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A case study on

Indian Hotels Company


Attempting a broad competitive
niche
Without diluting brand

Presented To: -

Prepared By:-

Prof. K.S. Prasad

Ashish rathod

(11F49)

Keyur jain

(11F63)

Nilesh makwana

(11F69)

G.H. Patel Post Graduate Institute of Business


Management,
Sardar Patel University,
Vallabh Vidhyanagar

Introduction of Indian Hotels Company :The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectively
known as Taj Hotels Resorts and Palaces and is recognised as one of Asia's largest and finest
hotel company. Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the
company opened its first property, The Taj Mahal Palace Hotel, Bombay in 1903. The Taj, a
symbol of Indian hospitality, completed its centenary year in 2003.
Taj Hotels Resorts and Palaces comprises 93 hotels in 55 locations across India with
an additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan,
Sri Lanka, Africa and the Middle East.
Spanning the length and breadth of the country, gracing important industrial towns
and cities, beaches, hill stations, historical and pilgrim centres and wildlife destinations, each
Taj hotel offers the luxury of service, the apogee of Indian hospitality, vantage locations,
modern amenities and business facilities.
IHCL operate in the luxury, premium, mid-market and value segments of the market through
the following:

TAJ (luxury full-service hotels, resorts and palaces) is flagship brand for the
world's most discerning travelers seeking authentic experiences given that luxury is a way of
life to which they are accustomed. Spanning world-renowned landmarks, modern business
hotels, idyllic beach resorts, authentic Rajput palaces and rustic safari lodges, each Taj hotel
reinterprets the tradition of hospitality in a refreshingly modern way to create unique
experiences and lifelong memories.
Taj also encompasses a unique set of iconic properties rooted in history and tradition
that deliver truly unforgettable experiences. A collection of outstanding properties with strong
heritage as hotels or palaces which offer something more than great physical product and
exceptional service. This group is defined by the emotional and unique equity of its iconic
properties that are authentic, non- replicable with great potential to create memories and
stories.

TAJ EXOTICA is resort and spa brand found in the most exotic and relaxing locales of
the world. The properties are defined by the privacy and intimacy they provide. The hotels
are clearly differentiated by their product philosophy and service design. They are centered
on high end accommodation, intimacy and an environment that allows its guest unrivalled
comfort and privacy. They are defined by a sensibility of intimate design and by their varied
and eclectic culinary experiences, impeccable service and authentic Indian Spa sanctuaries.

TAJ SAFARIS are wildlife lodges that allow travelers to experience the unparalleled
beauty of the Indian jungle amidst luxurious surroundings. They offer India's first and only

wildlife luxury lodge circuit. Taj Safaris provide guests with the ultimate, interpretive, wild
life experience based on a proven sustainable ecotourism model.

VIVANTA BY TAJ HOTELS & RESORTS span options for the work-hard-playhard traveller across metropolitan cities, other commercially important centres as well as
some of the best-loved vacation spots. Stylish & sophisticated, Vivanta by Taj delivers
premium hotel experiences with imagination, energy & efficiency. It's the flavour of
contemporary luxury, laced with cool informality and the charming Taj hospitality. Created
for the cosmopolitan global traveller and bon vivant, Vivanta by Taj Hotels & Resorts create
experiences that will amuse, invigorate & inspire you. Vivanta revels in a spirit that presents
the normal with an unexpected twist. Experiences which make you pause & appreciate the
hidden beauty in life! It challenges your expectations of a hotel and unfolds multiple layers of
delight. Innovative cuisine concepts, the smart use of technology & the challenge to
constantly engage, energize and relax you all add up to make Vivanta by Taj the new
signature in hospitality.

THE GATEWAY HOTEL (upscale/mid-market full service hotels and resorts) is a


pan-India network of hotels and resorts that offers business and leisure travelers a hotel
designed, keeping the modern nomad in mind. At the Gateway Hotel, we believe in keeping
things simple. This is why, hotels are divided into 7 simple zones- Stay, Hangout, Meet,
Work, Workout, Unwind and Explore.
As travel often means more hassle than harmony, more stress than satisfaction,
modern travelers are looking for smarter choices. Driven by our passion for perfection, we
welcome our customers to a refreshingly enjoyable and hassle-free experience, anytime,
everywhere. Offering the highest consistency in quality, service and style we set new
standards and take the unwanted surprises out of traveling. Our warm welcomes make our
guests feel at home, away from home and our crisp and courteous service empowers them to
get more done with greater effectiveness and control. And through our unrivalled network we
provide service that is effortless, simple, never overwhelming, always warm.

