Bugdet hotel Lemon Tree Study


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Study about Lemon Tree budget hotels , comparing with ginger hotels, fortune , courtyard marriott etc. Identify the current business strategy , current problems and limitations and suggest future marketing strategies for the hotel

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  • These are the four ways that sales responsibilities can be divided.

    Discussion Question
    How will a company decide which structure is best for them?
    The decision is based on how many product lines, how many industries, the size of the sales force, and the number of buyers.
  • Bugdet hotel Lemon Tree Study

    1. 1. Budget Hotels Industry LEMON TREE HOTELS
    2. 2. INDUSTRY ANALYSIS • Economic developments and a growth of trading activities have led to travelling • Tourism boards in different states have been paying attention to provide budget accommodation facilities for visiting tourists • India's room supply pipeline represents 17% of the Asia-Pacific pipeline. • It was moving at a CAGR of 10.8% for last 10 years and is now expected to grow at a CAGR of 6% for the next 5 years • Middle class with more disposable income at hand • Present budget hotels follow the no frills principle
    4. 4. PEST ANALYSIS Political Factors – Depended on the political framework of the government of the country – Operating environment is impacted by trade and labor laws, tax laws, environmental policies and trade restrictions • Trade license • ESI and EPF • Music License: • Elevator license. • Bar license:. • Food license:. • Trademark of name and logo
    5. 5. Environmental Factors • To monitor water consumption and rationalize its use • To save and protect local resources, to control energy use and monitor its consumption • To save energy and reduce atmospheric pollution • To reduce waste at the source and improve waste management • To implement a recovery and recycling strategy • To reduce the impact of consumption on the environment • To promote the development of local, ecological and social product flows • To limit noise pollution • To improve air quality inside buildings • To reduce the impact on the local landscape
    6. 6. • Economic Factors: – Factors like inflation and exchange rate impacts the firm’s behavior – The capital budgeting of the firms have become difficult over the years due to global crisis and highly volatile currency – Rise in the paying power of the visitors • Social Factors: – The availability and willingness of the workforce is a major factor which affects the hotel industry – People have started vacationing often – People on a holiday want a sense of calm and safety
    7. 7. • Technological Factors: – Chunk of the hotels are still using the manual book – Hotels are starting to upgrade themselves with the latest technology – Benefits of IT system are already showing. • Less inventory cost. • Forecast the room occupancy better. – Wi-Fi services to its customers – EPABX facilities in all rooms
    8. 8. PORTERS 5 FORCES Threat of entry HIGH Attractive market- less supply, more demand during different periods Comparatively less capital requirement to enter Customer switching cost nil Relaxed government regulations Power of Suppliers MEDIUM Small number of quality training providers and skilled employees Less availability of skilled people then required Higher attrition rate of employees The Power of buyers HIGH Customer driven market Size and customer concentration high Easy access to internet Customers are highly informed Huge offers and packages given by travel booking sites Threat to substitutes MEDIUM No direct substitues available Over 81% comprises of unorganized sector Price sensetive customers Rivalry among Existing Competitors HIGH
    9. 9. LEMON TREE HOTELS • Started in 2002 by Mr. Patu Keswani • Currently own 25 hotels in 15 cities with 2800 rooms and 3000 emplyees • They are second as per market share in the segment, behind Ginger Hotels • Operates under 3 brand names: – Red Fox – Economy Range – Lemon Tree Hotel – Mid-Scale – Lemon Tree Premier – Up-Scale
    11. 11. PREVIOUS SUCCESSFUL STRATEGIES • FLEUR HOTELS – A JOINT VENTURE BETWEEN LEMON TREE HOTELS AND DUTCH PENSION FUND MANAGER APG – In May 2012, Lemon Tree Hotels formed a joint venture with the Dutch Pension Manager APG group. – It has confirmed to invest more than Rs. 2000 Cr in Fleur Hotels for development and management of around 35 hotels by the end of 2016.
    12. 12. PREVIOUS SUCCESSFUL STRATEGIES • THE IMPACT OF RATEGAIN – RateGain is a company that provides SaaS solutions – It tracks the competitor prices on real time basis and helps the Lemon Tree Group with its pricing strategies. – RateGain has helped the hotel chain in increasing its resources and capabilities
    13. 13. CURRENT STRATEGY – COST LEADERSHIP • The group was amongst the first to successfully reduce the size of the rooms from 320sq ft to 240 sq ft • Lemon Tree group incorporated the concept of built in beds . This essentially meant that the worker could clean 22 rooms instead of 15,in one shift • They have employed disabled people • Unlike other hotels, the air conditioning and the water pipes are horizontal rather than vertical in the Lemon Tree hotels. This enables the group to shut the entire floor down during periods of low occupancy.
