The document contains analysis of the Indian hotel industry from all the major aspects. Comparison between 3 major Indian hotel chains show the level of competition and the benchmarks that are set by them to maintain their strategic advantage.

1. Indian Hotel Industry: Competition and
Benchmarking

2. Contents
Introduction......................................................................................................................................................... 4
Classification of Hotels ........................................................................................................................................ 5
Based on Location ........................................................................................................................................... 5
Based on Size of Property................................................................................................................................ 6
Based on service level ..................................................................................................................................... 6
Based on length of stay ................................................................................................................................... 7
Based on theme............................................................................................................................................... 7
Based on target market................................................................................................................................... 7
Based on price ................................................................................................................................................. 8
Industry Best Practices ........................................................................................................................................ 8
Industry Analysis.................................................................................................................................................. 9
SWOT Analysis................................................................................................................................................. 9
Strengths...................................................................................................................................................... 9
Weaknesses............................................................................................................................................... 10
Opportunities ............................................................................................................................................ 11
Threats....................................................................................................................................................... 11
PESTLE Analysis.............................................................................................................................................. 12
Porter’s Five Forces Analysis ......................................................................................................................... 12
ITC Group of Hotels ........................................................................................................................................... 12
Best Practices and Value Proposition............................................................................................................ 13
Green Practices.......................................................................................................................................... 14
Branded Accommodation.......................................................................................................................... 14
Welcom Cuisine......................................................................................................................................... 14
Welcom Art................................................................................................................................................ 14

3. Welcom Environment................................................................................................................................ 14
Welcom Theatre........................................................................................................................................ 14
ITC Green Centre ....................................................................................................................................... 14
Empowering Differently-abled people...................................................................................................... 14
ITC’s Sangeet Research Academy.............................................................................................................. 15
Rewards and Recognitions ........................................................................................................................ 15
Competitor Best Practices................................................................................................................................. 16
Conclusion ......................................................................................................................................................... 16

4. Indian Hotel Industry
Introduction
Tourism has become an important industry in India. It is a sunrise industry, a generator of jobs, an important
source of foreign exchange for the country. Tourism in India is the third largest foreign exchange provider in
the country. The booming tourist industry has a cascading effect on the hospitality industry with an increase
in capacity utilization and average room prices.
According to the World Tourism and Tourism Council (WTTC), India is one of the most popular tourist
destinations in 2009 and will be one of the favourites by 2018. The competitiveness of travel and tourism in
the World Economic Forum was India's sixth place in tourism and hospitality.
The tourism and catering sector is one of the top 10 sectors in India to win the highest foreign direct
investment (FDI). According to the Department of Industrial Policy and Promotion (DIPP), between April
2000 and March 2016, the hotel and tourism sector attracted some 9.2 billion US dollars of foreign direct
investment.
The hotel industry in India thrives largely because of the growth of tourism and travel. Due to the increased
tourism with rising foreign and domestic tourists is expected to expand the hotel sector. There is an
emergence of cheap hotels in India to meet the majority of the population who is seeking an affordable stay.
International companies are increasingly considering the creation of such hotels. The imbalance in the
increase of domestic and foreign tourists was not held with an equal number of rooms was a latent source of
growth.
The Indian hotel industry was divided into seven categories offered by the Ministry of Tourism, the
Government of India based on the facilities and functionality offered in the hotels. Among these, the luxury
segment is defined, consisting primarily of five star luxury hotels and five star hotels and the elite class of the
company. It offers quality service at a considerable price compared to other hotels. Its target market
segment is typically business people and high-end domestic and foreign tourists (Indian Ministry of Tourism,
New Delhi.). There is a significant overlap between the luxury sector and the heritage hotel segment as a
number of heritage hotels such as Oberoi Udai Vilas and the Taj Palace in Udaipur are classified as luxury
hotels although they are also heritage. For the purposes of this study, such heritage hotels have also been
included in the Indian luxury hotel industry.
Hotels are an important part of the tourism product. They contribute to all tourism experiences according to
the standards of facilities and services. In order to provide up-to-date standards and services in hotels, the
Ministry of Tourism has formulated a voluntary scheme for the classification of operational hotels, which
apply to the following categories: Star Hotels: 5 star deluxe, 5 Star, 4 Star, 3 Star, 2 Star and 1 Star Heritage
category: Heritage Grand, Heritage Classic & Heritage Basic
With an increasingly growing middle class and growing income available, the tourism and hospitality industry
is growing at a healthy rate and accounting for 7.5% of the country's GDP. According to a KPMG report, the
hotel industry in India is expected to reach 16.1% CAGR to reach 2,796.9 thousand crores by 2022. The hotel
industry encompasses a wide variety of hotels, activities in the hospitality industry. Services and is a major
supplier of jobs, directly and indirectly. The sector attracts the largest inflow of foreign direct investment
(FDI) and is the largest net foreign exchange income for the country. It also contributes significantly to the
indirect and indirect tax revenues of the State, which include income from VAT, service tax and luxury tax,
etc.

