Home / ANALYSIS / Hospitality Trends / The best thing to come out of the downturn

As travellers turn away from five-star properties, the mid-market offers exciting potential as a stable platform for growth. We talk to Jean-Marc Busato, managing director, Asia Pacific, at Carlson Hotels Worldwide and others on their plans for the sector

When one door closes another usually opens. That is certainly the case in the hospitality sector in India today.

The credit crunch means many five-star and other upscale properties have seen occupancy levels drop, as travellers, both corporate and tourist, scale down their travel spends.

Instead guests are checking in to three- and four-star properties, and like any good business sector, hoteliers are starting to follow.

The mid-market sector in India will see the highest levels of investment in the whole hospitality industry over the next two years. The latest annual report from the Ministry of Tourism shows that there are 598 three- and four-star properties in India as classified by the Ministry, compared to 185 five-star and five-star deluxe properties. And although the number of rooms that these represent is roughly equivalent, at 30,000, analysts think the major investments will now be heading into the middle segment.

Some foresee a doubling of the sector, from the one-third of India’s total hotel capacity that it currently holds.

Advertisement

COMMENT Comment on this article

“Despite the rapid growth in this mid-sector over the last two years, the latent demand continues to grow slowly but steadily. The sector is expected to double in capacity over the next three years,” says Sunil Rao, executive director for Q S Consultants India.

And there is good reason for this. “In the current fiscal environment developers tend to lean towards mid-market hotels, primarily due to the lower investment required towards construction,” says Ratnesh Verma, in charge of real estate and development in South Asia for Hyatt Hotels.

One of those leading the charge is Carlson Hotels Worldwide, and spearheading its expansion into India is Jean-Marc Busato, managing director, Asia Pacific. Busato took over the position in January 2009, and has considerable experience in tapping unchartered territories, having worked extensively in Egypt and in various locations in Europe. “India remains one of the world’s fastest growing hotel markets with an inherent appeal as a tourist, medical and cultural heritage destination choice,” he says.

The company plans to launch 50 new mid-market properties in India by 2012 under their brands Radisson Hotels and Resorts, Park Plaza Hotels & Resorts, Park Inn and Country Inns & Suites by Carlson.

But Busato will not have it all his own way. Domestic brands such as Gateway (Indian Hotels Company Limited), Lemon Tree Hotels, Fortune Hotels (ITC Welcomgroup), Royal Orchid Hotels, Sarovar Hotels and Resorts and the Lalit Hospitality Group are all looking at expanding their portfolios in this segment.

---