At home, and in some markets abroad, companies like Marriott International , which owns the Courtyard and Fairmont brands and Starwood Hotels & Resorts , owner of Sheraton and W, have virtually eliminated real estate risk.
They have sold all or most of their own hotels, and instead make money by franchising their well-known names. This business strategy of minimizing in-house resources is known as "asset-light."
But in India, hotel companies are finding it hard to grow without getting bogged down in bulky assets like land and, well, hotels. (For a graphic: )
"All the brands, they still want to do the asset-light model, but they understand in some cases the price to pay for entry is to put some capital, some equity into it," said Sri Sambamurthy, whose real estate firm West Point Partners is investing in India. Sambamurthy used to manage global real estate projects for Barry Sternlicht's Starwood Capital.
Rapid expansion in lends credence to the lodging industry's claim that its future lies mainly in emerging markets. But in India, growth will be slower, and more expensive.
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