The Tata Group’s hospitality firm Indian Hotels Company (IHCL), operator of the Taj group of properties, is working on a rebranding strategy that could see the Vivanta and Gateway budget brands facing the axe and all its hotels being branded under the broader Taj badge. The plans of rebranding were disclosed on Tuesday, where Rakesh Sarna, MD and CEO of IHCL, made a presentation outlining the proposal to the general managers of various Taj hotels. Plans include a rebranding of all properties as Taj Palaces, Taj Resorts and Spas, Taj Safaris, and Taj Hotels, according to the presentation made by Sarna, who took over the reins of IHCL in September 2014.
The Vivanta and Gateway brands, which could be axed if the proposal were to be implemented, were built over the past five years by IHCL as part of a move by the group that was in line with global industry practice, whereby big chains differentiated hotels on the basis of their categorisation — business, luxury or size of the hotel. There is increased competition in the hospitality space, with Marriott International and Starwood Hotels and Resorts officially merging into one company in September. Immediately after the merger, Marriott started by announcing its first major decision — to offer reciprocal benefits to members of each loyalty programme.
On the reason for the rebranding proposal by IHCL, a source close to the development said, “The CEO wants a position where even if they are present in a small space, the brand will command that space…There is a feeling within the company that customers come to Taj hotels for that brand and they do not like to be associated with another name.”
Operationally, though, as a result of this rebranding, all the smaller hotels will have to be upgraded and the service quality will have to be standardised so that the customer gets a basic level of service across all Taj hotels. A source said that while the initial plan of rolling out different brands such as Gateway and Vivanta was to differentiate the flagship hotels under Taj brand from the budget hotels to effectively ensure that the Taj brand does not get diminished or diluted.
The new plan could see the company going back to the old model, where all hotels will fall under one brand. This, according to those privy to the information, could require a significant investment by the company across its various hotels in order to improve them to come to a basic standard that the Taj brand stands for. Alongside, this may also help the company command a higher premium on the pricing across all the hotels, they said.
In July, IHCL had completed sale of Taj Boston hotel for US$ 125 million (about INR 839 crore). The hospitality firm had also sold off 12.7 lakh shares of Belmond (formerly known as Orient Express) for a consideration of US$ 11.96 million. IHCL had also sold BLUE Sydney, a Taj Hotel, to Australia Hotels & Properties for AUD 32 million (about INR 179 crore) in 2014.
