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3949610 hospitality-services-in-india


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3949610 hospitality-services-in-india

  1. 1. SR. TOPICSNO01 Hotel industry –an overview02 Contribution to Indian economy03 SWOT analysis04 Trends in hospitality sector05 Challenges for hospitality industry06 Use of IT in hospitality industry07 Importance of human resource in hospitality sector08 Future of hospitality sector09 The hotel industry10 Related cases11 Customer analysation12 Bibliography
  2. 2. HOSPITALITY INDUSTRY – AN OVERVIEWHospitality is all about offering warmth to someone who looks for help at astrange or unfriendly place. It refers to the process of receiving andentertaining a guest with goodwill. Hospitality in the commercial contextrefers to the activity of hotels, restaurants, catering, inn, resorts or clubs whomake a vocation of treating tourists.Helped With unique efforts by government and all other stakeholders,including hotel owners, resort managers, tour and travel operators andemployees who work in the sector, Indian hospitality industry has gained alevel of acceptance world over. It has yet to go miles for recognition as aworld leader of hospitality. Many take Indian hospitality service not for itsquality of service but India being a cheap destination for leisure tourismWith unlimited tourism and untapped business prospects, in the coming yearsIndian hospitality is seeing green pastures of growth. Availability of qualifiedhuman resources and untapped geographical resources give great prospectsto the hospitality industry. The number of tourists coming to India is growingyear after year. Likewise, internal tourism is another area with greatpotentials.The hospitality industry is a 3.5 trillion dollar service sector within the globaleconomy. It is an umbrella term for a broad variety of service industriesincluding, but not limited to, hotels, food service, casinos, and tourism. Thehospitality industry is very diverse and global. The industry is cyclical;dictated by the fluctuations that occur with an economy every year. Todayhospitality sector is one of the fastest growing sectors in India. It is expectedto grow at the rate of 8% between 2007 and 2016. Many international hotelsincluding Sheraton, Hyatt, Radisson, Meridien, Four Seasons Regent, andMarriott International are already established in the Indian markets and arestill expanding. Nowadays the travel and tourism industry is also included inhospitality sector. The boom in travel and tourism has led to the furtherdevelopment of hospitality industry.In 2003-04 the hospitality industry contributed only 2% of the GDP.However, it is projected to grow at a rate of 8.8% between 2007-16, whichwould place India as the second-fastest growing tourism market in the world.This year the number of tourists visiting India is estimated to have touched
  3. 3. the figure of 4.4 million. With this huge figure, India is becoming the hottesttourist destination. The arrival of foreign tourists has shown a compoundedannual growth of 6 per cent over the past 10 years. Besides, travel andtourism is the second highest foreign exchange earner for India. Moreover, itis also estimated that the tourism sector will account for nearly 5.3 per centof GDP and 5.4 per cent of total employment. Capital GDP Employment Visitor Export Personal T&T Investment Govt. Expenditure Outlook 7.80% 1.40% 10.90% 6.90 % 8.30% 7.70% for 2006 Outlook for 2007- 6.60% 1.00% 7.80% 6.70% 7.80% 6.60% 2016ATITHI DEVO BHAVO (guest is God)- we have all heard this phrase manytimes during our childhood from our parents and grand-parents. We can alsofind its presence in the earliest Vedas and religious epics. Hospitality is deep-rooted in our traditions and comes as an integral part of our heritage. In verysimple terms, hospitality is the art of being warm to strangers and has beenderived from the Latin word hospitalitem, which means "friendliness toguests".The hospitality industry covers a diverse range of establishments in the formof accommodation, food and drinks. It includes hotels, motels, restaurants,bars, ships, airlines and railways. The concept of hospitality business startedwhen people started traveling away on business and they needed a placeaway from home which could cater to all their needs.Today hospitality has evolved from the basic food and accommodationindustry and taken a very important position in almost all businesses. In fact,it has become a huge industry and drives economies across the globe. Thescope of hospitality/ service industry today is far more than one could haveever imagined a few years back. Earlier people who graduated from a HotelSchool could get employed either in Hotels, Cruises or Airlines.
