HOTEL INDUSTRY

The hospitality industry is probably the world’s fastest-growing, job-creating

profession,employing one in ten people worldwide. In the UK alone, the industry

employs over 1.8million people. It is estimated that the industry will require

30,000-35,000 trained people at management and supervisory level year on year

until 2010, if it is to fulfil its potential. There are currently too few students taking

college and university courses in hospitality to sustain this requirement. You can

imagine, therefore, that there is enormous scope for those who want to pursue a

career in the industry, plus a huge range of employment opportunities across the

varied subsectors. You might want to manage a hotel, run are staurant or become

the next Jamie Oliver, or maybe your interests lie in accountancy or information

technology. You may want to start your own business or be part of an international

one. Whatever your talents, the hospitality industry offers variety and opportunity.

COMPETITION FOR HOSPITALITY INDUSTRY

One of the greatest challenges plaguing the hospitality industry is the unavailability

of quality workforce in different skill levels. Some of the services required in the

tourism and hotel industries are highly personalized, and no amount of automation

can substitute for personal service providers. India is focusing more on white collar

jobs than blue collar jobs. The shortage of blue collar employees will pose various

threats to the industry.

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The Top Players( Leader) In Hospitality Sector Include The Following

 ITC Hotels

 Indian Hotels Company Ltd. (The Taj Hotels Resorts & Palaces)

 Oberoi Hotels (East India Hotels)

 Hotel Leela Venture

 Asian Hotels Ltd.

 Hotel Corporation of India

Some Of The Main Features Of The Indian Hotel Industry Include The Following:

The industry is more dependent on metropolitan cities as they account for 75% to

80%of the revenues, with Delhi and Mumbai being on top. T h e av er ag e r o o m

r at e (A RR ) a n d o c c u p a n c y r at e ( OC ) ar e t he tw o mo st c r i ti c a l factors

that determine profitability. ARR depends on location, brand image, star rating,

quality of facilities and services offered. The occupancy rate depends on other

seasonal factors. India is an ideal destination for tourists. Approximately 4.4 million

tourists visit India every year. Thus the growth prospects are very high. In the hotel

sector, a number of multinationals have strengthened their presence. Players like

Four Seasons are also likely to enter the Indian market in the near future. Moreover,

Indian hotel chains are also expanding internationally. A combination of all these

factors could result in a strong emergence of budget hotels, which could potentially

lower the cost of travel and related cost.

SCOPE IN RURAL AREAS

.• The New Tourism Policy released in May 2002 has outlined the following policy

initiatives for the tourism sector:• The new policy is built around the 7-S Mantra of

Swaagat (welcome), Soochanaa(information), Suvidhaa (facilitation), Surakshaa

(security), Sahyog (cooperation),Sanrachnaa (infrastructure) and Safaai (cleanliness).•

The new policy envisages making tourism a catalyst in employment generation,

wealth creation, development of remote and rural areas, environment preservation

and social integration. The policy also aims to spruce up economic growth and

promote India’s strengths as a tourism destination that is both safe and at the same

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time exciting.• The policy proposes the inclusion of tourism in the concurrent list of

the Constitution so as to enable both the central and state governments to

participate in the development of the sector.• No approval is required for foreign

equity of up to 51 per cent in tourism projects. Enhanced equity is considered on a

case-to-case basis. NRI investment is allowed up to100%.• Approvals for Technology

agreements in the hotel industry are available on an automatic basis, subject to the

fulfilment of certain specified parameters.• Concession rates on customs duty of 25%

for goods that are required for initial setting up, or for substantial expansion of

hotels.• 50% of profits derived by hotels, travel agents and tour operators in foreign

exchange are exempt from income tax. The remaining profits are also exempt if

reinvested in a tourism related project.• Approved hotels are entitled to import

essential goods relating to the hotel and tourism industry up to the value of 25% of

the foreign exchange earned by them in the preceding licensing year. This limit for

approved travel agents/tour operators is 10%.• Hotels located in locations other

than the four major metro cities are entitled to 30%deduction from profit, for a

ten-year period.• The expenditure tax has been waived in respect of hotels located in

the hills, rural areas, and places of pilgrimage or specified place of tourist

importance.

BENEFITS TO CUSTOMERS

Since the economy opened up in 1991, several foreign chains have entered the

Indian market, including Hyatt, Four Seasons, Hilton, Regent, Radisson and Holiday

Inn. The result is that the quality of service has improved. The overseas players have

brought inefficient systems and service standards from Europe and the US.

Competition has forced Indian hotel groups to improve their standards. The

customer has benefited in many ways. The influx of foreign players has led to major

price wars in the industry. In an attempt to woo customers, Indian hotels have

reduced their tariffs significantly. According to one hotelier, "India has become a

normal market -– like others in the Westor in Southeast Asia – with demand and

supply determining the price".

