Radisson Hotels expands rapidly across India amid growing demand for branded rooms

 

The Radisson Hotel Group is ramping up its presence in India, tapping into a burgeoning demand for hospitality services and strategically expanding across both metropolitan and emerging tier II-III markets.

With 200,000 branded rooms currently available in India, demand is significantly outpacing supply, creating an opportunity for growth in the hospitality sector.

“Demand is rising—and so are room rates," Nikhil Sharma, managing director and area senior vice president, told Mint exclusively. "India has only as many branded rooms as New York, and demand will continue to outpace supply for the next 7-10 years. Before the pandemic, there was a latent demand but somehow people were conservative in terms of spending a lot of money on hotel rooms. That perception has now evolved."

The international hotel management company's India arm is estimated to have had a revenue of about ₹4,000 crore across its 123 hotels, putting it ahead of competitors such as IHG and Hilton here. It has another 80 hotels in various stages of development.

The group's strategy includes a robust expansion into religious tourism, with recent openings in Ayodhya and Vrindavan.

"We were the first movers in Ayodhya, Uttar Pradesh. We also recently opened a hotel in Vrindavan. We are moving at a fast clip. Next on the horizon is Ujjain in Madhya Pradesh, and Guruvayur, Kerala. We are also present in Katra in Jammu and Kashmir and Amritsar, Punjab, where the circuit is becoming much stronger," Sharma said.

Occupancy rate

The company's occupancy rate - the percentage of hotel rooms that are filled with guests during a specific time period - exceeds 70%.

"That is higher than most other competitive players today, according to data from hotel market research company, STR. We will continue to grow," he said.

 

Radisson Hotel Group is owned by Radisson Hospitality AB, a subsidiary of the Jin Jiang International Holdings Company, a Chinese state-owned enterprise, which acquired it in 2018.

The group operates brands including Radisson, Radisson Blu, RED, and Park Inn by Radisson. Globally and in India, it competes with Marriott International, Hyatt Hotels Corp, and InterContinental Hotels group.

 

In India, it is also focusing on smaller cities, planning new hotels in Sagar (Madhya Pradesh), Phagwara (Punjab), and Saputara (Gujarat). Srinagar, Goa, and Dhanbad in Bihar are on its list of openings in calendar year 2024. About 50% of its hotels are in tier II and III towns.

The company aims to have an all-round development strategy and has plans for asset acquisitions through conversions and soft branding. Soft branding is when the hotel owners work with a hotel management company like Radisson and are allowed some flexibility in terms of managing their own property.

Goa exception

Sharma said there was a drastic shift in hotel consumer behavior after the pandemic. Disposable incomes are growing, he said, adding that he does not expect any price corrections now, except, possibly in Goa, where occupancy has fallen by about 4%.

"Prices (in Goa) have stayed constant there by and large too, despite a drop in demand. This market could be an exception because of new supply coming in. With the exception of a black swan event, we are spread almost evenly between leisure and business properties," he said. 

Today, as much as 50% of the company's revenues are from food and beverage operations. It introduced a high-end Indian sweets brand, Meetha, which it operates as luxury retail stores outside its hotels.

The overall buoyancy of the hospitality sector has not gone unnoticed in the stock markets. Prashant Biyani, vice president of institutional equity research at Elara Capital, said there is strong investor confidence in the hospitality sector right now.

"Stock prices for hotels have held around the same place as a few months ago, despite there being a small correction in Q1 in terms of consumption. The market has faith in the sector still," Biyani said.

As demand surges, Sharma said the next few years are crucial for Radisson.

"While the bigger cities are getting penetrated in terms of spaces where new hotels can be built, there will be a lot of developments in redeployed and redeveloped land parcels. Now the market is maturing to see some amount of re-branding of hotels as well," he said.

Rebranding is when hotel-managing companies change while the owners of the assets remain the same. 

Experiential travel

"We are also focused on developing the Radisson RED brand and will have two more assets by next year," Sharma said. This brand was announced in 2021 and is a lifestyle-oriented millennial brand catering to younger travellers.

In response to changing market dynamics, the company introduced the Radisson Individuals and Radisson Individuals Retreats brands in India about two years ago, targeting the experiential travel segment.

Sharma said the company has set a goal of opening 20 properties this calendar year. A fifth of them will be leisure resorts in places like Jawai in Rajasthan and Nainital in Uttarakhand, which command higher prices.

"India's average daily rate for organised hotels is about ₹7,000. Exclusive resorts are able to command anything upwards of ₹10,000 a night," he said, highlighting the potential for revenue growth.