A case study on Indian Hotels Company Attempting a broad competitive niche Without diluting brandPresented To: - Prepared By:-Prof. K.S. Prasad Ashish rathod (11F49) Keyur jain (11F63) Nilesh makwana (11F69) G.H. Patel Post Graduate Institute of Business Management, Sardar Patel University, Vallabh Vidhyanagar
Introduction of Indian Hotels Company :- The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectivelyknown as Taj Hotels Resorts and Palaces and is recognised as one of Asias largest and finesthotel company. Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, thecompany opened its first property, The Taj Mahal Palace Hotel, Bombay in 1903. The Taj, asymbol of Indian hospitality, completed its centenary year in 2003. Taj Hotels Resorts and Palaces comprises 93 hotels in 55 locations across India withan additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan,Sri Lanka, Africa and the Middle East. Spanning the length and breadth of the country, gracing important industrial townsand cities, beaches, hill stations, historical and pilgrim centres and wildlife destinations, eachTaj hotel offers the luxury of service, the apogee of Indian hospitality, vantage locations,modern amenities and business facilities.IHCL operate in the luxury, premium, mid-market and value segments of the market throughthe following:TAJ (luxury full-service hotels, resorts and palaces) is flagship brand for theworlds most discerning travelers seeking authentic experiences given that luxury is a way oflife to which they are accustomed. Spanning world-renowned landmarks, modern businesshotels, idyllic beach resorts, authentic Rajput palaces and rustic safari lodges, each Taj hotelreinterprets the tradition of hospitality in a refreshingly modern way to create uniqueexperiences and lifelong memories. Taj also encompasses a unique set of iconic properties rooted in history and traditionthat deliver truly unforgettable experiences. A collection of outstanding properties withstrong heritage as hotels or palaces which offer something more than great physical productand exceptional service. This group is defined by the emotional and unique equity of itsiconic properties that are authentic, non- replicable with great potential to create memoriesand stories.TAJ EXOTICA is resort and spa brand found in the most exotic and relaxing locales ofthe world. The properties are defined by the privacy and intimacy they provide. The hotelsare clearly differentiated by their product philosophy and service design. They are centeredon high end accommodation, intimacy and an environment that allows its guest unrivalledcomfort and privacy. They are defined by a sensibility of intimate design and by their variedand eclectic culinary experiences, impeccable service and authentic Indian Spa sanctuaries.TAJ SAFARIS are wildlife lodges that allow travelers to experience the unparalleledbeauty of the Indian jungle amidst luxurious surroundings. They offer Indias first and only
wildlife luxury lodge circuit. Taj Safaris provide guests with the ultimate, interpretive, wildlife experience based on a proven sustainable ecotourism model.VIVANTA BY TAJ HOTELS & RESORTS span options for the work-hard-play-hard traveller across metropolitan cities, other commercially important centres as well assome of the best-loved vacation spots. Stylish & sophisticated, Vivanta by Taj deliverspremium hotel experiences with imagination, energy & efficiency. Its the flavour ofcontemporary luxury, laced with cool informality and the charming Taj hospitality. Createdfor the cosmopolitan global traveller and bon vivant, Vivanta by Taj Hotels & Resorts createexperiences that will amuse, invigorate & inspire you. Vivanta revels in a spirit that presentsthe normal with an unexpected twist. Experiences which make you pause & appreciate thehidden beauty in life! It challenges your expectations of a hotel and unfolds multiple layers ofdelight. Innovative cuisine concepts, the smart use of technology & the challenge toconstantly engage, energize and relax you all add up to make Vivanta by Taj the newsignature in hospitality.THE GATEWAY HOTEL (upscale/mid-market full service hotels and resorts) is apan-India network of hotels and resorts that offers business and leisure travelers a hoteldesigned, keeping the modern nomad in mind. At the Gateway Hotel, we believe in keepingthings simple. This is why, hotels are divided into 7 simple zones- Stay, Hangout, Meet,Work, Workout, Unwind and Explore. As travel often means more hassle than harmony, more stress than satisfaction,modern travelers are looking for smarter choices. Driven by our passion for perfection, wewelcome our customers to a refreshingly enjoyable and hassle-free experience, anytime,everywhere. Offering the highest consistency in quality, service and style we set newstandards and take the unwanted surprises out of traveling. Our warm welcomes make ourguests feel at home, away from home and our crisp and courteous service empowers them toget more done with greater effectiveness and control. And through our unrivalled network weprovide service that is effortless, simple, never overwhelming, always warm.GINGER (economy hotels) is IHCLs revolutionary concept in hospitality for the valuesegment. Intelligently designed facilities, consistency and affordability are hallmarks of thisbrand targeted at travelers who value simplicity and self-service.
