From top: Fortune Park Panchwati, Calcutta; Ginger, Goa; the multi-cuisine restaurant at The Atrium, Faridabad

4stay well

Savvy travellers have new options with the boom in the budget and midpriced hotel segment, says Samita Bhatia

It’s a slightly unusual hotel experience for Indians. Step into the modest lobby at the Accor Group’s sparkling new 217-room Ibis hotel in Gurgaon and you’ll find the reception manned by a solitary front-office executive. Guests check-in and then wheel their luggage to one of the hotel’s rather compact rooms.

Here’s what Rs 4,400 and 3-star comfort gives you for a night’s stay in the heart of a business district: a 24-in LCD television, free Internet connectivity, a safe large enough to accommodate your laptop and of course a view of the main arterial Golf Club Road (soundproof glass cuts the city noise out). The modular loo is perhaps a tad tight on space — but you still get a shower-stall.

“The spaces are designed keeping today’s young and high-tech globetrotter in mind. Smart casual hotels — that are light on the pocket — are the way to go,” says Uttam Dave, president & CEO, InterGlobe Hotels, which has brought Accor to India.

On the other hand if you’re planning to stay at any of the 14 Ginger hotels from the Taj Group, chances are that you’ll be checking yourself in at a computerised kiosk in the modest lobby. For, the motto of the $22 per room night hotels from the Taj Group is quite simple — ‘Please Help Yourself’.

Shorn of the bells and whistles of the luxurious five-star luxury hotels, mid-priced and economy hotels are in hyperactive mode. Having made tentative inroads into the country a couple of years ago, this segment of hotels is now pushing ahead in right earnest — aggressively expanding, forging tie-ups and seeking out new destinations.

They are unveiling hotels all the time — in metros, mini-metros, business towns and even holiday destinations keeping a strict eye on affordable tariffs while making the hotels supremely comfortable.

Dave is upbeat: “It’s interesting to watch how different hotel chains interpret economy in varied ways.” The common denominator may be skeletal staff and self-help service, but they’re highly process-oriented so that all the basic necessities are taken care of.

So a Ginger hotel — which lives by the maxim of Smart Basics — doesn’t have a large banquet hall, a sprawling health club, a pool, or even room service (though rooms are equipped with tea/coffee-makers and mini-fridges). “This allows us to keep costs low and pass on the benefits to the customer by offering an attractive room rate, without compromising on the quality,” says Prabhat Pani, CEO & director, Roots Corporation, a subsidiary of the Indian Hotels Company Limited (IHCL), that’s behind Ginger Hotels.

But today the segment is poised for a boom with new players who all have strong blueprints for growth. Giant Indian hotel chains like the Taj Group have entered the fray while international mid-market chains have also set foot here firmly.

Besides the Taj Group’s Ginger, in business there are ITC’s Fortune Hotels, Sarovar Hotels & Resorts, Lemon Tree Hotels, Accor Hotels and Choice Hotels. The newest entrants are Dawnay, Day Hotels India. And we are still counting.

ON A ROLL

If you’re a mid- and upper-middle level businessman or holidaymaker — price-sensitive, yet looking for comfort and value-for-money — these hotels are for you. Typically, mid-market hotels fall in the three-star and four-star category, run on tight budgets and cost between Rs 3,500 to Rs 6,000/Rs 7,500 a night. That’s about 40 per cent to 60 per cent cheaper than a five-star hotel.

The hotels are filling the massive gap that existed between the exorbitant five-star luxury hotels at the top end and guest houses of dubious standards at the lower end. Says Suresh Kumar, president, Fortune Hotels: “There’s a huge demand for hotels that provide quality at affordable rates. Mid-market hotels shadow the luxury business.”

Currently, 24 Fortune hotels are operational (in management contracts with the owners) and another 24 are in the pipeline — some in various stages of construction and refurbishment.

Another fast growing hotel company, Lemon Tree Hotels, is holding out an experience that is “refreshingly different,” says Patu Keswani, the chain’s pony-tailed chairman and managing director. His five hotels — all owned by him — in Gurgaon, Pune, Goa and Kaushambi, provide comprehensive business and leisure facilities in a spirited environment. The hotels register 80 per cent occupancies across the chain with 40 per cent of guests being repeat clients.

Keswani is a man in a hurry and has huge plans for the next few years: there are 18 more hotels — translating to 2,500 rooms — under development across India. By 2010-11 when these hotels are operational, Lemon Tree will have a presence in 17 cities.

Then there’s the old-timer, Choice Hotels India, with 25 operational hotels and 25 more under construction, with properties going from 50 rooms to 300-rooms. “As a franchise company, a Choice hotel can open up anywhere — even on Mount Everest,” smiles the rather pleased CEO, Vilas Pawar.