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Future tense

TRENDS IN HOSPITALITY SECTOR

Trends That Will Shape The Future Of Hospitality Sector Are:

1. Low Cost Carriers

2. Budget Hotels

3. Service Apartments

4. Technology5. Loyalty Travel

Low cost carriers:

Travelers in general are more price sensitive to airfare than they are to hotel room

rates. Often a low airfare will stimulate demand for travel even if hotel prices are

increasing. LCCs are a good option for business travelers, as they have advantages

like low costs, more options and connectivity.

2. Budget hotels:

More than 50 per cent of occupancy of a majority of hotels comes from the business

travel segment. The average room rate (ARR) realized from business travelers is

normally higher than from leisure travelers. Heightened demand and the healthy

occupancy rates have resulted in an increase in the number of budget hotels. Some

of the new players entering into this category of hotels include Hometel,Kamfotel,

Courtyard by Marriott, Country Inns & Suites, Ibis and Fairfield Inn.

3. Service apartments:

The concept of service apartments, though a recent phenomenon in India, is an

established global concept. Villas in Spain, flats in the UK and apartment complexes

in the US have all created a viable market for those who want more than just a

room in a hotel. Service apartments are the latest trend in accommodation, offering

the comfort and convenience of a home without the hassles of having to maintain or

look after it. Ideally suited for medium-to-long staying guests, service apartments

are a natural choice for corporate

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Technology:

Travel and technology have become inseparable. Technology is making its own

advances with high-tech video conferencing facilities, web cameras And virtual

reality mode of conferencing. On-line bookings, e-ticketing, Wi-Fi Internet

connectivity, easy access to information, etc. are just a few areas where technology

has completely changed the way we travel.

5. Loyalty travel:

Today, airline-credit card company tie-ups have brought a whole range of benefits

to the travelers. These include insurance cover, upgrades, free tickets, access to

executive lounges, and a host of other goodies.

SWOT ANALYSIS

STRENGTHS

1. Natural and cultural diversity:

India has a rich cultural heritage. The "unity in diversity" tag attracts most tourists.

The coastlines, sunny beaches, backwaters of Kerala, snow capped Himalayas and the

quiescent lakes are incredible.

2. Demand-supply gap:

Indian hotel industry is facing a mismatch between the demand and supply of rooms

leading to higher room rates and occupancy levels. With the privilege of hosting

Commonwealth Games 2010 there is more demand of rooms in five star hotels. This

has led to the rapid expansion of the sector.

3. Government support:

The government has realized the importance of tourism and has proposed a budget

of Rs. 540 crore for the development of the industry. The priority is being given to

the development of the infrastructure and of new tourist destinations and circuits.

The Department of Tourism (DOT) has already started the "Incredible India

“campaign for the promotion of tourism in India.

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4. Increase in the market share:

India's share in international tourism and hospitality market is expected to increase

over the long-term. New budget and star hotels are being established. Moreover,

foreign hospitality players are heading towards Indian markets.

WEAKNESSES

1.Poor support infrastructure:

Though the government is taking necessary steps, many more things need to be

done to improve the infrastructure. In 2003, the total expenditure made in this

regard was US $150 billion in China compared to US$ 21 billion in India.

2. Slow implementation:

The lack of adequate recognition for the tourism industry has been hampering its

growth prospects. Whatever steps are being taken by the government are

implemented at a slower pace

3. Susceptible to political events:

The internal security scenario and social unrest also hamper the foreign tourist

arrival rates.

OPPORTUNITIES

1. Rising income:

Owing to the rise in income levels, Indians have more spare money to spend, which

is expected to enhance leisure tourism.

2. Open sky benefits:

With the open sky policy, the travel and tourism industry has seen an increase in

business. Increased airline activity has stimulated demand and has helped improve

the infrastructure. It has benefited both international and domestic travels.

THREATS1. Fluctuations in international tourist arrivals:

The total dependency on foreign tourists can be risky, as there are wide fluctuations

in international tourism. Domestic tourism needs to be given equal importance and

measures should be taken to promote it.

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2. Increasing competition:

Several international majors like the Four Seasons, Shangri-La and Aman Resorts

are entering the Indian markets. Two other groups - the Carlson Group and the

Marriott chain - are also looking forward to join this race. This will increase the

competition for the existing Indian hotel majors

Marketing mix in the hotel industry:

A modern hotel is a major establishment, manned by trained personnel from hotel

schools an institution of commercial hospitality and a building or an institution

where the guest expect refined behavior, excellent services and personal attention In

order to market a hotel product the combination of different sub mixes is very

important. The combination of core and peripheral services, the creative

promotional decision, the pricing strategy that will enable the hotel to maintain the

commercial viability, the place and the people are the important decision making

areas in the formation of sound mix for hotel industry.

THE PRODUCT: The core service / product of the hotel industry which satisfies the

basic needs of the customer is the rooms. The role of the industry is to provide basic

accommodation facilities. Apart from this there are other tangible elements that are

added like roomservice, laundry etc the other services that can be added are

childcare, barber , babysitting, boutiques, currency exchange , in room telephone

service , express check in, express check out, florist, front desk – 24etc.

PRICING DECISION There can be competition based pricing or demand based

pricing. Off season discounts can be clubbed with higher rtes during season also.

