You are on page 1of 143

Introduction to Hospitality Industry

UNIT 1 1.1 1.2 1.3 Meaning and definition Historical evolution and development Hospitality as an Industry

1.1 Introduction

Meaning and definition

Tourism is not just about the facilities and attractions provided for visitors. It is about people and especially about the relationship between the customer and the individual providing service. Everybody employed in tourism needs to have the knowledge, skills and attitudes to provide the standard of product and service that customers expect. Knowing about the tourism industry, its component parts and especially where you fit in is an important starting point to a successful career in tourism. What Is Tourism? Tourism may be described as the activities of tourists and those who cater for them. It is a highly diversified business with many component parts ranging from airlines to hotels. Tourism is concerned with providing: Travel and transport facilities Accommodation Food and drink Entertainment/recreation Information and assistance Souvenirs

Above all, tourism is a hospitality industry providing a service to visitors in a warm and welcoming way.

ICHM

Page 1

Introduction to Hospitality Industry


Who Are Tourists? Tourists are people who for a variety of reasons travel to destinations, where they stay at least one night. Excursionists are also visitors that do not make an over-night stop, such as daytrippers or people on cruises. There are several basic types of tourists: People who travel to another country simply for pleasure/leisure. People who travel to pursue specialist activities, e.g. cultural tourism, visit to People who travel for business purposes. People who attend international conferences and meetings. People who travel to another country to pursue specific courses of study. People who visit their friends and relatives in another country. People in search of their ancestral roots. People who travel for religious reasons, e.g. pilgrimages to Mecca. Retired people who have time to spare and money to travel.

historical sites.

1.2

Historical evolution and development

Origins of Hospitality Industry Early travelers were either warriors or traders or people in search of knowledge and there were no hotels. Warriors and conquerors pitched their tents for accommodation while traders and persons traveling for knowledge placed a high value on hospitality and sometimes traded their merchandise for lodging. Inn keeping can be said to be the first commercial enterprise and hospitality one of the first service for which money was exchanged. Inns of the Biblical times offered only a cot or a bench in the comer. Guests stayed in large communal rooms with no sanitation and privacy.

ICHM

Page 2

Introduction to Hospitality Industry


The rates were, of course, reasonable. The company was rough. Travelers shared the same quarters with their horses and animals. King James Version of Bible mentions that a Bethlehem innkeeper turned Mary and Joseph away, because there was "no room at the inn". According to Biblical scholars the innkeeper may have meant that the room was unsuitable for a woman about to give birth to a child. At that time, and probably for several centuries after that, men and women shared the same accommodation accompanied by their horses and livestock. The stable where Mary and Joseph spent the night was probably almost as comfortable as an inn and at the same time certainly more private than the inn itself. In the 3rd century AD, the Roman Empire, developed an extensive network of brick paved roads throughout Europe and Asia Minor, and a chain of roadside lodges was constructed along the major thoroughfare from Spain to Turkey. Till the Industrial Revolution of the 1700s, no significant improvement was made in the inns, and taverns and they were not very suitable for aristocrats. To accommodate wealthy travelers, luxurious structures were constructed with private rooms, individual sanitation and comforts of a European castle. These elegant new establishments adopted the French word for mansion-'Hotel'. Their rates were beyond the reach of an ordinary person. In America early inns were-modeled after European taverns with sleeping quarters shared by two or more guests. Herman Melville in his novel Moby Dick has mentioned about a seaman who checked into a room of a nineteenth century inn and next morning woke up to find out that he was sharing the bed with a cannibal. Sharing beds was a very common practice in early American and European inns. Throughout the 1800s American innkeepers improved their services and continued to build larger and more amply equipped properties and most of these properties were located near seaport towns. ICHM Page 3

Introduction to Hospitality Industry


The tendency of Americans to travel more provided an inspiration to lodging operators. The nation's democratic spirit also led to the development of comfortable and sanitary lodging within the reach of an ordinary person. Nature Of The Hospitality Industry Basically for all those who are away from their home, hospitality industry provides services. Hospitality industry consists of those businesses and institutions and (provide food, and lodging-such as hotels, motels, lodges) inns, cruise ships and restaurants etc. To some extent it also inc1udes the air lines industry. In a broad sense, any group engaged in tourism, entertainment, transportation and lodging are covered under hospitality. Hospitality industry is a part of travel and tourism industry. Early travelers were mostly warriors, businessmen, and scholars in search of knowledge or people in search of occupation. Mostly warriors would pitch their tents for accommodation while businessmen would look for a comfortable and safe place; and would often pay through their merchandise or cash to people providing them accommodation and food. The poor people traveling to far off places in search of job or occupation were provided the facilities of food and accommodation free of charges. As per some authentic sources, to facilitate travel throughout Western Europe a highway was constructed in 312 BC. Travel could be done on this highway by chariots. Later in 117 AD this roadway was reconstructed and covered a distance of nearly 50,000 miles. Hospitality business now is both profits making as well as non-profit making. For example, commercial hotels are profit making while canteens, cafeterias and religious catering outlets such as langars and bhandaras are non-profit making. Hospitality industry provides services, which are need oriented, and the services vary with the needs. For example, the needs of a business executive shall be a business hotel while the needs of a student is generally a youth hostel.

ICHM

Page 4

Introduction to Hospitality Industry


Traditional ways of providing hospitality in our country varies from place to place. In Jammu and Kashmir, Kashmiri Pandits, who are very God-fearing people, consider guests as epitome of God almighty Himself and welcome the-guest by a rangoli called Vyog patterned on their door-steps out of flowers and leaves. When the guests come, the host takes a glass of water and touches it on their forehead, so as to drive all evil spirits away from them. A special herb called Isbandh is also touched on the forehead and then burnt in the Kangri. The head of the Dogri family, another community of Jammu, goes to the door of the house to welcome the guest. The head female member of the family performs aarti of the guest and puts up a tilak on the forehead of the guest. Every day in the southern part of the country, ladies make rangoli of rice, flowers and flour etc. It is believed that by doing so they are inviting guests and giving a message that the house is open to welcome guests. Greeting guests with folded hands, touching their feet in respect, aarti, puja, garlanding, applying tilak and ringing of bells, are numerous other ways of providing warm reception and welcome-and hence hospitality-in various parts of our country. Beating of drums, dhols, blowing of trumpets, exotic dances and shows such as puppetry etc. are all different ways of expressing warm hospitality in our country. In different parts of the world, traditional style hospitality is provided. For example, ladies decorated with flowers greet the guests in Honolulu. In some countries, local people gather to welcome visitors -at airports. Providing shoeshine service for every guest in the morning in a hotel in Bangkok is a part of welcome to the guests. In one of the hotels in Mauritius, after the dinner service is over the staff collects in the dining area and sings local songs in the honor of the guests. Memorizing the names of the guests and addressing them by their names is another way of providing

Traditional Style Hospitality for Visitors Hospitality in one of the hotels in France is shown by Singing melodious songs at the time of departure of a guest is done in one of the resorts in Fiji.

ICHM

Page 5

Introduction to Hospitality Industry


All the above-mentioned examples along with many others reflect the concept of hospitality provided by highly trained and experienced staff. Through their sincere efforts every guest feels like a VIP and a welcome syndrome is generated. The past, present and future of the hospi1ality industry are linked together. Comfortable and sanitary lodging was once considered the exclusive privilege of the wealthy only, but with the rise of industry and democracy, hospitality has now become available to common men also. Hospitality has both influenced and is being influenced by cultural, social and economical changes in society. Hospitality business tends to satisfy human needs and also play an important role in the satisfaction of social needs such as belongingness, longing ness, love, esteem and status. 1.3 Hospitality as an Industry

Hospitality Market Hospitality has a very vast market. All those who have stayed in hotels or have plans to stay in hotels or any other lodging establishment can be put under hospitality market. Hence all travelers including tourists, visitors, businessmen, leisure travelers, pilgrims and company executives etc- can be the hospitality market. Depending upon the purpose of travel people can be classified under either commercial hospitality market or leisure hospitality market. Hotel Common Law states that a "Hote1 is a place where all who conduct themselves properly, and who being able to pay and ready to pay for their entertainment, are received, if there be accommodation for them, and who without any stipulated engagement as to the duration of their, stay or as to the rate of compensation, are while there, supplied at a reasonable cost with their meals, lodging and other services and attention as are necessarily incident to the use as a temporary home."

ICHM

Page 6

Introduction to Hospitality Industry


A hotel may be called as an establishment where primary business is to provide to the general public lodging facilities and which may also furnish one or more of the various services such as food: beverage, laundry, uniformed services etc. Hence, hotel can also be called as home multiplied by commercial activities. As per the Reader's Digest Dictionary the term 'Hotel' refers to 'a house of entertainment of travelers'. According to the Encyclopedia Britannica the word 'Hotel' is of ancient origin, but its use in English for a house offering lodging and food for travelers is recent. The Hostlers of London took the name of Inn keeping in 1473. The world Hostler' or 'Ostler' having come to mean an inn servant. The term 'Hotel' was used in England in about 1760. British law as a place where a bonafide traveler can receive food and shelter, provided he is in a position to pay for and is in a fit condition to be received defines hotel or inn. In legal terminology a: hotel is an inn and is required under common law to offer to its visitors lodging, food and protection, 10 their baggage. Hotel service is generally based on these three fundamental necessities of life. In addition to these a modem hotel provides its visitors many luxuries of modem urban city living, all under one roof. 1. Inns Public houses in early times in England were called inns. Normally the term 'Inn' was meant for the finer establishments catering to nobilities and clergy: In France these were ca1led 'HOTELLERIES. 2. 3. Taverns. The house frequented by common man were known as taverns. The less Hostel Derived from the word' Host' and was used very late. The head of the hostel was important establishment in France were called CABARETS. called" 'HOSTELER' in French, while in England he was called 'Inn-Keeper'. History Of Hotels And Accommodation Industry And Their Development ICHM Page 7

Introduction to Hospitality Industry


Early history of accommodation for travelers can be traced back to the Greek word 'Xenia', which not only meant hospitality but also the protection given to a traveler from discomforts. The city was bound to offer hospitality. In Sparta city, although due to rigorous customs visitors were not encouraged, yet goddess Athena was considered as protector of strangers and hence her name was 'Xenia Athena'. In this period travelers were mainly diplomats, philosophers; intellectuals arid researchers. Guests were invited to stay with noblemen. In ancient Olympia, buildings constructed with the aim to accommodate strangers can be seen. They were called 'Leonidio' and were, built in 4th century B.C. The concept of hospitality can also be drawn back to ancient times. Homer finds mention of it in Iliad and The Odyssey. Hotel keeping can also be traced back to many centuries and its evolution through the, ages has been brought about by Britains economical and industrial changes and developments. During the seventh and eighth centuries, it was thee monasteries that applied hospitality to strangers and, as no charge was made for the accommodation, a travelers were expected to contribute according to their means to the Abeey funds. As more people began to travel they grouped themselves together not only for company but for mutual protection from highway and robbers. Consequently travelers arrived in groups at a monastery and it was often difficult to accommodate them all. To overcome this, separate lodging houses, called 'Inns' (a Saxon word) were built. The word 'inn' came to mean a 'Lodging House' and until the passing of the Hotel proprietors Act in 1956, it was the legal term for 'Hotel' and hotel proprietors were legally referred to as 'Common innkeepers'. 'Common' in this sense referred to Common Law. In the thirteenth and fourteenth centuries, manor houses, being hospitable 'places; willingly gave accommodation to travelers. As no payment was expected, travelers tipped the servants as a 'thank you' for the generous hospitality received-thus the practice of tipping was born. When high taxes crippled the generosity and hospitality of the owners of the manor houses, many became commercial inns. During Elizabeth the First's reign, posting houses were ICHM Page 8

Introduction to Hospitality Industry


established and travelers, in addition to getting refreshment were able to change horses before continuing their journey. The turn of the century saw an era that was called the 'Belle Epoch when the grand and luxurious hotels flourished. A few hotels are still operating today. In London and some other cites attempts have been made to recapture some of the grandeur of the past era in the making of modem hotels, and bring back the memories the grand hotels of olden days. The next stage in the cycle of evolution of the hotel industry was the coming of the motorcar. It enabled people to visit those parts of the country not reached by railways. This gave birth to inland resorts and the hotel Industry began to flourish. International air, travel has helped create the modem 'stop-over' hotel. With the increase in this form of travel, the number of hotels built close to airports has multiplied. Another trend in hotel keeping is the motel, which is the twentieth-century version of the old 'Coach Inn'. People traveling the country by car, stopping overnight here and there, require not only refreshment for themselves, but also safe parking for their cars. Post Houses, developed by the Trust House Forte Group are in fact the modern version of the old coaching inns.

B.Sc. (HOSPITALITY AND CATERING MANAGEMENT) INTRODUCTION TO HOSPITALITY INDUSTRY UNIT II 2.1 Complementary roles with other industry 2.2 Contribution to Indian and global economy ICHM Page 9

Introduction to Hospitality Industry

2.1 Complementary roles with other industry Hotel industry in India Indias hospitality industry is all set to roll with big players entering the budget hotel segment. Due to a huge demand- supply gap, this segment holds enormous business potential. India is one of the worlds most dynamic economies today. So with the rapidly growing trade the number of inbound, outbound & domestic tourist has also increased. India is on track to capture 01% of the global trade in the near future. In fact the worlds GDP of India is expected to rise from 6% to 11% by 2025 & as such India may emerge as the 3rd Pole in the global economy. So, with a growing number of wealthy Indians as well as an expanding middle class, the number of Indians traveling within the country has nearly doubled in the past decades to about 450 million. It means that there is a huge domestic tourist market in India itself, including business & leisure travelers. An estimated 300 millions tourist trips annually are there, on average, which may also include those traveling for social & religious purpose. The industry expects a boom in tourism in the domestic sector in India, & a growth of 10% to 15% over the next few years. A growth in tourism will certainly mean a boom in hotel & restaurants & in turn focus on its service sector &the human resource manning those services. The hospitality industry has grown at 23.7% in 2005-2006 & now the focus is shifting towards domestic travel, which is the real driver of hotel business in the country in past, Foreign tourist arrivals in our country has been hovering around 2.5 million but in 2003, with 2.72 millions tourist, growing was at 14.3%. in calendar year2004, foreign tourist arrivals

ICHM

Page 10

Introduction to Hospitality Industry


reached the figure of 3.37 million, showing a growth of 23.5% & India crossed the magic figure of 03 million foreign tourist for the 1st time. And in an effort to encourage foreign investment in the real estate sector for hospitality industry, the Indian government has changed its restrictive laws in February 2005, to allow 100% foreign direct investment to develop new housing, commercial properties, hotels & hospitals. The international tourist arrival in Delhi for the year 2010 is forecasted at 18 lakh & of domestic tourist being 35.8 lakhs in the same year. Career in hospitality Demand of manpower in hospitality industry Encompassing all components of Hotel & Tourism consumption, investment, government spending & exports is expected to grow 5.4% & total S 6.2 trillion in 2005. the ten year annualized growth(2006-2014) forecast is 4.6% per annum illustrating the outlook for strong long term growth. Hotel industries GDP contribution in an Indian economy. Tourism & hotel industry contribute to world economy is illustrated by the direct industry impact of 3.8% of total GDP & the combined direct & indirect impact of Hotel & Tourism economy expected to total 10.6% in 2005. Role of Hotel management Courses in Hospitality Sector Introduction to Hotel Management India has great caliber for growth & development in the tourism sector. The growth of the hotel management is linked closely to this sector. Manpower requirement for hotels is on the rise. Star hotels require specialized trained staff for their various departments like Food & Beverage, Food Production, Housekeeping & Front office, Public relation, Account section & other services. These jobs have become increasingly challenging & sophisticated in recent ICHM Page 11

Introduction to Hospitality Industry


times. The employment opportunity in hotels varies within the industry & is largely dependent on the size of the hotel. Human resource required by the hotel industry by 2001 is predicted to match the extension of room space, likely to be almost an additional 124,000 rooms. Each room in a 5 star hotels needs 03 person & jobs with direct responsibilities, while many more persons indirectly assist the core group. Nature of work In all hotels, hotel managers & assistant managers works to ensure that guests visits are pleasant comfortable. 05 star hotels may employ hundreds of workers & under the manager there may be many assistant managers assigned among departments responsible for various aspects of operations. Employee in most of the hotel operational areas enjoys pleasant & comfortable working conditions. The office staff works with automated electronic office system, which provides the best job conditions. Hotels works on a 24 hour & so the employees work on shift system. Communicating with the various kinds of people would make the work quite interesting but housekeepers & their assistant staff performs physically strenuous duties. The job demand a consistent personal appeal, which may be difficult customers may be challenging. This dynamic sector offers jobs for young men & women with a pleasant personality & a flair for creativity. Hoteliering seems to be glamorous but at the same time it is tough. A gregarious, extrovert person can find this job pleasurable. Revenues of Hotel and Restaurant (H&R) industry in India during the financial year 2006-07 was INR604.32 billion , a growth of 21.27% over the previous year, primarily driven by foreign tourist arrivals ,which increased by 14.17%. Currently there are some 1,980 hotels approved and classified by the Ministry of Tourism, Government of India, with a total capacity of about 110,000 hotel rooms.

ICHM

Page 12

Introduction to Hospitality Industry


The hospitality industry, is poised to grow at a faster rate and reach INR826.76 billion by 2010. It is estimated that over the next two years 70,000-80,000 rooms will be added across different categories throughout the country. In the Indian scenario, the report covers the current trends in the Hotel industry (increase in foreign tourist arrivals, MNC's foraying into India, demand supply mismatch getting closer, rise in Occupancy rates and RevPAR and strong recovery of the Indian economy),its structure (composition of hotels), key consumer segments (business traveller, leisure traveller, & airline cabin crew) and value chain. As a part of the derisking model the companies in the Indian hotel industry are also moving up the value chain to management contracts and co-branding. 2.2 Contribution to Indian and global economy Dynamics of the Lodging Industry If there is one constant in the lodging industry, it is that everything changes. For example, changes in transportation technology brought about an increase in both hotel supply (number of rooms available to rent) and demand (people who want to rent rooms on use services). More people began traveling more frequently than ever before. With the rise in demand came an influx of new supply - hotels judiciously located and designed to service guests. The Influence Of Economic Fluctuations Generally throughout history, when economies expand, so do supply and demand. The healthy economy at the beginning of the twentieth century ushered in the Golden Age of hotels, during which time a number of large hotels were constructed in the United States. On its heels came the Great Depression, a time when banks failed, unemployment skyrocketed, and travel sharply decreased. Many of the hotels that survived the depression are nowhighly familier Statler, Ritz-Carlton, and Hilton, to name a few. Another major economic boom occurred in the 1980s. Tax incentives to investors, expectations of higher demand, and a growing economy helped fuel extensive hotel development. In the late 1980s and early 1990s, ICHM Page 13

Introduction to Hospitality Industry


however, further development was curtailed and the industry was seriously hurt by excessive room supply, economic recession, and elimination of tax incentives. In recent years, there have been more hotel rooms available than guests to fill them. The lodging industry is steadily emerging from this crisis situation. An economy recovery, an increase in domestic demand and international travel, and a slight but significant upturn in occupancy rates are all expected to help return the lodging component of the hospitality industry to profitability. The report on Indian Hotel Industry provides an in-depth view of the sector in general and important aspects of the sector. The report starts with the global hotel industry to give a perspective of the Indian hotel industry in the global context. The report covers the hotels industry structure, major players, regulations, growth drivers, issues and challenges, critical success factors and foreign direct investment trends. An analysis of the industry performance was made on critical business parameters like Occupancy rates, Revenue Per Available Room (RevPAR) and Average Room Rates (ARR) and compared with global trends. The report also analyses the performance of the industry across major markets, and profiles the major players in the industry. Contribution to Indian and global economy Revenues of Hotel and Restaurant (H&R) industry in India during the financial year 2006-07 was INR604.32 billion , a growth of 21.27% over the previous year, primarily driven by foreign tourist arrivals ,which increased by 14.17%. Currently there are some 1,980 hotels approved and classified by the Ministry of Tourism, Government of India, with a total capacity of about 110,000 hotel rooms. The hospitality industry, is poised to grow at a faster rate and reach INR826.76 billion by 2010. It is estimated that over the next two years 70,000-80,000 rooms will be added across different categories throughout the country.

