Hotel Industry in India

CURRENT TRENDS IN MANAGEMENT

THE HOTEL INDUSTRY IN INDIA

Under Guidance of Prof. Vivek Sane

Submitted by : ANAND TUTEJA

Institute : Symbiosis Institute of Management Studies , Pune

e-mail : [email protected]

Mobile : +91 97300 89532

Submitted on : 16 FEB 2009

CONTENTS

1. Global Scenario

2. Indian Scenario

3. Hotels in India

4. Growth Drivers

5. Classification

6. SWOT Analysis

7. Current & Future Trends

8. Job Opportunities

9. Effects of Recession

10. Effects of Terrorism

- The share of Travel & Tourism industry to the global GDP was 6.48% in the year

2007 with value of US 3,493.19 billion and industry demand contributed to 13.21% of

global GDP in 2007.

- Middle East was the fastest-growing region in terms of arrivals of international

tourists during 2007.

- According to the report by World Travel and Tourism Council, India currently ranks

18th in business travel and will be among the top 5 nations by the end of 2010.

- ASSOCHAM has projected that Medical Tourism is likely to become the leading

foreign exchange earner for India

- India is now emerging as one of the hot destinations for medical-tourism after

Singapore, Thailand, Hong Kong, Malaysia, Philippines, Columbia

I. GLOBAL SCENARIO

The hospitality and tourism sector is the largest industry in the world.

Contributes 10.4% of the global GDP & US$5.4 Trillion in 2007

Employed over 231.2 million people in 2007

Accounted for 8.3% of Total World Employment in 2007

Estimated to be comprised of more than 300,000 hotels and over 8 million restaurants, as well as countless tourist attractions, travel agencies, tour operations, cruise lines, tourism driven transportation systems, consulting firms, and real estate investment companies. The Asia-Pacific Hospitality Industry

Asia-Pacific is the region with the greatest growth potential for the hospitality industry.

2006 - Average tourism growth of 7.7% across APAC

Average tourism growth of 2.7% across Americas and 2.5% across Europe

Total number of tourist arrivals in the Asia Pacific region - over 252 million in 2006. The UK Hospitality Industry

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

employment-generating profession, employing one in ten people

worldwide. In the UK alone, the industry employs over 1.8 million

people. It is estimated that the industry will require 30,000-35,000

trained people at managerial and supervisory levels every year till

2010 to fulfil its potential.

Top ranking countries in terms of absolute tourist arrivals o China (49 million overseas travelers) o Malaysia (but inflated due to heavy border traffic) o Thailand o Singapore o Japan o South Korea o Australia

The Middle East Hospitality Industry

UAE predicted to average 7% p.a. growth.

Visitors to Dubai projected to reach 10 million by 2010 & 25 million by 2029.

Dubai investing $45 billion in infrastructure and tourism.

II. INDIAN SCENARIO

Annual Growth Rate = 24 %

The Travel and Hospitality industries have largely profited from the fast growing

economy of India, mainly due to the 3.5 million tourist arrivals in FY05 (22 % growth)

over the previous period, thus posting a CAGR of around 7 % from FY00-FY05.

The Average Room Revenues (ARRs) in some metro hotels in India has increased by 15

% from the last year

According to the estimates of the World Tourism Organisation, international tourist

inflow in India would be 10 million by 2020, which means the tourist influx has to grow

at a CAGR of 6.5 % for the next 14 years.

According to Government estimates, India needs about 80,000 rooms in all

categories over the next two or three years at an estimated cost of about US$ 8 - 9

billion.

A major reason for the growing demand for hotel rooms is the underlying boom in the

economy, particularly the growth in the IT and ITES industries. The overall growth

outlook appears buoyant and much of this growth will be driven by the BPO explosion,

IT, Telecom and energy sectors.

The average employee to room ratio is 1.8 in hotels in India, across all the categories,

except in the three-star category, where the ratio drops to 1.5 per room.

As new rooms are being added, the manpower requirement of the hotel industry is also

increasing.

It is further reported that jobs in accommodation and food services as a whole are

expected to increase by 17 percent between 2004 and 2014.

India‟s hotel industry is increasingly being viewed as investment-worthy, both within the

country and outside, and several international chains are keen to establish or enhance

their presence here. It is anticipated that, over the next three-five years, India will emerge

as one of the world’s fastest growing tourism markets

There will be a requirement of about 10 million people in the travel Industry in India.

The industry needs manpower, which is highly qualified, has leadership qualities and a

quest to lead the Indian Hotel industry.

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.