5. Growth in the hotel sector and its contribution to GDP will continue to be significantly higher than other
sectors of the economy due to the huge tourism potential of the country. However, the hotel industry is one
of the most heavily taxed industries and is responsible for several levels of taxation, such as VAT, service tax,
luxury tax, etc., ranging from 20% to 30%. This multiplicity of taxes increases operating costs and reduces
profitability. If the long-awaited operationalization of the GST is expected to streamline the tax structure,
bring a positive result with simplified taxes, improve ease of business and reduce cost to consumers, there is
an urgent need reduce taxes, encourage and attract more investment in the sector.
The development of infrastructure is the backbone and key to the growth of the hospitality industry. Real
estate development taxes for the hotel sector should be reduced to stimulate investment, as there is an
acute shortage of quality accommodation in the country. Second, the industry has been claiming the status
of the industry for more than two decades. The state of the industry in the hospitality industry will go a long
way in attracting investment and development in the sector. India is expected to be the fastest growing
nation in the tourism industry in the next five years, with profits of more than 20 percent per year until 2017
(SRI International), infrastructure development is essential to sustain this increase.
The government should also consider encouraging investment in the development of luxury and ultra-luxury
projects that will stimulate the hotel and travel industry in India. The government should also grant an
exemption from the service tax for new developments and a longer tax holiday for new hotels and resorts
that will help attract investment in the industry. In addition, the tax rate for the sector should be reduced
from the 18% proposal of the tax base under consideration for the new GST regime.
The hospitality industry is based on a number of opportunities for the functioning of the ecosystem and has
a reciprocal relationship with several other sectors such as transport, entertainment, aviation, and so on.
The strengthening of these related sectors will lead to the growth and development of the hotel industry.
Therefore, allowing a single window for real estate and home projects and providing the state of
infrastructure to the hospitality industry are essential steps for the growth of the industry.
The hospitality industry has the potential to be the main driving force behind the growth of the economy.
However, it will only be possible with the right amount of support and incentives from the government in all
categories of hotels and not limited to luxury and ultra-luxury segment. I believe that the government should
give its full support to encourage the sector and general taxation in the hotel industry should be reduced to
stimulate its growth and make India competitive with other reputable reception chains international.
Classification of Hotels
The classification is based on many criteria and the classification of hotels in different types is not an easy
task. The hotel industry is so extensive that many hotels do not fit into a single, well-defined category. The
industry can be categorized in different ways, depending on the location, the size of the property, and so on.
The major hotel chains in India are: the Taj Hotels Group, the Oberoi Group and the ITC Welcome Group.
Some of the international channels are Hyatt, Marriott and Le Meridian. These properties have also
appeared in India now.
Based on Location
City Centre: Generally located in the heart of the city, within walking distance of the business center,
shopping arcade. Rates are generally high due to the advantages of the site. They have heavy traffic during
the week and occupation is generally high.