GINGER (economy hotels) is IHCL's revolutionary concept in hospitality for the value
segment. Intelligently designed facilities, consistency and affordability are hallmarks of this
brand targeted at travelers who value simplicity and self-service.

Q-1:- Analyse the industry as a sector for survivability.


INDIA Travel and Tourism KEY FACTS AT A GLANCE
Contribution of travel and tourism to GDP expected to rise from AUD 120 bn in year
2010 to AUD 350 bn by year 2020
Average growth of 8.5% over the next 10 years in this sector
Export earnings from international visitors to grow to AUD 36 bn by 2010
Investment estimated to touch AUD 120 bn by year 2020.
India has a world ranking of 12th in terms of actual market size and is 4th in terms of
growth forecast.
Advantage India
The WTO (World Travel Organization) predicts that India will receive 25 million
tourists by year 2015.
Stable and consistent growth projected
India currently has over 200,000 hotel rooms spread across hotel categories and guesthouses and is still facing a shortfall of over 100,000 rooms
India to become a major hub for medical tourism, with revenues from the industry
estimated to grow to US$ 2.2 billion by 2012,
India will add almost 114,000 hotel guest rooms to its inventory over the next five
years.
Market Overview
High annual growth rates
The Indian hotel industry - Direct beneficiary of the growth in the economy and the
tourism industry
Companies moving up the value chain to management contracts and co-branding of
properties
Reforms in aviation sector have helped fuel growth
Liberalization in the regulatory framework in India
Increased visibility of India due to business and sporting events
Emerging Trends
Huge spurt in International Brands
The emerging market Budget & Business Hotels
Better infrastructure and air connectivity
More international brands and large domestic players entering the fray
Shift of focus away from the metros into Tier I and Tier II cities
Investments
Indian Hotels Company (Taj Group) plans to construct 50 budget hotels under the
Ginger brand in the next four years.
East India Hotels plans to develop 750 additional hotel rooms under the Trident brand
in the next 2.5 years.
Carlson plans to increase its presence in India to 78 hotels by 2012, from 28 in 2009.
Marriott plans to open 30 hotels in India in the next three years.

Hyatt Group has plans to open 15 new hotels in by 2015.


Key Initiatives
29 Mega Tourism projects across 22 Indian states
Focus on basic infrastructure
Conservation and eco sensitive plans
Focus on private sector
Looking beyond traditional tourism avenues into areas such as
- Rural tourism
- Eco tourism
- Medical tourism
- Adventure tourism
- Cruise and Heliport tourism
Opportunities
Investment in smaller cities
Hospitality chains looking upcountry
Emerging need for a suitable project mix
International hospitality chains are expected to acquire local players to increase their
presence in the country.
More room for strategic alliances and partnerships
All players are looking at faster turn around times
GREEN Technology is the in thing
Diversification into new segments
All hospitality chains local and international are now diversifying into new product
segments,
IHCL has already launched budget hotels in India, while Accor has announced similar
plans
Quality and Scalability
Higher impetus on scalability
High quality expectations and need for more innovation and eco-friendly solutions are
also driving hotel operators to look for options elsewhere

Q-2:- Analyse the competitive advantage the organization has with


respect to any of resources.
The Indian Hotels Company Ltd is a subsidiary of Tata Sons Ltd. It is mostly promoter driven
with promoters contributing the largest part of the shareholding. The detailed shareholding
pattern is as given below.

Share Holding Pattern of IHCL


Mr. Raymond Bickson is the Managing Director & CEO of the company. Mr Bickson brings
in international hotel experience and was voted as one of the Top 10 Best Hotel Managers by
Leaders Magazine from 1997-2002.

Generic Strategies
IHCL follows a broad based differentiation strategy. They have a differentiation
strategy targeting the premium segment. But they have also expanded their offerings
internationally to target a broader segment.

Operational Performance
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 of 67% is way better than the industry average of
60% but their competitor Leela Ventures is closing in by maintaining a better occupancy
rate. [2] Also, IHCL desperately needs to improve its operational efficiency. IHCLs Operating
Expenses Margin of 83% compared to Leelas 66% portrays this bad picture.

Financial Performance
As it can be seen from the table below, the consolidated Profit after Tax stood at
(68.87) crores at the end of 2011 registering a marginal increase of 49.53 crores. The increase
in revenue was mainly on account of additional room capacity being added, higher
occupancy, average room rates and revenue per available room (RevPar). Decrease in debt
proportion did also contribute towards the improvement of contribution margin. Room sales

showed a healthy growth over the previous year as a result of higher room rates and
occupancies. Food & Beverages grew by 19% over the previous year.

