Taj Group of Hotels is India's largest hotel group and the company operates in three major segments of the hospitality sector: luxury, business and leisure. Historically, the Taj Group has used the Taj name for all its operations to leverage the brand equity commanded by the name "Taj". As the Taj Group expands to other locations outside India, the Taj brand is playing an increasing role of driving revenues.
Similar is the story with Oberoi Hotels which is an Indian brand associated with ultra luxury hotels. Founded in 1934, Oberoi manages 30 hotels and 5 luxury cruises under the Oberoi and Trident brands. All the hotels owned by the company across the many segments in India operate under the Oberoi brand name.
The usual trend in the international hospitality industry is to have distinct brands for each segment that a hotel group operates in. This strategy ensures that the brand equity is not diluted when the brand enters the business segment or economy hotels segment. But the Taj and Oberoi brands have not treaded this path till now.
But lately, these companies have realized the advantages of separating the premium parent brand names of Taj and Oberoi from all operations and to restrict the brand names only to ultra premium hotel properties.
Taj Group plans to add around 12 hotels in the next three years in the business hotel segment. The company has decided to follow a sub-brand strategy where by the business hotels will run under a separate hotel brand name but endorsed by the Taj brand. Taj Group also plans to use its Gateway brand to bolster up the budget hotel segment.
In a similar move, the Oberoi Group has removed the Oberoi brand names from six of its hotels which are not luxury hotels. Simultaneously, it has brought all the luxury palace-hotels previously called "villas" under the Oberoi brand to convey the brand spirit and strengthen the brand equity.
This strategy ensures that Taj and Oberoi preserve their brand equity and also facilitates the expansion to other segments by endorsing the sub-brands with their parent brand names. With the Indian travel and tourism industry expected to grow at an annual rate of 8.8% to US$90.4 billion in 2015, these brand maneuvers become very important to ensure the famous Indian hospitality brands are up to the global challenges.