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Hospitality consulting firms in India : Hotel Sector

Hospitality consulting broadly means working with stakeholders from the hospitality sector to start, improve, or renovate a business. A hospitality consultancy can choose to work with restaurants, hotels, resorts, theme parks, cafes, bars and other similar entities. Top hospitality consulting firms in India often specialize in one of these areas, aiming to provide the best services to their clients. Many of them have professional qualifications and degrees, in addition to substantial experience in the industry which they use in their consulting projects. The first step is always to discuss the main goals, what the owner is looking for, if the firm will be able to provide that, and generally if both parties are a good fit for each other or not. Consultants then use all the information provided to them to start planning the project, its timeline, divide responsibilities etc. While doing all of this, they have to keep in mind who the target audience is, what the client’s needs are, the common final goals for both parties, along with the limitations and other factors.

How has Hospitality Consulting grown in India? 

Hospitality consulting firms in India are playing a crucial role in the hospitality industry these days. This has become evident due to the following reasons and more:

  • With better qualifications and opportunities to learn, hospitality consultants have a lot of knowledge and experience in their respective fields.

  • Most of them also have prior experience working in different hotels, and thus they know exactly how things operate these days.

  • They are capable of providing their reports and recommendations to their clients in the best possible way, as the clients are not well aware of market trends and jargons.

If we look at just the hotel industry, the demand for hospitality consultants in India has definitely risen, resulting in increased and more challenging competition among the top hospitality consulting firms in India. The number of different sorts of hotels and resorts is going up on a regular basis and among all the new hotels, most of them choose to tie up with hospitality consultants. It helps them manage their hospitality business properly while not having to worry about so many things that would have otherwise all been on their plate.

Effects of the pandemic on Hospitality Consuting in India

COVID-19 overall had a very significant and negative influence on the hospitality industry in India as well as across the globe. The hotel sector in India has always been a major contributor to our economy. It has also provided a large number of employment opportunities to people across various tax brackets. No doubt all of this got badly impacted during the pandemic and hotels are still recovering. No one had foreseen a risk this big. So many hotels, restaurants, cafes and resorts had to stop functioning completely during the COVID-19 years and are still struggling to go back to how they were before 2020.

 

Consequentially, many big and small hospitality consultants in India lost their clients to declining travel and tourism. But since now hotels are again opening up and fighting their best to get back on track, this seems to be a time where hospitality consulting firms in India can really shine, they can get new clients and even their old clients back now and help them recover from the dreadful losses they had to face in the COVID-19 period. After the pandemic, the expectations of travelers have also somewhat changed and the top hospitality firms in India can make sure that tourists are really getting what they want out of a vacation. Even the top hospitality consulting firms in India were not ready for a decline so steep. It has left even the best hospitality consultants in India to turn to unconventional methods which were never widely seen as an option.

Top trends of Hospitality Consulting in India in 2022

Hospitality Consulting in India has grown over the years, still having a lot of potential to grow into. Hotels and restaurants have seen an unstructured growth in rather organic markets within India. Feasibility study has been an optional tool for businesses in the hospitality industry, especially when it comes to small to medium projects in Tier 2 and 3 cities across the country. A few trends in the Hospitality Industry in India that came out in 2021, can be the basis of the upcoming trends in the Hospitality Industry in 2022:

Below trends are derived on the basis of the annual report

'India Hospitality Industry Overview 2021' by HVS | Anarock

Trend 1: Increasing RevPAR in India

Domestic leisure travel drove the recovery throughout the year, with business travel also showing early signs of revival as most businesses and organizations gradually started returning to a full or hybrid work-from-office model during the year. Additionally, weddings and social events, as well as the resurgence of small-to-medium-sized domestic MICE events, helped to stimulate hotel demand. While there was significant recovery, the year was not without pandemic-related setbacks, as the emergence of new COVID variants acted as temporary roadblocks in the sector’s recovery. Travelers and hospitality sector players, however, continued to adapt to the evolving situation and found new ways to move forward. Broadly speaking, the RevPAR the RevPAR trends can be summed up as follows:

  • RevPAR in India had a 24-27% of Y-O-Y increase in 2021

  • Region-wise, North India had the highest growth in RevPAR with a 28-31% of Y-O-Y growth whereas Central India had a 27-30% and South India had a 19-22% growth

Promiller Hotel Management Company.png

Trend 2: Domestic hotel brands for the win

International vs Domestic Hotel brands: 

Under Hotel brand signing, the trend of hotel brands signing new properties has shown signs of recovery after taking a dip in 2020, fairly due to the pandemic. With demand recovering faster than expected in 2021, hotel companies put the COVID-blues behind them and hit the ground running with their expansion plans, resulting in a year-over-year increase of over 24% in brand signings by keys. During the year, 135 new hotels with 12,359 keys entered the branded hotel market. Meanwhile, 58 hotels with 3,108 keys were rebranded during the year, a trend similar to that seen prior to the pandemic.

With an average key count of 65 keys during the year, domestic hotel operators continued to sign more properties (~78% of the total signings by properties) than their international peers. Meanwhile, international hotel operators continued with their strategy to sign larger properties, resulting in an average key count of 133 keys in 2021

International vs Domestic Hotel Brands India.png

Trend 3: Management Contracts-
the way to go

Management contracts remain dominant, accounting for 79% of the total signings by keys in 2021. Franchising is gradually strengthening its foothold, accounting for approximately 16% of the signings by keys in 2021, maintaining its increased share from the previous year. Leasing and other forms of contract remain the lesser preferred mode of signings in India. 

  • In 2019: 76% of the total number of property signings by key have been through Management Contracts, whereas only 14% and 4% of the share went to Franchised model and leased properties respectively.

  • In 2020: The numbers for Management Contracts went up to 80% as well as the Franchised model went up to 17% dropping the share of On-lease model to 3%

  • In 2021: Both Management contracts and Franchised model showed a 1% dip with 79% and 16% of property signing by key respectively across the year
     

Hotel Management Companies in India.png
Hotel Management Company in India.png

Trend 4:
Brownfield Projects

A brownfield project is one that carries constraints related to the current state of the site. In other words, the site might be contaminated or have existing structures that architects have to tear down or modify in some way before the project can move forward.

 

Brownfield signings have grown in popularity in recent years, accounting for 48% of the keys signed in 2021, as they are less risky and have a higher likelihood of completion than greenfield. The impact of COVID has also slowed down greenfield development. As a result, the share of greenfield keys signed has declined from 39% in 2020 to 32% in 2021. Conversion/rebranding, meanwhile, accounted for 20% of the keys signed during the year. Brownfield projects also took the lead in terms of number of properties signed in 2021, accounting for 47% of all signings by properties, while greenfield properties accounted for 23% of total signings by properties. Hotel rebranding or conversion is on the rise, accounting for 30% of total signings by hotels in 2021

Trend 5:
Reaching to Tier 3 and 4 cities

Hotel operators maintained their faith in the country’s THREE largest markets by supply, with Bengaluru & New Delhi witnessing the maximum signings by keys. Hotel brands also continued to be interested in leisure destinations, but the properties signed were smaller in size. But in addition to this expected behavior of the market, a new revelation can be seen- As hotel operators made stronger inroads into the country’s smallest towns, Tier 3 and 4 cities accounted for 51% of the total signings by properties in 2021. In contrast to the previous year, in 2021, the share of the Tier 1 cities in terms of signings by keys inched closer to pre-COVID levels

Conclusion

Hospitality consulting firms help hotels to create and work on effective strategies and solutions in order to shoot up their revenue. They do this by taking care of every aspect of a hotel’s business including revenue management, market feasibility study, asset management, third party management, digital marketing etc. In this modern world where the competition is so high and everyone’s trying to find their way to become the best, especially in the hospitality sector, seeking some kind of professional guidance seems inevitable if you want to remain at the top of the game. The hotel landscape is ever changing and no one can stop or avoid that. Therefore you might need someone who has the precise and complete knowledge that is necessary to keep up with the constantly evolving trends.
 
So if you are someone who is seeking expert guidance for your hotel or resort, we would recommend you to sign up with one of the various top hospitality consulting firms in India.

 

Read more about the Top Hotel Industry Trends in India in 2022, here.