International, domestic mid-scale hotel brands find room to expand

Rise in discretionary incomes from tax breaks may flow into travel

Marriott International, hotels — Taj’s Ginger, Hilton’s Hamptons, and Treebo’s Medallio rush to create capacity

4 min read Last Updated : Mar 30 2025 | 10:58 PM IST

International and domestic mid-scale hotels are charting strategies for expansion buoyed by sustained momentum in the Indian travel and tourism sectors with an expanding middle class and rising discretionary incomes. The likes of Indian Hotels Company’s (IHCL’s) Ginger brand, Hilton’s Hampton brand, and Treebo with its new mid-scale chain of Medallio, are rapidly adding supply to the segment to obtain a bigger share of the pie, which is getting bigger on account of young, new travellers emerging in the country.

Treebo Hospitality Ventures, the parent company of budget-friendly brand Treebo, has recently ventured into the promising mid-scale segment with Medallio, with room rates starting at ₹5,000 a night.

“While we hope to have 2-3 per cent of the economy market in the coming decade, with the country’s economic pyramid shifting upward and people looking to avail better services, we are now beginning to play in the mid-scale category, with 500-700 hotels planned in the coming years,” Sidharth Gupta, cofounder and chief executive officer (CEO), at Treebo Hospitality Ventures told Business Standard on the sidelines of the recently-concluded Skift India Forum.

Sparse competition in the segment gives room for aggressive expansion, according to the company, which is expanding from two Medallio offerings, one in Udaipur, Rajasthan and another in Gangtok, Sikkim to other Tier-II and Tier-III cities and towns like Puri in Odisha and Siliguri in West Bengal.

Meanwhile, IHCL – the parent company of the Taj group of hotels – has identified its mid-scale brand “Ginger” as a growth driver.

In the quarter ended December 2024, Ginger’s consolidated revenue grew 43 per cent year-on-year (Y-o-Y) to ₹157 crore, while expanding the earnings before interest, taxes, depreciation and amortisation margin by 200 basis points to 45 per cent. The brand continues to witness repeat business, with almost 40 per cent of the enterprise level revenue of Ginger is loyalty led. The company has thus identified Ginger as the second most important brand in its portfolio, after its mainstay Taj.

With tax breaks for middle-income groups taking effect from April, travel is expected to get a larger share of people’s wallets in the coming months and years. This comes at a time when an Indian tourism boom after Covid led to a demand-supply gap with not enough keys or rooms for the rising number of travellers.

“The (mid-scale) segment, which accounts for 38-40 per cent of India’s total hotel inventory, holds immense potential. Over the past decade, this segment has witnessed steady expansion, driven by increasing demand for leisure and business travellers across urban and emerging markets,” said Mandeep S Lamba, president and CEO (South Asia) at hospitality consultancy HVS Anarock.

Branded mid-scale hotel supply in India has clocked a compound annual growth rate of nearly 9 per cent up from around 9,000 rooms in 2000-01 to nearly 65,000 rooms in 2023-24, according to data from the consultancy.

International hospitality majors such as Hilton are seeing increasing scope in the segment and are rushing to bolster their presence in the range.

Last month, the New York Stock Exchange-listed hotel chain announced the launch of its mid-scale brand Hampton in India and signed a strategic licensing agreement with hotel management firm NILE Hospitality to bring 75 Hampton brand hotels, with the first ones expected to start trading in 2026.

“This marks our mid-market moment in India, which is a dramatically underserved market compared to other economies of a similar size, with one room available for 3,000 people,” Alan Watts, president of Asia-Pacific, Hilton, told Business Standard in an interview.

This came after the launch of its premium economy brand, Spark, in the Indian market, in partnership with Olive by Embassy Group in November last year.

“India is having its mid-scale moment, and now is the perfect time for brands to proliferate in this market,” Watts added.

Online travel platforms widening their presence have fuelled the visibility of the segment making it easier for travellers to discover and book accommodations. “These combined economic, demographic, and technology-driven forces are creating a strong momentum for mid-scale hotels, which offer an ideal mix of affordability, quality, and convenience to meet evolving guest expectations,” added Lamba.