Three stars' worth

UNEXPECTEDLY, FOLLOWING an extended period of anonymity, the Indian three-star hotel has found global attention (and not of the ignominious variety, mind).

An acquaintance in foreign private equity announced two weeks ago that he was prepared to commit up to a $100 million as seed capital towards a three-star hotel chain.

At roughly the same time, an undistinguished businessman in London was notching up similar pennies through the London Stock Exchange, for the same purpose.

I happened to report it, and my inbox was flush with requests from "interested parties". Someone was building a hotel in Uttaranchal and could do with some of that money, another asking me how he could raise $100 million.

A Delhi real estate broker wanted, I assume, to broker a deal... any deal.

A month ago, I had the privilege of staying in a "three-star" hotel, complete with multi-cuisine restaurant and banquet facilities "" stock collaterals of a non-luxury hotel. (This being a hotel in Kerala, an Ayurvedic masseuse was thrown in for good measure)

Now, this particular hotel was actually all right, but the general experience with budget mid-market Indian hotels is that for too long they have suffered from slapdash management, are exempt from any regulatory consistencies, not to mention suffer from lack of scale.

I found a definition for three-star hotels on wikipedia "" "middle class hotel, moderately priced, daily maid service, room service, dry-cleaning, Internet access, and a swimming pool".

Unfortunately there isn't an overseeing body that administers these parameters, so three-star hotels go with the happy middle "" neither five-star nor lodge, somewhere half-way, in pricing and service.

Come to think of it, the foggy three-star is not that different from the equally nebulous seven-star (Most established players are content to claim five, but occasionally you will get a hustler who will claim seven). Just as with the seven-star, you're working with the indefinable sky as your limit, with three-star you have the unrestrained middle ground.

There is an industry where the three stars actually mean five stars. In the vocabulary of gastronomy, the three Michelin stars indicate the most decisive culinary triumph.

The Michelin dining guide that originated in France, and has travelled across the Atlantic to the US, is the ultimate arbiter of haute cuisine. It's, admittedly no scientific measurement, just the critics' voice rating a restaurants' fineries, service and, of course, food, but in France the Michelin stars enjoy tremendous cachet and exert great bearing on the food markets.

For some, the loss of a star can mean the end of the world "" like Bernard Loiseau, a larger than life celebrity chef in France, who committed suicide reportedly in fear of losing his third Michelin star.

So how much are three stars worth to these potential investors? Probably not as much as it meant to poor Loiseau. But let the numbers do the talking... India's middle class estimated at 300 million in 2005, is expected to grow to 450 million by 2010.

And today, the hospitality industry is largely driven by the domestic market (largely middle class), which grew 13.7 per cent year-on-year between 2000 and 2004. India is also reportedly set to be the largest tourism market by 2010.

Besides, today's middle classes have ever mounting expectations, fuelled by the usual suspects "" conspicuous consumerism and rising disposable incomes.

They are looking for more bang for their buck, even with their three-star hotel accommodation. No longer will they be content with just a multi-cuisine restaurant. Or even "good ambience".