Mid-Market Hotels and Tech Redefine South India Hospitality

In an exclusive interaction with Adlin Pertishya Jebaraj, Correspondent at Homes India, Deep Jain, Director of Development - Mid Market (South India) at Treebo Hospitality Ventures, points out that South India is one of the most vibrant growth prospects of mid-market hospitality in India due to the combined demand of corporate travel in weekdays and leisure tourism in weekends. 

Deep Jain has an in-depth understanding of mid-market and scalable hospitality building models, leading to regional sourcing, integration of partners, and demand based growth of branded hotel assets. The leadership of his thought and the involvement in industry platforms make him a topical figure on the matters of trends in hospitality and investment dynamics. 

Which South Indian cities and micro-markets are emerging as high-potential destinations for mid-market hotel development, and why? 

South India has become one of the most vibrant markets in hospitality since it has a well-balanced corporate and leisure destination. Telangana, Tamil Nadu, and Karnataka are the main drivers of this region with the leading corporate locations being Hyderabad, Chennai, and Bengaluru. These are the cities that have experienced stable growth in IT, software services and office leasing and therefore they are reliable demand makers of business travel. 

In addition to these metros, Andhra Pradesh also provides good leisure and religious tourism destinations. The state of Andhra Pradesh enjoys Visakhapatnam coastline and religious tourism of Tirupati.  

Telangana boasts a commercial center, Hyderabad, which is backed by the rising cities, including Warangal, Khammam, and Yadagirigutta. Chennai is coupled with leisure and cultural tourism in Tamil Nadu which includes Ooty, Kodaikanal, Madurai, and Coimbatore, which are also corporate and manufacturing destinations.  

Kerala provides Kochi as a commercial port city, and temple towns as well as growing infrastructure, such as new retail and IT parks. Karnataka unites the cities like Bengaluru with other cities like Mysuru that are enjoying tourism as well as corporations. 

Such two-demand profiles: corporate weekdays and leisure weekends make South India one of the most successful areas to develop mid-market hotels, and several micro markets among others are turning out to be hot investment locations. 

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What are the defining characteristics of a successful mid-market hotel asset today in terms of location, room service, design, and service offerings? 

The contemporary mid-market hotel is no longer perceived as location-based; design efficiency and service consistency matter as well. Regarding the location factor, successful assets are usually within a 15-20 minutes distance of the major demand generators like IT parks, business districts, transit hubs, or commercial centers. Close distance will decrease the anxiety of the last-mile by the guests and greatly increase the preference at the time of booking. As it is situated or near major roads, it is easy to access any metro station, bus terminal, rail station or even airports, which increases connectivity and convenience to the guests. 

The design philosophy nowadays is based on efficiency not on wastefulness. The room sizes are normally between 180 and 250 sq ft and allow more key counts without compromising on functionality. The layouts of furniture are utilitarian and the communal areas are made to be multi-purpose instead of spacious. Lobbies are becoming more and more incorporating co-working-style seating, charging stations, Wi-Fi, and all-day cafes where guests work, meet, or rest and also cause other F&B revenues. 

Service-wise, the branded mid-market hotels perform successfully by providing predictability and dependability. Cleanliness, good bedding, reliable Wi-Fi, well-furnished bathrooms with 24/7 running hot water, hairdryers, and tea and coffee makers are the preferences of guests.  

The quality of breakfast and the staff behavior and standardized protocols in service are also key aspects. Compared to disorganized hotels which can have fluctuating experiences, consistency in mid-market brands achieves victory since guests have fewer reasons to worry, and loyalty is created. 

How is technology redefining the mid-market guest journey — from booking and check-in to in-room experience and post-stay engagement? 

The mid-market has witnessed the emergence of technology as the largest disruptor in the market, transforming the entire guest experience, including booking and check-in period, in-room service, and post-stay interactions.  

The contemporary trend in brands is the intensive optimization of their travel technology platforms and associated application systems because these systems are increasingly becoming the interface and loyalty determinants to customers. 

