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August 29, 2011

International hotel chains target mid-market

Extract from Business Today article
A range of leading global hotel chains have planned massive investments in India's midmarket segment - or hotels with a room tariff of around $100 (Rs 4,500) per night in big Indian cities - in the next four years. Starwood Hotels and Resorts Worldwide, which owns brands like Le Meridien and Sheraton, intends to set up 100 hotels in India by 2015. It already has 32, most of them five-star brands like The Luxury Collection, Le Meridien and W, but its current thrust is overwhelmingly on its midmarket brands like Aloft or Four Points by Sheraton. "India is our fastest-growing market after China," says Frits Van Paasschen, President and CEO, Starwood Hotels.

...Accor, another top global hotel chain, which at present has nine hotels in India under the brands Mercure, Ibis and Novotel, plans to raise the number to 90 by 2015. Though some of its five-star brands will also make their debut in India this year, Accor is pushing hard its budget and mid-market brands, Ibis and Novotel: seven new Ibis hotels will open this year, 13 more Novotel hotels in the next three years. It has also set up an investment fund with global travel services firm Interglobe to further its India programme.

...Eschewing five-star indulgences and deluxe amenities, mid-market hotels - a notch above budget or economy hotels - offer clean, comfortable rooms equipped with TV and Internet, and breakfast included in the room tariff. The total current shortage of rooms has been estimated at 150,000 by the tourism ministry, according to the Deloitte report, most of it in the mid-market segment. Just 15 per cent of the existing hotel rooms in India fall in the mid-market segment, compared to 43 per cent in the United States and 35 per cent in Britain. "The room supply structure in India is like an inverted pyramid," says Patu Keswani, founder of the indigenous Lemon Tree brand of mid-market hotels. "There are more five-star rooms, though rising demand is in the mid scale sector."

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