Differential pricing can also beadopted based on the type of client the hotel caters

to. PROMOTION MIX Promotion schemes should carried on regularly promoting the

hotel, the advertising should be done through attractive pictures through travel

agents, through hoardings, pamphlets etc. advertisements can also be given on travel

guides which are published by the govt agencies.

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PLACE

The place in case of hotel industry must provide easy accessibility in terms of

proximity to railway stations, airports etc. it must be a safe and convenient location.

The closer the places to such important places, the greater are the chances of

business.

Hotel

This article is about lodging establishments. For shared-room lodging, see Hostel. For

hotels designed for motorists, see Motel. For other uses, see Hotel (disambiguation).

"Hotel room" redirects here. For the 1993 HBO television series, see Hotel Room.

The Burj Al Arab in Dubai

The historic Plaza Hotel in New York City, New York

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 The Hilton San Diego Bayfront, San Diego, United States

Lobby of the Burj al Arab in Dubai, United Emirates

A hotel is an establishment that provides lodging paid on a short-term basis. The

provision of basic accommodation, in times past, consisting only of a room with a

bed, a cupboard, a small table and a washstand has largely been replaced by rooms

with modern facilities, including en-suite bathrooms and air conditioning or climate

control. Additional common features found in hotel rooms are a telephone, an alarm

clock, a television, a safe, a mini-bar with snack foods and drinks, and facilities for

making tea and coffee. Luxury features include bathrobes and slippers, a pillow

menu, twin-sink vanities, and jacuzzi bathtubs. Larger hotels may provide additional

guest facilities such as a swimming pool, fitness center, business center, childcare,

conference facilities and social function services.

Etymology
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The word hotel is derived from the French hôtel (coming from hôte meaning host),

which referred to a French version of a townhouse or any other building seeing

frequent visitors, rather than a place offering accommodation. In contemporary

French usage, hôtel now has the same meaning as the English term, and hôtel

particulier is used for the old meaning. The French spelling, with the circumflex, was
also used in English, but is now rare. The circumflex replaces the 's' found in the

earlier hostel spelling, which over time took on a new, but closely related meaning.

Grammatically, hotels usually take the definite article – hence "The Astoria Hotel"

or simply "The Astoria."

Types

Hotel operations vary in size, function, and cost. Most hotels and major hospitality

companies that operate hotels have set widely accepted industry standards to

classify hotel types. General categories include the following;

Upscale luxury

An upscale full service hotel facility that offers luxury amenities, full service

accommodations, on-site full service restaurant(s), and the highest level of

personalized and professional service. Luxury hotels are normally classifed with at

least a Four Diamond or Five Diamond status or a Four or Five Star rating

depending on the country and local classification standards. Examples may include:

Waldorf Astoria, Four Seasons, Conrad, Fairmont, and Ritz Carlton.

Full service

See full article: Conference and resort hotels Full service hotels often contain upscale
full-service facilities with a large volume of full service accommodations, on-site full

service restaurant(s), and a variety of on-site amenities such as swimming pools, a

health club, children's activities, ballrooms, on-site conference facilities, and other

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amenities. Examples may include: InterContinental, Starwood – Westin, Hilton,

Marriott, and Hyatt hotels

Historic inns and boutique hotels

See full article: boutique hotel Smaller independent non-branded hotels that often
contain upscale facilities of varying size in unique or intimate settings with full

service accommodations. Some historic inns and boutique hotels may be classified as

luxury hotels.

Focused or select service

Small to medium-sized hotel establishments that offer a limited amount of on-site

amenities that only cater and market to a specific demographic of travelers, such as

the single business traveler. Most focused or select service hotels may still offer full

service accommodations but may lack leisure amenities such as an on-site restaurant

or a swimming pool. Examples include Holiday Inn, Courtyard by Marriott, and

Hilton Garden Inn.

Economy and limited service

Small to medium-sized hotel establishments that offer a very limited amount of on-

site amenities and often only offer basic accommodations with little to no services,

these facilities normally only cater and market to a specific demographic of

travelers, such as the budget-minded traveler seeking a "no frills" accommodation.

Limited service hotels often lack an on-site restaurant but in return may offer a

limited complimentary food and beverage amenity such as on-site continental

breakfast service. Examples include Hampton Inn, aloft, Holiday Inn Express,

Fairfield Inn, Four Points by Sheraton, and Days Inn.

Extended stay

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Small to medium-sized hotels that offer longer term full service accommodations

compared to a traditional hotel. Extended stay hotels may offer non-traditional

pricing methods such as a weekly rate that cater towards travelers in need of

short-term accommodations for an extended period of time. Similar to limited and

select service hotels, on-site amenities are normally limited and most extended stay

hotels lack on an on-site restaurant. Examples include Staybridge Suites, Homewood

Suites by Hilton, Residence Inn by Marriott, element, and Extended Stay Hotels.

