The story of one of India’s biggest brands – the Taj
Some brands die a quiet death, others are swallowed by bigger, more powerful brands. Some, however, withstand the test of time. Like the Taj. Our Taj. However, the hotel has faced some rough times. The Indian Hotel Industry went through a recession in the nineties but the Taj survived it better than most hotels. Their investment plans continued unabated, share prices remained buoyant and dividend payment kept up. How did the Taj manage to achieve this?
Let’s go back to the beginning
The Taj was built at a time when Indians were not allowed entry into most of the prestigious hotels and clubs in British ruled India. Legend has it that this was one of the reasons why Jamshetji Nusserwanji Tata, the first Indian industrialist built India’s first luxury hotel. He went ahead with the project although he was busy with plans to industrialise India.
The first Taj Hotel, the flagship of the Group was born in 1903 and stood alone for almost half a century. Initially it was smooth sailing, even though the original hotel was conceived and built when the hotel business was not even considered an industry.
Right from the beginning, the Taj stood for class and comfort. It was a place where the viceroys of the Empire arrived and departed amidst scenes of splendour. Scenes which were typical of the Raj. In fact, it soon became one of the wonders of the Orient. Singapore’s Raffles or Hong Kong’s Peninsula did not come up to the level of the Taj inspite of their rich ancestry.
Notably, there was hardly any advertising directly to the consumer. In fact, this element of the marketing mix was not visible until the late nineties! Advertising was not considered necessary. Secondly the company was conservative and media shy for many years.
The reason the hotel towered above the rest was because of the amazing attention to detail that was paid by it’s founder Jamshetji Tata. As far back as 1900, he made sure that the Taj would have it’s own laundry, an aerated water bottling plant, electroplating for it’s silverware, a Mora sliver burnishing machine, a crockery washing plant and elevators. The hotel was built completely at a cost of 500,000 pounds in 1903.
Says Managing Director, R.K. Krishnakumar, ‘The vision for the Taj Group is for it to be a select chain, present globally. Asian, perhaps in character, but absolutely international in terms of systems and processes and with a strong West European focus. The way forward was to make sure that the entire Taj team is imbued with the missionary zeal to sell the brand.’
International travelers from the bulk of the market for the Taj, particularly in the metros. Even the profile of the Indian customer was changing. But overall, the Taj has a higher dollar rate of revenue – approximately 70 per cent comes from international guests.
The chain started expansion only in the 1970’s under the leadership of Ajit Kerkar. Kerkar had a big role to play in the rapid expansion of the Taj. The Taj Intercontinental (the new wing) was built in 1971.
In the early seventies came the Lake Palace in Udaipur. The company pioneered the concept of conversion of century-old palaces into hotels. Today this has become an USP of the Taj group.
In the mid 1970’s the chain expanded to Chennai (Taj Coromandel and the Fisherman’s Cove) and Fort Aguada at Goa. Here too, Taj scored over the others with it’s timing. At that time, Goa was not as much of a tourist’s paradise that I it became later on. Around the same time it set up the Taj Ganges in Benares and started international flight kitchens too.
In the 1980’s, two more hotels were built in Delhi, two in Bangalore, and one each in Chennai, Ooty and Agra. Next came the Jaimahal Palace Hotel in Jaipur as well as the New Delhi Flight Kitchen. The new hotels were build taking the original Taj as the model hotel.
The end of the decade saw the coming up of the Taj at Delhi. The last marked the start of an ethnic style in hotels with international standards. By this time, it appeared that nothing could held the phenomenal growth of the Taj.
However, cracks had become evident as the recession loomed large over the Indian economy. Excess capacity made some of the ventures unprofitable, specially overseas ones.
Lack of transparency
The new management also realised, to its dismay that there was a clear lack of transparency. The organisational structure had become almost feudal with 49 general managers reporting directly to the chief executive, without any interaction amongst themselves. The Taj had to change the way it viewed the world – if it wanted to remain a market leader.
As far back as the early nineties, it was realised that formal market research was a must to help understand the consumer better. It did not think that data from research agencies such as the airline and the travel industry were enough. The Group carried out extensive research to understand current lifestyles. The research attempted to discover whether the future customer would be more egalitarian, more democratic or would she want to be pampered? The findings revealed that she would like exclusivity more than anything else.
On the other, research also indicated that the company’s existing customers base of traditionalists – those who liked the Taj because it was understated yet classy – was shrinking. Something had to done to keep up the growth graph.
The Taj marked out three separate entities for the Taj Group: Business, Leisure and Luxury.
Though the concept of these sub-brands had come into existence earlier, in the mid nineties, it was in 1999-2000, that the hotels became operationally different. Which meant that though the heads of these three divisions sat at head office, their ‘territory’ is scattered geographically, according to which type of hotel they look after.
A higher emphasis was placed on the business segment as the profits are higher (this market being less price-sensitive) as compared to the luxury segment). There was a proliferation of the Taj Presidency hotels not only in new cities, but also smaller towns.
The group also kept looking at new opportunities. ‘The action plan is more opportunities, adding to and complementing the brand,’ says Krishnakumar.
There were other changes. Consolidation. Unprofitable ventures were hived of. The sales and marketing functions were separated. The HRD department modernized, with an emphasis on performance and career and succession planning. The organisation was made to flatter and more compact. Moreover, a continual benchmarking against international standards was made part and parcel of the culture of the Taj.
By the mid 1990’s, renovation was in full swing. Units across the country were refurbished. It meant ripping out entire floors. Rooms were revamped, business centres rebuilt. More than a hundred million dollars were reportedly spend for renovation – just in the lifestyle (luxury segment)! Since the business segment was slated to be become big (and those using it were likely to be non-traditionalists), the Taj went ostentatious with it’s new business floors. It meant putting in optic fiber cabling, remote control systems and giving the business guy a lounge where he could relax and even have breakfast. It included a min-business centre.
In the process, some mistakes did happen. For instance it was thought a mini-gym on the floor would be a convenience. But this had to be dropped after a few years due to disuse. Initially, fax machines ere installed in the room. They had to go with the advent of the internet and laptops. Other innovations have happened too. It was found that telephone usage was dropping because of the advent of mobile phones. Not only were mobiles provided on hire, the Taj also dropped communication charges by 33 per cent.
It was only when the product was ready, was a major advertising campaign developed. Earlier, advertising had been restricted to the major feeder markets: the US, UK, Germany, Singapore and Hong Kong. And the advertising emphasised the hardware aspect of the hotel. The new campaign developed a specific brand identity for the hotel.
Though the Taj had high unaided recall, it launched a corporate campaign to reinforce this new identity. The ad (made by Rediffusion) shows the enigmatic woman who stands for both hospitality and efficiency. The identity was developed after extensive research on the consumer’s attitudes towards the Taj. Over 60 in-depth interviews were conducted by client and agency. The parameters? Not quantity, but quality. The things done right. The quality of check-in, the smile, the greeting or the welcome drink.
The insights gathered were analysed and a clear slot, which the Taj could occupy when global competition arrived, emerged. This was translated into creating a distinct personality of the Taj as caring, efficient and enigmatic. The line went: ‘She is the Taj,’ The base line was ‘Nobody cares as much.’
Other hotels’ room occupancies plunged to as low as 37 % during the recession and average room occupany rates across all hotels were approximately 50 per cent. The Taj maintained a far higher average and continued to grow and expand. Slowly the hotel became more profitable than it had ever been. The reason is clear. It never slept.
(This article was published in the Advertising and Marketing (A&M) Magazine under the title: The Crown’s Subjects. The photograph is taken by me and copyrighted)
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