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PRESENTED BY :
Umesh patel Lahar pandey Kiran surage raghvendre shukla Jp rathore Swati dwivedi Sandeep pushpad Shakti pratap
What is Hospitality?
The reception and entertainment of guests, visitors, or strangers with liberality and good will.
Industry profile
It is one of the largest industries in both the global and national contexts. It involves cooperative organizations. relationships with multiple
INDIA being a cheap destination for leisure tourism ,unlimited tourism and untapped business prospects, we can expect green pastures of growth in the year ahead
Current scenario
India has potential to become the number one tourist destination in the world, with demand growing 10.1% per annum. The hospitality industry is poised to grow at a faster rate and reach Rs.1500 billion. The contribution in India to Gross Domestic Product is estimated to rise from 8.6% (USD 117.9 billion) in 2010 to 9.0% (USD 330.1 billion) by 2020.
Make sure the operation continues to provide service and make a profit
Permission for domestic airlines to commence international flights. Star-up of various low cost carriers. 100% FDI is permissible in this sector
Ambition
Hotel industry is expected to grow from USD 16.7 bn to USD 30.7 bn at 26% CAGR between 2008-13
Indian Hospitality market size (USD bn)
Total Hospitality
38.8
26.5
22.5
21.5
Currently Marriott has over 1,000 rooms spread across four properties in Mumbai and Goa.
Strong economic recovery coupled with governments numerous policies and incentives will drive the growth in hospitality sector
GROWTH DRIVERS OF HOSPITALITY INDUSTRY IN INDIA Regulatory Drivers
Incentives by Central and the State governments
Elimination of Customs Duty on
External Drivers
Strong economic growth
Internal drivers
Hosting major sporting events
materials,
GDP growth of 9% p.a. in 2010. Forecasted to grow at a rate of 8.7% p.a. till 2016 thereby enabling hospitality sector growth
Increasing FDI inflow
International sporting events like Formula One race in the National Capital Region (NCR) in 2011 are set to boost hospitality
Demand-supply imbalance
granted to 2-4star hotels established in specified districts having UNESCO-declared 'World Heritage Sites
Exemption of Luxury Tax and
FDI inflow increased due to allowance of 100% FDI and better infrastructure availability
Increasing tourist arrivals
Ministry of Tourism estimates a shortage of 0.15 mn hotel rooms in 2011, of which twothirds are in the budget category
Rising income and spending
Hospitality sector handled 5.58 mn international tourists arrivals(8.1% Y-o-Y growth) and 740.21 mn domestic tourists in 2010 (10.7% Y-o-Y growth)
India tourism campaigns
Rising disposable incomes, cheaper airfares, changing consumer lifestyle and ease of financial transactions leading
The Incredible India and Atithi Devo Bhavah campaigns have improved foreign tourist outlook for India
Hospitality industry is one of the most liberalized sectors in India with 100% FDI allowance through automatic route and single window clearance facilities
Foreign direct investment (FDI)
FDI has been permitted up to 100% under the
automatic route Total FDI inflow in hospitality sector between 2000 -10 amounted to USD 2.17 bn For foreign technology agreements, automatic approval is granted if: Up to 3% of the capital cost of the project is proposed to be paid for technical consultancy services Up to 3% of the net turnover is payable for franchising and marketing/publicity fees Up to 10% of gross operating profit is payable for management fees, including incentives fees
2010, government has given nod to single window clearance for hospitality industry The Ministry of Tourism approves hotels at project stage based on documentation. Project approval is given to a 1, 2, 3, 4, 5 Star Hotels and Heritage Basic Category The Hotels have to apply for classification under 5 Star Deluxe/ Heritage Classic/ Heritage Grand category if they fulfill the prescribed norms within 3 months of commencing operation Project approval will be valid for 5 years
A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel in specified areas, if such hotel / convention
centre is constructed and has started operations before 31st July, 2010
A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel located in the specified district having a World
Heritage Site and has started functioning before 31st March, 2013
The unorganized and largely fragmented hotel sector in India is undergoing a rapid change with entry of foreign players
