Mid-market and budget hotel chains are taking the mix-use development route for expansion as they find this a quicker way to expand, while saving costs.

"For budget brands, it helps reduce the fixed operating cost per key (room) as it is based on the concept of shared services," said Abhijeet Unathe, national head of hospitality and leisure at property consultancy Knight Frank India.

Under mix-use development, the hotel chain sets up its rooms and back-end facilities in a portion of an already existing complex — for instance, an IT park or a mall — unlike setting up a whole new standalone property which requires significant capital expenditure and construction time. A budget hotel costs at least Rs 15-20 lakh per room and usually takes two-three years to be launch-ready.

While the development period of budget hotels is comparatively short, delays in securing approval and licences for building them can derail even the best-laid plans. That is where the mix-use concept comes in as per a report in ET.

"It is the way forward for budget and economy hotels in the micro market, as the brands can tap into densely populated areas by converting existing resources into the brand's touch points," said PK Mohankumar, MD and CEO of Roots Corporation Ltd, a wholly owned subsidiary of Indian Hotels Co and operator of budget brand Ginger Hotels.

Hoteliers are banking on this model to save real-estate cost, which constitutes at least 25-30% of the cost of the project.

Budget brand Mango Hotels recently opened its first mixed-use property at Reliable Tech Park in the Airoli suburb of Navi Mumbai.

"The property was designed in one year and is spread over two floors, with 64 rooms, an F&B outlet and a conference centre. All this would have taken more than three years if we had gone for building a new property," said Mahesh Gandhi, founder of Apodis Hospitality that owns the brand.

In mix-use development, the hotel is designed to carve out as many rooms as possible with limited space wasted on public areas.

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