Q-1:- Analyse the industry as a sector for survivability.INDIA – Travel and Tourism KEY FACTS AT A GLANCE Contribution of travel and tourism to GDP expected to rise from AUD 120 bn in year 2010 to AUD 350 bn by year 2020 Average growth of 8.5% over the next 10 years in this sector Export earnings from international visitors to grow to AUD 36 bn by 2010 Investment estimated to touch AUD 120 bn by year 2020. India has a world ranking of 12th in terms of actual market size and is 4th in terms of growth forecast.Advantage India The WTO (World Travel Organization) predicts that India will receive 25 million tourists by year 2015. Stable and consistent growth projected India currently has over 200,000 hotel rooms spread across hotel categories and guest- houses and is still facing a shortfall of over 100,000 rooms India to become a major hub for medical tourism, with revenues from the industry estimated to grow to US$ 2.2 billion by 2012, India will add almost 114,000 hotel guest rooms to its inventory over the next five years.Market Overview High annual growth rates The Indian hotel industry - Direct beneficiary of the growth in the economy and the tourism industry Companies moving up the value chain to management contracts and co-branding of properties Reforms in aviation sector have helped fuel growth Liberalization in the regulatory framework in India Increased visibility of India due to business and sporting eventsEmerging Trends Huge spurt in International Brands The emerging market – Budget & Business Hotels Better infrastructure and air connectivity More international brands and large domestic players entering the fray Shift of focus away from the metros into Tier I and Tier II citiesInvestments Indian Hotels Company (Taj Group) plans to construct 50 budget hotels under the Ginger brand in the next four years. East India Hotels plans to develop 750 additional hotel rooms under the Trident brand in the next 2.5 years. Carlson plans to increase its presence in India to 78 hotels by 2012, from 28 in 2009. Marriott plans to open 30 hotels in India in the next three years. Hyatt Group has plans to open 15 new hotels in by 2015.Key Initiatives
29 Mega Tourism projects across 22 Indian states Focus on basic infrastructure Conservation and eco sensitive plans Focus on private sector Looking beyond traditional tourism avenues into areas such as - Rural tourism - Eco tourism - Medical tourism - Adventure tourism - Cruise and Heliport tourismOpportunities Investment in smaller cities Hospitality chains looking upcountry Emerging need for a suitable project mix International hospitality chains are expected to acquire local players to increase their presence in the country. More room for strategic alliances and partnerships All players are looking at faster turn around times GREEN Technology is the in thing Diversification into new segments All hospitality chains local and international are now diversifying into new product segments, IHCL has already launched budget hotels in India, while Accor has announced similar plans Quality and Scalability Higher impetus on scalability High quality expectations and need for more innovation and eco-friendly solutions are also driving hotel operators to look for options elsewhere
Q-2:- Analyse the competitive advantage the organization has withrespect to any of resources.The Indian Hotels Company Ltd is a subsidiary of Tata Sons Ltd. It is mostly promoterdriven with promoters contributing the largest part of the shareholding. The detailedshareholding pattern is as given below. Share Holding Pattern of IHCLMr. Raymond Bickson is the Managing Director & CEO of the company. Mr Bickson bringsin international hotel experience and was voted as one of the Top 10 Best Hotel Managers byLeaders Magazine from 1997-2002.Generic Strategies IHCL follows a broad based differentiation strategy. They have a differentiationstrategy targeting the premium segment. But they have also expanded their offeringsinternationally to target a broader segment.Operational Performance The key operating characteristics of luxury hotel industry are occupancy percentageand average revenue per room. As the hotel industry have their peak demand during thesecond half of a year, it is prudent for IHCL to take necessary steps to improve the occupancyrate in the first half. Their occupancy rate of 67% is way better than the industry average of60% but their competitor Leela Ventures is closing in by maintaining a better occupancyrate.  Also, IHCL desperately needs to improve its‟ operational efficiency. IHCL‟sOperating Expenses Margin of 83% compared to Leela‟s 66% portrays this bad picture.Financial Performance As it can be seen from the table below, the consolidated Profit after Tax stood at(68.87) crores at the end of 2011 registering a marginal increase of 49.53 crores. The increasein revenue was mainly on account of additional room capacity being added, higheroccupancy, average room rates and revenue per available room (RevPar). Decrease in debtproportion did also contribute towards the improvement of contribution margin. Room sales
showed a healthy growth over the previous year as a result of higher room rates andoccupancies. Food & Beverages grew by 19% over the previous year. Comparative Financial PerformanceIdentification of Key ResourcesThe VRIN framework has been used to have a resource based view of the firm and identifythe key sources of IHCL‟s competitive advantage.Resource based ViewThe analysis of various resources of IHCL has been done and the following five resourceshave been found to be vital in determining the competitive advantage of IHCL over otherplayers in the market. These resources are being further analysed by applying the VRINframework. Tangible Resources: Site & Location Intangible Resources: Positioning, Brand Strength Capabilities: Superior Guest Servicing, Managerial Vision & JudgementSummaryThe analysis of the resources and the conclusions on the competitive advantages offered by them aresummarized as under. The ability to provide competitive advantage for each sub-factor of VRIN hasbeen given a score on 5. Net score gives us an approximate idea of the net competitive advantageoffered by the resource Summary of VRIN AnalysisThus „site and location‟ and „Brand strength‟ are two most critical resources available with IHCL.