6. Motels: These are mainly on the roads, which offer accommodation to road travelers and also offer ample
amount of parking space. The duration of the stay is usually from one day to the next.
Suburban Hotels: They are located in suburban areas, they usually have a heavy traffic on weekends. This is
ideal for budget travellers. In this type of hotel, rates are moderately low.
Airport Hotels: These hotels are located near the airport. They have people in transit who are staying
between flights.
Resort Hotels: they are also called a resort or seaside resort and, depending on your location and location.
They adapt to a person who wants to relax, enjoy the mountain resort. Most of the station runs at full
capacity in high season. Sales and revenues fluctuate from season to season.
Floating hotels: the name implies that these hotels are set up on a luxury or luxury boat. It is located on the
river, the sea or the great lakes. On cruises, the rooms are generally small and all furniture is fixed.
Boatels: The houseboat hotels are called boatels. The SHIKARAS of Kashmir and KETTUVALLAM of Kerala are
penalties in India that offer luxury accommodation to travellers.
Rotels: these new variants are the hotel on the wheel. Our own "palace on wheels" and "Deccan
odessey”are trains that offer a luxurious hotel atmosphere. Its interior is designed as a hotel room. They are
usually used by a small group of travellers.
Based on Size of Property
Mall hotel: hotel with 100 rooms and less can be qualified as small hotels.
Medium-sized hotel: the hotel from 100 to 300 rooms is known as a medium-sized hotel.
Large hotels: hotels that have more than 300 rooms are called big hotels.
Mega hotels: they are the hotels with more than 1000 rooms.
Hotels chain: These are groups that have hotels in many places in India and international sites.
Based on service level
Budget / Economy Hotels: These hotels cater to the basic needs of guests by providing a comfortable and
clean room for a comfortable stay.
Middle Market Hotels: This is an all suite hotel that offers a small living room with adequate furniture and a
small bedroom with a king size bed.
Luxury hotels: offer a world-class service with restaurants and lounges, concierge service, meeting rooms,
restaurants. The bathroom linen is provided to guests and is replaced accordingly. These rooms include
furniture, artwork, etc. The privileged customers of these hotels are celebrities, business leaders and
politicians of high rank. Example: Hyatt Regency, New Delhi.

7. Based on length of stay
Transient Hotel: This is the hotel where guests stay for a day or even less, are usually five star hotels. The
occupancy rate is usually very high. These hotels are located near the airport.
Residential Hotels: This is the hotel where guests can stay for a minimum of one month and up to a year.
The rent can be paid monthly or quarterly. They offer a living room, a bedroom and a kitchenette.
Semi-residential hotels: These hotels integrate the characteristics of the hotel transition and residential.
Based on theme
Hotel Heritage: In this hotel, a guest is welcomed, offers rooms that have their own history, serve traditional
cuisine and are entertained by the folkloric artist. These hotels have put their best efforts to give the vision
of their region.
Example: Jai Mahal Palace in Jaipur.
Ecotels: these eco-friendly hotels use ecological elements in the room. Example: Orchid Mumbai is the first
and most popular five star hotels in Asia.
Boutique Hotels: This hotel offers exceptional accommodation, elegant and themed furniture and is suitable
for business travellers. Example: In India, Bangalore Park is a boutique hotel.
Spas: it is a therapeutic resort offering baths and massages as well as other characteristics of luxury hotels in
India Ananda Himalaya spa are the most popular Spa.
Based on target market
Commercial hotel: They are located in the heart of the city in busy commercial areas to get good bargains.
They are mainly occupied by businessmen.
Convention hotels: These hotels have a large congress complex and are aimed at people attending a
convention, a conference.
Example: Le Meridien, Cochin, is a hotel with the largest congress centre in South India.
Resort Hotels: These recreational hotels are primarily intended for vacationers who wish to relax and enjoy
with their family. The profession varies according to the season. The atmosphere is more relaxed. These
hotels are spread over vast area. So many stations have solar powered cars for the transportation of guests.
Hotel Suite: This hotel offers rooms that can accommodate a kitchenette. They are addressed to people who
move as lawyers, leaders who are away from home for a long professional stay.
Casino Hotels: The hotel with predominant gaming facilities falls into this category. They also have room,
food and operation. These hotels tend to accommodate vacationers. Gambling activities in some casino
hotels take place 24 hours a day and 365 days.

