Budget hotels new theme to attract domestic tourists

Hospitality players say the Indian middle-class will make the bulk of tourist population. This means, branded mid-scale and budget hotels will see brisk business.

After The Bell at 04:00 pm

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The global phenomenon of belt-tightening has meant that in 2011 just 1% of the tourists in India were foreigners. Hotel chains, both domestic and international, are working on bagging a larger chunk of the country's 800-million domestic travelers, reports Farah Bookwala and Supraja Srinivasan.

Goa, Kerala, Bangalore pick any tourist destination in India, you will find more Indians than foreign tourists.

Over the last 15 years, international inbound travel has grown at a compounded annual rate of 7.1%, while domestic tourists have grown 12.23%. Experts say the total number of travelers in India is set to hit 1.7 billion by the year 2021. So, there is a need to increase the number of hotel rooms available from the current 1.63 lakh, to over 3.4 lakh rooms.

Hospitality players say the Indian middle-class will make the bulk of tourist population. This means, branded mid-scale and budget hotels will see brisk business.

International chains like the US-based luxury hotel group Carlson Rezidor plans to open 49 mid-scale hotels under the Park Inn banner. The group has invested USD 42 million in the first two Park Inns that will come up in Gurgaon and Mohali. These will be operational by 2015.

Hubert Joly, chief executive officer, Carlson Group said, “Like any other market around the world, as the markets grow and develop the focus moves from international travel to domestic travel and from luxury to mid-scale, more than 40% will be in the mid-scale segment. So, we believe we are in the sweet spot of where the market is going."

But here's a twist. International players have to adapt to suit local sensibilities.

Aly Shariff, managing director, Premier Inn India said, "The brand has of course been adapted for the Indian markets, so you'll see a few physical changes like hard flooring as opposed to carpets, a facility for laundry, a limited room service. So these are things that you wouldn't see in the brand in the UK but you see it in India."

The growth estimates may be aggressive, but these predictions will come true only if the economic situation remains stable. So there is some caution in the air. Experts say the current 12% growth in domestic travelers could dip to 8% by 2021 if India's growth engine stalls, or even sputters. And this could force more check-outs than check-ins.

Watch the accompanying video for more details..