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 cities. 'Hotel Industry in

India' is set to grow at 24% 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.

III. HOTELS IN INDIA

ITC GROUP HOTELS ITC Hotel Maurya Sheraton & Towers,New Delhi ITC Hotel Grand Maratha Sheraton & Towers,Mumbai ITC Hotel Sonar Bangla Sheraton,Kolkata ITC Hotel Grand Central,Mumbai ITC Hotel Windsor Sheraton & Towers,Bangalore ITC Hotel Kakatiya Sheraton & Towers,Hyderabad ITC Hotel Park Sheraton & Towers ,Chennai

Welcome Hotel Rajputana Palace Sheraton, Jaipur Welcome Hotel Chola Sheraton, Chennai Welcome Hotel Mughal Sheraton,Agra Welcome Hotel,New Delhi Welcome Hotel Rama International , Aurangabad Welcome Hotel Vadodara Welcome Hotel New Delhi Welcome Hotel Grand Bay, Visakhapatnam

HOTELS IN AGRA Hotel Amar Vilas Agra Grand Imperial Hotel Amara Hotel Atithi Hotel Ganga Ratan Hotel Utkarsh Vilas Royale Residency Ashok Hotel Taj Plaza Amar Yatri Niwas Yamuna View Grand Hotel Agra Trident Hilton Agra Hotel Clarks Shiraz Agra Howard Park Plaza Mansingh Palace Agra Jaypee Palace Hotel Conventio Holiday Inn Agra The Mughal Agra The Oberoi Amarvilas

HOTELS IN HYDERABAD Viceroy Hotel and Convention Center Hotel Sitara Hotel Tara Hampshire Plaza Hyderabad Baseraa Inn The Golkonda Hyderabad Comfort Inn City Park Hotel Woodbridge The Residence Hyderabad Best Western Amrutha Castle Quality Inn Residency Hyderabad Aditya Park Hyderabad Katriya Hotel & Towers

Aditya Park Inn Offline Taj Deccan Hyderabad Ohris Banjara Ista Novotel Hyderabad Ellaa Compass Suites Taj Banjara The Kakatiya Hyderabad Hyderabad Marriott Taj Krishna Green Park Hyderabad

HOTELS IN MUMBAI

Ramada Plaza Palm Grove Hilton Towers Mumbai Taj President Hotel The Leela Kempinski Mumbai The Maratha Mumbai Vits Mumbai Sun N Sand Hotel Mumbai The Grand Central Mumbai Hotel Singhs International Taj Wellington Mews Luxury Residences The Orchid Hotel Bawa Continental Hotel Bawa International Hotel Red Rose Hotel Solitaire Hotel Tunga Regency Ramada Powai Krishna Palace Hotel Hotel Kohinoor Continental Sutra D'onyx The Gordon House Suites Sahara Star Hotel Palms Hotel Hotel Airlines International Hotel Samrat Hotel Arma Court Empire Royale Hotel Hotel Bandra Residency Chateau Windsor Hotel Ambassador Hotel Ramee Guestline Hotel West End Hotel

The Fariyas Hotel Comfort Inn Heritage Hotel Transit Hotel Golden Manor Royal Garden Hotel The Mirador The Park Navi Mumbai Quality Inn Parle International Ramee Guestline Hotel - Juhu Best Western the Emerald Orchid An Ecotel Hotel Ramee Guestline Hotel Dadar Hotel Tunga Paradise Hotel Tunga International Peninsula Grand Hotel The Shalimar Hotel The Oberoi - Mumbai Intercontinental The Grand Mumbai Park Plaza Royal Palm Mumbai The Marine Plaza Le Royal Meridien Mumbai Renaissance Mumbai Hotel and Convention Centre Hyatt Regency Mumbai Intercontinental Marine Drive The Taj Mahal Palace Mumbai Taj Mahal Palace and Tower Taj Lands End Lakeside Chalet - Marriott Executive Apartments Mumbai Jw Marriott Hotel Mumbai Hotel Sahil Pvt Ltd Sea Princess Residence Hotel and Convention Center

HOTELS IN DELHI The Imperial Hotel Vasant Continental The Hans New Delhi Hotel Chand Palace The Grand New Delhi Le Meridien New Delhi Radisson Hotel New Delhi Intercontinental The Grand New Delhi Ashok Country Resort Hotel Metro Heights Comfort Hotel Royale Residency Dee Marks Resorts Maurya Sheraton Htl N Twr

