Radisson, Marriott Hotels & Resorts, Lemon Tree and Sarovar Hotels are among a growing number of hospitality firms looking to take advantage of the growth in travel demand in India’s Tier-2, 3 and 4 cities and diversify their operations from major cities . Some of these companies have signed properties in places like Kumbhalgarh, Kasauli, Banswara, Kharagpur, Ranakpur and Neelkanth.
Delhi-based Naaz Hotel Consultants, a bespoke hospitality consultant, said several hospitality firms have been approached to conduct feasibility studies and connect them with property owners in smaller towns. “Since the cost of land is high in tier-1 cities and there is a limit on where companies can expand, it has been a good proposition for companies to grow in tier-2,3 and 4 cities. This does not mean that metro cities are not expanding, but in the last two years, we have signed 12 hotels and have around 10-12 hotels in places like Kasauli, Agra, Ranthambore, Kumbhalgarh, Dalsana, Pahalgam and Ranchi. are working on. Ishaan Kaul, director of the firm said.
Most global hotel chains have a range of brands to cater to diverse customer segments, the expansion helping them establish their midscale and upscale brands with 90-130 room properties in smaller cities. Enhanced air connectivity is also propelling their plans.
Radisson Hotels already has more than half of its Indian portfolio in smaller locations across India. Zubin Saxena, Managing Director and Vice President of Operations, South Asia at Radisson Hotel Group said that post the pandemic, India has become a huge domestic travel destination. It is largely operated by leisure hotels around Tier 2 and 3 locations.
Royal Orchid Hotels, which recently announced plans to run 100 hotels in the next year, is also expected to grow in Tier-3 and 4 locations such as Nellore, Gulbarga and Digha, up from the current 87, said Chairman and MD Chander Balji. he said .
Lemon Tree Hotels is opening properties in Bokaro, Chirang, Kharar, Shimla and Sonmarg next year ahead of its Tier-1 cities. Marriott Hotels & Resorts plans to foray into new locations such as Ranchi, Asansol, Maithon and Deoghar with its The Le Meridien, Courtyard by Marriott and Fairfield by Marriott brands.
“As a company, we were always on the lookout for signing properties that offer a great location and bring a sense of financial viability. When we look at such destinations, we are also looking for one or two resort locations. We remain focused, given the high average room rate, which is driving viability in tier- 2-3 cities,” said Saxena at Radisson Hotels.
Online travel operator Cleartrip.com said there is substantial demand for hotels in smaller cities as the number of average home vacationers has increased sharply since the pandemic.
Sarovar Hotels Managing Director Ajay Bakaya considers it a pioneer in venturing into locations beyond metropolitan cities. “We saw the opportunity 15 years ago. There was huge latent demand and a lot of commercial activity happening in these towns. Land is even less expensive in some places, so it’s a lot for the hoteliers and for us to come and manage That only makes a viable proposition.”
From January, Sarovar has started operating hotels in Vaishno Devi, Katra; Rajahmundry, Andhra Pradesh ; and Jalandhar. There are plans to open hotels in Manali, Orai, Sonepat, Ayodhya, Panchgani and Sriperumbudur in the next three years.
The Federation of Indian Chambers of Commerce and Industry has said in a recent report that India’s travel market is projected to reach $125 billion by FY2017, up from an estimated $75 billion in FY2010.
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