The reluctant hoteliers

ASK AMAN NATH AND FRANCIS WACZIARG WHAT they are and they spin out everything from their curriculum vitae—historians, cultural impresarios, authors, diplomats, bankers, heritage conservationists, international textile and artefacts buyers, even fakirs—but never use the word ‘hotelier’.

In each of their two previous interviews with Fortune India, Nath and Wacziarg, business partners as co-chairmen of the Neemrana Hotels (‘non-hotels’, as they call them), threw around a dozen alternatives and, by the third conversation, came to a consensus: restorer.

“Because that’s what we do, you see,” says Wacziarg, 70, who first came to India in 1970 as the commercial attaché of the French embassy and then worked with the Banque Nationale de Paris (now BNP Paribas).

Says Nath, 61-year-old historian: “Hotelier sounds like we put Italian marble everywhere and jack up the price of everything. We think of ourselves, primarily, as people who have been preserving things, many of which would have remained ruins otherwise.”
With 30 palaces and bungalows of erstwhile Indian princes and nobility converted to hotels, Neemrana Hotels, a 50:50 unlisted joint venture between Nath and Wacziarg, is one of the biggest owners of vintage property. The founders became friends and then business partners 30 years ago while jointly writing Rajasthan: The Painted Walls of Shekhavati, a book on frescos found in Rajasthan’s Shekhavati region.

However, with barely 300 rooms in the entire chain, it is dwarfed by just a single top line hotel from India’s hospitality biggies. Its last year’s revenue of Rs 28 crore (with post-tax profits of Rs 5 crore) is a pittance compared with what major chains make. But, as Nath points out, some of India’s most prominent groups such as the Taj, Oberoi, and the Leela have together more than
Rs 8,000 crore of debt. Neemrana Hotels has none.

In the next five years though, things may change as Wacziarg and Nath take their biggest gambles yet in a slowing niche hospitality market (last year Neemrana grew by only 7%, half its usual annual leap) with two projects. First up, restoring the sprawling ruins of a 19th-century fortress called Tijara in Rajasthan, about 100 kilometres from Delhi. There’s also the move into West Bengal with an ambitious blueprint of converting the Hooghly riverfront along the former Dutch and French settlements near Kolkata, which
they have proposed to the central and state tourism ministries.

When it opens in 2016, Tijara will add more than 70 rooms, a little more than a fifth of the current size of the chain. For Neemrana’s Bengal foray, 99 bungalows and homes in different states of disrepair, have been listed, with photographs and brief history, in an 84-page architectural document. Nath and Wacziarg fear they may not remain non-hoteliers, by size at any rate.

“IS THIS THE NEXT STAGE? YES,” says Wacziarg, who also has a separate eponymous international buying house for South Asian fabrics and artefacts with an annual turnover of $100 million (Rs 524.7 crore). Reluctantly, he admits that the next step might push them into some conventional hospitality ideas in tackling scale. Nath has been talking to stainless steel giant Jindal Stainless for innovative but unbreakable crockery—one tiny way they could save on costs.

Two other ways of adapting to changing business realities have been a 25% rise in the marketing team’s strength and an assessment that the hotel will gain traffic from Jain tourists on a pilgrimage since Tijara has a renowned temple with a 16th-century idol.

They are straining the purse strings and planning to open Tijara in phases to keep debt away. “What we are spending on Tijara is more than we have ever spent, but are we borrowing money yet? No,” says Nath, who turned down a Goldman Sachs offer (via Kotak Mahindra) to invest
Rs 500 crore in Neemrana last year. “They said, ‘You can expand to so many properties,’ but that’s not how we do business. Everyone said I was mad. But that’s the way it is. I spoke to Francis and we said—what will we do with Rs 500 crore suddenly?”

The incident reflects the conflicts the duo deals with: how to grow and stay profitable without being greedy. Given the loyalty they have among the global elite (late prime minister Rajiv Gandhi to Montek Singh Ahluwalia, deputy chairman of the Planning Commission, to authors Vikram Seth and William Dalrymple and Hollywood actor Gérard Depardieu) they could easily have built a far larger chain. Yet, they opt to stay where they are.

