Wallace Fort Hotel is successful boutique type hotel situated near Kasauli - a quaint but popular hill station in North India. Now a large and swanky new hotel is being built in Kasauli with better location and facilities. Should the owner of Wallace be worried ?

1. Written by Prof S K Palekar based on a project done by SPJIMR students. Ms Surabhi Jain helped.
Wallace Fort Hotel
Mr Anil Reddy, the General Manager of Wallace Fort Hotel (WALLACE FORT HOTEL)
near Kasauli, was a worried man in 2010. He told his wife Radha;
“I feel that our owner, Mr Ajay Bisht, is not seriously thinking about the threat posed
by the new property of Central City Hotel coming up in the main town of Kasauli.
People have been telling me that their location, amenities and plans for promoting the
property are superior to ours. I feel we will find it difficult to get customers and run
Wallace Fort Hotel after they start and I am afraid that the career that I have built up
will be ruined. I tried to argue with Mr Bisht that we must modernize the hotel, or
reduce our rates, or ideally both. But he just does not seem to understand that the
world has changed. We must move with the times or we will get wiped out. I am
really at my wit’s end!”
Mr Bisht’s Story
Ajay Bisht, 48, was leading a charmed and successful life for the last 10 years as the owner
manager of Wallace Fort Hotel. Talking about himself; he said;
“I did my graduation from the Institute of Hotel Management at Aurangabad in
Maharashtra and worked for over 15 years with reputed hotels in Mumbai and Delhi.
As time went by, I got tired of city life and the call of the mountains from my
motherland started beckoning me. So, I came back to Dehra Dun in 1999 and began
looking for an opportunity to run a hotel. After a few months I saw this property at
Kasauli. From a distance the property looked like a small fort but in reality it was
constructed as a lodge for woodcutters to stay and to store logs of wood. For decades
the property lay unoccupied till I saw it. The location was terrible - quite a distance
away from the main road and the construction was of load bearing stone walls which
are difficult to extend. To be frank, it seemed like an unlikely place to start a hotel but
the only good thing was that the property was affordable. By the time I made approach
roads and the interiors, I had no money left for plastering and painting from outside.
Since it still looked like a fort from outside, o I called it “Wallace Fort Hotel” and
opened my gates 9 years ago. The place must be lucky because we started making
money soon afterwards and have continued to make good money ever since then.”
Kasauli
It is a hill station and in the state of Himachal Pradesh. It is 260 Km from Delhi, 77 km from
Shimla and is situated at a height of 6000 feet from the sea level. It is known to be a quaint
little town in a time warp and reminds you of the colonial ambience of the 19th
century. It has
cobbled roads, gabled houses, charming facades and neat little gardens and orchards. Mixed

2. Written by Prof S K Palekar based on a project done by SPJIMR students. Ms Surabhi Jain helped.
forests of pine, oak and chestnuts surround the town and its narrow roads that slither up and
down the hillsides offer magnificent vistas of Himalayan Mountains.
Central City Hotel Comes to Kasauli
Mr Kakkar, a rich businessman from Delhi, began constructing a hotel called Central City
Hotel in the heart of Kasauli. A comparison of what Wallace Fort Hotel offers vis-a-vis what
Central City Hotels plans to offer is as follows.
Location
Central City Hotel is on Shimla Kalka highway and public transportation and shops and
people are close by because it is situated in town.
Wallace Fort Hotel, on the other hand, can be reached only by a 25 minute journey from
the highway and there is virtually nothing within 3 miles of it.
View
The mountain ranges are visible from both the hotels.
Climate Control
Central City Hotel is centrally air cooled / heated and hence all the areas are air
conditioned.
Wallace Fort Hotel has only window air conditioners. In winters they provide room
heaters.
Rooms and size
Central City Hotel has 150 rooms on its 10 floors. Each room is comparatively small of
180 sq ft but they have a lot of built up area outside the rooms : they have 3 restaurants
serving different cuisines, a gym, a spa, a bowling alley, a card room, 2 bars and a disco.
The hotel plans to hold events every evening : housie, talent competition and magic
shows.
Wallace Fort Hotel has only the ground floor and has a total of 30 rooms. Each is a large
one of 300 square feet. Each room opens into a private veranda.
Amenities
Central City Hotel rooms are equipped with a cable TV, DVD, bar, refrigerator and
lavishly furnished.
Wallace Fort Hotel has retained the old furniture. They have a cable TV in the room. The
pantry is furnished with a hot plate, a microwave, a fridge and a platform. There are
garden chairs which can be taken out to sit out.
Service
Central City Hotel has significantly more number of employees per guest than Wallace
Fort Hotel
Promotion
Central City Hotel plans to spend a lot of money in media and PR.

3. Written by Prof S K Palekar based on a project done by SPJIMR students. Ms Surabhi Jain helped.
Wallace Fort Hotel has never spent any money in promoting the hotel. However on the
internet there are many positive references to the hotel written by customers
Prices
Central City Hotel is planning Rs 6000 / room / day on double occupancy basis inclusive
of breakfast.
Wallace Fort Hotel charges Rs 8000 / room / day : breakfast is not included. But they
allow up to two children in the same room without any charge.
Anil Reddy’s conversation with Ajay Bisht
Finally, when Anil Reddy asked Ajay Bisht the crucial question of how he was planning to
compete with the Central City Hotel, he was surprised with the answer. Ajay said;
“Competition is not important; customer is. We are still going full and have to reject
bookings many times. Most of our customers are repeat customers and obviously they
are happy with what we are and what we do. Why should we bother to either upgrade
the facilities or reduce the price?”
Questions
1. Should Anil Reddy be worried ?
2. Should Wallace Fort Hotel modernize to compete with Central City Hotel ?
3. Should Wallace Fort Hotel reduce rates to compete with Central City Hotel ?
4. Is Ajay Bisht a good business man ?
5. Is Ajay Bisht a good marketing man ?