Faced with falling average room rates (ARR) in the five-star category, US-based Carlson Rezidor Hotel Group is stepping up its presence in the three and four-star hospitality segments in India.
The hospitality chain has planned to launch more than 100 hotels in India by 2015, a majority of which will be in the mid-market segment.
“Today, there is mixed growth in the hospitality sector. Our focus will not be on five-star hotels, where ARRs have fallen 5-7 per cent. Instead, we will opt for the three-star properties in the mid-market, where room rates have been stable,” said KB Kachru, Carlson’s Chairman for South Asia and founder of the group’s hotel business in India.
The group intends to push brands such as Park Inn by Radisson and Country Inns & Suites by Carlson in the country.
Scarcity of land in metros is also forcing the hotel chain to turn to smaller towns. “It’s basically the metro markets which can sustain hotels in the five-star segment. Since land is expensive in metros, we plan to take our three-star brands into tier-2 and tier-3 towns, and the suburbs outside the metros,” Kachru said. “We have recently signed 49 properties in this segment under our brands like Park Inn.”
The three-star segment has better scope in India with domestic tourism, where the rates have been stable between ₹4,000 and ₹6,000. Room rates are linked to the health of the economy and we will have to wait for things to improve after the elections,” Kachru said. The Group has brands like Radissson Blu in the five-star segment, but would restrict its expansion to the metros. “While we will continue to have five-star properties, it would be extended to only metros like Hyderabad and the NCR region. We hope the drop in room rates in this segment is temporary. Today, five-star room rates range from ₹8,000 to ₹15,000,” he said.
Currently Carlson Rezidor has 65 operational hotels and 36 under development in India.