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Even as room rates remain low, a slight improvement in occupancies last year and this year has made India a hotspot for hoteliers. Even Shanghai is said to have more branded rooms.
Companies like the US-based Hyatt Hotels, which operates in the mid-to-luxury segment, are betting big on India. One in every four new hotels that Hyatt is going to open globally will be in India.
Even though in its 30-year stint, it has 17 hotels so far, plans are afoot to launch 50 more under the Hyatt banner in the next five years. Three of them - Hyatt Raipur, Hyatt Regency Ludhiana and business hotel Hyatt Place Pune - will open this year. This is more than its pipeline for China, which stands at under 40.
Hyatt's global plan is to open 175 properties. Hyatt being a little under a tenth (with 535 properties) of the size of a hotel behemoth like Intercontinental Hotels Group (with more than 4,600 properties), India could provide it with accelerated growth, disproportionate to the other players.
The company's board was camping in India recently, including Thomas Pritzker, executive chairman of the Board of Directors, for the first time.
The company is going all out with plans to operate all of its seven sub-brands, including ones largely restricted to developed markets.
It has five brands - Hyatt, Grand Hyatt, Hyatt Regency, Park Hyatt and Hyatt Place - in India. Andaz and Hyatt House will be added in the next three years.
Eric Brun, vice-president, brands, Hyatt International, says, "We are amazed at the pace of acceptance of new brands in this market. In China, it is not so. There is a tendency of people in that country to go for the Grand Hyatt brand."
Hyatt has gained a foothold as a business-oriented brand with properties like the Grand Hyatt and Hyatt Regency (completed three decades in October this year).
"Guests have told us what they were expecting of a stay at our hotels. Based on that, we developed Andaz. It is based on personal themes to make you feel at home," says Brun.
Andaz, from the Urdu word meaning 'style', is developed on themes like local culture, personalised living spaces and uncomplicated service, tuned to personal preferences. Only 10 properties under this five-star brand are operational across Europe, the US and China.
Andaz will open in Delhi in 2015, sporting between 150 and 300 rooms. Food and beverages will be tuned to the neighbourhood, without any change in interior styling. None of the Andaz properties sport a reception; check-ins are on iPads.
Lest the upscale consumers who spend take Andaz to be a local brand (as the word is also used in Hindi), Hyatt is mulling whether to place a 'By Hyatt' suffix or not.
Hyatt House, the other new brand will focus on extended stays rather than short weekend trips, typical of hotels. The concept of serviced apartments is yet to take off, though.
"India will follow the US and Europe where demand for extended-stay properties have risen. A lot of senior and mid-level executives shuffle from one country to another and stay for one-two months. They prefer an extended stay over hotel rooms", says Brun.
Hyatt House, classified as an upscale extended stay, can be found in the US. Mumbai will host one in 2016. Mumbai-based Leela Hotels and Resorts, Taj Hotels and Resorts and Marriott Hotels have a handful of upscale serviced apartments.
However, increased appetite for expansion shown by most hotel companies are having an adverse impact, say analysts.
Rating agency ICRA says the Indian hotel industry's margin in the July- September quarter will fall to a five-year low of 7-8 per cent due to a decline in RevPAR (revenue per available room).
The agency points to the excess supply as the cause. With uncertain demand and further additions, the outlook for 2013-14 remains negative. The downturn in hotels has stretched to five years, as compared to past global cycles of one-two years.
Though, Kaushik Vardharajan, managing director (South Asia), HVS Global Hospitality Services, says, "This year margins would be flat, if not marginally better than last year, as the inventory pipeline has nothing much for the next several months, while there is growth in leisure travel."
According to the Hotel Industry Survey 2012-13, conducted by HVS, the nationwide RevPAR recorded a 5.2 per cent drop in 2012- 13 over the previous year, with the five-star segment registering the maximum decline (8.7 per cent), followed by the three-star segment (4 per cent).
It attributed the decline to an increased supply during the year. The year saw an addition of around 9,000 branded rooms - representing an increase of around 11 per cent over the previous year and 138 per cent since 2006-07.
