enterprise leela.

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Enterprise

When Luxury
means Leela
After pioneering the export of the legendary Bleeding Madras
fabric, Capt Krishnan Nair did a mid-career switch and went into
the hospitality business. Now, in an unusual growth strategy,
his successful hotel company is largely focussing on luxury
properties, reports Sailesh Kottary

A
dventure, and enterprise, have
always beckoned Captain C P
Krishnan Nair. When still in his
teens, he became a freedom
fighter and joined the Free India army. And
when India got independence in 1947, he
left his hometown Cannanore in the south-
ern state of Kerala and came to Mumbai to
enter the world of commerce. His family
was the state’s largest exporter of hand-
loom fabrics and he soon branched out into
garments. But his success in hoteliering
has dwarfed his achievements in textile
exports. Hotel Leelaventure Ltd, the com-
pany which he founded as chairman in the
late ‘70s and is named after his wife Leela,
has emerged as the chain with the highest
average room rates and with the highest
gross operating profit margins. Having
drawn encomiums for the grand styling of
its properties, it is the only hotel group that
is focusing sharply at the luxury segment
for future growth.
Even with its current stable of proper-
ties, the strategy of aiming high is paying
off. The exotic Leela Palace Kempinski in
Bangalore has for the last two years been
earning the highest average room revenues
(ARR) in the business; it is currently $500
per night, 10 per cent more than the com-
petition in the city. You still cannot get a
reservation there at short notice. The story
is the same at the chain’s flagship, and
first property in Mumbai, The Leela
Kempinski where ARR is highest among
hotels in north Mumbai. And also in Goa
where the ARR has been the highest in the
resort destination in the past 15 years.
And given Leelaventure’s emphasis on
developing sybaritic properties — all its
future hotels are labled as palaces — the
trend of record-setting ARRs seems bound

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FINETUNING THE ART OF SELLING LUXURY: Capt Nair at his home, Mumbai; facing page, The Leela Palace Kempinski, Bangalore, at night
to continue.
For the 84 year old Capt Nair, his entry
into the glitzy world of hoteliering truly
began at home. Or actually, next door.
After journeying to Mumbai, he established
himself as a exporter of handlooms which
were made at his family’s mill in his home-
town. The famous ‘Bleeding Madras’
which was a great success in the US, was
also his creation. By the seventies, he had
diversified into handloom garments and
had set up Leela Fashions, which manufac-
tured for some of the worlds’ biggest labels
such as Liz Claiborne, Ralph Lauren, Calvin
Klein and Tommy Hilfiger. He was also in
lace. In 1963, intent on buying a suburban
plot for setting-up a lace factory for Leela
Lace, he purchased a large plot with a
rambling colonial style house in Andheri, a
quiet northwestern Mumbai suburb.
But far from becoming a retreat, the
location of the house was instrumental in
triggering off the idea to enter the hospital-
ity business. The spark was lit in the late
‘70s when a new international airport for
the city was sited a stone’s throw away
from the Nair residence. “The decision to
enter the hotel business was chiefly loca-
tion-based,” recalls Nair. “There were loca-
tional advantages as we were close to the
electronic export zone and there were also
some industrial belts not too far away. It
was a place where luxury hotel accommo-
dation was non-existent. We felt a five-
star hotel was the need of the area. Our
land also had the added advantage of prox-
imity to both the domestic and internation-
al airports and the fast developing industri-
al belts of north Mumbai.”
So cottoning on to the concept of air-
port hotels, Nair leased the adjacent plot of
land and began construction of The Leela
Kempinski. Part of the property on which
his bungalow stood got seamlessly merged
with the hotel’s and Nair, ever since, just
walks across to office. As a green-at-heart
and orchid-lover, Nair simultaneously
began work on the landscaping, not only of
the hotel’s gardens but also of the entire
area. The result was that when the hotel
opened in April 1987 — it was initially the
Leela Penta — it was set amidst 11 acres
of lush landscaped gardens, cascading
waterfalls, lotus pools and fountains.
These gardens continue to draw accolades
from guests and have won Nair several
awards, such as the Global Laureate
Award from the United Nations
Environment Program and the Green
Hotelier Award in 1996 from the
International Hotel and Restaurant
Association, Paris.
The Penta collaboration has a very
interesting story. “We were in Washington
tying up our loan facilities with the
International Finance Corporation, an affili-
ate of World Bank, when we got an offer
from the Penta group, which was owned
by Lufthansa, British Airways and
Swissair. It so happened that the vice
chairman of the IFC was associated with
the Penta chain and he suggested a tie-
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ENTERPRISE

Kerala. This was the country’s first beach

resort — it was opened in 1969 and was
originally owned by the government of
India’s Ashok group. The resort has been
refurbished and re-named The Leela Beach
Kovalam and has 194 rooms on a property
spread across several acres along a 1.5 km
beachfront.
In a sense, the launch of the Leela
Kovalam Beach in July 2005 in his native
Kerala has been a home-coming for Nair. It
also signalled the move of the group into
new initiatives; such as Ayurveda — the
traditional Indian healing system — and
Wellness spas, which are the traditional
hallmarks of Kerala. At The Leela Beach
Kovalam, there are seven treatment rooms
including a foot massage pavilion, large
and tranquil yoga rooms with access to the
beach. More importantly, the property
intends hardselling Kerala as a destination
beach resort, just as neighbouring Goa has
become.
MORE TIME TO FRATERNISE WITH GUESTS: Nair and wife Leela (centre) with Bill Clinton

up,” says Nair.

