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You call me by a higher name, okay?

Global budget hotel brands market themselves higher in the positioning chain on setting base in India

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Budget hotel! As attractive as the word sounds to consumers in general, international hotel brands don’t seem to take very kindly to it when in India. Global budget hotel brands prefer to position themselves a notch or two higher, as mid-market and star-rated hotels in India.

In the past few years, several hotel brands, globally known as the ‘budget brands’, such as Fairfield, Ibis, Holiday Inn, Express, etc, have forayed into India. None of these brands, however chose to market themselves as budget hotels. Instead, these brands positioned themselves as mid-market or call themselves 2-star or 3-star hotels.

“Budget is a derogatory word in India and Indians understand stars better. This is just a marketing strategy for hotel companies, just so the perception of their brand gets no negative connotation,” said a senior hospitality expert who did not wish to be named.

One reason behind the upgrade, experts say, is also the additions hotels have to make to tailor themselves to the Indian market. For instance, unlike their global counterparts, most have to add food and beverage services. Room service has been specifically added in the Indian market.

Mariott Hotel’s brand pegs itself above other budget hotels like Ibis. It has added a restaurant and bar, a meeting room and banquet hall in its hotel in India. “In the US, there are a lot of options for eating out, unlike India. The cost of running a hotel there is also very high. In India, the infrastructure is poor and it makes better business sense to deliver it at the hotel,” said Rajeev Menon, area vice-president, Marriott International.

Premier Inn, the budget hotel chain based in Britain, has consciously positioned itself in the mid-market category in India. “Here, the categorisation of hotels is not clearly defined. The quality of service we provide here is star category. In the UK, we firmly stand in budget space. In India, the classification is slightly confused and not done on the basis of quality,” said Shwetank Singh, vice-president, operations, Premier Inn India.

Express, a limited service brand from the Intercontinental Hotel Group’s stable, is well known as a budget brand globally but has refrained from that tag in India. Here, it is positioned as a mid-scale brand and will follow the ‘pay for what you want’ model. “The brand delivers experience to the customer who is looking for value but doesn't want to pay for what he won't use,” said Jan Smits, chief executive officer of IHG Asia Australia. To customise its products in the Indian market, the company has added restaurants to its Holiday Inn Express hotel network. This is unique to India.

IN HIGH PLACES
Hotel Global positioning Indian positioning Global footprint  India footprint 
Fairfield Budget Moderate Price 600 0 (2 to open)
Ibis Budget 3-star 900 4 (16 to open)
HolidayInn Express    Budget Mid-market 2000 19 (to open)
Courtyard Mid-market 4.5-star 850 7 (18 to open)
Premier Inn Budget Mid-market 620 4
Source: Industry sources

However, this upgradation in brand positioning of hotels can also be because the hospitality market in India is still maturing and this practice may be unfair to customers. “There is a need for a strong hotel association to regulate these things in India. With more international brands coming into the country, the categories would get better defined,” said a senior official of a leading international luxury hotel chain.

Another aspect to this positioning, as some experts point out, is that various new entrants to the hospitality market want to make a statement and do not want to launch an international name with a budget tag. “Hotels in India turn out to be more elaborate. Most budget brands are not as highly pegged worldwide as they are in Asia,” said P Srinivas, hospitality consultant.

For facilities other than food and beverages and room service, the average room rates for most of these hotels remains the same all over. According to international trends, a budget hotel fare should range between $50 and $75. For the mid-market hotels, the fare is in the range of $75 and $150.

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