Key hospitality players in India
NATIONAL PLAYERS
INTERNATIONAL PLAYERS
Hence, hotel room supply is expected to grow at 15% CAGR surpassing demand which is estimated to grow at 10.3% CAGR during 2010-13
CONT
Room demand distribution in top 10 cities (2013E)
CONT
Upcoming room supply (2010-2013)
Increasing demand in Tier 2 and Tier 3 cities along with rising land costs will contribute towards shaping Future hospitality trends the future of hospitality
Upcoming Areas Hospitality supply in Tier II and Tier III locations will increase based on the untapped potential of the domestic commercial and leisure demand The Indian hotel market will remain an expensive market to enter with the exponential growth in capital land values across the country Green Hotels will increase operational efficiencies and bottom lines, inspite of its marginally higher construction costs Hospitality Real Estate
Green Hotels
Loca -vore: Local cuisines concept that believes in maximizing benefits to cultural heritage will be adopted in F&B
Resource Optimization
Relocation of non-revenue generating departments from hotel premises to off hotel premises will maximize space efficiencies
Growing Importance of healthy and organic food will result in its introduction in the menus of all day dining and multi cuisine restaurants Personnel Retention Manpower retention programs will result in marked increase in salaries across the sector
Source: HVS Report Hotels in India- Trends and Opportunities 2010, Oct. 2010
19
Budget Segment
TWO STAR
Budget Segment
ONE STAR
Consumer segments
The business traveler. International and national sports& game players The leisure traveler.
The boom has attracted several global players, ranging from Starwood and Mariott to Four Seasons and ShangriLa.
Currently Marriott has over 1,000 rooms spread across four properties in Mumbai and Goa.
Most of the five-star hotels are seeing more than 80 % occupancy and some of the lesserknown five-star hotels are overbooked.
Incredible India
The Ministry of Tourism is pushing the great Indian story effectively with its subtle and charming Incredible India campaign We have spent $5 million on this campaign since December 2002 and plan to keep it going, Amitabh Kant, the joint secretary at Indias Ministry of Tourism. According to estimates, another 150,000 rooms will have to be added across the country in the next five to Severn years to be able to meet the increased demand.
At 6,762 rupees, Bangalore had the highest ARR across all categories in the 30 cities. New Delhi was the second highest, registering an ARR of 5,498 rupees. All India ARR increased 26.9 % over the previous year. Star category occupancies ranged from 46.3 % to 72.1 %.
Hospitality experts believe that the Indian hotel industry will witness higher than usual growth in the coming peak season. The lean season has been exceptionally good for us. Our room occupancy rate has been around 89 per cent and we are looking at over 95 per cent occupancy for the period September to December, says Kapil Chopra, general manager, Trident Hilton, Gurgaon. The non-luxury segment in particular has been perking up with more and more investors spotting the demand supply imbalance, surge in domestic travel and growth in spending among middle-class Indians.
The Competition
The world's leading hotel brands - joining the battle The country has been flooded by some of the world's leading hotel brands. Unitech, which is setting up two hotels in Delhi, has already formed a joint venture with Marriott International to run its three new hotels in India, which are expected to Start operations by 2008. All other majors including Marriott, Hyatt, Hilton, Accor, Four Seasons etc are briskly rein forcing their presence in India.
The movement is not one-way Cash rich Indian hotel companies have been acquiring properties overseas. The Tata group's Indian Hotels Comptant is in the process of acquiring Boston based luxury hotel the Ritz-Carlton for around $170 million dollars With growing competition, hotels are under tremendous pressure to generate new lines of revenue with creative approaches. Hotels are trying every possible way to generate cash from alternative sources to achieve economies of scale. Reducing transaction costs, increasing productivity and promoting traditional Indian values
SWOT Analysis
STRENGTHS
Faster GDP growth Industrialization. Natural heritage India as a global player
WEAKNESS
Lake of connectivity. Lake of publicity. Hectic rules Influence of politicians Marketing gap.
Cont.
