External environment of taj & oberoi hotel industry

Industry Analysis – Desk Research

A Rep o r t On

Ex t er na l Envi r o nment o f Ta j & Ob er o i

Ho t e l Ind us t r y

Guided By : Prof. Dr. A. Ghosh

Submitted by :

Sa ura bh R. Gi ra tka r

(M3 1 4 6 0 8 3 )


3. EXTERNAL ENVIRONMENT

C o nt ro l l ing Minis t ry

The Ministry of Tourism is the nodal agency for the formulation of national policies

and programmes and for the co-ordination of activities of various Central Government

Agencies, State Governments/UTs and the Private Sector for the development and promotion

of tourism in the country. This Ministry is headed by the Union Minister of State for Tourism

(Independent Charge).

The administrative head of the Ministry is the Secretary (Tourism). The Secretary also

acts as the Director General (DG) Tourism. The office of the Director General of Tourism

{now merged with the office of Secretary (Tourism)} provides executive directions for the

implementation of various policies and programmes. Directorate General of Tourism has a

field formation of 20 offices within the country and 14 offices abroad and one sub-ordinate

office/project i.e. Indian Institute of Skiing and Mountaineering (IISM)/ Gulmarg Winter

Sports Project. The overseas offices are primarily responsible for tourism promotion and

marketing in their respective areas and the field offices in India are responsible for providing

information service to tourists and to monitor the progress of field projects.The activities of

IISM/GWSP have now been revived and various Ski and other courses are being conducted

in the J&K valley.

Role and Functions of the Ministry of Tourism

The Ministry of Tourism functions as the nodal agency for the development of

tourism in the country. It plays a crucial role in coordinating and supplementing the efforts of

the State/Union Territory Governments, catalyzing private investment, strengthening

promotional and marketing efforts and in providing trained manpower resources. The

functions of the Ministry in this regard mainly consist of the following:


All Policy Matters, including: Development Policies Incentives, External Assistance,

Manpower Development, Promotion & Marketing.

The Ministry of Tourism, Government of India has set some guidelines for the star

classification as given in the table


TA J H o t e l

Founder Jamsetji Tata

Headquarters Mumbai, Maharashtra, India

Key people MD & CEO

Rakesh Sarna

The Indian Hotels Company (IHCL) and its subsidiaries, collectively known as Taj

Hotels Resorts and Palaces, is one of Asia's largest and finest groups of hotels. Incorporated

by the founder of the Tata group, Jamshedji Tata, the company opened its first property, the

Taj Mahal Palace, in 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 53 locations,

including 25 Ginger hotels across India, with an additional 16 international. From world-

renowned landmarks to modern business hotels, idyllic beach resorts to authentic grand

palaces, each Taj hotel offers an unrivalled fusion of warm Indian hospitality, world-class

service and modern luxury. Areas of Business:

Taj is their flagship brand for the world's most discerning travellers seeking authentic

experiences given that luxury is a way of life to which they are accustomed. Each Taj hotel

reinterprets the tradition of hospitality in a refreshingly modern way to create unique

experiences. Vivanta - IHCL unveiled brand Vivanta in September 2010. It is positioned as a

premium brand below the “luxury” bracket occupied by brand Taj. The company utilised

social networking sites such as Facebook and Twitter as well as news agencies such as the

BBC and the FT to create a global buzz around the new brand. Gateway is a pan-India

network of hotels and resorts that caters mainly to business and leisure travellers and is

designed, keeping the modern nomad in mind. It is more about simplicity compared to the

above two segments. Ginger is their revolutionary concept in hospitality for the value


segment. Intelligently designed facilities, consistency and affordability are hallmarks of this

brand targeted at travellers who value simplicity and self-service.

Strategic Outlook The Taj Group of Hotels comes under the “Star” category in the

BCG matrix drawn for the TATA group the reason being the highest market share of 7% as

mentioned above and the high industry growth rate. Travel accommodation sees outlet

growth of 9% and current value growth of 21% in 2010.