8. Based on price
The current booking methods make it difficult to identify the purpose of the trip. Separate bookings per
segment for short stays of the week are by default. Recognize as leisure the booking of a double room during
the weekend.
As the new technology grew, corporate travel services, as well as the independent consumer, turned to
travel agents for the best discounts. As GDS technology has influenced booking and purchase practices,
additional segments have been created, resulting in the following market segment model:
Rack Rate: Without any affiliation to guarantee discounts, the Rack Rated customer paid the published rate,
which was the highest rate.
Consortia Rates: This was the same customer who booked through a travel agent using the GDS and
received a 5%-10% discount off Rack Rates.
Corporate Rates: Dwelling with the criteria of hotel calculation, as the volume, the companies will guarantee
discounted rates.
Group Rates: With a block of rooms, rates vary depending on the time of year and the nature of the group.
Weekend Rates: Individual leisure travellers, usually within driving distance of the hotel.
Promotional rates: These rates are usable for the purchase and the purchase of a way to estimate the case
by the use of all the prices with a personalized individual, independently of the affiliation.
The domestic consumer is the largest segment of the hotel and motel industry in India which accounts for
52.9% of the total value of the industry. The occupational segment represents an additional 24.4% of the
industry.
Industry Best Practices
Annual net sales for the luxury hotel industry amounted to about Rs. 5060 crore for the year 2011-2012. This
represents a more or less constant yearly growth of 12.47% for the ten years between 2001-02 and 2011-12.
Not only do financial figures show the size of this industry, the overall efficiency of this industry is also quite
high, as evidenced by the growth of operating profits during the same period. For industry, this growth was
spectacular at 24.15% from year to year.
Industry has largely been isolated from the global economic downturn, although rising inflation levels have
resulted in higher overhead costs for luxury hotels, which could result in lower margins in the years to come.
So far this has been largely offset by the strong influx of foreign tourists attracted by the weakened Indian
rupee. In addition, the economic crisis has forced domestic travellers to cancel their travel abroad and travel
more widely within their own country (Narayana, 2011).
Customers from ASEAN countries have increased by 17% since last year. This can be attributed to the recent
proliferation of Southeast Asian companies such as AirAsia, Tiger Airways and Silk Air, which made travel to
India more accessible to the population.
The labour utilization rate for the luxury hotel industry has grown steadily and currently accounts for about
2.71 employees per hotel room available. Not only are these numbers well above the industry average of

9. 2.01 employees per hotel room, but they are among the highest in the world. These high values are
attributed to Indian hotel owners who tend to "specify more" their offers and can pose a high cost risk
because a rising rate of inflation increases labour costs.
There is also a trend in the luxury sector to adopt green initiatives, which translates into a 3.3% reduction in
energy costs as a percentage of hotel revenues. Such green initiatives also improve the commercialization of
these properties.
Luxury hotels in India have been widely adopted quickly in the latest technology trends. This is now
highlighted by two facets. First of all, Indian luxury hotels have jumped into the social media marketing car
and have greatly benefited from its strong reach almost no cost. These hotels have even managed to
develop a connection with the non-elite and aspiring company section using their Facebook and Twitter
pages that provide insight into the day-to-day operations of many of these properties. Second, the rise of
the Internet also made the logistics much easier for these hotels to manage. Online bookings combined with
credit card transactions and net banking and intensive use of customer databases have facilitated hotel
offerings to provide a hassle-free quality service that can now be customized as required each individual
traveller.
Industry Analysis
SWOT Analysis
Strengths
Natural & Cultural Diversity of India
India is one of the most diverse countries in the world and has several millennia of cultural heritage. The
incredible geography of the highest snow-capped mountains in the world to the desert of Rajasthan, from
the sunny beaches to the back waters of Kerala, from the coast to the tropical forests, India is full of life.
India has a large number of tourist destinations that offer the hospitality industry an enormous and
unexplained potential.