OPPORTUNITIES
Health tourism. Strong in cultural and nature aspects. Commercialization of sports and games. FDI policy. Mismatch of supply and demand. THREATS Poor domest tourism infra structure Political conditions Terrorism Increase in pollution Entry of new competitors
Luxury
Importance
Impetus to other industries Third largest net earner of foreign exchange. Contributes to the national integration, preserves natural and cultural environments Create substantial job opportunities
Its rapidly growing Western-style fast food joints offer unlimited opportunities for foreign food and beverage exporters,
Thomas Cook, Cox & Kings India Limited, Star Luxury Cruises, Queen Mary II Cruise Liners etc
Forms of tourism
Cultural tourism & Round Trips Commonwealth Games 2010 Monsoon magic Rural & village tourism Medical tourism Luxury tourism Adventure tourism
IMPACT OF RECESSION
In 2009, the country is seen rising 6.5 percent, compared to the world output, which is seen falling 0.4 percent.
The tourism sector is expected to perform very well in future and the industry offers an interesting investment opportunity for long-term investors. The Indian tourism sector is seen generating $42.8 billion by 2017, a 42 percent surge from 2007, according to an industry research note by auditing and consulting firm Deloitte Despite the numerous problems, tourism industry was the second-largest foreign exchange earner for India.
CHALLENGES
successfully preserving these in their original form and making them accessible to domestic and international travellers. various categories of tourism products, such as
o o o o o o o o o Adventure tourism medical tourism Eco-tourism Rural tourism Cruise tourism Meetings Incentives Conferences And exhibitions (MICE) tourism etc.
Some major international events like 9/11, US-led war against terror and SARS hit the tourism industry over the past few years. Cutting down of routes by domestic airlines and increase in airfares last year also led to a fall in the movement of people in the country. The Mumbai terror attacks, targeting two premium hotels, also tarnished the country's reputation, drastically reducing hotel occupancy levels, and affecting year-end travel. Expenses per night of stay for a tourist in India during the SE Asian currency crisis was $100 whereas it was around $35-40 in the SE Asian countries. This hurt Indian tourism. High luxury and entertainment taxes and high landing charges applicable in Indian airports.
Thank you .
Any question???????
It is one of the largest industries in both the global and national contexts. It involves cooperative relationships with multiple organizations. INDIA being a cheap destination for leisure tourism ,unlimited tourism and untapped business prospects, we can expect green pastures of growth in the year ahead
The world travel and tourism council(WTTC) has predicted that India has potential to become the number one tourist destination in the world, with demand growing 10.1% per annum. The hospitality industry is poised to grow at a faster rate and reach Rs.1500 billion. The contribution of the entire travel and tourism sector including hospitality industry in India to Gross Domestic Product is estimated to rise from 8.6% (USD 117.9 billion) in 2010 to 9.0% (USD 330.1 billion) by 2020.
Many higher end hotels in India are realized that their key USP in international competition is not their high-tech facilities, but rather their outstanding staff-to-guest ratios and the longstanding tradition of Indian hospitality as immortalized by "Atithi Devo Bhava". Hospitality is about serving the guests and to provide them with a "feel-good-effect". Personalized comprehensive service, such as suites having their own personal butler, gives guests that extra feel of being valued by their hosts.
Make the guest feel welcomed Make sure things (products & services) work for the guest Make sure the operation continues to provide service and make a profit Lets explore each objective individually...
Brief Summary of Managements Role in the Hospitality Industry There were three main objectives of a hospitality manager:
Make the Guests Feel Welcome Make Sure Things Work for the Guests Make sure the operation continues to provide service and make a profit.
Simply stated, these objectives suggest that managers must be able to relate successfully to employees and guests, direct the work of their operation, and achieve operating goals within a budget - that is, to run a productive operation within certain constraints. (Chapter 1Page 6)
PRODUCT: High class accommodation, food and beverage and it is a luxury product PRICES: Prices are very high and varies as per the season PROMOTION: Very effective promotion to the targeted customers through national and international magazines.
