Hotels and Restaurants Industry in India

Industry of the Month
“The Hotels &
Restaurants Industry

eBizWire
Vol. I Issue. X, November 2012

Insight

Biz India News 2

Biz Policy Updates 3

The Indian Hotel & Restaurant Industry 4

Business Idea of the Month 9

StartBizIndia Discussion Platform 10

Upcoming Business Summit 11

Contact us 12

For more info on Business setup visit www.startbizindia.in

Page |1 For Business setup queries email at
nitesh@indiacp.com or call at 011 40622249

Biz India News Headlines
nd
• The consultancy firm Deloitte Touché Tohmatsu has said that in the India shall be the 2 largest
next five years, India is expected to be the second largest country on Manufacturing country
the manufacturing front. China will maintain the number one
positions and Brazil will occupy the third position after India. Deloitte
has said that what will keep these countries at these positions is the
competitiveness of each of these country’s manufacturing innovation
ecosystem,

• The quarterly PE investments have increased 4% in value in Q3. IT Private Equity Investments in
rd
and IT enabled services sector remained the top player with the India go up in the 3 Quarter
highest contribution from the Private Equity firms, both in value and
in volume. It is hoped that opening of the multi-brand retail sector is
going to fetch more PE investments to India.

•
nd rd India ranked 4th on the Renewable
Ranked 2 on the Solar Index and 3 on the Wind index, India has
been given an overall rank of 4 in renewable energy market Energy market Potential by E& Y
attractiveness. The share of renewable energy in the Country’s total
energy contribution has gone up by a little over 4% from 2008 to
2012. Investments in India in the clean energy sector have grown by
almost 57% every year which is the highest growth rate in the sector
across all economies.

• An MOU has been signed between the 2 countries, which is aimed India and Spain sign MOU on
to promote efficient and environmentally sustainable transport technical cooperation in field of road
systems. The Government officials and specialists of the relevant and railway transport
departments of India and Spain will constantly exchange to enhance
cooperation and exchange information in areas of road transport,
highways, high speed railways, safety in train operations, power
supply systems and similar matters.

• 12 Indian Companies have made it to the top 250 rankings and 6 Indian Energy firms shine in Platt’s
even rank high among the Top 50 Companies. Cairn India has been top 250 Global rankings
named as the fastest growing Company not only in Asia but the
whole World. Out of all the Indian Companies, Power Grid Corp
improved its overall ranking from 232 in 2010 to 172 in 2011.

• KWAN Entertainment and Marketing Solutions has entered into the India’s KWAN Entertainment forms a
Los Angeles based sports & entertainment firm which will represent Joint Venture with LA based
talent from India and other SAARC nations. The JV Company which Creative Artists
will called CAA KWAN will be based in Mumbai and provide services
in areas like motion pictures and television, music, commercial
endorsements, sports consulting, etc.



Biz Policy Updates Legal Headlines

Facilities for Persons Resident outside India – FIIs Facilities for Persons Resident
outside India- FIIs
Till now only designated branches of AD category I banks maintaining
accounts of FIIs were allowed to act as market makers to FIIs. The banks
are responsible for hedging the currency risk of FIIs on the market value
of their entire investment in equity and/or debt in India as on a particular
date.

From now on, the FIIs can approach any AD Category I bank for the
purpose if hedging this risk BUT the eligibility for the same will be decided
by that bank on the basis of a valuation certificate as provided by the
designated AD category bank. Apart from that the FII will have to give a
declaration that its global outstanding hedges plus the derivatives
contracts cancelled across all AD category banks is within the market
value of its investments. The FII will also have to give a quarterly
declaration as to the fact that the total amount of derivatives contract
booked across AD Category banks are within the market value of its
investments.

It has been clarified that hedges with AD banks other than the designated
AD banks will have to be settled through the Special Non Resident Rupee
Account only.



Hotels & Restaurants Industry in India
I ndia is known as the land of snake charmers to some, as land of
religious diversity to some others and as land of Bollywood to
entertainment lovers. Whether it’s the food, the diversity in cultures,
handicrafts or business opportunities, everybody seems to have some or
the other reason to travel to India. And the fact that the World Travel and
Tourism Council considers India to be one of the top most tourist spot with
the highest ten year growth potential (2009-18) [ www.wttc.org ], we have a
reason to believe that India is only going to see more visitors.

