With the Indian economy on the roll an increasing number of business travelers and tourists are visiting India, resulting in a short fall in the number of hotel rooms available in most Indian cities. Consequently international and domestic hotel chains are rushing in to bridge the growing void in the Indian hospitality sector.

Sensing tremendous opportunities in the mid-market segment, several players in the hospitality industry have expressed interest in modestly-priced hotels across the country. Among India's leading hospitality companies, keen on establishing their presence in this frill-free segment is the Indian Hotels Co Ltd. Part of the Tata Group, it has set up a separate subsidiary- Roots Corporation, with the Ginger brand- to cater to this emerging segment. Another key entrant is the Fortune Park Hotels, of the ITC Group .

More recently realty firm Emaar MGF entered into a JV with European hospitality leader Accor to develop “Formula 1” its brand of budget hotels across India. With an investment of $300 mn spread over the next 10 years, the Company plans to set up 100 hotels that characterize the “sleep well at the lowest price” concept. The 10,000 rooms planned will come at a tariff of Rs 1,000 per night in Tier 2 and Tier 3 cities and Rs 1,500 in Tier 1 cities.

Emaar MGF, a 50:50 joint venture between Dubai-based Emaar Properties and Delhi-based MGF Developments, has so far invested $1 bn in developing residential and commercial projects spread across India, the latest investment of $300 mn being over and above the total investment made so far.

Accor is also in a joint venture with Indian tourism company, Inter-Globe, to set up 25 Ibis economy hotels across India over the next decade. The Group is currently operating one Ibis hotel in Hyderabad and has commenced developments of six hotels, one each in Gurgaon, Mumbai, Pune, Bangalore, Hyderabad and Jaipur. The company is also negotiating sites for another three hotels in Mumbai, Bangalore and Ahmedabad. Interglobe Hotels expects to have 15 Ibis hotels under development with a total investment of $161 mn by the end of 2007.

The Novotel brand of four-star hotels in Gurgaon, Bangalore and Hyderabad and a five star Sofitel in Mumbai in the Bandra Kurla Complex are among Accor’s other Indian investments.