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Global Hotel Chains Customizing Mid-Market and
Economy Brand Business Model for India

By Meenakshi Verma Ambwani, The Economic Times, IndiaMcClatchy-Tribune Regional News

May 14, 2011--NEW DELHI -- British budget hotel chain Premier Inn opened its first Indian hotel in Bangalore in late 2009. In less than three months, several clients were enquiring about conference rooms and banquet halls--facilities that the UK's largest hotel brand never offered in its more than 590 hotels.

"We realised there is a huge demand for hotels to have banquet and conference rooms and decided to build these facilities in all our hotels," says Premier Inn India Managing Director Aly Shariff.

The Bangalore hotel will open a 200-seat conference room within three months. And its second hotel in Delhi will have a conference room to host 500 guests when it opens next month.

Premier Inn is not an exception. Most international hotel chains such as Marriott, Starwood, Carlson and Accor are all customising their mid-market and economy brands for India.

"Indian consumer have certain specific expectations from a hotel because of various social and cultural aspects and also because they are brought up in a service-oriented environment," says Rajeev Menon, area VP of India, Pakistan, Maldives and Malaysia at American chain Marriott International.

So hotel chains offer what they don't anywhere else-multi-cuisine restaurants, jet sprays in the washrooms, bellboys to assist guests with luggage, banqueting, meeting rooms, large lobbies, bar, gym... you name it.

Mid-market and economy hotels in the West do not offer these services. But in India, these are the norm. One reason for this kind of customization is increasing domestic travel, both on business and leisure. Gone are the days when international travelers occupied most hotel rooms.

"We believe 80% of our guests in our hotel rooms would be Indians and it is important to keep their expectations in mind," says Marriott's Menon.

When Marriott launches its mid-market brand Fairfield Inn, all the 12 hotels that it will build under the brand by 2013 will have restaurants offering all three meals, although in other countries they serve only breakfast. "Typically Fairfield Inn is surrounded by several restaurants, which might not always be the case in an Indian city or town," says Menon.

Marriott Hotels India undertook an extensive research to understand what Indian consumers want from a hotel before bringing Fairfield Inn.

French hospitality group Accor has big restaurants and gyms in its three Ibis economy hotels in the country. "At Ibis, we knew we will have to offer an elaborate spread and have bigger restaurants. Indians love a big breakfast, night outdoor areas and fitness centres," says Accor India Senior VP, Operations, Jean-Michel Casse.

But changing for the Indians has its upside too.

"The business model in India and other countries is very different. So even when we offer these services it does not disrupt our business model," says Casse.

Food and beverages contribute nearly 20-30% higher revenues to hotels in India than in other countries. Because Indians love to dine in restaurants in hotels even if they are not guests there.

Prognosis Global Consulting Managing Partner Siddharth Thaker says that food & beverage and other services contribute nearly half the overall revenues of hotels in India compared to global average of just 15%.

Convention hall brings good business too-think the big, fat Indian wedding. Hotels are the one-stop shop for meetings, parties and weddings in the country due to lack of convention halls.

So, mostly revenues from food & beverage sales and conferences make up for additional investments to provide these services.

Some hoteliers also train employees in various functions to keep costs low.

"We do not have a dedicated staff to lift the luggage or provide room service as that would have increased our costs. But we offer these services if a guest requests," says Premier Inn's Shariff.

Introducing full-fledged room service could have inflated costs, he says. But the hotel offers packed dinner or snacks, which guests can carry to their rooms.

American chain Carlson Hotels learnt its lesson a bit late. When it introduced its mid-market brand Country Inn & Resorts about a decade ago, it was largely a copy of the American concept. Now the chain is busy renovating the brand in tune with Indian taste.

"Hotels are essentially big socialising and meeting points in India, especially in the smaller cities and towns," says Ranjan Bhattacharya, managing director of Country Development & Management Services, the company that builds and manages the Country Inn brand in India.

"We realised to be able to expand aggressively we need to refurbish the brand to cater to Indian guests needs," he adds. The first renovated hotel will be launched in 2012.

Hotels are also tweaking room design for Indian guests.


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Copyright (c) 2011, The Economic Times, India

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