It is said that the Indian tourism brings a substantial share to the country’s
foreign exchange earnings and if you closely examine it, most of that
comes from the hospitality business in India. The revenue from the
hospitality sector in India broadly comes from two sources:
1. Hotels: Which include lodging, attending business conferences
and meetings India ranked 5th in the World
2. Restaurants: Which includes all sort of eateries whether fine
for hotels with the best
dining restaurants, quick service restaurants, takeaways or other
forms of eating joints. business outlook (A report by
Trip Advisor)
Hotels and Restaurants after all are the prerequisites for any visitor, local
or foreign. And focusing on the last bit, it’s hard to not miss out on the fact
that not only the foreign visitors, but Indian visitors travelling across states
and cities bring in a huge chunk of revenue for the country’s Hotel and
Restaurant Industry. Therefore it can be said that the Tourism and the
Hotel and Restaurant Sectors go hand in hand. Or rather, it can be said
that the latter forms a prominent and an important part of the former.

The market comprising of the foreign tourists is huge and is only growing
year after year. The Foreign Tourist Arrivals standing at a figure of 4.15
Lakh in September 2012, registered a growth of a little over 3 percent
compared to the corresponding month in the previous year. To prove the
huge amount of foreign exchange that is added to the country’s reserves is
the fact that the Foreign Exchange Earnings during September 2012 were
almost Rs. 6,650 Crores! [ www.ibef.org ].

The rise in incomes coupled with fascination to travel to a new country is a
considerable reason to believe the growth of foreign visitors to India.
Similar reasons can be attributed to upsurge in the domestic visitors too.
India is believed to be a country with the fastest growing middle class, and
applying the general principles of economics with respect to availability of
leisure time and disposable income, travelling is now a necessity for many.
Visiting the dear ones, exploring your own country, taking a break from
work, searching for business opportunities, there are reasons galore for
Indian citizens to look to travelling. Thanks to this upsurge, the hotel rates
in India increased by almost 12 percent in the first half year in 2012!
[ www.ibef.org ]

Hotels and Restaurants Industry: A source for bread for many

It is clear that the Tourism and the hospitality industry are highly inter-
related but not only that, the hospitality or the Hotels and Restaurants
sector is substantially linked with other industries in the economy like



agriculture, transportation and construction which can be easily reasoned.

To add to that the sector creates the maximum number of jobs than any
other industry in the economy. After all it has place for all kinds of people,
no matter how unskilled or specialized, which can be easily sampled in any
hotel or a restaurant.

Typically a hospitality unit such as a Hotel or a Restaurant consists of
various departments which work in close tandem to provide the combine
service a customer enjoys. There is facility maintenance and direct
operations which includes bartenders, kitchen workers, servers,
housekeepers, porters, etc. Apart from that there is the obvious and more
prominent Human Resources department, people taking care of the
marketing and the management.

Not only this, the employment generation potential has not gone unnoticed.
The World Travel and Tourism Council says that India’s Travel and
Tourism sector is soon going to be the second largest employer in the
India ranked highest among
World. It will be employing more than 40 lakh persons by 2019. various countries based on
[www.invest-india.com]
increased staff levels
What’s enhancing the business lately? (www.ibef.org)

The tourism can be divided into various categories depending on the
purpose of the visiting tourists. We have all known adventure tourism,
heritage tourism, rural tourism and pilgrimage tourism; the heritage tourism
being the most important driving factor in the Indian tourism sector because
of the country’s rich heritage and ancient culture that is known Worldwide.

