S. Patel's company, enticed by low fares from India's new budget airlines, sent Patel on five business trips around the country this year, far more than he has ever taken. Patel also treated his wife and two children to a trip to Rajasthan in September -- their first out-of-state vacation.
As India's economy revs at a breakneck pace, high-end hotels are packed with international business travelers, and their rates now rival those in the West. But lodgers such as Patel -- a marketing manager in Kerala who rarely spends more than $70 a night on a room -- are catching hotel companies' attention.
"The next big trend in the next five years is the Great Indian Traveler," said Sandeep Gupta, senior vice president of Asia Hotels, which owns the Hyatt Regency in New Delhi.
For the first time, millions of Indian consumers have more money to spend on travel, and India's more open economy is making travel more affordable: Car sales are booming, and India is Asia's second-fastest growing car market after China. A slew of budget airlines have taken flight in the past two years. Business in trade, hotel and transportation services grew 12 percent in the quarter ended Sept. 30 from the comparable quarter a year earlier.
Yet mid-range hotels are virtually unheard of in India. There is a huge shortage of four- and five-star hotels, so developers have focused on lucrative high-end chains. Domestic business travelers and local tourists who can't afford top rates have been left to the vagaries of India's unbranded low-end hotels. One hotelier, France's Accor SA, plans to build dozens of its three-star Ibis brand hotels in India to cater to the likes of Patel.
"People that used to take the train are starting to fly," said Dennis Oldfield, general manager of the Indian unit of Accor, which operates brands that also include Novotel and Club Med. "Low-cost airlines mean middle managers can get around."
Domestic tourism, which hit 230 million travelers last year, has grown 40 percent per year since 2003. There are plenty of cheap hotels, but many lack backup generators to combat blackouts, never mind amenities such as broadband Internet access that business travelers expect.
Choice Hospitality India Pvt. Ltd., the Indian-owned franchisee for India for Choice Hotels, plans to raise its hotel count to 50 from 32 within two years. Accor, which exited India in the mid-1990s after a joint venture went sour, has formed a new joint venture and plans to build four Ibis hotels a year over the next decade. Marriott plans to introduce its Courtyard brand in India.
"There aren't many branded chains in the mid-tier category; it's a huge opportunity," Oldfield said.
There are just 1,500 rooms in branded hotels in Bangalore, India's software hub -- not nearly enough to meet the demands of travelers who do business in the city. Daily rates for standard rooms at four-star hotels in Bangalore range around $250 to $300 and have jumped more than 20 percent a year for the past few years.
The crunch could ease soon. Developers have committed to building hotels that will add at least 5,200 rooms to Bangalore's supply by 2010, according to New Delhi-based property hospitality industry consulting company HVS International.