India’s Hotel Boom Is About to Get Much Bigger

Glenn: [00:00:00] Everybody at your hospitality friend Glenn, thank you so much for tuning in, which I know is going to be an exciting show because we are going to be focusing today on the amazing country of India and its explosive hotel growth that’s happening out there. But first, I want to thank our friends over at Actabl. Actabl, they give you the power to profit. Please do me a favor. Join them at actabl.com. All right. So a little while ago I had Bruce Ford on. We were talking about Asia Pacific, but we didn’t really get into the India thing because we felt it deserved its own show. Unbelievable growth, unbelievable opportunity. Unbelievable. Guest. Bruce Ford, SVP of Lodging Econometrics. How you doing, buddy?

Bruce: [00:00:41] Mr. Hausmann, happy days are here again. The skies are blue. The waves crashed softly in the background. It’s almost the end of summer.

Glenn: [00:00:54] Very depressing time for me, actually. I I saw pumpkin related stuff in the supermarket, and I broke down. I fell on the ground, I started crying, I was huddled up in a ball saying, no, Summer, don’t leave me.

Bruce: [00:01:09] Don’t you. And then you went inside and bought some fish tickets, right?

Glenn: [00:01:13] And some pumpkin beer to enjoy. Yeah. So Bruce. India. Right. So I want to talk about that today, but I’m curious before we get into it, why now? It seems like a good chunk of our career we’ve been watching explosive growth in China. What’s the difference for us to understand in order to tee us up to what we’re going to talk about?

Bruce: [00:01:37] So India had a good pipeline. Yeah. Previous real estate cycle that kind of ended up fizzling out. Okay. And some of the deals that the franchise companies did in India, multiple development deals didn’t take as well the last time. All right. So they’ve redoubled their efforts. Right? Okay. And each one of the franchise companies in the major global players had a lot to say about India because it’s largely under developed for hospitality. Believe it or not. Okay. And certainly underdeveloped for westernized brands.

Glenn: [00:02:19] Yes.

Bruce: [00:02:20] Now, Glenn when we look at westernized brands, one of the things that we talk about is the difference between full service and select service. That’s right. And in many cases, when you develop out major marketplaces, you build the full service hotels first. Yep. So the luxury, the upper upscale, that’s what I.

Glenn: [00:02:42] Saw in China and Hong Kong throughout our careers.

Bruce: [00:02:46] Then you backfill in with a layer of upscale and upper midscale.

Glenn: [00:02:51] Makes sense because that shows it’s more of a mature market. Typically, I would say when these new countries are developing, the people that go in are usually the business people that might have that budget to stay in those higher end hotels.

Bruce: [00:03:04] Well, they’re looking for some security, too. They’re looking for some safety in terms of safety. And security is a big part of that. But also the amenities because it takes so long to get there from the Western world. And it’s, it’s one of those aspects that you look for. So when we talk about India, each one of the franchise companies has a plan. Some of them are going in with master franchisors. Some of them are going in with multiple property development deals. Some of them are going in and looking to buy brands. So the story is a little different in each case, right? But one thing we know for sure is this is one of the top full service development markets in terms of percentage of projects in the pipeline. And when we talk about full service, that’s luxury and upper upscale And in many cases, that first layer is being built in probably 20 to 25 locations across India where there isn’t really a Western brand presence.

Glenn: [00:04:15] Wow. That’s interesting because obviously the locals get there first. And as the international markets grow and more people come, so does attention from international developing brands.

Bruce: [00:04:28] But when we talk about the full service growth, think about how we have had so many new brands in the full service sector from Hilton and Marriott and Hyatt, and they’ve consolidated with IHG different types of brands. So using an example here. Okay. Yeah.

Glenn: [00:04:46] Insane numbers.

Bruce: [00:04:47] Where else are they? Building eight J.W. Marriott and four Ritz-carlton’s. Where else are they? Where else are they under construction on 17 Hyatt’s.

Glenn: [00:04:56] Wow. 17.

Bruce: [00:04:58] Yeah. So Taj itself, which is the Indian hotel company t a yep, they have 17 of their luxury brand on there.

Glenn: [00:05:08] That’s got to be their biggest expansion spurt in their history.

Bruce: [00:05:12] Yeah, it’s quite unprecedented. And you’re even looking at company like a core, which is really, you know, has products all over the chain scales. They’re redoing their development deals in those markets now, right? And looking for new partners and doing new programming for success for ramp up. So also only 42,000 rooms under construction with well over 135,000 rooms in the pipeline. So we’re building a pipeline of early planning projects that have 12 to 24 months before they may begin. But we also have a pretty good swath that’s currently under construction.

Glenn: [00:05:54] Chris, earlier you said that the last real estate thing fizzled out. Why is this different? And how will this continue to propel forward?

