The next few years could be the rise of the white-label hotel-management firm — in other words, the third-party operators who sit between the international brand and the property owner.
Such companies are nothing new, but with the rise of travelers from India, I see that country largely expanding its number of hotels and growing those specialist firms with people who bring their local knowledge to running them.
In the 10 years I have been tapping away for Hotel News Now, I have seen this rise in white-label management in the United Kingdom and then their emigration to mainland Europe from the U.S., notably with Interstate Hotels & Resorts, now known as Aimbridge EMEA.
In his comments accompanying Accor’s full-year 2023 earnings, CEO Sébastien Bazin said the population of India's middle class is set to jump from approximately 300 million today to 800 million in possibly five years’ time.
India is in a growth spurt, and one sign of that is the 25 new motor freeways planned, and that will obviously result in easier movement of guests and more hotels.
One supposes most of these new Indian travelers will investigate their own massive, beautiful country first before perhaps heading outside of the country.
Where might they go to if not to India? Chinese travelers largely go to Southeast Asia, if not within China itself. Indian travelers likely will follow suit to places such as Malaysia — with its interesting mix of Asian and Indian cuisine — and other parts of Southeast Asia. It's also likely they could travel in the other direction to the Middle East, the world’s new playground. Such destinations are not too distant but have unique cultures.
Of course, middle class is a relative concept based on several factors, discernible income being one. People entering the middle class in India are not all likely to be able immediately to travel internationally or even too far domestically.
These things take time, but such is the growth of India, which could happen much sooner.
But I do expect to see in the next five years more consolidation of these white-label management companies, the larger or better-financed ones scooping up smaller players. Scale is as important for them as it is for international branded hotel firms looking to expand in new markets.
I assume it will be easier for international hotel brand companies to work with a white label rather than take a management deal. India is home to 1.5 billion people and spreads across 1.27 million square miles.
Initially, startup white-label firms will want to go very local, and there is room for them.
There will be an explosion — there already is — of mom-and-pop hotels that eventually will become more sophisticated and seek better revenue streams.
I recently visited India for the first time. As I was going along the New Delhi-to-Jaipur road, I saw hundreds of roadside hotels, many of which did not look too appealing.
There were a lot of Oyo Hotels, which, of course, despite all of its Airbnb-ness, is a classic distribution model.
But there were more independents that caught my gaze while I was on holiday.
As incomes and travel demand grow, these will increasingly be acquired, improved and better distributed, and increasingly white-label management companies will appear to oversee operations.
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