  4. 4. But service is the BUZZ word for all businesses today. Be it the RetailSector, Banking Industry, BPO, Telecom world, Real Estate or any othersector having direct customer contact, a person with hospitality backgroundhas an edge above the rest, because of their sheer capability of understandingthe needs of a customer better and handling difficult customers/ situationsefficiently.Hotel industry depends largely upon the foreign tourist arrivals furtherclassified into business travelers (around 65% of the total foreign tourists)and leisure travelers. The following figures show that business as well as theleisure travelers (both domestic and international) formed major clientele forhotels in 2004.Over the last two years, the hotel industry has seen higher growth rates dueto greater number of tourist arrivals, higher occupancy rate (being around75% in FY06) and significant increase in average room rate (ARR). Themajor factors contributing to this growth include stable economic andpolitical conditions, booming service industry, FDI inflow, infrastructuredevelopment, emphasis on tourism by the central as well as stategovernments and tax rationalization initiatives to bring down the tax rates inline with the international levels.
  5. 5. Accommodation • Hotels,  Residential  Public houses • Motels • Resorts • SanatoriumBars & Clubs • Nightclubs • Public houses • RestaurantsTravel and Tourism • Travel Agents • Airline Cabin Staff • Travel technologyService and Support • Accountancy • Occupational Health and Spa CONTRIBUTION TO INDIAN ECONOMY
  6. 6. The Indian hospitality industry is going great guns presently, with highoperating margins and increase in the number of travellers visiting India -both inbound and outbound. Thus, the only direction left for the sector pointsupwards. However, what needs to be focussed on is the fact thatopportunities are not missed, which presently include the large gaps in roomssupply as compared to demand. India has approximately 100,000 rooms onlyin totality, which is lesser than that in Las Vegas, besides contributing to aninsignificant portion of the GDP - just 5.4 per cent says Sudeep Jain,executive director of JLLM. In comparison to nations like China, Thailandand Malaysia where the hospitality share ranges between 12 and 15 per cent,Indias growth potential is boundless. "By 2020, the hospitality and tourismsector would be a major contributor to the Indian economy," says Jain.South Asia is and will remain a must-visit destination and India is lookingmore and more lucrative. Within the nation, major contribution asdestinations will be from the growing tier I and II cities with a specialemphasis on business hotels across categories as well as the prime leisuredestinations like Goa, Rajasthan, etc, which will remain on the growth path,creating the aura for India as a leisure destination. Accordingly, the needs ofthe traveller, will be nothing less than perfection. Jain says, "They will bemore discerning and more value conscious." With an increase in choicesavailable, they will be less forgiving of service deficiencies. Guests willrequire higher levels of service in the full-service segments, which willwarrant greater training requirements for hotel staff. The limited servicehotels will require a complete shift in the perception of customer service.Nevertheless, this is directly related to the travellers travel persona. "Thesame person will have different standards when he/she is on a business trip,versus an escape with his partner versus a leisure trip with the family," heexplains.Future-wiseHotels as a product will witness evolution, says Jain. According to him, "Asthe market becomes more segmented, especially in the mid-market and selectservice categories, more product types will appear." The driving force behindthese will be global brand standards and therefore they will have standardspecifications creating a degree of uniformity and standardisation in certainlimited and mid-market hotel segments. Differentiations in product type willevolve more at the higher end of the market with boutique hotels, resorts,convention centres, etc. The need to differentiate design will play an
  7. 7. important role. Various brands and operators will play a larger role in drivingdesign standards, getting involved at early project planning stages. "As hotelsegments cater to specific demand segments, design typologies will be morecustomised to suit travellers lifestyle," says Jain. Equal importance will alsobe given to green-building concepts in terms of development and operations,which will go beyond cost-saving, placating the demands from both investorsand customers. "From the investment side, there will be enoughenvironmentally-conscious investors, who will only invest in green buildingsand will also pay a premium for such properties relative to other properties,"predicts Jain. In addition, green-conscious business and corporate groupswill patronise hotels and brands that support green concepts," he furtheradds.Besides all this, the reliance on technology will move beyond Wi-Fi andinternet requirements to tools to support sales and marketing as well as yieldmanagement. Even basic interiors will be upgraded with the use oftechnology like self check-in and information kiosks. This will also revampsales and marketing as international brands will leverage their centralreservation systems and will initiate networks with third party reservationagencies. In addition, systems will become more sophisticated and targeted,customising sales and marketing efforts for each targeted traveller.F&B, an area of immense importance within a hotel will also evolve,especially for the select-service hotel categories. Jain gives an example. "Thestandard two/three-meal restaurant could be replaced by limited service 24-hrcafés that occupy a smaller area and employ fewer staff and can providelimited room service." Similarly he speaks of grab-n-go concepts also thatwould make inroads in the select service segments. However whendiscussing service, which is the main play of this industry, it has to beunderstood that the growth phase is still on and the market is currentlyundersupplied in terms of trained hotel staff to cater to the large supply pipe-line. "A larger number of globally recognised training institutes are requiredin the country and this is a great opportunity for educational institutions,"believes Jain.The driving forceBeing part of a real estate money management and services company, Jaindiscusses the various driving factors for growth opportunities, quoting
