MARKETING SERVICE

IMB 373J Ramachandran and Seema Gupta prepared this case for class discussion. This case is not intended to serve as an endorsement, source of primary data, or to show effective or inefficient handling of decision or business processes.Copyright © 2012 by the Indian Institute of Management Bangalore. No part of the publication may be reproduced or transmitted in any form or by any means – electronic, mechanical, photocopying, recording, or otherwise (including internet) – without the permission of Indian Institute of Management Bangalore.J RAMACHANDRAN AND SEEMA GUPTATHE PARK HOTELS: DESIGNING EXPERIENCEJanuary 2010. Priya Paul, Chairperson of Apeejay Surrendra Park Hotels Ltd., the hospitality arm of the Apeejay Surrendra Group that had interests in tea, shipping, real estate, retail, and financial services, was relieved. The company had weathered the sharp downturn caused by the twin effects of the 26/11 Mumbai terror attacks and the global economic meltdown better than its competitors in the highly competitive hotel industry (Exhibit 1). More importantly, the company was on track to make a significant contribution to the Group’s vision of being India's largest and most profitable privately owned family business.Priya Paul, winner of a host of awards including the India Today Woman in Business:1 Zee Astitva Business Woman:2 Young Entrepreneur of the Year;3 and recognized by Forbes as one of India’s 100 most powerful business women for 2006, had pioneered the concept of boutique hotels in the country and carved out a strong niche for the company. Her plans to grow The Park Hotels network (Exhibit 2) to 20 properties by 2020 with presence in ten major markets, five upcoming markets and five unique tourist destinations would radically redefine the traditional contours of boutique hotels. Historically, boutique hotels came into being as a response to the emergence of large hotel chains. They were typically small hotels that sought to differentiate themselves from large “full service” hotels by virtue of their unique design and highly intimate and personalized service. Sometimes referred to as "design hotels" or "lifestyle hotels", most were standalone properties as often, these hotels, were converted older properties resurrected by designers, combining the charm and character of an old building with modern design. Priya Paul asserted:The Park is neither a cookie cutter hotel nor a chain, but a collection of hotels. Each of the hotels in the group has it its own distinctive character, but shares a common spirit and standards of excellence. If you notice, our logo (Exhibit 3) has a blue base that is common across all properties – it shows that there is a certain look and feel about being in a Park hotel. But, it does not mean that everything is identical! And that is captured in the unique thread scheme for the individual properties reflecting the location of the hotel.Even as she executed her 20–20 plan, Priya Paul was aware of both the strategic and organizational challenges that lay ahead. The growing Indian economy was attracting large-scale entry from international majors with some of them planning to enter the boutique hotel segment. Their entry, coupled with the growth plans of incumbent hotel chains, both domestic majors such as The Taj, Oberoi, and ITC Welcomgroup and global majors such as Hyatt, Starwood Hotels, and JW Marriott would change the competitive landscape (Exhibit 4), and make the task of defending the niche she had so painstakingly built challenging. Further, as The Park expanded its “collection” of hotels, the task of maintaining the individual identity of the various properties while enhancing their operational efficiency through greater sharing of resources and coordination could prove to be particularly arduous. She said:The whole industry is in a flux right now in terms of positioning, niche, and where you belong. It is getting more and more crowded. Our strategy has worked well so far. Today, we are known internationally. We have built a strong niche with our boutique hotels. To maintain it, we will need to raise the bar and go to the next level. We need to grow, acquire good assets and find suitable people to manage the properties. We need to make our products even more interesting and the customer experience far more individual and innovative.1The award was given by the media group India Today in 2010 for her contribution in business.2 The award was given by the media group Zee jointly with the Mumbai-based Archana Trust in honor of Indian women achievers across various fields who have made significant contributions to the growth of society. 