New Delhi New Indian hotel chains like Fern, Choice Hotels, Pride, Royal Orchid, Sarovar Hotels and Lemon Tree are inking deals with developers and individual property owners as the industry sees a boom in domestic travel.
Management contracts for major hotels are on the rise as local hotel operators prefer to work with domestic hotel management firms that offer flexibility and charge lower management fees. Additionally, many international chains do not have brands that work in this budget and mid-tier segment.
According to real estate consultancy JLL, contracts in the mid-market and budget categories of Indian brands grew 74% between January and September 2022 compared to the same period in 2019. These contracts are largely for smaller hotels, with an average of about 50 rooms. Tier 2 and 3 cities.
By comparison, international operator signing grew 36% from 36 hotels with 4,794 rooms in 2019 to 49 hotels with 5,106 rooms in 2022.
There are around 150,000 branded hotel rooms in India.
Jaideep Dang, managing director of JLL’s Hotels and Hospitality Group, said this trend picked up post-Covid. “We see a lot of conversions from privately branded hotels to chain hotels in the mid-market and budget hotel categories. Owners are choosing to work with Indian hotel brands because Indian hotel operators are flexible with scale, product specifications, agreement terms and fees. Most of these hotels are 40-60 rooms, which international chains have not agreed to sign,” Dang said.
Sarovar Hotels & Resorts Managing Director Ajay Bakaya said the company has a pipeline of 45 hotels in the next five years. “We have been strong on both the opening and the signing. We are looking to open about 10 hotels a year. Most of these are new projects and are in Tier 3 and 4 locations. This is where we see demand for brand hotels as there is a shortage of rooms in these areas.”
He said that there were hardly two good hotels in a city like Gorakhpur. “We performed beyond the expectations of the owner in this city. Now we are getting a lot of queries from such places and there is scope to run many 80-100 room hotels. People like to spend money on weddings in these places and This is where there is a huge demand and it is not being met,” he said.
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