Timeshare and destination clubs

See full articles: Timeshare and Destination clubs A form of property ownership also
referred to as a vacation ownership involving the purchase and ownership of an

individual unit of accommodation for seasonal usage during a specified period of

time. Timeshare resorts often offer amenities similar that of a Full service hotel with

on-site restaurant(s), swimming pools, recreation grounds, and other leisure-

oriented amenities. Destination clubs on the other hand may offer more exclusive

private accommodations such as private houses in a neighborhood-style setting.

Examples of timeshare brands include Hilton Grand Vacations, Marriott Vacation

Club International, Westgate Resorts, Starwood Vacation Ownership, and Disney

Vacation Club.

Motel

See full article: Motel A small-sized low-rise lodging establishment similar to that of
a limited service hotel but not referred to as a hotel, motels are often located

adjacent to a major road or Interstate highway with little to no amenities and often

consist of exterior-entrance rooms using outdoor walkways. Motels are often

considered the "lowest classification" type of a lodging accommodation and often

operate with minimal staffing levels.

Management

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Hotel management is a globally accepted professional career field and academic field

of study. Degree programs such as hospitality management studies, a business

degree, and/or certification programs formally prepare hotel managers for industry

practice.

Most hotel establishments consist of a General Manager who serves as the head

executive (often referred to as the "Hotel Manager"), department heads who oversee

various departments within a hotel, middle managers, administrative staff, and

line-level supervisors. The organizational chart and volume of job positions and

hierarchy varies by hotel size, function, and is often determined by hotel ownership

and managing companies.

Boutique hotels are typically hotels with a unique environment or intimate setting.

Some hotels have gained their renown through tradition, by hosting significant

events or persons, such as Schloss Cecilienhof in Potsdam, Germany, which derives

its fame from the Potsdam Conference of the World War II allies Winston Churchill,
[citation needed]
Harry Truman and Joseph Stalin in 1945. The Taj Mahal Palace & Tower

in Mumbai is one of India's most famous and historic hotels because of its association

with the Indian independence movement. Some establishments have given name to a

particular meal or beverage, as is the case with the Waldorf Astoria in New York

City, United States where the Waldorf Salad was first created or the Hotel Sacher in

Vienna, Austria, home of the Sachertorte. Others have achieved fame by association

with dishes or cocktails created on their premises, such as the Hotel de Paris where

the crêpe Suzette was invented or the Raffles Hotel in Singapore, where the
[1]
Singapore Sling cocktail was devised.

A number of hotels have entered the public consciousness through popular culture,

such as the Ritz Hotel in London, through its association with Irving Berlin's song,

'Puttin' on the Ritz'. The Algonquin Hotel in New York City is famed as the meeting

place of the literary group, the Algonquin Round Table, and Hotel Chelsea, also in

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New York City, has been the subject of a number of songs and the scene of the

stabbing of Nancy Spungen (allegedly by her boyfriend Sid Vicious).

Resort hotels

Some hotels are built specifically as a destinations in itself to create a captive trade,

example at casinos and holiday resorts. Though of course hotels have always been

built in popular destinations, the defining characteristic of a resort hotel is that it

exists purely to serve another attraction, the two having the same owners.

On the Las Vegas Strip there is a tradition of one-upmanship with luxurious and

extravagant hotels in a concentrated area. This trend now has extended to other

resorts worldwide, but the concentration in Las Vegas is still the world's highest:

nineteen of the world's twenty-five largest hotels by room count are on the Strip,
[2]
with a total of over 67,000 rooms.

In Europe Center Parcs might be considered a chain of resort hotels, since the sites

are largely man-made (though set in natural surroundings such as country parks)

with captive trade, whereas holiday camps such as Butlins and Pontin's are probably

not considered as resort hotels, since they are set at traditional holiday destinations

which existed before the camps.

Other speciality hotels

RMS Queen Mary, Long Beach, California, United States

 The Burj al-Arab hotel in Dubai, United Arab Emirates, built on an artificial

island, is structured in the shape of a boat's sail.

 The Library Hotel in New York City, is unique in that each of its ten floors is

assigned one category from the Dewey Decimal System.

 The Jailhotel Löwengraben in Lucerne, Switzerland is a converted prison now

used as a hotel.

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  The Luxor, a hotel and casino on the Las Vegas Strip in Paradise, Nevada,

United States is unusual due to its pyramidal structure.

 The Liberty Hotel in Boston, used to be the Charles Street Jail.

 Built in Scotland and completed in 1936, The former ocean liner RMS Queen

Mary in Long Beach, California, United States uses its first-class staterooms as
a hotel, after retiring in 1967 from Transatlantic service.

 Throughout the world there are several hotels built from converted airliners.

Bunker hotels

The Null Stern Hotel in Teufen, Appenzellerland, Switzerland and the Concrete

Mushrooms in Albania are former nuclear bunkers transformed into hotels.

Cave hotels

The Cuevas Pedro Antonio de Alarcón (named after the author) in Guadix, Spain, as

well as several hotels in Cappadocia, Turkey, are notable for being built into natural

cave formations, some with rooms underground. The Desert Cave Hotel in Coober

Pedy, South Australia is built into the remains of an opal mine.