In conversations replete with spiritual references, Nath often refers to their business model as one which is all about renunciation and realising that money comes and goes. He holds up a decade-old water colour painting that depicts them as ascetics in saffron. That, he says, is their idea of business. When Fortune India requested a meeting with Nath, he sent poetry to explain their philosophy: “Fortune is that empty-handed wealth/Not lost in a bank account, but shared/For it was never ours/Just passing through our palms with purpose.”

Wacziarg, who has been studying vintage bungalows around Kolkata for 15 years, adds that Neemrana’s business model turns conventional wisdom on its head, but puts it in plainer terms. “It is not the business aspect that drives Neemrana. It is our passion for restoration and architecture. We cannot take on properties because we need to expand. We need to fall in love with the properties, otherwise we cannot work. We are foolhardy optimists.”

THE BUMPY ROAD TO TIJARA is little more than a narrow path through fields and villages. From a distance, it is what it is: a ruin. But up close, there are all the Neemrana touches—walls refurbished without changing the colour or texture of the original, no ceramic tiles in sight, a wall painted in the old Rajasthani style by artist Anjolie Ela Menon, etc.

Parvat Singh is the caretaker in charge of ensuring that one part of Tijara opens this Diwali. He says when he first joined the company seven and a half years ago, he would sometimes wonder about the chairmen and the way they spent money. “They could have built a huge hotel or lots of flats with one-third the money,” he says. “Here [in Tijara], there are no roads, so we have had to carry up materials on the backs of donkeys—everything is three times as expensive! And still they keep spending.” According to some estimates, Neemrana will be spending Rs 50 crore to restore Tijara, which is spread across 8 acres.

West Bengal will also be an uphill task. Even if it gets local government support, itself a major hurdle in a state with a moribund bureaucracy and political culture, the houses look so ramshackle that they may require resuscitation, not restoration.

But this is not new to Neemrana’s founders. This is how they started. As their book on Shekhavati paintings readied for release in 1982, the duo was shown a dilapidated fortress crumbling on 6 acres in the Aravalli foothills in Neemrana, Rajasthan, two hours from Delhi. They bought it in 1986 for Rs 7 lakh. Restoration took five years and an equal amount of money.

Vikram Madhok, managing director of luxury tour operator Abercrombie & Kent India, says the magic of Neemrana Hotels is that it converted “nowhere” into its greatest strength. “In the ’80s, what was Neemrana? It was in the middle of nowhere. It made no logical sense to open a hotel in nowhere!”

Villagers who stay in and around Neemrana say this is exactly why 20 years after Neemrana Fort-Palace, the flagship of the chain, was opened, it still employs mostly locals on its staff, and the least any local has worked there is 10 years.

Ratan Lal Soni, 75, a village elder whose daughter-in-law is the head of the village council, says Neemrana’s greatest achievement is that it put the village on the map. “What were we before the hotel came? Nothing. No one knew us,” says Soni. “Now everyone from the chief minister [of Rajasthan] to the prime minister has been here. Anywhere in the world, sophisticated tourists know about Neemrana.”

He has one complaint though. “If these guys could fix our roads too…”

His son Kumar objects. “This is the age of competition. What was dead or what the princes had left for dead, they have brought alive. Is it the job of the hotel to build roads? That is our job and the government’s. It’s because of the hotel that we have just got a grant of Rs 40 lakh from the tourism ministry for the cleaning and development of the village.”

Bhoop Singh, a neighbour of the Sonis, has worked at the Neemrana Fort-Palace for 18 years. He says the hotel’s fiercely local culture means that many villagers have learnt to appreciate their own surrounds. Egged on by Nath and Wacziarg, the villagers are helping Neemrana restore a 16th-century step well in the area along with the Tourism Department of Rajasthan. Recently, Nath has been aggrieved at some miscreants who destroyed part of the step well’s boundary wall. Singh says the villagers are determined to find out who was behind it.

“No one would ever come to this village before the hotel opened. Now there are tourists every day,” he says. Singh’s been taught to match upholstery at the hotel and now has matching bed spread and curtains at his home. He takes his wife regularly to the Fort-Palace to “make her understand what international-style cleanliness is”.