  8. 8. research done by Jones Lang LaSalle Hotels. He believes that if the countryis able to sustain its economic growth specially in the service sector, it willhave a direct influence on the hotel industry. This is directly related to theincoming foreign investments, not just in the hotels but the economy as awhole. Also equally important is the fact that India has now discovered thepower of marketing and with campaigns like Incredible India, there are alsothe various large scale regional and global events like the upcomingCommonwealth Games, Asian Games and the recent Indian Premiere Leaguethat builds interest about the nation. "These are just external factors. Thepolicies and incentives that will be provided over the next decade couldfurther act as a catalyst to this industry," says Jain. Apart from these externalfactors there are other factors where the industry can be given a great boost.For instance if land prices became more realistic, the process of gettingapprovals and licences to build and operate hotels are streamlined, togetherwith strong infrastructure development and investment and more tax/levyincentives being provided to build hotels, it would prove very fruitful for theindustry. "Also, moving to a more international FSI guideline will stimulatedevelopment. Today, FSIs for hotels in India are only a fraction of those thatexist in other mature markets," says Jain. He believes that there would be nostopping the growth in the industry if these measures were undertaken. Butthe fact remains that half of these changes will only occur if the governmentbegins to take some proactive measures and provide the much needed stimulito further accelerate development. SWOT ANALYSISSTRENGTHS
  9. 9. 1. Natural and cultural diversity : India has a rich cultural heritage. The"unity in diversity" tag attracts most tourists. The coastlines, sunny beaches,backwaters of Kerala, snow capped Himalayas and the quiescent lakes areincredible.2. Demand-supply gap : Indian hotel industry is facing a mismatch betweenthe demand and supply of rooms leading to higher room rates and occupancylevels. With the privilege of hosting Commonwealth Games 2010 there ismore demand of rooms in five star hotels. This has led to the rapid expansionof the sector3. Government support: The government has realized the importance oftourism and has proposed a budget of Rs. 540 crore for the development ofthe industry. The priority is being given to the development of theinfrastructure and of new tourist destinations and circuits. The Department ofTourism (DOT) has already started the "Incredible India" campaign for thepromotion of tourism in India.4. Increase in the market share: Indias share in international tourism andhospitality market is expected to increase over the long-term. New budgetand star hotels are being established. Moreover, foreign hospitality playersare heading towards Indian markets.WEAKNESSES1.Poor support infrastructure: Though the government is taking necessarysteps, many more things need to be done to improve the infrastructure. In2003, the total expenditure made in this regard was US $150 billion in Chinacompared to US$ 21 billion in India.2.Slow implementation: The lack of adequate recognition for the tourismindustry has been hampering its growth prospects. Whatever steps are beingtaken by the government are implemented at a slower pace.3.Susceptible to political events: The internal security scenario and socialunrest also hamper the foreign tourist arrival rates.OPPORTUNITIES
  10. 10. 1.Rising income: Owing to the rise in income levels, Indians have morespare money to spend, which is expected to enhance leisure tourism.2.Open sky benefits: With the open sky policy, the travel and tourismindustry has seen an increase in business. Increased airline activity hasstimulated demand and has helped improve the infrastructure. It hasbenefited both international and domestic travels.THREATS1. Fluctuations in international tourist arrivals: The total dependency onforeign tourists can be risky, as there are wide fluctuations in internationaltourism. Domestic tourism needs to be given equal importance and measuresshould be taken to promote it.2.Increasing competition: Several international majors like the FourSeasons, Shangri-La and Aman Resorts are entering the Indian markets. Twoother groups - the Carlson Group and the Marriott chain - are also lookingforward to join this race. This will increase the competition for the existingIndian hotel majors TRENDS IN HOSPITALITY SECTORTrends that will shape the future of hospitality sector are:1. Low Cost Carriers2. Budget Hotels
  11. 11. 3. Service Apartments4. Technology5. Loyalty Travel1. Low cost carriers: Travelers in general are more price sensitive to airfarethan they are to hotel room rates. Often a low airfare will stimulate demandfor travel even if hotel prices are increasing. LCCs are a good option forbusiness travelers, as they have advantages like low costs, more options andconnectivity.2. Budget hotels: More than 50 per cent of occupancy of a majority of hotelscomes from the business travel segment. The average room rate (ARR)realized from business travelers is normally higher than from leisuretravelers. Heightened demand and the healthy occupancy rates have resultedin an increase in the number of budget hotels. Some of the new playersentering into this category of hotels include Hometel, Kamfotel, Courtyardby Marriott, Country Inns & Suites, Ibis and Fairfield Inn.3. Service apartments: The concept of service apartments, though a recentphenomenon in India, is an established global concept. Villas in Spain, flatsin the UK and apartment complexes in the US have all created a viablemarket for those who want more than just a room in a hotel. Serviceapartments are the latest trend in accommodation, offering the comfort andconvenience of a home without the hassles of having to maintain or lookafter it. Ideally suited for medium-to-long staying guests, service apartmentsare a natural choice for corporate employees or expatriates relocating to aparticular city, non-resident Indians visiting the country for long spells andforeigners visiting the city for long durations.4. Technology: Travel and technology have become inseparable. Technologyis making its own advances with high-tech video conferencing facilities, webcameras and virtual reality mode of conferencing. On-line bookings, e-ticketing, Wi-Fi Internet connectivity, easy access to information, etc. are justa few areas where technology has completely changed the the way we travel.5. Loyalty travel:Today, airline-credit card company tie-ups have brought awhole range of benefits to the travelers. These include insurance cover,upgrades, free tickets, access to executive lounges, and a host of othergoodies.