But what is catching up more lately is the medical tourism. It is said that
medical tourism is a sunrise sector in India because of a large number of
foreign visitors coming to India for medical purposes. With good quality
medical services at rates cheaper than those in other countries, India
seems to have become one of the most preferred medical tourist
destinations. Not only this, domestic tourists also avail these facilities
especially if they can afford the super specialty hospitals which are known
for guaranteed treatment in most cases. That’s the reason you see so
many guest houses and B&B facilities (Bed & Breakfast) around hospitals
these days. According to a RNCOS report titled ‘Booming Medical Tourism
in India’, it is expected that the country will experience a Compound Annual
Growth Rate of 27% during 2011-2015 in this sector.
Various types of tourisms boosting
Another form is the wellness tourism which is more or less a subset of the Indian Hospitality’s Growth:
medical tourism. Since India is known for Ayurveda, Yoga, Naturopathy
and spiritual philosophy, our country is one of the most sought after
wellness destinations which attracts tourists from world over and from  Heritage Tourism
around the country to various Ashrams and centers which have been
established to promote the natural way of health and healing.
 Medical Tourism
Also, with the India Inc. brimming with opportunities, a trend which was well
 Wellness Tourism
existing before has become stronger. It is the MICE tourism, which is  MICE Tourism
basically an abbreviation for Meetings, Incentives, Conferences and
Exhibitions, that is the fastest growing concept in the industry.



Halls in hotels are almost perpetually booked by companies for such
events and this brings in the business travelers. Some top hotels cater to
these needs thus facilitating conduct of domestic as well as international
business meets.

Approval of Hotels

The nodal authority for regulation of Hotels is the Hotel & Restaurant
Approval & Classification Committee which is a division of the Ministry of
Tourism. It approves the projects on a 5 yearly basis. Once the hotel
becomes operational, an application for classification has to be made
whether or not all the rooms have been completed or not which again is
valid for 5 years.

Apart from the necessary prescribed documents, the following local
approvals are required from:

• Municipal Authorities
• Concerned Police Authorities
• Airport (for projects located near Airports) STAR HERITAGE
• Municipal Health Officer CATEGORY CATEGORY
• Fire Service Department
• 5 Star –
• Bar License
Deluxe • Heritage
Grand
The approvals shall depend on the classification of the Hotels in “Star • 5 Star
• Heritage
Category” or “Heritage Category” • 4 Star
Classic
• 3 Star
Necessary Licenses for a Restaurant • Heritage
• 2 Star
Basic
A restaurant apart from requiring a license under the respective state’s • 1 Star
Shop and Establishment Act will require the following licenses among
others:

• Food Safety License from FSSAI (Food Safety & Standards
Authority of India)
• Health License from the Health Department of the Municipal
Corporation
• Eating House License from the Police Commissioner
• Liquor License from the Excise Commissioner
• License for playing music from the Phonographic Performance
Limited
• NOC from the Fire Department

Some Important Associations you can be a part of if you operate in
the Industry:

1. Federation of Hotels and Restaurants Associations of India:
(www.fhrai.com)
The 3rd largest Hotel & Restaurant Association in the world,
FHRAI is the apex body of four regional associations representing
the Indian hospitality industry. Aiming to promote and protect the
interests of the Hospitality industry, FHRAI keeps its members well


informed about latest trade information and trends, statistics and
other studies.

2. Hotel Association of India: (www.hotelassociationofindia.com)
The Association aims at projecting the industry’s role as a
contributor to increasing employment opportunities and
sustainable economic and social development. It’s objective is to
raise the standards of hoteliering and build an image for the
industry both outside and within the economy.

3. National Restaurant Association of India: (www.nrai.org )
The NRAI is the leading association for stand alone and chain
restaurants and offers individual and corporate memberships to
them. Having a pan India presence with over 1000 members, it
aims at representing, educating and promoting the independent
restaurant owners and operators.

4. International Hotel and Restaurant Association: (www.ih-ra.com)
This International organization monitors issues that are raised by
major international organizations involved in tourism and lobbies
for better recognition of the hospitality members Worldwide. The
membership is not only open to the National Associations for
Hotels and Restaurants in various economies but individual
restaurants and hotels as well.

Foreign Direct Investment:

The Indian Government allows FDI up to 100% under the automatic
approval route in the Hotels Industry. The investment is available for
construction and development including that of hotels and resorts,
recreational facilities and infrastructure. For this purpose the term hotels
includes restaurants, beach resorts and other tourist complexes providing
accommodation and/or catering and food facilities to tourists. Not only this,
a 5 year tax holiday is available for organizations which set up resorts,
convention centres or hotels at specific destinations.