3The Federation of Hotels and Restaurants Association of India conferred the award for the year 1999–2000.TAKING CHARGEThe Park Hotels came into being in 1967 when the Apeejay Surrendra Group converted its surplus real estate on the fashionable Park Street in downtown Kolkata into a hotel. It was an instant success as it quickly emerged as the hotspot for Kolkata’s elite. The Group launched its second hotel, a beachfront property, in the then upcoming city of Vizag, in the southern State of Andhra Pradesh in 1968. The third property came up in downtown Delhi, almost two decades later, after Priya Paul’s father, Surrendra Paul, renewed the group’s interest in the hotel industry. Priya Paul recalled:In 1986, my father decided to move the family to Delhi as The Park New Delhi that was underconstruction was behind schedule. We all got involved. I would work here during every break.Soon after I completed my undergraduate studies in Economics from Wellesley, I joined full time.Initially I was keen to work in Wall Street, but the October 1987 crash ruled that out. I thenwanted to travel for three months in South America. When I told my father of my plans, he said‘‘Nothing doing. Tomorrow is your first day of work!’’ And that was July 1,, 1988.Priya Paul began as Marketing Manager of The Park New Delhi, but soon assumed the responsibility for the property as its acting General Manager. Priya Paul said:My father was a great teacher. He had very high standards; he wanted me to be the perfect GeneralManager! Initially he came in every morning and evening for an hour to guide me. Over the courseof a year, he gradually weaned me off and came in only once a week.With Priya Paul in charge of the Delhi hotel, Surrendra Paul turned his attention to the other two hotels in the group. Growing competition, difficult relationship with unionized staff, and years of benign neglect – The Park Kolkata was, for example, decrepit in comparison to newer hotels such as the Tata Group’s Taj Bengal, which had resulted in a decline in the performance of these hotels. He set about rejuvenating the group’s hotel business. His plans included renovation of the two properties as well as restructuring of the organization (until then, each of the properties operated independently). Tragically, before he could execute his plans, Surrendra Paul lost his life in a terrorist attack. The responsibility of leading the hotel division fell on the shoulders of the 23-year-old Priya Paul. She said:The first two years were really, really stressful. Even as I was coping with my grief, I foundmyself having to suddenly manage all the three hotels. There were lots of challenges: growingcompetition, militant employee unions, poor quality of service, dated systems, etc. All through1990–1991, I was learning what was happening in each hotel, putting systems into place, findingthe right people, and putting a team together. The idea was to bring the company together andfunction cohesively as one group.A NEW VISIONAmong the first people Priya Paul recruited was Vijay Dewan, the Managing Director, The Park. A graduate of the Oberoi School of Hotel Management, Dewan had just returned after serving as the General Manager of the Oberoi Hotel in Iraq. Vijay Dewan said:Right from the beginning, we were clear about the direction we had to take. The idea of a boutiquehotel was there right then, but we had to sort out a lot of operational matters. We were tough withthe unions. Today, there is no employee union at The Park. We also spent a lot of time onreorganizing the structure and practices and in building the team. We looked into all our differentactivities and began outsourcing many of them. We reviewed and benchmarked every one of ourprocesses to find out ways in which we could create a differentiation. For example, we noticed thata lot of hotels put in a lot of effort and expertise in guest arrival experiences but not much wentinto creating a departure experience for customers. We saw an opportunity to differentiateourselves on providing our customers with great departure experiences. For instance, we gift anarticle that resonates with the likings of the guest – chocolates for the chocoholic, traditionalBankura horse for those interested in arts, etc. The lobby manager provides a goodbye experience(similar to that experienced on staying at a friend’s house) by waving to the guest till the carleaves the premises. Our effort was and continues to be to differentiate and win on our service.Even as the team focused on enhancing the quality of service, Priya Paul realized that The Park would need to differentiate its product. The renovation of The Park Kolkata that her father had initiated provided her with an opportunity to test her ideas. She said:I used the new Chinese restaurant, Zen that was coming up at The Park Kolkata to demonstrate anew design or a vision for the team. I found the design that had been developed – we were thenworking with a senior Bombay designer who my father had worked with before – to be verytraditional and staid with red and green dragons and all that. I said let’s do something modern andcontemporary, something different from everyone else. We came up with a radical look in blackand white and went with that. We didn’t go out there in Kolkata and ask people what they wantedbut created products that I felt I would enjoy and hopefully others too.The restaurant opened