  12. 12. CHALLENGES FOR HOSPITALITY INDUSTRY1. Shortage of skilled employees: One of the greatest challenges plaguingthe hospitality industry is the unavailability of quality workforce in different
  13. 13. skill levels. The hospitality industry has failed to retain good professionals.2. Retaining quality workforce: Retention of the workforce throughtraining and development in the hotel industry is a problem and attritionlevels are too high. One of the reasons for this is unattractive wage packages.Though there is boom in the service sector, most of the hotel managementgraduates are joining other sectors like retail and aviation.3. Shortage of rooms: The hotel industry is facing heavy shortage of rooms.It is estimated that the current requirement is of 1,50,000 rooms. Though thenew investment plan would add 53,000 rooms by 2011, the shortage will stillpersist.4. Intense competition and image of India: The industry is witnessingheightened competition with the arrival of new players, new products andnew systems. The competition from neighboring countries and negativeperceptions about Indian tourism product constrains the growth of tourism.The image of India as a country overrun by poverty, political instability,safety concerns and diseases also harms the tourism industry.5. Customer expectations: As India is emerging as a destination on theglobal travel map, expectations of customers are rising. The companies haveto focus on customer loyalty and repeat purchases.6. Manual back-end: Though most reputed chains have IT enabled systemsfor property management, reservations, etc., almost all the data whichactually make the company work are filled in manual log books or are simplynot tracked.7. Human resource development: Some of the services required in thetourism and hotel industries are highly personalized, and no amount ofautomation can substitute for personal service providers. India is focusingmore on white collar jobs than blue collar jobs. The shortage of blue collaremployees will pose various threats to the industry. USE OF INFORMATION TECHNOLOGY IN HOSPITALITY SECTOR
  14. 14. The Internet is changing the way that resorts are marketing their properties.With a lean towards Internet vacation directories, the hospitality industry ismaking the search for consumers easier than ever.The popularity and growth of the Internet has changed the way manybusinesses and services are marketed. With the potentially unrestrictedaccess to millions of people, hotel, resorts, and lodges have capitalized onInternet advertising and promotion as a means of adding value to the servicesthey are able to offer; thus, enabling them to cater to a niche market.Those businesses in the travel and tourism sector have benefitedtremendously from online advertising, as the Internet allows them toeconomically market in a highly efficient manner. As this market has steppedaway from printed pamphlets and brochures as a primary means ofpromoting tourist areas and hospitality properties, and focused more ononline hospitality and vacation internet directories, they have recognizedtremendous financial savings due to the market reach being much larger and
  15. 15. offering unlimited advertising possibilities as compared to traditional printpromotions.As the hospitality industry trend gears towards on online advertising, theyhave become aware of valuable services, such as vacation directories, thatpromote a particular resort region or destination. Unlike other marketingmediums, online directories not only allow hospitality businesses toshowcase their property to potential customers, they also provide valuableinformation about the region, information that is not often provided withtraditional marketing. Additionally, this industry has recognized the valuethat vacation directories are able to offer to lesser-known vacationdestinations. By utilizing directory hubs, the playing field is levelled; thus,allowing much smaller resorts to compete more readily with larger, wellknown destinations.Having a solid understanding of the value that online directories offer to bothvisitors and business owners alike, the directory was created to provide awealth of area information that is complied into assorted categories for easyaccess. Featured on the directory are a wide range of area vacation and resortproperties, as well as area attractions and activities; thus, making it easy forvisitors to find what they are looking for in a vacation, while providing thebusiness owners with an affordable way to market their business. Thisservice has shaped the way that the Almaguin Highlands tourist industryfunctions and will continue to offer many benefits to this region.Vacation directories encourage resort bookings by assisting both resortbusinesses and vacation seekers alike. Additionally, this service provideshospitality owners with a cost effective venue to effectively promote their
  16. 16. property to its best advantage, as well as offering vacationers a source ofinformation on a specific area and allowing for comparative shopping whenresearching a vacation resort. With the start up the new Almaguin Directory,it is expected that the tourism industry will benefit dramatically, not onlythrough providing affordable advertising, but also through the increasednumber of tourists that will now be able to experience an area that they maynot have otherwise known about.IMPORTANCE OF HUMAN RESOURSE IN HOSPITALITY SECTOR
  17. 17. The national council for hotel management and catering technology(NCHMCT) is also registered under the societies registration act,1960, and ismanaged by a board of governors which includes representatives from thecentral government and the private sector. The NCHMCTregulates all academic activities of the institutes of hotel management. It alsooversees all admission, course deign, examinations and certificates. Thefaculty development programme, research, cooperation and coordination andaffiliation with professional organizations at the national and internationallevel also come under NCHMCT. In addition to the central governments