ICHM

Page 14

Introduction to Hospitality Industry


In the Indian scenario, the report covers the current trends in the Hotel industry (increase in foreign tourist arrivals, MNC's foraying into India, demand supply mismatch getting closer, rise in Occupancy rates and RevPAR and strong recovery of the Indian economy),its structure (composition of hotels), key consumer segments (business traveller, leisure traveller, & airline cabin crew) and value chain. As a part of the derisking model the companies in the Indian hotel industry are also moving up the value chain to management contracts and co-branding. The report on Indian Hotel Industry provides an in-depth view of the sector in general and important aspects of the sector. The report starts with the global hotel industry to give a perspective of the Indian hotel industry in the global context. The report covers the hotels industry structure, major players, regulations, growth drivers, issues and challenges, critical success factors and foreign direct investment trends. An analysis of the industry performance was made on critical business parameters like Occupancy rates, Revenue Per Available Room (RevPAR) and Average Room Rates (ARR) and compared with global trends.. The report also analyses the performance of the industry across major markets, and profiles the major players in the industry. Role of multinational chains/groups of Hotels in the Indian hospitality industry and their contribution to the Indian Economy The role of the multinational companies are significant with their increasing contribution to the Economy. Basically Services are intangible deeds, processes and performances that cannot be touched, seen or felt but can be experienced. The Service sector is characterized by its diversity. Global opportunities are growing due to accelerated growth of the service economy. In the hospitality industry, Average room rate (ARR) and occupancy are the two most critical factors that determine the profitability, since most of the marginal revenue gets added to the bottom-line. ARR in turn depends upon location, brand image, star rating, quality of facilities, pricing of value added services, complementary services offered and the seasonal factor. The ICHM Page 15

Introduction to Hospitality Industry


hotels to manage and invest their fund in India adopt many business strategies to establish their place of business and create innovative service packages to their custom. In a long-term perspective, these measures bring significant financial returns. CURRENT SCENARIO: The hotel industry in India has a latent potential for growth. This is because India is an ideal destination for tourists as it is the only country with the most diverse topography and relative political stability. At present India attracts approximately 2.5 Million tourists every year, which is just 0.4% of the world tourist arrivals. Normally the Multi national hotels operated In India can be owned, leased or acquired under management contract basis. Hotel operators want the leverage on their management expertise and brand equity without making enormous capital investment. In management contract agreements a fee calculated as a percentage of revenue and/or operating profit is charged. Typically, the management fee is to the tune of 3% of the total revenue and 7% of gross operating profits. Most players, with the exemption of IHCL and EIH, have entered into a marketing tie-up with major international hotel chains. Thus we have Hyatt Regency a renowned international hotel chain having tied up with AHL, Leela having tied up with Kempinski and ITCH having a franchisee agreement with ITT Sheraton to use the latter's brand name. For the Indian hotel owners and the international hotel chains the benefit is mutual, tie-up with an international hotel chain puts the hotel on the global map with access to chain's reservation network worldwide. For the international hotel chain they can ride on the boom of the industry without making enormous capital investments on infrastructure and facilities. Associations with international brand also play a major role in image building and attracting foreign tourists. However the value of the international brand gets diluted if a foreign entity enters an agreement with several Indian companies.

ICHM

Page 16

Introduction to Hospitality Industry


SOME FINANCIAL ISSUES : Luxury hotels operate under single tariff structure whereby the foreign tourists are charged in dollar terms whereas the domestic guest is charged the equivalent amount in rupees. The luxury hotels earn about two-thirds of their revenue from foreign tourists. Leisure travelers constitute approximately 76.5% of the total tourist arrivals whereas business travelers constitute 21% of the total arrivals. The remainder is accounted by students. The hotel industry is the second largest foreign exchange earner and between 1991 and 1998 there has been a 100% growth in foreign tourists. Hotels benefit from rupee depreciation as over 60% of revenues in the luxury hotel segment are in foreign currencies. Thus any depreciation of the rupee goes directly to the bottom line (FOREX income is also fully tax exempt), as none of the costs are directly linked to the exchange rate. The hotel debt environment is also improving. While many countries are hampered by a still sluggish economy, those with a low interest rate environment with relatively stable-banking conditions will provide opportunities for hotel investors to raise capital. For hotel lenders, from a risk/return basis, there has never been a better time to provide new capital to this industry in India. Currently, guest retention and repeat clientele is the name of the game. Hotels those are able to provide guests a product where the service is consistent and of a level required by the target market, will only survive. The Hotel industry, always ready with innovative ambitious business plans and the spirited management plotting the right strategies, is contributing its might to improve the position of the Economy. So the role of multinational chains/groups of Hotels in the Indian hospitality industry and their contribution to the Indian Economy is significant. There have not been many exploratory researches in this area. But there is every need to work on the economics for a proper planned growth at a macro level. Also the WORLD definitely looks better and happy with ALL the hospitality it can muster.

ICHM

Page 17

Introduction to Hospitality Industry

Tourism & Hospitality India boasts of the world's highest mountains, miles of coastline with excellent beaches, tropical forests and wildlife, adventure tourism, desert safari, lagoon backwaters, ancient monuments and World Heritage Sites, forts and palaces, and of course, the Taj Mahal. The Indian tourism and hospitality industry has thus emerged as one of the key sectors driving the country's growth. The tourism sector is thriving, owing to a huge surge in both business and leisure travel by foreign and domestic tourists. According to the latest Tourism Satellite Accounting (TSA) research, released by the World Travel and Tourism Council (WTTC) and its strategic partner Accenture, India's travel and tourism industry is expected to generate approximately US$ 100 billion in 2008 and almost US$ 275.5 billion by 2018, growing at an average of 9.4 per cent over the next ten years. Moreover, according to the TSA research, travel and tourism is expected to contribute 6.1 per cent to India's national gross domestic product (GDP) and provide almost 40 million jobs by 2018. Also, a country brand index (CBI) 2008 survey, conducted by FutureBranda leading global brand consultancyin collaboration with public relations firm Weber Shandwick's Global Travel & Lifestyle Practice, has ranked India second in the value-for-money index. The rapid growth of India's tourism industry has been instrumental in South Asia being the preferred tourist destination as noted by the UN World Tourism Organisation (UNWTO). Foreign tourist arrivals during the period JanuaryOctober 2008 increased by 370,000 to 4.32 million as compared to 3.95 million during the corresponding period of 2007. Number of foreigners visiting India as tourists in October 2008 was 453,000 as compared to 331,000 in September 2008. Consequently, foreign exchange earnings from tourism in India rose from US$ 8.293 billion during January to October 2007 to US$ 9.696 billion during January to October 2008. Earlier, in 2007, total number of foreign tourists visiting India was 5.08 million - an increase of 14.3 per cent over 2006.

ICHM

Page 18

Introduction to Hospitality Industry


Outbound Tourists A booming economy and increase in disposable income has led to a massive growth in the number of Indians travelling abroad. In 2007, 9.78 million Indians went abroad for tourism, an increase of 17.3 per cent over 2006. Indian outbound tourist flow is expected to increase at a compounded annual growth rate (CAGR) of 13.30 per cent during 20082012, according to a new report titled, "Indian Tourism Industry Analysis", by RNCOS, a leading market research and information analysis company. Along with the rise in the number of Indians travelling abroad, both the total and per capita expenditure spent abroad has been increasing. For example, according to the European Travel Commission, average spend per trip of Indian outbound tourists has increased from US$ 611 in 2000 to US$ 822 in 2006. Similarly, Euromonitor International estimates the outgoing tourism expenditure from India to grow to US$ 21 million by 2011, representing a growth rate of over 25.7 per cent between 2006 and 2011. Medical Tourism "First World treatment' at Third World prices" is how industry sources define medical tourism in India. Although India is a recent entrant into medical tourism, it is fast catching up. According to a study by McKinsey and the Confederation of Indian Industry (CII), medical tourism in India could become a US$ 2 billion industry by 2012 (from US$ 350 million in 2006). Credit Suisse estimates medical tourism to be growing at about 2530 per cent annually. Indian hospitals are fast becoming the first choice for an increasing number of foreign touristsand as per a Credit Suisse estimate, nearly 180,000 medical tourists were treated in India in 2004. The key selling points of the medical tourism industry are its cost effectiveness and its combination with the attractions of tourism. Many travel agents are now selling combined packages of treatment and vacation. India has some of the best hospitals and treatment centres that are equipped with infrastructure and technology, which are at par with those in ICHM Page 19

Introduction to Hospitality Industry


the US, UK and Europe at a fraction of the costs only a tenth and sometimes even a sixteenth of the cost in the West. In fact, according to the World Travel and Trade Council, Indian tourism demand will continue to grow at a rapid pace. It estimates the demand to grow at an average of 8.8 per cent between 2004 and 2013, making India the world's third fastest growing tourist market. The boom in the Indian tourism industry has cascaded to the rural areas as well. India continues to attract tourists owing to its splendid historical architecture and rich culture along with beautiful beaches, rural tourism or what now is called 'responsible tourism' is also fast gaining popularity with travellers flocking to discover the best in rural arts and heritage. Hospitality The boom in India's tourism industry and the surge in tourist inflow to the country have percolated to other associated sectors like hospitality. The revenues for the Indian hotel and restaurant industry in the year 2006-07 exceeded US$ 118.85 million, an increase of nearly 22 per cent over the previous year. The industry is poised for rapid growth and is projected to be well worth over US$ 158.49 million by the year 2010. And with the continuing surge in tourist inflow, this sector is likely to offer tremendous opportunity for investors. For example, while the estimated number of required hotel rooms is around 240,000, the current availability is just 90,000 rooms - leaving a shortfall of 150,000 rooms to be provided. India's hospitality sector is expected to see an estimated US$ 11.41 billion in the next two years, and around 40 international hotel brands by 2011, according to a report by Ma Foi Management Consultants. Moreover, the sector is expected to provide over 400,000 jobs. Along with these large-scale expansion plans, international hotel asset management companies are also likely to enter India. Several global hotel chains see immense investment opportunities in the sector with global chains like Hilton, Marriott International, Berggruen ICHM Page 20

Introduction to Hospitality Industry


Hotels, Cabana Hotels, Premier Travel Inn (PTI), InterContinental Hotels group and Hampshire amongst others have announced major investment plans in India with others likely to follow suit. Latest Trends Hotels are no longer satisfied with the plain-vanilla room concept but are now getting ready for alternate hospitality formats such as residential hotels, destination resorts, condo hotels, vacation ownership and private residents' club. Four Seasons is developing a destination resort in Puthenkayal, Kerala, which will have 75 villas and also 20 branded, luxury private residences. The resort will be operational by 2012. Nearly 11 per cent of the hotel demand in the country is from long stay guests. The Leela Group is looking at tapping this market. Its property in Gurgaon will have 90 apartments called 'The Residence' aimed at the long stay guests. India's largest real estate player, DLF, is building India's first residential hotel in Goa with the Hilton Group. DLF plans to invest US$ 2 billion to have six hotels on a similar format in the next five years. Expansion Plans With India being on the global tourist map and more and more people coming to India for tourism or business, hotels are looking at expansion in a major way. The Taj Hotels Resorts and Palaces in a joint venture with CC Africa, a leading safari operator and ecotourism company from Africa is opening two safari lodges in Madhya Pradesh at Panna and Kanha National Parks. It already has a safari lodge each at Bandhavgarh and Pench National Parks.

ICHM

Page 21

Introduction to Hospitality Industry


Marriott, which manages six hotels in India at present, is looking at a steady growth in the number in the next four years. It expects to have 25 hotels by 2011 with room strength of 8,00010,000. EIH, which owns the Oberoi and Trident group of hotels, is looking at opening 10 hotels in India and abroad in the next three years. These include a luxury Oberoi Hotel in Gurgaon to be opened in 2009, a 320-room Trident hotel at the Bangalore International Airport to be opened in 2010, and two hotels to be opened in Hyderabad in 2010. Hotels in Hyderabad are on an expansion spree and a whooping 4,000 rooms will be added in the next couple of years. Around 20 major properties including that of Park Hyatt, Trident, Marriott, Leela and Taj among others will effectively double the current capacity of 4,000 rooms across all types of hotels. International Recognition India's booming tourism sector has not only witnessed international investments but also achieved international accolades with its increasing appeal as the leading global tourist destination. The government has been instrumental in making tourism a priority sector. Its efforts have borne fruits with a series of international recognition and awards. India has been elected to head the UN World Tourism Organisation (UNWTO), the highest policy making world tourism body represented by 150 countries. The world's leading travel and tourism journal, Conde Nast Traveller, has ranked India as the 'numero uno' travel destination in the world. India was adjudged Asia's leading destination at the regional World Travel Awards (WTA). India's Taj Mahal continues to figure in the Seven Wonders of the World. Bangalore-based Leela Palace Kempinski was voted the favourite business hotel in the world in a Readers' Choice Awards by Conde Nast Traveller in 2007. ICHM Page 22

Introduction to Hospitality Industry


India bagged the World's leading Destination Marketing Award for the Incredible India campaign. Government Initiatives To unlock the huge potential in this sector, the government has taken various initiatives Launch of Incredible India campaign to promote tourism both in domestic and Recognition of spare rooms available with various house owners by classifying these for the development of this sector. international markets. facilities as "Incredible India Bed and Breakfast Establishments"', under 'Gold' or 'Silver' category. A new category of visa, "Medical Visa" ('M'-Visa), has been introduced which can be given Ministry of Tourism has tied up with United Nations Development Programme (UNDP) to to foreign tourists coming into India for medical tourism. promote rural tourism. 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. ICHM Page 23

Introduction to Hospitality Industry


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. Sources said, 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 15% 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. For further information on ''Hotel Industry in India please go through the following links. Hotel Industry in India has witnessed tremendous boom in recent years. Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel industry. The thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. The 'Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' (ADB) campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry. In recent years government has taken several steps to boost travel & tourism which have benefited hotel industry in India. These include the abolishment of the inland air travel tax of ICHM Page 24

Introduction to Hospitality Industry


15%; reduction in excise duty on aviation turbine fuel to 8%; and removal of a number of restrictions on outbound chartered flights, including those relating to frequency and size of aircraft. The government's recent decision to treat convention centres as part of core infrastructure, allowing the government to provide critical funding for the large capital investment that may be required has also fuelled the demand for hotel rooms. The opening up of the aviation industry in India has exciting opportunities for hotel industry as it relies on airlines to transport 80% of international arrivals. The government's decision to substantially upgrade 28 regional airports in smaller towns and privatization & expansion of Delhi and Mumbai airport will improve the business prospects of hotel industry in India. Substantial investments in tourism infrastructure are essential for Indian hotel industry to achieve its potential. The upgrading of national highways connecting various parts of India has opened new avenues for the development of budget hotels in India. Taking advantage of this opportunity Tata group and another hotel chain called 'Homotel' have entered this business segment. According to a report, Hotel Industry in India currently has supply of 110,000 rooms and there is a shortage of 150,000 rooms fueling hotel room rates across India. According to estimates 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 rates in India are likely to rise by 25% annually and occupancy by 80%, over the next two years. This will affect the competitiveness of India as a cost-effective tourist destination. To overcome, this shortage Indian hotel industry is adding about 60,000 quality rooms, currently in different stages of planning and development, which should be ready by 2012. Hotel Industry in India is also set to get a fillip with Delhi hosting 2010 Commonwealth Games. Government has approved 300 hotel projects, nearly half of which are in the luxury range. The future scenario of Indian hotel industry looks extremely rosy. It is expected that ICHM Page 25

Introduction to Hospitality Industry


the budget and mid-market hotel segment will witness huge growth and expansion while the luxury segment will continue to perform extremely well over the next few years. Classifying Lodging Properties Because of constant changes, staying current just with who is offering what and where can be difficult for the guest. The necessity for classifying hotels came about when hotels began to differ from one another enough to appeal to different group of people. Long gone are the days when the guest had two choices luxury hotels or budget hotels. Hotel entrepreneurs such as Kemmons Wilson created a third option when they built facilities intended to serve middleclass families. These property classes had clear-cut boundaries in the beginning. Potential guests knew they could expect more services at a luxury hotel than a budget motel, and something in between at a midpriced hotel. As the economy in general boomed and room supply increased, hoteliers focused on setting themselves apart from the crowd by offering specialized accommodations. No longer just a place to sleep, hotels were appealing to conventioneers, business groups, and special-interest groups. Descriptive hotel classifications helped potential guests locate suitable lodgings, and as such, became a valuable marketing tool. As this diversity flourished, so did competition for customers and brand loyalty. As properties continually upgraded their services, boundaries between the descriptive labels blended into one another. Old systems of classification were not as clear. For instance, the Marriott brand, once recognizable as a midpriced hotel, began to include hotels classified as economy (Fairfeilds Inns), business (Courtyard), extended-stay (Residence Inns), all suite (Marriott Suites), and upscale (Marriott Hotels and Resorts). Other chains also began to cater to a myriad of guests from business to pleasure travelers and from individuals to groups. Consequently, lodging classification became more complex. Facilities were then grouped according to size, amenities offered, price, type of guest (business or pleasure), or type of hotel (luxury, full-service, or economy, extended stay to name a few). Many facilities fit two or more categories, and did so in order to attract different types of guests. ICHM Page 26

Introduction to Hospitality Industry

Descriptive Labels Motels and hotels are the most widely recognized forms of lodging. They can be found almost anywhere from the center of a huge metropolis to the streets of a small town. For the most part, hotels and motels attract transient guests who need a place to stay for a night or two while traveling for business or pleasure. Hotels that specialize in residence or extended-stay accommodations serve guests looking for more permanent lodging. Hotels. From the age of grand hotels to the troubled 1990s, the hotels has been the most fabled type of lodging. Varying greatly in style and service, most hotels share a similar structure. They generally have more than two stories with guest rooms located along common hallways. Guests rooms usually have a bed, bath, telephone, and television. In addition to housekeeping, services may include luggage assistance, access to a business center for use of a photocopier or fax machine, and availability of recreation facilities, restaurants, or bars. Hotels are most often located in or near business districts, travel destinations, and airports. Motels. Motels offered fewer amenities and were less expensive to build and operate than downtown hotels. The lower rates, basic accommodations, roadway locations, and lack of a central lobby were well-suited for the new overnight automobile traveler. Motels are generally less formal than hotels. Guests usually carry their own luggage, and free parking is available, often adjacent to the guests room. Many motels provide swimming pools and restaurant service. Guests who prefer to save money may opt for a budget motel that has smaller rooms, no pool, and fewer amenities. All-Suite Hotels. Unlike regular hotels, all-suite hotels rent only suites, often combing living space with kitchen facilities, or a bedroom section with an attached parlor. To keep rates competitive with other ICHM Page 27

