INDIA HOTEL INDUSTRY

OUTPUT 1
DECEMBER 2018
 MOST OF THE REVENUE IS DRIVEN BY THE LUXURY SEGMENT, MID-SEGMENT ACCOUNTS
FOR A SMALLER FRACTION, THE LOW END SEGMENT IS ALMOST NEGLIGIBLE

% Room split by star % Revenue split by star

(2017) (2017)
0.2
1% 1 and 2 Star 1 and 2 Star
8% 3 Star
18% 3 Star 11%
4 Star • We can clearly see that 5 star
deluxe and 5 star segment (Luxury
17%
4 Star 20% segment) though comprising 64%
5 Star
of the rooms contribute 81% of the
23% revenues, this is due to higher
5 Star
revenue per available room
61%

41%
5 Star Deluxe 5 Star Deluxe

Number of rooms Revenue

Note: The total number of star hotels and rooms in the Indian Tourism Statistics report does not correspond to total number according to
HVS Report. This can be explained by the fact that the Tourism Statistics report is for approved hotels only and hence understates the
actual numbers. This effect is much more pronounced in budget hotels which tend to be unregistered far more than 4 or 5 Star hotels.

2/ TMT / ShARE – IoT Source: Hotelivate Report 2018 and Indian Tourism Statistics 2018
 LUXURY SEGMENT(5 STAR DELUXE) DESPITE HAVING 41% ROOMS CONTRIBUTES TO 61%
OF THE REVENUE BECAUSE OF HIGHER REVENUE PER ROOM.

% Revenue split by segment % Room split by star

(2017) (2017)
8% Budget
17%
• Mid-segment (4 Star and 5 Star)
31% and Budget segment ( 3 star and
Mid-Segment below) contributes only 31% and
23% 8% of the revenues despite
accounting for 40% and 19% of the
rooms respectively. This indicates
considerable difference in Revenue
61%
per room between Luxury and
41%
Luxury other segments.

Number of rooms Number of rooms

Note: The total number of star hotels and rooms are taken from the Indian Tourism Statistics report.The port is for approved hotels only
and hence understates the actual numbers. This effect is much more pronounced in budget hotels which tend to be unregistered far
more than 4 or 5 Star hotels. Hence both numbers and revenue for budget segment are systematically understated

3/ TMT / ShARE – IoT Source: Hotelivate Report 2018 and Indian Tourism Statistics 2018
 WHILE 5 STAR AND ABOVE HOTELS MAKE UP 30% OF HOTELS THEY MAKE UP 64% OF
ROOMS INDICATING MUCH HIGHER NUMBER OF ROOMS PER HOTEL IN THE LUXURY
SEGMENT
Number of hotels in India by Star Designation Number of Hotel Rooms in India by Star Designation
(2017) (2017)
35,672

442

19,791
253 15,619 14,611
158 160

43
6 236 955

1 Star 2 Star 3 Star 4 Star 5 Star 5 Star 1 Star 2 Star 3 Star 4 Star 5 Star 5 Star Deluxe
Deluxe
% of
0.6% 4% 41% 24% 15% 15% 0.3% 1% 18% 17% 23% 41%
total

Note: The total number of star hotels and rooms in the Indian Tourism Statistics report does not correspond to total number according to
HVS Report. This can be explained by the fact that the Tourism Statistics report is for approved hotels only and hence understates the
actual numbers. This effect is much more pronounced in budget hotels which tend to be unregistered far more than 4 or 5 Star hotels.
4/ TMT / ShARE – IoT Source: Indian Tourism Statistics,2018
 ONLY TWO DOMESTIC COMPANIES INDIAN HOTEL COMPANY AND ITC HAVE BEEN
ABLE TO MAINTAIN SIGNIFICANT PRESENCE IN 5 STAR AND 5 STAR DELUXE SPACE
AMIDST STRONG EXPANSION BY INTERNATIONAL BRANDS

Number of rooms 5 Star and above

(2017)
21,000
• International hotel companies have
expanded rapidly in India culminating in
13,382 Marriott overtaking Indian Hotel
Company to become largest luxury
10,500
8,900 player.
7,000
5,100 • Most foreign companies already have
multiple brands in India with Marriott,
Accor and Hyatt having 30,9 and 7
brands in India respectively. Most of
Marriott Indian Hotel Radisson Accor Hotels Hyatt ITC Hotels
International Company
them plan to launch more brands in India