  18. 18. support for training tourism industry personnel; there are other trainingcourses and programmes carried out by various agencies, includinguniversities, state government and private organizations.The department of labor has set up a central apprenticeship council (underthe central apprentice act) to conduct training courses and short courseslasting three months to one year in cooking, bakery, confectionery,housekeeping and other services. The Central Apprenticeship Council trainedabout 1,600 people every year at Delhi, Fairabad and Meerut centres ever in1998. state governments trained about 250 people at craft institutes. Themajor hotel chains trained about 250 people, universities trained about 500people and private institutes trained 750 people. The total number of trainedpersonnel from theses agencies was 3,350 people.Comparing this total with the need for 20,000 additional personnel each year,it is clear that further analysis is required. A survey being conducted toidentify the requirements for trained manpower at each level of employmentwould focus on general management trainees, trainees in kitchenmanagement, housekeeping management, operational trainees, front officeand accounting management, chefs, butlers, captains, bakery, confectioneryand other specialized cooking.Middle management positions would be filled by people holding three yeardiplomas, while other jobs could be filled by craft trainees. Craft institutescould be targeted for expansion in order to meet the needs for lower levelskills areas.HUMAN RESOURCES IN HOSPITALITY INDUSTRY – DEMANDSIDEIn India there is a tremendous shortage of trained manpower in thehospitality sector. Tourism sector on an average requires manpower about20,000 per year. Against such a requirement the actual trained output fromgovernment institution is only 5000 per year. When we consider all otherprivate institutions, the total available trained manpower does not exceed10,000 in a year. Thus there need to develop required human resource invarious segment of the tourism industry, as a consequence of the rapid
  19. 19. growth in tourism, changing technology and markets both national andinternational level.By the very nature of tourism as a service industry, its efficientadministration and successful operation depend largely on the quality ofmanpower. In the Asian and pacific region, the shortage of skilled manpowerposes a major threat to the overall development of tourism. Internationaltourism is a relatively new phenomenon and therefore the lack of managerialcapability exits at all levels of the industry.In particular, the rapid expansion of hotels of an international standard in theregion is creating a high level of demand for skilled and experienced staff.The nature of the decisions facing hotel management is continuallyexpanding. For their business to remain competitive, managers must beskillful in may diverse areas. For instance, they must a good understandingof how current events and the economy affect the market and develop skill inmarketing their products. They must also strive to keep up with thetechnological innovations in the operational side of the industry. As part ofthe service industry, tourism is a labor intensive and generally requires welldeveloped social and language skills in a cross cultural workingenvironment. Theses demands have placed considerable strain on small,independent operators, who cannot rely on the broad management expertiseavailable to their multinational hotel chain competitors.The availability of skilled and trained manpower is a crucial element in thesuccessful long term development and sustainability of a tourist destination.In the ultimate analysis, skilled and trained human resources will ensure thedelivery of efficient, high quality service to visitors, which is a direct andvisible element of a successful tourism product. High standards of service areparticularly important is sustaining long term growth, since success as atourist destination is determined not only by price competitiveness or therange of attractions available, but also by the quality of the servicesprovided. Repeat visit a vital factor in maintaining growth, will be deterred ifstandard of service do not meet expectations.Recommendations to the governmentThe government could constitute a steering committee to review the demandand supply of the human resources in the hospitality industry and prepareplans for developing qualitative human resources which are required for the
  20. 20. present day global industry . The committee should constitute with themembers from all concerned areas like :  State and central tourism development commissioners  Representatives from all areas of hospitality industry  Member’s / president / secretary of the hotel management associations  Member’s / president / secretary of the travel and tourism associations  Representative from hotel employees associations  One member representative from international hotel chainThe committee should review the present situation and suggest the steps tobe taken to reduce the gap between the demand and supply of humanresources in the industry .The committee should concentrate on the following issues mainly :  Create a policy on industry institute interaction  Establish an apex body t coordinate all the management institutes in the country  For conducting common entrance test for all Govt. university / AICTE / private institutes in the country  Curriculum development from time to time as industry requirement  Fees structure for different courses in different institutes  Appoint a committee to identify the requirements of qualified manpower for International Hotels and also identify the ways to develop .Recommendations to the hospitality industry :  Tie – ups with institutes : It is the duty of the Industry t make necessary tie-up / arrangement for their required human resources with one or two hospitality institutes in the country .  Continuous training : There is a need of continuous training to all categories of employees in the organization . when they have a tie – up with the institutes , the institutes will offer in – house training to
