‘Luxury travel has hit its peak, budget hotels are the future’

New Delhi: The consumption of luxury hotels has topped out globally and is slowing now, a senior official of a global hospitality chain said, emphasizing that travellers are typically looking at no-frills, economical rooms as they explore the world.

Dimitris Manikis, president of the EMEA (Europe, the Middle East, and Africa) region for the US-based hospitality company Wyndham Hotels & Resorts, who is in India for a market tour, told Mint that economy and midscale hotels will be the future, at least for their brands here.

"Luxury travel has had its peak and we see it slowing now. All the CEOs of hotel companies globally are now talking about the future being midscale and economy travel. It supports the democratization of travel, just like budget airlines have done. We believe in deomcratizing travel and adjusting to the needs of the new consumer," he said.

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The company operates hotels under brands like Ramada, Days Inn, and Wyndham in India.

Its focus will remain on the economy and mid-market segments in the country. "Us and other Indian hospitality companies that are expanding abroad are inspired by the same thing -- the 150 million people that are travelling abroad. Unlike the Chinese, who generally prefer to travel abroad to South East Asia, Indians prefer to travel around the world," he said. This makes sense, considering that a recent report said Indian tourists heading overseas are projected to spend $18.82 billion in 2024, according to a new report, as travel returns to pre-pandemic levels and new hotspots emerge.

About 28.2 million Indians visited overseas last year, crossing the almost 27 million in 2019. That year, Indians spent $28 billion on travelling abroad, according to a FICCI-Nangia knowledge paper titled ‘Navigating Horizons: The Rise and Future of Indian Outbound Tourism,’ which cited government data.

Wyndham Hotels & Resorts has 63 franchised hotels in India across seven brands with about 5,500 rooms. There are another 45 hotels in the pipeline with a similar inventory of 5,000 rooms that are in various stages of development. It has grown from about 50 hotels here in 2021. "We have more hotels in the pipeline in India than ever before. We are also launching new brands like Wyndham Garden which will launch by the end of the year," Manikis said. It also has a new five-star hotel brand, Wyndham Grand, opening in the first half of next year at Udaipur.

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The company has about 500,000 rooms in the United States alone, and another 385,000 rooms in the rest of the world. It has more than 9,200 hotels world over. But when seen in the Asian context, in Asia (excluding China), the company has about 36,500 rooms, and India holds more than a seventh of its entire room inventory in the region. 

India business

Manikis said the company has bucked the trend of a poor first quarter, unlike other hospitality firms in India. Last week, Mint reported that India's hotel industry reported mixed June quarter results, with the general election, extreme weather, and increased outbound travel hurting the sector's performance. "Our business books are growing in India. Because of the spaces we operate in  -- economy, budget and midscale hotels, we continue to do well here, because of our affordable pricing. Luxury hotels just make up 12% of the world's hotels and perhaps that number is even lower for India. Not a lot of people can afford ₹24,000 a night rooms. Our focus is the remaining 90%," he said.

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"Dropping rates is not a good strategy for hotels, in general. We won't be dropping any rates. We will now only do that for special events or occasions. Luxury brand Gucci dropped in value because they did not maintain their pricing range around the world. In the minds of the consumer, buying a brand that doesn't change its rates is better than one that discounts a lot," he added.

In terms of average daily rates, a metric by which a hotel room's tariff is calculated, the first half of 2024 saw a 7-8% growth over the same period last year, and also saw an occupancy increase of 2-3%. This was despite the fact that general elections and fewer auspicious wedding dates reduced travel during the period. The company also operates brands like Howard Johnson, Hawthorn Suites, Days Hotel, Trademark Collection here and recently opened hotels in Amritsar, Udaipur, and Gorakhpur.

The power of the Indian tourist

He said that continents like Europe taking too long to issue visas or deny visas to Indians was a "stupid" decision. "Indians are the travellers of the future. They are young, have disposable incomes and are educated. They are going to want to explore places. It doesn’t make any sense to me that countries in Europe are not issuing enough visas to Indians. Europe has an ageing population. They should learn from countries like Georgia, Dubai and Vietnam, which are welcoming people with open arms. Which is why even we, as a hotel company, are seeing India in two ways: how we can bring more tourists to India and how we can get business from travellers that leave from India," he added.

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However, the India business is still quite small in the company's global scheme of things. In fact, India doesn't even find a mention in its global financial results for the quarter ended June.