at the end of 1992 and met with rave reviews. Its success prompted further experimentation. The bar at The Park Kolkata was next. When it opened on August 19, 1994, it was different from all other bars in the city. Branded Someplace Else, the bar, hosted live bands. It too proved to be a big hit. Priya Paul explained: Our timing was great. Soon after the liberalization of the economy in 1991, there were suddenly alot of Indians who had made a lot of cash and wanted to spend it and there was nowhere to do that.There were hardly any clubs or bars that were fun places. Most hotels were these bastions offormality with waiters with gloved hands, etc. So when we opened our clubs and restaurants inKolkata, apart from the fact that they were very refreshing looking and the serving style was muchmore informal – our waiters wore colored uniforms and not those white and black things that weretypical of those days – they became an entertainment venue. Someplace Else became a hotspot; aplace where you could go and spend some time and relax and be seen.The success of both Zen and Someplace Else, prompted Priya Paul to formally articulate a new vision for The Park: Leadership through Differentiation (Exhibit 5). Priya Paul said:Our challenge was to survive and grow in a market place that had big chains like The Taj Group,The Oberoi Group, and the international chains. We could do that only by being different, bybeing more creative than them and by creating a new paradigm in terms of product and service.But, we needed to get a buy in from our people before we could sell the concept of differentiationto our customers. I made presentations to senior management on how The Park is a design hotelwith superior service and what it meant to be a boutique hotel company.PIONEERING A NEW PARADIGMThe acquisition of two properties in quick succession in Bangalore and Chennai provided Priya Paul with an opportunity to create a new paradigm on the lines of what Ian Schrager4 had done in New York. Priya Paul said: While I was in college, I was watching what Ian Schrager had done in New York; I had evenstayed in two of his boutique hotels and had realized that hotels can be quite different. So when Iwanted to figure out what our identity was, how we make ourselves seen and heard against thecrowd, I felt that we could create a niche for ourselves by positioning ourselves as a boutiquehotel. The buying of the Bangalore property was a defining moment. It was small enough to becompletely transformed and launched as a proper boutique design hotel.4 Ian Schrager, co-founder of the famous nightclubs Studio 54 and Palladium in New York City, pioneered the concept of boutique hotels when he launched Morgans Hotel, a refurbished property, in 1984 in New York City’s Madison Avenue. Several other hotels – the Royalton (1988), the Paramount (1990), and the Hudson (2000) in New York, the Delano (1995) in Miami, the Mondrian (1997) in Los Angeles, and the St. Martins Lane (1999), and the Sanderson (2000) in London followed. In 2005, Schrager left the Morgans Hotel Group to create the Gramercy Park Hotel in New York, in collaboration with artist Julian Schnabel, and two residential projects: 50 Gramercy North, in collaboration with British architect John Pawson and 40 Bond Street in partnership with Swiss architects with Herzog & de Meuron. In 2007, Schrager signed a deal with Marriott International to design about 100 boutique hotels, to be owned by individual investors and operated by Marriott, in major cities across the Americas, Europe, and Asia. The first two properties branded ‘‘Edition’’ were to be operational by the end of 2010. (Source: Author research)While the centrally located Bangalore property was small enough, its transformation was not easy. Deepak Bali, Vice President, Engineering & Projects explained:What we had acquired was a three star property, which meant it was built differently – the rooms,the restaurants, the banquets, and the kitchens were all built small. To convert that into a five starproperty was a challenge.The company hired the UK firm Conran & Partners to design the hotel. Priya Paul said:Until then, we had worked with local design firms and it was clear to me that there was a limit tohow far Indian firms could take the design. I felt an international company would be able tointerpret India in a more contemporary manner than anybody else.The new hotel, The Park Bangalore, opened in the year 2000 to rave reviews. The hotel’s design was a fusion of vibrant colors and landscapes; the first floor was designed to give a feel of cool expanse of sea, the second floor suggested a mountain landscape, the third the look of a jungle and, the fourth floor sported the feel of an oasis in a desert. The unique imagery won it a place among the Tatler magazine’s 101 best hotels in the world. The Park Bangalore’s lounge bar, the I-Bar, with its low furniture, bean bags, and neon colors was described by a leading Bangalore daily as one of the hippest hangout places in the city. Its Italian