Introduction:

The Ginger brand of hotels is the first-of-its-kind ‘Smart Basics’ Hotels

introduced by the Indian Hotels Company which is the hospitality arm of
the TATA group. The hotels are positioned in the budget segment and
brought about a revolution in the hospitality sector as there was lack of
clarity on the segmentation of hotels in India.

The concept was designed by well-known management guru, C.K Prahlad.

The idea was a sandbox model approach where he says that to create
an impossibly low-cost, high-quality business model, one should start by
cultivating constraints.

And that is what Ginger managed by Roots Corporation of India, the fully-
owned subsidiary of Indian Hotels Company implemented. With Smart
Basics, they tried to offer intelligent, well-thought out facilities and
services at a low cost of Rs999 for a single room per day.

And how does it manage to do so:

1. It does not have any bell boy – Help yourself philosophy.

2. No swimming pool, people hardly use these facilities hence cut down on
costs.

3. Self check in.

4. No multi-cuisine restaurant.

5. Vending machines for beverages and water

The first hotel was located at Whitefield in Bangalore.

These hotels have been conceived and designed by New Delhi based
design firm called Incubis Consultants (I) Private Limited, which has been
working on the concept since 2003 and is now handling the rollout of all
the new hotels.

The rooms are individually air-conditioned and provided with electronic

locks, comfortable beds, a work area, a 17-inch flat screen colour
television with satellite channels, direct-dial telephone including STD
facility, mini-fridge, tea or coffee maker, 24 hours hot and cold water and
toiletries.

Other guest facilities at Ginger hotels include a restaurant, meeting room,

gymnasium facilities, a cyber café, 24-hour reception, automatic check
in kiosk, digital safe deposit boxes, 100 per cent power backup, as well
as wi-fi connectivity in the public areas and individual rooms.

Opportunity seen by TATA’s

Industry analysts say that till 2004 there was a lack of clarity in the
segmentation of hotels in India because all five-star hotels were
considered as luxury hotels and everything else as budget. But hoteliers
in India are catching up fast with the global segmentation of luxury, mid-
scale, budget and economy hotels.
50 lakh tourists last year criss-crossed the country

70 lakh outbound traffic

India is investing some $6.2 billion in new hotel properties.

By 2010, it is expected that the number of hotel rooms will increase from
110,000 to 260,000

Target audience

Ginger is targeting either smaller business centres like Tirupur or

Durgapur or tourist destinations that attract visitors round the year. That
is also why it has a property at Nashik, Maharashtra — given its proximity
to popular pilgrimage Shirdi — but not Manali, which is deserted in the
winter.

They cannot afford to look at places where we don’t clock 70 per cent
occupancies through the year. In fact, the Haridwar property, set up
earlier this year as an experiment, hasn’t been doing too well because the
flow of tourists has been unexpectedly seasonal. On the other hand, Goa
may bring in good returns since the state is beginning to see some serious
business traffic.

SWOT

Strengths

• Ginger provides competitive pricing

Ginger, which operates in the three-star category, prices its

rooms competitively — single rooms cost Rs 999, while a double
room won’t set you back by more than Rs 1,799, inclusive of taxes.
And the tariffs are the same whether you’re in Bangalore or
Bhubhaneshwar, and whether it’s January or June.

Ginger provides a simple and informal experience at its hotels, it

 has done away with room service, multi-cuisine restaurants,
swimming pool to keep costs down.

• Lean-mean staffing

Thanks to lower manpower costs, employee per room (EPR) ratio for
no-frill hotels in India is the highest anywhere in the world. While
globally budget or no frill hotels maintain an ERP ratio of 0.5, it is as
high as 1.5 in India. However Ginger sticks to global standards and
halves the number of employees usually at a 3-star hotel of 150-
175. Thus maintaining a EPR ratio of 0.5.

• Part of the TATA group

TATA has been a well-reputed and respected brand in the Indian

industry. People expect value and quality driven services from the
TATAs for all its various businesses. This perception gives it an edge
over the competitors.

• First-mover advantage

TATAs were the first to introduce the concept of an out-an-out

budget hotel presenting an ultra low-cost model with the basic
amenities and hygiene factors. It has tapped the market at the right
places where business was on the upswing and pilgrimage was
popular.

Weaknesses

• Concept of self-service is not very popular

Traditionally, Indian consumers are used to service at every price

segment and are not really comfortable with the do-it-yourself
hospitality model.