Cliff hotels

Located on the coast but high above sea level, these hotels offer unobstructed

panoramic views and a great sense of privacy without the feeling of total isolation.

Some examples from around the globe are the Riosol Hotel in Gran Canaria, Caruso

Belvedere Hotel in Amalfi Coast (Italy), Aman Resorts Amankila in Bali, Birkenhead

House in Hermanus (South Africa), The Caves in Jamaica and Caesar Augustus in
.
Capri

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Ice, snow and igloo hotels

Igloo Village in Kakslauttanen,the Ice Hotel in Jukkasjärvi, Sweden, and the Hotel de

Glace in Duschenay, Canada, melt every spring and are rebuilt each winter; the

Mammut Snow Hotel in Finland is located within the walls of the Kemi snow castle;

and the Lainio Snow Hotel is part of a snow village near Ylläs, Finland.

Garden hotels Garden hotels, famous for their gardens before they became hotels,

include Gravetye Manor, the home of garden designer William Robinson, and

Cliveden, designed by Charles Barry with a rose garden by Geoffrey Jellicoe.

Railway hotels

Frequently, expanding railway companies built grand hotels at their termini, such as

the Midland Hotel, Manchester next to the former Manchester Central Station, and

in London the ones above St Pancras railway station and Charing Cross railway

station. London also has the Chiltern Court Hotel above Baker Street tube station;

there are also Canada's grand railway hotels. They are or were mostly, but not

exclusively, used by those traveling by rail.

Straw bale hotels

The Maya Guesthouse in Nax Mont-Noble in the Swiss Alps, is the first hotel in

Europe built entirely with straw bales. Due to the insulation values of the walls it

needs no conventional heating or air conditioning system, although the Maya

[5]
Guesthouse is built at an altitude of 1,300 meters in the Alps.

Transit hotels Transit hotels are short stay hotels typically used at international

airports where passengers can stay while waiting to change airplanes. The airports

are typically between the checkpoints and do not require a visa for a stay.

Treehouse hotels Some hotels are built with living trees as structural elements, for

example the Treehotel near Piteå, Sweden, the Costa Rica Tree House in the

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Gandoca-Manzanillo Wildlife Refuge, Costa Rica; the Treetops Hotel in Aberdare

National Park, Kenya; the Ariau Towers near Manaus, Brazil, on the Rio Negro in

the Amazon; and Bayram's Tree Houses in Olympos, Turkey.

Underwater hotels

Some hotels have accommodation underwater, such as Utter Inn in Lake Mälaren,

Sweden. Hydropolis, project cancelled 2004 in Dubai, would have had suites on the

bottom of the Persian Gulf, and Jules' Undersea Lodge in Key Largo, Florida requires

scuba diving to access its rooms.

Largest

In 2006, Guinness World Records listed the First World Hotel in Genting Highlands,
[6]
Malaysia, as the world's largest hotel with a total of 6,118 rooms. The Izmailovo

Hotel in Moscow has the most rooms, with 7,500, followed by the Venetian Palazzo

Complex in Las Vegas (7,117 rooms) and MGM Grand Las Vegas (6,852 rooms).

Oldest

According to the Guinness Book of World Records, the oldest hotel in operation is

the Nisiyama Onsen Keiunkan in Yamanashi, Japan. The hotel, first opened in 707

A.D. has been operated by the same family for forty-six generations. The title was

held until 2011 by the Hoshi Ryokan, in the Awazu Onsen area of Komatsu, Japan,

which opened in the year 718, as the history of the Nisiyama Onsen Keiunkan was

virtually unknown.

Highest The Ritz-Carlton Hong Kong claims to be the world's highest hotel. It is

located in the top floors of the International Commerce Centre in Hong Kong, at

484-metre (1,588 ft) above ground level.

Living in hotels A number of public figures have notably chosen to take up semi-

permanent or permanent residence in hotels.

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 Fashion designer Coco Chanel lived in the Hotel Ritz Paris on and off for more

than 30 years.

 Inventor Nikola Tesla lived the last ten years of his life at the New Yorker

Hotel until he died in his room in 1943.

 Larry Fine (of the Three Stooges) and his family lived in hotels, due to his

extravagant spending habits and his wife's dislike for housekeeping. They first

lived in the President Hotel in Atlantic City, New Jersey, where his daughter

Phyllis was raised, then the Knickerbocker Hotel in Hollywood. Not until the

late 1940s did Larry buy a home in the Los Feliz area of Los Angeles.

 General Douglas McArthur lived his last 14 years in the penthouse of the

Waldorf Towers, a part of the Waldorf-Astoria Hotel. The composer Cole

Porter also spent the last 25 years of his life in an apartment at the Waldorf

Towers.

 Millionaire Howard Hughes lived in hotels during the last ten years of his life

(1966–76), primarily in Las Vegas, as well as Acapulco, Beverly Hills, Boston,

Freeport, London, Managua, Nassau, Vancouver, and others.

 Vladimir Nabokov and his wife Vera lived in the Montreux Palace Hotel in

Montreux, Switzerland (1961-his death in 1977).

