Kamat Hotels India Limited (KHIL) plans to expand its four-star luxury business brand of hotel chain, VITS, through franchise route in India. VITS will enter into franchise agreement with independent hoteliers to revive and grow their existing units and simultaneously help the standalone hoteliers to earn a higher return on investments (ROI). For its new business model the company will initially focus on Mumbai, Gujarat and Goa and start six hotels in the next one year through franchise. These hotels will be a mix of existing and newly opened properties.
Vikram Kamat, Executive Director, KHIL said, “KHIL has owned and managed properties for years. Of the seven VITS hotels operational in India; Delhi, Bhubaneswar and Aurangabad are managed whereas properties in Mumbai, Pune, Nashik and Nagpur are owned and managed by us. Besides owning and managing our family restaurant brand, Vithal Kamats, we have rolled out franchise mode for our restaurants and hence want to follow the same for our VITS properties. With KHIL having its presence in Maharashtra, Gujarat and Goa with 28 units (including hotels and restaurants), we want to focus on these three locations in the first year.”
Speaking about the new business model, Vikram Kamat said, “Unlike the regular franchise agreements, we don't charge fixed royalty on the turnover. In our case, a monthly commission on the number of rooms has to be paid by the franchisee. We shall provide the training to the staff, general manager along with the franchisee on a regular basis.”
“The whole franchise model has been devised keeping in mind the win-win situation for both VITS and independent hoteliers as owners will continue their control and the ownership of their hotels while VITS will provide them with its established brand name, its expertise, training to existing staff and will improve the entire operations system, which is proved to be foolproof and successful with the VITS own hotels. Further, it also offers assured return with the Minimum Business Guarantee clause. Thus, this tie up will also help hoteliers to increase their room rates and turnaround the existing property in a short span of time,” Vikram Kamat further added.
VITS is a full service business hotel with 85 per cent of business from domestic clientele. Vikram Kamat said, “We wanted to increase our presence across the various locations in the country. There are loyal customers, who would like to stay in our hotels at various destinations and keeping the requirement and demand of such customers, we decided to increase our base.”
About advantages of partnering with VITS, Vikram Kamat said, “There are a number of standalone hotels in Mumbai which are not doing business to their fullest capacity due to lack of marketing and skills, therefore often get exploited by Online Travel Agents and other intermediates. By becoming VITS franchisee, many standalone and unknown hotels can get an opportunity to be at par with an international hotel chain. The franchise business is one of the safest and assured business opportunities available because it is a ready-made business with instant success, instant consumers and instant support.”
Talking about the criteria for franchise agreement, Vikram Kamat added, “The room inventory is not a criteria, however, the hotel should have Wi-Fi connectivity, gymnasium, swimming pool, restaurant (serving alcohol) etc. On the marketing front, the franchisee hotelier will get all the brand building support from VITS as VITS has a prominent presence in print, outdoor, radio and electronic media (Running ad spots on about 21 national TV Channels and Radio) supported with loyalty card members. To ensure that franchisee unit becomes efficient and equipped with the state of the art administrative facilities, VITS will provide them with Central Reservation Office, Software and GDS Code connecting them to 1.1 lakh agents."
Kamat further added, “VITS’s ‘Pay for Performance Module’ will safeguard the interest of franchisee as under this model, the franchisee pays to VITS only for the bookings it receives. Thus, turning around and creating a completely new and profitable hotel business for the franchisee. There is a monthly commission to be paid by the franchisee's total number of rooms.”
Kamat Hotels (India) Limited (KHIL) was started by Late Venkatesh Krishna Kamat in 1986. The group has a turnover of Rs. 80 crore and approximately ten thousand share holders. The company is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).