• Situated away from the railway stations and airports

The Ginger hotels are situated strategically close to the IT parks and
places of pilgrimage. They have been usually away from the railway
stations and airports and hence travelling is a problem. But recently
through the Rail Yatri Niwas hotels, it is adopting a strategy to
target the domestic travellers too by being close to railway stations
and airports.

• Lack of awareness
 The Ginger hotels spend only 7-10% on promotion and hence
awareness about the hotels is less to a certain degree.

• Poor Support Infrastructure

Indian Tier2 and Tier3 cities which are the main targets of Ginger
Hotels are not well developed in terms of road and railways and
hence the support infrastructure is on the lower side.

Opportunities

• Changing demographics of India

The Indian middle aged group is growing every year and hence the
percapita income of India is rising. This leads to higher spending
power for Indians and hence more travel for leisure and business
purposes.

• Increasing internet penetration leading to reduced distribution costs

The internet reach is increasing day-by-day even in the remote

towns and villages. Since Ginger allows online booking of hotel
rooms, it saves costs on commissions given to agents.

• Tie-ups with corporate houses

More and more corporate houses are doing away with their guest-
houses and roping in budget hotels that provide the company
employees with affordable accommodation.

• Rapidly growing economy of India

The Indian economy has been growing at a very fast pace in the last
4-5 years. Industrialization in the form of SEZs and frequent travel
due to low-cost airlines is providing umpteen opportunities for
growth in the hotel industry.

• CommonWealth games in Delhi 2010

According to official estimates, two million foreign tourists and 3.5

million domestic tourists are likely to arrive in Delhi in 2010 as a
result of the Games.[14] To prepare for this influx, the government
is providing tax incentives for hotel rooms to be constructed in
India, with a focus on tourist regions of Agra & Jaipur. Additionally,
the government has extended a five-year tax rebate to the
tourism industry to promote growth
 As per government estimates, the number of hotel rooms required
in the national capital region (NCR) for the Commonwealth Games
2010 is about 40,000. Currently the room supply by branded hotels
in five star, mid -market and no frills categories in the region is just
7,000-8,000. Analysts believe that even if you add non-branded
hotels in areas like Paharganj it takes up the total room count in
NCR to no more than 15,000. And even if you add another 5,000-
6,000 additional branded rooms that are expected to be built before
the Games, that still leaves NCR with a shortfall of around 20,000
rooms

Threats

• Skyrocketing land and construction prices

The real estate prices have risen dramatically in the last couple of
years and hence made it extremely difficult to build a Greenfield
project that was Ginger’s initial strategy. Instead it has changed its
policy by getting into management/lease contracts, setting up
rooms atop malls and in PPP for e.g Indian railways.

• New entrants

Ever since Ginger setup in May 2004, several competitors have

explored the budget hotel space like LemonTree Hotels with its Red
Fox Hotels brand, Sarovar hotels with its ‘Hometels’ brand, Accor
International with the “Ibis” brand and many more.

Segmentation

Middle income group, business travellers, cost-conscious

leisure seekers.

Geographic:

Predominantly Tier-II and Tier III cities

Demographic:

Value for money income groups

Targeting

Business

Corporates
 Individual business travellers

Pleasure/Leisure:

Price conscious middle income travellers

Tourist

Pilgrims

Positioning

• Positioned as ‘the luxury of simplicity’

• Value for money, clean neat accommodation at reasonable
prices
• Less-frills hotels, informal experience hotel
• Recently started positioning the ‘smart basics’ concept as a
replacement for guest houses and service apartments

4Ps of marketing

Product

Budget hotels

Price

1000-1300 for single room

1800-2300 for double room

Place

Tier II and Tier III cities, close to IT parks, places of pilgrimage, atop
malls, near SEZs

Promotion

Journey from 2004-2008

The first hotel was setup at Whitefield in Bangalore. Currently it has 14

hotels in various cities of India like Goa, Haridwar, Mysore, Agartala,
Puducherry, Durgapur, Pantnagar, Bhubaneshwar, Vadodara, Nashik,
Pune, Thiruvavanathapuram, Bangalore, New Delhi.

Initially all rooms in all hotels were priced at 999 for single room and at
1199 for a double room. However rising real estate prices have forced
Ginger Hotels to price their rooms differently based on the location. Hence
Bangalore being a Tier-1 city has a rate of 1699 for single room whereas
Tier2 and Tier3 cities still have 999. Some business hubs like Nashik and
Vadodara also have 1299 as the charge for a single room.

