The Indian hotel industry faces many challenges including managing labor costs, increasing competition, lowering operating costs while boosting revenue, high taxes, difficulties obtaining visas, technological issues, safety and security concerns after incidents like the 2008 Mumbai attacks, ensuring food safety, and managing customers' time effectively in restaurants. Some suggestions to address these issues include optimizing staffing levels, enhancing the customer experience through upselling, carefully adopting new technologies, maintaining high hygiene standards, and finding cost savings. Overall industry growth depends on tackling these issues through coordinated policy changes and industry cooperation.

1. Made by:
Mudit Grover
Final Year
Challenges faced by
Indian Hotel
Industry

2. Index
S.No. Contents
Slide
No.
1. Introduction 3
2. Manpower Management 5
3. Competition 6
4. Lowering Costs-Increasing Revenue 8
5. Over-Taxed Industry 9
6. Vying for Visas 10
7. Technological Issues 11
8. Safety & Security 13
9. Food Safety 15
10. The Tangible cost of Time 16
11. Suggestions 17
12. Conclusion 18
13. Bibliography 19
14. Appendices 20

3. Introduction
• India is known worldwide as the Land of Hospitality and has made a significant
mark for itself on the international tourism and hospitality scene.
• Its been a very challenging time for the Indian hotel industry with many diverse
challenges being thrown its way.
• Whether it be natural calamities such as earthquakes, tsunamis or Mumbai Terror
attacks, or any technological issues- all lead to a significant slowdown in the
industry.
• The Indian hospitality industry managed to emerge out of the drastic decline in
2008-09, but the present and the future ahead are abounding in critical issues that
need to be addressed.
• So, lets discuss some of the major issues being faced
by Indian Hotel Industry….

4. Challenges in Indian
Hotel Industry

5. #Manpower management
• Putting employee first is better than putting customer first.
• Industry reputation is on lower side because of long hour shifts, night and weekend
shifts.
• Lagging wage rates: Starting salaries, wages or packages are low as compared to
other industries which in result is finding difficult to retain
and attract qualified candidates.
• Companies must compete for employees as hard as they are competing for
customers.
• Health care cost & other benefits cost have significantly increased adding up in
Labor cost.
0
20000
40000
60000
80000
100000
120000
140000
160000
Year Starting Year End

6. #Competition
• With each passing day competition among the hotels for their own survival is becoming
fierce.
• Directly or indirectly causing the revenue loss.
• Rooms are not only sold only on lower price but are also being bundled with special
packages.
• Packages could be like: Breakfast included, 3+1 night complimentary, 1 day sight-
seeing, airport pickup/drop.
• A booming industry has also attracted many international players as well. These include
Radisson, Marriott, Sheraton, Hyatt, Holiday Inn, Crown Plaza.
• New brands such as Banyan Tree, Mandarin Oriental are planning to enter the Indian
Hospitality industry.
• Competition calls for innovation in hospitality industry.

7. Number of approved hotels and
availability of rooms
2009 2010 Growth %
Number of hotels 1,839 2,483 36%
Number of Rooms 92,784 117,815 27%
NUMBER OF HOTELS NUMBER OF HOTEL ROOMS
2009 2010 Growth 2009 2010 Growth %
Premium 207 302 46% Premium 34,935 51,331 47%
Mid Market 636 1,026 61% Mid Market 31,816 48,644 53%
Budget 275 374 36% Budget 9,294 10,983 18%
Heritage 88 146 66% Heritage 2,545 3,879 52%
Others* 623 635 2% Others 14,194 2,978 -79%
Total 1,829 2,483 36% Total 92,784 117,815 27%
* As per the ministry of tourism

8. #Lowering Costs-Increasing Revenue
• With increase in competition day-by-day, hotels are being forced to lower the cost
according to their competitive brands irrespective of facilities available.
• Staffing need to be “Just Right”. Further, they are in the “the right place at the right
time”.
• Investing wisely in infrastructure, technological solutions.
• Need not to focus just on room revenue.
• Making rooms “smarter” about energy use. Automatic power off for room when no
one is in there.
• Offering facilities to guest wisely.
• Selecting the target market accordingly.

9. #Over-Taxed Industry?
• “Indian Hospitality Industry is an Over-Taxed Industry” quoted Samir Kuckreja
, Ex-President(NRAI).
• High service tax and other taxes is actually hampering the growth of the industry.
• The industry which was rising at a rate of 20-25 per cent has slowed down, due to
the burden of taxes.
• Service Charge, Service Tax, Luxury Tax & Value Added Tax are currently being
charged by customers.
• Different tax structures in different states are difficult for tourists to comprehend.
• In India, hotels are taxed anywhere in between 20% to 25% depending on the state
when other Asian countries are levying 8%-10%.
• Once GST comes, taxes will be reduced.

10. 7
16
26 27
36
0
4
8
12
16
20
24
28
32
36
40
India Singapore Malaysia Thailand Turkey
Millions
Count of Foreign Tourist in 2013
#Vying for Visas
• India failed to attract foreign tourist and gained the lowest spot among its
competitors.
• Onerous Visa application process which is often fraught with the long delays.
• Excessive documentation, Old bureaucratic procedures deterring potential tourists.
• As per the new policy, India is poised to offer Tourist Visa-on-Arrival and
Electronic Travel Authorization to the citizens of 180 countries.
• The Government has indicated that it will take five six months for the respective
departments to put in place the requisite infrastructure in terms of technology and
trained personnel.