PLACE: located in all metros and follows its own regional tradition and treats their guests accordingly PROCESS: Regular maintenance of the room, keeping the surroundings clean and hygienic
PHYSICAL EVIDENCE: Deep sleep is more than just the right bed. It is about an environment that soothes all the five senses. Experience our rooms and know how it feels to sleep like a baby again. PEOPLE: Highly professional workers ,internationally qualified chefs.
HOSPITALITY & TOURISM INDUSTRY development goes hand by hand. Tourism policy. Governments open skies policy. Foreign Trade policy. FDI in HOTEL & TOURISM INDUSTRY. Other government initiatives.
Liberalization in aviation sector. Pricing policy for aviation fuel which influences international air fare. Rationalization in tax rates in the hospitality sector. Tourist friendly visa regime. Immigration services. Procedural charges in making available land for construction of hotels. Allowing setting up a guest house.
Permission for domestic airlines to commence international flights. Star-up of various low cost carriers.
FDI
Hotel industry is expected to grow from USD 16.7 bn to USD 30.7 bn at 26% CAGR between 2008-13
Indian Hospitality market size (USD bn)
Restaurant sector Hotel sector Total Hospitality 26% CAGR 12% CAGR 38.8 21.5 6.8 14.7 2009 26.5 9.5 30.7 17 2010 2013
The Indian hospitality industry is one of the fastest
growing sectors of the Indian economy; except for a short phase the during recession and the terrorist attacks in 2008 and 2009 respectively
As of May 2011 contribution of the hospitality industry
8.1
Total Number of Hotels in India, 2010 Hotel Categories 5 Star deluxe/5 Star 4 Star 3 Star 2 Star 1 Star Heritage Uncategorized Total No. of Hotels 165 770 505 495 260 70 7078 8707 No. of Rooms 43965 13420 30100 22950 10900 4200 132885
generating industries which according to executive search and HR consulting firm Ma Foi Randstad generated 160,300 jobs in 2010 and is expected to generate 218,200 jobs in 2011
According to hospitality consulting firm HVS, there is a
shortage of quality branded hotel rooms in the major Indian cities as compared to other international cities and the shortage will be more pronounced as Indian 60
economy strives toward double-digit growth Source: Technopak Report Dissecting the Indian Hospitality Industry 2009, Ma Foi Randstad press release dated 31 March 2011, India Biz News Article dated June 13,2011, Livemint article dated May 2010
The boom has attracted several global players, ranging from Starwood and Mariott to Four Seasons and ShangriLa. The largest hotel company in the world,French chain Accor, has entered India and is now devising aggressive plans for expansion in the market. Several others are racing to increase their presence in India, including the Marriott group.
Currently Marriott has over 1,000 rooms spread across four properties in Mumbai and Goa.
Strong economic recovery coupled with governments numerous policies and incentives will drive the growth in hospitality sector
GROWTH DRIVERS OF HOSPITALITY INDUSTRY IN INDIA
Regulatory Drivers
Incentives by Central and the State governments
Elimination of Customs Duty on
External Drivers
Strong economic growth
Internal drivers
Hosting major sporting events
GDP growth of 9% p.a. in 2010. Forecasted to grow at a rate of 8.7% p.a. till 2016 thereby enabling hospitality sector growth
Increasing FDI inflow
International sporting events like Formula One race in the National Capital Region (NCR) in 2011 are set to boost hospitality
Demand-supply imbalance
sports,
guest
FDI inflow increased due to allowance of 100% FDI and better infrastructure availability
Increasing tourist arrivals
to 2-4star hotels established in specified districts having UNESCOdeclared 'World Heritage Sites
Exemption of Luxury Tax and Sales
Ministry of Tourism estimates a shortage of 0.15 mn hotel rooms in 2011, of which two-thirds are in the budget category
Rising income and spending
Hospitality sector handled 5.58 mn international tourists arrivals(8.1% Y-o-Y growth) and 740.21 mn domestic tourists in 2010 (10.7% Yo-Y growth)
India tourism campaigns
Rising disposable incomes, cheaper airfares, changing consumer lifestyle and ease of financial transactions leading
The Incredible India and Atithi Devo Bhavah campaigns have improved foreign tourist outlook for India
62
Source: Technopak Report Dissecting the Indian Hospitality Industry 2009, TCFI Report Hospitality in India, Oct. 2010
