Major hotel chains outline Indian expansion plans

With India suffering from a lack of hotel rooms, major industry players were always going to make their move. Recent announcements illustrate the strategic importance of the Indian hospitality sector.

Expansion of India's hospitality sector has been expected, finally international and domestic chains have announced their intentions, collectively they see growth opportunities at both ends of the market.

Luxury boost

The luxury Peninsula chain plan to open their first hotel in India. With rising Indian consumer wealth, they take a long-term view.

Hyatt Hotels also has its eye on India's increased wealth, choosing India as the first location outside of the US to grow its up-market Hyatt Place brand.

Domestic luxury

Anticipating 35-40% revenue growth for the Oberoi brand and 15-20% for the Trident brand this financial year, East India Hotels plan for 25-30 new hotels by 2015. Newly redeveloped Mumbai Oberoi, will be charging as much as US$ 6,750 a night.

Domestic rival and Tata-owned Taj Hotels are opening 15 properties. The hotels will be a mix of the new, premium Vivanta by Taj brand and the upscale Gateway brand.

ITC - while planning their own expansion - have agreed a deal with Starwood Hotels & Resorts Worldwide, the arrangement will see them operate Starwood's Luxury Collection brand.

Multi-brand expansion

President of Starwood's Asia Pacific, Miguel Ko revealed plans to double their presence to 38 hotels and introduce other brands from the Starwood's portfolio. Hyatt also plan to open 25 new Hyatt Regency and Grand Hyatt hotels.

Marriott International expect to be managing 40 hotels by 2013, up from the 11 it currently operates. Commenting, Ed Fuller, president and managing director of international lodgings said:

"We are thrilled by the robust expansion of our hotel portfolio in India. India is witnessing unprecedented growth and expansion of its travel and tourism industry and we are delighted to participate in this expansion in a meaningful way."

Targeting domestic travelers

Intercontinental Hotels Group plan 41 hotels, taking occupancy levels up to 9000 rooms, up from current 2000. Crucially, 29 will be the more affordable Holiday Inn brand. Their strategy is to attract business from mid-market domestic travelers, choosing to focus on the 500 million domestic trips in India, rather than the five million international visits.

April 22, 2010 Add a comment

Modern lifestyle and growing affluence damaging India's health

Reports reveal how economic growth; and subsequent lifestyle changes are creating new medical challenges for India and concerns for the nations health.

Heart disease is now India's biggest killer, overtaking so called "poverty" diseases. India's modernization appears to correlate with the state of the nations health.

Government backed research shows 25% of 130,000 deaths (analysed between 2001-2003) were due to coronary heart disease. During the same period, 10% of the sample died of tuberculosis and 4% died of diarrhea related disease.

The period of study is at the start of India's economic development, so we can assume that deaths due to modern living have increased further.

Two tier health system

Government spends just 0.9% GDP on public health, the system is creaking and will struggle to meet this new influx of coronary care. While the likes of Fortis Healthcare, Apollo and Max India are building well equipped hospitals for the growing middle class, elsewhere state hospitals are in decay. Estimates are that modern life diseases will cost India $US200 billion between 2005-2015. Indian's will have to pay for the best care.

Modern disease and modern living

This isn't the first report to show that modern living brings modern disease. India is already suffering from a Diabetes epidemic and Assocham have concluded that 24% of corporate employees sleep less that six hours a day due to high stress levels, costing the economy US$ 150 billion a year in lost productivity.

University of Maryland and the National Council of Applied Economic Research have found 22% of Indians living in cities are overweight and 7% obese.

Market opportunities

Not surprisingly the health and well being sectors are likely to develop. The Wellness Service Market (beauty, slimming & fitness and alternative treatments) - valued at R's 110 billion in 2009 - is expected to grow at 33% annually.

In addition the nascent health insurance industry - current penetration at below 5% - is expected to boom as people protect themselves from rising healthcare costs and modern life.

April 16, 2010 1 comment

Global FMCG giants innovate and engage to appeal to Indian taste buds

India offers huge opportunities, but even the biggest most established players realise they need to localise products to appeal to Indian consumers. New entrants should take note.

Two of the biggest, most experienced FMCG names have announced plans to develop and introduce more products to cater specifically for local Indian tastes.

Big FMCG names localise their brands for India

Nestle - trading in India since 1912 - and PepsiCo - operating in India since 1989 - are each placing more focus on Indian concepts.

India - Nestle's 12th largest market - contributes just 1.5% in overall international sales, localisation it seems will be at the heart of growing the Indian business. PepsiCo have built sales of US$ 1.5 billion making them India's largest food and beverage company, much of their success has been built on creating locally relevant products and involving their consumer base in product development.

Each company has their own approach.

Nestle "Indianisation"

Antonio Helio Waszyk, Chairman and MD of Nestle India wants to bring more products available in Europe to the Indian market. But he is realistic, "We need to Indianise products. We have to create Indian concepts. We are working on how to make them more Indian".