11. #Technological Issues
• The challenge of keeping up with the fast pace of technology is difficult and
expensive.
• Many are moving to take full advantage of this opportunity to streamline their
operations, but adoption is frequently hampered by older systems & outdated
infrastructure.
• Special and well trained staff requirement raises.
• Hospitality systems & their interfaces are rapidly moving to Internet-based
technology.
• Guest can now book the rooms of particular hotel through hotel’s website via
internet.
• In India, around 25%-35% reservations are made through internet in a year.

12. • New technologies like:
– Almost all paper work is now done by computer systems by the use of PMS.
– Check in through mobile applications
– Room amendments can be made through mobile applications.
– In restaurants, paper menu has been replaced by tablet menu or a digital menu.
– Metallic keys have been replaced by key card.
– Locking and unlocking doors through mobile applications……….
• System and server failures are frequent, which has to be dealt carefully and
wisely.

13. #Safety & Security Issues
• Many Indian cities are not considered safe for foreign tourists, especially for female
tourists.
• There have been such instances where foreign tourists are abducted, assaulted or
robbed.
• Before 26/11, hotel staff did not focus a lot on the security department. There has
been a paradigm shift in hotels in India after 26/11 attack.
• Newer hotels under development relooked at their design aspects with greater
attention given towards integrated surveillance systems, advanced lock and access
control systems, and sophisticated asset protection tools.

14. • Offering free or paid internet is at the discretion of the hotel, but offering secured
and managed internet is the need of the hour.
• According to the Trustwave 2012 Global Security Report, hospitality industry has
four times consecutively ranked on top of the list for data breaches.
• It shows that most of the hospitality companies in the world are unaware about
managing the access network.

15. #Food Safety
• Food safety is receiving more attention worldwide with a rising incidence of food
borne diseases.
• Knowledge and best practices in this field are rapidly evolving.
• FSSAI has been established under the Food Safety & Standards Act, 2006 which is
consolidating statute related to food safety & regulation in India.
• The agency is also responsible for inspection of food in hotels, restaurants, cafés
under the Food Safety Act.
• Hotels are embracing the open kitchen methods to win the trust of their customers
as they cook food for them under their watch.

16. #The Tangible Cost of Time
• Potential loss of revenues for the food service outlet when low paying guest take
too much time in restaurant & have a modest billing that is not at all commensurate
with their time spend in the outlet.
• People arranging official meetings or interviews in QSR outlets or Fine dining
restaurants.
• Though these type of situations happen more in case of casual coffee cafes and
bakery cafes, but its possibility of happening in formal fine dining restaurants can
also not be ruled out.
• Situation need to be addressed tactfully by the restaurant staff.
• Restaurants should keep educating the potential customers about a reservation
system on a regular basis so that they don not have to wait for the seat.

17. Suggestions
• The cost of the labor is the biggest expense in all categories of hotels. Hence, an
appropriate number of employees should be hired and then must be retained by the
company as long as they can.
• Competition is increasing day by day. Hence, hotel staff should try up-selling
techniques to gain more profits and try to make guest comfortable.
• Technology will become advance in coming time and at a faster pace. One need to
keep hotel’s requirement in mind before advancing on to the latest technologies.
• Safe food is everyone’s basic requirement and hotel staff must follow the best
hygienic practices & standards to cook, handle and serve the food to guests.
• Hotel staff should take care off small points around them and try to do cost
cutting so as to maximize the profit with which they will be affected
indirectly.

18. Conclusion
• There will be long-term, sustainable and fruitful growth of the hotel
industry in India and the future seems bright, provided the issues at hand
are tackled.
• Most of the issues need to be tackled by way of evolving policies at the
centre and state level and taking stands and united decisions by recognised
hospitality forums.

19. Bibliography
Food and Hospitality World,
Magazine
www.hotelonline.com
www.ahrmhospitality.com www.expertresearchers.blogspot.in
www.wikipedia.com www.indiahospitalityreview.com
www.hotelnewsnow.com www.4hoteliers.com
www.tourism.gov.in www.thetelegraph.com
www.thetribune.com www.timesofindia.com

20. Appendices
• FSSAI : 15th Slide, 3rd point
– The Food Safety and Standards Authority of India (FSSAI) is an agency of
the Ministry of Health & Family Welfare, Government of India. The FSSAI is
responsible for protecting and promoting public health through
the regulation and supervision of food safety. The FSSAI has been established
under the Food Safety and Standards Act, 2006 which is a consolidating
statute related to food safety and regulation in India.
• Food Safety & Standards Act,2006 : 15th Slide, 3rd point
– An Act to consolidate the laws relating to food and to establish the Food Safety
and Standards Authority of India for laying down science based standards for
articles of food and to regulate their manufacture, storage, distribution, sale and
import, to ensure availability of safe and wholesome food for human
consumption.

21. • NRAI : Slide 9, 1st Point
– National Restaurant Association of India
– It represents Independent and Chain Restaurant Owners and Operators
in India.
• QSR : Slide 16, 2nd Point
– A fast food restaurant, also known as a quick service restaurant (QSR)
within the industry, is a specific type of restaurant characterized both
by its fast food cuisine and by minimal table service.