Hospitality industry is one of the most liberalized sectors in India with 100% FDI allowance through automatic route and single window clearance facilities
Foreign direct investment (FDI)
FDI has been permitted up to 100% under the
automatic route Total FDI inflow in hospitality sector between 2000 -10 amounted to USD 2.17 bn For foreign technology agreements, automatic approval is granted if: Up to 3% of the capital cost of the project is proposed to be paid for technical consultancy services Up to 3% of the net turnover is payable for franchising and marketing/publicity fees Up to 10% of gross operating profit is payable for management fees, including incentives fees
window clearance for hospitality industry The Ministry of Tourism approves hotels at project stage based on documentation. Project approval is given to a 1, 2, 3, 4, 5 Star Hotels and Heritage Basic Category The Hotels have to apply for classification under 5 Star Deluxe/ Heritage Classic/ Heritage Grand category if they fulfill the prescribed norms within 3 months of commencing operation Project approval will be valid for 5 years
A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel in specified areas, if such hotel / convention
centre is constructed and has started operations before 31st July, 2010 A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel located in the specified district having a World Heritage Site and has started functioning before 31st March, 2013 Finance Bill 2009, which has proposed to abolish Fringe Benefit Tax with effect from 1st April 2009 has become major advantage to the Hospitality industry
63
The unorganized and largely fragmented hotel sector in India is undergoing a rapid change with entry of foreign players
Key hospitality players in India
Players InterContinental Segment Presence
Brands InterContinental Crowne Plaza Holiday Inn Holiday Inn Express Hotel Indigo Staybridge Suites Candlewood Suites Radisson Hotels and Resorts Park Plaza Country Inns & Suites Park Inn
INTERNATIONAL PLAYERS
2015
Carlson
Indian Hotels
NATIONAL PLAYERS
ITC Hotel Luxury Collection Welcome Hotel Sheraton Fortune Welcome Heritage
few years
Plans to develop 750 additional hotel
Oberoi Trident
rooms under the Trident brand over the next 2.5 years
Expected to add 349 more rooms in
The Leela
2012
64
Source: TCFI Report Hospitality in India, Oct. 2010
Hence, hotel room supply is expected to grow at 15% CAGR surpassing demand which is estimated to grow at 10.3% CAGR during 2010-13
Indian Hospitality Market : No. of Keys * (2010-13)
Demand 53,412 32,660 Supply 66,487 35,503 75,967 81,296
38,789
43,828
4% 8%
2010
2011 F
Jaipur
2012 F
2013 F
7% 3% 6%
24%
13,075 1,087 2,363 9,480 684 3,231 9,625 5,714 2010 2011F 5,565 2012F
several measures that will increase investment into hospitality sector and accelerate the process of development
The huge influx of incremental rooms will result in the occupancy
543 1,835
5,330
743 1,280 3,307 2013F
levels of hotels for most of the cities falling considerably except Mumbai and Goa during 2010-13
Despite a similar quantum of room demand in Mumbai and the
NCR in 2013, the size of Mumbai market, at USD 930 mn, will be substantially greater than the NCR market size of USD 620 mn
65
Increasing demand in Tier 2 and Tier 3 cities along with rising land costs will contribute towards shaping the future of hospitality
Future hospitality trends
Hospitality supply in Tier II and Tier III locations will increase based on the untapped potential of the domestic commercial and leisure demand The Indian hotel market will remain an expensive market to enter with the exponential growth in capital land values across the country Green Hotels will increase operational efficiencies and bottom lines, inspite of its marginally higher construction costs Hospitality Real Estate
Upcoming Areas
Green Hotels
Loca -vore: Local cuisines concept that believes in maximizing benefits to cultural heritage will be adopted in F&B
Resource Optimization
Relocation of non-revenue generating departments from hotel premises to off hotel premises will maximize space efficiencies
Growing Importance of healthy and organic food will result in its introduction in the menus of all day dining and multi cuisine restaurants Personnel Retention Manpower retention programs will result increase in salaries across the sector in marked
Source: HVS Report Hotels in India- Trends and Opportunities 2010, Oct. 2010
66
Budget Segment
TWO STAR
Budget Segment
ONE STAR
The business traveler. International and national sports& game players The leisure traveler. Airline cabin crew.
