With slowdown well behind the hospitality industry and the market hotting up, foreign hotel players are thronging the country. And this time around, it?s not just big numbers, it?s big hospitality players bringing new brands to India to cater to all price points?be it luxury, mid-market or budget.
Last year, InterContinental Hotels Group (IHG) signed management contracts with Delhi-based developer Amrapali to develop six hotels in the coming years, marking the launch of IHG?s limited service hotel brand Holiday Inn Express. Also spreading its wings is the Wyndham Group. Though its brand Ramada is already established in the country, its plan is to introduce other brands such as Tryp, Days Inn, Dream and Howard Johnson. The group has also signed management contract for its economy brand Day Inn. US-based Marriott International of the Courtyard and JW Marriott fame is also bringing mid-market brand Fairfeild Inn.
While domestic players have started brand restructuring by introducing budget and mid-market brands, international biggies are in India to cash in by introducing brands in each segment. ?We want to ensure that we cover all the categories, at every price point. India and China are such markets where one needs to have a variety of brands. As domestic tourism in India is registering a robust growth, it becomes all the more imperative to have a range of brands, especially in the mid-market and budget segment,? says Daniel Tannenbaum, regional director of Accor India. Accor has a JV with the InterGlobe Group in India to develop its Ibis brand of hotels. Other brands are signing up management contracts with developers.
Hilton India?s VP-development Rajesh Panjabi also feels that it?s a good time to bring brands addressing different segments in the country. ?The market here is growing very quickly. There is a demand across all segments, be it luxury, mid-market or budget. And at the same time, there isn?t much supply around to address gaps in these segments,? he says.
Though most hotel chains have a presence in the country through their luxury brands, they now want to expand their reach through mid-market and budget brands, courtesy the growing domestic tourism. Different brands also mean hospitality companies can now have a mix of management contracts and franchisees. While for luxury projects, hotels are particular about signing management contracts with the developer, for budget brands they are flexible, trying out both management contracts as well as franchisees. ?We are very selective about our W brand (which is a luxury boutique hotel brand), be it the location or developer. We want to bring our luxury brand St Regis to India, too and we are having active discussions with players to sign management contracts for the same. However, for the expansion of our Aloft and Four Points by Sheraton brands (select services brands) we are working on franchisees,? says Matthew Avril, president, Hotel Group for Starwood Hotels and Resorts, explaining the brand strategy of the group. Starwood also has a partnership with Indian hotel chain ITC, for its The Luxury Collection brand. ?The discussions to expand the number of The Luxury Collection hotels in the country is also on with the ITC,? adds Avril.
In the pre-slowdown period, hospitality companies, in a bid to get a share of the growing tourism pie in the country, announced many projects. However, during the downturn of 2008 and 2009 there was no active development owing to liquidity crunch and weakening demand. But the demand has picked up again and hotel companies are on an expansion spree.
Accor, which operates nine hotels in the country at present, will add 21 hotels by the end of 2012. It aims to have 90 hotels in the country, across brands, by 2015. Starwood has 31 hotels in India, and is targeting a total of 100 hotels by 2015. India will triple the number of hotels in the next two years, taking the count from five at present to 15 by the end of 2012. Wyndham Hotel Group has 12 hotels in India, and another eight properties are under development.
Industry analysts feel that the macro picture looks good, with both foreign tourist arrivals and domestic tourist numbers showing healthy growth. This is expected to fuel expansion and give further fillip to the trend of introducing different brands. ?We have seen emergence of different formats like boutique hotels, serviced apartments and budget brands in the last one year. These are interesting times for the hospitality industry and the trend of getting different brands in the country will only grow with niche tourism, such as medical tourism and religious tourism, on an upswing,? says Pankaj Arora, managing director at Protiviti Consulting.
As international brands check in to the country, it would be interesting to see how domestic players strategise. According to the HVS Trend & Opportunities Report, around 89,500 (or 60,000 confirmed) branded hotel rooms will be added across India in the next five years. Delhi has the highest number of room inventory under development?an estimated 20,021 rooms will be added in the next five years to the city’s existing supply of 11,018 hotel rooms. During the same period, Mumbai will add 7,477 hotel rooms, Bengaluru, 9,819 and Chennai, 5,995 rooms. Segment wise, while luxury will see 18% growth, upscale or first class will witness 32% growth, mid-market, 31%, budget, 16% and extended stay or serviced apartment segment will see 3% increase in the inventory.
