Staying at $50 per night in a good quality standardised hotel room is finally possible in India if you're staying at a ‘Made in India’ Mid Segment hotel chain like Mango Suites, Check Inn or Red Fox.
These hotels provide guests with complimentary in-room high speed Internet access, multiple electrical points for easy recharging and intelligent lighting equipped with sensors. They typically have room service, travel services, good security and are sparkly clean. These hotels have mushroomed over the past couple of years across India in cities like Mumbai, Delhi, Bengaluru, Hyderabad, Amritsar, Jaipur, Agra, Mysore etc. Some of these brands are rapidly expanding into cities which currently have limited room inventory. Typically these include cities like Patna, Ranchi, Guwahati, Kanpur as well as ‘sector focused’ emerging industrial clusters such as like Morvi, Aligarh & Sivakasi.
Mango Suites is an Express Business Hotel which in a very short time has presence in multiple locations, targets mainly the business travelers from the corporate and SME segments and works extensively on the pre-sales and packaged sales model. They target EBITA margins of 40% at a low ARR of $50 a night even in the tier I cities.
It's unlikely these mid-segment hotels will remain undiscovered for long, as more business travelers book their own travel, rather than relying on group tours or travel agencies. Corporates and SMEs are seeing value in blocking their room requirement for the whole year while taking advantage of 50% reduction in travel costs.
These Mid-Segment hotels often charge around $50 per night but can cost as low as $30 per night through pre-sales and package deals to their fast growing list of corporate clients. Companies like L&T, Aditya Birla Group, Alkem and a multitude of SMEs are already utilising services of these chains.
At this price point, immediate competition for these mid-segment hotel chains comes from ‘stand alone’ hotels which tend to have huge disparity in their services and standards. Stand Alone hotels are often plagued by smelly carpeting, 30-watt light bulbs that made reading impossible, and questionable bathroom facilities. Besides this, their visibility and credibility tend to be poor.
Some of these Mid-segment hotel brands are taking over these stand alone hotels and renovating the hotels as per their own standardised brand specifications. They plug those old flaws with their efficient project teams and make the hotels live in a seemingly impossible 90 to 120 day period.
As frequent travelers to cities like Delhi, Bangalore and Hyderabad, our own company representatives prefer to stay at mid segment hotel brands like Mango Suites and Check Inn and their experience is that these hotels are clearly better than the closest options in terms of outright Value. Most of the front desk staff speak functionally good English and guest services provide a full range of business services.
The hospitality woes that existed in India seem like they will finally be addressed by Indian Brands that are born out of the pain points specific to the Indian Market. After all, have we not seen this happen before in China and even in mature markets like the United States of America?
(The author is MD & CEO of Noesis Capital Advisors)
