will have close to 70,000 square feet of meeting space, and the ballroom itself is 40,000 square feet of, you know, pillar-less ballroom. I think it’s going to be game-changer for the city and for the country. Today, India attracts very few global conferences. When you think about what we do just in Asia Pacific, we operate 40 to 45% of the large big box hotels. Rarely we are able to bring a major convention from one of the other big cities across to India. That hotel or complex opening next year will give us that opportunity. 

Two weeks ago, I was with Tony and our leadership team in San Diego where we opened the Gaylord Hotel, which was a 1600 room hotel with some 200,000 square feet of meeting space. Countries like US do exceptionally well in this space. India with its population base, with the growth that we experiencing, all of this is going to come. It’s a matter of time. 

So, for me, any number you put out there is potentially achievable because that’s where I see India headed towards over the next few decades. 

Mandeep Lamba: And I hope your words all come true. Raj, before we let you go, for all the work that you’re doing for Marriott and for the years that you spend with Marriott, if Marriott decided to open a new hotel brand, let’s say it’s called RM’s, for you on Rajeev Menon, what do you think will be the signature experience of that brand?

Rajeev Menon: So, you are very, very kind to think that way. That’s not what, from my perspective, would ever happen. Mr. Marriott is a legend. And we are super proud to be growing the portfolio of brands that we have. For some reason if one day RM shows up then for me something that I have been very passionate around from day one as a hotelier is really personalizing experiences and if you think about our top customers today, which are Ambassador Marriott Bonvoy members, any of our hotels they stay in in Asia Pacific, they get a personalized card from me and to me that is what I would want to do if tomorrow I own the hotel that every single guest that stayed with us got some kind of a personalized message and an amenity that really connects them to the name behind the hotel or the brand.