“We have only now understood what our heritage is and how ruins can rake in money,” he adds.

THERE IS BUSINESS SENSE in this. “The cost of acquiring a property for Neemrana is much less than any major hotel chain in India. They pick up things that are out of the way, almost fallen off the map, but have great history, and then the property creates the destination,” says Manav Thadani, chairman of HVS India, the Indian arm of the global hospitality consultancy major. Often the lease is for seven years when the owner decides to pay for restoration. Otherwise the lease period varies according to the amount of money spent. Tijara has been leased from the government of Rajasthan for 60 years. That’s why industry experts say Neemrana often spends much less than the hundreds of crores spent by the Taj or Oberoi to create luxury destinations.

“But then,” says Thadani, “Neemrana has always, very astutely, never pitched itself as luxury.”

So even in its most expensive suites—at Rs 15,000 or more a night—there is no wall-to-wall carpeting, television set, or room service. The decor in no two hotels is the same; mirror frames, more than a hundred years old, chipped and cracked, are left intact; giant wooden doors retain their wrought iron clasps and are not replaced with modern fittings, though modern plumbing, airconditioning, and toiletries are added, as are swimming pools. The staff is advised to speak in Hindi to Indians as the founders do not believe that English necessarily needs to be the “official language of Indian hospitality”. The pitch that connects 14th-century fortresses to Raj-era forest hideouts to Portuguese mansions stays the same—an authentic local experience.

Navin Chawla, a longtime patron and former election commissioner of India, says, “Many years ago, when Francis and Aman invited my wife and me to Neemrana, we literally sat amid a ruin. I was sceptical whether their dream of restoring and converting it into a hotel would materialise. Nearly two years later, I saw how they had transformed it with passion, grit, and on a shoestring budget. As they spoke of yet another project, I realised they were visionaries.”

Rajen Habib Khwaja, secretary with the Ministry of Tourism, applauds Neemrana’s work. “They have walked the unwalked path,” he says, “and instead of continuously looking for larger properties in more prime locations because they have more money, they have gone looking for sites in the most forgotten of places. I have been to their properties and I have seen hotels across India—the rooms they sell for Rs 5,000 a night can easily sell for Rs 15,000, without any fall in traffic. I am sure of that.”

Khwaja points to Neemrana’s new Noble Homes programme where it’s seeking out old homes with even four or five rooms to restore as mini-hotels. He adds that Wacziarg and Nath were the first to sign up for a government programme offering skills development to school dropouts especially in masonry, restoration, and other architectural and heritage preservation work. “Whenever they commit to a government programme, they always deliver and never cut corners.”

Former tourism secretary Shilabhadra Banerjee says he likes the Neemrana way because “it seems like they are working on a museum and not a hotel”.

THIS IS WHY WHEN Uma and Dhananjay Jadhav, erstwhile aristocracy from Gwalior who now live in Jordan, wanted to convert their 16-room palace, set on 10 acres, into a hotel, they turned to Neemrana. “We tried other options and bigger groups but they were all about marketing at best. We needed advice to restore, maintain, preserve,” says Dhananjay Jadhav, “and not just sell rooms.”

His wife says there was a wall which was an eyesore and blocked light. On Nath’s advice, it was given a series of windows that matched the architecture. “You can’t even tell that they are new,” says Uma. “Which hotelier would give me this advice and then be around to see it implemented properly?”

For Nath, author of 14 books on architecture and heritage, and Wacziarg, an Indian citizen since 1990 and founder member of the Indian National Trust for Art and Cultural Heritage, the country’s most prominent heritage preservation organisation, Neemrana continues to be the hunt for unique sites to bring back to life.

As an example, Nath points to his collars. Cutaway and upright, they make a statement in an otherwise simple check, half-sleeve shirt. “It’s a Benetton shirt and the collars got frayed. But I have had it for a long time. So I got my tailor to snip away the frayed edges and stitch them. Now I wear them turned up. Everyone says, ‘How smart, where did you get these?’

“You have to learn to appreciate old things. That’s the lesson of heritage.”