 Actor Richard Harris lived at the Savoy Hotel while in London. Hotel archivist

Susan Scott recounts an anecdote that, when he was being taken out of the

building on a stretcher shortly before his death in 2002, he raised his hand

and told the diners "it was the food.

Hotel Industry in India

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Over the last decade and half the mad rush to India for business opportunities has

intensified and elevated room rates and occupancy levels in India. Even budget hotels

are charging USD 250 per day. The successful growth story of 'Hotel Industry in

India' seconds only to China in Asia Pacific.

Over the last decade and half the mad rush to India for business opportunities has

intensified and elevated room rates and occupancy levels in India. Even budget hotels

are charging USD 250 per day. The successful growth story of 'Hotel Industry in

India' seconds only to China in Asia Pacific.

'Hotels in India' have supply of 110,000 rooms. According to the tourism

ministry, 4.4 million tourists visited India last year and at current trend, demand

will soar to 10 million in 2010 - to accommodate 350 million domestic travelers.

'Hotels in India' has a shortage of 150,000 rooms fueling hotel room rates across

India. With tremendous pull of opportunity, India is a destination for hotel chains

looking for growth. The World Travel and Tourism Council, India, data says, India

ranks 18th in business travel and will be among the top 5 in this decade. Sources

estimate, demand is going to exceed supply by at least 100% over the next 2 years.

Five-star hotels in metro cities allot same room, more than once a day to different

guests, receiving almost 24-hour rates from both guests against 6-8 hours usage.

With demand-supply disparity, 'Hotel India' room rates are most likely to rise 25%

annually and occupancy to rise by 80%, over the next two years. 'Hotel Industry in

India' is eroding its competitiveness as a cost effective destination. However, the

rating on the 'Indian Hotels' is bullish. 'India Hotel Industry' is adding about 60,000

quality rooms, currently in different stages of planning and development and should

be ready by 2012. MNC Hotel Industry giants are flocking India and forging Joint

Ventures to earn their share of pie in the race. Government has approved 300 hotel

projects, nearly half of which are in the luxury range. Sources said, the manpower

requirements of the hotel industry will increase from 7 million in 2002 to 15

million by 2010. With the USD 23 billion software services sector pushing the Indian

economy skywards, more and more IT professionals are flocking to Indian metro

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cities. 'Hotel Industry in India' is set to grow at 15% a year. This figure will skyrocket

in 2010, when Delhi hosts the Commonwealth Games. Already, more than 50

international budget hotel chains are moving into India to stake their turf.

Therefore, with opportunities galore the future 'Scenario of Indian Hotel Industry'

looks rosy.

Hotels Sector Analysis Report

 India occupies the sixty-eighth position among the top tourist destinations in the

world for 2011. To encourage the tourism sector, the government in recent times,

has taken some measures which will benefit the sector. The Centre and States are

also working out a PPP (Public-Private-Partnership) model to increase hotel

capacity.

 Government of India increased spend on advertising campaigns (including for the

campaigns 'Incredible India' and 'Athithi Devo Bhava' - Visitors are like God) to

reinforce the rich variety of tourism in India. The ministry promoted India as a

sate tourist destination and undertook various measures, such as stepping up

vigilance in key cities and at historically important tourist sites.

 According to the latest Tourism Satellite Accounting (TSA) research, released by

the World Travel and Tourism Council (WTTC), the demand for travel and tourism

in India is expected to grow by 8.2 % between 2010 and 2019. This will place

India at the third position in the world. India's travel and tourism sector is

expected to be the second largest employer in the world. Capital investment in

India's travel and tourism sector is expected to grow at 8.8 % between 2010 and

2019. The report forecasts India to get more capital investment in the travel and

tourism sector and is projected to become the fifth fastest growing business travel

destination from 2010 through 2020.

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 India's rapid economic growth has already set the stage for fundamental changes in

the country's population. With more disposable income, the demand for travel and

tourism has also grown. Although, currently domestic tourists constitute a very

small chuck of the total tourist pie, the segment is growing.

Key Points

Supply We have a shortage of 100,000 guest rooms short in the

country. This is expected to keep ARRs high for the next few

years.

Demand Largely depends on business travelers but tourist traffic is also

on the rise. Demand normally spurts in the peak season

between November and March.

Barriers to entry High capital costs, poor infrastructure facilities and scarcity of

land especially in the metros.

Bargaining power Limited due to higher competition, especially in the metros.

of suppliers

Bargaining power Higher in metro cities due to increasing room supply.

of customers

Competition Intense in metro cities, slowly picking up in secondary cities.

Competition has picked up due to the entry of foreign hotel

chains.

 The performance of the hotel industry is directly connected with global and local

economic growth and investor confidence. A strong underlying economy is a pre-

requisite for sustained recovery. Unfortunately, the year 2011 has not been a year

of economic recovery either in India or globally. After two exceptionally bad years,
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 the global hospitality industry was expected to recover in 2011. Despite

encouraging signs in the first half of 2011, there was growing uncertainty during

the latter part of the year. As a result, recovery has been fragile during 2011. The

situation in India mirrors this overall global trend.

