Content area
Full text
Introduction
The branded budget hotel segment is considered profitable because of its ability to offer better facilities as compared to two-/three-star hotels or guesthouses. Senior and Morphew (1990) noted that branded budget hotels are unique because they are “strategically located” and have “new/modular construction”. Brotherton (2004) also notes that besides being a “high value for money offer”, branded budget hotels typically exhibit operational features like “centralized reservation system”, “standardized unit construction”, “extensive geographic coverage” and fixed room. Ruetz and Marvel (2011) offer an Asian perspective on budget hotels and elucidate that such hotels target domestic as well as business travelers including “white-collar middle managers, lower level salesmen and small time entrepreneurs”.
In India, many branded budget hotels have opened in the past five years due to growth in the tourism industry. Currently there are about 7,000-8,000 rooms in this category ( The Economic Times, 2013) and a branded budget hotel room (per night) costs between INR 1,500 and INR 4,500 (Balasubramaniam, 2008). Based on this price point, the market is also segmented into economy hotels (with daily price point between INR 1,500 and INR 2,500) and branded budget hotels that offer larger range of services (with daily price point between INR 3,000 and INR 4,500 (Deloitte, 2010).
In India there is still a huge demand-supply gap in this hotel segment, as only 20-25 per cent market is being served by branded players. Further, branded budget hotels in India are facing challenges like stiff competition, reluctance to increase room rates, dipping consumer loyalties and unavailability of profitable locations. Competition among branded budget hotels in India is becoming stiffer because “differentiation is harder to achieve” (Deloitte, 2010). As a possible solution to these issues, O’Niell et al. (2004); Love et al. (2002); David (2003) and Wheelen and Hunger (2002) discuss that it is critical for top management at branded budget hotels to identify challenges faced by the industry and address the same. Extant literature tries to address some of the issues; however, industry perspective has not been considered by researchers in this area.
Literature like Hua et al. (2009) and Brotherton (2004) explore critical success factors for branded budget hotels in the Chinese and European context and indicate that critical success factors (CSFs) are “core...