  21. 21. different category of employees from time to time to update their skills .  Sponsoring: It is the duty of the industry to sponsor some amount / equipment to the institute for their betterment . if possible the sponsor a chair for continuous funding and research for that institute .  Research : Every institute must spend some amount for the research which is essential for further development and understand the present situation . the industry should involve in the researchers by providing timely information and data which is ultimately useful for them only .Recommendations to hospitality institutes (academic) :  Industry Institute interface / interaction : Every institute must make necessary tie – ups with hotel / tourism industry for providing employment to their students .  Arranging guest lectures from the industry : the management of the institutes must arrange guest lectures / visiting faculty from the industry to give complete industry information to the students about the industry and its development .  Visits to hotel (students) : The institutes should arrange field visits and training in star hotels for their final year students .  Nominating industry people : Every institute must nominate one or two people from industry in their advisory body for the betterment of students .  Revise the curriculum: It is the duty of the institute to revise the curriculum as r the industry needs from time to time .  Pay good salaries to trained staff : several educational institutions are offering very low salaries to their teaching staff , this influence the quality of teaching and there by it produces inferior quality managers which indirectly created unemployment though there is a demand in the industry .
  22. 22. The need to develop required human resources in various segments of thetourism industry has become imperative as a consequence of the rapidgrowth in tourism , technology and dynamic changes in the Internationaltourism market . The storage of quality human resources can be solved whenthe government and private go together with a standard education andtraining system and better working conditions . FUTURE OF HOSPITALITY SECTORTo boost up the growth of tourism in India, the government has proposed toinvest Rs. 520 crore in 2007-2008. Tourism in expected to grow further overthe next few years due to the changes taking place on the demand and supplysides. The factors that will account for the further growth of tourism willinclude the following:
  23. 23. Change in standards of living More disposable income Better education Long leisure time Aging populationOwing to growth of tourism sector, infrastructure will improve, competitionwill increase, new products will come into markets and better services willbe provided. Due to the rapid growth in tourism, the hotel industry is alsobooming. Many international players like Le Meridien and Accor are headingtowards Indian markets to expand their business. With governments fullsupport in developing infrastructure, increase in demand, open sky policiesand increased competition, the hospitality industry is getting consolidatedand has many more opportunities to grow further. THE HOTEL INDUSTRY
  24. 24. A hotel is an establishment that provides paid lodging, usually on a short-term basis. Hotels often provide a number of additional guest services suchas a restaurant, a swimming pool or childcare. Some hotels have conferenceservices and meeting rooms and encourage groups to hold conventions andmeetings at their location.Some of the main features of the Indian hotel industry include the following: The industry is more dependent on metropolitan cities as they accountfor 75% to 80% of the revenues, with Delhi and Mumbai being on top. The average room rate (ARR) and occupancy rate (OC) are the two mostcritical factors that determine profitability. ARR depends on location, brand
  25. 25. image, star rating, quality of facilities and services offered. The occupancyrate depends on other seasonal factors. India is an ideal destination for tourists. Approximately 4.4 milliontourists visit India every year. Thus the growth prospects are very high. In the hotel sector, a number of multinationals have strengthened theirpresence. Players like Four Seasons are also likely to enter the Indian marketin the near future. Moreover, Indian hotel chains are also expandinginternationally. A combination of all these factors could result in a strongemergence of budget hotels, which could potentially lower the cost of traveland related costs.The hotel industry can be further categorized into three segments: hotels,restaurants and contract caterers.A. HOTELSThe hotels in India can be broadly classified into the following segments:1.Star rated hotels2.Heritage hotels3.Budget hotels4.Unclassified hotelsStar rated hotels: They form 30% of the industry size. These are mainlysituated in the business districts of metro cities and cater to business travelersand foreign tourists. These are considered to be very expensive. They arebuilt over an area of up to 18000 sq. meters1 Five star deluxe2 Five star3 Four star4 Three star5 Two star6 One star The first 2 types are usually located in business areas of metro cities andcater to foreign tourists, business travelers, top government officials andpolitical brass, offering luxury at a high price.You’ll find the next 2 types in tier II cities and tourist destinations, preferredby mid-level executives and leisure tourists.
