BUDGET HOTELS: LAUNCH OF INDIONE Abhishek Maloo
BUDGET HOTELS: LAUNCH OF INDIONE
Abhishek Maloo
HOSPITALITY INDUSTRY
• It is one of the fastest growing industry in the world as well as in India.
• With the advancement of the budget hotels its pace is accelerated.
• According to World Travel and Tourism Council India has the potential of becoming the number one tourist destination with the demand growing at 10.1%/ annum.
HOSPITALITY INDUSTRY
• The World Travel Organisation predicts that India will receive 25 million tourist by 2015.
• India currently has over 200,000 hotel rooms and is still facing a shortfall of over 100,000 rooms(source-FHRAI).
• India will be adding 114,000 hotel rooms over the next five years and investment of INR 40, 463.10 crore (source-HVS).
• Application of aggressive strategies through its campaign “Incredible India” to promote tourism.
The Current Scenario
• Existing hotel rooms in India:- 202,963(source-FHRAI)
• Revenue of the Indian hotel industry FY 2009- 10: US $ 137.36 million (INR 47,889.03 crore)
• 30% of the revenue i.e. US $ 41.2 million (INR 14, 366.7 crore) went back into the market in FY 2008 – 09 as operating expenses.
COMPANY PROFILE
• The Indian Hotels Company (IHCL) and its subsidies are collectively known as Taj Hotels Resorts and Palaces.
• It is one of Asia’s finest and largest group of hotels.
• Incorporated by the founder of Tata group Jamsedji Tata.
COMPANY PROFILE
• Taj Hotels Resorts and Palaces comprises 93 hotels in 53 locations.
• It includes 25 Ginger hotels across India and 16 international hotels.
• IHCL operates in the luxury, upper upscale and value segment of the market.
• IHCL’s head office is in Mumbai, India.
BUDGET HOTELS :
• It is India’s first of its kind chain of Smart Basics hotels.
• It is a innovative concept which redefines the way the business travel is done in India.
• It is a GenNext category of hotels in India.• It signify simplicity, convenience, informality, style,
warmth, modernity and affordability.• The concept was developed in association with Dr.
C.K. Prahalad.
BUDGET HOTELS :
• It was first launched in Bangalore and was called IndiOne, a brand name given by Chlorophyll (communication consultancy).
• Chlorophyll also designed the signage, curtains, furnishing and the website.
• It was also provided with the job of direct marketing activities of the brand.
INITIAL PROBLEMS
• The venture was not under the Brand name of Taj.
• After stripping features in the services and cutting cost, they cannot go below Rs. 2500.
• It was not a competitive price for the Budget Segment.
STRATEGIC MOVE
• They took the assistance of Dr. Prahalad.• He suggested the bottom – up approach to
arrive at a price and the service offering.• They surveyed managers, salespersons and
business travellers of mid-sized companies.• This gave them a fair idea of price range i.e.
Rs. 1000/room.
STRATEGIC MOVE
• Each hotel was built in the area of 1 acre with 100 rooms.
• They budget of each hotel was marked at Rs. 100 millions which means Rs. 1 million/ room.
• This was comparatively far lower than the investment of Rs. 5 millions – 15 millions / room in developing five star hotels.
STRATEGIC MOVE
• Size of the room was kept small- around 180 sq. ft. as compared to 250- 400 sq. ft. of premium segment hotel.
• The company cut down room service and applied the concept of “Help Yourself”.
• This concept helped in operating the hotel with 25 people as compared to 250 people in premium category hotel.
PRICING
• Single Room Charges- Rs. • Double Room Charges- Rs. 950.• The customers were entitled to a discount of
Rs. 50 if booking is made through internet.• This practice helped to cut their marketing
costs which contributes to 10% -15 % of room costs.
SPECIAL OFFERS
• Early Booking Offer:- “SAVE NOW” Book Early and Pay Less.
• Last Minutes Rates:- Sensational last minutes rates in their top destinations.
