Tuesday, June 14, 2005

Infosys open 500 room hotel at Bangalore campus

Checking it out: Infy logs into hotels
Tech Bellwether Opens 500-Room Hotel At Bangalore Campus; Signs On Ex-Leela F&B Head
The Economic Times

WHAT does Infosys have in common with a seven-star chef? Or for that matter with the Tridents & the Fortune Parks? Plenty. Tired of the ridiculous tariffs being charged by the hospitality industry combined with non availability of rooms even at these high rates, Infosys has decided to enter the hospitality industry itself. And it has brought in Hotel Leela Palace’s former F&B head Jean Michel Jasserand to start a French restaurant in this property called Le Terrace.

At the same time, Infosys, takes pains to explain that its foray into hotels is strictly for internal consumption and not for commercial purposes.

In a move that might have far-reaching consequences for the Indian hospitality industry — which in places like Bangalore has seen turbocharged growth piggy riding on the success of the IT industry — Infosys has just commissioned a 500-room hotel at its Electronics City campus in Bangalore which is equivalent to a four-star hotel. It has 300 functioning rooms in this property with the balance 200 converted into workstations. The property has been built by Shoba Developers as is the rest of the campus. The investment in the hotel (inclusive of workstations) works out to Rs 40 crore.

The hotel will house the board of directors when they visit Bangalore for meetings, conference attendees, out of station employees and customers, “who cannot get rooms outside,” says Mr Nandan Nilekani, Infosys CEO.

Le Terrace, as the hotel is also called, already has 120-130 guests staying in it including about 15 from overseas. The hotel is being managed by Infosys itself.

According to company CFO and administration head, Mr Mohandas Pai: “We had a genuine problem that forced us to take this step.” He points out that in Bangalore, it is well-nigh impossible to get a hotel room. “Then the behaviour is shabby, people are turned away in the last minute and the worst, the outrageous prices.” In Bangalore, he points out, the average room rate is $200/300 for a 5 star room. “These are New York, London rates. These cities are among the 50 most expensive places on earth. Bangalore most definitely is not in that category. So what is the justification for charging such high rates?” Mr Pai says that while he understands the market dynamics of supply and demand and the fact that shortage in capacity has led to this spike in rates, he believes the industry is not doing enough to meet the challenge. “All this is impacting the image of Bangalore,” he adds.

Infosys, he says, “is creating its own residential space to take care of internal needs due to capacity constraints in the market,” adding, “this is a wake-up call to the hospitality industry to increase capacity at reasonable rates and to meet the needs of the industry. Otherwise corporates will take their businesses elsewhere.” Lot of action In Infosys’ case, to itself. Another factor driving this is the huge traffic snarls in Bangalore which at peak hours make the Infosys campus a good 1.5 to 2 hour drive from most of the city hotels.

In fact, Infosys today, totally has 3,250 rooms that it can offer. It has 60 apartments in Bangalore with three rooms each (180 rooms). In offers 2,350 rooms at its training centre in Mysore. At Chennai, another 50, at Hyderabad a 500 room block is coming up. Chandigarh has 100 and Bhuvaneswar another 60. In all, making for a total investment of Rs 240 crore.

The Bangalore campus of Infosys is set to see a lot of action. A new food court is coming up. As the campus now houses 14,000 people, the existing food court with 3200 seats has been found to be inadequate. A new one with 1500 seats will offer Japanese, Thai, Chinese, Italian, Jain and Indian food. It will also have a pastry shop and salad bar. “We have a global workforce and we need to offer them global cuisine,” being the rationale.

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