  26. 26. The last 2 types are found in smaller cities and around tourist spots, preferredby domestic tourists.Reputed Indian veterans include ITC, Indian Hotels Company (Taj group),East India Hotels (Oberoi group), Hotel Leela Venture and ITDChotels. Foreign hospitality players include Marriott, Radisson, Sheraton,Meridien, Hyatt, Four Seasons Regent, Carlson group, Jumeirah andMandarin Oriental and Dubai’s Istithmar luxury hotels,Heritage Hotels. These are characterized by lesser capital expenditure andaffordability and include hotels running in palaces, castles, forts, huntinglodges etc. The heritage hotels are further classified as:2.1 Heritage classic2.2 Heritage Grand2.3 HeritageHeritage Classic: These include hotels built between 1920 and 1935.Heritage Grand: These include hotels built prior to 1920.Heritage: These include hotels built between 1935 and 1950.Budget hotels: They’re usually preferred by domestic travelers seekingeconomical accommodation. These are reasonably priced, offer limitedluxury, seasonal discounts and decent services. Some new global entrantsinclude UK’s Dawnay Day and Whitbread Premier Travel Inn, Shangri-la,Aman resorts, Golden Tulip budget hotels, Fairfield inn, Country inns andsuites, Courtyard by Marriott, Hometel, Ibis and Kamfotel amongothers. Budget hotels are preferred by business travelers contributing togreater ARR (average room rate) than leisure travelers. Increased demandand healthy occupancy has fueled the growth of budget hotels in a short time.Unclassified hotels: They’re motels spread across the country. They form19% of the industry size. Low price is their only USP.B. RESTAURANTSThese typically include fast food chains, ethnic restaurants, fine dining andcoffee bars. The major players include Barista, Mc Donalds, Ruby Tuesday,
  27. 27. Bercos, etc.CONTRACT CATERINGThis includes any catering business unit that is formally not a part of thehotel industry but is closely allied to it. Some of the major players in thiscategory include Sodexho, Compass Group, etc. RELATED CASES After 17 yrs, McDonalds expects to earn profits in India
  28. 28. NEW DELHI: Riding on the back of a major expansion spree, global fastfood chain McDonalds on Monday said it expects the Indian operations to beprofitable from the next fiscal, 17 years after it set up shop in the country.The company, which achieved break-even in 2007, is expecting returns on itsinvestments from the current year."We achieved cash break-even last year and we hope our real profits willstart here-on," McDonalds India Franchisee (Northern and Eastern)Managing Director Vikram Bakshi said.The company, which currently runs 126 restaurants in the country, has so farcommitted an investment of Rs 1,200 crore in India for setting up cold chainsand other infrastructure.In its latest round of expansion, McDonalds is investing Rs 400 crore overthe next three years."We will set up 40 outlets by the end of the current year at an investment ofabout Rs 100 crore," Bakshi said.It is also looking to expand its newly set up kiosks format by opening 40more in the northern and eastern regions.The company aims at doubling its turnover every three years, Bakshi saidwithout disclosing details."Our aim is to now push for numbers wherever it is possible. We are talkingof doubling our turnover every three years for at least six years.Automatically, the number of outlets should also double," Bakshi said.Amid controversies and opposition to MNCs, Mcdonalds started groundwork for its Indian innings in 1991 and opened its first outlet five years later. Indian restaurant chain Tamarai blooms in BritainLONDON: Indian Tamarai has blossomed in Britain -- the popular restaurantchain added another feather to its reputation for culinary excellence, this timeby winning an award for the Best Night Bar in London.