Q-3:- what are the different strategies adopted in the past fiveyears? In India, IHL is recognized as the premier hospitality provider with a strong brandimage and ownership by the Tata Group, a highly respected group with varied businessinterests in several countries. Its brand Taj has become a symbol of luxury and service inIndia. The same image and experience of brand building have been leveraged in theinternational markets, not only in hotels but also in providing an experience in food andbeverages. With wide range of restaurants at its hotels, food and beverages has become afocus area for IHL and provides stability to revenues and profits. The globalization of IHL‟soperations has been a success for several reasons by adopting various strategies as follows:Strong sales and marketing: The Company‟s international operations have been supported by a strong sales andmarketing network that also includes its international sales offices in various locations. IHLhas an efficient reservation network that includes a National Call Centre with toll free numberthat provides unified access to information to potential guests and well as facility for makingreservations. The company‟s innovative website has been awarded the Best Travel OnlineCampaign world-wide in the Web Marketing Association‟s 2005 Internet AdvertisingCompetition, the premier event for web developers and marketers each year. The website ishighly interactive and user-friendly, with an enhanced reservations section, a Taj Holidayssearch tool and a versatile hotel finder.Innovative product ideas: The Company has sought to pursue innovative product ideas to derisk its business.These include luxury serviced apartments that were first launched and tested in Mumbai andthen extended to its properties in Dubai and London and Jiva Spas that are now part ofseveral international Taj hotels.Marketing alliances: IHL has entered into strategic tie-ups with other players in the business for thepromotion of its properties. Currently IHL has marketing alliances with Raffles Hotels andResorts, Shilla Hotels and Resorts and CC Africa. Such alliances not only allow for crosspromotion of hotels with alliance partners, but also allow members of corresponding loyaltyprogrammers to avail of special amenities and privileges at participating hotels. In addition,several partnerships have been entered into with international and domestic airlines for crosspromotions with key customers and package tours.Maintaining high service standards: IHL has launched a programme across its hotels called “Taj Brand Standards” thatidentifies standard operating procedures to ensure consistency in guest experience. In order toensure that these standards are consistently implemented and sustained across theorganization, a robust third party audit system has also been initiated.Creating a talent pool of people: High caliber senior executives have been introduced in the company at high levelsfrom other countries, supplemented by one or two top Indian managers to enable mentoringand cultural integration with the company. In addition to the expatriate managers, young
Indian managers are also made to work in international properties to gain overseas workexperience.Future plans IHL is well poised for growth and to leverage the advantage of the rapidly growingtourism industry in India. Encouraged with its success of its Ginger hotels, IHL is in theprocess of rolling out such hotels to several new locations – Pune, Nashik, Mysore, Panjim,Varanasi, Trivandrum, Jamshedpur and Durgapur. IHL has recently entered into a jointventure with Conservation Corporation Africa and Cigen Corporation to provide tourists withwildlife Experiences within India through an ecologically sustainable model. This venturewill offer a mix of game sightings, nature walks and meditative experiences with tented, treehouse or cottage accommodation on the borders of India‟s world renowned tiger reserves.The rollout of the venture is planned in a phased manner across key wildlife locations in theIndian subcontinent. It is expected that 5 lodges will be in operation by 2018. To take itsglobalization plans further IHL is also eyeing the hotel industry in China and South Africa bysetting up properties in these countries.Globalization at a glance• Hotels in 15 locations across the globe, including US, Middle East and Asia Pacific Hasacquired properties in Australia and Zambia.• Nearly 16 per cent revenues are from international operations Route of managementcontract adopted to enter most international markets