 As per statistics by the Indian Ministry of Tourism, the foreign tourist arrivals in

India for 2011, has been 6.29 million which is an 8.9% increase over 5.8 million

tourists of 2010, the growth being higher than the global scenario but less than

the overall Asia-Pacific region. Foreign Exchange Earnings from tourism increased

to Rs 775 bn in 2011, from Rs 648 bn in 2010, with a growth rate in earnings

of 19.6% over 2010. Extension of Visa on Arrival scheme to six more countries

(Cambodia, Indonesia, Vietnam, Philippines, Laos and Myanmar) has led to growth

in foreign tourist arrivals.

 In terms of hospitality industry performance in India, the overall rates, occupancies

and RevPAR have been stagnant owing to the impact of increased supply in the

market and the general recessionary environment.

 Supply overhang in certain cities, increase in food and fuel costs and rising interest

rates eroded the margins for the Indian hotel industry. The balance sheets of hotel

companies remained under stress on account of acquisitions of land banks at

unrealistically high prices in the past and the resultant rise in debt levels.

Prospects
 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. Various domestic and international brands have made significant

inroads into this space and more are expected to follow as the potential for this

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 segment of hotels becomes more obvious.

 The United Nations World Tourism Organisation (UNWTO) expects growth to

continue for the tourism sector in 2012, although at a slower rate. It forecasts

international tourist arrivals to grow in the range of 3% to 4% in 2012. WTTC

indicates that this growth will be moderate as the bounce-back for tourism

destinations that faced specific challenges last year, will be offset by a weaker

performance in other countries. Travel & tourism in China, India, Japan (bounce-

back), Latin America and Africa is expected to perform well in 2012. UNWTO

predicts that India will receive 25 million foreign tourists by the year 2015.

 Despite the economic and political scenarios worldwide, demand for business travel

has remained relatively robust. Companies are likely to increase spends and the

multiplier effect of healthy salary increases will drive discretionary spending,

especially on leisure travel. The affluent segments plan to spend more on travel in

2012, creating opportunities for the hospitality sector in the luxury space.

 India's room supply pipeline represents 17% of the Asia-Pacific pipeline. It was

moving at a CAGR of 10.8% for last 10 years and is now poised to grow at a

CAGR of 6% in next 5 years. The intense supply pipeline would be backed by

addition of room capacity by all the hotels both in India and Internationally. The

supply pipeline would beef up also on account of improved foreign tourist arrivals,

corporate travels, etc. International hotels like Carlson, Strawood, Marriot, etc are

the ones which have chalked out plans to acquire the sufficient market share, thus,

giving a thrust to the Indian supply pipeline.

INDIAN HOTEL INDUSTRY – CURRENT AND EMERGING TRENDS

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The constant transformation has made the Indian hotel industry more functional

and practical and has gained a level of acceptance world over. The standards of

facilities and services offered have evolved over the last decade towards the extensive

use of technology, environment friendly services, pricing, market segmentation,

regional preferences, etc. The Indian hotel industry has seen a significant growth in

room inventory across categories from upscale luxury to limited services and,

boutique and budget hotels. The occupancy and the room rates have seen continued

gains both from the domestic and the international traveller in both the business

and leisure segment. With the continued growth in India's GDP, improvement in the

per capita income, and increased inspirational spending, the Indian hospitality sector

is expected to grow faster than most countries around the world. According to the

Consolidated FDI Policy, released by DIPP, ministry of Commerce and Industry,

government of India, the government has allowed 100 per cent foreign investment

under the automatic route in the hotel and tourism related industry. The inherent

strength of the Indian economy has led to increased international visits to India. For

foreigners, the travel time has increased to three-five days for business travel and

from five days to seven-10 days for leisure travel.

The government of India has announced a scheme of granting tourist visa on arrival

(T-VoA) for the citizens of Finland, Japan, Luxembourg, New Zealand and

Singapore. The government has stepped up various reforms to accelerate the

industry growth with liberalisation in the regulatory framework, investment friendly

schemes, extensive support for creating a world class infrastructure, initiating better

air and land connectivity, incentivising regional set-up in tier III and IV cities,

exploring the untapped geographical resources. Currently 29 mega tourism projects

are being initiated across 22 states. The government is focusing on the PPP and is

looking beyond the traditional tourism avenues and on to new initiatives – medical

tourism, sports and adventure tourism, religious circuit, wildlife safaris, rural

tourism, eco tourism, cruise tourism and wellness tourism. But, still more concrete

measures such as uniformity of state and municipal taxes, single window clearances,

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improvising lower bureaucracy in effective planning and execution, and safe and

secure environment will be critical to the industry’s growth. According to World

Travel & Tourism Council, by 2020, travel and tourism investment is estimated to

should reach US$ 109.3 billion or 7.7 per cent of total investment. The future of the

Indian markets and their ability to mature into destinations relies on concerted

efforts, both by the relevant government bodies and the private sector players.

