The development pipeline of international hotel brands is heating up in India.
Earlier this month, global hotel CEOs met in New York and shared their excitement for the hotel development opportunities in China and India. Hyatt Hotels Corp. President and CEO Mark Hoplamazian described India as "so under-hoteled at this point, it's crazy." Hilton President and CEO Chris Nassetta advised hotel companies "have a lot more vision and look a little longer down the path" in India.
On the ground in India, hotel brand officers are hard at work laying the foundation for introducing their companies' brands and building awareness and loyalty, which will take time. But the conditions seem right; both India's economy and middle class are growing, and more members of the population are building disposable income to spend on travel.
Sudeep Jain, managing director of South West Asia at IHG Hotels & Resorts, called India a "priority growth market" for IHG. He said IHG has 46 hotels and approximately 7,800 rooms open in India and plans to double that number in the next five years.
“India has significant long-term potential that requires patience and commitment. This is not a short-term endeavor but a sustained effort. We are here for the long haul,” Jain said.
IHG currently has six core brands in India, and except for four franchised hotels, all are brand-managed properties, Jain said.
“We announced the opening of the Voco Jim Corbett, India’s first Voco, and there is a pipeline of 50 IHG hotels in India,” he said.
Nikhil Sharma, managing director and area senior vice president of South Asia at Radisson Hotel Group, said international inbound demand to India is gaining momentum, which is prompting the global brands to ramp up their pipelines in the country.
Radisson aims to open 30 hotels annually, with a strategic focus on secondary and tertiary Indian cities to tap into burgeoning domestic and religious tourism, Sharma said.
“With infrastructure improvement ensuring last-mile connectivity, tier two, three and four cities are more accessible and attractive for investment. Lower operational costs and a readily available workforce have also enticed organizations to expand their presence in India,” he said.
Last year, Radisson signed 21 new hotels and added 2,086 hotel rooms in India — a significant jump from 2022 — and introduced its Radisson Collection and Park Inn & Suites by Radisson brands to the country, Sharma said.
“[In 2024,] we will see a strong footprint expansion with eight new openings and 1,200 new keys across leisure and city locations,” he added.
Radisson's recent additions to its Indian hotel portfolio “include new signings across the length and breadth of the country, from Ayodhya, Odisha and Delhi to Bengaluru, to name a few.”
“The long-term vision for [us] in South Asia is to ensure that Radisson properties are easily accessible within a two- to three-hour drive across India, significantly improving upon the current average travel time of four hours,” he added.
Sunjae Sharma, managing director of India and Southwest Asia at Hyatt Hotels Corp., said that currently 90% of India travel demand is domestic. But he added that the India Brand Equity Foundation expects international tourist arrivals to reach 30.5 billion by 2028, more than three times the current number.
“India continues to be a big travel market and contributes to a large outbound business. So, yes, the growth in India is expected to be significantly higher than many other markets across the world,” he said.
He added that India, along with the Americas and China, is one of Hyatt’s key growth markets.
“Hyatt in India saw 33% year-on-year growth in revenue per available room in 2023, while this year it has increased by 14% driven by strong occupancy and rise in average daily rate,” he said.
IHG’s hotels in India have similarly performed well of late, Jain said.
“We are on a growth curve in India and have recorded great performance last year. In 2023, our RevPAR saw nearly a 30% increase compared to 2019. Occupancy rates rose by over 12%, reaching 74% in 2023 compared to 2019. Additionally, ADR increased by over 17% in 2023 compared to 2019,” he added.
Fueled by such performances, most international hotel firms have begun expansion plans across segments.
Accor is looking at adding 30 new hotels, or a total of 5,500 keys, in the next three to five years, while Marriott International is looking at adding 12 new hotels in the next few years.
Back in New York, Accor Chairman and CEO Sébastien Bazin said opening a hotel in India can take between five and six years. The road to open a hotel is much shorter elsewhere; it takes about two years to do so in the U.S. and three years in Europe.
“So, the question is, can you make money in those two places?” Bazin asked. “Do we all make a lot of money in China? No. Do we need to be in China? Yes. Are we going to make a lot of money in India? No. Do we need to be in India? Because you’re playing the outbound market.”
Editor’s note: Chris Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.