Comparative Financial Performance

Identification of Key Resources


The VRIN framework has been used to have a resource based view of the firm and identify
the key sources of IHCLs competitive advantage.
Resource based View
The analysis of various resources of IHCL has been done and the following five resources
have been found to be vital in determining the competitive advantage of IHCL over other
players in the market. These resources are being further analysed by applying the VRIN
framework.
Tangible Resources: Site & Location
Intangible Resources: Positioning, Brand Strength
Capabilities: Superior Guest Servicing, Managerial Vision & Judgement

Summary
The analysis of the resources and the conclusions on the competitive advantages offered by them are
summarized as under. The ability to provide competitive advantage for each sub-factor of VRIN has
been given a score on 5. Net score gives us an approximate idea of the net competitive advantage
offered by the resource

Summary of VRIN Analysis


Thus site and location and Brand strength are two most critical resources available with IHCL.

Q-3:- what are the different strategies adopted in the past five
years?
In India, IHL is recognized as the premier hospitality provider with a strong brand
image and ownership by the Tata Group, a highly respected group with varied business
interests in several countries. Its brand Taj has become a symbol of luxury and service in
India. The same image and experience of brand building have been leveraged in the
international markets, not only in hotels but also in providing an experience in food and
beverages. With wide range of restaurants at its hotels, food and beverages has become a
focus area for IHL and provides stability to revenues and profits. The globalization of IHLs
operations has been a success for several reasons by adopting various strategies as follows:

Strong sales and marketing:


The Companys international operations have been supported by a strong sales and
marketing network that also includes its international sales offices in various locations. IHL
has an efficient reservation network that includes a National Call Centre with toll free number
that provides unified access to information to potential guests and well as facility for making
reservations. The companys innovative website has been awarded the Best Travel Online
Campaign world-wide in the Web Marketing Associations 2005 Internet Advertising
Competition, the premier event for web developers and marketers each year. The website is
highly interactive and user-friendly, with an enhanced reservations section, a Taj Holidays
search tool and a versatile hotel finder.

Innovative product ideas:


The Company has sought to pursue innovative product ideas to derisk its business.
These include luxury serviced apartments that were first launched and tested in Mumbai and
then extended to its properties in Dubai and London and Jiva Spas that are now part of
several international Taj hotels.

Marketing alliances:
IHL has entered into strategic tie-ups with other players in the business for the
promotion of its properties. Currently IHL has marketing alliances with Raffles Hotels and
Resorts, Shilla Hotels and Resorts and CC Africa. Such alliances not only allow for cross
promotion of hotels with alliance partners, but also allow members of corresponding loyalty
programmers to avail of special amenities and privileges at participating hotels. In addition,
several partnerships have been entered into with international and domestic airlines for cross
promotions with key customers and package tours.

Maintaining high service standards:


IHL has launched a programme across its hotels called Taj Brand Standards that
identifies standard operating procedures to ensure consistency in guest experience. In order to
ensure that these standards are consistently implemented and sustained across the
organization, a robust third party audit system has also been initiated.

Creating a talent pool of people:


High caliber senior executives have been introduced in the company at high levels
from other countries, supplemented by one or two top Indian managers to enable mentoring
and cultural integration with the company. In addition to the expatriate managers, young

Indian managers are also made to work in international properties to gain overseas work
experience.

Future plans
IHL is well poised for growth and to leverage the advantage of the rapidly growing
tourism industry in India. Encouraged with its success of its Ginger hotels, IHL is in the
process of rolling out such hotels to several new locations Pune, Nashik, Mysore, Panjim,
Varanasi, Trivandrum, Jamshedpur and Durgapur. IHL has recently entered into a joint
venture with Conservation Corporation Africa and Cigen Corporation to provide tourists with
wildlife Experiences within India through an ecologically sustainable model. This venture
will offer a mix of game sightings, nature walks and meditative experiences with tented, tree
house or cottage accommodation on the borders of Indias world renowned tiger reserves.
The rollout of the venture is planned in a phased manner across key wildlife locations in the
Indian subcontinent. It is expected that 5 lodges will be in operation by 2018. To take its
globalization plans further IHL is also eyeing the hotel industry in China and South Africa by
setting up properties in these countries.

Globalization at a glance
Hotels in 15 locations across the globe, including US, Middle East and Asia Pacific Has
acquired properties in Australia and Zambia.
Nearly 16 per cent revenues are from international operations Route of management
contract adopted to enter most international markets