As domestic business travel grows and high flying executives of smaller companies get price conscious, five star brands are beginning to view the mid-segment hotel as the next gold mine -- over the next five years, at least 51 such hotels will be opened in India and an estimated $10.3 billion dollars will be pumped into this sector by global and domestic hotels. All for the business traveller and picky tourist who'd like to save some money, but still experience the service of
As domestic business travel grows and high flying executives of smaller companies get price conscious, five star brands are beginning to view the mid-segment hotel as the next gold mineu00a0-- over the next five years, at least 51 such hotels will be opened in India and an estimated $10.3 billion dollars will be pumped into this sector by global and domestic hotels. All for the business traveller and picky tourist who'd like to save some money, but still experience the service offered by five-stars
Ravi Trivedi, a 48 year-old United States-based businessman, travels every week within the US and once in three weeks to other countries, including India. Over the 10 years that he has been travelling, his experience of New Delhi hotels has left a bad taste in his mouth. Literally. The budget hotels that Trivedi spends Rs 3,500 a night on, comes with unclean rooms and bathrooms, below average food and shoddy service. However, now, there's good news for Trivedi's ilk. As many as seven luxury hotel brands are moving into the mid-scale segment -- by 2016, 51 mid-segment hotels would have opened in metros as well as smaller tier two and three cities such as Chandigarh, Aurangabad and Mundra. 
A typical room at the Holiday Inn Express from the chain's hotel in Beijing.
With smaller-sized rooms that start at Rs 5,000 and fewer amenities -- one restaurant instead of several, spas that the customer may have to pay for if he/ she is keen to use them, packaged meal options instead of a la carte room service -- business travellers and domestic tourists alike will soon have a bevy of options to choose from. These hotels are being opened by five-star brands such as Marriott International Incorporation, InterContinental Hotels Group, Hyatt, and Starwood Hotels & Resorts (owner of Sheraton and Le Meridien), which means that travellers like Trivedi can breath a sigh of relief about quality of service and comfort.
Reports also indicate that domestic five star brands such as the Indian Hotels Company Limited that runs the Taj group of hotels and Hotel Leelaventure Limited are looking at entering the mid-scale hotel segment. Taj already operates a budget hotel brand, Ginger, in 24 cities in India. Even ITC's mid-segment hotel brand Fortune has been aggressively expanding to several tier two and three cities, including religious centres like Tirupati, Shirdi and Amritsar.
The first of Marriott International Incorporation's mid-segment hotel
Fairfield will open in India in 2013. As many as 14 Farfield hotels will be
opening in India in the coming years.
"If I can get five star quality rooms with basic amenities at a good price point, it would be perfect. I wouldn't mind," says Trivedi. Nor would Amitabh Chatterjee, Creative Director of a mid-sized Mumbai-based advertising agency, who usually stays in five star hotels during his business travels. "Why spend a lot for just one night? Nowadays, companies are keen to spend their resources meaningfully. It will be great to have hotel options that are not exceedingly expensive but are better than the budget hotels," he says. "Even small issues like not being able to drink in a five star hotel room because of its prohibitive cost, make the option of a mid-scale hotel seem attractive," adds Chatterjee.
As it turns out, these "small issues" are actually a big deal, and have led domestic and international luxury brands to invest as much as $10.3 billion in the sector over the next five years. According to industry experts, urban business travellers of mid-size firms and multinational companies like Trivedi and Chatterjee form the customer base that these five star brands are targeting.
Movers and shakers
"The Indian economy is booming, the middle class has exploded. There are almost 650 million domestic air travellers in the country and therefore there is a growing need for an affordable yet quality hotel segment, as five stars are not an option for everybody," says Rajeev Menon, area vice president (India, Pakistan, Maldives and Malaysia) of Marriott International Incorporation. "Our research on Indian consumers revealed that most Indian business travellers fall under the age group of 25 and 40 and are mid-level employees," says Menon.
And the Indian hospitality sector is more than ready for the change. According to market estimates, there are about 66,000 rooms in well-known hotels and roughly 70,000 in lesser-known hotels. Now compare these figures to hotel rooms in China and the United States, and the picture gets clearer. "The room inventory in the US is close to 40 lakh and China has over 10 lakh hotel rooms. A city such as Shanghai has more rooms than the whole of India put together," informs Menon.
"India will get another 60,000 rooms in the next five years," he says.u00a0u00a0u00a0In fact, experts agree that mid-market hotels will soon outpace luxury hotels in their growth. "As corporations continue to be more cost-conscious and leisure travellers are always looking at value-for-money options, the mid-scale categories hold great potential for growth," says Chief Operating Officer, South West Asia, InterContinental Hotels Group Chris Moloney.
Intercontinental Hotel group recently signed a joint venture partnership with Duet India Hotels Group to develop 19 mid-segment Holiday Inn Express hotels that are expected to be operational by 2016. These hotels already operate in over 90 countries.
