OPINION | What BRICS teaches us: India's next opportunity is in the middle

When India hosts a major international gathering, attention naturally turns to the convention centre, airport, security arrangements and the city's ability to move visitors efficiently. Yet another piece of infrastructure becomes visible when demand suddenly surges—the hotel room.

The experience around the BRICS Summit in Delhi is a useful reminder. Some luxury rooms were reportedly being offered at as much as ₹2.55 lakh a night around the summit dates. But the more important question is whether a destination has enough accommodation, across price points and locations, to absorb demand when it arrives at scale. 

India's answer should not be to build only more luxury hotels. The bigger opportunity is to build greater depth in the middle of the hospitality market. By "middle", we do not mean a particular room tariff. We mean professionally managed, reliable and well-located accommodation offering consistent quality and service without the price point of a luxury hotel.

Such hotels serve international leisure travellers, business travellers, conference delegates, media, event staff, families and domestic tourists. 

A major international event makes this clear. Five-star guests are only one part of the ecosystem; an event also brings officials, technical teams, organisers, journalists, business visitors and support staff, each with different accommodation requirements.

A city with excellent convention infrastructure but limited quality accommodation across price points can therefore find its ability to host larger events constrained by something as basic as the availability of the right rooms.

India's tourism ambitions increasingly require travellers to move beyond a relatively small group of established destinations and discover new cities, circuits and experiences. That requires accommodation to grow alongside the destination.

A visitor considering a heritage circuit, wildlife destination or cultural centre should not have to choose between a luxury hotel and accommodation that falls short on reliability, service or consistency. The encouraging part is that the market is already moving in this direction. Hotelivate reports 68 per cent occupancy across India's branded hotel sector in 2024-25, the highest in recent memory.

Proposed branded supply stands at 114,151 rooms through 2029-30, with 52.8 per cent of this pipeline in the upper-midmarket and midmarket segments. Independent and unbranded accommodation still accounts for 68 per cent of India's broader lodging landscape. 

There are already business models showing how this can work. Lemon Tree Hotels, for instance, has built a significant mid-priced portfolio and continues to expand through new development and franchise-led growth. 

This points to an important shift—professional hospitality can follow emerging demand rather than waiting for every market to become a major metropolitan centre. 

The opportunity is particularly significant because India's independent and unbranded base provides a large conversion and professionalisation opportunity. Franchise, management and technology platforms can bring better standards, distribution and service to existing properties, expanding quality supply faster and with less capital than building every room from scratch. This is particularly relevant in destinations where demand exists, but the economics of a new large hotel remain uncertain.

A mid-market hotel with a larger inventory of smaller-sized rooms, with fewer public and dining areas associated with luxury, can be more profitable than a smaller room inventory in a luxury hotel, on the same land area.

Government can help accelerate this expansion without becoming a hotel developer. Predictable approvals, clearer land and development rules, better connectivity, appropriate incentives and easier access to finance can materially improve hotel economics.

There is also a long-standing industry case for formally recognising hotel development as infrastructure, which could improve access to longer-term capital and better repayment structures for a capital-intensive asset. Destination plans and MICE strategies should assess accommodation capacity across segments alongside convention infrastructure.

This would catapult hotel development to a much bigger canvas, at a faster pace.

Singapore offers another useful lesson. Its tourism authorities have created SHINE, a hotel partnership programme for business events that brings together 22 hotels, representing up to 25 per cent of Singapore's hotel room inventory, across global and local brands and different price points.

Organisers get access to negotiated accommodation options and benefits, while delegates can extend their stays. The lesson for India is not to copy Singapore, but to recognise that accommodation can be actively integrated into destination and MICE planning. 

BRICS therefore offers us the opportunity to improve. When demand rises sharply, prices respond and existing capacity is tested. India's larger play is to prepare for such demand before it arrives—not simply with more rooms, but with the right rooms, in the right places, operated to the standards travellers increasingly expect.

India does not need to choose between luxury and budget accommodation. A mature tourism economy needs both, alongside a strong middle that provides depth, resilience and choice.

If India wants to host more global events, welcome more international travellers and take tourism to more parts of the country, the next opportunity in hospitality may not simply be to add more rooms at the top. It may be to build the depth in between—creating a significant opportunity for hotel investors and operators while giving India's destinations greater capacity to convert tourism and MICE growth into widely distributed economic value.

The authors, Ajay Bakaya is Chairman, Sarovar Hotels, and Hemant Joshi is CEO, Atithi Foundation.

The opinions expressed in this article are those of the author/s and do not purport to reflect the opinions or views of THE WEEK.