India has long been known as a country with some of the most opulent palace hotels in the world. From Oberoi to Taj, Leela to Amanresorts, India teems with ultra-luxury.
What it doesn't have as much of is product below this lofty level. Part of that is need, part of that is infrastructure and part of that is because it's grueling trying to get a U.S.-branded hotel built in India.
However, as some of this difficulty is mitigated, along with the further expansion of a mobile middle class, down-scale brands are making their move into India's secondary and tertiary markets—at least that is what local news outlet The Hindu is reporting.
Starwood Hotels & Resorts Worldwide, a company with great global exposure, is reportedly set to double the number of its Four Points by Sheraton brand in India over the next five years, in locations such as Bhopal, Vijayawada and Vembanad Lake in Kerala.
“India today is still an ‘under-hoteled’ market, and the demand for high-caliber lodging is expected to far exceed current supply for at least the next three to five years,” said Dilip Puri, Starwood’s managing director for India. “As domestic travel increases and Indian travelers continue to demand more sophistication in terms of both quality and experience, we have significant opportunity to grow our brands across the spectrum in gateway cities and tertiary markets as well as in resort destinations.
“The mid segment will grow faster as it is linked to the growth of low-cost carriers reaching out to the smaller markets. Besides, there are lesser entry barriers with respect to cost of land and development in tier-II and -III cities.”
Starwood currently operates nine Four Points Hotels across India, including properties in Agra, Ahmedabad, Bengaluru, Dehradun, Jaipur, Pune, Mumbai, New Delhi and Visakhapatnam. Seven other hotels in the pipeline include Dahej, Gurgaon, Tirupati, Vadodara, Aurangabad, Hyderabad and Tiruchirappalli.
Marriott International is also forging ahead with its select-service brands, such as Fairfield and Courtyard by Marriott. In a recent trip to India, Marriott CEO Arne Sorenson said, “We also expect to grow these brands through local franchises in smaller tier-III markets.”
Rajeev Menon, COO, Asia Pacific (excluding Greater China), Marriott International, recently talked to India's BW about Marriott plans in India.
“We started our journey back in 1999 with the opening of the Goa Marriott Resort, the first hotel we opened in India as a managed hotel. “Since then we have built a strong portfolio of 29 hotels under different brands that we operate across the country.”
According to Menon, Marriott's India pipeline currently sits at 47 hotels under construction. “When you look at it, our Courtyard brand today is growing the fastest. We have 12 open and another 18 under construction. Interestingly, JW Marriott is our second fastest growing brand, we have seven operating in India today and a few more under construction,” he said.
Two Fairfield hotels will open by year-end and another 12 are under development.
“When I came back to India in 2007, Marriott hotels on average, would do 67 to 70 per cent of business with international clients. As India started to see economic growth, we figured we had to focus on engaging with Indian companies and really building a strong base of Indian consumers. Today, I am proud to say across the country, our average is exactly the opposite, almost 70 per cent Indians and 30 per cent international,” Menon said.
Carlson Rezidor Hotel Group is reportedly bringing more of its mid-market properties, such as Country Inns & Suits and Park Inn, to India.
“Excess inventory in the five-star segment is putting rates under pressure. We will focus on the mid-market segment with 16 new properties across our two mid-market brands targeting the new smart cities in future,” said KB Kachru, group chairman, Carlson Rezidor.
Achin Khanna, managing director, HVS, said the cost of building and land requirement is much higher in the case of a luxury hotel in a metro market compared to smaller cities.
“There will be more mid-market brands in smaller markets such as Agartala. Global chains like Hyatt will bring in more of their mid-market brands like a Hyatt Place than a Park Hyatt or Hyatt Regency,” he said.