InterGlobe Hotels Pvt Ltd is focusing on India’s tier I cities for its Ibis brand as it looks to shed the budget tag and positions itself in the mid-market segment, citing strong demand for quality hotels.
The joint venture between InterGlobe Enterprises and Accor Asia Pacific, which has 29 Ibis properties in India, is evaluating opportunities in top locations in city centres for the next phase of growth, according to JB Singh, president and chief executive officer at InterGlobe Hotels.
“There is a huge opportunity in India to build more branded hotels. Classified hotels are severely under-penetrated,” he said. “Travel and tourism will also grow at a multiple of 1.5 to 2x. As a result, the industry has an assured growth of 8-14% for not just five years but longer than that.”
While Accor classifies Ibis as a budget hotel brand, Singh cited construction quality and build to call it a mid-market chain. “We don’t look at ourselves as a budget brand. We are a mid-market hotel company purely because of the projects we do,” he said. “In fact, we’re one of the more efficient ones in the category.”
The French hospitality major Accor–the company behind iconic brands like Pullman Hotels & Resorts–set up the partnership with Indian aviation giant IndiGo’s parent in 2004 to develop the budget-to-mid-market properties here. Ibis competes with Indian Hotels Company Ltd.’s Ginger brand as well as Akoi-family backed Bloom Hotels.
“As a company, as a JV, we are very focused on India. We also recognize that India needs quality products. India will continue to be a headline item for us,” Singh added.
Last year, he said the 20-year-old hotel company’s revenues grew 14% and occupancies in key markets hovered between 85-89%.
“Mumbai and Delhi have done phenomenally well for us. It’s been a great run for us post covid, like it has been for a lot of other hotel companies. Our price points have also been growing because of our locations,” he said. “Our buildings are also becoming more efficient so we see a lot of repeat travellers. More than 50-60% of those who use our hotels are repeat travellers.”
‘Cost per key is upwards of ₹40 lakh’
This week, the company opened its new property in Mumbai’s BKC business centre, which has 206 rooms. Its per key cost is about ₹40 lakh.
Globally, Ibis has about 1,200 hotels. At present in India, it has 29 properties now, with one under development. IndiGo Hotels also owns properties in Europe under its Miiro brand in locations like Barcelona, London, Gstaad and Paris. In July last year, Rahul Bhatia, group managing director of InterGlobe Enterprises, sold a 2% stake in InterGlobe Aviation in a block trade for ₹3,360 crore to use the money to expand its hospitality and other developing businesses.
“We continued to build during the pandemic and had an active pipeline which we needed to finish in the last four years. We are now taking a pause and reevaluating our strategy and will largely target a “densification” strategy and revisit and build in the same cities we are present in using special purpose vehicles,” Singh told Mint.
The company opened its Thane, Vikhroli Bengaluru and Goa projects in the last few years and has about 6,000 rooms across India. It now has nearly half a dozen hotels in Mumbai and Bengaluru each.
The company is actively looking for real estate in Mumbai, Hyderabad, Delhi NCR and Pune. It may not be in any hurry to go to tier II cities yet, Singh said. “It is a tier I city strategy for now. If an opportunity arises and the market has enough traction and the numbers stack up, then we will evaluate,” he added.
The next set of hotels will be built to incorporate anywhere between 160-220 rooms. “We’d not like to have anything below 150 rooms per hotel,” he said.
The country also has a huge opportunity for growth as an “events marketplace”, said Singh. “Newly developed meeting and events spaces in cities will start to mature in the next 3-5 years too. This will add to hotel demand.”