The Taj Mahal Palace inMumbai is the first hotel of Taj, opened in the year 1903

In 1974, the group opened India's first international five star deluxe beach resort, the Fort

Aguada Beach Resort in Goa. In 1970s, the Taj Group also began its business in metropolitan

hotels, opening the five-star deluxe hotel, Taj Coromandel in Chennai, in 1974, acquiring an

equity interest and operating contract for the Taj President (now Vivanta by Taj - President),

a business hotel in Mumbai, in 1977, and also opening the Taj Mahal Hotel in Delhi in 1978.

The group has been converting royal palaces in India into luxury hotels since the 1970s. The

first palace to be converted into a Taj luxury hotel was the Lake Palace in Udaipur, in 1971.

Other examples include the Rambagh Palace in Jaipur, Umaid Bhawan Palace in Jodhpur,

Falaknuma Palace in Hyderabad and Nadesar Palace in Varanasi. A part of the Umaid

Bhawan Palacein Jodhpur is a Taj luxury hotel and it is a member of the Leading Hotels of

the World.


To p 3 P la ye rs

1. Taj Mahal Hotel, Mumbai.

2. Taj Hotel, Delhi.

3. Taj Hotel, Jaipur.

A c t io n by S E B I

The Indian Hotels Company Limited (“the Company”) has been practicing good

Corporate Governance even before Securities Exchange Board of India (SEBI) made it a

mandatory requirement from 2001. Out of more than 5000 companies listed with the BSE

Limited, the Company is categorized as an "A Group" Company which group comprises only

200 companies and the criteria for selection is based on Market Capitalisation, Liquidity,

Industry Representation, Listed History and track record of Compliance. Being a TATA

group Company, the Company goes beyond the mandatory requirements of Corporate

Governance and conducts business in a fair and transparent manner. It maintains good

investor relationships and endeavors to deliver to investor consistent quality services. quality

services.

Prohibition by SEBI

Neither the Company, nor the Directors or the Promoter Group Companies, or

companies with which the Company’s Directors are associated with as directors or

promoters, have been prohibited from accessing or operating in the capital markets under any

order or direction passed by SEBI. Further, none of the directors or person(s) in control of the

Promoter have been prohibited from accessing the capital market under any order or direction

passed by SEBI. Further neither the Promoter, the Company or group companies has been

declared as wilful defaulters by RBI / Government authorities. Eligibility for the Issue The

Company is an existing company registered under the Companies Act whose Equity Shares

are listed on the BSE and NSE. It is eligible to offer this Issue in terms of Clause 2.4.1(iv) of

the SEBI (DIP)

SEBI vide it’s Circular No. CIR/MRD/DP/10/2013 dated March 21, 2013 has

instructed all Companies for usage of electronic payment modes for making cash payments to

the investors. Companies whose securities are listed on Stock Exchanges are directed to use,

either directly or through their RTI & STA, any Reserve Bank of India approved electronic


mode of payment such as ECS [ECS (Local ECS) / RECS (Regional ECS) / NECS (National

ECS)], NEFT etc. Thus, Members are requested to kindly provide their requisite bank

account particulars by quoting their reference folio number(s) if shares are held in physical

form. If shares are held in demateralised form, Members may kindly provide the requisite

bank account details to their Depository Participant, to ensure that future dividend payments

are correctly credited to the respective account.

The Securities and Exchange Board of India (SEBI) has mandated the submission of

Permanant Account Number (PAN) by every participant in securities market. Members

holding shares in electronic form are, therefore, requested to submit their PAN to their

Depository Participants with whom they are maintaining their demat accounts. Members

holding shares in physical form can submit their PAN details to the Company. Members

holding shares in single name and physical form are advised to make nomination in respect of

their shareholding in the Company. Members holding shares in physical form are requested to

kindly notify the Company of any change in their addresses so as to enable the Company to

address future communication to their correct addresses. Members holding shares in demit

form are requested to notify their respective Depository Participant of any change in their

addresses.


