6) You are to link the observation made from the financial

analysis of the firm and the internal analysis/external

analysis/industry
analysis/competitor
analysis
and
give
recommendation to improve/sustain the performance of your firm

In the recent years, the growth of IHCL has been stagnant especially when
compared to the other competitors in the industry. Below are some of the
recommendations based upon the above analysis carried out.
Key Risks and concerns:

Heavy credence on India operations: IHCL depends heavily on

Indias operations on foreign tourist arrivals, foreign exchange
earnings, visa on travels, etc. Hence it is largely exposed to
domestic economic conditions.
Competition from international chains: The arrival of international
hotel chains such as Carlson, Starwood, Hilton, Accor, Radisson,
Marriott, Meridian, Holiday Inn, Sheraton, etc. would result in more
stiffer pressure on operating margins.
Foreign exchange fluctuation risks: The presence of foreign currency
debt at IHCL exposes it to fluctuations in currency and interest rate
risks.
Dependence on the high end luxury segment: Luxury hotels
constitute a large part of the revenues for IHCL and since this
segment is heavily impacted by international events and thus
suffers from high operating leverage.

Recommendations based on internal analysis of IHCL

The key operating characteristics of luxury hotel industry are

occupancy percentage and average revenue per room. As the hotel
industry have their peak demand during the second half of a year, it
is prudent for IHCL to take necessary steps to improve the
occupancy rate in the first half. Their occupancy rate is although
better than the industry average, IHCL desperately needs to
improve its operational efficiency to have a competitive advantage.
It needs to fully utilize established infrastructure by increasing
occupancy percentage.
IHCKL faces a moderate threat from substitute products available
like service apartments and company owned guesthouses. Service
apartments are flourishing currently due to rising needs of corporate
and shortage of hotel rooms in most cities. They result in saving of
25-40% as compared to the prevailing hotel prices and thus an
economical option. Taj operates some upmarket service apartments
in Mumbai and as a result has a straddled response to this threat.

IHCL should speed up the implementation of the use of the Balance

score card which records its performance along the parameters of
financial growth, guest satisfaction, strong internal processes,
employee satisfaction and training.
It could resort to focussing more on MICE (meetings, incentives,
conference, exhibition) tourism and luxury residencies.

Recommendations based on external analysis of IHCL

IHCL should focus more on expansion in Asia Pacific and the Middle
East regions as these countries have a comparatively higher growth
rate as compared to world average. Also the greater disposable
income coming out from these countries means a higher chance of
conversion of prospective customers, IHCL should look at expansion
of their business in smaller cities in India to tap the potential from
upcoming modern customers.
IHCL could probably have a well-known Indian celebrity as their
brand ambassador for larger reach to the customers and staying
contemporary.
Diversification into new segments
IHCL can take advantage of the five year income tax holidays
provided by Government for setting up hotels in specified districts in
non-metro areas.
It should focus on ecotels and floatels. Ecotel or Eco hotel is a hotel
or accommodation that has made important environmental
improvements to its structure in order to minimize its impact on the
environment. Since these kind of hotels promote hotel tourism in an
environment friendly manner, they find a preference amongst the
visiting foreign tourists. Floatel refers to the installation of living
quarters on top of rafts or semi-submersible platforms. Flotels are
used as hotels on rivers or in harbour areas, or as accommodation of
working people, especially in the offshore oil industry.
In light of the Mumbai attacks on 26/11, security has become an
added concern for tourists. This has combined to further decrease
the number of foreign tourists travelling to India. In particular this
directly affected the patrons of IHCL. Though having many negative
effects this also resulted in reinstating the motto, philosophy and
commitment of the Taj Group which earned a lot of respect and
admiration on how it came out of the entire situation. IHCL could
gain more by highlighting the safety aspects in place at its various
locations thus gaining back the confidence of their customers.

Recommendations based on Industry analysis of IHCL

As mentioned in the industry analysis, Ass per Cushman & Wakefield
(C&W) reports, hospitality sector of India is expecting to witness better

infrastructure growth. Approximately 4,304 new hotel rooms are expected

to open in 2014, of which 36% for Mid-scale, 13% in the upscale segment,
17% is expected for Budget segment, 13% in Upper Upscale, and 20% in
the Luxury segment. So we can conclude that the industry is promising
and hotels can improve their profits as compared to previous years if they
strategically plan the future. Following are the major recommendation
based on the Industry analysis which we thought a hotel should look upon
to be promising and top in the industry.

In the long term, the demand-supply gap in India is very real and
that there is need for more hotels in most cities. The shortage is
especially true within the budget and the mid market segment.
There is an urgent need for budget and mid market hotels in the
country as travellers look for safe and affordable accommodation.
Indian hotels should try to focus on this segments to out go its
competitors and have huge market penetration.
Indian hotels should plan its expansion plan by carefully looking at
the demand and supply in industry and then calculating its market
share. Expansions plans are very important in order to gain a
competitive advantage in the industry as a whole. Tourist perception
about a hotel changes if it has wide reach and provides services
across cities.

Recommendations based on Competitor analysis of IHCL

As we see from ranking on the competitor analysis, IHCL ranks 20 th in the
hotel industry and is making losses of 82.02 crores. The competitors are
far away and are earning huge profits. The Company continues to face a
challenging environment not just in the domestic market, but also across
the key international markets wherein the Company owns / operates
hotels and / or markets that are a source of business. The Companys
hotels in the US have shown an improvement in their turnover and
margins despite the continued challenges faced by the US economy. The
Company is continuing on its focus to improve the profitability of its US
operations on priority and selectively has invested money to renovate and
upgrade its hotels in Sri Lanka and Maldives in recent years. Below are
some recommendation for the company to earn more revenues and thus
outgo its competitors.

The Company should look at various revenue enhancement and cost

containment measures to tide over the tough times and earn profits,
so that it can take advantage of the upswing in business.

Hotel should continue looking upon brand innovation. Brand

innovation helps in attracting and holding customers by quality,
price or a specific target age group for example. Buyers are
generally price sensitive, except in the premium market. Innovation,
such as gym, spas etc., is also vitally important in attracting

customers, as competing on price alone can be difficult. Larger

companies have implemented loyalty schemes, by offering a points
system which reduces buyer power.

Due to safety issues many hotels end up losing customers. Safety

has become a more prominent concern for tourists. Concerns about
womens safety remains of paramount importance. Safety and
security are vital to providing high quality tourism. Hence, to
promote tourism hotel should advertise themselves as secure and
safe place. This will gain confidence of the tourist and hence will
help getting more revenue.

The company should look at not only earning profits but should also
look at increasing market share in the industry. In order to improve
its market share the company can introduce series of services like
better membership plans, Improve hygiene standards, Improvement in
knowledge & skill set of employees etc. and advertise these services so
that more tourist are attracted towards the hotel.

Also the company should focus more on critical success success factors
like
o
o
o
o

Site and Location

Positioning
Flexibility
Equity brand

References:
http://www.tajhotels.com/corporate/resources/pdf/about_us/investor_relati
ons/financial_reports/annual_reports/TAJ-AR-2013-14-For-Web.pdf
https://en.wikipedia.org/