  29. 29. Tamarai (meaning lotus in Tamil), Indias Old World Hospitality groups thirdLondon restaurant after Chor Bizarre in Mayfair and Sitaaray, has got theaccolade at the Theme Bar Awards 2008.The award by Britains widely read magazine, Theme, celebrates the best inthe industry bringing together excellence in modern drinks, design andhospitality in different categories."lts an exceptional honour for a bar operated by an Indian company in themost competitive food and drinks city in the world," said a spokesperson forthe group which operates the Habitat World at India Habitat Centre as well as12 other restaurants in Delhi.The restaurant was last year awarded The Best Wine List in London by TheIndependent newspaper and The Best Pan-Fusion Food in London by theEvening Standard. Hidesign and Khoday check in hospitality sectorBANGALORE: International hospitality firms and domestic hotel operatorsare not the only ones tapping into India’s growing hospitality industry. Thesector is attracting players from different backgrounds. In many cases, theseplayers have no prior hospitality experience.Among the list of firms that have ventured into this segment are Puducherry-based leather accessories maker Hidesign and Bangalore-headquarteredliquor firms Khoday Group of Industries and John Distilleries. According toexperts, many people who own land are cashing in on the demand for hotelrooms.In India, a hotel and resorts construction boom is underway across metrosand secondary cities. According to consulting major Deloitte, internationaltourism expenditure in India in 2006 was about $8.7 billion and is expectedto rise to over $10 billion in 2008 with the lion’s share of this beinggenerated from the hotel sector.There were an estimated 105,000 hotel rooms in India as of July, 2007, a
  30. 30. number comparable to that of Manhattan, according to the Deloitte survey.This number falls short of the demand and is, therefore, luring entrepreneursto invest in this sector. “The number of five-star rooms in the country is lessthan what is available in Manhattan. Most people are aware of the need forquality rooms. Therefore, anybody with access to a piece of land is venturingto develop hotels,” said, Rajeev Menon, area vice-president, MIPM,Marriott.The Khoday Group, for instance, is investing in a 250-room hotel inBangalore and is also scouting for land to set up resorts. The spirits majormay tie up with a foreign player for its resorts foray. Meanwhile, Hidesign,which already has two boutique hotels in Puducherry, is now looking atbuilding beach villas and resorts. The company is planning a third boutiquehotel in South India.“We decided to get into the hospitality business because we believe we couldoffer something different to the customer, a combination of fashion anddesign. We are also getting international recognition for our niche offering,”says Dilip Kapur, president, Hidesign. Their third property, located betweenChennai and Puducherry, is expected to open by mid-2009. The 70-roomhotel will see an investment of Rs 40 crore. CUSTOMER ANALYSATION
  31. 31. QI] Maximum amount you will prefer to pay in a hotel for a onenight stay?The answer to this one wasn’t uniform. As it changed depending from personto person. Again it depends on a person’s spending behavior and hispriorities. If he prefers comfort more than price he tends to spend more for aone night stay but the situation gets reversed if he considers price as hispriority. The purpose for which he rents the hotel room also plays animportant role in determining his budget. But on an average this is what wecould infer:Minimum amount one can spend: 1500 – 4000QII] What basic services according to you should be available ina hotel?On asking about basic services all talked about good food ,cleanliness , prompt service and co – operative staff. But somethingvery important was brought to our notice and that was satisfaction ofhuman needs. Human needs refers to the need of an individual whenhe is frustrated, disappointed, irritated and during this time he expectsthat the hotel staff provides him with the service which is above theirstandardized service pattern. Here the fact that how a service isprovided comes into view rather than what service should beprovided.QIII] What is the basic aspect considered by you while selectinga hotel?Basic aspect considered while selecting a hotel by a particularindividual were more or less similar to the ones mentioned above i.egood food , the environment , the way of providing service , behaviorof the staff , the level of comfort and price.But the aspect that topped our list was the price factor. Majoritypeople like to go in for a hotel that fits their budget irrespective of thepurpose for which they hire the hotel room. Next thing that is givendue consideration was the level of comfort provided by a hotel. Wecan very well see that both the factors do not go hand in hand. If onepays less one cannot expect high level of comfort and vice versa.
  32. 32. OIV] You would like to have your stay at a club, resort or a hotel?That depends on the purpose for which one rents a room along withhis budget. On a vacation with friends and family and a mediumbudget resort is preferable. Premium class might go in for a club orfive or seven star hotels.