PepsiCo "Indovation"

PepsiCo talk of Indovation, Sanjeev Chadha, Chairman of PepsiCo India says, "We see it (Indovation) playing a greater role in our growth story in India". Chadha's company learned the importance of localising with the Kurkure snack brand, it is so popular it rivals their global potato chip brand Lay's for Indian sales.

Last year saw the launch of Aliva, a baked cracker with Indian seasonings. Sales have been so good, local variations are being considered for other International markets. PepsiCo's Nimbooz brand, a play on India's traditional "Nimbu paani" lemonade drink has also been successful, as has Slice, a mango flavored drink.

New variants provide co-creation opportunities

Developing new, local variants provides marketing and PR opportunities. PepsiCo are trialing crowd-sourcing to find a new flavor for its Lay's brand. The "yourlaysflavour.com" competition attracted 1.3 million entrees (or brand advocates?), the winner - to be announced in May - will receive R's 50 Lakh (£70,000) and one percent of the sales turnover.

Consumer interaction

PepsiCo conclude that India's youth are "experimenting with their food (and are) not interested in one-way communication and want to be interactive".

New entrants can learn from this. Localised and relevant products are crucial in this market, and there are significant benefits - both R&D and marketing - from engaging potential customers early in the process.

April 11, 2010 Add a comment

British Airways "twins" Mumbai with London in new social network initiative

Metrotwin Mumbai - developed by BA - brings together UK and Indian based bloggers. The site contrasts attractions in each city providing a central source of information for leading-edge travelers between the two cities.

Although still in its Beta testing stage Metrotwin Mumbai already looks to be a handy source of information for those traveling between India and the UK.

Illustrates the importance of trade links

The premise of the site is to cross-reference attractions, allowing users to find relevant information about comparable activities in either city. The fact the site exists illustrates the significance and importance of UK-Indian commerce.

Lightly branded by British Airways

With no overt branding, BA is clearly (and cleverly) aiming to create an impartial and authentic resource that is accepted by the web community. The benefit to the brand is that it evokes good will and positions BA as an airline that understands its destinations and the fabric of each city.

Emphasizing shared values

While on the surface the two cities are divergent, BA have identified a number of shared values. Judy Jarvis, Regional Commercial Manager, South Asia has been quoted as saying:

"Mumbai and London may be on the other side of the world from each other but have many things in common - the love of great food, fashion and entertainment are the obvious ones. There are also historical links that tie both cities - London has St Pancras train station; Mumbai has the equally beautiful CST train station. While Londoners play football on Hackney Marshes; Mumbaikers have a match of cricket at Azaad Maidan. Metrotwin Mumbai will help a Londoner get the Mumbaiker experience and vice versa."

BA's commitment to the Indian market

This isn't the first time that BA has reinforced its commitment to India. Their recent TV advertising campaign called "Opportunity" focussed on illustrating the vibrancy of Mumbai by using the Lakme Fashion Week as the theme for the TVC.

You can follow Metrowin Mumbai here.

April 8, 2010 Add a comment

Rural Indian internet usage overtakes the Metro's

The internet has penetrated rural India, for the first time smaller towns have overtaken the top eight metro cities in internet usage.

The I-Cube 2009-2010 Internet in India survey has found that 36% of all internet users can be found in small towns with a population of less than half a million. By comparison 34% of users live in one of the major metro's. This represents growth of 6% in rural use since last year's survey.

Overall growth in internet use

According to the survey - commissioned by Internet & Mobile Association of India and IMRB - Indian PC users now total 95 million, up from 87 million last year. "Claimed" internet users - someone who has used the internet at any point in the past - increased by 20%, from 63 million in 2008 to 71 million this year, and "Active" users - someone who has been online in the last month - are up from 46 to 52 million.

Internet becoming increasingly democratic

The findings also show that due to lower prices and easier access, usage is growing across lower socio-economic groups. Internet usage amongst affluents in the SEC (Socio Economic Classification) A band used to total 49% of all users in 2000, now they represent a smaller proportion of 33%, growth is coming from less affluent social-economic groups.

On-line users getting younger

Not surprisingly web access is highest amongst India's youth. 44% of users are either school children or students at college. Despite this only 4% of users access the internet from school or college.

Cyber cafes provide the main access point with 37%, followed by the office (30%) and home (30%). The findings suggest that new access points like mobile internet and kiosks are gaining traction, 4% of users now go on-line using 'alternative' sources, this segment is likely to grow as telecom regulation eases.

Reasons to go on-line

With 87%, email is still the most popular reason for using the internet, but the figure has dropped from 91% in the last 12 months. Information searching has grown to 80%, suggesting that the internet is now an essential research tool for educational purposes, even if accessed away from school or college.

Accessing music and video (45%) is now the fourth most popular reason to go online, jumping from seventh place last year. And while access to on-line gaming sites has dropped 8%, it still represents a sizable percentage with 33% of users accessing the internet for this purpose.

70% rise in time spent on-line

Time spent on-line has gone up to 15.7 hours per week, up from 9.3 hours. The report attributes this to improved content and increased use for entertainment purposes, principally music and video and social networking.

April 7, 2010 Add a comment