    14. 14. CURRENT STRATEGY • There are no carpets in the hotels. This concept removes foul smell during the time when the air-conditions are switched off • Lemon Tree Smiles- the loyalty program • The Lemon Tree group has also successfully found a Blue Ocean in a highly creative domain .Its parties range from Kitty parties to regular office parties to even birthday parties, for the mid-market customer • The hotel also successfully reduced the number of offerings from the rooms and installed only the necessities
    15. 15. SWOT ANALYSIS Strength  Provide a variety of hotels covering mid market to upscale market  Provide a refreshing and fun experience, produce their toiletries on their own.  They have an extremely friendly staff ,separate staff present to resolve grievances  A very good place to work at, recently has been listed in top 50 companies to work for in India Weakness  New in the market so have less market share  Hospitality experience cannot match to the existent market leaders Opportunities  Increasing demand for budget hotels in India due to frequent travels of officials  lemon trees’ presence in major cities which involve travel for business  Utilization of internet to exploit their product , offer visibility, presence, marketing and distribution  Affordable hotels are an ideal option for a weekend stay Threats  High competition in which involves poaching the staff  As budget hotels are preferred for their economic viability price wars and better facilities by competitors can be deteriorating  A lot of high end hotels have come up with new brand of budget hotels which adds to their competition apart from new players
    16. 16. Ginger Hotels • Indian hotel chain formed as a part of Tata group ,1st hotel in 2004 , Bangalore • Started with 999/night to up to 2500/ night today • One of the first premier Indian hospitality group to get into budgetary hotels, 1st of its kind chain of smart basic hotels , No frills hotel • Smart basics signifies simplicity, informality, warmth, style, modernity and affordability • Segment group -Executive level employees, Regular business travellers • Currently are 28 in number, future expansion to 50 by 2015 Smart Basics Concept – please help yourself • No provision of bell boy • Room AC in lieu of central AC • Single quality restaurant • A hotel could be established in 40,000 sq feet • Size of the room was around 180 sq ft small compared to 250 -400 sq ft Reduce the manpower to 1/3rd Smart basics provides facilities intelligently to reflect modern way of life – • meeting room • conference room • restaurant and WiFi and net zone • CCD, water dispenser • 20 inch flat-TV in each room with satellite channel and Mini fridge • 24 hr hot /cold water
    17. 17. Ginger Hotels Smart planet –doesn’t compromise environmental and ecological issues • CFL lighting , energy saver key tag system in rooms, maximum use of natural light, thermal insulation, and gas fired water boiler system • Water conservation measures ground water recharging system, rain water harvesting, auto-flush in public urinals. • Waste management done through proper sewage treatment. • Noise pollution measures such as use of acoustically sealed noiseless diesel generators and vacuum sealed windows to maintain external noise level up to 50 decibels. Awards 2009- CNBC travel award for Best budget hotel 2010- Scurry award for creating new market/category at Leap Vault Change Leadership Awards 2010-11- Best economy hotel 2010 -11- Outlook’s travellers award 2011-12 -Best budget hotel , golden star awards
    18. 18. COMPETITOR ANALYSIS Hotel Originated in Tagline Branches USP Segment group Planned Expansion ITC fortune hotels In 1995 Let Fortune take you places 40 hotels, 66 operational alliances in over 50 cities Provide top quality accommodation at affordable prices Business and leisure travelers 90 hotels strong chain by 2015 Ginger hotels 2004, as a part of TATA group Please help yourself Around 28 hotels in different locations of the country One of the first premier Indian hospitality group to get into budgetary hotels Executive level employees, Regular business travelers 50 hotels by 2015 Courtyard Marriott In 1990s By business travelers for business travelers 16 hotels in different cities Have a high brand recognition owing to Marriott Business travelers Around 47 properties by 2017
    19. 19. SUGGESTION FOR BEATING THE COMPETITION • Identifying the current strategy of the company • Identifying the changes in the environment along with the resources and capabilities of the company • Devicing a new strategy
    20. 20. SUGGESTIONS • Lemon tree hotels can diversify into heritage tourism • Lemon tree can leverage upon India’s increased pilgrimage tourism • New and aggressive marketing strategy • Improved hr strategy