Impa c t o n Indus t ry

Indian Hotels stand alone in 3rd quarter revenues were 10.8% , while income for Taj

Mahal palace, Mumbai , was at 15% yearly. The occupancy rate stood at 64% in FY 2009,

while Average room rates have recorded at steady growth at 7%. PAT weighed down by

higher tax rate but lower interest cost helped cushioned the decline to an extent. High

inflation in 2010 – increase in RM. Opening of new Taj Falaknuma palace, in Hyderabad –

increase in expenses in marketing & advertisement.

Decrease in profit by 4.6%. But after construction- increase in profits upto 29%.Thus

overall 2011 performance of Taj Hotels were up to margin.


E nv iro nme nt a l & G lo ba l Is s ue s

The Lake Palace, Udaipur

Energy Conservation Initiatives

Energy cards are placed in the guestrooms and energy conservation training's are conducted for the staff.

Bulbs used in the hotel are energy efficient bulbs such as CFL, Fluorescent

Road lights, Public area and corridor lighting have centralised on/off control operated by photocell.

Economisers are used in the boiler to recover the heat from the hot exit gas, which is used for preheating the water fed to boiler

Water Conservation Initiatives

Orifice is provided in each water outlet to monitor the water usage

Solid waste management Initiatives

Old carpets are reused as far as possible otherwise sold to the scrap

contractor. Wherever possible, reduce, reuse, and recycle waste is adopted for food, plastic, water or any waste material.

Other Initiatives

Taj Group's Environmental Initiative promotes the cause of being "Eco - Friendly". Being Eco - Friendly means working in harmony with the environment, creating a positive impact on the finite resources available on this planet so that we can

preserve it for future generations and ourselves. We at Lake Palace Hotel are engaging ourselves in certain Eco-friendly measures as....

o Using both sides of paper for internal communication to save a few trees.

o Judicious use of light and other forms of electricity so as to reduce energy consumption thereby reducing dependence on fossil fuels and other energy sources.

o Helping our people understand dire need to use water in the right quantity and avoiding wastage.

o Wherever possible substituting cloth for paper and adhering to usage of handmade paper.

Risk Management: Economic Risks: The hotel sector may be unfavourably affected

by changes in global and domestic economies, changes in local market conditions, excess

room supply, government policies and regulations, fluctuations in interest rates and foreign


exchange rates and other natural and social factors. Socio-Political Risks: The Hotel industry

faces risk from volatile socio-political environment, internationally as well as within the

country. India, being one of the fastest growing economies of the world in the recent past,

continues to attract investments. Security Risks: The Hotel industry demands peace at all

times to flourish. The biggest villain in South East Asia has been terrorism supplemented by

political instability. Risk of wage inflation: The hotel industry needs quality employees and

with demand for the same improving across the industry, the Company feels that wage

inflation would be a critical factor in determining costs for the Company. Foreign Exchange

Risk: The Company may be impacted by the fluctuation of the Indian Rupee against other

foreign currencies. To mitigate this risk the Company has migrated to single currency billing

in Indian Rupees.

In the hotel industry there is usually another hotel just around the corner. They appear

in all price ranges, with varying levels of service and amenities. The constant challenge will

always be to get the guest to choose your hotel over the competitor. The internet makes the

overall market more efficient.

The Taj Mahal Palace, Mumbai commits itself to:

Continually improving its environmental and social sustainability performance and

Benchmarking : Establishing, implementing, maintaining and continually improving its

Environmental. Management System; Complying with all relevant legislation and regulations

and other requirements to which the hotel subscribes which relate to its environmental

aspects; Striving to achieve international best practice in key areas such as greenhouse gas

emissions; energy efficiency, conservation and management; management of freshwater

resources; ecosystem conservation and management; management of social and cultural

issues; land use planning and management; air quality protection and noise control; waste

water management; waste management and storage of environmentally harmful substances;

prevention of pollution including efficient use of resources, reuse recovery and recycling.