Federation of Hotel and Restaurant Associations of India states

that India currently has over 200,000 hotel rooms spread

across hotel categories and guest-houses and is still facing a

shortfall of over 100,000 rooms. Leading hotel brands have

pepped up their investments and are in various stages of commencement of new

proprieties in India, both in metro and non- metro cities. Cities such as Hyderabad,

Pune, Jaipur and Chandigarh have emerged as growth markets. The emergence of

these secondary and tertiary cities has led to an aggressive increase in hotel

development activity, which was previously dependent in just five main cities.

Another trend that has now emerged in the various major markets is the growth of

micro-markets, especially in the larger cities like Delhi, Mumbai, Chennai, etc, where

travel time has increased. For example, Taj Group, while it was feasible to build two

luxury hotels in Delhi, the presence of independent micro-markets has lead them to

open business hotels in other parts of National Capital Region. Vivanta by Taj at

Dwarka, Delhi and Gurgaon are the underconstruction Taj projects.

The Indian hotel industry is seeing huge spurt of foreign investment and

international brands entering the foray. Most major international hotel brands such

as Starwood, Hilton, Marriott, Hyatt and Accor already have a growing presence in

India and they have an even stronger pipeline. Marriott International operates 11

properties across the country and plans to expand its network to 100 hotels over

the next five-years. ITC Hotels also have projected its plan to open 25 new hotels

under the Fortune brand over the course of next 12-18 months. The emergence of

branded budget and economy segment hotels present tremendous opportunities.

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Keys Hotels, a brand of Berggruen Hotels, is setting up a leading chain of mid

market hotels, resorts and service apartments across India and plans to open and

manage 40 hotels over the next five years. So does, Ginger Hotel also plans to open

60 to 70 budget hotels in 23 locations across the country.

This relationship between technology and hospitality will only grow stronger in the

years ahead. Technology is used almost in every department and function to increase

efficiency and standardise operations. Today, handheld devices having a display

screen with touch input and a miniature keyboard is used for KOT (kitchen order

ticket) generation in restaurants. The hotels are becoming increasingly conscious for

the security of its guest. Keys Hotels launched women only floors in India with video

phones in each room to ensure that the women travellers feel secured and enjoy the

hospitality and amenities without any apprehension. Many international chains have

added various amenities such as special hair dryers and toiletries and operate

women-only lounges on the dedicated floor. The usage of electronic key card by the

residential guest has not only enhanced the security measure but has also become a

facilitator in access to guest floors, elevators and recreational facilities.

The easy kiosks for check-in, 24x7 vending machine for snacks, beverages and

other facilities have left the transient traveller more contented and happy. Besides,

direct hotel reservations, the central reservation systems (CRS) and global

distribution systems (GDS) serve as the primary channels of sales for hotel room

nights. The hotels maintaining huge facility have now shifted their focus from

revenue management to yield management by maximising occupancy and protecting

rates variations to optimize the RevPAR.

The growth of the internet has played a key role in truly

globalising the sales efforts as well as the marketing

opportunities for the hotel industry. The advent of third

party travel websites such as Hotels.com, Expedia.com and

Travelocity.com as well as a few home grown websites like

MakeMyTrip and Yatra.com has also been witnessed in recent years. Additionally,

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independent hospitality review and opinion websites like Tripadvisor.com are also

very popular with the travelling population of today. The pressure on consistent

delivery of brand promises is further maintained by online customer feedback which

impacts the attraction quotient of the product for other prospective customers.

Another trend that is emerging is the MICE segment that has immense potential

and provides tremendous growth opportunity in India for the sale of several

hundred room nights as opposed to few by the transient travellers. India's growing

strength in the information technology, bio-technology, pharmaceutical and

manufacturing sectors has prompted a few prominent international bodies to host

trade shows and conventions in the country and similar prominence is also expected

in the coming years. The Hyderabad International Convention Centre (HICC) by

Accor is India's only branded large scale convention facility.

Similarly F&B offerings in India have evolved and are fast making a mark for

themselves. Of late, standalone restaurants like Indigo, Olive, Hakkasan, Trishna,

Zest, Smoke House Grill, to name a few have raised the bar for the F&B offerings

across major metros. Quick Service Restaurant (QSR) brands like Domino’s, Pizza

Hut, KFC, McDonald’s have huge expansion plans in the next five years.

The key challenges that the industry faces today are infrastructure, regulatory,

availability of product bouquet, rising inflation, intercultural differences and the

biggest amongst them the shortage of skilled manpower. With the addition of new

hospitality products and attrition to other service industries such as retail, banking,

insurance, travel, the demand gap is only widening. The challenge further aggravates

with the industry looking for trained manpower as opposed to the untrained

manpower. The demand is so high that each student passing out of a quality hotel

management institute is offered a job by five-six hotel companies besides other

service sectors looking for the similar trained manpower.

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 BIBLIOGRAPHY

http://www.tourismofindia.com

http://business.mapsofindia.com/india-industry/hotel-in

http://www.equitymaster.com/research-it/sector-

info/hotels/Hotels-Sector-Analysis-Report.asp

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