| There are two things most of us detest when on holiday — waiting for hours because of inflexible check-in or check-out times and waking up early to catch breakfast. Kapil Chopra’s Postcard Hotel chain has fixed both those pain points. Its 11 properties, mostly small and in secluded locations, offer palatial rooms with magnificent views, as well check-ins, check-outs and breakfast at any time. For loyalty club members there’s also free laundry. “For 32 years no one has attempted to build a luxury hotel brand in India. We thought it was time,” Chopra said.
It’s a tough business where funding constraints have resulted in a high founder-exit rate, from Aman’s Adrian Zecha to Leela’s CP Krishnan Nair. Even the vaunted Oberoi Group needed an Ambani rescue. Luckily Chopra’s got market timing on his side with India’s burgeoning millionaire class looking for more than just legacy palace hotels. He says the lack of exceptional new properties is the biggest challenge facing India’s luxury hotel market. “If you’re waking up in Dallas or London, why would you choose to visit India? How many times can you visit the Taj Mahal?” he said.  Kapil Chopra founded The Postcard Hotel in 2018. Source: The Postcard Hotel This interview has been condensed from video and email conversations and lightly edited for clarity. Besides a unique service approach, how are you disrupting product strategy? The first pillar is to build fast to minimize cost of construction. We built our Leh hotel in 11 months. And to build for the future with sustainable materials from that region like basalt and kadapa over Italian marble. Our Assam hotel has mud walls, which are six degrees cooler, and lower energy costs. The second is to double the room size and build intergenerational hotels. The standard luxury hotel room is 400 square feet, ours is 800 square feet. In our Ranthambore hotel it is 1,950 square feet. Jeff Bezos of Amazon says focus on what’s not going to change in the next 10 years. Well, 10, 20, 30 years later people are not going to say I don’t need a bigger room. And the final part of the product disruption is to build in five key locations — mountains, forests, beaches, palaces and wine/tea/coffee estates. The destination itself is the story. How does a new brand compete with established luxury brands in the country? A lot of hotels fail for one reason and that is if you don’t have distribution sorted out. So 33% of your hotel’s success is product, 33% is service and 34% is distribution. We’ve partnered with banks and cards like Citi, American Express, Axis Burgundy, HSBC, and airlines. We are Singapore Airlines’ only hotel partner in India. Do you know the Tata-owned Vistara Airlines’ first hotel partner was Postcard Hotels? When I met their chief commercial officer I asked how come the group’s hotel business was not a partner. He said they never asked. I got Vistara to sign a one-year exclusivity with me.  The Postcard Hotel’s property in Assam has 12 chalets located in a 1,400-acre tea estate. Source: The Postcard Hotel What’s your financial model to succeed when so many before you have failed or sold out? Most hotel companies now work on management contracts or asset-lite strategies. Postcard is among the few luxury chains to also do revenue-share leases, especially for smaller properties. This gives me skin in the game and I can operate the hotel to my standards. The property owner gets the first cut of revenue, but if the hotel succeeds my return is higher than just a management fee. We also charge a technical services fee for project development and that gives us some cushion for the first few months when a new hotel launches. We are a profitable business with a portfolio occupancy of 54% at 32,092 rupees ($376) per night average room rate. You are adding more than 20 new hotels in the next three years. What about capital requirements beyond the 200 million rupees you raised a few years ago? That was raised by just one project company. The Postcard Hotel currently has 22 such special purpose vehicles. Each SPV either involves a family office that owns the asset or an institutional fund. For instance, we have DMI Alternative Investment Fund-Special Opportunities Scheme as our partner in Ranthambore. Similarly, other institutional funds, including real estate and sovereign funds, are now investing in both single hotel projects and multiple hotel portfolios. We expect to make an official announcement on this very soon.
Our structure is intentionally complex. Unlike a traditional company, we have structured ourselves asset-wise and at an operational level. Even at the operational level, we have raised significant capital. This approach keeps us debt-free, prevents balance sheet leverage, and allows us to make long-term strategic decisions to build the company for the next 20 to 30 years. This structure is, in many ways, our secret sauce. What’s the one brand you hope to outdo over time?
Aman Resorts. I’m not building just for India. Where is that Indian hotel brand in Barcelona, in Madrid, in Paris? One very large Indian hotel group with deep pockets went international and failed spectacularly. They had to sell some of those properties. Because you don’t go to the US to build hotels. US is the Waterloo. I’ve been trying to do a whisky hotel in the Scottish Highlands for the last three years. I’ve been trying to do a hotel in the Greek islands. I have ambitions for Asia. Vietnam, Cambodia, Thailand get a lot of Indian tourists. There are no Indian hotel brands there. India will be the fifth-largest outbound travel economy by 2027 but there are no Indian hotels outside India. At Postcard our mission for the first seven years was to focus on India. Our next seven-year mission is India and the world. Any summer vacation plans? What’s on your travel bucket list? Email me at indiaedition@bloomberg.net. Thanks for reading. — Menaka India Edition Last Week: Modi Sends a Message to Trump With UK Trade Deal | 
