Transcript
Indian Hotel Industry
Presented by
Ayyappan.R(07MBA020)
J.Karunanithi(07MBA053)
Mahendran.S(07MBA059)
Nithya.S(07MBA069)
• 'Hotels in India' have supply of 110,000 rooms of
which 5 Star category accounts for approx. 30%. • India’s luxury rooms availability lower than even
smaller East Asian countries
HongKong Bangkok Singapore Malaysia India0
10000
20000
30000
40000
50000
60000
70000
80000
33536
5890932348
76373
21000
Source: Compendium of Tourism statistics, WTO
• 5 million tourists visited India last year• India needs an additional 50,000 rooms in the
next 2 or 3 years to service projected tourist arrivals
• Manpower requirements of the hotel industry will increase from 7 million in 2002 to 15 million by 2010
Main Characteristics Location No:of rooms Affiliation/Ownership Market Segment Mix Service Positioning Occupancy rate Rooms sold Average room rate Conference facilities/F & B outlets Physical facilities & services
Users of Hotel Services
Domestic ForeignPilgrims Political Representatives
Students Trade Representatives
Officials Cultural Representatives
Film Stars Educationists
Intellects Sportsmen
Business Executives Business Executives
Tourists Tourists
Economic impact of the Travel & Tourism Sector
% Share of World Travel & Tourism
Demand
Travel & Tourism Economy as %
of Total GDP
Travel & TourismEconomy Jobs as
% of TotalEmployment
WORLD 10.1 9.9 8.4South Asia 6.5 6.1 5.9India 6.5 6.1 6.4
Market Segmentation in Indian Hotel Industry
0
5
10
15
20
25
30
35
40
1.1
39.5
8.1
1.9
19
94.8
1.65.8 6.3
3
Key Operating Characteristics
Average Occupancy(%)
City 2003-04 2004-05 2005-06
All India 59.7 63.6 64.1
Mumbai 66.3 74.9 75.8
Delhi 69.1 76.6 74.8
Chennai 61.6 73.3 78.0
Nagpur 51.3 46.1 71.0
Visakha-patnam
70.1 80.6 77.2
Average Rate(Rs)
2003-04 2004-05 2005-06
2,689 3,413 3,227
3,063 4,307 4,615
4,247 5,498 6,699
2,061 2,384 3,080
985 931 1307
1,293 1,531 1,686
Fluctuations in Demand: From Excess Demand to Excess Capacity
Four conditions potentially faced by fixed-capacity services:
Excess demandToo much demand relative to capacity at a given time
Demand exceeds optimum capacityUpper limit to a firm’s ability to meet demand at a given time
Optimum capacityPoint beyond which service quality declines as more customers are serviced
Excess capacity Too much capacity relative to demand at a given time
Variations in Demand Relative to Capacity
VOLUME DEMANDED
TIME CYCLE 1 TIME CYCLE 2
Maximum Available Capacity
Optimum Capacity (Demand and Supply Well Balanced)
Low Utilization (May Send Bad Signals)
Demand exceeds capacity (business is lost)
Demand exceeds optimum capacity (quality declines)
Excess capacity (wasted resources)
CAPACITY UTILIZED
Capacity Constrained: Defining Productive Capacity in Services
Physical facilities to contain customers
Physical facilities to store or process goods
Physical equipment to process people, possessions, or information
Labor used for physical or mental work
Public/private infrastructure
Alternative Capacity Management Strategies
Level capacity (fixed level at all times)Stretch and shrink
Offer inferior extra capacity at peaks Vary seated space per customer Extend/cut hours of service
Chase demand (adjust capacity to match demand)Schedule downtime during periods of low demandUse part-time employeesRent/share extra facilities and equipmentsCross-train employees
Flexible capacity (vary mix by segment)
Demand Levels Can Be Managed: Alternative Demand Management
Strategies Take no action
Let customers sort it out Reduce demand
Higher prices Communication promoting alternative times
Increase demand Lower prices Communication, including promotional incentives Vary product features to increase desirability More convenient delivery times and places
Alternative Demand Management Strategies
• Use price and other costs to manage demand
• Change product elements• Modify place and time of delivery
– No change – Vary times when service is available– Offer service to customers at a new
location• Promotion and education
Challenges faced..• Slow in implementation: Lack of adequate recognition for the
industry despite being one the biggest generator of employment has been hampering growth prospects. Infrastructure development, though happening, continues to languish. Amidst improving fundamentals, India could lose out to other countries if the pace is not accelerated.
• Regional hubs developing: Though India has the potential in the tourism sector, competition is more global. The rapid growth of China, select South East Asian countries, the pace of development in the Middle East could affect India, in terms of its ability to attract tourist into the country.
• Susceptible to geo-political events: Since tourism is a global phenomenon, any adverse developments on the geo-political front are likely to impact global tourist flows. India is no exception to the same, as was evident during events like Parliament attack, sequential blasts etc.
Scope of the industry..
• As a tourist destination: Though India accounts for a fraction of global tourist flows currently, the country is expected to increase its market share over the long-term. The recognition of tourism as an industry in the recent past has paved way for opening up to competition.
• Infrastructure development: The road development project along with other aspects like airport modernization and port development is likely to result in increased economic activity.
• Increased competition: In the hotel sector, a number of multinationals have entered/strengthened their presence in the country. Besides, Indian hotel chains are expanding in international market. A combination of all these factors could result in a strong emergence of the budget hotels.
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