restaurant, Italia, quickly gained popularity among the discerning foodies of Bangalore and won a host of awards including the Best Italian Restaurant award from The Times Food Guide, the Best International Restaurant, and the Restaurant of the Year awards from the Taste & Travel Food Lovers Food Guide.If The Park Bangalore showcased contemporary India, The Park Chennai, built on the premises of the historic Gemini film studios5 and designed by the American firm, Hirsch Bedner Associates captured the fantasy world of films. While the lobby with its stage-like setting evoked the look of a theatre (Exhibit 6), old movies projected during the evenings on a floating screen located in the atrium and the carpets in the corridors that looked similar to film reels reminded one of the magic of movies. Reviewing The Park Chennai, soon after its launch, the industry magazine Hospitality World commented:It is difficult not to get away from the metaphor of film nostalgia while sampling the manydifferent aspects of The Park. On the 8th floor for instance, floating up over the rest of the stillmodest Chennai landscape is a setting worthy of Lawrence of Arabia. There are blue and whitestriped tents and sunshades that hover over white cushioned deck chairs that border a Californiastyle swimming pool. An op-art-like effect of black and white stripes dominates the floor of theadjoining coffee shop called Aqua, with blond wood furniture and a startling close up of a youngwoman clad in a blue and white thing stretches along one wall to add a surreal effect.The widespread acclaim the company received for the Bangalore and Chennai properties prompted it to build new boutique hotels in Navi Mumbai and Hyderabad. In designing the former, it sought to bring together “East and West and fusing technology with local crafts” and in the latter case, it drew inspiration from Hyderabad’s history of producing precious stones; the hotel’s façade, for example, references the fabled jewelry collection of the Nizam of Hyderabad.Even as she pioneered the concept of boutique hotels in the country, Priya Paul was clear that her notion of boutique hotels differed from the Western models. She said:I don’t believe in design for design sake. Both design and function need to work together.Customers want both good design and good service, especially Indian customers. They don’t likethe western concept of plug and play. They would like us to guide them to get plugged. And whynot? I believe we are in the business of indulging people. That’s why I never put weighing scalesin any of my rooms. I believe in people having fun, enjoying the night life, hanging out in the bar,eating in our restaurants. The last thing I think customers should do is discover that they are 5kilos overweight the next morning on the weighing scale!5 Gemini studio was one of the earliest and most influential film producing studios of India. The Gemini emblem of two small boys with bugles adorned many classic movies made between 1940s and 1960s.INDULGING CUSTOMERSIn addition to building new properties, the company, renovated its older properties in Delhi, Vizag, and Kolkata. The Park Delhi got a complete facelift. Its new design was inspired by the five elements of nature (water, fire, air, earth, and space) from the Hindu science of Vaastu Shastra. The Park Kolkata focused on further enhancing its reputation as a fun and happening place. A street café called ‘‘The Street’’, created a vibrant atmosphere right at the entrance.A new cocktail bar Roxy, its retro look a tribute to the swinging ‘60s, offered customers a wide variety of cocktails and an enviable choice of cigars. Spread over two split levels, the night club Tantra with its pulsating dance floor and a lounge area called the Santra Room, provided its typically young customers a choice of two bars. While Aqua, a fashionable new bar, indulged the young and trendy with a “Miami”-like poolside experience – the open deck, used for sunbathing by the day, became a stage for night time revelry, Someplace Else continued to offer customers its signature live band experience. Vijay Dewan said:The traditional notion of hotels was one where people came to sleep when they were travelling onbusiness. We asked ourselves “Can we be more? Can people socialize in hotels, can people cometo party in hotels, and can people come to entertain or get entertained in hotels?” That is when thesecond part of our mission came in, we would take customer experience to be the purpose of ourevery action we take and every job we do. Our 1995 vision and mission statement focused oncustomer satisfaction. In the early part of 2000, we revised it to focus on creation of experiences.Thereafter began our huge emphasis on entertainment, in creating a spa experience, in creating aluxury experience; you may come for business, but you can also relax and get entertained. For us,entertainment is a key differentiator.The company also offered its customers a wide variety of culinary experiences through its exciting range of