• Public-private partnership

The Indian Hotels Co Ltd has started to tap a new segment of budget
travellers with its lineup of hotels close to railway stations, as rising
middle-class incomes encourage more domestic travel.

Indian Hotels, which runs the luxury chain of Taj hotels and resorts and
budget chain Ginger, had won a 15-year lease in January 2007 for the
first of Indian Railways' low-priced guest houses given over to a private
company.

The centrally located Ginger Rail Yatri Niwas (travellers' guest house),
which was taken over by Indian Hotels in January 2007, has been
renovated at a cost of 105 million ($2.4 million) in 14 months. The
hotel opened in June 2008 and will now be run and managed under the
Ginger Hotel brand.

Also, to further the public private partnership under which it got a

contract for the Rail Yatri Niwas in Delhi, Ginger would also look into
converting the state tourism board properties under its own brand in
states like Andhra Pradesh, Karnataka and Orissa.

• Cafe-Coffee day outlets

In May 2007, Ginger hotels announce a partnership with Cafe Coffee

day to have Café Coffee Day outlets within its properties to provide an
enhanced fresh experience to its guests. At Ginger, they have always
strived to enrich guest experience. Their association with Café Coffee
Day is one such initiative. The partnership is based on the profit-
sharing basis. From May, the Ginger hotel in Bangalore will feature a
Coffee Day outlet. This will be accessible not just to the hotel guests,
but outsiders as well.

• Multi cuisine restaurants and Book stores

With the launch of tenth Ginger property in Puducherry, Ginger has tied
up with Landmark bookstore and the Harbour Market by Mohanlal's
Taste Buds Restaurant for its multi-cuisine restaurant specialising in
coastal flavours.

• Hotels atop malls

Ginger Hotels has tied up with Aerens for a mall in Ludhiana and with
Ansal API for their malls across India
 Ginger is looking at ways to get around buying or leasing expensive
property. For instance, it has decided to set up a hotel on the fourth
and fifth floors of a mall in Ludhiana. While Ginger saves on real estate
costs, the owners of the mall are able to use the space more efficiently.

Also, being located in a mall, Ginger needs to focus even less on food
since the mall would most certainly have a food court.

Suggestions for overcoming challenges being faced by TATAs

• Differential pricing according to location.

Ginger in the past has maintained a fixed price of Rs 999 for a single
room. Due to rising real estate prices, it has incurred increased
input costs in terms of land cost and construction costs. Ginger can
introduce higher prices for Tier-1 cities and keep Tier2 and Tier3 city
rates at lower levels since real estate prices are much lower there. It
has recently started using this policy.

• Extra charges for peripheral services

The main strategy has always been to provide the basic facilities
keeping basic facilities, hygiene and safety in mind. Ginger can
probably provide premium services such as spas, multi-cuisine
restaurants, wi-fi services etc to non-business guests and charge
over and above the basic fare.

• Discount on internet booking

Providing certain discounts on internet booking as compared to

booking rooms with travel agents or online travel websites can save
on commission costs that Ginger has to shell out to agents.

• Attractive schemes on travel websites

Ginger in cooperation with travel websites like cleartrip.com,

yatra.com etc can provide for discounts/incentives to travellers
during booking of rooms. These discounts can be monetary or fuel
vouchers.

• Spends on Promotion and awareness

Ginger currently spends about 7% on promotion and advertisement.

The visibility of the brand is yet to catch up fully with the target
audience. It needs more events like promoting PHL etc to leverage
upon the TATA brand name.

• Leverage on Tata brand name:

 The legacy of the tata brand name has not been fully leveraged by
Ginger. People still do not know that Ginger belongs to Tata’s. With
more promotion and awareness, the visibility of the brand will
increase and directly affect the choice of the targeted segment, i.e.,
business houses, foreign travellers

• Tie up with local guides, bus drivers:

CSR:

Smart Planet — an eco initiative

The steps include:

Energy conservation

Use of Compact fluorescent lights (CFL)

The key tag energy saver system helps conserve energy in

rooms when the guest is away.

Natural lighting is well utilised.

Auto time management for air-conditioning and ventilation

fans also play a significant role when it comes to conserving energy.

Hydro-pneumatic system for water supply ensures adequate

pressure levels and reduces load on pumps.