• Day Use Rates:- Introducing special day use rates for travelers to freshen up or relax before heading to work.
• Coolest Offer Packages:- Visit most popular destination starting at just Rs. 2799/- onwards.
FACILITIES• Ginger’s facilities and services are intelligently designed
for customers comfort and convenience.• It provides:-
• meeting room, • conference room, • restaurant and WiFi and net zone • self checking • safe zone• CCD, • water dispenser• 20 inch flat-TV in each room with satellite channel• Mini fridge• 24 hr hot /cold water
BOOKING SYSTEM
• It provides a toll- free number-1860-266-3333 to book over phone.
• Payment Options:- American Express Card. Master Card / Debit Card. Visa credit/ Debit Card. Net Banking. • Facility of group booking is also available.
CORPORATE ADVANTAGES
• Optimizes costs:- Enjoy special customized rates.• Enjoy exciting facilities.• Convenience and peace of mind:- suitable
location, rooms are hygienic, peaceful & comfortable.
• Consistency:- Uniform standard in services.• Hassle free resevations.• Transparency in booking process• National Contract.
GLOBAL TRENDS
• Enjoy unmatched blend of comfort and economy & convenience in India.
• According to global study, international travelers are increasingly concerned about their safety while choosing hotels, so Ginger ensures stringent checks.
• The Ease of the internet for booking solutions and customer can also get SMS and e-mail updates of every transaction.
STRATEGIES ADOPTED BY GINGER HOTELS
Meeting room for CorporateBanquet hallsGymnasium facilities with Certified TrainersHotels in MallsPPP models-Yatri Niwas
HEALTH TOURISM & “HOTEL IN MALLS”
• India’s gaining popularity in Health tourism– Disparity cost in healthcare services.– Yoga, meditation, ayurveda etc
• Hotel in Malls for seasoned business travellers or tourists– Tristar Hotels Private Limited, first in Delhi
SUCCESS FACTOR FOR BUDGET HOTELS
• Site & location
• Positioning
• Financial flexibility
• Brand equity
EXISTING PLAYERS
• ITC Fortune Hotels- strong presence in – Ahmedabad, Chennai, Darjeeling, Indore,Jodhpur, Jamshedpur
• Courtyard - Mariott International– commissioned hotels in Goa, Chennai, Pune, Hyderabad
• Lemon Tree Hotels- Delhi based Company– presence in cities like Goa, Gurgaon, Ahmedabad, Aurangabad, Indore,
Chennai
• Formula 1-joint venture between France hospitality giant Accor and Emaar MGF
UPCOMING PLAYERS
• Keys -backed by NewYork based Berggruen Holdings.
• Premier Inn-UK’s largest hotel chain
• Hilton Garden Inn- a joint venture launched by DLF and Hilton Hotels
• Indian Railways, in the public sector, has announced its plans to set up 100 budget hotels all over country on railway land
CHALLANGES
• Poor domestic tourism infrastructure• Highly prone to socio-economic & political
conditions• Tourism on the verge of ecological imbalance• India’s growing economy and new entrants
PORTER’S FIVE FORCES COMPETITORS• Existing players • Unorganized
hotel sector
SUBSTITUTES• Mid- Size hotels
BARGAINIG POWER OF SUPPLIERS
Limited due to higher
competition (metros)
BARGAINING POWER OF BUYER• Higher in metro
cities due to increasing room supply.
NEW ENTRANTS • India's growing
economy thereby attracting new competitors
• 100% FDI permissible
• Low investment
ANALYSIS OF GINGER HOTEL, BHUBANESWAR
• Implementation of all “Smart Basics” concept• Coffee Café day• Presence of Swosti Premium, May Fair, Hilton• No proper advertisement & promotion
Our strategies
• Target to middle class foreign tourists• Corporate tie-ups• Loyalty cards• Referral system• Travel agents• Hop-on-Hop-off