Introduction to Hospitality Industry


hotels, many all-suite hotels have small lobbies and no public meeting rooms. Some do not offer restaurant or bar facilities. As the market has expanded, through, some all-suite hotel hotels have reintroduced public areas and limited foodservice. Amenities such as free breakfast, cocktail hour, and access to an on-premise health club keep Summerfield Suites Hotel in San Jose, California, at a 98 percent average occupancy rate. Convention Hotels. Convention hotels provide meeting and banquet facilities for large groups (usually five hundred or more) booked in their guest rooms. Because they target groups, these hotels need large lobbies to accommodate group arrivals. They also have a high percentage of double-occupancy rooms and emphasize food and beverage services. Convention hotels may also offer concierge floors to cater to individual guests needs. Levels Of Service At one time, hotels differed distinctly by the services they offered. Recognizing that all guests do not expect the same services nor have the same amount to spend on lodging, the hotel industry offered a variety of services at different prices aimed at particular markets (groups whose members have similar expectations and budgets). Familiarity with these labels is helpful in understanding guest perception as the transition is made from one system to another. Also, classifications short history shows how dynamic the industry is and how important service is at all levels. Classifying hotels by service contains four broad categories: luxury, full-service, limited-service, and economy. Luxury Hotels And Resorts. Traditionally, independent hotels offer the finest accommodations money can buy. Luxury properties are descendants of the grand hotels, featuring expensive, lavishly decorated public areas and the high levels of customer service. They offer the finest cuisine and the full range of amenities from shampoos and hair dryers to private Jacuzzis and fireplaces. Whether parking your car, carrying your luggage, or delivering room service, staff members including concierges, bell persons, front desk attendants, and wait staff are well-trained and efficient. Luxury resorts offer the finest entertainment and recreational facilities available. A part of ICHM Page 28

Introduction to Hospitality Industry


luxury properties attraction is their ability to perpetuate an exclusive image by charging high rates. Hotels in the category include Four Seasons and Ritz-Carlton properties, the WaldorfAstoria, and the Trump Plaza in New York. Royal Sonesta, a deluxe hotel in New Orleans, Louisiana, spends an estimated $1.5 million annually on guest service. Their guests must find such service pleasing with an average occupancy of 75 percent in 1992, the hotel grossed $25 million in sales. Full-Service Properties. Featuring properties operated by Hilton, Hyatt, Westin, and Marriott, this category of hotels attempts to offer a wide range of services at lower rates than luxury hotels. Full-service hotels generally offer clean, well-decorated hotels with meeting and restaurant facilities, a limited room-service menu, and a variety of recreational activities. Although not as extravagant as the luxury properties, full-service hotels generally have large, attractive public areas. The ratio of service of the concierge or other staff may be limited to designated VIP floors. Some all-suite and extended-stay hotels with good-sized public areas also fit into the full service category, with amenities like in-room coffeemakers, microwave ovens, and refrigerators. Limited-Service Properties. Lodging establishments like Days Inn, Hampton Inn, and Quality Suites & Inns were once considered limited-service facilities. Usual offerings included simple, clean rooms with a telephone, free cable television, swimming but some offered a few extra amenities such as complimentary shampoo and lotion to distinguish themselves from the economy properties. The remaining all-suite hotels fit into this category because of their limited services and amenities, and small public areas. The Days Inn in Fort Pierce, Florida, has a guest mix of 50 percent business and 50 percent leisure. As the second most successful highway facility in 1992, its management renovated its public spaces including two meeting rooms. Economy Properties. ICHM Page 29

Introduction to Hospitality Industry


Once offering only the basic bed and bath facilities, economy properties focus on more values for the dollar with clean and low-priced lodging. Economy properties generally did not offer meeting and recreational facilities or food and beverage services, with the possible expectation of a vending area featuring prepackaged snacks and video games. Staff was limited to only those required to provide basic front office services, security, and housekeeping services. Generally, the smaller guest rooms of the economy hotels offered one or two double beds and a separate bathroom equipped with no more than towel and soap. Properties in this category include Econo Lodge, Motel 6, and Daystop. Economy Lodging Systems management company has positioned Knights Inns as the lodging choice of Middle America. According to President Gregory P. Terrel, The target is traveling salesmen, senior citizens, and people with a family income of $30,000 a year. How Important Is Tourism To The Economy? A healthy vibrant industry is important for the national economy and job creation. Tourism makes an important contribution to employment. By its nature, tourism is a highly labor intensive activity as it relies so much on personal service. It is probably the sector of the economy, which is least vulnerable to substitution of labor by technology. Tourism has also an important role to play in the bringing of prosperity to those under-developed parts of the country, which for various reasons, are relatively unsuited to industrial development or agriculture. In this context, tourism's expressed natural effects complement Government's policies to achieve a balanced growth throughout the whole economy. The hotel sector represents a vital part of these earnings, since the provision of accommodation, food and beverage is essential for anyone spending time away from home, whether it is for business or pleasure. As the nature of the traveler will vary, so the category of hotel available to them will differ accordingly.

ICHM

Page 30

Introduction to Hospitality Industry


The star rating system is based upon the facilities, which the hotel offers, and the service they provide. This may be as basic as a room with breakfast, or as sophisticated as the service offered in a luxury five-star operation. The decision to stay in a particular hotel may be influenced by various factors. One will certainly be the price. The guest will, however, be influenced by other variables such as the facilities on offer, or the location, or the size, or the standard of service. Many guests are loyal to a particular group or chain of hotels. They always seek out an establishment in which they feel the surroundings to be familiar. Hospitality is treating people like you would want to be treated when you are traveling. In other words, it means making a tourist feel totally welcome as not only your guest, but also the guest of the complete family of the Hotel. Hospitality is genuine smiling face. Hospitality can be termed as deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and public i.e. business of making and keeping friends, and promoting an atmosphere of better understanding. Very frequently we hear phrases like "He is always hospitable to visitors", "We are grateful to friends for their hospitality in putting us up while we were on holiday", "She is so inhospitable that she grudges giving us anything to eat or drink when we visit her" etc. All such statements are suggesting the positive or negative attitude of welcome towards visitors, friends or strangers. Hospitality activity covers everything i.e. providing attentive and courteous services, facilities and amenities to a traveler, meeting and greeting him at the door, providing efficient and caring service of food and beverage to him in the room i.e. providing "A Home away from Home; and making his visit a memorable and pleasant experience. Reception, welcome and, in general, the treatment of a guest pr a stranger in most friendly manner is Hospitality. In most of the countries all over the world a guest is received with a ICHM Page 31

Introduction to Hospitality Industry


great amount of courtesy and warmth and is provided with entertainment. The basic concept of Hospitality is to make the guest feel that he has come amongst friends and that GUESTS ARE ALWAYS WELCOME. Although the basic concept of hospitality has remained the same, yet with the passage of time and development of technology and science, the needs and wants of travelers have changed greatly thus providing numerous services and facilities in terms of accommodation, and other basic needs such as food and beverages. In olden days kings, lords, maharajas, landlords and sometimes the panchayats etc. used to provide food and shelter to travelers and their animals free of charges and it used to be a benevolent activity. But with the passage of time it has not only remained a benevolent activity but has become a flourishing business too. A part of hospitality activity is being attentive, alert, and cordial with the guest without forcing yourself and your ideas on to him; at the same time being very polite and cooperative. All those working in hospitality industry have one common objective-"Creating an image of friendly reception and treatment" for guests and visitors. As front office personnel, the hotel staff, in order to provide hospitality should make his guests feel at home and use pleasant tone of voice smilingly, offers his assistance wherever possibly can be provided. Don't ignore the guest, and don't be abrupt no matter how busy you are: anticipate his needs and wants and provide the same without his asking them. As an hotelier, keep on checking the hospitality attitude of your organization. Make a checklist and be sure that you and your-staff are fulfilling each and every point of the checklist. The checklist may include areas such as front desk arid lobby, etc. Make sure that the front desk is always kept clean, orderly and well lighted. Even the stationery used is so designed that it does not create confusion and clearly indicates how it is to be filled in, and. is inviting. The lobby is kept clean and furniture kept at proper _place. Lighting system is soft and appealing. The welcome spirit that the guest is looking for is there. Floor covering, pictures, furnishing etc. are appealing, attractive and aesthetically designed.

ICHM

Page 32

Introduction to Hospitality Industry


Further, the check list should include the intangibles such as training of the staff and willingness and positive attitude of the staff., The arriving guest is always greeted with a smile and proper salutation to show interest in his trip and his well being.

REVIEW QUESTIONS 1. 2. 3. 4. 5. What is the meaning and definition of hospitality industry? Write a note on historical evolution and development of hospitality industry Give an overview on hospitality as an Industry Discuss on role of hospitality industry in complement with other industry Write a note on contribution of hospitality industry to Indian and global economy

ICHM

Page 33

Introduction to Hospitality Industry


B.Sc. (HOSPITALITY AND CATERING MANAGEMENT) INTRODUCTION TO HOSPITALITY INDUSTRY UNIT 3 3.1 Hospitality accommodation 3.2 Food and beverage facility 3.3 Ancillary service, Support service 3.4 Hospitality organization

To efficiently run their hotels, hotel managers organize them into various functional areas and then delegate responsibility and authority. The functional areas are divided into revenue and cost (or support) centers. Divisions such as rooms and food and beverage are revenue centers; others, like engineering and accounting, are cost centers. The number of such centers (or divisions) depends on the size of the hotel. 3.1 Hospitality accommodation Service Departments To provide lodging to guests, all hotels are organized around four basic functions: (1) front desk operation (2) housekeeping (3) building maintenance/engineering, and (4) security. Beyond these common services, hotels and their departments can vary tremendously. For example, most luxury hotels include a restaurant and beverage department, while most budget facilities do not. The performance of these functions can also vary widely among different types of hotels. Business guests of a convention center may expect hi-tech front desk

ICHM

Page 34

Introduction to Hospitality Industry


operations, and guests at a resort may prefer a more personal approach. At any rate, all hotels carry out these functions both behind the scenes and at the front of the house. Functional Areas: There are two approaches to classify departments in typical hotels: 1. Revenue Generating versus Cost Centers: The first approach is trying to differentiate between departments revenue-wise. In fact, this approach entitles that if a department generates revenue to the hotel (ex. Rooms Division Department, F&B Department), it is called a revenue generator. On the other hands, if a department incurs costs without directly contributing to hotel profitability, it is called a cost or support center (ex. Accounting Department, Maintenance and Engineering Department). 2. Front of the House versus Back of House: This approach classifies departments according to department staff's frequency of communication with guests. If communication between staff and guest is frequent (ex. Front Office Department), then the department is said to be a front of the house department. On the other hand, if the communication between department staff and guests in nonexistent or on occasions, then the department is said to be back of the house department. Different Departments: Rooms Division: In a statistics conducted by the U.S. Lodging Industry in 1995, it has been shown that the majority of hotels revenues (60.2 %) are generated from Rooms Division Department under the form of room sales. This very department provides the services guests expect during their stay in the Hotel. Lastly, the Rooms Division Department is typically composed of five different departments: ICHM Front Office Reservation Page 35

Introduction to Hospitality Industry


Housekeeping Uniformed Services Telephone

Beneath is a brief description of the different departments decomposing the Rooms Division Department, along with their related main responsibilities: Front Office: Sell guestrooms; register guests and design guestrooms Coordinate guest services Provide information Maintain accurate room statistics, and room key inventories Maintain guest account statements and complete proper financial settlements

Front office is also known as the face of the hotel. It is the first guest contact area and also the nerve center of the hotel. All the activities and areas of the front office are geared towards supporting guest transaction and services The major functions that is performed as a part of the Rooms Division Department are: a) b) c) d) e) f) Reservation, registration, room & rate assignment Fulfills guest services and updates room status Maintains & settles guest accounts Creates guest history records Develops & maintains a comprehensive database of guest information Coordinates Guest Services

The sole priority of the Rooms Division Department is ensuring Guest Satisfaction, which happens when, guest expectations match what the hotel provides. In order to achieve Guest Satisfaction, front office department should prepare: a) b) Careful designed front office organization chart Comprehensive goals, strategies and tactics ICHM Page 36

Introduction to Hospitality Industry


c) d) e) Planned work shifts Well designed job descriptions Well designed job specifications

Reservation: Receive and process reservation requests for future overnight accommodations. With technology development, the Reservation Department can, on real time, access the

number and types of rooms available, various room rates, and furnishings, along with the various facilities existing in the hotel There should be close relation-ships with Sales and Marketing Division concerning Large Group Reservations Rooms Division: Concierge The Concierge department is there to answer the guest's inquiries about the city and its surroundings, make reservations at restaurants, theaters, sightseeing tours and many other services Rooms Division: Transportation / Garage The Transportation department oversees the parking garage and also any special transportation needs that a guest might have. Rooms Division: Guest Relations This department is responsible for engineering surprises and anticipating our guests' needs, by pre-calling all guests prior to their arrival to help garner preferences, identify special occasions and offer additional hotel services. Housekeeping: . Inspects rooms before they are available for sale ICHM Page 37

Introduction to Hospitality Industry


. Cleans occupied and vacant rooms . Communicates the status of guestrooms to the Front Office Department . Cleans and presses the propertys linens, towels, and guest clothing (if equipped to do so, free of charge or for a pre-determined fee) . Maintains recycled and non-recycled inventory items One of the most integral departments within the hotel, the housekeeping department is responsible for the immaculate care and upkeep of all the guest rooms and public spaces. Individuals who excel in the housekeeping departments have an eye for detail and a commitment to the training, development and motivation of a diverse group of talented employees. In a competitive hotel market, it is service and cleanliness that really make an impact on guests and determine whether they will return. An efficiently managed housekeeping department ensures the cleanliness, maintenance and the aesthetic appeal of the hotel. The housekeeping department not only prepares clean rooms for the arriving guests on a timely basis, but also cleans and maintains everything in the hotel so that the property is as fresh and attractive as the day it opened for business. The task performed by the housekeeping department is critical for the smooth daily operation of any hotel. The concept of housekeeping is very simple but considering the size of the establishment the task is gigantic. The rooms division constitutes 50% or more of the total revenue. The hotel management ensures optimal room sales for maximum profit. The sale of rooms is dependant on the quality of the dcor, facilities, cleanliness and safety of the room. Housekeeping has to ensure that the basic human needs of comfort and security are catered to. Thus the efforts of the housekeeping department in giving a guest a desirable room has a direct bearing on the room and the guests experience in the hotel. In any residential or commercial establishment, whether a hotel, hostel or hospital, the basic requirement s are food, beverages and accommodation. ICHM Page 38

Introduction to Hospitality Industry

On arrival a guest gauges the quality of the hotel from the entrance and the foyer and the behaviour of the staff. On reaching the room the guest has more time to take a closer look at the dcor, the furniture and fixtures, the furnishings, especially the bed, cleanliness and comfort of the surrounding and can judge the standard of the establishment. This impression is formed before a guest has had any meals or beverages in the hotel. The basic services provided should be a clean, comfortable and safe room. In a hotel, accommodation is the biggest major revenue generator and thus the satisfaction of the guest is of prime importance. In any establishment there are three departments that are concerned with accommodation: Reception/Front office - Sell rooms Housekeeping - Clean and maintain rooms Maintenance - Maintain a/c, light, water

Management of the accommodation or housekeeping department will be influenced by factors like size, type and location of the establishment. However regardless of the size of the department, it should be run with the highest degree of efficiency at the lowest cost.

d) Uniformed Services: . Bell Attendants: Ensure baggage service between the lobby area and guestrooms . Door Attendants: Ensure baggage service and traffic control at hotel entrance(s) . Valet Parking Attendants: Ensure parking services for guests automobiles . Transportation Personnel: Ensure transportation services for guests from and to the hotel ICHM Page 39

Introduction to Hospitality Industry

. Concierge: Assists guests by making restaurant reservations, arranging for transportation, and getting tickets for theater, sporting, or any other special events Telephone Department: . Answers and distributes calls to the appropriate extensions, whether guest, employee, or management extensions . Places wake-up calls . Monitors automated systems . Coordinates emergency communications . Protects Guest Privacy 3.2 Food and beverage facility Food & Beverage: Restaurants/Bars/Lounges This includes all the restaurants, bars and lounges that are located throughout the hotel. Food & Beverage: Banquets This department sets up the rooms where small and large meetings and events including weddings and receptions are held. They take place in the various conference rooms and ballroom of the hotel. They also provide the service of food and drink to the guests at these events. The Banquet Department coordinates the details of an event as it is happening, executing the requests the guests have made prior to their arrival and responding to any unexpected needs of each guest. Food & Beverage: Culinary

ICHM

Page 40

Introduction to Hospitality Industry


This department includes all the kitchens of the hotel. Typically, a hotel will have a Main Kitchen, a satellite Fine Dining Restaurant Kitchen, a Banquet Kitchen, a Cold Kitchen, a Pastry Kitchen and sometimes, a Pool Kitchen. These various kitchens order, receive, store and prepare all the meals in the Hotel. They also prepare the beautiful buffets and the guest room food amenities. Food & Beverage Night Cleaners Since the food and beverage areas are all very busy from morning to night, much of the cleaning activity must take place overnight to ensure that the highest levels of cleanliness and hygiene are maintained in all food preparation and service areas. Food & Beverage: Room Service Also known as In-Room Dining, this department provides meal and beverage service to the guest in his/her room. The meal is always beautifully presented, as if the guest were at a table in one of our restaurants. This department operates 24 hours of the day. Food & Beverage: Stewarding This department stores, cleans and distributes all the equipment (glassware, silverware, chinaware) that is needed in food and beverage service for our guests. This Stewarding department supports the entire food and beverage operation, providing important equipment supply and cleaning services to the kitchen and to every food and beverage outlet. Food & Beverage: Storeroom This is the storeroom where all fresh produce, meat, dairy and preserved foods as well as beverages are stored at the correct temperatures and in an orderly way until they are needed for preparation in the kitchens.

ICHM

Page 41

Introduction to Hospitality Industry


Food & Beverage Service Department: According to U.S. Lodging 1995 statistics, F&B Department constitutes the second largest revenue generator of a typical hotel with an average of 23.1 for Food sales, and 8.6 % for Beverage sales. In a five-star hotel, Food and Beverage outlets might have the following forms: . Quick Service . Table Service . Specialty Restaurants . Coffee Shops . Bars . Lounges . Clubs . Banquets . Catering Functions . Wedding, Birthdays 3.3 Ancillary service, Support service Sales & Marketing Division: This department sells the hotel and all its services and brings in the guests. Sales people have targets to meet and their goal is to keep the hotel busy all year. A typical hotel should usually have Sales & Marketing division. However, if the staff size, volume business, hotel size, expected group arrivals is low enough, the hotel might have marketing staff placed under the reservation department (i.e. No need for a Sales & Marketing Division). A typical Sales & Marketing Division is composed of four different departments: a) Sales b) Convention Services c) Advertising d) Public Relations ICHM Page 42

Introduction to Hospitality Industry

The following are the sections coming under sales and marketing Public Relations The Public Relations department ensures that the image of the hotel and the company in the local community is always maintained at the very highest level. They also make press releases whenever there is something important to announce and maintain excellent media relations. Sales Reservations & Revenue Management The Reservations department takes calls, emails and faxes from guests and makes their room reservations for arrival at a future date. The Revenue Management department establishes the optimal room rate at any given time, based on demand and other market variables. Sales & Marketing: Catering Sales The Catering Sales Department sells, plans, and coordinates all social and local corporate catering events such as weddings, bar/bat mitzvahs, retirement parties, society events, local functions and meetings. After booking the event, the catering sales department works with event planners to understand, record and coordinate the details of what the guest is looking for and communicate these to the relevant departments. The team works to ensure the guest's utmost satisfaction at the event. Each catering sales manager is also responsible for individual booking goals and for achieving departmental budget requirements. Sales & Marketing: Conference Sales This department sells the space that guests need to hold their meetings and social events in our hotels. They also take care of recording and sharing with the appropriate departments all the details (other than food and beverage needs, which are handled by the catering department) related to the function such as flowers, audio-visual needs, table layout etc. ICHM Page 43

Introduction to Hospitality Industry


Finance/Accounting Division: All transactions involving cash, billing, purchasing and other numerical data processing and reporting are done in this department. This department also assists with the preparation of the annual budgets and the profit and loss statements and other accounting reports.

