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International hotel chains like Marriott, Starwood looking to scale up properties in India

International hotel chains Marriott, Starwood, Carlson Rezidor and InterContinental Hotel Group are scaling up the number of properties in India by 2020, moving faster than their local rivals, widening their presence to strengthen their negotiating position with online travel agencies and take on new age disruptors such as Airbnb. 



US operator Marriott, which has 32 hotels in the country, has over 35 units in the pipeline across its seven brands. Carlson Rezidor runs 76 hotels and has a target of 170 operational and under-development properties in India by 2020. British hospitality chain InterContinental Hotel Group wants to triple its business over the next 3-5 years in India, its third-biggest growth market. 

Overseas hotel chains currently own almost half the branded rooms offered in the country and are set to surge ahead of their Indian rivals by 2020. With more rooms in their control, hotel operators will be in a better position to negotiate rates with online travel agencies, while a wider presence in the country will help them to compete with room aggregators. 

Experts estimate demand for hotel rooms will increase 11-12%, while supply will expand at a slower pace. Pan-India hotel occupancy crossed 60% in 2015 - for the first time in five years - on the back of improved market sentiment. A rise in domestic travel and government initiatives such as Make in India, Digital India and the e-visa scheme are expected to drive demand for hotel rooms. 

International chains are expanding faster than their Indian counterparts primarily because they only manage hotels. Indian groups such as Taj, Oberoi, ITC and The Leela have been focused on owning and operating their hotels. With the cost of land rising and debt levels growing, Indian companies have been forced to turn asset-light and realise the need to expand through management contracts. 

Taj Hotels Resorts and Palaces, a part of the Tata Group, opened 20 new properties between 2012-13 and 2015-16, according to an investor presentation in December. The Oberoi Group is expected to open six properties by 2019, according to its 2015 annual report. 

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