Taking a cue from China, hotels in India eye manchise route

NEW DELHI: A hotel business model that has taken China by storm is gaining prominence in India. Manchise – a hybrid of franchise and management – means greater involvement of owners after an operator runs a hotel in the initial years. With some of China’s largest hotel companies reporting improved business through the manchise route, some in India, too, have started experimenting with the concept.

“I do see manchising growing in India like China as the brands are not really performing to the owners’ satisfaction,” said Manav Thadani, founder chairman of Hotelivate, a hospitality consulting firm. “This is the middle ground where the brand has some control over the product but not full control.”

In manchising, hotel owners have a greater say in day-to-day operations. The general manager is appointed by the operating company and strikes the delicate balance between owner and operating brand, he said.

“There was a time when global chains like Marriott would not have adopted a franchised route, but they are willing to consider such manchising and franchising arrangements for brands like Fairfield or Four Points. Brands like Radisson have been working on manchising arrangements. Hilton has done it. IHG has done it in some places,” Thadani added.

Aggregator OYO began operating some hotels under manchised route. Budget brand Treebo said it will focus on the manchised model to double its total inventory to about 800-850 hotels this year. “We are doing this quite extensively. About 100 of our hotels are under the manchised arrangement. It has worked out very well for us,” said Sidharth Gupta, cofounder of Treebo Hotels.

Cygnett Hotels & Resorts started a manchised model called Cygnett Lite last year. “Manchising can help brands grow faster. In a management model, the whole responsibility of their balance sheet and financial performance is on the hotel brand. Here, I give marketing support and the owner wants control over operations. We have six hotels under Cygnett Lite in locations like Sonepat, Goa and Katra and will launch 5-6 more this year. Manchising works for hotels which are non-standardised and offer select service,” said Sarbendra Sarkar, founder of Cygnett Hotels.

Manchising constitutes 10% of the Radisson Hotel Group’s portfolio in India, but Raj Rana, CEO, South Asia, expects it to grow. “The proportion of manchising arrangements will go up as it is the perfect model for the times we are in in India. There are second-generation hotel owners who are savvy and professionally educated and are getting first time into international branding. So this model helps them,” said Rana.