Luxe it up, take your brands to places

Indian hotel chains are expanding furiously. And although growth is normalising, appetite for luxury hospitality is in a structural uptrend. The Tatas, ITC and Oberoi have driven the supply response to branded hotel rooms as occupancy and room rates keep mounting. Expansion has been in new locations, through rebranding of available inventory in top-tier cities, as well as in high-end religious tourism, which has been largely underwhelming for HNI tirth yatris. Younger, richer Indians are choosing to upgrade their travel experience as connectivity improves. This mid-term trend is expected to keep demand for luxury hotel rooms ahead of supply, which is constrained by land costs in prime locations. India's version of convention tourism is led by the wedding industry, creating demand for lux hospitality in its smaller cities.

The challenge for hotel chains is to ensure brand fidelity while capturing growth opportunities. Tatas and ITC have created bouquets of brands catering to various market segments, from luxury to super-luxury. They are entering underdeveloped tourist geographies that have so far been left in the shadow of more celebrated attractions. This is a hedging strategy as established markets become saturated. New travel themes, such as yoga, are being tapped. Having 'branches' of their branded F&B services in upmarket out-of-hotel sites - say, ITC's Bukhara at Delhi's Khan Market or even Dubai's Palm Jumeirah - would be the next logical step while ensuring strict brand non-dilution.

All this marks a maturing of the hospitality industry, driven principally by domestic demand. Indian hotel chains have an edge here because they are better placed to customise hospitality to local tastes. Branded hospitality improves the supply response across all segments in which leading players operate. It also makes tourism in India more sustainable by easing infrastructure pressure on established markets. Going abroad for a lux getaway can increasingly be an option, not a necessity, for the high-living, high spender.