Double glazed vacuum-sealed windows help

conserve energy by preventing loss of air conditioning and reduces

absorption of external heat.

Thermal insulation reduces the rate of heat transfer and

increases room comfort while conserving energy.

Gas-fired water boiler increases the efficiency and reduces the

emission of green-house gases.

Water conservation

Aerators/flow restrictors save water by maintaining the water

force and reducing the outflow.

Rain water harvesting helps protect and replenish the water

table.

Auto flush for public urinals minimise water wastage in the hotel.
 Ground water recharging systems in all our hotels maintains the
ecology of the local geography.

Waste management

Sewage treatment helps process waste and treated water is let

into the city drainage systems, thus reducing pollution.

Noise pollution management

Double glazed vacuum sealed windows block street noise more

efficiently than traditional windows. They help maintain external
noise level below 50 decibels, which in turn reduces noise pollution.

Noiseless diesel generators are acoustically insulated. These

generators dampen the sound to minimal level.

Roots Corporation Limited

Ginger Corporate Office

Vikhroli (E)

Mumbai.

Vision
Ginger is a fresh and warm experience, of an unsurpassed value.

Mission
We provide smart, clean and safe hospitality offerings by adopting
next-practices that constantly enhance value for our patrons.

We are driven by respect for people and nature and passion for our
stakeholders.

Values

Customer-driven excellence: We anticipate expectations and delight

our patrons with convenient and modern facilities at an unsurpassed
value

Entrepreneurship: We strive to take ownership of the tasks we

perform and to create an environment that encourages and
supports initiative and appropriate risk-taking
Innovation: We believe that making meaningful changes to improve
products, services and processes to create value for all stakeholders
is an integral part of the daily work of the organisation

Valuing employees, partners and communities: We believe in

nurturing and developing internal and external partnerships,
balancing the growth of the core business while preserving natural
resources and contributing to society

Speed and agility: We deliver on promises with a sense of urgency

and short response time

Fun, joy and zing: We believe that a happy employee leads to a

delighted guest

Plan:

50 properties by 2011

Ginger Hotels Location(14)

Agartala

Bangalore

Bhubaneshwar

Durgapur

Haridwar

Mysore

Nashik

New Delhi (Rail Yatri Niwas)

Pantnagarnagar

Puducherry

Pune

Goa

Thiruvananthapuram

Vadodara

Features:
Self check-in

Water dispenser

Smart Space rooms

Conference room Meeting Room 8-10 people

Wi-fi and net zone

Gymnasium

Safe zone- electronic safes in every room

Give and Take laundry Services. Give before 9.30 am at the counter
and get clothes laundered before 7.30pm

100% power backup

Single room, twin room for 2, Double room, Special PH room

Tea/Coffee maker

STD local dialing

17” Flat TV

Difference vis-à-vis other hotels:

Dial food and take it from the counter – No room Service

No bell boys and hence No one to tip

Water filling on own – No room service

Get hot/cold beverages even when the restaurant is closed,

dispensing machines

No multi-cuisine restaurant

Safety:

CCTV cameras 24 hours

Swipe card lock

Digital ‘Safes’

Cancellation Charges:

24 to 48 hours prior to arrival: 50 per cent of the room tariff per

reserved room
Less than 24 hours prior to arrival: Room tariff for one night per
reserved room

Rescheduling possible subject to availability

Profitability:

At 50% occupancy, Ginger is profitable (analysts)

Smart Basics Concept

Smart Basics™ is much more than a catchy phrase. It is a

philosophy of providing intelligent, thought-out facilities and
services at a ‘value’ pricing. Smart Basics™ reflects the new spirit in
which people live and work today. The emerging lifestyle which is
visible in the degree to which individuals have taken control of their
various activities viz. the use of email instead of letters as also the
use of mobile phones, conference calls and video conferences to get
things done quickly and efficiently.

Essentially, Smart Basics™ signifies simplicity, convenience,

informality, style, warmth, modernity and affordability.

Simplicity and convenience in ease of doing business (awareness,

booking channels, payment gateways); informality, style, warmth
and modernity in its approach to product design, service philosophy
and affordability in pricing.

Ginger Specials:

Theme rooms: Art works by famous artists at no extra cost of

staying

Smart rates: Discount for early confirmed bookings

More options with square meal

CCD 24*7: Bangalore, Mysore and Thiruvananthapuram