Having traveled and stayed at some of the major Indian cities the one aspect which I find most disturbing (and with most opportunity) is the business of hotels. India as a country has a huge population, huge density in the major cities, and an unbelievable number of travelers. But the problem lies in providing these travelers with a decent, hygienic hotel to stay which is not extremely expensive (I don’t believe it is too much to ask).
Typically the most common routes taken to find accommodation are: Firstly to go and stay at a relative / friend / connections place. The informal network in India is very very strong and it is generally not difficult to find some relative at whose house you can spend a couple of days. Secondly is ofcourse going to a 3 Star – 5 Star Hotel and shelling out a lot of money. I really can’t believe the hotel rates for 5 Star hotels in Delhi and Mumbai. Thirdly is to look for a cheaper place to stay and this of course becomes very very difficult since almost no information is available online and you can find brokers everywhere who want to make their commissions.
I think I do not need to explain why this is really a problem. The lack of information and inconvenience to find a decent hotel to stay in budget is enough! But lets look at why this is also an opportunity. Indian middle class is growing and it is expected to become the biggest class in India over the coming years. Moreover the culture in India is changing where people now want to take vacations, travel around and see new places. Most people prefer pre-packaged foreign tours but when Indian Hotels and Travel become cheaper and better, this market will definitely explode.
Who is currently targeting these markets? Almost all the travel websites, MakeMyTrip, ClearTrip, Yatra and others. By providing information about various hotels on their website and allowing booking, they are making it much easier for people. The only problem is establishing trust. When I book with the website I do not know what will happen if I don’t like the room or its condition or locality, the trust has not been built into the system as yet. However it is a good attempt and I hope it becomes successful. Also the Tata initiative of Ginger Hotels is another great initiative aimed at the hotel industry keeping the middle class in mind.
The whole point is to provide a good place to stay for the masses and also make money from it. Moving from the 5 Star Busines of high margin – low volume to a good budgeted hotel with high volume – low margin. Such innovation is probably yet to be seen in India. Thus when I read about the initiative by ITC Ltd to invest Rs 8,000 crores in the hotel industry I felt excited! Maybe something is moving in this direction but it will probably take a lot of time to come out. I feel it is a great industry to target but somehow have not seen much movement in it. The only movement is in the 5 Star Hotel market. Come on PEs / VCs invest in India, invest for the middle class and I am sure they will make huge returns for you.