Sunday joys, Monday blues for the hotel business
The Daily Brief
The episode examines the shifting landscape of the Indian hotel industry, focusing on the rise of 'weekend getaway' models and the acquisiti
Key takeaways
- Hotel chains like IHCL and Leela are prioritizing the acquisition of existing villas and resorts to quickly capture the weekend tourism market.
- The Indian consumption economy is exhibiting a K-shaped pattern, with luxury travel surging among high-income groups while middle-income sentiment declines.
Main topics
- Indian Hotel Industry Trends
- Telecom Unbundling Regulations
Notable quotes
I am not a holiday product. I am a weekend getaway product.
Conclusion
The episode highlights how regulatory pressure and changing consumer p
Transcript preview
Speaker 2 (0:03) In today's episode, we'll do one deep dive and cover another story for the day. First, we'll talk about Sunday joys and Monday blues for the hotel business. And then we'll talk about the telecom industry having an unbundling problem. Welcome back to The Daily Brief by Zerodha, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets. I'm your host Akshara, and today is Thursday, 24th September. Coming to the first story. So the other day, we noticed an interesting quote from Devendra Parlekar, who's the CEO of Saffron Stays, a company that runs around 500 privately owned villas as holiday rentals. He told Business Lion that it plans to grow its South India portfolio from around 25 homes to 200 over the next two years and its overall portfolio to about 900. But what caught our eye was how he described the business. I am not a holiday product. I am a weekend getaway product. Now, Saffron Stays only wants homes within two to four hours of a big city, the kind of place you drive to on a Friday evening and leave on Sunday. And it isn't the only one chasing this. Many of India's biggest hotel chains have caught the drift of this wave. IHCL, the company behind Taj, completed its purchase of a 51 % stake in the boutique leisure chain Bridge for about Rs 222 crore. Meanwhile, the Leela paid Rs 560 crore for a 71 villa resort in Coorg, which is just a road trip from Bengaluru. Shalai, which owns the JW Marriott at Mumbai's Sahar and the Westin in Povai, paid Rs 171 crore for a resort in Udaipur. Samhi, which owns city hotels like Courtyard, Fairfield and Sheraton, bought 70 % of Rare India, a network of heritage and boutique hotels. So the logic seems obvious. Short weekend getaways have only become more popular over time. So if you're in Bengaluru and you see a long weekend like the upcoming Gandhi Jayanti, you're probably thinking of a quick fun time at Pondicherry, Goa, Coorg or Ooty. And it's easier than planning trains or flights to a far-flung destination. But that's only half the puzzle. A leisure room does earn more on the nights where there's a lot of demand, which is mostly weekends. But what about weekdays when there's a slump? What does that mean for the operational risks behind this trend? That's what we'll be diving into today. Here's a side note. If you want a refresher on how hotel companies make money, we covered it here. First, let's start with the prices, specifically why leisure rooms sell for much more than business ones. In the case of Chalet, for instance, between April and June, its resorts charged an average of Rs 18,250 a night, while its business hotels charged Rs 12,657. And at the luxury end, the gap is even wider. The Leela's average room rate across FY26 was about Rs 25,000 and some he told analysts that over 70 % of rare hotels charge more than Rs 25,000 a night. And it's not hard to guess why. A business traveller is usually on a company budget, often at a rate the employer has negotiated in advance. But a family on holiday is paying for something they've looked forward to all year and will happily pay extra for a pool or a whole villa to themselves. So at Rs 18,000 to Rs 25,000 a night, we can comfortably conclude that only the top slice of Indian households is buying these nights. And they're the same people we discussed in our conversation with SOIC on premiumisation, trading up from hatchbacks to SUVs and from regular whiskey to single malts. Now the rest of India is in a different mood. In the RBI's latest Consumer Confidence Survey, urban households' view of current conditions fell for a third straight round. to 90.7. So anything below 100 means more people think things are getting worse than better. And the RBI said the decline was driven by weaker sentiment on discretionary spending. Now, in a sense, this broadly reflects the K-shaped nature of India's consumption economy, where the upper income bracket sees surging wealth and spends aggressively on premium goods and lifestyle upgrades, while the lower and middle income segments face stagnant incomes. That has translated to a massive leisure travel bonanza among Indians. So Indians have been traveling abroad in record numbers. And according to the Ministry of Tourism, we made 32.7 million trips abroad in 2025 and approximately 44 % of those were for leisure. But Speaker 1 (4:32) more than a third of all those trips went Speaker 2 (4:34) to just two countries. the UAE and Saudi Arabia. So when war broke out in West Asia this year, a big chunk of India's usual holiday routes suddenly looked risky. In March, the outbound travel fell 27 % from a year earlier. In May, quite famously, Prime Minister Modi personally addressed Indians to put off foreign travel in an attempt to save foreign exchange. And you could see that in the air traffic numbers. This was best expressed in Shalai's July earnings call where the CEO said, Speaker 1 (5:04) Air traffic stayed flat for April to June, indicating some recovery in sentiment post the peak disruption in March. Speaker 2 (5:12) So that means some of the money that would have gone abroad was spent at home instead. On its July call, Indian hotels said revenue per available room grew 27 % in