award-winning restaurants. Priya Paul said:I am a foodie and I enjoy discovering new cuisines. So, I am willing to be a lot more adventurous.Sometimes they don’t work like the Spanish restaurant that we opened in The Park Delhi. It wastoo avant garde and had to be closed down despite excellent reviews for its authenticity. When wedid Fire, our Pan Indian restaurant in Delhi, I asked all the chefs, some 10–12 of them, who werefrom different parts of the country to make the best dish from their respective homes, whether itwas their own recipe or their grandmother’s. Every one of them came back with great pride withwhat was the best from their home. We had a wonderful time – tasting them all and choosing whatwas to be included in the menu. Our challenge was to make the traditional Indian dishes in a waythat they can be included in a restaurant menu. Take Haleem. Most restaurants won’t serve such alabor-intensive item. But we do, at Fire. It has been such a run-away success that we can’t take itoff the menu. Our customers would protest! Our effort is to make items that are usually not onrestaurant menus, and offer them along with staple dishes on any menu like Dal Makhani.Aditya Gemini, Executive Sous Chef, The Park Delhi added:Food is not only to fill the stomach; it is also to evoke emotions. There should be at least onehighlight of the meal that the guest will never forget. Cooking is not a task, but an art form – letthe passion reflect on the plate. It is not the chef but the food one makes that is the star. Every dishirrespective of its position on the menu or its price tag needs to get equal love from the chef.According to Vijay Dewan, what made the customers experience memorable, in addition to the company’s distinctive products, was the quality of its service. He said:Our style is different. It is what Priya calls “white-gloved service without the white gloves”. Thedifference can be in small things like say how we present our people to you – all our staff are inuniforms designed by designers like Rohit Bal or Suneet Verma or Raghavendra Rathore or KiranUttam Ghosh – or in how they interact with you. Our people know it. We actively encourage themto express their individuality in their interactions with customers because we believe it is criticalfor our success.EMPOWERING PEOPLEIn 2007, The Park received the international ‘‘Gallup Great Workplace Award’’ for extraordinary employee engagement. The Park was the only winner from India, other winners included reputed brands such as Starbucks, Wells Fargo, and Marriott; the award was given to firms in which The Gallup Organization, USA, a premier research-based management consulting firm, finds that the employees are 100% psychologically committed to their role; are thrilled by the challenges of work; are in the roles that uses their talent; know the scope of their job; and are always looking for newer and different ways of achieving the outcomes of their role. Priya Paul explained: We give our people responsibility far beyond their age. We encourage them to take decisions andback them if they falter.Namrata Ray, Manager – Events & Entertainment, The Park Kolkata, concurred. The 28-year old, who almost singlehandedly conceptualized the events to be organized at The Park Kolkata, made the calls on which popular or emerging talent was to be invited to perform at Someplace Else, what event to host at the Tantra, etc. said: The events cannot be planned too much in advance. I make last minute decisions on event genresand artists to tap into the popular culture at that time or to counter attack competition. I get totalfreedom.Further, The Park trained its people to look at things differently. It expected each of them to think of their property first and The Park Hotels next. Vijay Dewan explained:The General Manager of The Park Chennai thinks of The Park Chennai first and then The ParkHotels. That is because he has to create a differentiation in his product and service to becompetitive in his market. If he opts to practice something happening in another unit, then it isbecause he believes he can create a great success out of it and not because of a standard code. Ourbackend systems and processes are standardized, whether it is HR, Finance, or Purchase. Forinstance, if I have an incentive scheme in Calcutta, I will have the same incentive scheme in Delhialso and so on. But at the front end, we avoid too much standardization as our products, services,and experiences have to be differentiated.The Park was the first hotel in the Indian hospitality sector to embrace SAP for managing its human resources (HR). In addition to streamlining and standardizing administrative systems, SAP enabled the company to improve efficiency through better planning and superior MIS (Management Information System). Further, it engineered its technology and other associated systems to enable its people to excel, for example, a single point of contact system in which guests at The Park had to dial a single number for all their needs ranging