Raising the bar

Kerala-based CGH Earth defied popular beliefs to carve a niche for itself in the eco-friendly tourism space

The empty dining area of the ‘The Catch Of The Day’, offers a perfect setting for the interview and photo shoot we have scheduled with Dominic Jose. The sunlight pouring in through an opening in the thatched roof above makes for a natural spotlight at the entrance of the restaurant. A mid-sized replica of the famous Kerala snake boat sets the scene. Despite being situated smack in the middle of a bustling city, we find ourselves surrounded by the bounty of nature on this property on Willingdon Island in Kochi. 

This is exactly the kind of experience that CGH Earth strives to create when you check in to one of their hotels. Jose, the CEO of this five-decade-old hospitality group, defines what the company stands for: “We are in the business of creating experiential holidays resting on our core values — sensitivity to the environment, inclusion of the local community and adoption of the local ethos.” The eco-friendly hotel chain is often credited as one of the major contributors to Kerala’s tourism industry. With a portfolio of 17 hotels comprising 409 rooms spread across Kerala, Tamil Nadu and Karnataka, CGH Earth has been selling the concept of unique holiday experiences both to domestic and expat travellers.  

In 1957, Jose’s father, Dominic Joseph teamed up with three other friends from the shipping industry and leased the iconic Malabar Hotel in Fort Kochi from its English owners, Spencer & Co and renamed it Casino Hotel. Even after a decade, the business wasn’t doing well. So, he bought out the other partners and constructed a 32-room property that cost him Rs.7 lakh — a huge number back then. Undeterred and with full conviction in his dream, Joseph was determined to see this through no matter what — a trait he has generously passed on to the next generation. 

Things went on smoothly till 1977, when, following his father’s death, Jose quit his chartered accountant job in Mumbai and as the eldest of the six siblings, took over the reins of the family enterprise. His only tryst with the hospitality industry until then had been in the form of a client he had handled in his role as CA: the Tata group of hotels. An executive of the same company cautioned young Jose that success in the industry required the deep pockets of a bigger brand. Apprehensive at first, he chose to take the warning on as a challenge. 

In 1988, an opportunity arose when CGH placed a bid alongside the titans of the industry to manage the only property constructed on a land that still remained untouched by the outside world — the Bangaram Island in Lakshadweep. There were several naysayers even then and Jose confesses that he did have his doubts initially. He says, “Had we failed to make a success out of the place, it would have jeopardised the existing property under the brand and our ability to service a Rs.25 lakh loan sourced from Indian Bank.”

Not having the kind of financial backing that his rival bidders enjoyed, Jose’s proposal for India’s first island resort was a project that could be completed within a few months. He confesses how he was hardly convinced he had a chance, but the added joy of being among the few to be flown down to the island was a chance he wasn’t ready to give up. And sure enough, Lady Luck rewarded the Casino Group of Hotels with a lease contract for 25 years. “That was a big break for us. The scale of our investment was what gave us a huge competitive advantage,” he says. The company had initially invested a crore and a half followed by Rs.2 crore to develop waste management and self-sustainable systems. What enabled it to keep a low investment figure? Defying popular assumptions of a luxury holiday retreat, the Bangaram Island resort under CGH featured no telephones or television sets, no multi-cuisine restaurants and air-conditioners. They marketed it as, “nature in its most pristine form” and listed it with a $180 per night price tag similar to that of The Oberoi in Mumbai then. Jose adds, “Had we priced it lower it would not have been commercially viable for us. And tourists who were making their way to Bangaram were paying that much at hotels en route”.  It was a gamble that paid off and earned it an enviable reputation in the responsible tourism space. The group achieved break-even on the property in three years and charged a princely sum of $450 a night back in 2015, which is when the hotel was taken up by a government body after the lease ended.

