Ginger adds a dash of spice to offering 

Ginger, the midscale brand of the Indian Hotels Company Limited (IHCL), is getting bigger. One of the first to get into the branded budget segment, way back in 2004, Ginger had frittered away its pioneering advantage by being slow to scale up. But ever since its brand makeover in 2018, when it graded up to what it calls ‘lean luxe’, the number of Ginger properties and its revenue have increased.

It is also opening hotels with more rooms, signalling developer confidence and growing travel demand. The trend is evident both in established markets such as Mumbai, Bengaluru and Goa which are seeing hotels with over 300 keys, as well as in smaller towns.

Sizing up

“For Ginger, the average number of rooms per hotel used to be around 70 but it is increasing now. In our existing portfolio of 60 hotels, the average number of rooms per hotel is 83. This will increase to 115 in our 26 pipeline hotels. More the number of rooms, better is the efficiency of a hotel based on the demand in the market,” says Deepika Rao, IHCL’s Executive Vice President, Hotel Openings.

“In tier II and III cities, where we have entered, the existing non-branded hotels have a small inventory. Typically, the largest property in these towns would have about 80 rooms. But now developers are gaining confidence to build bigger hotels with more than 100 rooms. I see the change in most of the tier II and III cities except in the North-Eastern States where the room count per hotel is still around 70-80,” notes Suma Venkatesh, IHCL’s Executive Vice President, Real Estate and Development.

Currently, IHCL has 86 Ginger hotels, 60 in operations and 26 under development — these will come up in diverse markets such as Agra, Ahmedabad, Durgapur, Dehradun, Goa and Gangktok. 75 per cent of Ginger hotel’s portfolio is owned/leased and only 25 per cent is managed.

“Cities are growing, creating their own micro markets and business districts. We see a great opportunity in the mid-scale segment and feel that every district headquarters in the country can take a Ginger hotel,” says Venkatesh.

According to Hotelivate, around 23 per cent (38,000 rooms) of the current hotel inventory in the country can be classified as mid-scale segment. It is also among the fastest growing with 18,000 rooms under construction, accounting for 26 per cent of upcoming inventory. Ginger is playing in a crowded space with brands such as The Fern (Concept Hospitality), Fortune (ITC) , Lemon Tree, Royal Orchid and international brands like Ramada (Wyndham), Fairfield by Marriott, all having at least 2,000 keys each.

Many of the new Ginger properties are coming up in cities where the brand is already present. IHCL has been awarded a land lease to build a 300-room Ginger hotel at MOPA airport in Goa. It will be the third largest hotel under the Ginger brand. A 371-room property is opening near the Mumbai airport soon. A 325-room Ginger hotel, that is part of a twin project along with a 450-room Vivanta, will be coming up near Bengaluru airport in the next three years.

Brand makeover

The first Ginger hotel opened in the Whitefield area of Bengaluru in 2004. Modelled as a budget no-frills brand, it sold rooms for ₹999 a night in its initial years. A lacklustre performance and increasing competition in the budget space forced IHCL to change strategy and Ginger underwent a brand makeover in 2018. While the average room size of around 200 sq ft remained intact, interiors and aesthetics were changed to give a more vibrant look and feel. In-house food and beverage service in hotels were introduced instead of outsourcing. Around 60 per cent of the Ginger properties have been revamped as a part of the strategy.

Ginger brand’s enterprise revenue grew from ₹200 crore in FY18 to ₹360 crore in FY23. The pace of growth has grown 5x with aggressive signing of new deals. The hotel pipeline was just five in 2018 but has risen to 26 hotels now.

Ginger Goa Panaji

Ginger Goa Panaji

Analysing the change, Nandivardhan Jain, Founder and CEO of Noesis Capital Advisors, says, “In its earlier years, the Ginger brand faced challenges in resonating with Indian consumers due to its perceived lack of vibrancy and its positioning as a budget property, which did not align with the preferences of discerning customers. However, since 2018, the brand has undergone a remarkable transformation, shedding much of its previous baggage. The new Ginger properties have earned recognition for their elegance and efficiency, delivering higher returns to property owners and garnering significant attention from potential investors.”

The transformation of 60 per cent of its portfolio to the lean luxe positioning has paid dividends. Company records show that the brand has commanded a RevPAR premium of 34 per cent over the mid-scale economy segment in FY22-23.

According to Hotelivate, occupancy in the midscale segment in FY23 was 60-65 per cent and average room rates were around ₹4,600. Rates could go even higher depending on location and demand. A spiced up Ginger seems to be well placed.

Leave a Reply

Your email address will not be published. Required fields are marked *