The boom has attracted several global players, ranging from Starwood and Mariott to Four Seasons and ShangriLa. The largest hotel company in the world,French chain Accor, has entered India and is now devising aggressive plans for expansion in the market. Several others are racing to increase their presence in India, including the Marriott group.
Currently Marriott has over 1,000 rooms spread across four properties in Mumbai and Goa.
A booming market
The established hotel chains A number of global players are already well established in India. These include Hilton, Shangri-La, Radisson, Mariott, Meridien, Sheraton, Hyatt, Holiday Inn, InterContinental and Crowne Plaza.
Investments Now besides hotel companies, even the investment firms and private equity companies are beginning to get excited about India. Berggruen Holdings India, a subsidiary of New York-based investment company Berggruen Holdings,has announced that it is seed-funding a nonluxury hotel chain in India. Private equity firm Warburg Pincus has picked up around 27 % stake in Delhi-based mid-price hotel chain,Lemon Tree, for $ 60.2 million.
The tourism traffic has been growing between 20-28 % every wear for the last four years and this rate of growth Is expected to continue for the next few years.
The constant boom and the resultant demandsupply mismatch has led to sharp increases in the average room rates and thus pushing up revenues of industry players (hotels, tour operators, airlines, shipping lines, etc)
The tourism sector is expected to perform very well in futureand the industry offers an interesting investment opportunity for longterm investors. Most of the five-star hotels are seeing more than 80 % occupancy and some of the lesserknown five-star hotels are overbooked.
Incredible India
The Ministry of Tourism is pushing the great Indian story effectively with its subtle and charming Incredible India campaign We have spent $5 million on this campaign since December 2002 and plan to keep it going, Amitabh Kant, the joint secretary at Indias Ministry of Tourism. According to estimates, another 150,000 rooms will have to be added across the country in the next five to seven years to be able to meet the increased demand. At 6,762 rupees, Bangalore had the highest ARR across all categories in the 30 cities. New Delhi was the second highest, registering an ARR of 5,498 rupees. All India ARR increased 26.9 % over the previous year. Star category occupancies ranged from 46.3 % to 72.1 %.
HOTEL CHAINS
SMALL CHAINS
INDIAN HOTELS COMPANY LTD EIH LIMITED ITC HOTELS LTD ITDC LTD
The Competition
The world's leading hotel brands - joining the battle
The country has been flooded by some of the world's leading hotel brands. New brands such as Amanda, Satinwoods, Banana Tree, Hampton Inns, Scandium By Hilt and Mandarin Oriental are planning to enter the Indian hospitality industry in joint ventures with domestic hotel majors. Unitech, which is setting up two hotels in Delhi,has already formed a joint venture with Marriott International to run its three new hotels in India, which are expected to start operations by 2008. The three new hotels will be located in Kolkata, Gurgaon and Noida. We are investing around 700 crore rupees to set up these hotels, says Unitech managing director Sanjay Chandra. All other majors including Marriott, Hyatt, Hilton, Accor, Four Seasons etc are briskly reinforcing their presence in India.
STRENGTHS Faster GDP growth Industrialization. Natural heritage India as a global player
WEAKNESS lake of connectivity. Lake of publicity. Hectic rules Influence of politicians Marketing gap.
OPPORTUNITIES Health tourism. Strong in cultural and nature aspects. Commercialization of sports and games. FDI policy. Mismatch of supply and demand.
THREATS Poor domestic tourism infra structure Political conditions Terrorism Increase in pollution Entry of new competitors
Hospitality
Tourism Infrastructure
Industrialization
Education
Thankyou .
Any question???????