Destination Celebrations, Spiritual Stays Fuelling Hotel Expansion

Over the past few years a quiet transformation has swept across India’s smaller cities and towns. Where once the hospitality spotlight fell on metros, a new wave of hotel development is reshaping the travel map and it is unfolding in tier II and III centres. From heritage towns and pilgrimage circuits to emerging industrial hubs, wedding destinations and weekend getaways, these lesser known regions are witnessing a surge in hotels, resorts and branded accommodations. ITC Hotels Ltd. has been an early mover in this shift, and, as its Managing Director, ANIL Chadha explains, it is actively remodelling industry strategy for the non-metro era.

Just a few years ago, weddings typically meant rituals and feasts conducted in a marriage hall. But today, destination weddings at resorts in offbeat and picturesque outdoor settings, with an emphasis on creating memorable experiences, are gaining ground across urban and mofussil regions. Besides, pilgrim tourism is evolving with travellers now seeking comfortable stays and Instagram worthy meals in addition to spiritual fulfilment. It is therefore unsurprising that leading hotel chains are focusing on growth in the upperupscale and mid-scale segments, rather than only luxury in these emerging markets.

One such example is ITC Hotels Ltd. (ITCHL), which has developed a framework of key strategic drivers for expansion into tier II and III Indian cities. “These cities have grown in respect of demand quotient in the weddings and social event segments and have therefore presented considerable opportunity for hotels that offer significant MICE spaces. For example, Storii Solan, Storii Dharamshala, Welcomhotel Jim Corbett, Welcomhotel Manali, Mementos Udaipur and Mementos Jaipur,” says Anil.

He also agrees to the fact that spiritual destinations present a unique opportunity for growth. “There has been a huge surge of interest in pilgrimage destinations and this is reflected in the footfalls at certain hotels like Welcomhotel Prayagraj, Welcomhotel Bhubaneswar, Welcomhotel Amritsar, Welcomhotel Bodh Gaya, Welcomhotel Katra and Fortune Haridwar,” Anil elaborates.

This has led ITCHL to set an ambitious target of over 220 hotels by 2030, driven largely by expansion into tier II and III cities. Such geographical growth is also spurred by the overall infrastructure development in these cities.

Treading a Widening Path

Reflecting ITCHL’s strategy, and stimulated by increasing demand for hotels in emerging wedding and spiritual hubs, the group has made significant inroads into tier II and III markets. “To give an example, Storii by ITC Hotels is fast growing in the leisure market. We have also opened Fortune Airport Road Kochi and Fortune Select Siliguri,” Anil informs.

Fortune Hotels has a distinctive presence in key religious hubs, having established hotels in Puri, Katra, Amritsar, Haridwar, Tirupati and Madurai, and even a resort in Bhaktapur Nepal. The brand plans further additions in under served, high potential locations such as Ayodhya, Rishikesh, Mantralayam and Deoghar. Offerings are adapted to local cultures, tastes and traditions while maintaining brand consistency. Besides, its approach is heavily focused on both business and leisure locations like Kochi, Kalimpong, Hoshiarpur, Gorakhpur, Hosur and Aligarh.

Our portfolio caters to all segments and adapts its offering in smaller cities with balanced brand consistency and local relevance. The product is calibrated to match local demand patterns through flexible food and beverage formats and efficient spatial design,” Anil elaborates. Service models are simplified and digitally enabled to enhance guest experience while controlling operating costs, keeping hotels aspirational yet accessible in smaller markets.

“Further, at Fortune Hotels we have been conscious about catering to expectations and sentiments of guests especially in regards to their cuisine preferences. Thus, hotels in many pilgrim locations have an exclusively vegetarian restaurant in the hotel which is reflective of our customer consciousness and inspired by the cultural ethos,” Anil says.

Influencing Factors

For hotels expanding into non-metro cities, an asset-right strategy must align with market dynamics driven by destination weddings, spiritual tourism and MICE. “Locations with strong social event demand drivers such as pilgrimage circuits, heritage towns and emerging business hubs are important markets. Most of such properties offer larger banquet capacity, flexible outdoor venues, and wellness-oriented facilities to capture weddings and spiritual travel,” Anil shares. ITCHL’s Fortune and Welcomhotel brands have been positioned to serve this demand.

“Interestingly, we have recently launched Fortune Select Siliguri, a premium hotel positioned as a memorable destination for grand celebrations, weddings, corporate events and intimate gatherings. In fact, nonmetro has been a focus area for the Fortune brand due to potential for our expert hospitality. Multiple cities and towns have ‘Fortune’ as its first branded hotel and we are positively inclined towards pushing the envelope and finding more high-potential areas outside the metro city arena to grow our presence,” Anil states.

Non-Metro: The New Port of Call

Looking ahead five to ten years, leading hotel chains in India are likely to establish properties in many tier II and III cities, offering guests the best in experience and service. In fact, as Anil points out, such cities will be major growth drivers as demand rises from domestic leisure, spiritual travel and social events. Guest expectations are also evolving. They want brands that understand hospitality, deliver food and beverage excellence and provide seamless digital convenience at value-led pricing. Versatile brands and asset-right strategies will position these hotels to scale swiftly and deliver consistent quality.

Tackling Operational Challenges

While expanding into tier II and III markets may now be a strategic priority for many leading hotel chains, it brings specific operational and talent-related nuances. For instance, smaller cities often have a deficit of trained hospitality talent. “In emerging cities, ITCHL’s key human resource challenges revolve around limited availability of trained hospitality talent, higher early-stage attrition and the need to rapidly embed brand culture and grooming standards,” Anil reveals.

ITCHL addresses this through early talent partnerships, intensive pre-opening training and deployment of experienced task-force teams to transfer culture and capability. “We strengthen local talent pipelines through partnerships with institutes and deploy experienced teams from metro hotels during preopening to ensure culture transfer from day one. Clear career pathways, focused engagement initiatives and ‘quality of life’ enablers help improve retention, while structured training and rigorous induction ensure that employees, irrespective of location, deliver superior guest experience,” Anil says. Together, these measures ensure that even in emerging cities, such hotels deliver the same service excellence, grooming standards and responsible luxury experience that define the hotel’s brand value.

Meanwhile, setting up an efficient supply chain is also a crucial input. Centralised supplier clusters and procurement systems are being formed to maintain quality and cost efficiency.