The Taj Mahal Palace, Mumbai has appointed the Chief Engineer, Mr. Shirish Wagh

as the Co-ordinator, who has responsibility for ensuring ongoing environmental performance,

identification of environmental risks, recording and monitoring of impacts and implementing

environmental and social sustainability measures.


3. EXTERNAL ENVIRONMENT

O be ro i H o t e l


Industry Hospitality

Founded 1934

Founder Late Rai Bahadur Mohan Singh Oberoi

Headquarters Delhi, India

Key people PRS Oberoi,Vikram Oberoi,Arjun Oberoi

Website Oberoi Hotels & Resorts

The Oberoi Group is a global hotel company with its head office in Delhi. The

Oberoi, founded in 1934, owns and/or operates 20+ hotels and two cruisers in five countries.

It remains one of the most decorated hotel chains in the world with many of its group hotels

bagging various awards and accolades from Travel+Leisure, Condé Nast Traveler,Forbes and

World Travel Awards. The foundations of the Oberoi Group dates back to 1934 when Rai

Bahadur Mohan Singh Oberoi, the founder Chairman of the group bought from an

Englishman; two properties - The Clarke's in Delhi and The Clarke's in Shimla. In the

following years Mr. Oberoi, assisted by his two sons, Tilak Raj Singh Oberoi and Prithvi Raj

Singh Oberoi continued the expansion of their group with properties both in India and

abroad.

Today, P.R.S.Oberoi is the Chairman of The Oberoi Group and his son, Vikram Oberoi and

his nephew, Arjun Oberoi serve in the capacities of Joint Managing Directors at EIH Ltd and

EIH Associated Hotels, the two major holding companies of The Oberoi Group. The group

also manages hotels under the Trident brand, and operates properties in India and Saudi

Arabia. The Group also operates the The Clarke's in Shimla and the Maidens Hotel, Delhi.

These two properties however are not held under the Trident or under the Oberoi brand. The

Clarke's, after remaining temporarily shut following its lawns caving in because of

construction in the eco-sensitive vicinity, reopened on September 16, 2012.

P o lic ie s


Arrival and Departure Policy

Check in - 1400 Hours Early arrival is subject to availability. For guaranteed early check-in,

reservation needs to be made starting from the previous night. Check out - 1200 Hours Late

check-outs are available on request and subject to availability. A recent Government

notification requires guests to present proof of identity at the time of check in. Guests are

requested to carry with them the required document during their travel.

Guarantee Policy

All bookings must be guaranteed at the time of reservation by a Credit Card or Travel

Agency. All major credit cards are accepted.

Cancellation Policy

Reservation must be cancelled 72 hours prior to the planned date of arrival. Reservations

cancelled within 72 hours of the arrival date will incur a cancellation fee equivalent to one

night’s accommodation charge.

Child Policy

Two children up to 8 years of age can stay in the parent's room without an additional charge.

However, a maximum of one child's bed can be placed in a room which will be provided at

no additional charge.

E nv iro nme nt a l i s s ue s


With the mercury rising water and power scarcity has hit the country hard and how. As the

need to be eco-sensitive gains momentum, we look at a few initiatives taken by hotels, which

could serve as easy examples.

The Oberoi, Mumbai has efficient systems in place for the management of water resources,

reveals executive VP Devendra Bharma, “Apart from the usual, we also use water from STP

for cooling towers. Sensors and flow restrictors notwithstanding, area-wise metering of water

consumption is undertaken to determine areas of high usage and initiate further conservation

methods.” Patu Keswani, CMD, Lemon Tree Hotels, shares that they use approximately 30

per cent of the recycled water from STP in the garden and flush systems. “We also have

rainwater harvesting and auto flush for public urinals in place,” he adds. “Our hotels are

designed and operated with zero waste-water discharge,” reveals Sunil Relia, VP,

engineering, The Leela Palaces, “To reduce site disturbance, green area provided is 25 per

cent more than the local norms and species selected are of native/adaptive nature to reduce

water consumption. We have efficient rainwater harvesting (RWH) system to recharge site

aquifer through recharge pits to reduce storm water run-off volumes post development and

these pits are cleaned and maintained periodically,” he elaborates.

