Kamat Hotels will focus on an asset-light model: V Kamat, CMD

Dr Vithal Kamat, Chairman and Managing Director, Kamat Hotels (India) Ltd, talks about occupancy, growth momentum, expansion plans, F&B Business and debt reduction plans among others during an interview with Swati Khandelwal, Zee Business.

See Zee Business Live TV Streaming Below:

Edited Excerpts:

Q: Summer vacation is around the corner and people are quite excited about it, people are saying that this demand in terms of occupancy. So, are you seeing such good momentum and strong summers this time?

A: Two years have passed in Corona, a time when people were supposed to stay at the home. Secondly, people did not get a chance to meet and exchange. Thirdly, the marriages turned into a small event. Accordingly, the atmosphere is good everywhere and people are willing to complete pending works. Along the same lines and at the same time, we have resorts in Jadhavgadh, Shimla and Odisha and these are the places where people are going. In fact, the occupancy has increased a lot. Similarly, demand for food and drink has also increased and we have restarted our Mid Night Buffet at Orchid and the response is fine.

Q: How will you define the year's summer season and do you feel that it will be better than the expectations? Also, is the occupancy levels are moving towards 100% and can you give us a bifurcation of demand in Leisure and Corporate travel and has the corporate travel crossed the pre-COVID levels?

A: It is nearing the pre-COVID levels but the ARR is not as high as it should be but will happen. The turnover is the same and none of the hotels runs at 100% occupancy but they run at 90-95%; your services get better with 5% less occupancy. There was an inactiveness among people and they were a bit disappointed but that disillusionment has gone. Everywhere whether it is a corporate hotel or a leisure hotel or a destination or marriage or convention or conferences are happening for the last one month at Orchid and other places in Jadhavgadh. We have also seen back-to-back three to four conferences in Shimla and we are getting good support in the same.

Q: Update us about your expansion plans and how will you cater for the growing demand? Also, name the geographies where opportunities for opening of new resorts are visible?

A: We have expertise in managing unmanageable hotels. The biggest thing is that we have dedicated and most importantly quiet people with us. As far as the functioning of the Hospitality industry is concerned, people should have faith in the industry and the guests should be welcomed with folded hands and we have such people with us. You will be happy to know that we have recently we have won the Best Place to Work in Maharashtra award for both years, which simply showcases the relationship we share with our staff members. At the same time, I would like to appreciate our staff for doing good work in the pre-COVID, during-COVID and after-COVID eras. Most important thing is that we still we are maintaining the same precautions in which we check people before allowing them into our properties. Along with precautions, we are also enhancing our hygiene standards. It seems that ARR will remain the same but occupancy levels will go up. Secondly, the F&B business is likely to go up because earlier people were not allowed to move out but it can happen now. There is an increase in marriages and domestic tourism. There is a huge scope in domestic tourism. We took three hotels during the COVID and have started one in Lonavala and two in Himachal Pradesh. In fact, the Governor of Himachal Pradesh has inaugurated the Kamat Hotel Restaurant last week. So, all these activities are going on. In the case of properties that will come for management, we want to function on an asset-light model because few people were not able to handle it, secondly, staffers of someone have gone but we have dedicated staff for so many years. Our brand is 80-year-old, which resonates with the brand loyalty of people and we are moving ahead with the same loyalty.

Q: Food and Beverages (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 revenue do you get from it and how it will increase shortly? Also, what is your outlook on the margin of the company?

A: As far as F&B is concerned, its proportion stands between 30-35%. I have entered into this business from the F&B background due to which our, Kamat Hotels, the business stands at around 40% always. As you asked about the cost, the cost is about to increase but if you reduce your wastage and equal the proportion of your menu, i.e., if you make new things like cheese, paneer and rest of the things like vegetables, to ensure that your food cost remains under 30% then it will not affect your profit a lot and it may improve. Thirdly, at Kamat Hotels and Orchid, we prepare fresh food every 45 minutes, which helps us in reducing wastage and even the guest gets a chance to have fresh food. In fact, during the COVID, we have learnt the ways to reduce wastage further ensuring the happiness of the guests. As far as the future is concerned, I think that people are fed up with packaged food, home food and satellite kitchens because during the COVID, people who did something at the home didn't have any other option, which led to the creation of these satellite and cloud kitchens but I feel these things will reduce with time and people will go to places where professionalism is present. I think, the business will come back to its normal conditions in the future.

Q: You want to say that focus on cloud kitchens will reduce while other people in the F&B business are betting big on the cloud kitchen?

A: You are right but as you are talking to an experienced person then I would like to tell you something you, there are 500 schools in Mumbai but why only 30 schools are running well? If three things, Rules, Planning and Control, are good then only your cloud kitchen or restaurant can run well. We have kept the same standard for the last 80 years. What happens in the cloud kitchen is that these kitchens are created on the willpower of people but there is a need to have a look at its rules, packaging, food standard and most important is the food quality. Earlier, people didn't have an option or alternative, due to which the cloud kitchens were started to serve food accordingly. Now, cloud kitchens will be more and when anything turns more like photocopy was made at Rs 2 in Mumbai earlier, then it came down to Re 1 and then to 50 paise and now it is one free on one. So, the cloud kitchens that have maintained perfect standards will continue to run. There is a fever of cloud kitchens and those who will be good in this fever in terms of competition, quality, quantity and most importantly packaging will run. Because it is very important to get the food in the same shape, size and colour.

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? Also, around 92% of promoter shares are pledged. In September 2021 you said that we will finalize promoter pledging in some time. Till now there is no update

A: The asset-light model is the model for reducing debt. Earlier, we used to do it, which was also important, and it was that we were supposed to create a few hotels of our own. Generally, people come to us for the management of their hotels after having a look at these properties. We tell those people whose hotels are managed by us to go to our hotels in our absence and have a look at how do you feel there. If a person or two comes and we are ready then that is not management. Management is in your absence it should run as if you are present and we run it accordingly. So according to the management, many people come to us, recently, we took 3 hotels and will take more. Earlier, people used to build hotels for their happiness. Building a hotel is a science but running it is a religion and everyone cannot run that religion. Our debt will be reduced.

For more details, Watch Full Video Here:-