Desi Tamasha

US group to open 100 hotels in India

By Joe Leahy in Mumbai

Best Western International is planning to roll out 100 hotels in India as the world’s largest hotel chain races to capitalise on the country’s chronic shortage of tourist and business travel accommodation.

Best Western’s licensee, Cabana Hotel Management, will invest more than $1.2bn in the initiative over the next 10 years, which will look to develop the mid-tier four-star market, a segment that is almost non-existent in India today.

“We decided that India is going to become a very important country for Best Western in terms of inbound and outbound tourism,” said David Kong, chief executive of Best Western.

With foreign investors flooding into the country, hotel rooms in India are routinely in such short supply that luxury hotels often charge $300-$400 a night for rooms that just a few years ago would have cost half or a third of that.

In some mid-tier cities, such as Bangalore, rates for five-star hotels can rise to as much as $800 a night excluding tax when the city hosts a major event.

The country has about 110,000 rooms in the organised hotel sector. Analysts said this was as little as half what the market needed and a fraction of what was available in developed countries. The US city of Las Vegas alone boasts 150,000 hotel rooms.

Mr Kong said Best Western already had six hotels in India but had decided to expand its offering in a bid to target not only travellers within the subcontinent but also the rising number of Indians travelling abroad for business and holidays.

The idea is to promote the brand in India’s domestic market in anticipation that, as the country’s middle class prospered, they would follow the example of their peers in China and become a major source of outbound tourism in the decades to come.

Indians familiar with the Best Western name in their home market would be more inclined to stay at the chain when they went abroad, he said. More than 6m Indians made overseas trips in 2005, according to Euromonitor – roughly twice the number of incoming visitors to India, half of which are business travellers.

Best Western will roll out the initiative through Signet Hotels, a subsidiary of its partner Cabana Hotel Management. The plan was to open 10,000 rooms across India, which will be priced at 20 per cent to 30 per cent below rates at five-star hotels.

Signet would also consider the possibility of sub-licensing the brand to other companies.

The hotel group’s push follows plans by French hotel group Accorand Dubai-based developer Emaar Properties announced last November to develop jointly 100 budget hotels in India.

Hyatt International Hotels plans to open 15 deluxe hotels in the next few years and Starwood, owner of the Sheraton brand, is aiming for 50 hotels by 2010.

Mr Kong said that to help deal with a shortage of trained workers, Best Western and Cabana Hotel Management would also begin work on a hospitality institute in India this month to train future staff.