Alan Watts, President, Asia-Pacific at Hilton, was in India for the launch of a 619-key dual-brand resort in Bangalore in partnership with Embassy Office Parks REIT, a real estate investment trust. In an interview, Watts spoke about the Indian hospitality industry catching up with China, the disproportionate focus on the luxury segment, and why India is a key market for the company. Edited excerpts:
What are Hilton’s expansion plans in India?
We have 24 hotels for sale today in India and 14 under construction. When it comes to the hospitality market in India, the hospitality sector in particular is at the beginning of its journey. If you compare India to China, India has only 2.6 million keys or rooms for 1.4 billion people compared to about 3.2 million guest rooms for 1.4 billion people in China.
This means that in the longer term, India’s expansion in terms of GDP, urbanization and modernization of major cities, is expected to become the third largest accommodation market in the world. Both in the domestic market, where the majority of business is today, but also from the perspective of the Indian outbound market, this is a critical market for us. We need to make sure we are building our brands where our customers want us to be.
India is still a minnow since Hilton has about 460 hotels in China and 24 in India.
The difference between this market (and India) is a matter of time. Obviously, China was ahead in terms of hotel investment, and a lot of Chinese companies have government investment. Thus, some of the state-owned vehicles are investing in the travel and tourism sector. In India, the under construction pipeline of all brands is much smaller, but it will eventually catch up and quickly. So that’s an unfair comparison today but longer term, it’s not. The demographics of the two markets, their GDP growth and, indeed, India’s competitive advantage, especially among young people, are yet to be realized.
Which segment do you see the maximum growth coming from?
I definitely think it’s in the mid-range and full-service segments. These properties like the Hilton Garden Inn and the Hilton, that’s where the market will mainly grow, as it has in China.
People are entering the workforce at a younger age and buying into the entry level hotels and then buying into their careers so to speak. These big hotel deals we’ve done in China, they’re all at Hilton Garden Inn prices. So the huge explosion has not happened in India yet.
What about the luxury segment?
I think luxury gets a lot of attention. There are many credible players in luxury, but this is not where the explosion will follow compared to other markets.
Are you bringing new brands to India in the coming years?
We are always on the lookout for ambitious luxury for our Conrad and Waldorf Astoria brands, but we will continue to grow with our core brands.
Hilton is the most recognized and loved brand in hospitality, so we continue to build on that. You won’t see any new creative brands for India and we think it’s the mid-sized and full services that are seeing the growth.
Many of your competitors have ventured into homestays and boutique travel, how about you?
We are looking at Hilton Garden Inn which meets this need and we have a brand called Hampton which is the fastest growing brand in China.
We may roll out Hampton in the future as mid-range demand grows. But in the short term, we will continue with Hilton Garden Inn which has been our main vehicle.