At present, the medium-sized hotel market has become the largest market segment in the supply of branded hotels in India, accounting for about 43% of the total supply in India in 2019. Experts analyzed that in the post-epidemic era, paying attention to the recovery of the tourism industry will effectively promote the development of the Indian medium-sized hotel market.
Whether it is the growth of the domestic tourism industry, the change of lifestyle, the increase in trust in price-competitive branded hotels, and the mergers and acquisitions of individual hotels in some 2nd and 3rd tier cities, they are driving the popularity of mid-range hotels in India. .
Under the Unlock 4.0 guidelines, domestic travel restrictions have been relaxed, family leisure and business travel across the country will also gradually resume, and the domestic tourism industry will endorse the Indian hotel industry.
Brand hotel endorsement
People are more willing to choose “branded products” when traveling because they are considered “safe”.
On the other hand, the continued economic downturn may also reduce the country's per capita income, thereby pushing value-driven customers to seek full-service hotels, especially mid-sized hotels.
In addition, it is expected that more and more travelers will seek "experience" in some start-up leisure destinations in the country, because medium-sized hotels there also have stronger reference value. As the company continues to take cost-cutting measures, business The growth in traveler demand will also promote growth in this area.
It is reported that domestic and foreign hotel companies with established and new mid-range brands have increased their influence in India in order to take advantage of middle-income domestic travelers and international budget travelers (especially in tier 2, 3, and 4 cities). ) With increasing demand, many hotel owners are still trying to expand their scale by trying to merge some unbranded individual hotels.
The best time to invest
As far as India is concerned, the development of national industrial corridors has led to an increase in exclusive demand for high-quality medium-sized hotels around highways, which is very similar to the situation in the United States decades ago, when the development of medium-sized and selected service hotel rooms in the United States was driven by Driven by the growth of highways.
Although under current circumstances, supply growth in various market segments is expected to slow down. In the past, the main factors hindering the growth of this field were high land and construction costs, coupled with high interest rates and short-term loan use rights, which made it difficult for Indian hotel projects to survive.
However, in the post-epidemic period, mid-range hotels will be a viable investment object because they have a floor space and high efficiency and less investment in terms of development conditions. In addition, unlike high-end and luxury hotels, medium-sized hotels have higher flexible pricing capabilities and can still be profitable despite lower operating costs.
In order to help the domestic tourism industry recover its full potential in India, the government should allocate complete land at a feasible price or long-term lease to allocate well-located areas to promote the development of medium-sized hotels. It is reported that the industry has also been granted investment of more than 200 million Indian rupees to help owners obtain long-term loans at lower interest rates.
The lessons learned from the COVID-19 pandemic will also help the country’s future mid-sized hotels to launch new products more efficiently: because the increase in contactless demand will result in smaller public spaces, fewer restaurants, and more advanced technology, all of which Both will help reduce capital costs, while increasing income-generating areas (such as rooms) and provide a better return on investment.