Changing perspective
“We believe that unnecessary capital-intensive luxury defined by ostentation is passé in the hospitality industry. The success of the Bangaram venture showed us that the meaning of luxury itself had moved on from ostentation to experience,” narrates Jose. A lesson that soon became the foundation for every other CGH experience created. This included myriad experiences such as at the Spice Village, set up in 1991, which is a tribal-styled resort complete with indigenous architecture serving local food, nestled in the hills of Thekkady and adjoining the Periyar Tiger Reserve. Or perhaps the Coconut Lagoon in Kumarakom made up of heritage structures called tharawad houses that were bought for a song from localities looking to upgrade in 1993; or yet still, the ancient Vengunad kingdom mansion that was turned into an Ayurveda palace, an initiation into the wellness category for the brand. 

“The success of the Spice Village prompted us to test the backwaters which are today the highlight of Kerala. Even as late as 1993, there were no resorts along the backwaters. We were one of the first to set it up in Kerala. In a very short time, it became an extraordinary success,” Jose proudly asserts. Amitabh Kant, the current CEO of government think tank NITI Aayog and former tourism secretary for Kerala is often credited with transforming the southern state into a premium travel destination. “CGH Earth is a great example of a local entrepreneur creating experiential hospitality that addresses the aspirations of new age travellers,” Kant says.

The decision to venture into the space of wellness and Ayurveda was not a planned one. In 2004, Jose received a call from the matriarch of the Vengunad Palace seeking help in restoring its ancient structure and converting it into a hotel. Jose acquiesced, hoping to replicate the success in Rajasthan of the palace-to-hotel model, until he heard of the conditions he had to comply by. The family forbade the consumption of meat and alcohol on the premises and that prompted the establishment of Kalari Kovilakom. The resort requires a person to sign up for a seven-day package minimum, with offerings for a two-week, three-week and four-week treatment plan as well. Jose claims that 50-60% of the foreign clientele that visit the wellness properties are repeat customers and the hotels enjoy an 80% occupancy rate for rooms that began with a $3,720 package in the beginning and have now moved to a range of $7,018-10,042 for 14 days.

But it was a hard sell in the initial days. “Our occupancy rate in the first two years was under 5%. We feared that we had definitely done something wrong this time. Tour operators would urge us to go lax with the arrangements, serve meat and alcohol and reduce the tenure of the base package. But we were following the tenets of Ayurveda, and if we were going to do this, we were determined to do it the right way,” reasons Jose. Soon enough, it became a place to be reckoned with for its Ayurvedic healing programme.

It’s again the principle of no compromises and sticking to the original plan that delivered results for CGH. The company today has three more properties under the wellness category, focusing on yoga and Ayurveda. Filmmaker Mira Nair, Bollywood actor, Akshay Kumar and front man Jimmy Page of English rock band Led Zeppelin have opted for the group’s wellness resorts.

Such has been the praise for CGH Earth’s wellness properties that the management has been prompted to consider expanding naturopathy to enhance its offering in this category. “Today, the big challenge for this product category is not of securing a global following, but an Indian one. Tourists from Western Europe and Russia make up the bulk of the clientele, while Indians comprise a rapidly growing 20% in this category despite the seemingly high price point. With an increasing knowledge about natural healing and Ayurveda medicine, people are making lifestyle changes. They call it an investment for health,” explains Jose. So the eco-tourism chain of hotels now has two clear product categories — experiential holidays, and wellness. That latest project under the latter has been commissioned in Kerala, 45 minutes away from Thekaddy, where its second successful experiential holiday property, the Spice Village is built. With plans to begin operations by September this year, this will be CGH Earth’s first property in the naturopathy segment. And they have adopted a new mode of investment for the same, where they have partnered with another entity who owns the land and handles construction. Jose explains, “This is an asset-light model. We take it on lease from them and put in soft furnishing and the medical equipment and handle operations. Wellness has a higher yield per room as compared to leisure.” 

Right from the very first project, CGH Earth’s desire to present something unique to the traveller has worked for it. The company at the same time maintains its true fibre and does not let short-term gains cloud its judgement. Jose recalls the time when CGH received a handsome offer from a globally established hotel chain to hand over the reins of the Bangaram Island property. Resisting the temptation of the guaranteed gains that would come his way as a property manager was not easy. But the Dominic clan at the helm of the company is clear that it will continue along the same lines even in the future. This, believes Jose, will be one of its biggest challenges. 