As The Leela Penta was too upscale a
property for a Penta, it was later felt that it
would be better to re-lable it as a
Kempinski, since Kempinski — which was
also a Lufthansa group company — was a
more upmarket brand. And so the group
has retained the brand affiliating marketing
arrangement with Kempinski since 1987,
and is part of its worldwide reservation
Leela’s Luxury Drive
70
60
50
$ Million
system.
Growth came in 1991 by way of The
Leela, Goa, a 75 acre resort in Goa, which
has 165 rooms in villas, a nine-hole golf
course, tennis courts, watersports centre
and an alluring beachfront. Then came the
Leela Palace Kempinski in Bangalore in
2002, which was set amidst seven acres
of gardens. And last year, the acquisition
of the historic Kovalam Beach Resort in
Turnover
B each tourism in Kerala has not realised
its potential due to tourists flocking the
backwaters of the state. However, beach
tourists stay on an average for 10-14 days
compared to 2 days in the backwaters.
There is also the lack of large beach resorts
with 200 rooms-plus capacity to aggres-
sively sell the charter concept to the trade.
But with The Leela Beach Kovalam, we
intend reversing the flow towards the
beaches,” says Nair. Not to lose out on the
backwaters lure, Leelaventure has recently
tied up a marketing alliance with
Kumarakom Lake Resort to market the lux-
ury property of 50 traditionally styled villas
on the bank’s of Kerala’s famed Lake
Vembanad. The lake has emerged as a
major tourist draw for the backwaters
experience.
Admittedly, Leelaventure is still a small
chain. Its revenues during 2004-05 were

40 $62 million and profit before taxes was

$11 million. It currently has 1,100 rooms
30 in four properties in the two metro cities of
Mumbai and Bangalore and in the popular
holiday destinations of Goa and Kovalam.
20 But it’s story is still unfolding as it has
plenty of growth impetus, all aimed at the
top-end.
10
Net Profit Early this year, Leelaventure signed a
3.31 management agreement for an ‘under con-
0
On the Web
2000-01 2001-02 2002-03 2003-04 2004-05
Hotel Leelaventure: www.theleela.com
Source: Annual reports

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NETWORKING HIS EUROPEAN HOTEL CONNECTIONS: Peter Leitgeb aims to make The Leela the No.1 luxury hotel marque
struction’ deluxe hotel near New Delhi
which will have 319 rooms plus 90 serv-
iced residences. When that becomes oper-
ational in April 2007, it will give
Leelaventure a presence in a third major
metro. Two months later, The Leela Palace
Udaipur will open with 77 rooms on the
banks of Lake Pichola. Thereafter,
‘palaces’ will be opening up in Chennai
(400 rooms), Hyderabad (320) and Pune,
the increasingly important IT city 180 km
southeast of Mumbai (280). By 2009,
when all these hotels will be functional,
they will add 1500 rooms to make
Leelaventure a 2700-plus room major.
A relative newcomer to the business,
Nair has always been a contrarian.
When all hotels in Mumbai were located
downtown, Nair built his at the other end
of the city, near the airport. When all the
hotels in sun-drenched Goa were in the
northern end of the former Portuguese
enclave, Nair chose his site at the southern
end - which has now become an upmarket
destination. In all his expansion plans, Nair
has spared no effort, and cost, to give his
guests the feel of staying in an Indian
palace. And he has insisted that in design,
each property should have reflect ‘The
essence of India’ in its ambience, instead
of a cookie-cutter contemporary look.
The Leela Goa has been designed by
Hawaiian designer Tom Puglioso, and
emphasises the former colony’s
Portuguese historic influences and Indian
heritage. Bangalore’s The Leela Palace
Kempinski has been designed by the
California-based firm Wimberly Allison
Tong and Goo, which has to its credit the
other famous Palace Hotel in Sun City,
South Africa; The Palace of the Lost City.
It recreates the grandeur of the bygone
Vijayanagar Empire.
A lot of Nair’s focus on luxury is cur-
rently being shaped by Leelaventure’s 54-
year old President Peter Leitgeb, who
joined the group two years ago. An
Austrian by nationality, Leitgeb’s aim is to
make Leela the No. 1 luxury hotel marquee
in India in the next five years. Leitgeb,
who has had 18 years of experience with
the Kempinski and the Steinberger Group
hotels around the world, has initiated a
ENTERPRISE
$20 million upgradation programme at The
Leela Kempinski in Mumbai and a similar
$10 million effort in Bangalore, for the
expansion of 120 guestrooms. He is also
detailing a $10 million outlay for creating
health spas in the group’s properties. To
beef up Leelaventure’s marketing muscle,
Leitgeb is leveraging his European connec-
tions. He has appointed general sales
agents in London and Frankfurt, and is tap-
ping Kempinski to make Leelaventure the
Indian hotel of choice to the global chain’s
patrons.
Leitgeb’s involvement has eased the
pressure on Nair. That leaves him with
more time to fraternise with his celebrity
guests, like the Dalai Lama and Bill Clinton
and also time to savour the awards that
have come his way. The most recent, and
distinguished awards, have been the 2005
PATA Award of Merit for leadership in the
industry and the Lifetime Achievement
Award by the American Academy of
Hospitality Sciences.
Nowadays, Nair spends more time in
his garden than at work, doing what he
loves best; growing orchids.
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