The Accounting Division monitors the financial activities of the property. Some of the activities that are undertaken in the Accounting Division are listed below: a) Pays outstanding invoices b) Distributes unpaid statements c) Collects amounts owed d) Processes payroll e) Accumulates operating data f) Compiles financial reports g) Makes bank deposits h) Secures cash loans i) Performs other control and processing functions Finance Purchasing/Receiving This department ensures that all the products, food and beverage, equipment and other operating supplies required to run the hotel are ordered in a timely manner, received, checked and stored until they are needed by the operating departments. Engineering and Maintenance Division: This very department maintains the property's structure and grounds as well as electrical and mechanical equipment. Some hotels might have this very division under different names, such as maintenance division, property operation and maintenance department

ICHM

Page 44

Introduction to Hospitality Industry


The maintenance department takes care of all repairs such as electrical, air-conditioning, plumbing, carpentry, painting and polishing and masonry. A list of the items required for maintenance, is given to the desk housekeeper by the floor supervisor. The latter maintains order slips and informs the maintenance department, which can attend to the complaints. Once the repairs have been carried out the room is double checked by the floor supervisor and cleared to the front office for sale.

Security Division: Security division personnel are usually screened from in-house personnel, security officers or retired police officers, across certain physical skills, and prior experience. Some of the functions of the security division are listed below: a) Patrols the property b) Monitors supervision equipment c) Ensures safety and security of guests, visitors, and employees Human Resources Division: Some of the duties of the human resources division are listed below: a) Responsible for external & internal recruitment b) Calculates employees' salaries, compensation, and tax withholding c) Administrates employees' paperwork, monitors attendance d) Maintains good relations with Labor Unions e) Ensures employees' safety and working conditions Other Divisions: All the above mentioned departments and/or divisions should exist in a typical five-star hotel, however there might be some revenue generators that are specific to certain hotels but not existing in others. Below is a list of some possible extra or other divisions that might exist in a hotel:

ICHM

Page 45

Introduction to Hospitality Industry


Retail Outlets (i.e.: Shops rented to outsiders or managed by the hotel) The revenue earned from this is called a Rental Recreation Facilities (ex: Fitness Center, Tennis Courts, and Cinema Saloons) These facilities may be operated by an independent operator who would pay either a flat fee, a minimum fee and a percentage of the gross receipts or simply a percentage of gross sales. The revenue earned from this is called a Concessions Conference Centers Casinos Hotels may be paid a fee by suppliers that are located outside the hotel but provide a service to hotel guests e.g. car rentals and photographers. The revenue earned from this is Commission Fitness/Recreation This department includes services and facilities to enhance the well-being and health of our guests by offering Tennis, Golf, Massage, Swimming and a Fitness Center among other activities Golf Some of our hotels offer golf facilities to our guests. This department ensures that all the guests' needs with regard to playing golf are met. This includes the management of the landscaping, irrigation, golf buggies, golf retail store etc. Information Systems / Technology This department ensures that all the computers and computer systems in the hotel are installed correctly and run properly at all times. This department also ensures the efficient functioning of the telephone switchboard equipment.

ICHM

Page 46

Introduction to Hospitality Industry


Meetings & Special Events The Meetings/Special Events Department coordinates all details involved with group bookings, working closely with meeting planners to arrange all rooming, food and beverage details, meeting facility specifications, and any additional requirements of the group. The Meetings & Special Events Managers partner with company event planners prior to their arrival to understand, manage, record and coordinate the details of each event and to communicate these to the relevant departments. The role of the Meetings & Special Events manager is to be the liaison between the planner and the hotel operational departments. The team works to ensure the guest's utmost satisfaction with the event. The Meetings & Special Events department is responsible for accurate forecasting of group rooms, banquet food and beverage and for achieving overall hotel budgeted revenue. Quality The Quality department makes sure that the quality sciences are known and energized by all employees and that all decisions are made using quality tools. Spa The Spa department operates almost like a hotel with a hotel. It offers separate services such as reservations, housekeeping, front desk and concierge. It may be joined to a fitness center or a Golf Club or a Resort Hotel, and will operate as a profitable business unit. In addition to the services mentioned above, the Spa department employs certified massage therapists, nutrition consultants, wellness coordinators, nail technicians, and hair stylists. Audio Visual The Audio Visual department supports the Food & Beverage and Meetings/Special Events departments by providing audio (sound), light, projection and other services to guests who hold meetings and events at our hotels. ICHM Page 47

Introduction to Hospitality Industry

Control Systems An important part of managing is to measure performance levels and take corrective action if they do not meet the goals of the enterprise. In order to maintain control over all aspects of an organization, managers and owners must first establish goals against which results can be measured. For example, an organization may establish a payroll goal of 30 percent of revenues-that is, the operating plan is to spend 30 percent or less of sales on salaries and other payroll expenses. The plan may also provide that a variance of 2 percent is acceptable, but that anything above that is not. If payroll expenses exceed 32 percent, management must take action. The ideal control system allows managers to quickly recognize and correct deviations from the operating budget (or some other management standard) before they become major problems. One way hotel managers accomplish this is to have accurate forecasting systems. In too many cases, corrections are made long after the problem starts. The longer the period between the variation from property goals and the correction, the weaker the control system and the greater the potential for lost revenue and increased costs. Training plays a key role in control systems. A certain number of errors by front desk personnel and food servers is inevitable-no human system is perfect. But careful training can minimize errors and bring performance levels up to standard. Many of management's goals can be quantified. The more specific the goal and the easier it is to quantify, the more likely it is that the goal will be met. Guest room occupancy levels, guest counts in restaurants, and revenue and expense targets are examples of quantifiable goals. Not all goals are easy to measure. For example, an operating plan might have a goal of increasing guest satisfaction or employee morale. However, even there it is possible to be more specific and measure the results accordingly. Two of the most important types of controls for hotel managers are financial controls and quality controls. Financial Controls ICHM Page 48

Introduction to Hospitality Industry


Among the most useful financial control tools are financial statements. Investors use them to monitor profitability. Lenders view them as measures of financial stability. Managers base their planning on them and monitor the success of their planning with them. In order to understand a hotel financial statement, it is necessary to be familiar with the hotel industry's financial terminology and to understand the manner in which revenues and expenses are grouped by hotel division. Uniform System of Accounts. In March 1926 the American Hotel & Lodging Association (at that time it was called the American Hotel Association of the United States and Canada) adopted a manual called the Uniform System of Accounts for Hotels. The system was formulated by a committee of accountants and hoteliers in New York City. The ninth edition bore a new title to better encompass all segments of the industry: The Uniform System of Accounts for the Lodging Industry classifies the different types of hotel revenues and expenses, and groups them in the statement of income by division or department. The statement of income is one of management's major control tools. It shows the total sales by product or service category (rooms, food, beverage, and so on) for a stated period of time, the expenses incurred in generating those sales, and the profit earned or the loss incurred as a result of those activities (see Exhibit 11). There are three types of hotel expenses: divisional expenses, overhead expenses, and fixed charges or capital costs. Divisional expenses include a wide range of items, such as rooms division payroll expenses, restaurant laundry, and telephone supplies like message pads and pencils. Overhead expenses are costs such as marketing and energy--costs that relate to the entire hotel and not to one specific division. Fixed charges or capital costs are expenses related to the investment, such as insurance on the building and contents, and interest on the mortgage loan. The uniform system also classifies assets (something of value that is owned) and liabilities (what is owed to creditors). Examples of assets might be the hotel building itself, furniture and equipment, and courtesy vans to transport guests to and from airports. Liabilities include items such as the mortgage loan and food purchases for which payment is due. All of these items are grouped ICHM Page 49

Introduction to Hospitality Industry


together in the financial statement known as the balance sheet (see Ex A balance sheet reports the financial position of a business by presenting its assets, liabilities, and owner's or shareholders' equity on a given date. Quality Controls It is a relatively simple task to standardize the quality and cost of a manufactured product. This is because products, whether they be toasters or skis, are produced in a factory under strictly controlled 'conditions. Some assembly lines are computerized, and many use robots to perform some functions. Moreover, quality control inspectors not, only monitor all operations but can inspect each finished item before it leaves the plant and a consumer purchases it. Service businesses such as hotels operate under an entirely different set of circumstances. The product that a hotel produces-the experience of staying there is manufactured in the hotel "factory" right in front of the consumer. For example, a guest enters a hotel, goes into the lounge, sits down at a table, and orders a strawberry daiquiri. The product in this case is not simply the daiquiri-it also includes the lounge, the server, and the bartender who mixes the drink. It is this total experience that the guest pays for. If the guest had just wanted a strawberry daiquiri, he or she could have made one at home or bought a bottled one at the corner liquor store. Because of the nature of a service business, it is extremely difficult to standardize or even control the service that guests receive. There are too many variables that can interfere with the process-including the guests, who, for example, may be rude 'and provoke employees to be rude in return. Opportunities for dissatisfaction abound. Take our guest who ordered the strawberry daiquiri. Possibly the guest had to wait for a table because none was available or the host was out of the room temporarily. Maybe the seating was prompt, but the guest had to wait longer than expected for the order because the ice machine or the drink mixer was broken. Perhaps the bartender was preoccupied with a personal problem instead of concentrating on fixing a perfect strawberry daiquiri. Even if everything else goes well, it can all be spoiled if the guest, has to wait too long for the check or if there is a mistake on it. All of these possibilities exist ICHM Page 50

Introduction to Hospitality Industry


whenever a guest enters the lounge. Any of them can affect the quality of the experience (the product) and thus the guest's perception of the lounge and the hotel. This one transaction is a single example of the many kinds of things that can go wrong in a hotel that is open 24 hours a day, seven days a week, where guests interact regularly with, and receive service from, front desk agents, food servers, room attendants, bell persons, concierges, valets, maintenance people, and gift shop employees. Product and service consistency is of primary importance and can only be achieved through quality controls such as: Setting standards that answer the needs and expectations of guests Selecting employees who are capable of achieving those standards and who are motivated to do so Conducting continual training and certification programs for all employees at every level Involving employees in structuring job descriptions, setting performance, standards, and solving work problems Having a feedback system so that all managers and employees know they are achieving what they have set out to do-satisfy the guest Rewarding managers and employees for achieving quality goals Quality programs at hotels go by various names: "quality assurance" (QA) and "total quality management" (TQM) are two examples. Although their names vary, the goal of all such programs is to provide quality service to guests. 3.4 Hospitality organization Hotel Organization: In order to carry out its mission, global and departmental goals and objectives, every company shall build a formal structure depicting different hierarchy of management, supervision, and employee (staff) levels. This very structure is refereed to as organization chart. Moreover, the organization chart shows reporting relationships span of management, and staff/line functions. ICHM Page 51

Introduction to Hospitality Industry

Usually in the hotel industry, where the sole aim is to satisfy guests, positions, whatsoever level in the hierarchy they occupy, shall coordinate jointly their efforts so as to provide quality, standard product to their customers. Therefore, examples of dotted lines are numerous in hotel organization charts. Every organization chart shall be flexible, to reflect the ever-changing environmental dynamics and, hence be able to survive. In accordance, organization charts shall be reviewed periodically in order to determine whether the actual organization still match the environment needs (i.e. guests, employees, technology, competitor's needs) or not.A SWOT analysis (i.e.: Strengths, Weaknesses, Opportunities, and Threats) shall be a good start to initiate a change in the organization chart or not. Last but not least, it is of extreme importance that there are no 2 hotels having exactly the same organization chart, and that a hotel might have an organization chart change over time. For, organization charts shall be tailored to fit the needs of each individual property. REVIEW QUESTIONS 1. 2. 3. 4. What do you mean by hospitality accommodation? What are the Food and beverage facility in the hotels? Write a note on Support service in hotels Comment on hospitality organization B.Sc. (HOSPITALITY AND CATERING MANAGEMENT) INTRODUCTION TO HOSPITALITY INDUSTRY UNIT 4 4.1 Hospitality distribution channels- meaning and definition, function and

level of distribution

ICHM

Page 52

Introduction to Hospitality Industry


4.1 Hospitality distribution channels- meaning and definition, function and level of distribution MARKETING MIX Introduction Marketing mix allows you to combine all the marketing tools in order to sell your product. Marketing mix is also said to be the marketing tool that the hotel uses to purchase its marketing objectives in the target market. The various marketing tools are 1. Product 2. Place 3. Price 4. Promotion

SALES PROMOTION PRODUCT HOTEL PRICE ADVERTISI NG CHANNEL CUSTOMER

SALES FORCE

PUBLIC RELATION

ICHM

DIRECTIONAL TELEMARKET ING

Page 53

Introduction to Hospitality Industry

Definition: Marketing mix is the combination of elements that we use to market our product. There are four elements: Product, Place, Price and Promotion. They are called the four Ps of the marketing mix. Some people think that the four Ps are old fashionable and propose a new paradigm: The four Cs! Product becomes customer needs; Place becomes convenience, price is replaced by cost to the user, promotion becomes communication. It looks like a joke but the Cs is more customer-oriented. Product A good product makes its marketing by itself because it gives benefits to the customer. You should have a clear idea about the benefits your product can offer. Suppose now that the competitors products offer the same benefits, same quality, same price. You have then to differentiate your product with design, features, packaging, services, warranties, return and so on. In general, differentiation is mainly related to: The design: it can be a decisive advantage but it changes with fads. For example, a fun The packaging: It must provides a better appearance and a convenient use. In food The safety: It does not concern fun board but it matters very much for products used by The "green": A friendly product to environment gets an advantage among some segments. board must offer a good and fashionable design adapted to young people. business, products often differ only by packaging. kids. In business to business and for expensive items, the best mean of differentiation are warranties, return policy, maintenance service, time payments and financial and insurance services linked to the product.

ICHM

Page 54

Introduction to Hospitality Industry


Place-Distribution A crucial decision in any marketing mix is to correctly identify the distribution channels. The question how to reach the customer" must always be in our mind. Definition: The place is where you can expect to find your customer and consequently, where the sale is realized. Knowing this place, you have to look for a distribution channel in order to reach your customer. Important The place is not where is located your business but where your customers are. For a retailer it is the same but for a boat producer located in Philippines the real place is the entire world. Do not confuse positioning and place. Here place means the real physical position of the customer in a geographic area or along a distribution channel. Channels It exists today, with the internet, more channels than in the past but basically, you have to consider three main distribution channels: -Selling to the customers: Whether you sell by yourself ( as retailer) whether you employ a sales force, you are in these cases in front of the final customer. There are not intermediaries between you and him. Unfortunately, except for the retailer business, this situation is far to be the general case. Selling to the retailers: For example, you manufacture the fun boards and you sell them

to the retailers. This practice could be a bit complicated. Selling to the wholesalers: There are maybe four or five sport articles wholesalers . You

sell your fun boards to these big men. On turn the wholesalers sell the fun boards to the retailers which finally sell to their customers.

ICHM

Page 55

Introduction to Hospitality Industry


As you can see, the choice of your distribution channel heavily depends on your product and place in the productive process. If you are in coal mining, do not expect to sell some coal buckets to the final consumer.

PRICE Price means the pricing strategy you will use. You have already fixed, as an hypothesis a customer price fitted to your customer profile but you will have now to bargain it with the wholesalers and retailers. Pricing strategies There are three pricing strategies: Competitive pricing: If your product is sold at the lowest price regarding all your competitors, you are practicing competitive pricing. Sometimes, competitive pricing is essential. For instance, when the products are basically the same, this strategy will usually succeed. The success of competitive pricing strategy depends on achieving high volume and low costs. If your prices are lower than your costs, you are going straight to bankruptcy! To avoid such a mistake, you have to take notice of the break even ratio. Cost-plus-profit: It means that you add the profit you need to your cost. It is also called

cost-orientated strategy and is mainly used by the big contractor of public works. The authority may have access to the costing data and should like to check if the profit added to the cost is not too high. In fact, this strategy is only good for a business whom the customers are public collectivities or government agencies. Value pricing: It means that you base your prices on the value you deliver to customers.

For example, when a new technology has a very large success, you can charge high prices to

ICHM

Page 56

Introduction to Hospitality Industry


the customer. This practice is also called skimming. It is easy when you are in the introductory phase of the product life cycle. Value pricing is also common in luxury items. Sometimes, the higher the price, the more you sell: Fashionable clothing or restaurants for Promotion Advertising, public relations and so on are included in promotion and consequently in the 4Ps. Sometimes, packaging becomes a fifth P. As promotion is closely linked to the sales, here are the most common features about the sale strategy. Definition: The function of promotion is to affect the customer behavior in order to close a sale. Of course, it must be consistent with the buying process described in the consumer analysis.Promotion includes mainly three topics: advertisement, public relations, and sales promotions. Advertisement: It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice about three important notions: Reach is the percentage of the target market which is affected by your advertisement. For example, if you advertise on radio you must know how many people belonging to your segment can be affected. Frequency is the number of time a person is exposed to your message. It is said that a person must be exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating point. You have to evaluate it before any advertisement campaign. Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest, create desire and finally require action that is to say close the sale. Public relations: Public relations are more subtle and rely mainly on your own personality. For example, you can deliver public speeches on subjects such as economics, geo-economics, futurology to ICHM Page 57

Introduction to Hospitality Industry


several organizations (civic groups, political groups, fraternal organizations, professional associations) These speeches will enable you to develop new relationships and their cost is nil. Sales promotion: It includes fair trades, coupons, discounts and are linked to the sales strategy. Sales Strategy Sales bring in the money. Salesmen are directly exposed to the pressure of finding prospects, making deals, beating competition and bringing money. Definitions: A lead is a person who has been identified as a prospect. A prospect is a potential customer. An account is a customer that often buys from the company. A national account is a very big customer An order taking: the customer asks for a product and the vendor sells it. It's usual way to sell candy, soda or to sell tickets for theater. On the contrary, active selling involves locating customers and persuading them to buy. Inside sales refers to selling done mainly by phone or by internet. Outside sales involves getting appointment to meet customers at their home. Home cold calling means to phone people you do not know. Hard sell means to use of high pressures upon the prospect. We have then to distinguish the sale process and the sale organization. The sales process: It depends heavily on the buying process. It includes prospecting and persuading.

ICHM

Page 58

Introduction to Hospitality Industry


Prospecting involves finding the leads and presenting the product. After making contact, the salesman must show that the product solves a customer's problem. He must also answer two questions : Has the prospect a need or an interest in the product ? Does the prospect have the money to buy the product ?