But the Kerala-based group has worked out the construct of its ideal customer. CGH Earth has borrowed its terminology for this customer from a Danish academic, Peter Aderhold. After conducting a detailed survey about tourist preferences on 5,000 travellers in Europe, Aderhold divided them into two categories — there is the sun, sand and surf traveller on the one side, and the alert independent traveller on the other. The former, Jose describes, is a holiday planner who prefers predictable locations, cuisines, activities, and accommodation while the latter is an adventurer seeking unique travel experiences. And back in 1986, that category of tourists comprised only 5% but today, this segment is estimated to be 31% of the global market coming second to only to the researched traveller at 35%.  

Dipak Deva, MD, Travel Corporation of India, a subsidiary of Thomas Cook India has over two decades of experience in the inbound travel market in India. Conceding with Jose’s observation, he says, “The inbound traveller today is not looking for a standard five-star hotel. Those are the same everywhere, and they all look the same. People are looking for experiential holidays. I handle the inbound travel market for India, Bhutan, Nepal and Sri Lanka and I can say that CGH Earth is well respected. What makes them stand apart from a standard luxury hotel is the uniqueness of their properties and the fact the management has continued to maintain its value system.” It is this confidence of its trade partners that has now encouraged CGH Earth to look beyond the southern peninsula of India. The management reveals plans to set up experiential holiday destinations up North, and Deva promptly adds, “Why only north India, if it follows the ethos, it can even expand in south Asian countries.”  When probed about the same Dominic says, “We find ourselves engaging on this conversation a lot these days — from here where and how? We had a short venture for about two years in Germany in the past. Sri Lanka beckons very strongly. Maldives could also be a possibility. We were invited by the Australia Trade Council last year but the per hour cost of labour is too high. And finally, we see a possibility in Belize, a developing country in Central America. Visa restrictions are not stringent and it’s an hour’s flight from Florida.”

Conquering the north
However, even when it comes to expanding further North, Jose and his team do not want to go where it is already too crowded. While acknowledging that states such as Rajasthan, Gujarat and Madhya Pradesh are tempting, they would be more comfortable in an unexplored area. Jose explains, “In a place like say the northeast, where it’s not too crowded, the land prices will be low, the fight for resources will not be tough and the government will be forthcoming and eager to welcome companies that will generate employment.” He further adds, “Wherever we go, we will be local. We know we can’t take Kerala up north.” The immediate focus is to go pan India starting with the northwest and northeast first. 

The next area of focus for the group is setting its house in order. Currently managed by five of the founder’s sons, the company is witnessing members of the third generation taking charge as well. Having clocked a turnover of Rs.110 crore in FY17, the group has diversified into other businesses, such as air catering under the brand Casino Air Caterers and Flight Services (CAFS), that accounts for 40% of the revenue. Then there is its venture into the realty market with three residential properties so far that account for 10% of the larger pie.

Jose reveals that the group is now concentrating on what he calls, “transforming from a family business to a business family.” The group is taking the help of a team at Indian School of Business in Hyderabad to professionalise its operations and is even considering hiring a professional CEO.

Jose reveals the company will be on the look out for private equity in the future with an eventual public issue on the agenda as well.

Jose is also keen on enhancing the CGH brand. Formally called Casino Group of Hotels, the management has rechristened it to reflect the brand image, translating it to Clean, Green and Healthy instead. “We are open to inorganic growth. We are open to looking at both models — owned and managed, and only managed. One Kochi property follows the latter model. We also believe the opportunity exists to add another brand of hotels to the CGH umbrella, one that is not necessarily low-priced but that doesn’t insist on so many restrictions that we maintain elsewhere. The CGH Earth group would like to have a larger presence in the holiday space in India,” he shares. In pursuit of this goal, the management aims to retain its DNA of providing experiences that are not replicated elsewhere, not even from one property to another of their own. At CGH Earth, they believe in always raising the bar.