“Hotel companies are making a deeper foray into tier-2, tier-3 and even tier-4 cities, as they recognise the increasing potential of these markets for both business and leisure travel and as the impact of a rapidly growing economy reaches smaller cities and towns,” said Mandeep S Lamba, president for South Asia at hospitality consultancy HVS Anarock.
“Tier-2, tier-3 and tier-4 cities accounted for a whopping 86% of all brand signings by properties in 2022, of which 47% were in tier-3 and tier-4 cities,” he added.
Samir MC, managing director of Fortune Hotels, which announced the opening of a new hotel in Khajjiar this week, said the chain will launch new hotels in Tiruppur, Aligarh and Hoshiarpur in the second quarter of this fiscal year, and is in talks to sign new hotels in Kevadia and Hosur.
Nikhil Sharma, market managing director for Eurasia at Wyndham Hotels & Resorts, said there is a strategic focus on tier-3 and tier-4 locations such as Ambala, Bhiwadi, Dhanbad, Gorakhpur, Khopoli, Panipat, and Viramgam in Wyndham’s pipeline of hotels. “Recognising the immense potential and growing demand in these areas, we have strategically expanded our presence in recent years,” he said.
Buoyed by a promising uptick in business in recent months, many hoteliers are looking for first-mover advantage in smaller towns that are attracting an ever-increasing number of visitors.Lemon Tree’s upcoming pipeline includes hotels in Chirang, Erode, Jabalpur, Banswara, Chandausi, Tezpur, Bharuch, Kharar, and Sri Ganganagar. “We are aggressively looking at tier-2, tier-3 and tier-4 locations for two reasons: most of these locations have no branded supply, so we get the first-mover’s advantage; (and) we also benefit from the network effect as the residents of these cities stay at our hotels in multiple locations,” said Vikramjit Singh, president of Lemon Tree Hotels. Deepak Jain, founder of MayFair Consultants, said he is in advanced stages of negotiations with international brands for new hotels in Vithalapur, Siliguri and Bathinda.
Ajay K Bakaya, managing director of Sarovar Hotels & Resorts, said Sarovar will be the first branded chain to open hotels in Ayodhya and Saharanpur. The hotels are scheduled to open in the third and fourth quarters of this year, he said. The chain’s upcoming openings for this year also include hotels in Sonipat, and Jalandhar.
