Dr. Vithal Kamat, Chairman and Managing Director of Kamat Hotels (India) Ltd, talks about occupancy rate, growth momentum, expansion plans, F&B activities and debt reduction plans among others during from an interview with Swati Khandelwal, Zee Business.
Watch the Zee Business live stream below:
Q: Summer vacation is fast approaching and people are very excited about it, people say that this demand in terms of occupancy. So, do you see such good momentum and strong summers this time around?
A: Two years have passed in Corona, a time when people were supposed to stay home. Second, people haven’t had the chance to meet and talk. Third, weddings have turned into a small event. As a result, the mood is good everywhere and people are ready to finish the work in progress. Along the same lines and at the same time, we have resorts in Jadhavgadh, Shimla and Odisha and these are the places where people go. In fact, attendance has increased a lot. Likewise, the demand for food and drink has also increased and we have restarted our Mid Night Buffet at Orchid and the response is good.
Q: How will you define the summer season of the year and do you think it will be better than expected? Also, are occupancy levels approaching 100% and can you give us a bifurcation of demand into leisure and business travel and has business travel exceeded pre-COVID levels ?
A: It is approaching pre-COVID levels, but the ARR is not as high as it should be, but it will happen. The turnover is the same and none of the hotels are operating at 100% occupancy, but they are operating at 90-95%; your services improve with 5% less occupancy. There was an inactivity among the people and they were a little disappointed but that disillusionment disappeared. Everywhere, whether corporate or leisure hotel, destination, wedding, convention or conference, it has been going on for a month at Orchid and in other places in Jadhavgadh. We have also seen three to four consecutive conferences in Shimla and we have good support in the same.
Q: Please keep us posted on your expansion plans and how will you meet the growing demand? Also, name the geographical areas where opportunities for opening new stations are visible?
A: We have expertise in managing unmanageable hotels. The most important thing is that we have dedicated and mostly silent people with us. When it comes to the operation of the hospitality industry, people should have faith in the industry and guests should be welcomed with folded hands and we have such people with us. You will be happy to know that we recently won the award for best place to work in Maharashtra for two years, which just illustrates the relationship we share with our staff members. At the same time, I want to thank our staff for their good work in the pre-COVID times, during and after COVID. The most important thing is that we still maintain the same precautions in which we check people before allowing them to enter our properties. In addition to precautions, we are also strengthening our hygiene standards. It looks like the ARR will stay the same, but the occupancy levels will increase. Second, F&B activity is likely to increase because previously people weren’t allowed to move, but that may happen now. There is an increase in weddings and domestic tourism. There is a huge scope in domestic tourism. We took three hotels during COVID and started one in Lonavala and two in Himachal Pradesh. Indeed, the Governor of Himachal Pradesh inaugurated the Kamat Hotel Restaurant last week. So all of these activities are ongoing. In the case of the properties that will come for management we want to operate on an asset-light model as few people weren’t able to manage it, secondly someone’s staff members left but we have dedicated staff for so many years. Our brand is 80 years old, which resonates with people’s loyalty to the brand and we are moving forward with the same loyalty.
Q: Food and Beverage (F&B) is an important element even from a business point of view and also to complete the ecosystem. What is your share in F&B and what income do you get from it and how will it increase in the near future? Also, what is your vision of the company’s margin?
A: As far as F&B is concerned, its proportion is between 30 and 35%. I came into this business from the F&B environment through which our, Kamat Hotels, business is still around 40%. As you asked about the cost, the cost is about to increase, but if you reduce your waste and equal the proportion of your menu, that is, if you make new things like cheese , paneer and the rest of the stuff like vegetables, to make sure your food cost stays below 30%, it won’t affect your profit much and it might get better. Thirdly, in Kamat and Orchid hotels, we prepare fresh food every 45 minutes, which helps us reduce waste and even the guest is lucky to have fresh food. In fact, during COVID, we have learned ways to reduce waste by further ensuring guest happiness. Looking to the future, I think people are tired of packaged food, home food and satellite kitchens because during COVID people doing something at home didn’t have a other choice, which led to the creation of these satellite and cloud kitchens, but I think these things will diminish over time and people will go to places where professionalism is present. I believe the business will return to normal in the future.
Q: You mean the focus on cloud kitchens will diminish as other people in the restaurant business go big on cloud kitchens?
A: You are right but as you are talking to an experienced person so I would like to tell you something, there are 500 schools in Mumbai but why only 30 schools are functioning well? If three things, rules, planning and control, are good, only your cloud kitchen or restaurant can work well. We have kept the same standard for the past 80 years. What is happening in the cloud kitchen is that these kitchens are created on the will of the people, but it needs to review its rules, packaging, food standards and the most important thing is food quality. Previously, people had no option or alternative due to which cloud kitchens have started serving food accordingly. Now cloud kitchens will be more and more and when something looks more like a photocopy that was made at Rs 2 in Mumbai earlier then it went down to Re 1 then 50 paise and now it’s a free on one. So cloud kitchens that have maintained perfect standards will continue to operate. There is a cloud kitchen fever and those who will be good in this fever in terms of competition, quality, quantity and above all packaging will run. Because it is very important that the food has the same shape, size and color.
Q: The company has reduced its long-term debt from Rs 206 crore in 2020 to Rs 49 crore in September 2021. What are the debt reduction plans? In addition, approximately 92% of the developer shares are pledged. In September 2021, you said that we will finalize the commitment of the promoters in a certain time. For the moment there is no update
A: The asset-light model is the debt reduction model. Before, we did, which was also important, and that is that we had to create a few hotels of our own. Typically, people come to us for their hotel management after visiting these properties. We tell the people whose hotels we manage to come to our hotels in our absence and see how you feel there. If a person or two comes and we’re ready, that’s not management. Management is in your absence, it should operate as if you were present and we manage it accordingly. So according to the management, a lot of people come to us, recently we took 3 hotels and will take others. In the past, people built hotels for their happiness. Building a hotel is a science but managing it is a religion and not everyone can lead that religion. Our debt will be reduced.
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