As the number of middle-income families going on domestic vacations and business travellers on a tight budget keeps rising, international hoteliers are rushing in to capture the mid-market segment bridging the gap between luxury and budget hotels in India.

The concept of mid-market hotels is relatively new to India. Industry experts say there exists a whole range of tourists between the budget travellers and the well-heeled. 

The bulk of leisure travellers are from the middle class and a large proportion of corporate travellers in India is mid-level executives. They want all the trappings of a luxury hotel but at an affordable price.

"With companies continuing to be more cost-conscious, and leisure travellers looking for value-for-money options that do not compromise on quality, there is a clear gap in the mid-scale market," said Chris Moloney, chief operating officer, South West Asia, Intercontinental Hotels Group (IHG).

One of the key drivers behind the booming Indian tourism, Moloney told IANS, was the burgeoning numbers of middle class "which has incredible headroom for growth".

A recent survey by the Confederation of Indian Industry and PricewaterhouseCoopers also identified the mid-market and budget segments as growth areas.

IHG has signed a joint venture with Duet India Hotels Group (DIHL) to develop 19 new Holiday Inn Express hotels in more than 12 key cities by 2016 to cater to this segment.

"We have taken 24 percent equity stake, making a multi-year investment of $30 million into the partnership," said Moloney.

According to the data released by the government's tourism department, 740.21 million Indians travelled inside the country in 2010 (up by 18.8 percent against 2009) while foreign tourist arrivals (FTAs) were 5.78 million (up by 11.8 percent against 2009). These numbers are expected to go up to 1,451.46 million and 11.24 million respectively by the end of 12th Plan.

In comparison, the country has just 15 percent of its 117,800 hotel rooms that fall under the mid-market segment, compared to 43 percent in the United States and 35 percent in Britain.

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