While 14 Ginger hotels are operational, there are six more in various stages of construction. “While growth is happening across all segments of hotels, the growth in the budget and no-frills segment of hotel is proving to be very attractive,” says Pani.

The chain intends to have 60-70 Ginger hotels over the next three to four years, while an investment of about Rs 100 crore is on the cards this financial year, says Pani.

Another player, Sarovar Hotels & Resorts, a hotel management company, is now 13 years old in the hospitality game. And today it has 35 hotels under its fold. An additional 33 hotels are in various stages of development and another 30 plus hotels on the drawing board. By the end of 2012, Sarovar will be managing a total of 100 hotels and almost 1,00,000 rooms.

Ajay K Bakaya, executive director, Sarovar Hotels & Resorts, is upbeat about the chain’s future growth. He says: “The maximum growth will continue in the budget segment across metros, non-metros and smaller cities with more foreign chains entering the market.”

Then there are also smaller players like The Atrium, Delhi from The Claridges Hotels & Resorts, a mid-market hotel specialising in meetings and conference tourism. Manoj Thapa, the hotel’s general manager, is upbeat about the future. “The boom in tourism and business travel indicates that India needs more investment in the mid-market segment,” he says.

Investment is pouring in. With one Ibis Hotel now open, InterGlobe has 11 others in various stages of development. The newest entrant Dawnay, Day Hotels India (a fully owned subsidiary of Dawnay, Day International) too has strong plans. Dawnay Day’s Ten Hotels will be 4-star upscale hotels with the first, Ten Jaipur, scheduled to open in November followed by Pune and Ahmedabad in 2009.

SEGMENTATION IS THE NAME OF THE GAME

These hoteliers have reason to be cheery about the future. While the hotel industry has boomed in the last few years, the current economic slow-down is already reflected in a rationalisation of prices and tempering of hotel tariffs in cities like Bangalore and Pune. “In this scenario, mid-budget hotels may fare better than five-star hotels,” says Dave.

To develop a sharp product profile, mid-market hotel chains have also been busy re-configuring their business models since they reared their heads. “Mid-market hotels will only get smarter with time,” says Vilas Pawar of Choice Hotels.

Segmentation — or segregating their hotels according to size and market niche — has become the order of the day. This really means that the chains offer full-service, 4-star hotels at the top end and bare-bones, basic-as-basic can be hotels at the entry level.

For instance, Keswani’s Lemon Tree hotel tariffs are 50 per cent to 60 per cent of five-star hotel tariffs in that particular city. But the company’s low-end Red Fox hotels that are in the pipeline will cost 50 per cent to 60 per cent of Lemon Tree hotels (the tariffs are yet to be fixed).

ITC too decided to go for a thorough rebranding of the Fortune chain two years ago. “This was done to give the business clarity,” says Kumar. Today, Fortune Hotels operate in as many as 11 different categories with Fortune Select topping the pyramid and room rates starting at Rs 8,000. These hotels are located in business hubs/metros such as Bangalore, Hyderabad, Chennai and Gurgaon.

But at the lower end Fortune has its Faith hotels that cost some Rs 2,000 a night and come minus the frills. Then there are other segments within the Fortune fold. Fortune Park hotels are a notch below Select, followed by the Inns (60-room hotels), and Resorts (located in holiday destinations like Bay Island in Port Blair and Mahabalipuram). The other Fortune sub-brands to go online are Stop and Spot (to come up on highways), Lodge (for rural tourism) and Adventure (for adventure tourism). Soon Fortune will also add Apartments to its fold, the first of which will open in Cochin.

Choice Hotels for its part has 3-star, 4-star and entry level 5-star hotels under its umbrella. At the bottom there are the basic Sleep Inns — which are limited-service, basic accommodation oriented hotels in the Rs 2,000 to Rs 3,000 price band. Then, there are the higher Comfort Inns and the Quality Inns. At the very top Choice’s Clarion hotels are full-service, entry level 5-stars.

Sarovar Hotels & Resorts, offers Hometel at the bottom end with tariffs pegged between Rs 2,400 and Rs 4,400 (depending on the city) and Sarovar Premiere at the top end. There are others — Sarovar Portico, Park Plaza and Park Inn. Park Plaza and Park Inn are operated in India under Master Franchise from Carlson Hotels.

THE CHALLENGES

Are there challenges involved in operating mid-priced hotels? Keswani says with land prices skyrocketing, anyone who buys land is tempted to set up a 5-star facility rather than an economy hotel. Dave adds that though the demand for mid-market hotels is high, the supply is low mainly because of high cost land.

Another challenge is to provide top-rated services at budget prices — and retain manpower. “Since we can’t compromise on the quality of manpower to ensure optimum service standards, we lose associates to hotels in the luxury segment since they are better paymasters,” says Thapa.