Bruce: [00:06:05] I think the investment dollars coming from outside of the country are more significant this time, and I think it’s being matched by investment inside the country. As you look towards India as a tourism market, most people would not have ascended to that. However, the very southern tip of India, which is closest to Sri Lanka, has quite a bit of development down there.

Glenn: [00:06:33] Right? So take a look at maybe some of the cities.

Bruce: [00:06:36] Yes. So that’s where Bela Guru is. And, and some of those other markets. Now the cities as I mentioned, okay, you only have 12000 of the 42,000 in these top five markets. So there’s really like 20 different places. Okay. Where there are developments from the Northeast corridor up near Pakistan or the northwest corridor up near Pakistan to the far eastern edge of India, to the very southern tier. Okay, it’s got a great distribution amongst all of it. And many of the major markets like you would ascend to talking about Mumbai and perhaps New Delhi. Those markets are built. Okay. So that what they’re feeling in there is more of the select service, but many of the other markets don’t have a Western full service brand. And they’re going to for the very first time.

Glenn: [00:07:35] Interesting.

Bruce: [00:07:36] It’s it’s really compelling because when hotel companies and franchise companies go into a country full force for the first time, it’s high design. It’s big dollars. It’s got to make a splash. It’s looking at the landscape of the markets to say, I want to be the market leader. Right. Okay. And that’s pretty, pretty relevant here. As we look towards the opportunity. And in India, what this is going to do also is it’s going to end up with a refreshing of the supply and renovation cycle that may occur in early in the next decade. So the anticipation is, is that we will probably have 5 to 600 hotels under construction here by the beginning of 28.

Glenn: [00:08:27] Wow. That’s that’s pretty significant. For those of you who don’t realize India is might be about one third the size of the United States in landmass, but has four times the population. Yes. So what you’re talking about makes a lot of sense contextually, right? Kind of think about it in the, in the late 1990s, when select service hotels, for example, started popping up everywhere to meet moving populations and stuff like that and different like smaller towns, like kind of my gut is that a lot of that kind of stuff is is starting to happen. Not the same, but the same idea of that proliferation around smaller places of the country, not the same types of hotels.

Bruce: [00:09:07] And the size of the hotels are bigger too. Most interesting, because often it’s a compound kind of development. So in, in a lot of cases, you get kind of a rooms minimum of some. 250. So those, those luxury projects, okay. The average size on those luxury projects, I think was over 250 keys, which is large for many other developments across the world. So that attracts the best suppliers, that attracts the best designers. That attracts a lot of attention for investment coming from the outside.

Glenn: [00:09:44] You mentioned suppliers. Any advice to our vendor friends out there and how to leverage this potential opportunity?

Bruce: [00:09:50] Well, the franchise companies, the Western franchise companies are all developing a plan. And you really just kind of have to identify where the design decisions are coming from. Are they coming from Asia? Are they coming from Europe? Are they coming from the Middle East? Because the answer could be any of those three, right. And it’s not typical that an American design firm without a, you know, a shingle out in Asia Pacific would be participating. But stranger things have happened. I heard there was a show. So, Glenn, tell me will you travel again this summer, or are you done with the airport delays?

Glenn: [00:10:34] No. I’m doubling down because I love being stuck in airports, so I assume that as this is airing we’ll be at the Southern Lodging Summit. I got a good a fun keynote speech on the state of hospitality. Then I’ve got another trip at the end of the month. I’m going to be doing a keynote for a hotel company, Hospitality America.

Bruce: [00:10:54] And I understand the countdown might be on. Glenn, I will see you in less than 60 days. How about that

Glenn: [00:11:00] Oh. Lodging conference coming soon.

Speaker 3: [00:11:03] Good.

Bruce: [00:11:03] Large in conference.

Glenn: [00:11:06] Bruce, how do we find you?

Bruce: [00:11:09] So we’re releasing a lot of information about our new forecast for 2028 openings. You will be able to find that from lodging econometrics.com/global insights. Also you can follow us on LinkedIn. We will post all those releases as well and sign up for our newsletters, which are regularly delivered to your inbox with insights on hospitality.

Glenn: [00:11:33] Excellent. Love it. And while we’re sound. So I got a new graphic here. Subscribe. Today. Maybe I’ll next time I’ll make it fit to screen, but okay, so my.

Bruce: [00:11:42] How much do I get for that? Is that that’s.

Glenn: [00:11:44] My ad for the conference. What’s that?

Bruce: [00:11:46] Is that worth five bucks?

Glenn: [00:11:47] Oh, well, definitely. I was going to propose a revenue share, but you’re probably better off the five bucks, so. Do that. All right. Ready. Thanks so much. Really appreciate you being here. We’ll see you right back here next time. Oh, yeah. And don’t forget you got one life. So blaze on art. Peace out everybody. See you.