    21. 21. LEMON TREE HOTELS CAN DIVERSIFY INTO HERITAGE TOURISM STRENGTH • India has 28 world heritage sites • Provide travelers luxurious and unique experience • Heritage hotel provides facilities of 5-star hotel • Attracts foreign tourists • Foreign tourists arrival in 2013 increased by 6.4% compare to 2012 • Shift in demographics with rise in expenditure on leisure service • Incentives provided by MoT on heritage basic category will be Rs Three lakh per room, subject to a maximum of Rs 100 lakh WEAKNESS  Seasonality of Indian hotel industry  Lack of knowledge and education about Indian culture  Locations usually remote and rural places  Human resource required not same as a typical hotel  Heritage properties difficult to maintain  Prior approvals by Archeological Survey of India  Marketing a heritage property is not the same as any other hotel OPPORTUNITIES • Traveler looking for heritage and culture rather than just high-tech hotel rooms • Revenue from leisure travel totaled USD 66.5 bn in 2012 and is estimated to reach over USD152 bn in 2023 • Foreign tourist’s arrival increased at a CAGR of 7.8 % during 2005-2012 THREATS  Substitutes like unorganized hotels and rest houses available  Poor infrastructure, safety and hygiene in rural and remote places
    23. 23. LEVERAGE UPON INDIA’S INCREASED PILGRIMAGE TOURISM • Due to the diverse background of Indian population and the religious inclination of people we can see a huge potential of pilgrimage tourism
    24. 24. MARKETING STRATEGY • Better Deals and Discounts – Airport shuttle service – Sweet suit deal – Free WIFI 24*7 – Save 2 nights or more and save Recommended offers: • Early Bird Special: As Taj Hotel offers a value for money deal on early booking. • Special offers on holidays: More offers should be given on holidays. Currently Lemon Tree in not offering any special holiday offer. • Breakfast inclusive deal: Extra discount can be given to the customer if he wants to have breakfast at hotel only. This will bind the customer to enjoy good cuisine in hotel itself. • Extended Stay: Deals if a family wants to extend the stay, then a discount should be given. This will increase the average number of staying days of a customer. • Business Offer: The hotel should provide a conductive atmosphere and ambience for corporate people who generally come in group for a project or dealings. This is offered in Leela hotels.
    25. 25. MARKETING STRATEGY • Search Engine Optimization – Subscribe for paid search as done by Ginger Hotel Ranking Score = bid * Quality Score • Improve Facebook Page – The Facebook page of Lemon Tree hotel was last updated in Oct 2013 • Increase visibility and awareness – Increase involvement of people: Currently there is no campaign organized by the hotel group itself. – There is no proper Wiki page: A wiki page should be there, explaining in and out of the hotel that is from history to future plans. – More tie ups with companies: More and more tie ups should be done to increase customer base and hence increasing awareness.
    26. 26. HR STRATEGY • ISSUE : Inadequate supply of quality talent. – RECOMMENDATION: The hoteliers are now starting to setup training institutes of their own and train newly joined recruits according to their preferences. • ISSUE: Growing attrition rates in the industry. – RECOMMENDATION: Provide ESOP to employees in the lower hierarchy too. • ISSUE :Low Employee Productivity. – RECOMMENDATION: Introduce employee monitoring systems using CRM technologies
    27. 27. OPPORTUNITIES • Opportunity: The number of foreign guest is about 1/10th the no of Indians who move around the country and settle in local and regional unbranded hotels. – Suggestion: Lemon tree should try and expand in the middle segment at more than the other segments. Currently its growth pace is immense and thus it just need to focus at the right segment. • Opportunity: Lemon tree can go for international expansion in countries like Sri Lanka and Nepal. – Suggestion: Lemon tree enjoys high brand value in the hotel industry and has attracted foreign investors for its high repute. The company should now go for IPO without further delay and raise fund to fulfill its expansion plan both in Indian and International domain.
    29. 29. REFERENCES • http://delhipolicelicensing.gov.in/hotel/hotel.htm • http://www.iracst.org/ijrmt/papers/vol3no12013/1vol3no1.pdf • http://www.sacredyatra.com • • http://www.livemint.com/Companies/JBRVLcYwDXQAUshcxevfyL/Skilled-manpower-shortage-threat-to- hotel-industry-growth.html • http://articles.economictimes.indiatimes.com/2013-03-14/news/37713890_1_hotel-properties-lemon- tree-hotels-patu-keswani • http://www.ibef.org/industry/tourism-hospitality-india.aspx • http://www.pwc.in/assets/pdfs/publications-2012/hospitality-insights-from-the-indian-ceo-desk.pdf
    30. 30. THANK YOU