A number of tools are used to control energy consumption and enhance energy efficiency —

integrated room automation system, VRV technology for air conditioning, HRV with thermal

enthalpy wheels, LED lighting in public areas, etc. “We have the world’s most energy

efficient and lowest emissions Trane CenTraVac chillers in air-conditioning systems. Their

energy consumption is as low as 0.57 KW per ton. The hotel also uses halon-free fire

extinguishers and chimney stack heights are maintained according to Pollution Control

norms,” explains Bharma. At Lemon Tree hotels, many steps are underway to bring down

power consumption or use renewable energy (wind power is being implemented in a phased

manner at the Chennai property followed by Aurangabad and Pune). “Reducing power

consumption is a key priority. Our hotels are designed so that entire floors can be shut down

if demand drops (unlike others, our AC and water lines are horizontal). We also use other

techniques and alternate sources to save energy. For example, Key Tag Energy Saver System,

Solar Panel for hot water, Wind Power and many more,” says Keswani. In light of its

commitment towards prevention of pollution and continual improvement in environmental

performance by controlling the impact of activities, products and services on the

environment, all Leela hotels adhere to save 10 per cent on energy cost year on year reveals

Relia, “We recognised the importance of alternate power source and established wind mills in

Karnataka. Incidentally, we are working on introducing solar power generation at our

Bangalore hotel,” he adds. The Oberoi practices benchmarking for energy consumption in

day-to-day operations, “Sub-meters monitor, target and control power consumption for

strategic areas. Energy benchmarks for daily operation volumes of various departments have

been set, and performance is monitored on a daily basis. The benchmarks are reviewed

quarterly for further scope of improvement. Energy audit has been conducted and methods of

improving energy efficiency are being implemented,” Bharma elaborates.

G lo ba l Is s ue s


While the management of Company continues to leverage the opportunities, it also

foresees the following challenges: Availability of skilled resources and acquisition and

retention of highly talented workforce which would ensure Frequent amendments in

regulations Lack of supporting infrastructure such as roads, highways, electricity, etc. that

can hamper the growth of real estate as it thrives on availability of good infrastructure.

Increase raw material / labour cost.

Training and Orientation of New Staff is also a big issue. System can be also a big

issue for hotel industry. Strategy making is difficult in hotel management. And again the

Competition this is one of the global issue for oberoi hotel. After 26/11 attack Economic

Slowdown is increases and becomes the global issue for oberoi as well as taj hotel.

Impa c t o n ho t e l indus t ry


To p 3 P la ye r

Three Oberoi hotels have been ranked among the six best in the world in Travel +

Leisure magazine's World's Best Awards 2008. The Oberoi Rajvilas, Jaipur. The Oberoi


Udaivilas, Udaipur and The Oberoi Amarvilas, Agra have been rated 2nd, 4th and 6th

respectively.

Annual Grow Rate

MARKET SEGMENTATION-OVERALL


Hotels- heavily regulated by both central and state governments including but not limited to

approvals, licenses, sanctions. Procedural changes making land available for hotel

construction(India identified 32 villages to become tourists hubs).100% FDI allowance.

Change in Government regulations – changes within the industry(change in tax laws

Gas Price.

CRITICAL SUCCESS FACTORS OF OBEROI HOTELS

Technology related:-Used of advance technology in hotel premises. Manufacturing- related:-

High utilization of fixed assets. Serving customer according to their specification.

Distribution-related:- Presence of hotel chain at various places.A strong network.

Marketing related:- Breadth of product line and product selection.


Comparison of Taj & Oberoi

8.69.4

5.7

1.2

3.4

0

2

4

6

8

10

Marriott Hilton Taj Hyatt Oberoi

MARKET SHARE

Percentage

External environment of taj & oberoi hotel industry

Leadership & Management

development of tourism

promotion of tourism

tourism promotion

taj hotels resorts

office of secretary

director general of

directorate general

tourism independent