A Report On The Hotel Industry

Report By: Sheetal Iyer (25) Shaul Bhondave() Rachit Maheshwari() Shruti Shah() Dur Khan ()
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MMS 2011-13 BATCH 1

Sr. No. 1 2 3 4 5

Topic HOTEL INDUSTRIES IN INDIA CRITERIA FOR STAR RATING Pest Analysis MARKETING MIX IN HOTEL INDUSTRY SWOT Analysis of Taj

Pg No 03 04 05 08 11

HOTEL INDUSTRIES IN INDIA

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.

CRITERIA FOR STAR RATING

3 STAR HOTELS
Formal and spacious reception area and lounge Their restuarants cater to non- residents guests too En-suite baths with good standard and quality of equipments Comfortable stay targeted

4 STAR HOTELS
High quality furnishing, dcor, and equipments High staff to guest ratio for better services Serious approach towards cuisines and variety

5 STAR HOTELS
The entire hotel is spacious and luxurious Exquisite cuisines that cater to taste buds from all over the world Services are more, flawless and personal attention to the guests needs

SOME UNIQUE SERVICES PROVIDED IN THE 5 STAR HOTELS

Butlers Chauffer driven luxury cars Pillow menu Customised services in the in-house spa and saloon 42 plasma tv, internet, fax, laptops on rent and much more
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Pest Analysis
POLITICAL ENVIRONMENT
These refer to government policy such as the degree of intervention in the economy. Hotel industry as well as tourism industry has a basic backbone of the government support without which it wont be able to sustain the competitive world. Government charges huge amount of tax from the star and luxury category of hotels and thus has a huge impact with the political changes that occur. Any small step taken by the government by changing some law it would seriously affect hotel industry. The hotel industry is getting huge incentives and the state governments are supporting the development of the hotels and their growth. This infact answers the question how are Indian Hotels are planning to expand in the economic crunch time. The Terror attack on the citys [ Mumbai ] renowned hotels Taj and the Oberois had brought a concern on the faces of the hoteliers with a substantial drop in foreign travellers to India taking the terror threat into account.

ECONOMIC ENVIRONMENT
These include interest rates, taxation changes, economic growth, inflation and exchange rates. Mumbai being the financial capital of India has many foreign tourists arriving with the whole and sole purpose of meetings, conferences etc. thus Hotels in Mumbai try to capitalise on the foreign travellers who are seen to bring more money to spend along with increasing amount of expectations from the hotels. As seen in the recent past the guests are willing to pay for the services they get and the more the guests pay the more would the hotel and the industry would prosper. With the increase in the paying power of the guests the need for the good and luxurious hotels become massive. The per capita income in India also has rose to a new extent enabling the common man to go to luxurious hotels to have a lunch or a dinner. Economy of India faced one of the most minimal drop in the whole world because of the controlled and sound financial system in the country. This helped hotels to only concentrate on
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the foreign travellers which had reduced and the local market being stable was much of a relief to the Indian Hotel Industry.

SOCI- CULTURAL ENVIRONMENT

Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. Hotels being situated near the airport see the maximum amount of guests who are in for the business meetings and conferences. There are very few FIT(Free Individual Tour) guests seen in the hotel as compared to the BTC guests [ Bill to Company Guests ] and the business travellers. This explains the reason why the hotel could be seen having single room guests or a twin bedroom guests more than the double bedroom guests. Being the Business hotel it has maximum males arrivals compared to female arrivals. The Hotels could also be seen having layover guests many a times which becomes the revenue generator for the hotel in the slack period of time. Seeing the ratio of the various classes of guests of the hotels it could be easily said that the Hotel must strive for the FIT and the group checking by linking the hotels to the travel agencies in and outside India. This could probably balance the demographic ratio of the arriving guests.

TECHNOLOGICAL ENVIRONMENT
As said before the technology used in hotels is way below the standards when it comes to Hotel management software and the Mini Bar system. Some Technologies used are quite old and need to be replaced with the new ones in the technological market. For example: If a hotel used the printed KOT and BOT and the stewards had to give it themselves to each of the departments. It could be substituted with the direct computerized sending of KOT and BOT to the kitchen or the Bar. Technology always has been seen to have reduced the manpower and the energy required by the people. It would always be a boon to mankind and the technological upgrades would also help to show the advances and the progress of the property. Hotels do not have the wifi installed instead they provide internet connection to every room personally which should be made wifi which would reduce the guest complaints about the in

room facilities complaints and thus they could find many guests happy and satisfied with a thought of you get what you pay for.