The Oberoi Hotel Royal Residency Hotel Dream Inn Good Times The Claremont Hotel Hotel Red Castle Hotel Omni Sunstar Grand Hotel Hotel Megha Sheraton Hotel Megha Palace Hotel Orichid Garden Hotel Ashiana Hotel Le Heritage Hotel Lohmod The Courtyard Hotel Lohias Hotel Grand Sartaj Hotel Corporate Park Hotel Blue Sapphire Hotel Paras International Grand New Delhi Hotel Bb Palace Icon Towers Ashu Palace Ashoka International Hotel Classic Hotel All Seasons Hotel Garden View Hotel Welcome Palace Hotel Grand Park Inn Hotel C Park Inn Grand Godwin Nice Palace Thirty Three 33 Raunak International Star Grand Villa Swagat Palace Hotel Pallvi Palace Hotel Astoria Hotel Cosmo Hotel Ajanta Hotel Pauls Court Hotel Yuvraj Deluxe Hotel Mohan International Hotel Ivory Palace Hotel Naman Palace Hotel Maurya Heritage

Hotel Welcome Palace Hotel Pooja Palace Hotel Metro City Hotel Swati Deluxe Hotel Mohan Sheraton Hotel Ashu Palace Hotel Perfect Hotel Rahul Palace Hotel Pablas International Hotel Raunak Karol Bagh Hotel Metro Continental Suncity Hotel Hotel Tara Palace Hotel Sunstar Residency Hotel Sunstar Heritage Hotel Southern Hotel Asian International Annaught Place Hotel Swati Hotel Sri Nanak Continental Hotel Star Hotel International Inn Park Hotel Hotel Madonna Hotel Regent Continental Hotel Suncourt Yatri Airport Hotel New Haven Hotel Hotel Westend Inn Hotel Clark International Taj Palace Hotel New Delhi The Residence Delhi The Metropolitan Hotel New Delhi Uppals Orchid The Tivoli Garden Resort Jaypee Siddharth Crowne Plaza Delhi Maidens Hotel The Ambassador Hotel Intercontinental Nehru Place Shangri-la New Delhi Sheraton New Delhi Hotel The Oberoi New Delhi The Maurya New Delhi Taj Palace Intercontinental Hotel Dee Marks Taj Mahal Hotel The Claridges New Delhi

Hotel Palace Heights Crowne Plaza Today Gurgaon Hyatt Regency Delhi

HOTELS IN BANGALORE Ramee Guestline Hotel Bangalore The Orchard Suites Sankey Road Inn Bangalore Vivienda Hotel Blue Chip Serviced Apartments 12th Avenue Hotel Pai Viceroy- Jayanagar Hotel Pai Comforts-jp Nagar Hotel Golden Landmark Hari International Bell Hotel and Convention Center Central Park Bangalore Park Field Resortel Maia Beacon Residences Jp Churchill Hotel and Suites Hotel Museum Inn Crowne Plaza International Nalapad Residency Rainbow Homes The Tricolour Hotel Chalukya Monarch Hotel Cross Roads Inn Hotel Bangalore Gate The Libra Monarch Luxur Mallika Residency Nalapad Hotel Srk Samrudhii Suites White Regency Hotel The Atria Hotel Hotel Vintage Residency Lake View Residences Ramanashree Richmond Circle Bangalore Evoma Bangalore Jaya Mahal Palace Hotel Royal Orchid Harsha Drive Rajkumar International Ramanashree California Resort Radha Hometel Bangalore Hotel Bangalore International

The Bride Corporate Suites D Habitat Hotel Apartments Hotel the Elite Shilton Residence Mepc Residences Castle Street Hotel Infantry Court The Chevron Shashank Association Hotel Regaalis Shilton Suites The Residence Bangalore Nahar Heritage Hotel Royal Orchid Central The Capitol Mapple White Field Bangalore The Chancery Goldfinch Hotel The Park Bangalore The Chancery Pavillion The Leela Palace Kempinski Taj Residency Hotel Hotel Royal Orchid Ista Bangalore The Taj West End The Windsor Bengaluru The Oberoi Bangalore The Nandhana Grand Kormangala E Inn Bangalore The Mark Boulevard The Grand Ashok Bangalore

HOTELS IN PUNE Hotel Raviraj Oakwood Residence Naylor Road St Laurn Business Hotel The Coronet Elegance The Coronet Hotel Beverly Hills Hotel Deccan Rendezvous The Sagar Plaza Quality Inn Centurion Quality Hotel Regency Lemon Tree Hotel Hinjawadi Pune Hotel Central Park Studios The Central Park Hotel Pune Sun-n-sand Pune Seasons Apartment Hotel Aundh

