Hotelogix, global provider of cloud-based hospitality technology, has released a comprehensive white paper examining the opportunities and challenges that home-grown mid-segment hotel brands face in competition with their international counterparts. The white paper reveals that domestic brands are not just surviving but thriving in a market dominated by global hotel brands. These young and dynamic properties capture around 60% of the total branded rooms in the country, demonstrating resilience and innovation within the competitive Indian hotel industry.
The white paper “The Rise and Rise of India’s Home-grown Mid-segment Hotel Brands” (download the white paper) is one of the few publications focusing on domestic mid-segment hotel brands. It provides valuable insights from leading hoteliers who have successfully established a niche in this segment. The paper aims to uncover opportunities and offer guidance on navigating challenges to create a unique identity while meeting the distinct needs of their guests.
According to the insights presented in the white paper, domestic mid-market brands with limited inventory are poised for significant growth in tier 2, 3, and 4 cities. This surge is driven by international brands’ considerable challenges in establishing operational capabilities in these regions, where a remarkable 80%-85% of demand comes from domestic sources. Echoing the same sentiment, Aryavir Kumar, Managing Director of The Clarks Hotels & Resorts, says, “In 2023, domestic mid-market brands accounted for about 66% of all hotels added. Of this, 53% were in tier 3 and 4 cities.”
According to Vikramjit Singh, Founder & CMD of Alivaa Hotels and Resorts, home-grown hotel brands capitalize on their strength over international players in drawing flexible contracts with suppliers with competitive cost structures, flexible agreements, and exit terms, which helps them with rapid expansion in tier 2, 3, and 4 cities. “In 2023, approximately 70% of hotels signed were domestic brands, with an average of 70 rooms per property,” says Vikramjit.
Philip Logan, Chief Operating Officer of Royal Orchid Hotels, explains that domestic brands have the flexibility to quickly utilize world-class, home-grown hospitality technology solutions. This gives an edge to domestic brands as these solutions are not only cost-effective but also better suited for Indian markets. Whereas international brands often face restrictions in their choice of technology due to the need for policy uniformity globally. “Access to cost-effective, made-in-India cloud-based solutions like Hotelogix is a significant advantage for home-grown mid-segment hotels,” says Philip.
“Hotelogix has a unique advantage in working with small, large, and growing domestic hospitality enterprises. It allows us to understand their opportunities and challenges while competing with international rivals. Our white paper aims to engage industry professionals and stakeholders in discussions about exploring innovative strategies to empower home-grown brands and help them flourish on a larger scale,” says Aditya Sanghi, CEO of Hotelogix.
Despite their success, challenges remain. Domestic brands face hurdles in attracting top talent, navigating complex regulatory landscapes, and brand perception that international players bring. They also need to up their game to compete with the established presence of international chains in tier-1 cities. “The allure of global brands poses a challenge for domestic players in terms of talent acquisition and retention,” noted Jaideep Ahuja, Managing Director & CEO of Ahuja Residency.
Yet, the outlook remains optimistic. Data shows a remarkable 70% surge in contracts for domestic hotel brands, with expectations that the Indian hotel market will reach USD 47.50 billion by 2030. The white paper ultimately positions domestic brands as not just participants but as future leaders in the evolving hospitality landscape.
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