Meanwhile, Marriott has decided to launch 14 mid-segment Fairfield hotels starting in 2012, in tier two cities and in what Menon calls the "peripheral areas of metropolitan cities such as Chennai and Mumbai". Chicago-based Hyatt Hotels Corporation plans to open 14 mid-segment properties in India across tier one and two cities including Aurangabad, Mundra and Mysore. They are expected to come to India before 2013. "Hyatt Place is our select service brand designed for the busy lifestyle of today's multi-tasking business traveller," says Kapil Aggarwal, director of Sales and Marketing, Hyatt Internationalu00a0 SW Asia.
Existing properties of Hyatt Place in cities around the world have 125 to 200 rooms, "complimentary Wi-Fi throughout the hotel, a complimentary daily continental breakfast and freshly prepared food available for purchase 24/7," informs Aggarwal. Starwood Hotels & Resorts, who operate in partnerships in India under the brand names Sheraton, Westin and Le Meridien, will launch the Aloft mid-segment hotels, starting with Aloft Coimbatore Singanallur that will open on July 1, 2011. Over the next two years, they will open three more hotels in Chandigarh (in November 2011), Ahmedabad (in January 2012) and Bengaluru (in June 2013).
Tweaked to our needsu00a0u00a0
Given that these luxury brands are already in the business of pleasing their customer, it's little surprise that they would pay attention to something like the number of extra sofas in the mid-scale hotel room. After all, lower cost must not imply a decline in the experience of the customer. At least, that's the plan.
"We have a dedicated design and engineering team in India to (fulfill) the needs of the Indian market and its customers," says Moloney.
For instance, the US Fairfield hotels do not have bars and restaurants. But in-house research found that that wouldn't work for Indians, who would want a restaurant, bar and room service in their hotel experience. All the three will be incorporated in the Indian Fairfield hotels, says Menon.u00a0 Even small details and consumer habits have been considered before designing the rooms. "Indians receive a lot of friends in their hotels and we realised that we need to ensure that the rooms have more than one chair, unlike the ones in the US," he adds.
The Holiday Inn Express Hotels have also been designed around travellers' needs. Guests can expect high-speed Internet access, complimentary breakfast, large showers and cosy bedding. "The plan is to cater to the needs of self-sufficient travellers, who are looking for a hotel that gives them what they need -- and not charge them for what they don't need," says Moloney.
HR executive Sonika Sharma, who looks in to the travel expenses of the employees of her IT firm, welcomes the shift. "Managers and mid-level executives are the ones who travel the most. When we make travel arrangements for our employees we are not looking to splurge. The idea is to provide them with clean, comfortable stay at economical rates," she says. Lavanya Verma, a 34 year-old Vice President of Origin Beanstalk, a media agency who travels twice a week, says, "Younger executives are not willing to pay a premium just for the heck of it. People end up staying for a night and are too busy through the day to enjoy the luxuries of a five star hotel. I am happy with a clean spacious room, a functional bed and breakfast and an indoor dining facility."
Handbook
Your guide to the mid-scale hotel room
A mid-segment hotel room is built on the mantra -- simple and comfortable. To that end, it would be spacious, with a bed, cupboard, desk and chair. The hotel may possess amenities such as a fitness centre, a swimming pool and sauna, but the use of these amenities will not be included in the room tariff.
Most rooms may also provide a television and Internet, along with parking facilities. Some may not have room service, while others may retain room service but offer packaged meals instead of a la carte options.
They would also have a single restaurant instead of the five to seven multi-cuisine restaurants found in a five star hotel. Five star hotel rooms also possess a separate living area, and work space. Guests are also offered a variety of services that range from a salon, florist, concierge, bookstore, and even baby sitting, which will not be offered here.
Luxury
Special packages with room rates as low as Rs 10,000 (excluding tax) are available in hotels like the JW Marriott, and Taj Mahal Palace, among others. Top end luxury suites start at Rs 25,000.
Mid segment
Mid-segment hotel Aloft Coimbatore, owned by Starwood, is currently booking rooms at Rs 5,000 (excluding taxes). It is slated to open July 1, 2011.
Budget
Ginger, the budget hotel by the Taj group, which has 24 branches in India, offers rooms between Rs 1,500 to Rs 3,000. However, if you book in advance, you may also get one for Rs 1,000.
Mid-segment hotel checklist
Bed, cupboard, desk, chair
No separate living area or workspace
Lesser amenitiesu00a0-- no florist, baby sitter, or salon
Single restaurant, instead of several
Pre-packaged meals insteadu00a0of a la carte menu in room service
Free parking
InterContinental Hotels Group will develop 19 mid-segment Holiday Inn Express hotels in India by 2016, and already have a dedicated design and engineering team in India to figure out the needs of the Indian customer. At present, it has over 1,500 such hotels in 93 countries.
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