The Gordon House Hotel Pune Taj Blue Diamond Le Meridien Pune Royal Orchid Golden Suites

IV. GROWTH DRIVERS

Rising GDP in developing nations is being rapidly followed by rising living standards in countries such as China, India, Indonesia, Malaysia and Thailand. Affluence = Travel Asians are on the move. Recent years have seen outbound travel from Asian countries grow by more than 20% . The middle class - A changed mind set People now have the money and are willing to spend it not only on necessities but also on luxury products, travel, adventure and cultural experiences. Affordability = Low Cost Carriers (LCC) Air Asia “Now everyone can afford to fly” Budget airlines are here to stay - Air Asia, Value Air, Air Sahara, Air Deccan, Kingfisher, Tiger, JetStar Asia, Star Flyer, Spring Airlines etc Lower fares = Higher Demand 40% could not afford to fly 30% can now afford to fly more PLUS more business travel LCC radically changing travel volumes 45 budget airlines 870 more aircraft in Asia Pacific by 2012 250,000 pax per aircraft p.a. 75,000,000 more tourists by 2008 Access = Technology Online travel market Only a decade old Fastest growing distribution channel in Asia Advantages for consumers:

Comparison shopping is easier. Consumers understand busy periods command premiums and that

“cheap” comes with some inconvenience. Custom designed holidays

Online Suppliers and Distributors: Airlines and Hotels

Cheapest way to sell travel Eliminate the middle man - TAs Can pass on savings to the consumer Online sales USA market - maturing - battle for market share Europe market - still growing rapidly East Asia - is developing - potential is huge In Europe, thousands of travelers go abroad each weekend with same ease and cost as going to a restaurant. Similar behavior can be expected from Asian travelers as travel habits become more sophisticated.

V. CLASSIFICATION

VI. SWOT ANALYSIS

VII. CURRENT & FUTURE TRENDS

JOINT VENTURES

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.

E-BUSINESS

One of the top strategies for hotel e-business is evolving from selling to engaging the

customer. Hoteliers need to think more like retailers. To succeed, hoteliers need to fulfill

the experience expected by customers, not just think of them as heads in a bed.

Another strategy is engaging the customer through social computing, which is the fifth

generation of electronic distribution. Travel plays a big role in social computing, making

social computing a blend of marketing and distribution,

The sixth generation for electronic distribution is mobile technology. Mobile phones are

becoming ubiquitous in many countries. Travelers are an ideal group for mobile-based

services and activities. Frequent travelers are the ones who find the most utility from

using mobile services.

Some of the opportunities center around the five important trends affecting hotel e-

business. These trends are: more demanding consumers; more complex distribution

channels; changing business models where companies must give more but expect less in

return; an emphasis on technology and richer content; and a change in the structure of

hotel e-business.

COMMONWEALTH GAMES

These will be organized by Delhi in 2010. Will provide a boost to the hotel industry.

CHANGING FACTORS IN DECISION MAKING

Shaping customers expectations is becoming crucial as customers look for an

„experience‟ rather than just a room. The more compelling the experience for the

customer, the more satisfied the customer will be.

“Content will replace price as a deciding factor for customers,”

But who then owns that content and the customers that are attracted by it? Is it the hotel

or is it the online service?

Consumer generated content, which is more and more in demand, is all about a traveler‟s

experience. This is a great way to match content with traveler‟s age group and interests.

It‟s also a way to bolster the customer‟s expectation about what that experience at the

hotel will be like.

There‟s an incredible reluctance by hotels to post consumer generated content, fearing

that it will be negative. However, most people that take the time to write have positive

comments about their travel experience.

GLOBALIZATION VS LOCALIZATION

Are globalization and localization competing strategies? No. “Any business needs to

think about both,”

Globalization is here to stay as evidenced by changes in demographics and affluence. For

instance, Russia is becoming the biggest European market while India, China and other

Asian countries are emerging as important markets, too. In all of these regions, there‟s a

huge rise in an affluent middle class who will be interested in travel.

A globalization strategy needs careful planning, “You can‟t rush into it. You need to give

it some thought,” Don‟t forget about the local aspects of your strategy. You need to

incorporate local and global to be successful.

