India to become 3rd largest lodging market globally: Hilton
Premium- Alan Watts, president, Asia Pacific at Hilton was in India for the launch of a 619-key dual-branded hotel complex in Bengaluru in partnership with Embassy Office Parks REIT
Alan Watts, president, Asia Pacific at Hilton was in India for the launch of a 619-key dual-branded hotel complex in Bengaluru in partnership with Embassy Office Parks REIT, a real estate investment trust. In an interview, Watts spoke about India’s hospitality industry catching up with China, the disproportionate attention given to luxury segment, and why India is a critical market for the company. Edited excerpts:
What are Hilton’s expansion plans in India?
We’ve got 24 hotels trading today in India and 14 under construction. As far as the India hospitality market is concerned, particularly the hotel sector is early in its journey. If you contrast India with China, India has only 2.6 million keys or rooms for 1.4 billion people versus China’s about 3.2 million guest rooms for 1.4 billion people.
What that means is in the longer term, India’s expansion from a GDP perspective, from urbanization and modernization in the major cities, it stands to become the third largest lodging market in the world. Both from the domestic market, which is where the majority of the business is today but also from an India outbound market perspective, it is a critical market for us. We need to make sure we’re building our brands where our customers want us to be.
India is still a minnow as Hilton has about 460 hotels in China and 24 in India.
The difference between that market (and India) is a time issue. Obviously, China was ahead from a hospitality investment perspective and a lot of the Chinese business has state investment in it. So, some of the state-owned vehicles invest in the travel and tourism sector. In India, the under-construction pipeline across all brands is a lot smaller, but eventually it’ll catch up and catch up quickly. So, it’s an unfair comparison today but in the longer term, it’s not. The demographics of the two markets, their GDP growths, and, in fact, India’s competitive advantage, particularly with youth, is yet to be realized.
Which segment do you see the maximum growth coming from?
I certainly think it’s in the mid-scale and full service segments. These properties like the Hilton Garden Inn, and Hilton, that’s predominantly where the market is going to grow, as it did in China.
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People join the workforce at a younger age and buy into the entry level hotels and then buy up during their careers so to speak. Those big hotel deals we did in China, they’re all at the Hilton Garden Inn sort of price point. So the huge explosion is yet to happen in India.
What about the luxury segment?
I think luxury gets a lot of attention. There are a lot of credible players in luxury, but it’s not where the explosion is set to follow in comparison to other markets.
Are you bringing any new brands to India in the coming years?
We’re always on the lookout for aspirational luxury for our Conrad and Waldorf Astoria brands, but we will continue to grow with our core brands.
Hilton is the most recognized and valued brand in hospitality and so we continue to leverage that. You won’t see any new creative brands for India and we feel it’s mid-scale and full services where the growth is.
Many of your competitors have ventured into the home stays and boutique travel business, what about you?
We look at Hilton Garden Inn which caters to that need and we do have a brand called Hampton which is the fastest growing brand in China.
We may deploy Hampton in the future course as more mid-scale demand picks up. But in the short term, we’ll continue with Hilton Garden Inn which has been our lead vehicle.