from in-room dining to housekeeping, laundry, etc. This facilitated the team to provide a personal touch to the services they rendered to the customers. Guests often requested for a specific person to be assigned to their rooms who knew all their preferences. Sujata Guin, Area Director-Human Resources said:We encourage a ‘‘serve with a smile’’ attitude even when situations are challenging! Our focus inHR is on people engagement and alignment with the organization’s business strategy. Towardsthis, we invest heavily in our people. Learning and development is a huge focus for us. We sendour people to various national and international development programs at Cornell University,London Business School, Harvard University, etc. Our chefs are sponsored to attend meets andseminars in Europe. The Apeejay Institute of Hospitality, our hospitality training institute, helpsbuild future leaders through the Management Training Program. We also encourage sharing ofbest practices by organizing periodic get-togethers of work groups and competitions among them.Several awards like ‘‘U make the Difference’’ and ‘‘Monthly Best and Merit Employee awards’’recognize and appreciate outstanding performance.MARKETING THE EXPERIENCEThe differentiated product and service experience enabled The Park Hotels to compete against its much larger and perhaps better-known rivals. In markets such as Navi Mumbai, Kolkata, and Vizag, it had leadership positions (Exhibit 7).The Park reached out to corporations and airlines, the two large segments through direct sales force. Pramod Bhandari, Director Sales, explained:We sign contracts with large corporate houses by participating in RFPs (request for proposals).We win most of the RFPs we participate in. But, we do not get to participate in many RFPs as wedo not have a hotel in Mumbai and these organizations are looking at hotel chains with majormetro presence and at times a global presence. Among the airlines, we have a strong presence indomestic airlines segment, but with international airlines, we do take a setback at times as theylook for a global contract with a global chain like Hyatt. But even if the crew stays at the Hyatt,they party at the Park!Food and beverage accounted for nearly 38% of The Park’s revenues. Rupa Thomas, Director Public Relations & Corporate Communications said:Italia in Bangalore; Leather Bar in Chennai; Fire in Delhi; Tantra, Roxy, and Someplace Else inKolkata have a strong brand appeal in local markets. We attract customers to these spaces byhosting lot of events and promotions around art, fashion, music, and book launches. This keeps thebuzz going and has a rub-off on our room business also.Anirban Simlai, Executive Manager, The Park Kolkata added:We have built communities around these spaces on social networking sites like Facebook wheremembers join on their own volition. We post the upcoming event on the group page and sendinvites to the group members. Members can also express their opinion on what has been posted forthe group. Facebook thus provides a forum for immediate, honest, and interactive communication.The Park’s alliance with ‘‘Design Hotels’’, a consortium which marketed select 162 hotels across 42 countries through a global distribution system enabled it a fair share of foreign guests (Exhibit 8). A state-of-the-art revenue management system6 (RMS) provided the hotel front office staff with access to rich data that included the capacity (the inventory of service resources), cost (the price of the service), customer demand forecast (at any given time/date), competitive tariffs, hurdle rate for the day, etc. Sunitha Garcha, Associate Director, Front Office & Revenue Management, said:Based on the data, the lobby managers could charge differential rates, offer discounts up to 10% toprivileged customers.To improve its share of online sales (Exhibit 9), the company set up a web marketing department. The Internet was increasingly becoming an important source of bookings for the hotel industry (Exhibit 10). Bookings through brand websites7 (Exhibit 11) comprised a lion’s share of the bookings through Internet. To encourage embassies to hold their parties there, as well as encourage industry bodies such as CII, FI CCI, etc. to hold their conferences at The Park, the company had dedicated ‘‘Relationship Managers’’ to focus on the special needs and preferences of these 6 RMS is an algorithm which helped in setting reservation policy in a manner that maximizes revenues. It used past history and other statistical data to make continuously updated recommendations regarding the hotel booking patterns and the minimum price to be offered to the guest. It maximized revenues by driving business to higher paying or longer staying guests and by estimating the overbooking that the hotel could do based on the likely cancellations or no shows and the walk cost (the cost of turning the customer away) which depended on the customer’s future lifetime value.7 Website where distribution is operated and managed by the brand (e.g. /)。