Major names in the industry:

Several players, national and international have established a strong
foothold on the Indian platform for Hotels and Restaurants. International
names like Accor, Amanda, InterContinental, Hilton, Marriot, Starwood,
Satinwoods and the similar continue to woo the customers whether Indian
or visitors to India. But on the other hand, Indian Companies in the industry
are equally well established and in many a case doing better than their
international counterparts. The Indian Hotels Company, East India Hotels,
ITC, Leela, Asian Hotels have all kept the visitors in awe. Where the
restaurants are concerned, the Indian brands and stand alone restaurants
co-exist in harmony with international food chains like Domino’s,
McDonalds, Pizza Hut, KFC, Costa Coffee and now Starbucks also.


Important Developments that are hoped to boost the industry:

• The Indian Company ITC launched its hotel “Great Chola” in
Chennai with an investment of over Rs. 1,200 Crores which is
touted to be the World’s largest LEED Platinum Green Hotel.
• The KEF Company plans to set up a luxury hotel and a super
specialty hospital in Kerala with an investment of Rs. 1,600 Crores
approximately.
• Bengaluru based Hyagreev Hotels have entered into a JV with the
Japanese Toyota Enterprises.
• FHRAI has signed four memorandums of understanding with its
counterparts operating in USA, Europe, Middle East, United
Kingdom and China to exchange expert solutions regarding the
industry.
• USA based Wyndham Hotels will increase its properties in India to
70 in number by 2016.

Government’s Initiatives which will have a direct impact on the Hotels
and Restaurants Industry

• The Maharashtra Government will set up an international cruise
terminal at the Mumbai port which is expected to bring the
European and the American tourists to India.
• The Gujarat State Government is whole heartedly trying to boost
tourism in the State and has allocated Rs. 400 Crores for the
purpose. The Planning Commission has also approved a grant of
Rs. 1,200 Crores to promote coastal tourism in Gujarat.
• The Incredible India Campaign started by The Ministry of Tourism
which is already playing a huge role in development of the industry
is hoped to continue bringing more tourists to India because of the
way it promotes the Indian culture that leaves a lasting impression
on the minds of people. Other campaigns started by the
Government like the “Colours of India” and “Atithi Devo Bhava” are
also doing well.
• The Central Government allows the visa on arrival for tourists from
Countries like Finland, Luxembourg, New Zealand, Japan and
Singapore which removes unnecessary hassles for these tourists
in terms of obtaining a visa.
• The Government has introduced a new category of visa altogether,
called the ‘Medical Visa’ or simply M-visa to promote medical
tourism
Given the enthusiasm of top players in the Industry, of the
Government to promote the industry and of the tourists to visit India
is proof enough of the bright future this Industry has. Setting up a
new Hotel might be a herculean task requiring a lot of investment but
starting a restaurant offers huge earning potential even for those who
want to start small.



Business Idea of the Month

Mobile Food Van

Mobility has become part and parcel of the high paced lives
people lead today, especially so in the metros. Competition you
call it or the most modern manifestation of the famous Charles
Darwin’s theory of Survival of the Fittest, everybody is working
very hard to the extent of being available 24x7. And this makes
it ever important for people to indulge in activities that
rejuvenate their sense, good food being one of them.

West has this popular culture of food trucks which are nothing
but mobile catering vans which move around in localities (very
much like the ice cream carts here) selling anything from fast
food to gourmet food served by amateur chefs. Such vans are Do not forget to
very popular among people for various reasons: one,
refer to the Food
because of the convenience of locality; second, because of
their lower prices in comparison to proper restaurants and Safety and
third, the quickness of their service. Standards
India has a similar concept bur more or less with the vans (Licensing and
stationery at a place and that too is more common in industrial Registration of
areas. For someone who likes to cook and feed people as a
hobby, this is the best work idea where you not only get to Businesses)
fulfill your interest but get to earn as well. Regulations 2011
One thing to consider here is that the initial investment in a van
which can accommodate your cooking appliances depending
on your preferences and the type of food you wish to sell. How
you can differentiate your food van from others is by giving your
van a proper look, having uniforms for all the staff that you plan
to have, giving attention to the appearance of food you serve,
emphasizing on hygiene and using social media to connect to
the people. You can also give a new dimension to your
business by accepting contracts for catering and getting booked
for private events

Among other formalities before starting a business, you will
have to consider the license and registration as per the Food
Safety and Standards (Licensing and Registration of
Businesses) Regulations 2011 and also seek permission from
the Traffic Police in case you want your mobile food van to be
mobile in the truest sense of the word.



