Five-star hotel brands such as Starwood and Marriot could soon be launching more of their mid-market brands in tier II and III cities in India. Improved flight connectivity to smaller cities and the slowing down of the luxury segment in the metros are the primary drivers of this move.

Starwood Hotels, for example, is set to double the number of its mid-market brand, Four Points by Sheraton, in places such as Bhopal, Vijayawada and Vembanad Lake in Kerala.

“The mid segment will grow faster as it is linked to the growth of low-cost carriers reaching out to the smaller markets. Besides, there are lesser entry barriers with respect to cost of land and development in tier II and III cities,” said Dilip Puri, Managing Director, Starwood Hotels.

Local franchisees

Marriott International is also planning to seek opportunities through local franchisees to build its mid-market brands such as Fairfield and Courtyard by Marriott. “We also expect to grow these brands through local franchises in smaller tier III markets,” said Arne Sorenson, President & Chief Executive Officer, Marriott International, during his latest visit to India.

Even the Carlson Rezidor Hotel Group is bringing in more of its mid-market properties such as Country Inns & Suits by Carlson and Park Inn by Radison.

“Excess inventory in the 5-star segment is putting rates under pressure. We will focus on the mid-market segment with 16 new properties across our two mid-market brands targeting the new smart cities in future,” said KB Kachru, Group Chairman, Carlson Rezidor.

Achin Khanna, Managing Director, HVS, a hospitality research agency, said the cost of building and land requirement is much higher in the case of a luxury hotel in a metro market compared to smaller cities.

“There will be more mid-market brands in smaller markets such as Agartala. Global chains like Hyatt will bring in more of their mid-market brands like a Hyatt Place than a Park Hyatt or Hyatt Regency,” he said.

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