If the prospect does not meet these criteria, you have better to move on to the next prospect ! Persuading and authority are often necessary to close a sale. The salesman's approach is often to rise questions in order to lead the prospect to a logical conclusion : I must buy now. The sale organization: The two major issues are to recruit salesmen or to organize a franchising or multi-level market If you recruit the salesmen: You should determine the size of the sales force: It must cover the customer segment. A poor coverage is an invitation to competitors. Remember the production possibility frontier to determine your maximum sales force. o You should also determine the alignment of the sales force: Alignment by territory divides the market into geographical areas such as counties or Alignment by product specializes each salesman in a product Alignment by customer specializes each salesman in a customer (it means that the You can also combine the three alignments. You should finally determinate how to motivate the sale force: Sales people can be

cities and specializes each salesman in an area. o o o

customer must be a national account).

compensated by commissions, salary or salary plus commission. For a starting business it's more convenient to pay only commissions If you organize a multi level marketing: Salesmen becomes independent distributors. They operate as contractors. They are encouraged by your company to recruit other distributors. In return, they receive a percentage commission on the sales of their recruits. ICHM Page 59

Introduction to Hospitality Industry


There are two benefits from multi-level marketing :You get a large sale force without the expense of full time employees and the distributors work very hard to improve their income. Global connections Time is coming to emphasize on the logical connections between all these elements. Low involvement products such as soda, with high price elasticity can afford a competitive pricing and a mass market strategy. But you have to take notice that competitive pricing implies low costs and a lot of technical progress, that require big investments and big money. What is more, mass market strategy implies very important budgets in advertising and once again big money. It is easy to view all the implications. It shows that this strategy fit to important companies. On the contrary, high involvement product with low price elasticity do not always implies big investments or important expenses in advertising: Value is subjective to the consumer and is not related to the real cost ( fashionable clothing, luxurious perfumes) But how to convert any product in a high involvement product? 1) The best way is to create a value expressive message about the product. You have to link the product to very high involvement issues. For example : health, social status, youth, success, and so on. This link must be seen by the consumers as a very important characteristic (in fact, this characteristic is only subjective. It just exists in the consumer's mind). 2) A product provides different benefits : For example, a single garment brings you three benefits : it is warm, it is fashionable and it is easy to clean. Hospitality Distribution channels Distribution (or "Place") is the fourth traditional element of the marketing mix. The other three are Product, Price and Promotion. The Nature of Distribution Channels

ICHM

Page 60

Introduction to Hospitality Industry


Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as "all the organisations through which a product must pass between its point of production and consumption" Why does a business give the job of selling its products to intermediaries? After all, using intermediaries means giving up some control over how products are sold and who they are sold to. The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself. Functions of a Distribution Channel The main function of a distribution channel is to provide a link between production and consumption. Organisations that form any particular distribution channel perform many key functions:

Information Promotion Contact Matching Negotiation

Gathering and distributing market research and intelligence - important for marketing planning Developing and spreading communications about offers Finding and communicating with prospective buyers Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging Reaching agreement on price and other terms of the offer

Physical distributionTransporting and storing goods Financing Risk taking Acquiring and using funds to cover the costs of the distribution channel Assuming some commercial risks by operating the channel (e.g. holding stock) Page 61

ICHM

Introduction to Hospitality Industry

All of the above functions need to be undertaken in any market. The question is - who performs them and how many levels there need to be in the distribution channel in order to make it cost effective. Numbers of Distribution Channel Levels Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer is a "channel level". The figure below shows some examples of channel levels for consumer marketing channels:

In the figure above, Channel 1 is called a "direct-marketing" channel, since it has no intermediary levels. In this case the manufacturer sells directly to customers. An example of a direct marketing channel would be a factory outlet store. Many holiday companies also market direct to consumers, bypassing a traditional retail intermediary - the travel agent.

ICHM

Page 62

Introduction to Hospitality Industry


The remaining channels are "indirect-marketing channels". Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. The consumer electrical goods market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods directly to large retailers such as Comet, Dixons and Currys which then sell the goods to the final consumers. Channel 3 contains two intermediary levels - a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of several producers goods and then breaks into the bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense. This arrangement tends to work best where the retail channel is fragmented - i.e. not dominated by a small number of large, powerful retailers who have an incentive to cut out the wholesaler. A good example of this channel arrangement in the UK is the distribution of drugs. Distribution - channel strategy The following describes the factors that influence the choice of distribution channel by a business: Market factors An important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars. The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing). ICHM Page 63

Introduction to Hospitality Industry


Another important factor is intermediary cost. Intermediaries typically charge a "mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business. Producer factors A key question is whether the producer have the resources to perform the functions of the channel? For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors. Producers may also feel that they do not possess the customer-based skills to distribute their products. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers. Another factor is the extent to which producers want to maintain control over how, to whom and at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control over the final consumer price, since the retailer sets the price and any relevant discounts or promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. Direct distribution gives a producer much more control over these issues. Product factors Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers. Distribution Intensity There are three broad options - intensive, selective and exclusive distribution: Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a

ICHM

Page 64

Introduction to Hospitality Industry


range of acceptable brands to chose from. In other words, if one brand is not available, a customer will simply choose another. Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply. Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area. Distribution - types of distribution intermediary Introduction There is a variety of intermediaries that may get involved before a product gets from the original producer to the final user. These are described briefly below: Retailers Retailers operate outlets that trade directly with household customers. Retailers can be classified in several ways: Type of goods being sold( e.g. clothes, grocery, furniture) Type of service (e.g. self-service, counter-service) Size (e.g. corner shop; superstore) Ownership (e.g. privately-owned independent; public-quoted retail group Location (e.g. rural, city-centre, out-of-town) Brand (e.g. nationwide retail brands; local one-shop name)

Wholesalers

ICHM

Page 65

Introduction to Hospitality Industry


Wholesalers stock a range of products from several producers. The role of the wholesaler is to sell onto retailers. Wholesalers usually specialise in particular products. Distributors and dealers Distributors or dealers have a similar role to wholesalers that of taking products from producers and selling them on. However, they often sell onto the end customer rather than a retailer. They also usually have a much narrower product range. Distributors and dealers are often involved in providing after-sales service. Franchises Franchises are independent businesses that operate a branded product (usually a service) in exchange for a licence fee and a share of sales. Agents Agents sell the products and services of producers in return for a commission (a percentage of the sales revenues) Direct selling Introduction A key decision a business has to make about distribution is whether to sell direct. This method of distribution is usually called direct marketing. Direct marketing means selling products by dealing directly with consumers rather than through intermediaries. Traditional methods include mail order, direct-mail selling, cold calling, telephone selling, and door-to-door calling. More recently telemarketing, direct radio selling, magazine and TV advertising, and on-line computer shopping have been developed.

ICHM

Page 66

Introduction to Hospitality Industry


The main advantages of selling direct are that there is no need to share profit margins and the producer has complete control over the sales process. Products are not sold alongside those of competitors either. There may also be specific market factors that encourage direct selling: There may be a need for an expert sales force, to demonstrate products, provide detailed Retailers, distributors, dealers and other intermediaries may be unwilling to sell the Existing distribution channels may be owned by, or linked to, competing producers pre-sale information and after-sales service product (making it hard to obtain distribution by any other means than direct) However, there are significant costs associated with selling direct which may be higher than the costs associated with using an intermediary to generate the same level of sales. There are several potential advantages of using an intermediary: More efficient distribution logistics Overall costs (even taking into account the intermediaries margin or commission) may be Consumers may expect choice (i.e. the products and brands of many producers) at the UNIT V 5.1 Major Hospitality distribution channels travel agents, tour operators, consortia, and reservation system, GDS, Internet A travel agency is a retail business, that sells travel related products and services to customers, on behalf of suppliers, such as airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and package holidays that combine several products. In addition to dealing with ordinary tourists, most travel agencies have a separate department devoted to making travel arrangements for business travelers and some travel agencies specialize in commercial and business travel only. There are also travel agencies that serve as general sales agents for

lower point of sale.

ICHM

Page 67

Introduction to Hospitality Industry


foreign travel companies, allowing them to have offices in countries other than where their headquarters are located Origins The British company, Kings, is sometimes said to be the oldest travel agency in the world, but this rests upon the services that the original bank, established in 1758, supplied to its wealthy clients. The modern travel agency first appeared in the second half of the 19th century. Thomas Cook, in addition to developing the package tour, established a chain of agencies in the last quarter of the 19th century, in association with the Midland Railway. They not only sold their own tours to the public, but in addition, represented other tour companies. Other British pioneer travel agencies were Dean and Dawson, the Polytechnic Touring Association and the Co-operative Wholesale Society. Travel agencies became more commonplace with the development of commercial aviation, starting in the 1920s. Originally, travel agencies largely catered to middle and upper class customers, but the post-war boom in mass-market package holidays resulted in travel agencies on the main streets of most British towns, catering to a working class clientle, looking for a convenient way to book overseas beach holidays. Operations As the name implies, a travel agency's main function is to act as an agent, that is to say, selling travel products and services on behalf of a supplier. Consequently, unlike other retail businesses, they do not keep a stock in hand. A package holiday or a ticket is not purchased from a supplier unless a customer requests that purchase. The holiday or ticket is supplied to them at a discount. The profit is therefore the difference between the advertised price which the customer pays and the discounted price at which it is supplied to the agent. This is known as the commission. A British travel agent would consider a 10-12% commission as a good arrangement.

ICHM

Page 68

Introduction to Hospitality Industry


In some countries, airlines have stopped giving commission to travel agencies. Therefore, travel agencies are now forced to charge a percentage premium or a standard flat fee, per sale. However, some companies still give them a set percentage for selling their product. Major tour companies can afford to do this, because if they were to sell a thousand trips at a cheaper rate, they still come out better than if they sell a hundred trips at a higher rate. This process benefits both parties. Other commercial operations are undertaken, especially by the larger chains. These can include the sale of in-house insurance, travel guide books and timetables, car rentals, and the services of an on-site Bureau de change, dealing in the most popular holiday currencies. The majority of travel agents have felt the need to protect themselves and their clients against the possibilities of commercial failure, either their own or a supplier's. They will advertise the fact that they are surety bonded, meaning in the case of a failure, the customers are guaranteed either an equivalent holiday to that which they have lost or if they prefer, a refund. Many British and American agencies and tour operators are bonded with the International Air Transport Association (IATA), for those who issue air tickets, Air Travel Organisers' Licensing (ATOL) for those who order tickets in, the Association of British Travel Agents (ABTA) or the American Society of Travel Agents (ASTA), for those who sell package holidays on behalf of a tour company. A travel agent is supposed to offer impartial travel advice to the customer. However, this function almost disappeared with the mass-market package holiday and some agency chains seemed to develop a 'holiday supermarket' concept, in which customers choose their holiday from brochures on racks and then book it from a counter. Again, a variety of social and economic changes have now contrived to bring this aspect to the fore once more, particularly with the advent of multiple no-frills airlines. Commissions Most travel agencies operate on a commission-basis, meaning that the compensation from the airlines, car rentals, cruise lines, hotels, railways, sightseeing tours and tour operators is ICHM Page 69

Introduction to Hospitality Industry


expected in form of a commission from their bookings. Most often, the commission consists of a set percentage of the sale. In the United States, most airlines pay no commission at all to travel agencies. In this case, an agency usually adds a service fee to the net price. Types of agencies There are three different types of agencies in the UK: Multiples, Miniples and Independent Agencies. The former comprises of a number of national chains, often owned by international conglomerates, like Thomson Holidays, now a subsidiary of TUI AG, the German multinational.[1] It is now quite common for the large mass-market tour companies to purchase a controlling interest in a chain of travel agencies, in order to control the distribution of their product. (This is an example of vertical integration.) The smaller chains are often based in particular regions or districts. In the United States, there are four different types of agencies: Mega, Regional, Consortium and Independent Agencies. American Express and the American Automobile Association (AAA) are examples of mega travel agencies. Independent Agencies usually cater to a special or niche market, such as the needs of residents in an upmarket commuter town or suburb or a particular group interested in a similar activity, such as sporting events, like football, golf or tennis. There are two approaches of travel agencies. One is the traditional, multi-destination, outbound travel agency, based in the originating location of the traveler and the other is the destination focused, in-bound travel agency, that is based in the destination and delivers an expertise on that location. At present, the former is usually a larger operator like Thomas Cook, while the latter is often a smaller, independent operator. Consolidators ICHM Page 70

Introduction to Hospitality Industry


Travel consolidators or wholesalers are high volume sales companies that specialize in selling to niche markets. They may or may not offer various types of services, at a single point of access. These can be hotel reservations, flights or car-rentals, for example. Sometimes the services are combined into vacation packages, that include transfers to the location and lodging. These companies do not usually sell directly to the public, but act as wholesalers to retail travel agencies. Commonly, the sole purpose of consolidators is to sell to ethnic niches in the travel industry. Usually, no consolidator offers everything, they may only have contracted rates to specific destinations. Today, there are no domestic consolidators, with some exceptions for business class contracts. Criticism and controversy "Racking" Travel agencies have been accused of employing a number of restrictive practices, the chief of which is known as 'racking'. This is the practice of displaying only the brochures of those travel companies whose holidays they wish to sell, the ones that pay them the most commission. Of course, the average customer tends to think that these are the only holidays on offer and is unaware of the possible alternatives. Conversely, by limiting the number of companies that a travel agency represents, this can bring a better and more profitable, working relationship between the agency and its suppliers. Travel agencies can then obtain special benefits for their customers, from a supplier, by concentrating their bookings with that supplier. Some examples of these special benefits would be room upgrades or the waiver of change and cancellation fees. ("Racking" is a British expression, not used in the United States.) The Internet threat With general public access to the internet, many airlines and other travel companies began to sell directly to passengers. As a consequence, airlines no longer needed to pay the commissions to travel agents on each ticket sold. Since 1997, travel agencies have gradually been disintermediated, by the reduction in costs caused by removing layers from the package ICHM Page 71

Introduction to Hospitality Industry


holiday distribution network.[2][3] However, travel agents remain dominate in some areas such as cruise vacations where they represent 77% of bookings and 73% of packaged travel. Many travel agencies have developed an internet presence of their own by posting a website, with detailed travel information. Full travel booking sites are often complex and require the assistance of outside travel technology solutions providers such as Travelocity and OTRAMS. These companies use travel service distribution companies who operate Global Distribution Systems (GDS), such as Sabre Holdings, Amadeus IT Group, Galileo CRS and Worldspan (now Travelport GDS), to provide up to the minute, detailed information on tens of thousands of flights, hotels and car rentals. Some online travel sites allow visitors to compare hotel and flight rates with multiple companies for free. They often allow visitors to sort the travel packages by amenities, price, and proximity to a city or landmark. Travel agents have applied dynamic packaging tools to provide fully bonded (full financial protection) travel at prices equal to or lower than a member of the public can book online. As such, the agencies' financial assets are protected in addition to professional travel agency advice. All travel sites that sell hotels online work together with GDS, suppliers and hotels directly to search for room inventory. Once the travel site sells a hotel, the site will try to get a confirmation for this hotel. Once confirmed or not, the customer is contacted with the result. This means that booking a hotel on a travel website will not necessarily result in an instant answer. Only some hotels on a travel website can be confirmed instantly (which is normally marked as such on each site). As different travel websites work with different suppliers together, each site has different hotels that it can confirm instantly. Some examples of such online travel websites that sell hotel rooms are Expedia and Orbitz. The comparison sites, such as Kayak.com, TripAdvisor, and SideStep search the resellers site all at once to save time searching. None of these sites actually sell hotel rooms.

ICHM

Page 72

Introduction to Hospitality Industry


Often tour operators have hotel contracts, allottments and free sell agreements which allow for the immediate confirmation of hotel rooms for vacation bookings. Mainline service providers are those that actually produce the direct service, like various hotels chains or airlines that have a website for online bookings. Portals will serve a consolidator of various airlines and hotels on the internet. They work on a commission from these hotels and airlines. Often, they provide cheaper rates than the mainline service providers as these sites get bulk deals from the service providers. A meta search engine on the other hand, simply culls data from the internet on real time rates for various search queries and diverts traffic to the mainline service providers for an online booking. These websites usually do not have their own booking engine. Careers With the many people switching to self-service internet websites, the number of available jobs as travel agents is decreasing. Most jobs that become available are from older travel agents retiring. Counteracting the decrease in jobs due to internet services is the increase in the number of people travelling. Since 1995, many travel agents have exited the industry, and relatively few young people have entered the field due to less competitive salaries.[6] However, others have abandoned the 'brick and mortar' agency for a home-based business to reduce overheads and those who remain have managed to survive by promoting other travel products such as cruise lines and train excursions or by promoting their ability to aggressively research and assemble complex travel packages on a moment's notice, essentially acting as a very advanced concierge. Cargo A small number of companies work with cargo airlines and cargo ships. A history of Thomas Cook: From Leicester upwards

ICHM

Page 73

Introduction to Hospitality Industry


Thomas Cook started organising leisure trips in the summer of 1841 when its founder, who gave his name to the company, organised a successful one-day rail excursion at a shilling a head from Leicester to Loughborough. During the next three summers Mr Cook arranged a succession of trips, taking passengers on trips to the midland towns of Leicester, Nottingham, Derby and Birmingham. Four years later, he organised his first trip abroad, taking a group from Leicester to Calais to coincide with the Paris exhibition. From its humble beginnings Thomas Cook steadily grew, adding more destinations and holidays and today is the second largest European travel group. It now has 33 tour operating brands, 2,400 travel agencies, 66 aircraft and employs 19,775 full time staff. Thomas Cook was nationalised shortly after World War Two when it became part of the stateowned British Railways. It was privatised in the 1970s with Midland Bank becoming its sole owner in 1977. It was then sold by Midland in 1992 to a German bank and charter airline. Mark Twain, Europe and Elsewhere - 1923 (An article on the historic trip) The people boarding the train at Leicester station thought that they were only going on a good day out. As far as the majority of the 570 people it was a day to relax. Little did they know that they were taking part in history, as part of Thomas Cook's first excursion in 1841. Nothing had happened like it before. Rail travel was still relatively new and Cook was the first person to organize a group round fare- something even the rail companys had not thought of yet at the time-excursion rate for 'the enormous distance of eleven miles and back a shilling, children half price.' Thomas Cook not only brought excursions into the real of reality, he also bought travel for common, ordinary citizens into scope. Until that first excursion in 1841, most travellers for pleasure were the wealthy and the aristocracy who travelled independently: less privileged people travelled only through necessity. Thomas Cook's entrepreneurial spirit, enthusiastic vision, and social conscience changed all that. 'God's green earth in all it's fullness is for the people' he proclaimed, and set about making it possible. ICHM Page 74

Introduction to Hospitality Industry

Today we take organized travel for granted but Cook's approach was revolutionary. He went to Liverpool before the trip and checked hotel accommodatoins and resturants to ensure that his 350 excursionists had the best possible service. He then wrote A Handbook of the Trip to Liverpool in which he gave every detail of the excursion. It was probably the first guidebook of its kind. Other trips followed, Cook's pioneering excursionists to Scotland were greeted with crowd lined streets, brass bands and cannon fire because the tourist was still unusual enough to be an entertaining curiousity. Cook was also an opportunist. He was quick to see the possibilities for travel which the newly invented railways presented, and he reacted speedily when the S S Great Britain ran aground in Dundrum Bay by organizing an exursion to view the stranded ship in 1847. The Great Exhibition of 1851 brought him an excellent opportunity to expand his business and he seized it with relish. He did NOT make money, but he did make his name by persuading a great many people to visit the Exhibition with Cooks. Despite the many setbacks of the railroad trying to undermine him by undercutting his prices, he was forced to find more passengers than he had at first calculated. He brought his son John Mason, 17, into the business to help and together they paraded though the streets of Sheffield, Leeds, Derby and Bradford with a band, making speeches about their trips to the Great Exhibition. They had also set up clubs so working men could pay in small sums a week toward the total cost which included accommodatoin at the Ranclagh Club-bed and a hearty Victorian breakfast- for two shillings, the fare was five shillings. Through their direct selling methods, he was able to take 165,000 people to the Exhibition. Other Victorian Entrepreneurs did not miss the opportunity to copy Cook and had many rivals who gave him keen competition. Over the years he took tourists to such varied places as: the Paris Exhibition, A Grand Circular Tour of Antwerp, Brussels, Waterlo, Cologne, Frankfurt, Heidelberg, Baden Baden and Paris. In 1863 he lead a tour to Paris and ICHM Page 75

Introduction to Hospitality Industry


Switzerland, and in 1864 to Italy. In that year Cook claimed that he had one million clients and the business was stable enough for him to settle clients' bills, but he was not actually running inclusive tours yet. The following year Coook opened an office at 98 Fleet Street, which was run by his son, John Mason. In 1865, Cook finally crossed the Atlantic. During the American Civil War Cook watched the North American continent, which was then virgin territory untrampled by the feet of British tourists. That year the very first group of European tourists set foot in America. Led by his son, they visited among other places, New York, Washington, Niagara, Chicago, The Mammouth Caves of Kentucky and the rather gruesome deserted battlefields of Virginia where they say, 'skulls, arms, and legs all bleaching in the sun.' The party travelled 10,500 miles in nine weeks. During the famous Nile Tours, there were no hotels so in 1868 they travelled as a vast caravan, accompanied by 65 horses, 87 pack mules, tents, beds anf field kitchens to prepare Victorian breakfasts of boiled eggs, followed by chicken and cutlets, and dinners of seven courses including wild boar and mutton. However, it was not all fun and games. When one of the party, a Mrs. Samuels, died on the trip, Cook diplomatically disguised the fact from the Arabs and, pretending that she was ill, packed up her body and had it carried in a palanquin until a suitable burial could be arranged. No matter the circumstances, Cook had a bevy of admirers. Oscar Wilde said of Cook 'They wire money like angels.' Kipling and H. Rider Haggard found words of praise. Even the American writer, Mark Twain gave Cook a mention in his writings. Cook's tours not only were for the middle classes, they also attracted the likes of the British Royal Family, The Kaiser, the Czar, many European aristocrats, politicians, bishops, archibishops and more. The inclusive tour, in which everything is paid for in advance was also a creation of Cook as well as the Circular Note, the forerunner of the trveller cheque which he created in 1873.

