ITC's Fortune Hotels plans presence in Ayodhya as it eyes potential in smaller cities

The hotel chain is in active discussions with investors in Ayodhya

Fortune Hotels, a member of ITC's hotel group, which is betting on smaller cities as it plans to expand its portfolio that recently hit the 50 hotels-mark, has its eyes on the emerging destination Ayodhya.

The hotel chain is in active discussions with investors in Ayodhya, it was learnt.

"We are in active discussions with some investors in Ayodhya at the moment. We're excited about this sort of visibility for this emerging location. There is going to be increased travel demand over the next few years and we will definitely want to be present there. At this stage, we have some very interesting discussions going on with potential investors and I'll be able to share with you some news over the next few months," Samir MC, MD, Fortune Hotels, told Moneycontrol.

He said that the increased interest for Ayodhya adds another potential option for pilgrimage tourism. The hospitality firm has properties in other popular spiritual destinations like Tirupati, Katra, Madurai, Amritsar, among others.

"Locations like Tirupati, Katra continue to attract devotees and pilgrim consumers who are attached to specific locations. For spiritual destinations, the demand is round the year as people keep going back to these places. With Ayodhya and Ram Temple inauguration, a potential location has been added where pilgrims can go," the hotelier said.

Online travel platform MakeMyTrip's latest data shows that there has been 97 percent growth in searches for spiritual destinations in the last two years with Ayodhya on top of the list with 585 percent increase in searches in 2023 versus 2021.

Also read: Temple towns emerge as travel hotspots, Ayodhya to further boost spiritual tourism

In addition, Ayodhya is being searched from across the globe, with the maximum search contribution coming from the USA at 22.5 percent, Gulf at 22.2 percent, Canada at 9.3 percent, Nepal at 6.6 percent, Australia at 6.1 percent.

Growth in smaller cities

While Ayodhya is an emerging destination in the spiritual tourism segment, Samir said that smaller cities overall present a strong growth opportunity for hotels.

"We have a good mix of pilgrimage and leisure along with metros and tier II and III cities. I think that's (smaller markets) where the growth is going to be in India over the next few years. Partly because of the fact that real estate in big cities might not be as financially viable from a hotel investment perspective. Also, if you just look at the growth in travel, it's a lot more in  smaller cities. And I think that's where the possibilities lie for players like us," he said.

Also read: Investors line up investments for Ayodhya hospitality sector

In FY24, the company has signed 10 new hotel agreements and has opened seven so far. It has plans to open another three to five more hotels in the next three to four months.

"We have established ourselves in multiple locations. We are already present in 14 different locations. And a lot of them in the tier two and tier three towns where we probably have been the first mover or the first brand to come in and set up operations," the MD said.

He added that FY24 has been a second good year after the pandemic as they continue to see double digit growth in revenue and anticipate this to continue in the near term future.

Bullish on hotel industry

Samir is also bullish on India's hospitality industry. "India as a market is in the high 60s or early 70s (percent) in terms of occupancies. This is a sign of India maturing as a tourism destination. We are getting into that period where the hospitality industry will see a lot more positives. The market continues to be extremely positive for hoteliers. Travel demand continues to be strong. The gap in the supply growth is probably going to be lesser over the next couple of years in relation to the demand growth which is going to augur well for the hospitality industry over the next few years."

He said that in the post pandemic period travellers are taking more travel breaks. "People have started taking additional breaks during the year. People who took one break a year have now started to do two to three breaks. This is having a positive impact on leisure travel."

While Fortune Hotels' business currently is more skewed towards the business segment, Samir expects a 50:50 ratio between business and leisure soon.

"We are gearing up to cater to both segments fairly well. We used to be heavily skewed towards the business portfolio with more than 75 percent of our hotels in the business segment. And our objective is to slowly aim to get to a 50:50 mix between leisure and business. At this point of time, we are probably in the high 30s in terms of leisure presence. We are inching towards the 50:50 mark.