The notion may seem outlandish today, but for decades after the Taj Mahal Palace Hotel was opened in 1903 in Mumbai by Jamsetji Nusserwanji Tata, the founder of the Group, its very existence was in question. The hotel was an architectural marvel, but many in the Tata family considered it a ‘white elephant’; some even called it “an old man’s hideously expensive folly.”
Although the hotel made handsome money during the two World Wars, the management struggled financially; two labour strikes in the early 1920s didn’t help either. Directors at Indian Hotels Company (IHCL), which ran the Taj, considered selling the hotel to London’s Ritz and, later, to a catering company from England. Worse, after the Second World War, there was a proposal to tear down the structure to build a new hotel.
JRD Tata, the founder’s nephew, who took over as Chairman of the Group in 1938, tried to turn things around. “It was comical the way Taj was run those days,” says Tata in
But even as a competitor – the Oberoi Group, founded by Rai Bahadur Mohan Singh Oberoi – was growing in stature in Delhi, the Taj got a lease of life in the form of Col. Leslie Sawhny. A professional soldier, he proved an equally efficient hotelier. He and his band of boys, including Ajit Kerkar, who later became Managing Director of IHCL, changed things around at the hotel – from the way it sourced fruits and vegetables to the interiors of the rooms, and from the menus in its restaurants to the new wing that opened in 1972. The Tower wing instantly found patronage in the affluent business community in the country’s financial capital.
Even Oberoi’s splendid new hotel in Mumbai, or ITC’s emergence, couldn’t impact Taj’s growth. By the early 1970s, IHCL’s turnover was over ₹2.5 crore, against ₹4 lakh in 1941. The ‘new’ Taj also commanded a premium, with its single-room tariff crossing the ₹100-a-night mark — without breakfast! IHCL had turned a page; its place in the hospitality industry was cemented.
“The Taj is an iconic hotel. And IHCL put Indian hospitality on the world map,” says Manav Thadani, Chairman, HVS Asia Pacific, a consultancy firm. Apart from pioneering almost every facet of the Indian hospitality industry — including introducing the Chinese cuisine through its Golden Dragon restaurant in 1974 — the Taj Group also helped develop the Indian tourism industry.
“A lot of credit goes to the company for making Rajasthan, Goa, Chennai and Kerala popular among foreign tourists,” adds Thadani. Through the 1970s, the Taj Group expanded its services beyond Mumbai, opening properties in Rajasthan — where it transformed two palaces into luxurious heritage hotels – Goa and even overseas, in Africa.
To fill these hotels, Kerkar began an aggressive sales push to attract international guests, and found an able Sales Manager in Camellia Panjabi. One of her initiatives saw the company publishing a magazine, the first for an Indian hotel, and mailing it to leading international travel writers. The company flew down about 80 international writers to India to market its properties. It is said that the Taj’s rivals persuaded Air India to withdraw its offer to fly the guests for free. Fortunately for the hotel company, the US airline Pan American agreed to give the complimentary tickets.
By the turn of the century, change was beckoning, both at the IHCL and the Indian hospitality industry. Ratan Tata, who had taken over as Chairman of Tata Sons in 1991, replaced Kerkar with Krishna Kumar in 1997. Under Kumar, and later with Raymond Bickson at the helm from 2003, IHCL embarked on an international expansion that saw it establishing its brands in New York, Boston, London and Cape Town.
Around the same time, India’s growing economy and improving perception among international travellers (the 3.9 million tourist arrivals in 2005 would grow to about 7.4 million in 2014) saw international hotel chains vying for a slice of the domestic hospitality industry. US multinational Marriott, for instance, has 32 hotels in India, and plans to add 35 more by 2020. Others such as Carlson have expansion plans.
“Taj has managed to remain the largest hotel chain in India, despite the inroads made by MNCs,” says Patu Keswani, founder of Lemon Tree Hotels and a former veteran at Taj hotels. “Taj is a phenomenal brand. But the challenge would be to maintain its position,” he adds. At present, the IHCL’s three brands have 100 hotels globally, including 82 in India. Its budget chain subsidiary Ginger has 34 properties across the country.
Debt: the unwelcome guestThe biggest challenge is the debt pile of ₹4,781 crore, as on March 31. The sale of its Boston property earlier this year signals a change in strategy. It now wants to become asset-light and pare down the debt. “Jamsetji gave us the rights to be the custodian of Indian hospitality. We don’t want to squander that away,” says Rakesh Sarna, Managing Director and CEO, Taj Hotels ( see Interview ).
For inspiration, Sarna, who took over from Bickson in 2014, wouldn’t have to look far. The corridors of the Taj Mahal Palace whisper dozens of intriguing stories. One of them is about how Jamsetji, denied entry at a European hotel, vowed to make one grander than all of them in Mumbai. And that resulted in the Taj, where princes were born, political treaties were written, and which stands gloriously on Mumbai’s shoreline, unscarred by the vile act of terrorists…
On Monday: Ashok Leyland