ICHM

Page 76

Introduction to Hospitality Industry


Travel agents Travel benefits, such as reduced rates for transportation and lodging, attract people to this occupation. Training at a postsecondary vocational school, college, or university is increasingly important. Travel agents increasingly specialize in specific destinations or by type of travel or traveler.

Nature of the Work Travel agents help travelers sort through vast amounts of information to help them make the best possible travel arrangements. They offer advice on destinations and make arrangements for transportation, hotel accommodations, car rentals, and tours for their clients. They are also the primary source of bookings for most of the major cruise lines. In addition, resorts and specialty travel groups use travel agents to promote travel packages to their clients. Travel agents are also increasingly expected to know about and be able to advise travelers about their destinations, such as the weather conditions, local ordinances and customs, attractions, and exhibitions. For those traveling internationally, agents also provide information on customs regulations, required papers (passports, visas, and certificates of vaccination), travel advisories, and currency exchange rates. In the event of changes in itinerary in the middle of a trip, travel agents intercede on the travelers behalf to make alternate booking arrangements. Travel agents use a variety of published and computer-based sources for information on departure and arrival times, fares, quality of hotel accommodations, and group discounts. They may also visit hotels, resorts, and restaurants themselves to evaluate the comfort, cleanliness, and the quality of specific hotels and restaurants so that they can base recommendations on their own experiences or those of colleagues or clients.

ICHM

Page 77

Introduction to Hospitality Industry


Travel agents who primarily work for tour operators and other travel arrangers may help develop, arrange, and sell the companys own package tours and travel services. They may promote these services, using telemarketing, direct mail, and the Internet. They make presentations to social and special-interest groups, arrange advertising displays, and suggest company-sponsored trips to business managers. Agents face increasing competition from travel and airline websites for low-cost fares, but travelers still prefer using travel agents who can provide customized service and planning for complex itineraries to remote or multiple destinations. To attract these travelers, many travel agents specialize in specific interest destinations, travel to certain regions, or in selling to particular demographic groups. Work environment. Travel agents spend most of their time behind a desk conferring with clients, completing paperwork, contacting airlines and hotels to make travel arrangements, and promoting tours. Most of their time is spent either on the telephone or on the computer researching travel itineraries or updating reservations and travel documents. Agents may be under a great deal of pressure during travel emergencies or when they need to reschedule missed reservations. Peak vacation times, such as summer and holiday travel periods, also tend to be hectic. Many agents, especially those who are self-employed, frequently work long hours. Advanced computer systems and telecommunications networks make it possible for a growing number of travel agents to work at home; however, some agents feel a need to have an office presence to attract walk-in business. Travel agents organize and schedule business, educational, or recreational travel or activities. Other workers with similar responsibilities include tour guides and escorts, travel guides, reservation and transportation ticket agents and travel clerks, retail salespersons, and hotel, motel, and resort desk clerks. Tour operator A tour operator typically combines tour and travel components to create a holiday. The most common example of a tour operator's product would be a flight on a charter airline plus a ICHM Page 78

Introduction to Hospitality Industry


transfer from the airport to a hotel and the services of a local representative, all for one price. Niche tour operators may specialise in destinations e.g. Italy, activities and experiences e.g. skiing, or a combination thereof. The original raison d'etre of tour operating was the difficulty of making arrangements in far-flung places, with problems of language, currency and communication. The advent of the internet has led to a rapid increase in self-packaging of holidays. However, tour operators still have their competence in arranging tours for those who do not have time to do DIY holidays, and specialize in large group events and meetings such as conferences or seminars. Also, tour operators still exercise contracting power with suppliers (airlines, hotels, other land arrangements, cruises, etc.) and influence over other entities (tourism boards and other government authorities) in order to create packages and special departures for destinations otherwise difficult and expensive to visit. The two major tour operator associations in the US are the National Tour Association (NTA) and the United States Tour Operator's Association (USTOA), in Europe it is the European Tour Operators Association - ETOA and in the UK it is AITO . Travel technology Travel technology is a term used to describe applications of Information Technology (IT), or Information and Communications Technology (ICT), in travel, tourism and hospitality industry. Travel technology may also be referred to as tourism technology or even hospitality automation Definition of Travel Technology Since travel implies locomotion, travel technology was originally associated with the computer reservations system (CRS) of the airlines industry, but now is used more inclusively, incorporating the broader tourism sector as well as its subset the hospitality industry. While travel technology includes the computer reservations system, it also represents a much broader range of applications, in fact increasingly so. Travel technology includes virtual ICHM Page 79

Introduction to Hospitality Industry


tourism in the form of virtual tour technologies. Travel technology may also be referred to as e-travel / etravel or e-tourism / etourism (eTourism), in reference to "electronic travel" or "electronic tourism". In other contexts, the term "travel technology" can refer to technology intended for use by travelers, such as light-weight laptop computers with universal power supplies or satellite Internet connections. That is not the sense in which it is used here. Applications of Travel Technology Travel technology includes many processes such as dynamic packaging which provide useful new options for consumers. Today the tour guide can be a GPS tour guide, and the guidebook could be an audioguide, podguide or I-Tours, such as City audio guides. The biometric passport may also be included as travel technology in the broad sense. History of Travel Technology Certainly travel technology was born on the coat-tails of the airline industry's use of automation and their need to extend this out to the travel agency partners. It should be kept in mind that there was an online world before the advent of the world wide web in the form of private and commercial online services, via packet switched network using X.25. Travel technology played a significant role in the so-called dot-com boom and bust, circa 1997-2001. GDS Worldwide computerized reservation network used as a single point of access for reserving airline seats, hotel rooms, rental cars, and other travel related items by travel agents, online reservation sites, and large corporations. The premier GDS are Amadeus, Galileo, Sabre, and Worldspan owned and operated as joint ventures by major airlines, car rental firms, and hotel groups. Also called automated reservation system (ARS) or computerized reservation system (CRS). A computer reservations system (CRS) is a computerized system used to store and retrieve information and conduct transactions related to air travel. Originally designed and operated ICHM Page 80

Introduction to Hospitality Industry


by airlines, CRSes were later extended for the use of travel agents; major CRS operations that book and sell tickets for multiple airlines are known as global distribution systems (GDS). Airlines have divested most of their direct holdings to dedicated GDS companies, who make their systems accessible to consumers through Internet gateways. Modern GDSes typically allow users to book hotel rooms and rental cars as well as airline tickets. History In the early days of American commercial aviation, passengers were relatively few, and each airline's routes and fares were tightly regulated by the Civil Aeronautics Board. These were published in a volume entitled The Official Airline Guide, from which travel agents or consumers could construct an itinerary, then call or telex airline staff, who would mark the reservation on a card and file it. As demand for air travel increased and schedules grew more complex, this process became impractical. In 1946, American Airlines installed the first automated booking system, the experimental electromechanical Reservisor. A newer machine with temporary storage based on a magnetic drum, the Magnetronic Reservisor, soon followed. This system proved successful, and was soon being used by several airlines, as well as Sheraton Hotels and Goodyear for inventory control. It was seriously hampered by the need for local human operators to do the actual lookups; ticketing agents would have to call a booking office, whose operators would direct a small team operating the Reservisor and then read the results over the telephone. There was no way for agents to directly query the system. In 1953, Trans-Canada Airlines (TCA) started investigating a computer-based system with remote terminals, testing one design on the University of Toronto's Manchester Mark 1 machine that summer. Though successful, the researchers found that input and output was a major problem. Ferranti Canada became involved in the project and suggested a new system using punch cards and a transistorized computer in place of the unreliable tubebased Mark I. The resulting system, ReserVec, started operation in 1962, and took over all booking operations in January 1963. Terminals were placed in all of TCA's ticketing offices, ICHM Page 81

Introduction to Hospitality Industry


allowing all queries and bookings to complete in about one second with no remote operators needed. In 1953, American Airlines CEO C. R. Smith chanced to sit next to R. Blair Smith, a senior IBM sales representative. C.R. invited Blair to visit their Reservisor system and look for ways that IBM could improve the system. Blair alerted Thomas Watson Jr. that American was interested in a major collaboration, and a series of low-level studies started. Their idea of an automated Airline Reservation System (ARS) resulted in a 1959 venture known as the SemiAutomatic Business Research Environment (SABRE), launched the following year. By the time the network was completed in December 1964, it was the largest civil data processing system in the world. Other airlines soon established their own systems. Delta Air Lines launched the Delta Automated Travel Account System (DATAS) in 1968. United Airlines and Trans World Airlines followed in 1971 with the Apollo Reservation System and Programmed Airline Reservation System (PARS), respectively. Soon, travel agents began pushing for a system that could automate their side of the process by accessing the various ARSes directly to make reservations. Fearful this would place too much power in the hands of agents, American Airlines executive Robert Crandall proposed creating an industry-wide Computer Reservation System to be a central clearinghouse for U.S. travel; other airlines demurred, citing fear of antitrust prosecution. In 1976, United began offering its Apollo system to travel agents; while it would allow the agents to book tickets on United's competitors, the marketing value of the convenient terminal proved indispensable. SABRE, PARS, and DATAS were soon released to travel agents as well. Following airline deregulation in 1978, an efficient CRS proved particularly important; by some counts, Texas Air executive Frank Lorenzo purchased money-losing Eastern Air Lines specifically to gain control of its SystemOne CRS.

ICHM

Page 82

Introduction to Hospitality Industry


European airlines also began to invest in the field in the 1980s, propelled by growth in demand for travel as well as technological advances which allowed GDSes to offer everincreasing services and searching power. In 1987, a consortium led by Air France and West Germany's Lufthansa developed Amadeus, modeled on SystemOne. In 1990, Delta, Northwest Airlines, and Trans World Airlines formed Worldspan, and in 1993, another consortium (including British Airways, KLM, and United Airlines, among others) formed the competing company Galileo International based on Apollo. Numerous smaller companies have also formed, aimed at niche markets the four largest networks do not cater to. Major systems Name Created by Also used by Online travel agencies including ebookers Expedia Opodo Flights Anyfares Over 500 individual airlines Over 120 individual airline websites Over 90,000 travel agencies Over 76,000 hotels Expedia Travelocity Anyfares Kayak Over 20 individual airlines CheapTickets Destinia ebookers Ixeo

Amadeus Air France Iberia Lufthansa SAS

SABRE

American Airlines All Nippon Airways Cathay Pacific Airways China Airlines Singapore Airlines Aer Lingus Air Canada Alitalia Swissair TAP United Airlines

Galileo

Worldspan Delta Northwest Patheo ICHM KLM Finnair

Orbitz Hotwire Priceline Online Travel agencies including Airgorilla Page 83

Introduction to Hospitality Industry


Lufthansa VA Flights Kayak Anyfares American Express Online travel agencies including Zuji Over 450 individual airlines Over 25 countries in Asia Pacific Over 80,000 hotels

Abacus

SABRE All Nippon Airways Cathay Pacific Airways China Airlines EVA Airways Garuda Indonesia Dragonair Philippine Airlines Malaysia Airlines Royal Brunei Airlines SilkAir Singapore Airlines

In December 2006, Travelport, which owns Galileo, agreed to buy and merge with the Worldspan GDS. The combined company would then control a 46.3% market share using 2002 airline booking data. Worldspan's market share is 16.9% globally and 31% in the U.S. according to 2006 MIDT airline transaction data. In March 2007, Royal Dutch Airlines KLM switched from Galileo to Amadeus as a result of the merger with Air France.

REVIEW QUESTIONS 1. 2. 3. 4. 5. What is hospitality distribution channels- meaning and definition? What are the function and level of distribution of hotel market What is market mix? Explain What are the major Hospitality distribution channels for hotels? Write a note on travel agents, tour operators, and reservation system in hotels UNIT 6 6.1 Major players in the industry 6.2 Emerging markets ICHM Page 84

Introduction to Hospitality Industry


6.3 Role of support services and infrastructure 6.1 Major players in the industry The major players in the Indian hotel industry can be broadly classified into private players and public players. The major private players include Indian Hotels Company limited, East India Hotels Limited (The Oberoi group), Asian Hotels and ITC Hotels. ITDC and Hotel Corporation of India are the major public sector players. The Top Players in Hospitality Sector Public Sector Players: 3 4 ITDC hotels Hotel Corporation of India

Private Sector Players: ITC Hotels Indian Hotels Company Ltd.(The Taj Hotels Resorts & Palaces) Oberoi Hotels(East India Hotels) Hotel Leela Venture Asian Hotels Ltd. Radisson hotels & Resorts

ICHM

Page 85

Introduction to Hospitality Industry


Hotel Corporation of India The Hotel Corporation of India Limited is a public limited company wholly owned by Air India Limited and was incorporated on 8 July,1971 for providing in-flight catering services to the national carriers and for operating a chain of hotels, particularly near the airports. The company has a total of 3923 employees and its net worth is Rs. 55.40 crore. HCI has an authorized capital of Rs. 41 crores and a paid up capital of Rs. 40.60 crores. All the hotels of HCI operate under the name of "Centaur Hotels". Currently, HCI is operating two hotels in Delhi and Srinagar. Centaur Hotel Delhi Airport, Delhi The Centaur Hotel at Delhi Airport was commissioned in November 1982. It has 376 rooms, including 4 Deluxe Suites and 2 Presidential Suites, a 24 hour Coffee Shop, 2 Speciality Restaurants, Bar, Health Club, Swimming Pool, Beauty Parlor, Tennis Court and a Shopping Arcade. The hotel has a magnificent lobby and a fully automatic electronic Telephone Exchange. This is the only 5 Star Deluxe Hotel near the Indira Gandhi International Airport at Delhi. The hotel provides free Transport Facility into town and also offers facility for sightseeing Tours, Hire of Cars and has an Air India Office situated within its premises. The hotel has now been upgraded to a 5 Star Deluxe Hotel. (B) Centaur Lake View Hotel, Srinagar The Centaur Lake View Hotel at Srinagar was commissioned in December 1983 and is part of a Modern Convention Center Complex. It has 249 rooms including suites, Health Club, a 24 hour Coffee Shop, 2 Speciality Restaurants, a Bar, Shopping Arcade and other recreation facilities. The hotel was planned as a Holiday Resort and is located on the banks of Dal Lake. The hotel had been a popular venue for a large number of Conference and Convention but the business has suffered a lot on account of terrorism.

ICHM

Page 86

Introduction to Hospitality Industry


Management: Commodore D. Jena is the Managing Director of HCI. ITC Hotels Limited ITC was founded on August 24, 1910 in Kolkata. ITC's hotel business operates over 60 hotels across more than 50 destinations in India. Management: (Hotel Division) Chairman: Mr.Yogesh C Deveshwar Divisional Chief Executive: Mr. Nakul Anand Executive, Vice President(Operations): Mr. Pawan Kumar Verma Sr. Executive-VP(Projects, Growth & Development): Mr. S C Shekhar VP, Sales & Marketing: Mr. B Hariharan ITC Hotels: ITC Hotel Maurya Sheraton & Towers, New Delhi ITC Hotel Grand Maratha Sheraton & Towers, Mumbai ITC Hotel Sonar Bangla Sheraton & Towers,Kolkata WelcomHotel Mughal Sheraton, Agra WelcomHeritage ( These hotels are spread over all over india and are currently

operating in Rajasthan, Punjab, Himachal Pradesh, Madhya Pradesh, Uttaranchal, Jammu & Kashmir, West Bengal, Tamil Nadu, Haryana and Karnataka.) MARKET CAPITALIZATION Month July 2006 August 2006 October 2006 High 69470.81 71935.59 73136.79 Low 61622.49 63162.11 68235.51 69172.79 66984.82 Average 65132.68 66907.27 69865.82 70595.60 69353.40 Page 87

September 2006 71616.29 November 2006 71870.11 ICHM

Introduction to Hospitality Industry


December 2006 71557.75 63306.15 67001.52

Key Stats & Ratios Quarterly Net Profit Margin Operating Margin EBITD Margin Annual (2006) 21.70% 31.32% 34.70% 18.35% 26.75% Annual (TTM) -

Return on Average Assets Return on Average Equity RECRUITMENT POLICY:

The potential candidates who are looking forward to build their career in ITC Hotels should possess several qualities like integrity, intellectual rigor, a 'will do' attitude, team skills, ability to think strategically, high energy, creativity and leadership. For entry level, ITC relies on campus recruitments and visits various management and engineering institutes. Some of the institutes include IITs, IIMs, FMS, XLRI, etc. ITC also provides summer internships. The internships are for a total of 8 weeks during April - July every year. For middle level opportunities, advertisements are placed on the company website and the interested and eligible candidates are invited to apply on-line. The middle management level provides opportunities in Marketing, Finance, Human Resources, Information Technology, Logistics and many more.

