Hospitality giants get penny wise with budget hotels
The existing supply of budget hotels may not have kept pace with the increasing demand for budget hotels, but things could change soon. And branding as a tool is taking centre stage in their growth.
By Vishakha Talreja, TNN |
NEW DELHI: It’s not only airlines which are cashing in on the ‘no-frills’ model but hotels as well. The existing supply of budget hotels may not have kept pace with the increasing demand for budget hotels, but things could change soon. And branding as a tool is taking centre stage in their growth.
According to the Indian Association of Tour Operator’s (IATO), there are around 1,285 budget hotels in India in the approved sector with around 51,000 rooms. Owing to the increasing demand, hospitality players are now expanding their operations in the budget category.
According to HVS International, a hotel consultancy, mid-market and budget hotels have good potential across the country. However, it is becoming increasingly important to have brand affiliation or a unique USP to survive.
Sarovar hotels, which opened its first budget hotel Hometel in Bangalore, has around seven more in the pipeline. It’s two budget hotels in Pune (120 and 200 rooms each), two in Hyderabad (100 and 200 rooms each), and one each in Mumbai (100 rooms), Chennai (150 rooms) and Baddi (50 rooms) will be operational within an year.
The investment per room of these hotels is around Rs 13 lakh (excluding land price). “Brand affiliation helps a budget hotel in marketing and operations. We have forecasted an operating profit of around 55% for our budget hotels,” Ajay Bakaya, executive director, Sarovar Hotels told ET.
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Indian Hotels, the Tata group company that owns the Taj Group of hotels, will also be adding seven more hotels in its budget segment which operates under the brand name Ginger. The average room rate of Ginger Hotels, operational in Hardwar, Bhubaneshwar and Bangalore, is around Rs 1,000. Clark’s Inn, the budget segment of Clark’s group, is also growing and targeting tier II cities. Clark’s Inn, Gorakhpur, a 70-room hotel with investment per room of around Rs 5 lakh, will be starting its operations in December this year.
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