StartBizIndia Discussion Platform

6 years back Mrs. Sushila Kumar who lives in the North Campus of
Delhi University started a Tiffin facility for several students residing
in the area. The business has now slowly and steadily flourished and
the number of students the food is supplied to has increased from 25
to 300. With the introduction the Food Safety and Standards
Regulations, 2011 by FSSAI, Mrs. Sushila wants to know what
measures she should take in order to be compliant.
th
All the existing food businesses need to comply with the Regulations by 4
February 2013 and in order to do that, the follow steps must be followed:

dfca
1. Food Safety Audit
Any business planning to apply for license must get a gap audit
conducted wherein the gaps existing in its Standard Operating
Procedures (SOP) are located by measuring them against the
standards set by the regulations. The audit would be conducted by
the authority’s own officer.

2. Testing
Any FBO manufacturing, selling, serving, handling, distributing and
importing food needs to assess whether the raw materials are
chemically and microbiologically safe for the human consumption.
This testing can be done either by an in-house lab or by a NABL
accredited or FSSAI notified lab.

3. Training
Any person handling, storing, manufacturing, serving, selling,
distributing or transporting food needs to be trained about the new
regulations

4. Proper Documentation
All the documents as required under the regulations need to be
maintained in a proper format as it will be the only safeguard in
any court of law.

5. Application for License
To be legally authorized to continue the business, every Food
Business Operator will be required to apply for a license under
these regulations based on the turnover specifications given under
the Food Safety & Standards (Licensing and Registration of Food
Businesses) Regulations, 2011.


P a g e | 10 For Business setup queries email at

Upcoming Business Summit

 Business Opportunities Show, 2012

A forum focused on franchise opportunities and development, it has
had coverage of almost 31 cities in India since its inception in 2003.
Keep your planner free if you are a franchisor interested in expanding
your business regionally or a franchisee who’s looking for better
opportunities.

Date and Venue:

st
1 December: Hotel Surya Palace, Vadodra
rd
3 December: Hotel Grand Regency, Rajkot
th
4 December: Hotel St. Laurn Towers, Ahmedabad

 Small Business Congress, 2012

A conference that will unveil various business opportunities for small
businesses, it is aimed at exploring environment for creating new
business ideas, funding, team building and competition. Attend this
conference if you want to expand your connections, land up angel
investments for your ideas or expose others to your business.

th
Date: 17-18 December
Venue: The Lalit, Mumbai

INTERNATIONAL EVENT
 The Business
 Tie Con Australia 2012 Opportunities Show, 2012
The conference aims to bring together people and discuss how there’s
nothing wrong with starting a business when you are 40 and how a  The Small Business
business is more likely successful if formed with a meaningful higher Congress, 2012
purpose and an ethical and generous mindset.

rd
Date: 3 December
 Tie Con Australia, 2012
Venue: Park, Hyatt Hotel, 1 Parliament Place, East Melbourne



Biz India News

Nitesh Latwal Visit us at

E: nitesh@indiacp.com

D: +91.11.40622249
M: +91 9873521481 A Venture of

st
D- 38, 1 Floor, South Extension, Part I
New Delhi – 110049
Ritika Kharbanda

E: ritika@indiacp.com T: +91.11.40622200 F: +91.11.40622201
E: info@startbizindia.com
D: +91.11.40622246
M: +91 9899180593

Disclaimer:

This paper is a copyright of Corporate Professionals (India) Private Limited. The entire content of this
paper have been developed for the new startups. The author and the Company expressly disclaim all
and any liability to any person who has read this paper, or otherwise, in respect of anything, and of
consequences of anything done, or omitted to be done by any such person in reliance upon the
contents of this paper.



Hotels and Restaurants Industry in India

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