Summer’s round the corner. You’re on a budget. But you still want to head somewhere exotic. This is when you try to factor in all expenses: transport, food, shopping, and accommodation. For long, this last box on the check-list was a matter of worry. It often meant a compromise between hygiene, cleanliness and cost. Cheap hotels translated to shady, a la Hotel Decent (Jab We Met, anyone?). Fortunately, players in the Indian hospitality industry are trying to change this, and up the game.
Gone are the days when you’d have to scrounge through myriad travel apps and websites, hoping and praying for the best. The emergence of budget chains like OYO, Mango Hotels and FabHotels has ensured that travellers can expect a reasonable balance between quality and cost. Most promise the comfort and safety of a three-star, even in premium locations, at a much lower price. Put simply, more branded toiletry to pocket, without paying through your teeth.
“The hospitality industry in India suffers from a major disconnect between demand and supply of quality living spaces, forcing travellers and city dwellers to compromise on location, comfort, and pricing,” says Abhinav Sinha, COO of OYO. This was the gap that Sinha says they wanted to bridge when they started OYO.
Once a property is listed under OYO, it must meet a stringent list of quality and price standards. “A 150-point check-list is reviewed to transform a hotel into a branded property,” Sinha says. They use a 3C (3 crosses) score mechanism to evaluate a partnering hotel’s performance. “This rating is a combination of parameters i.e, room compatibility (to OYO standards), constant availability and customer reviews,” he explains. A complaint against a hotel gets them a certain number of ‘crosses’, based on a certain weightage. If it exceeds a certain number, that hotel faces penalties, which include being delisted.
Mango Hotels feeds the same customer base. According to Prashanth Rao Aroor, CEO, IntelliStay Hotels (which runs Apodis and i-Stay Hotels as well), “Mango Hotels was first conceived to bridge the gap in quality hotel rooms at an affordable price point and to better utilise built-up space on non-retail floors of commercial buildings.” Aroor notes that the Indian hospitality industry is crying out for quality, with patrons being under served.
Each of these chains caters to customers across price brackets and locations. Rooms often start as low as ₹999 for a night and can go even lower, depending on prevailing offers and time of year. Price apart, hotels are grouped by convenience and purpose. OYO, for example, groups its offerings as OYO Welcomes Couples, OYO Family, and business. This minimises the hassle and stigma that a lot of travellers often face.
While budget players disrupt the existing hotel business, Airbnb, has redefined accommodation and the very essence of ‘hotels’, and had a defining impact on the Indian market. “Almost a million Indians have travelled using Airbnb since 2008,” says Amanpreet Bajaj, Country Manager, Airbnb India. 2016 was a particularly strong one for them, he adds. “Listings in India grew by 115% over the past year and now there are over 24,000 listings across the country.”
Aroor says he hopes disruptors continue to thrive, after the initial boom. “I think they have done a great job of scaling up locations and giving a taste of ‘branded’ to an audience who have never had that option before. But the true test will come when they have to get people to pay what’s due and without discounts. We know that great brands are not the lowest price offerings. Quality costs money.”
Burgeoning demand
The Indian hospitality market continues to grow exponentially, in terms of numbers. It’s the industry that needs to catch up with this burgeoning demand. “We continue to out-execute competition, and have gained a huge lead in the business. We doubled our top-line and brought our losses down by a third. We created new market opportunities by launching OYO Townhouse — a new mid-market brand,” Sinha says. OYO also raised $250 million in funding from SoftBank and others last year.
At the same time, Airbnb launched ‘Trips’, a curated travel experience that brings accommodation together with unique local interests and cultures, to provide for a ‘transformative’ travel experience. Aroor, meanwhile, says IntelliStay and their associated hotel chains plan to focus on secondary and tertiary markets within the country. “India has incredible diversity; in some ways, we are like the EU. There are 15 or more ‘countries’ within the country,” he says.
With more people travelling, options for a comfortable night’s stay are only going to get better as the market responds. A word of caution: remember to read the fine print, go through traveller reviews and check each listing carefully. With competition so intense and cut throat pricing, it is already getting challenging for players to provide the stringent safety checks and organised framework of the more traditional hotels. If something looks too good to be true, it probably is.