MARKETING MIX IN HOTEL INDUSTRY

PRODUCT MIX IN HOTEL INDUSTRY:

In any organization, product has the focal point. The hotel services also require a fair combination of core and peripheral services. In almost all the hotels of same category by and large the core services are identical and therefore the peripheral services divert a close attention where the hotel personnel need professional excellence. More innovative the peripheral services, more attractions organization add to their product mix. This makes it essential that hotels and hotel companies assign due weightage to the formulation of an optimal product mix in which peripheral services prove to be a point of attraction.

PRICE MIX IN HOTEL INDUSTRY:

Pricing decisions are found critical, challenging and chaotic. No marketing mix is found so much critical as pricing. Pricing is not only outcome of the marketing forces it conveys something to customer even about the quality of the product. Fixing the hotel tariffs is just like pricing other goods and services. But the hotel services are found of perishable nature. The seasonal fluctuation in demand & increasing intensity of competition also complicate the pricing decision. Pricing plays important role, due to inseparability & perishability of the hotel products. Following are the major setting tool. Seasonal discounts are applicable in the hotel industry. Customer to charge lower prices, especially during the off season. Trade discount is applicable, as tour operators & travel agents are offered discounts. Special discounts in the hotels, special room rates for overnight convention.

PLACE MIX IN HOTEL INDUSTRY:

The problems hotel experience in reaching new customer leads them to use third parties as intermediaries. This cost money in the form of commission. Various means by which hotels and their customer can be brought together are:
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Direct individual sales:

This is the simplest method. The would-be guest chooses a hotel and then contacts it by letter, telephone or some other medium. The only parties involved are the hotel and the customer. Direct group sales: Many direct bookings are actually made on behalf of groups of one sort or another. Some of these are relatively small, such as sports clubs outings, overnight functions and the like, but others can be very large, such as major conferences. These are sometimes arranged by specialist agencies, but quite often the organizer prefers to deal with the hotel directly. Travel agents

There are two main types: 1 Retail agents these are the common and familiar high Street agents who sell direct to the public. Their main business is to arrange holidays for their customers, including hotel accommodation. 2 Company agents some city centre agencies specialize in business house travel, while organizations such as major multinational companies are so big that it is worth their while to have their own travel agency to handle all their business. Sometimes they buy one outright, sometimes they simply invite a small agency to specialize in their business. Airlines

The major airlines are in a special position, since they are large and commercially very powerful. They are important to hotels because:

The nature of their operations means that they constantly have to send their flight crews to overnight in hotels all over the world, and this in itself means that they create a considerable amount of business. They deal with an enormous number of travelers. Such travelers often find it convenient to arrange other services, such as car hire and hotel accommodation, at their destinations as part of the booking process

PROMOTION MIX IN HOTEL INDUSTRY:

For successful marketing, it is only not sufficient to concentrate on the quality of services but it is also impact generating that we promote our business in such a way that the prospects come to know about the quality to be offered to them as hotel customers. This focuses the attention on innovative promotional measures. The components like advertisement, publicity, sales promotion, personal selling, word-of-mouth promotion and telemarketing need due attention of hotel professionals.

PEOPLE:
The hotel management should train its people regularly. Especially the frontline professionals. The front- line-staffing particular need to identify the changing levels of expectations of users and in a majority of the cases they virtually fail in doing such. A gap is generated between the quality-promised and the quality-offered. If the hotel personnel prove to be high-performers, personally-committed, professionallysound, value-oriented, aware of the behavioral management; familiar with the aesthetic management; they can satisfy the users even if the sophisticated technologies develop a fault. This makes it essential that the hotel personnel are made available an ongoing training facility efficacious in enriching their professional excellence.

PHYSICAL EVIDENCE:
It is ability, environment in which services are offered to the customer. Especially in hotel industry environment, ambience and surrounding is important. it is a material part of services. There are no physical attributes to service so a consumer tends to rely on material cues. Physical evidence can be categorized into two- peripheral and essential. Essential physical evidence is provided by those tangibles given out by service provider as gifts. The important benefits offered by physical evidence are increased employee productivity, creation of good impression among customers, increased credibility of the service provider and differentiation from competitors, effective service quality & repositioning of services.