Note: 5 Star and 5 Star deluxe rooms have been combined in this analysis as separate data wasn’t available. Total number of 5 star
and 5 star deluxe rooms is a good proxy for strength in upscale market
5/ TMT / ShARE – IoT Source: Annual Reports and News Articles
 THE LUXURY HOTEL (5 STAR DELUXE) SEGMENT IN INDIA IS ESTIMATED TO BE $645M.
IT GREW AT CAGR OF 11% FROM 2012-2017 ONWARDS

5 Star Deluxe Hotel Industry revenue

($ Millions)
CHECK DATA
645 • Since 2014, Revenue for 5
CAGR +11% Star Deluxe segment has
576
grown at a significantly
502 higher CAGR of 14% vis-a-
439 vis market growth of 9%
400
370
• Domestic leisure segment is
fastest growing in luxury
hotel market. Domestic
leisure traveller’s share of
total leisure market has
increased from 30% to 50%
from 2012 to 2017

2012 2013 2014 2015 2016 2017

8% 7% 14% 15% 12%

TMT / ShARE – IoT Source: Euromonitor International and Business Standard 2018
 ITC AND INDIAN HOTEL CO, TWO DOMESTIC FIRMS HOLD 57.2% OF THE ENTIRE PREMIUM
SEGMENT (5 STAR DELUXE). ALMOST 70% OF PREMIUM HOTELS ARE OWNED BY INDIAN
COMPANIES
Revenue by geography of top 10
players (2017)

30.00% • ITC, an Indian FMCG controls the

largest supply with 5100 luxury
rooms. ITC is also a major player in
70.00% mid-segment where it operates
under ITC Fortune brand.

Domestic Foreign • Indian Hotel Company Ltd. (IHCL)

owned by Tata Group has the
largest number of luxury rooms at
Company share of Premium Hotels (2016)
13382 rooms under different
FRHI Hotel & Resorts 1.80%
brands including Taj, Vivanta and
Hilton Worldwide 3.90%
Gateway. It is second largest player
Others 4.00% in premium segment.
Hyatt Corp 4.70%
EIH Ltd. 13.10%
Marriott International Inc 14.40%
Indian Hotel Co Ltd 27.20%
ITC Ltd. 30.30%

7/ TMT / ShARE – IoT Source: Euromonitor Luxury Hotels in India

 OYO ROOMS, TREEBO HOTELS AND FAB HOTELS ARE BIGGEST PLAYERS IN BUDGET SPACE
All three are internet based franchised and leased hotel chains with lower capex costs than traditional players

Hotels in budget space

Rooms in budget space
(2017)
(2017)

149,000
8,000

10,000 7,000 400 300

Oyo Rooms Treebo Hotels Fab Hotels Oyo Rooms Treebo Hotels Fab Hotels

8/ TMT / ShARE – IoT Source: TechCircle

 THERE HAVE BEEN MERGER TALKS BETWEEN TREEBO AND FAB HOTELS TO TAKE ON OYO
ROOMS
This is in backdrop of Oyo’s aggressive capital raise of $1B & rapid China expansion

Number of rooms in Oyo rooms Vs

Potential Merged Entity 149,000 Comments
• Oyo has seen spectacular rise in China with 180000
rooms across 4000 properties. It is now in top 10
players in China

• Oyo has raised $1 Billion in funding, large part from

Softbank. Around 60% of the funding used in China

• Treebo and Fabhotel’s growth has slowed considerably

and are underfunded to take on Oyo.

• Low prices by Oyo in a price-sensitive country like India

may force budget brands of large chains to upgrade to
mid segment
17,500

Treebo and Fabhotels combined Oyo(in India)

TMT / ShARE – IoT Source: Livemint and Forbes

 INDIAN MID-SEGMENT SPACE IS HOTLY CONTESTED AND DOMINATED BY MID TIER
DOMESTIC COMPANIES
However, this space has attracted attention of global hotel giants, which might make it further competitive

This is as per the old

classifcation • Sarovar Portico and
Lemon Tree are biggest
players in this segment
Hotel Rooms in Mid-Segment space
(2017)
with 6400 and 5000 rooms
6400
respectively.
5,000
• With high capex costs in
3,600 3,600 luxury segment and higher
growth rates in mid-
segment several brands,
both India- including ITC
Fortune and Ginger and
foreign including Ibis from
Sarovar Portico Lemon Tree Royal Orchid ITC Fortune
Accor are looking to enter
making the space
competitive.

10 / TMT / ShARE – IoT Source: Business standard and other news articles