FOCUS ON TECHNOLOGY

GROWTH OF OTHER INDUSTRIES

With the USD 23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities. 'Hotel Industry in India' is set to grow at 24% a year. This figure will skyrocket in 2010, when Delhi hosts the Commonwealth Games. A major reason for the growing demand for hotel rooms is the underlying boom in the economy, particularly the growth in the IT and ITES industries. The overall growth outlook appears buoyant and much of this growth will be driven by the BPO explosion, IT, Telecom and energy sectors. The opening up of the aviation industry in India has resulted in exciting opportunities for the hotel industry. The various emerging concepts in India such as service apartments, spas, medical tourism, wildlife resorts, cruise tourism, adventure tourism etc will boost the hotel industry in India.

BUDGET HOTELS

Already, more than 50 international budget hotel chains are moving into India to stake their turf.

VIII. JOB OPPORTUNITIES

IX. EFFECTS OF RECESSION

The Indian Hotel Market Outlook Report, India Digest 2008 (brought out by Jones Lang LaSalle Hotels) states in an assuring manner that the impact is expected to be short term. The Indian economy has withstood such upheavals in the past so there is nothing to panic about.

Organizations that want to effectively take note of the recessionary trends and protect their business will have to take on some hard decisions like 'back to basic' kind of planning, and ensure that input costs are maintained at levels that would continue to give them the profit margins without sacrificing the quality of delivery or the products.

The hospitality industry should work on training, preventive maintenance, multi-skilling, employee exposure, cross training and such measures that are non-financial and would enhance guest satisfaction. Staff retrenchment, cost cutting, travel and advertisement cuts may show savings in the short run but would certainly damage the long term growth of the hospitality industry. The next 18 to 24 months are testing times for the industry, but hoteliers with a proven track record will take things in their stride and come out of the recession with learning and experience.

Another opportunity before the hoteliers is to look at options of joint promotions. Many hoteliers are already operating in collaboration with airlines, travel agents, etc for packages, not only for tourists but also groups, MICE as well as wedding promotions. Hotels have also associated with car rentals, travel portals and airline networks. This is expected to help ease the recessionary cascading effect.

Hoteliers can join hands with the respective state tourism boards and other private operators to take full advantage of the hitherto unexploited domestic tourism potential. With the baton of the Commonwealth Games 2010 being passed on to India, and hotels increasing rooms, things will definitely start looking up in a few months.

Increased interest in the Indian markets, improved international access coupled with the modernising of major airports will definitely boost hotel industry in India.

X. EFFECTS OF TERRORISM

The Mumbai terrorist attacks, on top of a global economic recession, have come as a

double whammy for India's hotel & tourism industry. For example, Only 14 of 90 rooms

were occupied at one of the top luxury hotels in India's most popular tourist destination,

Agra, on Thursday. And on Wednesday, the northern Indian city saw only about 2,000

people visiting the Taj Mahal, the white marble mausoleum built by a medieval emperor

for his beloved queen. Usually in the high tourist season of Indian winter the monument

draws more than 15,000 visitors each day.

There were 40 to 45 per cent cancellations since November 26, the night armed gunmen

unleashed three days of mayhem in India's financial hub, Mumbai, killing more than 170

people and injuring over 300. Most of the cancellations are from the US, Britain and

France.

As this was the beginning of the high tourist season in India (November to March), there

was already a drop in business of about 15 per cent with the recession in the western

countries, Japan, Australia, where the high-end tourists mainly come from. Now with

these attacks it has probably dropped by at least another 10 per cent.

Travel advisories put out by several countries warning of a high terrorist threat

throughout India and specifically mentioning the attacks on the luxury hotels have added

to the negative impact.

The hospitality industry has been harder hit with a drop of almost 20 per cent in business

since the Mumbai attacks of November 26 and is struggling to give a sense of security to

prospective guests.

Several conferences and events had been cancelled or put on hold. Non-resident Indians

who flock to India in the winter were changing plans. Even smaller cities like Chandigarh

and Punjab are seeing 20 to 30 per cent cancellations. Foreigners are preferring what they

see as safer destinations. Domestic tourism has also dropped.

The industry has been cutting rates. A room in a Delhi hotel that cost around 18,000

(about 362 dollars) to 23,000 rupees a night now comes at 12,000 to 15,000. Rooms in

the range of 12,000/13,000 rupees are now 9,000. Elite guest houses are coming as cheap

as 4,000 rupees a night, Kumar said.

All luxury hotels across the country are upgrading security measures. Hotels are

incorporating thorough checks at the gates and main porch. X-ray machines and metal

detectors are being installed. All baggage is being thoroughly checked. Guests'

identification papers are also being closely scrutinized.

The hotels are employing private security agencies to bolster an increased armed police

presence at the entrances and perimeters. Staff have been asked to be alert and vigilant.

"But hospitality and security don't go together,"