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SWOT Analysis of Taj

STRENGTHS:
The major strength of the property is the fact that they are the only ecotel i.e. the environmental hotel around that place which makes them unique in a way. The Wellness club which is situated in the lobby area is a well known and a renowned place to be for the local visitors. It is a well maintained all instruments fitted fitness gym which also has a sauna and steam bath. This often is the attraction of the in house guests. The hotel is very close to the international airport many international airlines prefer the hotel for the compensatory stay to the layover guests. Layover guests are the guests whose flight has been delayed or cancelled for some reason and are offered the fine accommodation and the food and beverage facility to them. The property has six banquets and conference halls which have conducted many successful conferences as well as banquet parties till date. This is the main attraction for many small budget companies to have their conferences in a luxurious atmosphere. The employees are given a certificate of honesty which keeps them motivated to be loyal to the guests as well as the property. The Poolside Restaurant is a well known attraction among the higher middle class families for a peaceful breakfast lunch and dinner facilities. It also conducts food festivals as other hotels do which makes the restaurant even more attractive for the targeted market. The occupancy percentage of the hotel is generally very competitive with regards to its range of hotels which it fits in.

WEAKNESS
Basic weakness of the hotel is again the locality. Being situated off the road it may see a significant impact on the FIT guests [ FIT denotes Free Individual traveler] The Hotel having the best possible kitchen as explained earlier lacks the major departments of the kitchen that is the bakery and the butchery section. There is a small bakery which handles small orders of cakes etc and needs an attention of the management. The solution the management found was to bring the bakery and the butchery items from their sister hotel The Orchid which is situated near the Domestic Airport and is managed by KHIL itself [Kamat Hotels India Ltd.]

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The Hotel also has a basic problem of internet as the wi-fi has not been installed in the property and the internet access has to be given to the guests individually. Also the Internet facility provided is not included in the rack rate and needs a fair bit of attention. The solution the management found was that they have introduced the package of rack rate plus the internet rates which is quite fair in order to reduce the initial installation cost of the wifi. The Hotel as seen has not upgraded the hotel management software and has stuck to PMS i.e. Property Management System whereas the other hotels in the locality may have upgraded it to the Opera or the Fidelio which are the industrys current softwares which are faster in performance and standards. The hotel also lacks the mini bar technology wherein if the product is removed from the bar and is not kept in 1 minute the product is charged on the guests bill. This technology helps save the time of checkout of the guests as the mini bar handling steward does not have to attend every checkout room on the spot. He gets some buffer time having the room cleaning to be done. The Hotel also uses the whitney rack system and needs to be upgraded to the fully computerized system which would serve the hotels motto of saving the environment by reducing the amount of paperwork. This would also reduce the hustles and bustles of the reception staff as they would not have to check each and every bill. This would also reduce the work of the night auditor. The Hotel lacks the proper swimming pool which is located next to the restaurant and there is no privacy for the swimmers which they may feel a bit weird.

OPPORTUNITIES
With the upcoming government plans and incentives for the Hotel Industry as explained earlier, it has been one of the hotel chains who are growing their business by introducing more and more properties as explained earlier. This is the part where the Hotel Chain has capitalized and has grabbed upon the opportunities.

THREATS
The recent Bomb Blast in Mumbais best Hotels would be seen as a biggest threat as the consumers/ guests would have been afraid of the fact that the terrorist activities could be prevalent. But as Indian government came up with the NSG [ National Security Guard] Branch specially for Mumbai, this threat would have been diminished. One more threat for the Hotel would be the local 4 star properties which would obviously be trying to succumb the pressure put by the it by introducing their new

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policies and the discounts. The local Hotels which may try to introduce the competitive marketing plans are the Kohinoor Continental and the Mirador. Even then the Hotel has been doing well with an upper hand in the Occupancy percentages of the local Hotels. The upcoming concern for the Hotel could be the recent changes in the human behaviour towards the health and living. People have started becoming more and more conscious about having low calorie, low salt and spices food which may be a threat if the menus are not worked out for those guests demanding that type of food.

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