Corporate Office: Virginia House 37, Jawaharlal Nehru Road Kolkata, 700 071

ICHM

Page 88

Introduction to Hospitality Industry


+91-33-22886426 http://www.itcportal.com Indian Hotels Company The Indian Hotels Company (IHC) is the parent company of Taj Hotels Resorts and Palaces. It was founded by Jamsetji N. Tata on December16, 1903. Currently the Taj Hotels Resorts and Palaces comprises 57 hotels at 40 locations across India. Additional 18 hotels are also being operated around the globe. During fiscal year 2006, the total number of hotels owned or managed by the Company was 75. The Taj hotels are categorized as luxury, leisure and business hotels. The Taj Luxury Hotels offer a wide range of luxurious suites with modern fitness centres, rejuvenating spas, and well-equipped banquet and meeting facilities. The Taj Leisure Hotels offer a complete holiday package that can be enjoyed with the whole family. It provides exciting activities ranging from sports, culture, environment, adventure, music, and entertainment. The Taj Business Hotels provide the finest standards of hospitality, which helps the business trips to be productive. They offer well-appointed rooms, telecommunication facilities, efficient service, specialty restaurants and lively bars, well-equipped business centres, and other conference facilities. Management: Chairman: Mr. Ratan N Tata Managing Director & CEO: Mr. Raymond Bickson Chief Operating Officer, Leisure Hotels: Ms. Jyoti Narang Chief Operating Officer, Luxury Hotels: Mr. Abhijit Mukerji Chief Operating Officer, Business Hotels: Mr. Jamshed S. Daboo Vice President-Legal & Company secretary: Dev Bajpai Chief Financial Officer: Mr. Anil P Goel Financial Data Key Stats & Ratios ICHM Page 89

Introduction to Hospitality Industry


Quarterly (Mar '04) Net Profit Margin 4.86% Operating Margin 8.24% EBITD Margin Return on Average Assets Return on Average Equity Month July 2006 August 2006 September 2006 October 2006 November 2006 December 2006 Careers at IHC Ltd. Campus Recruitments: IHC Ltd visits the campuses of premier institutes and selects candidates. The selection procedure includes a preliminary interview or a group discussion followed by a final interview with the senior management. Training Programs: Taj offers two training programs, viz. Taj Management Training Program (TMTP) & Hotel Operations Management Training (HOMT) Program. The TMTP is further divided into 2 segments- food and operations. The duration of TMTP Operations is of 18 months and that of TMTP food is of 24 months, while the duration of HOMT program is 12 months. The recruitment for HOMT program commences in October/November every year. The Oberoi Group (EIH) High 6983.18 7536.56 8093.45 8576.75 9046.91 9444.76 Annual (2006) 11.93% 16.75% 29.11% 5.32% 15.48% Low 5883.71 6745.18 7482.83 7911.81 8080.31 8400.55 Annual (TTM) 5.03% 7.77% 23.33% Average 6640.63 7229.90 7835.64 8146.62 8681.29 9001.56

Market Capitalization in last 6 months (Rs.crores)

ICHM

Page 90

Introduction to Hospitality Industry


The Oberoi Group was founded in 1934 by Late Rai Bahadur M S Oberoi. The group owns and/or manages 32 hotels with 3,193 rooms under names of "Oberoi Hotels & Resorts" and "Trident Hilton", a luxury backwater cruiser in Kerala and Oberoi Flight Services, a division of EIH that provides commercial in-flight catering and operates airport lounges and restaurants. It has branches in five countries, situated in two continents (Asia and Africa). The chain operates the following hotels and resorts in India: The Oberoi, New Delhi Oberoi, Mumbai, Maharashtra The Oberoi, Banglore, Karnataka The Oberoi Amarvilas, Uttar Pradesh The Oberoi Grand, Kolkata, West Bengal The Oberoi Udaivilas, Udaipur, Rajasthan The Oberoi Vanyavilas, Rajasthan Wildflower Hall, Shimla, Himachal Pradesh The Oberoi Cecil, Shimla, Himachal Pradesh The Oberoi Motor Vessel Vrinda, Kerela.

The other businesses of EIH include: Mercury Car Rentals Corporate Air Charters EIH Press Mercury Travels FlightCatering Corporate Office: 4, Mangoe Lane Kolkota, 700 001 IND +91-33-2486751 ICHM Page 91

Introduction to Hospitality Industry

Management: Board of Directors: Chairman & Chief Executive: P.R.S. Oberoi Vice Chairman & Managing Director: S.S. Mukherji Deputy Managing Director (Operations): Vikram Oberoi Deputy Managing Director (Development): Arjun Oberoi Independent Directors: S.K. Dasgupta, Anil Nehru, Rajan Raheja & Christopher Reeves Career opportunities: After XIIth: XIIth pass outs can become trainees for four operations areas, viz food and beverage (F&B) service operations, front office operations, housekeeping operations, and kitchen operations through the Systematic Training and Education Programme (STEP). STEP is a three-year comprehensive training programme in which training in hotel operations is coupled with the opportunity to graduate. Two elements combine to make it a meaningful alternative to a course from an institute of hotel management: e of Bachelor of Tourism Studies through IGNOU

Operations assistants: These positions are usually available in one of the four operational departments: Food and beverage (F&B) service operations Front office operations Housekeeping operations Kitchen operations

The recruitment for the above positions is done through a system called "The Oberoi Central Employment Register" (OCER).

ICHM

Page 92

Introduction to Hospitality Industry

Operations executives: The candidates for this position are developed through The Oberoi Center of Learning and Development.(OCLD)

Position

Profile

Age

Qualification

Engineering Technician electrical,mechanical, Up to 27 air diploma in engineering, ITI conditioning, refrigeration, certificate utilities Accounts Assistant general accounting, Up to accounts 27 B. Com payable, accounts receivable, literacy purchasing, store keeping HR Assistant human resource, training Up to 27 with computer

PGD in personnel management, PGD in human resources, MBA(HR)

The market capitalization of EIH as on march 21, 2007 was Rs. 3,748.74 cr.

Key Stats & Ratios Annual (2006) Net Profit Margin Operating Margin EBITD Margin Return on Average Assets Return on Average Equity 22.32% 30.45% 48.13% 8.81% 21.09%

Hotel Leela Venture Ltd The Leela palaces and resorts include a chain of five star luxury hotels and resorts. It was founded by Capt. C P Krishnan Nair in 1957. The Company's properties include The Leela Kempinski Mumbai, The Leela Palace Goa, The Leela Kempinski Kovalam Beach Kerala and The Leela Palace Kempinski Bangalore. The Leela properties will also enter into prime ICHM Page 93

Introduction to Hospitality Industry


locations in Gurgaon, Delhi N.C.R. Udaipur, Chennai, Hyderabad, and Pune. The Company has entered into an operations and management contract for a 409 rooms hotel in Gurgaon, Delhi. Its subsidiaries include Kovalam Hotels Limited and Amin Group Hotel Limited (AGHL). The land held by AGHL has been developed as The Leela Business Park. The number of employees employed by Hotel Leela Venture Ltd. is 2,030. Corporate Office: The Leela Sahar Mumbai, 400 059 +91-22-56911234 http://www.theleela.com/ Key Stats & Ratios Quarterly (Dec '06) Net Profit Margin Operating Margin EBITD Margin 35.13% 37.24% Annual (2006) 19.36% 29.93% 49.89% 3.90% 9.26% was Rs. Annual (TTM) 38.48% 44.42% 59.73% 20, 860, 277, 524

Return on Average Assets Return on Average Equity The market capitalization

Management: Board of Directors Chairman: Capt. CP Nair Managing Director: Mr. Vivek Nair Joint MD: Mr. Dinesh Nair Deputy MD: Mr. Venu Krishnan Other members on board include: Mr. M. Narasimham ICHM Page 94

Introduction to Hospitality Industry


Mrs. Madhu Nair Mr. P.C.D.Nambiar Mrs. Anna Malhotra Mr. Vijay Amritraj Mr. R. Venkatachalam Mr. Anik Harish Mr. C.K. Kutty

Careers: One can keep track of job openings in Leela venture by visiting the career link on its website. To apply for the job openings, candidates can directly send their resume to the following email id: leelahr.mumbai@theleela.com Asian Hotels Limited It is engaged in the business of setting up and operating hotels. Asian Hotels Ltd. owns the Hyatt Regency Hotel in New Delhi and another hotel in Srinagar. There are 215 Hyatt hotels and resorts in 43 countries around the world, operating under the Hyatt, Hyatt Regency, Grand Hyatt and Park Hyatt brands. Key Stats & Ratios Annual (2003) Net Profit Margin Operating Margin EBITD Margin 9.03% 15.40% 21.06%

Return on Average Assets 1.65% Return on Average Equity 3.65% The market capitalization of Asian Hotels limited is Rs.16,076,512,620

Corporate Office: ICHM Page 95

Introduction to Hospitality Industry


Bhikaiji Cama Place M.G. Marg New Delhi 110066, IND +91-6791234 Company website: http://www.asianhotelslimited.com Careers: The Hyatt group visits almost 38 campuses every year. For corporate management training program, applications are invited throughout the year for January and June placements. Applicants are required to meet the following criteria: A bachelor's degree in a related field Minimum GPA of 2.8 Nine months of related industry work experience Leadership and involvement in extracurricular activities and on-campus organizations Positive references from two previous employers

This management training program is given in various fields such as accounting, food & beverages, human resources, catering, culinary, sales, engineering, etc. Besides, Hyatt also provides internship programs to provide practical experience to the fresh graduates. ITDC Hotels ITDC came into existence in October 1966 for the promotion of tourism in India. The hotel portfolio of ITDC includes 33 hotels across India. Some of them are: Hotel Ashok at Delhi ICHM Ashok Yatri Niwas Bharatpur Forest Lodge Khajuraho Ashok Temple Bay Ashok Beach Resort at Mamallapuram Hotel Qutub at Delhi Page 96

Introduction to Hospitality Industry

The Corporation is running hotels, restaurants at various places for tourists, besides providing transport facilities. Presently, ITDC has a network of eight Ashok Group of Hotels, six Joint Venture Hotels, 2 Restaurants (including one Airport Restaurant), 12 Transport Units, one Tourist Service Station, 37 Duty Free Shops at International as well as Domestic Customs Airports, one Tax Free outlet and two Sound & Light Shows. Broadly, the main objectives of the Corporation are: To construct, take over and manage existing hotels and market hotels, Beach Resorts, To provide transport, entertainment, shopping and conventional services; To produce and distribute tourist publicity material To render consultancy-cum-managerial services in India and abroad; To carry on the business as Full-Fledged Money Changers (FFMC), restricted money To provide innovating, dependable and value-for-money solutions to the needs of tourism Travelers' Lodges/Restaurants;

changers, etc; development and engineering industry, including providing consultancy and project implementation As on 31st March 2005, the authorized capital of the ITDC was Rs 75 crores and the paid up capital was Rs 67.52 crores. Approximately 90 percent of the paid up equity capital of the Corporation is held in the name of President of India Corporate Office: India Tourism Development Corporation 6th Floor, Scope Complex, Core 8, 7, Lodi Road, New Delhi Ph: 011-24361690 ICHM Page 97

Introduction to Hospitality Industry


http://www.theashokgroup.com/ Management:Chairman: Mr. Parvez Diwan Vice president(Hotels): Mr. M S Manchanda Director(Finance): Shri P P Singh Vice president(Hotels outside Delhi):Mr. Jawahar Ghadiok General manager(Ashok tours & travels): Mr. I Majumdar Company Secretary: Mr. C Stephen 6.2 Emerging markets Introduction Hotels may attract many different markets, e.g. business, holiday/pleasure, conference and these markets could be local, domestic or overseas. Even within these classifications you may find that every guest has a different reason for being in the hotel, for example, an individual guest may be on business or he may just be stopping over en-route to the airport. A group arrival may indicate that they are o n vacation but on the other hand they could b e attending a conference. Each guest will have their own reason for being there and will have their own expectations about the hotel and the service. Knowing who your different types of customers are and what markets your hotel attracts will help you to understand more fully the needs of your guests. This in turn will enable you provide each and every guest with the type of service appropriate to their particular needs. All hotels spend as much as six times more to capture new guests as they do for repeat guests. I believe today's hotel mantra should be "let's optimize every guest experience so guests can't wait to return - - and tell a friend!" Smaller independents and boutique hotels are able to hold their own and, in many cases, out perform chain properties all over the U.S. by focusing on a combination of solid guest ICHM Page 98

Introduction to Hospitality Industry


identification needs and wants assessment satisfaction, recognition and reward programs. "Getting to know their existing customers better" Successful Independent and boutique hotel operators have realized that limited dollars, resources and distribution channels make it near impossible to compete with mega-chain brands and their sophisticated, attractive frequent guest programs. Rather than attempt to go head-to-head in the global, national, regional and local market places, smart independent and boutique operators are protecting and expanding market share by getting to know their existing customers better - - their needs, their preferences and the primary reasons for their patronage and loyalty. This vital information is now being recorded electronically and, when deemed absolutely necessary, manually by hand. There may be a multitude of reasons for why today's hotel guests select a small independent or boutique hotel over a chain-affiliated property. The reason could be price. Availability. Location. Possibly, a friend's recommendation. All things being equal, however, I believe that more and more guests are making hotel selections based upon comfort ability, recognition and service. Status is a whole other issue, one to be addressed in a future article. "Build a solid data base on all guests, electronically or manually" Here are some good tips for independents and boutique hotels for both attracting and retaining today's (and tomorrow's) guests: Insist on a clean, safe, efficient, user-friendly operation (owners) don't assume, inspect what you expect If on site food and beverage can not be presented and delivered correctly, on time and Learn as much as possible about guests and guest needs desires Build a solid data base on all guests, electronically or manually New data base mining companies can help match preferred guest profiles and deliver Customize an appropriate reward program for your preferred guests ICHM Page 99

affordable, insist that all guests are introduced to neighborhood, value-priced F&B options .

lists of hundreds of prospective new guests

Introduction to Hospitality Industry


Communicate with guests via e-mail or direct mail between visits Recognize and thank guests at both check in and check out develop a satisfied guest "sales force" to spread the word amongst family, friends and coInsist general managers make local sales calls daily Seek out new, advantageous, neighborhood marketing partnering relationships.

workers

Who Are Our Guests? Who are the people who stay at hotels? The Worldwide Hotel Industry Study indicated that 52.6% of hotel room-nights were sourced from foreign travelers, whereas 47.4% were domestic. Leisure travelers made up 34.1% of the market, business travelers 28.5%, tour groups 17.7%, and conference participants 10.1%. These are worldwide averages, and individual countries showed large variations from these norms. Within Australia, most domestic travel is by leisure travelers. The motives for their travel are as varied as the people themselves. Business travelers include both private-sector and publicsector travelers, and this business sector tends to be the most attractive to hospitality operators-not only because of the frequency of their travel and the repeat business, but also because they are not as price-conscious (because their travel expenses are usually met by their businesses or their employers). Market Segmentation The lodging industrys target market is all the potential guests of lodging properties whether visiting relatives, conducting business, or relaxing on vacation. Because the total market is so vast, marketers break it into market segments smaller, identifiable groups with common characteristics. These segments can be defined using any set of characteristics, such as those found in geographic, demographic, or psychographic information. Often, information from different sources is combined. For example, one hotel may first narrow its target segments by focusing on one geographic area (all people living in Thiwan). The segments may then be further narrowed by financial status (all people living in Thiwan whose income is above ICHM Page 100

Introduction to Hospitality Industry


$20,000 a year and below $50,000). By continuing this process, marketers can find increasingly more precise targets. Marketing narrow targets is a more efficient use of marketing dollars but is also the most expensive form of marketing, since most companies must tarb t several segments at once. Broad Segments The most common marketing segment is defined by trip purpose-either business or leisure. In an effort to maximize their occupancy rates, most lodging facilities attempt to attract members of both groups since their differences are sometimes complimentary. For instance, business guests are more likely to need lodging from Monday through Thursday, and hoteliers can lessen the weekend slack by planning specials for leisure guests who are more likely to travel on weekends. Not all of the differences balance one another so nicely, however. Since many of the needs of both groups are often specific to each, different marketing strategies are necessary. Business Guests. Business travel is the most important source of guests for80 percent of all hotels. For this reason, recognizing and catering to the special needs of the business traveler is vital to the success of the lodging industry. Traditionally, business travel is high on weekdays and low on weekends, with the average trip lasting approximately 3.5 days. During their stay, business travelers usually spend the majority of their time working. This means their needs are specific: well-lighted workspaces; a telephone; and access to equipment like personal computers, modems, photocopies, or facsimile machines. The business segment can be further defined by socioeconomic and psychographic factors. Some business travelers are on limited budgets, while other spare no expense for their accommodations. This letter group often expects VIP treatment and luxury accommodations. In some cases, business travelers need lodging for extended periods. For conferences, business guests may need access to meeting and banquet facilities. The possible segments are legion. ICHM Page 101

Introduction to Hospitality Industry

Leisure Guests. Personal and leisure travel accounts for 56 percent of all hotel stays. Many experts predict that the leisure travel market will flourish in light of the increase in discretionary income of aging baby boomers. Discriminating and extremely conscious of price and value relationships, leisure travelers desires may vary widely from one nights stay in basic accommodations to several weeks at a resort with extensive recreation, entertainment, food and beverage facilities. In the past, leisure trips were lengthy. Today, however, the increase in dual-income families has influenced the trend towards shorter, more frequent trips close to home. Weekend getaways, as these trips are often called, have been spurred by the difficulties of coordinating vacation time. Still, families with two working parents (76%) are more likely to vacation than those with one (64%). Target markets Every hotel seeks to identify target markets. Target markets are distinctly defined groups of people that the hotel hopes to retain or attract as guests. Hotels frequently have a mixed market, which is drawn from both business and holidaymakers. The most frequently defined market segments are: Conference Business Independent Travelers Local Travelers Overseas Holidays Domestic Travelers

The needs of different types of guests The need of the business traveler may include: Ease in making a reservation Quick, efficient check-in Reliable and comfortable product Discreet meeting places (e.g. lounges, bars and conference rooms) Early breakfast and quick checkout Business facilities Leisure facilities ICHM Page 102

Introduction to Hospitality Industry


Budget accommodation Convenient location Foreign currency exchange The needs of a tourist may include: Friendly front office staff Other Segmentation Criteria There are other differences between people, which influence their needs, and preferences. For example, their age, marital status, nationality, lifestyle and gender. Old, affluent widows from Paris would differ greatly from young, single, working-class girls from Tokyo. What Do Our Guests Need? Once we know who our customers are we can then identify their needs. We can build a customer profile for each customer to learn more about them, their reason for staying in our hotel and the type of services they require. This information will help the hotel in its marketing activity and overall will enhance the service to the guest. Business Or Pleasure? Guests who are staying in the hotel for business purposes are interested in the services, which the hotel provides: Telephone, fax or business center facilities Restaurants for entertaining Location and hotel transport Efficient service Tourist may be more concerned with: Leisure facilities Location vis--vis tourist attractions Friendly service

The needs of the guest can also vary depending on the classification of guests within the hotel Once a visitor or caller is identified as a prospective user of hotel services, he may be studied under different headings such as: 1. ICHM Guests on the basis of status: For example, Page 103

Introduction to Hospitality Industry


2. an expected guest, an in-house guest check out guest. Guests on the basis of recognition: Such as, regular guest, V.I.P., special Attention and distinguished guest and new guests, and Paying guests, and Complimentary Guests.

