Hospitality will Increase Footprint in Tier II, III and IV Markets in New Decade

According to Vilas Pawar, CEO, Choice Hotels India, the Indian hospitality sector has everything to be optimistic about, based on demand-supply economics

THE INDIAN hospitality industry has the potential to contribute to the nation's economic growth in a big way. With the introduction of e-visa for foreign tourists and with the domestic economy poised to improve, there are clear signs of increased domestic travel. The growth rate in room demand has also been consistently outpacing the supply growth in India for the past few years.

India's Tourism sector too has been performing well with foreign tourist arrivals and foreign exchange earnings growing year-on-year. This is likely to continue to grow in the future. Domestic travel spending has also witnessed an impetus, year-on-year. The appreciation of the US dollar has made international travel unattractive to many, who are now seeking to travel within the country for holidays, thereby increasing leisure travel in the country. Likewise, with the economy growing, domestic business travel would also increase.

The long-term outlook for the Indian hospitality business continues to be positive, both for the business and leisure segments. The sector has the potential for growth on the basis of increases in disposable incomes, increase in foreign tourist arrivals, momentum from government-led initiatives, and the burgeoning middle-class population.


The most pressing challenge faced by our industry is shortage of labour as well as skilled manpower. This is because recruiting and retaining employees in the hospitality sector has proven to be extra challenging with them moving to similar sectors like retail and restaurants, attracted by their work environment, remuneration and growth potential, producing an unprecedented workforce gap within the industry.

Another big challenge is the impact of social media on customer loyalty. Online customer reviews has driven increased customer competition and high service-level expectations. A great customer experience promoted online can bring big profits, while a single negative review can have a lasting impact on your brand. What's more, it cannot be tamed.

Disruptors Within And Without

The main disruptors within the industry continue to be Online Travel Agencies (OTAs) and room aggregators such as OYO and Airbnb. However, their impact on our business has been little, Choice being an international brand.

Impact Of Technology

Smart technology is changing every aspect of our lives, and the hospitality industry is no exception. Kiosk check-ins, self check-ins, use of robots for housekeeping – all make use of applications. Hospitality being a service industry, offers many opportunities for smart technology use –from operations to guest experience to marketing. Smart technology also offers a variety of cost savings and revenue opportunities that enable hotel owners to reach higher levels of profitability.

Year 2020 onwards, smart technologies such as customer surveys, loyalty-program management and hotel management will play a bigger role in how hotels operate. The key to smart hotel operations is implementing the right technologies to meet guest expectations.

As we move forward, we can expect to see more hotel properties leveraging a variety of smart technologies to reduce operational costs, improve guest experience and exploit new sources of revenue. The opportunities lie in the data. Those properties will be successful which invest in collecting and analyzing data to get results.

The New Decade

With the Indian economy poised to grow at a fast pace over the next five years and beyond, to become one of the largest economies in the world, the hospitality Industry would definitely stand to benefit. Due to the consistently growing middle-class with its increasing disposable incomes, the tourism and hospitality sector is witnessing a healthy growth and accounts for 8 per cent of the country's GDP. 

The hospitality sector encompasses a wide variety of activities within the services sector and is a major job provider, both directly and indirectly. This sector is also an important foreign exchange-earner for the country.

However, for the hospitality sector to grow substantially and consistently, incentives and support need to be given by the government, like a reduction in the overall taxation on the hospitality sector, making hospitality projects more viable and attractive from a businessman’s perspective, and making room tariffs more attractive for the end consumer. 

Indeed, the hospitality sector will continue to rise on the back of domestic leisure tourism and growing business opportunities in Tier II and III cities.

Choice Vision

The goal for year 2025 for Choice Hospitality India Pvt. Ltd – a wholly-owned subsidiary of Choice Hotels International, one of the largest and most successful lodging companies in the world – would be to grow our footprint across the Tier II, III and IV markets to increase RevPAR for our hotels as well as have a strong return on investment for our stakeholders i.e. hotel owners and promoters, and to increase value deliverables to our franchisees.

While there are over 7000 Choice hotels across the globe, Choice Hotels India franchises 32 hotels with 12 being developed. Choice Hotels are known by its brands - Quality, Comfort, Sleep Inn, Clarion and Ascend - which offer choices from full service upscale to limited service mid-scale hotels.

This article was published in BW hotelier issue dated '' with cover story titled '5 Years Young & Just Begun'

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