Indian mid-segment hotels enjoy competitive edge against int'l peers

Flexible contracts with suppliers and access to cost-effective cloud solutions are giving home-grown mid-segment hotel brands a competitive edge against international counterparts in India, according to a whitepaper by cloud-based hospitality technology solutions provider Hotelogix.

According to the whitepaper, home-grown mid-market brands with small inventory can experience rapid growth in tier II, III, and IV cities, as it is exceedingly challenging for international brands to establish operational capabilities in those areas where 80-85 per cent of demand is domestic.

India's home-grown mid-segment hotel brands control about 60 per cent of the total branded rooms available in the country, it mentioned.

 

These domestic mid-market brands have also begun exploring management contracts and franchise models as a growth strategy, providing a significant competitive advantage over international chains, it said.

Being Indian brands, they understand local people, culture, and tradition better than their bigger international rivals, the paper added.

Despite the allure of established international names, these hotels have survived and thrived in the last couple of years, their journey, though challenging, is a testament to their resilience in the dynamic, competitive, and attractive Indian hotel industry.

The Hotelogix whitepaper is based on insights from industry professionals and stakeholders.

Further, it stated that the advantage of home-grown mid-segment brands is their ability to deliver customised services instantly based on guest needs, which is a major advantage as international brands often offer experience owing to their sheer size and not-so-flexible policies.

Mid-scale home-grown hotel brands can easily blend local culture, and cuisines, among others, to craft a compelling narrative around offering differential guest experiences, it noted.

To some extent, the whitepaper said, the home-grown brands score over bigger international players in this area of operation.

Domestic brands have a better understanding of the local ecosystem, and by leveraging the local elements, they can quickly determine how to create value and profit for their hotel partner, it stated.

In this scenario, property owners and travel agents in tier III and IV cities are more likely to work with growing mid-segment domestic brands, which can offer domestic travellers personalised experiences and are also flexible on service inclusions and amenities.

However, the domestic brands also face a set of challenges in attracting and retaining employees, it said.

Retaining staff can be challenging for home-grown brands due to the perceived stability, higher remuneration and benefits offered by international chains, it added.

Even expanding in tier I cities is the most challenging for homegrown mid-market brands as metros are saturated with established international hotel chains that have a strong brand presence and customer loyalty, it said.

For mid-scale home-grown brands, competing with these well-known players can be overwhelming, especially when trying to attract high-value customers, it added.