10. Demand Supply Gap
The Indian hotel industry is experiencing a major gap in the supply and demand of hotel rooms. This
situation ultimately led to high occupancy and occupancy rates in the Indian luxury hotel segment. In this
way, a large number of luxury and quality hotels have been opened to meet customer demand. In addition,
the cost of labour for the hospitality industry is the lowest in India.
Government Support
Government support is a very influential factor in the growth of any industry. Tourism has emerged as a
major industry and the government is supporting tourism with several of its projects and development
projects. The government has approved the approval of a huge amount to develop infrastructure and new
routes and tourist destinations, as well as for the maintenance of historic monuments. The Ministry of
Tourism's (DOT) "Incredible India" campaign has been very successful in showing India as a tourist
destination not only in the domestic market but also in the international market.
India & International market
India's participation in the international hotel and tourism market has increased dramatically in recent years
and is expected to increase further. Luxury hotels in India are ranked among the best in the world.
Weaknesses
Poor state of Infrastructure
The state of infrastructure is well below the norm in India, despite the adoption of many measures by the
government. India has made a total investment of $ 20 billion, while countries like China have made more
than $ 150 billion. In addition, real estate and real estate prices in India account for 50% of the cost of the
project compared to 15% abroad.
Current state of affairs and practices
Most hotels in India are in excess compared to other countries. For Indian hotel companies, the staff room
ratio is 3: 1, which is 1: 1 for international hotel companies.
The number of luxury hotel rooms in India is much lower compared to any country in the world.
The hotel tax and luxury tax on hotel accommodation increases the bill by 30% in India, which is much higher
than in other countries (Kanjilal, n / a).
Slow implementation
The lack of adequate recognition for the tourism industry has hampered its growth prospects. Whatever the
measures taken by the government are implemented at a slower pace.
Susceptible to political events
The foreign tourist arrival rates are also affected by the internal security scenario and social unrest.

11. Opportunities
Untapped market with unique and diverse topography
India has one of the most diverse topographies in the world, Indian luxury hotels and heritage offer a unique
experience to travellers looking for experience. The hotel industry has enormous potential for growth, India
being a land of many tourist destinations, natural, historical or contemporary.
Rising Income
India's incomes are rising dramatically and more and more Indians are demanding luxury and experience,
thus improving leisure tourism in India.
Open Sky Policy
The Open Skies policy has largely benefited luxury tourism in India. The increase in aviation activity has
benefited both domestic and international travellers, but has also contributed to improving infrastructure.
Different demand needs of Domestic & International travellers
Demand between international travellers and domestic travellers can be easily handled due to the difference
in holiday seasons. For domestic travellers, the peak season is the summer month, while for international
travellers, the peak season is from October to March.
Threats
Fluctuations in international tourist arrivals
As there are wide fluctuations in international tourism, the situation becomes risky when we get totally
dependent on the foreign tourists. To balance this we need to provide equal importance to the domestic
tourism and should take measures to promote it.
Increasing competition
Several international multinationals like Four Seasons, Shangri-La and Aman Resorts are entering the Indian
markets. Two other groups - the Carlson group and the Marriott chain - also hope to join the race. This will
increase competition for major Indian hotels.

12. PESTLE Analysis
Porter’s Five Forces Analysis
ITC Group of Hotels
ITC is one of the leading multinational corporations in India with a market capitalization of $ 50 billion and a
turnover of $ 8 billion. The ITC is one of the world's top companies, the "Fab 50" in Asia and the world's best
known companies by Forbes magazine and "India’s Most Admired Company" in a study conducted by
Fortune India magazine and Hay Group. ITC is also one of the world's largest sustainable value
manufacturers in the consumer goods industry in a study conducted by the Boston Consulting Group. The
ITC was ranked among the most valuable companies in India by Business Today magazine. The company
ranks among the "most valuable" brands in India, according to a study by Brand Finance and published by
Economic Times. ITC is also one of the top 50 companies in Asia compiled by Business Week.

13. Best Practices and Value Proposition
ITC Hotels is one of India’s premier chain of luxury and budget hotels. It is widely respected and is
synonymous with the Indian hospitality. It has established presence in key business locations with over 6000
rooms under 4 distinct brands.
ITC is India fastest growing hotel chain with highest operating efficiency amongst the 3 leading hotel chains.
It caters to different segments of customers with its four category of hotels and brands under each one of
them.
Category Brand Positioning
Luxury ITC Hotel: Luxury Collection ‘Mansions of Luxury’
Upper upscale Welcom Hotel: Sheraton ‘Passion for Quality’
Upscale-mid-scale Fortune Hotels ‘Promise of True Value’
Heritage Welcom Heritage ‘Unique Experiences’

