India has been one of the early players in the hotel branding business, with the mighty Taj and Oberoi being the discerning pioneers who devised peerless standards and famed Indian hospitality into a globally acclaimed brand standard! The brand is what the brand brings to the table. It brings a promise of what the brand hopes to deliver, thus creating the essence of consumer familiarity and recall.
Indian entrepreneurs have always loved to name their immovable assets after their loved ones, whether in daughters and sons or wives and parents. Some interesting names that have christened their hotel empires after families include the Oberois, Marriott, and Hiltons, while Tatas decided to name it after India’s Marquis Monument of Love and the Imperial Tobacco Company (now just known as ITC). Flush with nicotine-infused wealth, they have experimented with franchises, upgraded franchises, and now ITC (some might even accuse them of surrogatedly selling cigarettes in the guise of luxury hospitality!). ITC, the great Indian multi-brand, multi-dimensional Moghul, has been, for some reason, known to itself, unable to create a luxury brand. Despite being a well-respected marketing company with an envious cash balance to boot, it has yet to discover the potential of owning a marketable luxury brand name. The Luxury Collection, currently franchised from the Marriott–Starwood network, does not give it the edge. ITC has since introduced Mementos and Stories, which are very promising.
ITC cannot be a mere asset owner and should commence investing in creating a brand synonymous with its bespoke hospitality collection. Its second-rung brand, ‘Welcomhotel,’ is too complicated-sounding a brand to make sense of as well. Gone are the days when asset-owned brands command market valuation.
Leela, the bespoke ingrown hospitality brand, is named after the legendary late Capt. Nair’s better half, who has taken in regular global franchises but insisted on co-branding it with the ‘Leela’ tag. Toronto-based Brookfield Asset Management acquired four of Leela’s assets in Delhi, Bangalore, Udaipur, and Chennai from JM Financial Asset Reconstruction Co. in March 2019 for Rs 3,950 crore. The Leela Palaces, Hotels, and Resorts now manage hotels in major cities and leisure destinations across India with a portfolio of 3,382 keys across 12 operational hotels. These include the flagship hotel in the capital city of New Delhi, Bengaluru, Chennai, Udaipur, Jaipur, Gurugram, East Delhi, Mumbai, Gandhinagar, Kovalam, and Ashtamudi. With an IPO planned for Rs. 5000 crores, Leela is all set to double its inventory in the next five years.
IHCL manages a diversified portfolio of five hotel brands: Taj, Vivanta, Seleqtions, and Ginger, with a portfolio comprising 310 hotels: 110 under the Taj brand, 39 under Seleqtions, 57 under Vivanta, and 90 under Ginger. Recently, it re-launched the ‘Gateway’, which has a portfolio of 17 hotels. Additionally, the portfolio now features the newly introduced brand “Tree of Life,” which consists of 14 hotels. Besides, IHCL also owns Ama Stays & Trails, a heritage bungalow and luxury homestay chain. IHCL recently agreed with Claridges New Delhi to develop the Claridges brand further.
Most international brands that have bombarded India in the last decade or so have brought with them their perceived brand value and global brand standards that are not necessarily even to the Indian big four but have expanded and have become bigger in numbers. The inability of Indian brands to create brand standards that could be replicated and create a marketing ecosystem among discerning hotel owners around India and abroad has resulted in global brands running to the bank. For Indian hotel brands, investing in brand-building is almost like an afterthought and will do it only at gunpoint. Indian hotels have been quick to copy global revenue management practices where they see an opportunity to add to the bottom line by way of optimizing customer spending (the Hall Rentals on banquets is one such shining example of a revenue enhancement or a scam, depending on which side of the desk you are).
It has always been a difficult mindset drive for hotel brand owners like our big three to shift from being an owner-driven hotel brand to engaging, managing, and marketing properties of third parties. Globally, it is now, among the major brands other than Shangri-La, that have opted to be asset-light and grow by being brand owners. This can be very well articulated when Colony Capital, a PE fund, bought the Grand Ol’ Lady of Singapore, ‘Raffles Hotel,’ for USD 1 billion in 2005. This is a ridiculous amount for 100 key inventories and a single hotel to boot. The surge of the Raffles brand has turned hotel brand valuation on its head. Since then, Accor Hotels bought a collection of the brands which included Fairmont, Raffles, and Swissôtel brands, for $2.7 billion! No one has been talking about the real estate valuation here!
Among the Indian chains, the Taj, Oberoi, and Leela have been successful in managing and marketing luxury properties for asset owners in a limited way. But, with most real estate companies seeing value in multi-use development and investing in a hotel still seen as a wealth generator, the opportunity to bid and create superior service barometers is immense. As the world shrinks, support for global RFPs and the value of a reliable GDS is paramount in crossing all the ticks in choosing the right luxury franchise, but a home brand like Leela still commands a considerably higher average than its peers on the GDS in Bengaluru.
Consider this for small measures and ambition: OYO, which now is considered a travel-tech company, is now in the black for the first time for the year 2023-24, has over 13,000 franchised and leased hotels, and over 450,000 rooms, adding over 64,000 rooms every month globally. This has also brought in changes in the form of OYO diversifying from a pure aggregator model to owning inventories through a network of franchises or lease operations. Oyo still does not own a single hotel but is valued at USD 4.6 billion. Of course, Airbnb continues to be the world’s highest-valued chain with a valuation of over USD 80 billion!
The Indian brand game has been a game-changer in the three- and four-star domains, with homegrown brands such as Sarovar, Lemon Tree, and Fortune having been more nimble-footed in acquiring hotels via management, marketing, and franchise mechanisms. Sarovar now operates over 135 hotels in 80 cities with over 9000 keys, with another 80 hotels in the pipeline. Sarovar was acquired in 2017 by Louvre Hotels Group, the second-largest hospitality group in Europe, for an undisclosed sum.
Brand Finance, an independent brand valuation consultancyin its 2024 report on Hotel Brands said According to Brand Finance, the total brand value of the world’s top 50 most valuable hotel brands stands at USD 56.8 billion for 2024, a significant drop from the pre-pandemic figure of USD 70.2 billion in 2020. Airbnb was not included by now owning properties themselves. However, I am sure, in the coming years, it will get more difficult to ignore the likes of Airbnb and Oyo!
Though Indian hotel brands have been late starters in the hotel-branding enterprise, it is never too late to reach out to what might just be the world’s second fastest-growing hotel market. Indian mid-scale brands such as TGI, Bloom, and Clarks are making enough noise to now be considered serious players to target newer geographies and be part of a heeded value proposition.
What transpires when you wake up one fine morning and decide to rebrand your property? The brand wars to take over the Indian hospitality space have only just begun. Gear up and enjoy the ride…