Technology is also important as it helps unbranded hotels to be assimilated into branded networks. An example is property management systems and channel managers that enable a smooth OTA synchronization, real time inventory update and dynamic pricing.  

Room rates are automatically adjusted according to occupancy when the demand is high and adjusted upon reevaluating the price when the demand becomes weak. This reduces the number of over bookings, inventory suspensions, and customer dissatisfaction, all of which affect the brand trust directly. 

On the operational side, technology allows smooth billing because it combines the services (early check-ins, airport transfers, laundry, and room service) in one system. The guests are also given a single consolidated bill instead of having a number of departmental bills thereby enhancing transparency and experience. Form a staffing perspective, standardized systems save time and money of training, as teams are more efficient when acquainted with the platform. 

App-based ecosystems enable hotels to provide discounts, loyalty points and personalized experiences on the guest-facing side which enhances retention. Once guests start using a hotel app, it makes convenience one of the major sources of loyalty. Real-time dashboards are important in the management teams as they give them access to occupancy, pricing, and performance data to facilitate quicker decision-making and governance. Technology is the staple of brand differentiation in the current environment where guests have to choose the hotel to stay in. 

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How are private equity, institutional investors, and family offices reshaping capital flows into South India’s hospitality market? 

Family offices are shifting away from the understanding of hotels as a prestige asset. Though long-term capital gains were considered to be the main play in which hospitality assets are viewed, investors are currently becoming more interested in the yield generation and operational returns. Hotels in mid-market are specifically appealing since they usually provide net operating margins of 30-36%, and even 40, basing on location and cost structures.  

Mid-market properties have lower manpower expenses, due to hiring of multi-specialty staff, leaner business models, and shorter breakeven timelines than luxury hotels because luxury properties take 10-15 years to breakeven, a duration exceeding 6 to eight years. 

The institutional investors and the public markets are also showing increasing confidence in hospitality. It is estimated that India requires nearly three million extra hotel rooms by 2030 to meet the five billion Annual Domestic trips. It is this structural supply-demand gap that is drawing capital into scalable, mid-market formats, which can be rolled out in a fast and efficient manner. 

Institutional validation is coming out in South India particularly. Prestige Hospitality Ventures has registered a public issue to grow about 2,500-2,600 keys in seven cities. The agreement between Brigade Group and Marriott should result in the addition of almost 1,000 rooms to the southern markets. Hotels like IHCL and ITC Hotels that are publicly traded are still growing aggressively. These are indications of growing investor confidence due to high domestic travelling demand, better infrastructure and favourable state tourism policies. 

Government programs are also contributing. Recent tourism summits and policy efforts in states like Tamil Nadu, Karnataka, Kerala, Telengana and Andhra Pradesh, across the spectrum of eco-tourism, resorts, hill stations, wildlife tourism and coastal tourism are growing the opportunity set and increasing investor confidence in hospitality as a viable, sustainable and revenue generating asset category. 

How do you see South India’s mid-market hotel segment evolving over the next five to seven years? 

In the next five to seven years, there will be a high shift in the supply side of the South India hospitality market to branded mid-market hotels. Although most of the segment still is disorganized nowadays, with family-run businesses, independent hotels with high local recognition, a slow but steady process of consolidation into branded networks takes place.  

These operators are becoming more aware of the advantages of standardization, improved distribution, and professional operations as well as improved demand visibility that branded affiliations can offer. 

With the penetration of branding, the mid-market segment is expected to expand at a compound annual growth rate of about 15-20% by 2030, exceeding the world averages. This business and leisure travel merger will only increase demand more especially in the diversified destinations found in South India, where corporate centers coexist with cultural, religious and leisure tourism centers. 

To the extent of familiarity with the quality of services, hygiene, and convenience, travelers are likely to keep presenting branded properties. More unorganized hotels will turn into branded portfolios and this will make the market more institutionalized, scalable and investment ready. In general, South India is set to continue as one of the most rapidly growing and structurally strong mid-market hotel areas in the nation.