Raymond Bickson is trying to change the Taj hotels' operating model, but first the chain will have to learn to get out of its comfort zone
In 2008, when INSEAD's Gabriel Szulanski wrote his case study around the Taj hotels’ acquisition of The Pierre, a marquee property in the heart of Manhattan, little did he realise just how prescient he would turn out to be. The case study delved into the group’s dilemma on whether to expand in the US market.
Since 2004, the Taj had been on a roll. In its home market, rooms were in short supply. Its rack rates were at an all-time high.
Indian Hotels Company (IHCL), the firm which owns the Taj brand, had chalked out an ambitious plan to buy assets at peak valuations in India and around the world. IHCL had ended the financial year 2008 with an operating profit of around Rs 1,000 crore. In fact, 2008 was the best in 41 years for the global hotel industry. Hubris was high, markets were at their peak.
The Pierre had seemed like a perfect fit.
Overlooking Central Park, it had hosted Elizabeth Taylor, Yves Saint-Laurent and Mohamed Al-Fayed as permanent residents in the upper floors that house the suites and grand-suites. It moved from being under the Four Seasons management to IHCL in 2005. Not satisfied with the condition of the property, the Tatas plonked down $100 million (Rs 500 crore) to restore it. But by the time it re-opened in ’09, the world had changed.