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Academic Analysis of IHCL


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Academic Analysis of IHCL

  1. 1. Indian Hotels Company Ltd.<br />Team B8<br />
  2. 2. The Hotel Industry – A Snapshot<br />Source: CRISIL Research<br />
  3. 3. The Indian Hotels Company (IHCL)<br />IHCL + Subsidiaries = Taj Hotels Resorts and Palaces<br />64 hotels in 45 locations : India <br />15 International hotels<br />Operational Market Segments : a) luxury b) premium c) mid-market and d) value<br />
  4. 4. Predictions for Decline : Current Financial Performance<br />Source: CRISIL Research<br />
  5. 5. Business/Leisure destinations – Bleak ARRs, occupancy rates and RevPARs<br />
  6. 6. Long-Term Optimism<br />
  7. 7. PEST ANALYSIS<br />
  8. 8. POLITICAL<br />ECONOMIC<br />Foreign direct investment -100%<br />Disinvestment<br />Taxes<br />Eco-tourism - ‘thrust industry’<br />Foreign collaboration<br />Government pressures to increase the security level, add sewage treatment plant etc.<br />Government Promoting Tourism<br />Government permission is no longer required for hiring foreign technicians<br />Recent economic Slowdown effect<br />High growth in tourism industry expected - Africa, Asia Pacific & Middle East above global average<br />Export Promotion Capital Goods Scheme (EPCG)<br />Not given Infrastructure Industry Status<br />Interest rates<br />Exchange rates <br />Inflation rate<br />
  9. 9. SOCIAL<br />TECHNOLOGICAL<br />Increased Extremism<br />Increasing disposable income <br />Changing life styles due to exposure to global environment.<br />Urban middle class forms 40 per cent of the total population<br />Computerization<br />Global Distribution System (GDS)<br />Provide LCD, Laptop & conference facilities<br />Real-time access to inventory, transparency across multiple channels<br />
  10. 10. Five Forces analysis Luxury segment hotel industry<br />
  11. 11. POWER OF BUYERS<br />Premium segment buyers less sensitive to prices<br />More sensitive to quality offered <br />No concentration of buyers<br />Business customers have higher negotiating power for better prices<br />Cost of switching – Low<br /> Power of Buyers - Moderate<br />
  12. 12. POWER OF SUPPLIERS<br />Property owners, developers and real estate companies, interior design & furnishings companies, architects, management & training service providers, marketing companies, industry consultants & ICT manufacturers.<br />Low concentration/Large in numbers<br />Switching costs are low to moderate<br />Possibility of supplier integrating forward - Negligible <br /> Power of suppliers – Low to moderate<br />
  13. 13. THE THREAT OF SUBSTITUTES<br />Substitutes – other forms for leisure accommodation. eg camping facilities, RV, informal accommodation with family & friends<br />Switching cost can range from high (RV) to low.<br />But no specific substitute for add-ons offered such as spas, recreational facilities and quality restaurants.<br />Threat of substitutes : Low<br />
  14. 14. THREAT OF ENTRY<br />Capital intensive<br />a large-scale upfront investment in real estate, buildings, décor & furnishings<br /> expensive staff<br />Legal and financial complexities in the purchase, leasing, and management of property<br />necessary spending on professional services.<br />Threat of entry : high<br />
  15. 15. COMPETITIVE RIVALRY<br /><ul><li>High exit barrier due to difficulty in divesting tangible assets (as specific to industry)</li></ul>Mergers and acquisitions possible<br />Average Sales growth rate ( 23 % -2003-2008)<br />Scope for individual players to grow<br />Few brand names in Luxury segments <br />ITC , IHCL, Oberoi, Hotel Leela Venture, Asian Hotels Ltd., Radisson hotels & Resorts<br />Differentiations possible with innovations in offered services<br /> Competitive rivalry : Moderate : overall<br /> High : in metros<br />
  16. 16. SWOT analysis<br />
  17. 17. Strengths<br />Weakness<br />Brand Value<br />Infrastructure<br />Best in class services.<br />Sales and Marketing network<br />Dependency majorly on Indian Territory <br />Dependency only high end Luxury Segment<br />
  18. 18. Opportunities<br />Threats<br />Rapidly growing market in India, South Asia and key gateway cities in source-market destinations.<br /> Expansion in international destinations<br /> Growing demand in the budget and mid-market segments.<br /> Extending the product portfolio in luxury residences, wildlife lodges and spas.<br />General downturn in economies<br /> Interest rates fluctuation<br /> Cheaper international airfares<br /> Growing presence of international hospitality chains<br />
  19. 19. Hotels - Factors influencing room demand from leisure tourists<br />Demand for hotel rooms from leisure tourists<br />(domestic and foreign) <br />Competitiveness of other markets, especially South-East Asia<br />Leisure spending<br />Promotion and distribution channels<br />Tourist attractions<br />Infrastructurefacilities<br />Personal disposable income levels<br />Visa restrictions<br />Socio-political situation<br />Tourist promotion <br />Presence of GDS, tour and travel agents, and sales offices<br />Hotel accommodation <br />Road, rail and air connectivity<br />GDP<br />
  20. 20. Hotels - Factors influencing room demand from Business Travellers<br />Demand for hotel rooms from business travellers <br />(domestic and foreign) <br />Infrastructure facilities<br />Business opportunities - India <br />Corporate performance of international (especially in the UK and US) and domestic companies<br />Increased deregulation of certain sectors<br />Political stability<br />Accommodation (availability and pricing)<br />Availability and pricing of amenities <br />(water, telecom, power) and use of teleconferencing<br />Road, rail and air connectivity<br />Availability of conference, convention and<br />exhibition facilities<br />Marketing of India as a MICE destination<br />Hotels (including service apartments)<br />Guest houses (owned or leased)<br />
  21. 21. Recommendations<br />Focus on expansion in Africa, Asia Pacific and the Middle East as these countries are experiencing higher growth rates than the world average<br />Promote brand “India” amongst tourists through campaigns<br />AD campaigns with internationally known Indian face <br />Commonwealth games in 2012 will lead to increase in demand for rooms<br />Scope to buy the hotels disinvested by Government at prime location(centaur hotel in Mumbai, Qytab hotel , Ashoka)<br />Lobbying for Infrastructure status<br />
  22. 22. <ul><li>Focus on MICE (meetings, incentives., conference and exhibition) tourism.</li></ul>Focus on ecotels and floatels<br />Increased Govt conditions expected in future<br />Focus on in luxury residences, wildlife lodges and spas, and service apartments<br />Budget hotels - large market to explore<br />Focus on safety aspects especially after Taj attacks <br />Recommendations<br />
  23. 23. Thank you!<br />