International hotel chains are changing business model in India. They are going beyond lending brands and managing hotels owned by local partners to invest directly in ventures that develop hotels to scale up operations in the world’s second fastest growing major economy.
Many global hospitality chains are striking deals to expand mid-segment hotel brands in the country. Unlike five-star hotels that generate enough revenues to sustain themselves, hotels in the mid-segment become more lucrative if they operate as a chain.
French firm Accor has already struck multiple deals to develop its budget hotels in India, including a JV with InterGlobe Enterprises to develop the Ibis brand in the country and a three-party venture with Pacifica Partner and InterGlobe Enterprises for seven hotels under various brands like Novotel and Pullman.
The UK-based InterContinental Hotel Group (IHG), which runs brands like InterContinental and Holiday Inn, has just entered into an agreement to form a joint venture with Duet Hotels India, said a person close to the development. The venture, in which IHG is likely to hold 24% stake, will invest $300 million to build 20 hotels for the budget brand Holiday Inn Express in India.
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