A few years ago, in one of those ritual paroxysms that grip the Indian business community every so often, everyone decided to set up budget hotels across India. As is wont in such circumstances, serial announcements were made, each one rivaling the previous about the number of rooms that would be set up across India in just 3 to 4 years. And as is wont again, nothing much has happened since.
Let me tell you why.
The basic premise went thus. With India’s economy booming at almost 10% growth every year there was a lot of new business activity expected. Most of this activity would require people to travel resulting in a huge increase in the demand for mid-range and economy hotels for these itinerant business men. Given that the current capacity was all in low-end, dirty (nay, mostly filthy) ‘lodges’ that sprout next to bus stands and railway stations, there was clearly an opportunity to provide clean, hygienic, smart hotels that would provide great accommodation at a compelling price point.
Unfortunately, the script has not quite worked out the way it was intended to. Uptake has been sluggish for the few hotels that managed to get launched. And it has left a number of highly-paid heads being scratched vigorously (mostly of people who have never ever done low-end business travel in India themselves).
To understand why the whole things has been a damp squib, a good starting place would be to deconstruct the basic premise I outlined earlier. The hypothesis had the following elements:
1. Indian economy will grow
2. That will lead to massive growth in business travel
3. Most of this additional travel will be in the mid to lower end of the market
4. Evolving consumers will demand a new product in business travel accommodation
5. This ‘new’ product will be ‘hygienic, smart, functional’ rooms at around Rs 1000/- per night cost
My guess is that the first four elements of the hypothesis turned out to be broadly correct although probably much lesser in extent or speed than envisaged in business plans. Extensive reading of hotel reviews on HolidayIQ, lots of conversations with actual consumers and my own personal experience of low-end business travel back in my CA student days suggests to me that the problem is primarily in point 5 above.
We all agree that the average Indian budget business hotel (the ‘lodges’ we talked about) is extremely unhygienic and generally unkempt. But that is to miss the primary value they provide. In addition to providing a room with a bed to sleep on, these lodges provide travellers with a perception of being important. In classic Indian ‘high touch’ style, there are multiple minions (the quintessential ‘chhotus’) who hover around the traveller and cling on to every word and take barked orders with meek accetance and generally scurry about. This sense of finally being a VIP is the biggest value provided by small business hotels to small businessmen. And it is precisely this value that has been lost in the new breed of hotels. With their policy of no room service and general parsimony towards having employees, this new breed of ‘hygienic and smart’ hotels are exactly what their target customer wants to avoid. After all, who wants to walk into a people-less hotel and realise that one is truly unimportant.
And in this lies their failure.