14. Green Practices
ITC Hotels pioneered the concept of ‘Responsible Luxury’ in the Indian hospitality industry. It draws its
strength from ITC group’s exemplary sustainability practices. It integrates world class green practices with
contemporary design elements to deliver the best of luxury in the greenest possible manner.
From a combination of its green practices and love for nature, it delivers a unique value proposition to
guests, provoking a sense of responsibility for the nature and generating a love for our planet earth.
Such efforts have made ITC Hotels the greenest luxury hotel chain in the world with all its eleven premium
luxury hotels LEED (Leadership in Energy and Environmental Design) Platinum certified.
Branded Accommodation
ITC Hotels has also pioneered the concept of branded accommodation. Under its umbrella, it has developed
three brands of accommodation ITC that is ‘One’, ‘Towers’ and the ‘Executive Club’. This enables ITC to cater
to the different needs of its various customers and provide them the highest level of services.
Welcom Cuisine
ITC was also the first to introduce branded cuisine in India under the Umbrella WelcomCuisine. Some of the
chain’s restaurants like Bukhara and Peshawri, Dakshin and Dum Phukt offer cuisines from North to South
covering the culinary traditions of India. Bukhara and Dum Phukt have consistently been rated among the
top 50 restaurants in Asia to go to and among the best in India.
Welcom Art
ITC also promotes the interest of the Indian art under the banner of WelcomArt. The Shrishti art galleries
located at various ITCWelcomGroup hotels regularly sponsor the works of upcoming Indian artists.
Welcom Environment
Established with commitment to protect and serve our nature, WelcomEnviron follows the best in class
practices ‘Reduce, Re-use and Recycle’ and operate in harmony with nature.
Welcom Theatre
Launched more than a decade ago, WelcomTheatre showcases the best of Indian theatre production.
ITC Green Centre
In its commitment to sustainability - Ecological, Social, Economic, ITC developed a Green Centre in Gurgaon
which is also the headquarters of ITC’s Hotels Business. Spread over 170000 square feet, this sprawling
campus acts as ITC’s expression of following green and sustainable practices. It was declared as world’s
largest LEED Platinum rated office space in 2004. It was re-certified in 2012 as the world’s highest rated
green building with Platinum certification by the US Green Building Council.
Empowering Differently-abled people
ITC hotels have taken a unique initiative of employing differently-abled people at their workplace. It believes
that each individual can contribute in some form and should be treated equally and with respect and

15. Green
Practices
sensitivity. Thus different people have been employed in different functions keeping in mind their abilities
like housekeeping, teleworking, bakery, as musicians. It made efforts to create special badges, whistles, sign
languages for disabled people alike enabling them to communicate more effectively. These are some
examples of how ITC has created a sense of well-being and care for others.
ITC’s Sangeet Research Academy
With the objective of preserving and promoting Indian Classical Music, ITC had also established the
prestigious ITC Sangeet Research Academy in Kolkata in 1985.
Rewards and Recognitions
ITC is first Indian company and the second in the world to win the prestigious Development Gateway Award
which it won for its trailblazing ITC e-choupal initiative in the field of Information and Communication
Technologies to address issues like poverty.
ITC won the Golden Peacock Award for ‘Corporate Social Responsibility (Asia) ‘ in 2007, the wards for CSR in
Emerging Economics 2005’ and Excellence in Corporate Governance’ in the same year.
ITC Maurya in New Delhi is the first hotel in India to get the coveted ISO 140001 Environment Management
Systems certification.
Welcom
Initiatives
Branded
Accommo
dation
Social
Responsibi
lity

16. Competitor Best Practices
Conclusion
Indian Hotel Industry has seen a positive performance over the previous 10 years. The impact of an
improved micro-environment and a relatively stable political climate enabled the industry to recover from
constantly declining average room rates and occupancy rates. This improvement in the overall macro-
economic scenario led to an increase in business confidence.
The Indian Hotels Company Ltd has been a long-standing brand in the Indian hospitality industry. The brand
Tata and its rich culture had helped them survive the cut-throat competition in the hotel industry. Taj has
evolved dramatically over the years by adapting to the constantly changing market environment and
catering to the needs and preferences of different types of customers.
Based on the study of the Indian Hotel Company Ltd and the industry as a whole, we found that their policies
and best practices such as people management, social responsibility, environmental protection activities
have been the key factors in their continuous success and long withstanding brand visibility in the market
over the years