3. Guests on the basis of revenue: For example,

Customer Profile Information Once the market has been established, it is then necessary to identify the needs of individual customers. Those guests who are staying in the hotel for business purposes will b e interested in the service which the hotel provides, may make frequent use of the telephone system, may require the use of a telex or fax machine, or may wish to entertain clients in the restaurant. On the other hand, tourists may be far more concerned with leisure facilities and friendly service. Suggest the different types of service required by: Business traveler Tourist Customer Profile information is readily available to the hotel. The sources of information available include. Information on the nationality of customers, which is available from the registration, forms. Other information on customers can be built up by examining booking records, by asking specific questions when bookings are made, such as how did the person hear about the hotel, and by incorporating additional questions on registration forms such as reason for visit.

ICHM

Page 104

Introduction to Hospitality Industry


This data can be used to market the establishment more effectively, for example; by deciding to attract more local business, then at a later stage measuring the results (in terms of increased numbers of local guests) of advertising, promotional offers, and other methods which might be used to reach the local market. Female Customer Profile One out of every three-business traveler is a woman and Female travelers account for one out of every five-business trip, according to SRI, IntI, a California consulting firm. More than half of "baby boomers" are women (baby boomers represent 70 million Americans, about 30 percent of the population) Furthermore, the U.S. Census Bureau (1980) reports that women now hold 30.5 percent of all U.S. management positions. Anticipating Female Traveler Needs Good Place to Start Numerous studies have been produced recently pointing our preferences of female travelers. Most studies indicate that female travelers differ from male travelers as far what's important to them in hotels. A study of Opinion Research Corporation, Princeton, NJ revealed women business travelers are younger, more often single and have lower individual incomes than their male counterparts. The study determined: Women place more emphasis on amenities and personal safety while men are more Women are less likely to make their travel reservations and report more corporate travel concerned with price (when asked to describe the reasons for hotel and motel preferences). restrictions. The May, 1984 issue of Hotel & Motel Management featured an article on the needs of the female traveler. H&MM quotes a survey conducted by Metropolitan State University, St. Paul, MN that the "typical female business traveler's prime concerns are personal safety and comfort." ICHM Page 105

Introduction to Hospitality Industry


Safety features in order of importance: Guest room door locking devices. Self-locking doors on floor exit routes Visible security in the hotel parking areas and a guest "escort service."

Female executives stressed, according to the survey, the importance of lighter meals, including salads, soups, fresh fruits and cheeses, along with typical business amenities such as reading materials in the rooms. Nearly six out often polled said they desired "a more subtle way of checking in, one that would not reveal they were alone." "Basically, women business travelers don't want preferential treatment said Arnold Hewes, executive vice president of the Minnesota Hotel & Motel Association, co-sponsor of the project.They want to be treated with respect." Women polled listed these room amenities as "most important": skirt hangers (87%), iron and ironing board (63%), shampoo and conditioners, hair dryer and moisturizing soap. Project Director Robert-Ian Salait summed up what the women polled were saying:"'1 has more concern for security that the average male traveler is willing to admit, and I would like certain amenities. But I don't want to be coddled. I don't want to be singled out. I certainly don't want to be left alone on an all-women's floor." What We Can Do Now? First, all lodging owners and operators need to acknowledge that the business market is segmented and that the female business traveler market is significant and here to stay. Your properties need to be examined again to see how they look through the eyes of a woman is business. Conclusions of these new reports must be studied carefully and discussed with key staff members. Whether it is done by personal interviews or questionnaires begin asking questions of your present female guest to learn of their preference. The feedback you'll receive should be ICHM Page 106

Introduction to Hospitality Industry


invaluable and your sincere interest and concern should make a very positive impression on those women who frequent your property. Listen carefully. Study the information you receive. Evaluate how well you property caters to the real needs of women business travelers today. Make the necessary operational changes that can be justified. Communicate what you are doing internally and externally, verbally and in writing. Communicate by your actions. Begin to "work" your present women business travelers for referrals. You'll find these women have their own 'networks' and will be eager to 'spread the good word' about your property. Work your referrals, monitor the program and watch for results. If you start only a pilot program and it begins to produce results, consider putting a budget together to cover some advertising, publicity and promotional programs designed to attract your fair share of this market. To understand the personality of the GUESTS I would like to discuss these cases, which was published in Express hotelier and caterer in their March 2001 issue. These cases will clear your concept regarding the personalities of the guests who frequently visits the hotels it has also been aided with the power point slide summarising all the cases of Guests Personality. Every Front office Personal in his average eight to 12 hours of work at the hotel interacts with a number of guests daily. Each of these guests vary in their personality and a personnel needs to be very careful in dealing with them. The staff should be smart enough to identify the nature/personality of the guests and should act accordingly while investigating them or meeting up with their requirements. It has been universally proved that nature and nurture does influence the personality of a person. This is mainly because different surroundings, circumstances or situations have a major impact on how a person behaves, his nature or his overall personality. Take an example of twins, when nurtured under two different conditions are known to have two different characters and vice-versa.

ICHM

Page 107

Introduction to Hospitality Industry


Similarly, guests are known to differ in their characteristics depending on the way they have been brought up, their values and their nationality as well. There is a vast difference in how guests of similar origin brought up in different countries would react under a given situation. For example, an Indian guest if stopped at the hotel lobby for investigation will take offense on the same. The same guest when, authoritatively, told to decrease the volume of the television in his room, as the guests staying in the neighbouring rooms were getting disturbed, will happily do so. Later if the Indian guest is facing with the same problem, will not complain because Indians per se are adaptive and tolerative by nature. Now, consider a Non Resident Indian (NRI) under the similar situation. If he is stopped at the hotel lobby for investigation, he will not take any offense for the act. But, try telling him to decrease the television volume and observe how he reacts. Firstly, he would like to know the reason for the same and will act accordingly only if the reason is justified. Now, after some time if he is faced with the same problem, he wont keep quiet but will complain. This is because he has learned to abide by rules and also to complain if he finds people deviating from the laid down rules. With the help of Power point slides these cases have been discussed which will make your concept clearer. GUESTS PERSONALITY Difference in the character of the guest leads to variance in his attitude and behaviour while interacting with people. Some guests are positive in attitude and behaviour while others are not. It is very important for every Front office personnel to understand the variable human personalities if they have to be effective in their communication and interaction at work. According to studies conducted by research organizations, Front office personnel, during his routine, will come across guests with the following different types of personalities: Guests who understand and are co- operative in nature. Guests who are inquisitive, hesitant and demand proof for anything and everything. ICHM Page 108

Introduction to Hospitality Industry


Guests who are irritable and quick in loosing their temper Guests who are talkative, like to joke and waste time Guests who are conceited, like to brag about their position and acquaintances. Chaotic guests who try not to follow the rules and regulations laid down by the property. Silent guests who hate talking. Mysterious guests who do not clearly communicate what they want Guests who are

under the influence of alcohol Now we will deal one by one with every type of guest personality Guests who are quiet - hate to talk. Guests who are very talkative and like to joke and waste time. Most of the hotels are

frequented by business travelers. These guests prefer to stay very quiet as they are usually busy with their work and often preoccupied with some or the other thing. They have little or no inclination to indulge in informal conversations and small pleasantries. It is very difficult to decide on whether this trait is natural i.e they hate to talk or has business molded them to an extent that they talk very little. In such a case it becomes very difficult to probe owing to their silent nature. So then, how does one deal with such a guest? The best way of meeting the requirements of guests falling under this category is by being very brief in putting across the facts It is very important to read and understand his body language and facial expression when dealing with him. His body language and facial expressions, most of the time, will indicate his willingness to carry on with the conversation. Knowing his preference becomes important because his silence makes it difficult to understand his needs Treat him with as much respect and dignity as you would treat a friendly guest who loves to talk and joke and make your work load a little lighter. So now how do you tackle a guest who is very talkative and joke a lot and waste time Be responsive to his words at the beginning of the conversation. Listen to him ICHM Page 109

Introduction to Hospitality Industry


without interrupting for a while as he may have valuable facts to tell you. To such guest try to offer service as quickly as possible. Always remember that in a service industry, silence of a guest needs to be cautiously stirred to render crystal service. On the other hand, joking and talkative guest conversation needs to be rightly and constructively channel is. This ensures that precious time is not wasted in serving and reaching out to just one guest Chaotic - Someone who tries not to follow the rules. Mysterious - A person who is not very clear about his/her requirements. Drunk - A guest heavily under the influence of alcohol. You may wonder why a well

placed guest, who has attained a level of understanding, break rules? Every hotel staff, should remember that for every instance of such behaviour there is always a cause. Try to understand that cause., Try to convince him that rules and procedures are to be followed and not broken and that by doing so he is only helping you secure him, the hotel and everything that's in it. Such a guest needs to be tactfully and efficiently dealt with. Understanding a guest of the second category - mysterious - requires some extra efforts by the Front office personal These guests need patient and calm handling. Encourage such a guest to clarify his ideas, wants or needs by positive questioning. Ask such a guest direct questions and suggest alternatives to the answer Do not give him a choice. After you have suggested alternative to the answer, also use

silence sometimes to pressurise him into thinking and clarifying his ideas When such a guest does begin to speak listen to him carefully and give him the

impression that you have begun to understand him. Do not rebuke or contradict such a guest either by words or gestures.

ICHM

Page 110

Introduction to Hospitality Industry


After he has finished, make it a point to thank him for cooperating Coming to the third

category - Drunk guests, A drunken guest needs patience handling as well Such a guest is not in his right senses, is emotionally sensitive and could take offense of

your behaviour. Do not cough or smile at his actions or comments. Avoid doing anything that will irritate him. Ask him direct questions and give him enough alternatives.

Guest history card Some hotels keep a personal record of each guest. What began as handwritten notes on file cards has become computer-stored data. Management can use guest history information to better understand its clientele and to determine guest trends. Linked to reservations and registration files, guest history data informs a reservationist of a callers past record with the hotel. It provides details on: Guest address Number of stays Method of payment Preferred room category, and Any special requirements

The hotel can use this information in two ways: To provide a better and more efficient service to the guest, and As a source for mailing lists or to identify guest characteristic important for strategic marketing. This information may help the hotel develop and place advertisements that appeal to the types of clientele the hotel is attempting to attract. Guest history records may also point out the need for new, additional or improved services.

ICHM

Page 111

Introduction to Hospitality Industry


Courteous Service All guests expect and are entitled to courteous service This is under your control and at all times you should try to provide service which is: Prompt Efficient Friendly Courteous

Remember, good service means giving customers a little bit more than they expect. 10 Ways to Build Customer Loyalty: 1. 2. 3. Take ownership of your customers problemeven if you are not the cause of it. Follow-up with every customer who was upset or had a difficult problem. Ask yourself with every customer interaction you have, "If this were me, what would I

want?" 4. 5. Thank your customers and co-workers every chance you get! Fax articles or other materials to your customers if you think they can benefit from the

information. 6. Remember personal details about your customers such as birthdays, children`s names

and accomplishments. 7. 8. 9. SMILE every time you are on the telephone. Look for ways to bend the rules and remove service obstacles. Time is a person`s most precious commodity. Respect your customer`s time and

schedule. 10. Provide your customers with respect, friendliness and knowledgeand, oh yes, the products and services you sell. ICHM Page 112

Introduction to Hospitality Industry


The Customer Service solution is simple. Educate people as to how the customer feels when things go wrong. Teach them to empathize, as this gate agent did. But then empower them to make a real difference in creating opportunities to build customer loyalty. The cost to the company of doing so is typically small to insignificant. The payoff is GIGANTIC! 10 Steps to Improved Service: Improving the quality of your customer service requires commitment and consistent effort from everyone. Since creating a product that is unique in the eyes of the customer is becoming increasingly difficult in today's competitive environment more companies are relying on service to achieve competitive advantages. Outstanding service companies share some basic similarities, but they also customize systems, structures, management styles and employment practices so suit their strategic goals. To improve the quality of your service take the following 10 steps:

1. Make a commitment to service. The return on investment for companies that impress their customers with value added service can be staggering. These returns are not the result of providing excellent service but of customers perceiving that a company delivers service that is unique. Achieving quality service takes a serious commitment from every employee in the organisation to remove the "s" word (satisfy) from service goals and instead work to exceed customers' expectations to the point that customers are willing to tell others. 2. Develop a proactive recovery strategy. The quickest way to improve your service reputation is to improve your recovery process. Customers are impressed by companies that make an empathetic, hassle free effort to recover when customers perceive that they received less service than they expected. These efforts dramatically communicate to customers that the company cares, that it is sensitive to the

ICHM

Page 113

Introduction to Hospitality Industry


customer's business and that it will stand behind its product or service - no matter what. An effective recovery strategy requires going all out to find disgruntled customers. 3. Ensure continuous improvement. Effective service improvement is the cumulative effect of a thousand small improvements made daily at every level in the organisation. It often requires changing the culture from one that accepts the status quo to one that is excited about change and continuous improvement. Innovating service practices and redefining service delivery must be everyone's job -start small and demand improvement from everyone. Define success as continually improving in all areas, including service, first-time quality, cost reduction, productivity and development of human resources. 4. Listen to customers. Listening is the foundation of all good relationships and a prerequisite to business success. But suprisingly few companies systematically listen to customers, suppliers, employees and competitors. The radical service improvements needed in this decade will require better customer information systems. The more we know about a customer's business, the easier we can form strategic partnerships. Because service professionals spend so much time with customers, they must be the primary source for developing and updating the system. 5. Facilitate change. Service problems are leadership problems, often resulting from management's unwillingness to change structures, reduce the number of inflexible policies and procedures, set higher service goals for themselves and their work groups and spend more time on customer-related issues. Service improvement efforts fail more from ineffective management practices than from lack of front-line effort. Yes, the front-line people are often unwilling or unable to take risks necessary to embrace their changed role and enthusiastically deliver service that consistently exceeds customer expectations. But this happens because leaders fail to ensure that: ICHM Page 114

Introduction to Hospitality Industry


1) Desired service outcomes are well defined; 2) the service delivery process is clearly communicated and perceived to be flexible; 3) guiding principles and core values are established; and 4) everyone understands their role in the show. 6. Define the playing field. Front-line employees must understand the rules of play and how to win before they can successfully customize service for the customer. There must be a clearly defined direction (a goal-line that indicates how to score) and predefined parameters (the "rules" or boundaries) that outline the limits of responsibility and decision making. In the past, outlining boundaries has been accomplished primarily by correcting mistakes. Unfortunately, this does not communicate what is desirable, only what is out of bounds. When employees are not secure, they focus on avoiding problems and mistakes and not on creativity and customisation. This uncertainty often results in such responses as "I'd like to help you but It's not my job," "I just work here, "or "It's just our policy." These responses are the consequence of a risky service culture created by uncertain boundaries and inconsistent goals. 7. Provide autonomy. Creative, dedicated, enthusiastic service professionals who routinely make business decisions and improvise when necessary are the foundation of excellent service. Yet many companies ignore the benefits of engaging the talents of their work force. Too often they ask front-line employees to park their brains at the front door and blindly obey pre-determined policies and procedures. Serious service improvement involves people meaningfully in every aspect of service delivery, including service planning. innovation and process improvement. It means replacing many "rules" with judgment, allowing for greater flexibility in front-line decisionmaking within well defined parameters. It requires more trust between leaders, employees and their unions, a greater sharing of information and an unprecedented commitment to continuous education. The heroes in a customer-focused culture must be highly trained, enthusiastic front-line service professionals who make hundreds! of decisions daily to deliver a customized product faster than ever before.

ICHM

Page 115

Introduction to Hospitality Industry


8. Measure performance. Managers must educate everyone to routinely measure all of the responsibilities crucial to success. Cost-reduction measures should be balanced with measures of service, quality and leadership, employee flexibility and continuous improvement. The most valid measures of service quality are the subjective opinions of customers. Only customers can evaluate service in light of their unique expectations. Consequently, responsibility for measuring and demonstrating continuous service improvement should be focused closer to the service professional. Only when service teams are actively involved in every facet of the service business, including measurement of quality; can organisations capture the creativity and enthusiasm needed to radically enhance service delivery? 9. Hold everyone accountable. When we ask, "Who is responsible for service improvement in your organisation?", we are usually given the names of several people whose responsibilities cross many functional areas. When a service problem surfaces, these people point out that the root cause of the problem exists with another group This "fragmented accountability" is no accountability at all, Until a single person is accountable for service improvement and until serious personal consequences are set for failing to achieve service goats, continuous service improvement is unlikely. Lack of individual accountability allows leaders to avoid focusing on ineffective managerial practices, such as adhering to time-wasting routines, attending endless meetings, failing to set goals that test their talents and failing to change ineffective reporting and promotional structures. If all employees were held personally accountable for influencing the perception of the customer, customer service wou! ld be perceived as a part of the strategic plan instead of a "slogan" or theme program. 10. Celebrate success. Every organisation must develop a culture of celebrated discontent - a simultaneous feeling of accomplishment and a desire to improve. Too often, though, organisations create an almost

ICHM

Page 116

Introduction to Hospitality Industry


schizophrenic "either/or" mentality celebrate one minute and be emphatically discontent the next. People find these environments confusing and uncomfortable. Organisations must celebrate often, making the celebrations sincere and spontaneous. Those who consistently demonstrate improvement must become the heroes. These 10 fundamentals will help create a culture of continuous service improvement. Companies must define success for everyone in the organisation as continually improving everything -everyday. Nothing less will do. In Taking Care of eBusiness, Siebel shares eight key principles that he believes will help companies make the most of their customer opportunities in the Internet Age. Like many top executives who produce strategy books on the side, Siebel brings his intelligence and energy to about two-thirds of the book -- and clearly relies on news clippings and safe, puffy phrases to pad out the rest of the manuscript. But even if Siebel the author isn't quite as formidable as Siebel the CEO, his best ideas are highly compelling. As Siebel points out in his opening chapter, the opportunities to gather customer data have never been better. Used effectively, that data can translate into better and more profitable service -- where the "right" products and services are offered to the "right" customers at the "right" time. But the playing field is also increasingly complex. Customers with an order or a complaint don't just call a toll-free number or wait for their district sales representative to arrive. They may turn to email, a Web site, or a host of other channels to do business. If companies can't make each of those channels work well or can't integrate information throughout each piece of their sales, marketing, and service systems, well, it's never been easier for customers to say good-bye and take their business elsewhere. So, straight from Siebel's playbook, here are five of his best insights for connecting with customers. Personalise the customer experience: Siebel writes admiringly of Marriott International's ability to gather data on repeat customers' preferences, so that it can present them with appealing choices for restaurants, golf courses, ICHM Page 117

Introduction to Hospitality Industry


and the like - as well as a night's lodging. One such program, he notes, has produced both an improvement in guest-satisfaction ratings and a $100-a-day jump in spending beyond the basic room rate. In essence, Marriott has become smart enough about its customers that it can cross-sell with clarity and success. That sort of personalization is easier than ever when dealing with customers through email, the Web, or even a call centre with Internet-based technology. There's no easy way to reconfigure a physical store for each customer or to print customized catalogues for each shopper. But in the online economy -- as shown by the early success of customized home pages on Yahoo -- it's easy to tailor information and presentation to suit each customer's own tastes. Store your data in one place: Most companies, Siebel notes, have allowed customer data to become incredibly fragmented over the years. Billing departments, marketing divisions, and service centers all may know a bit about the same customer, but companies have no effective way to tie that knowledge together. Those discontinuities are likely to sound grimly familiar to anyone who has bought or serviced a car recently. But Siebel is optimistic about a $300 million initiative being undertaken by Saturn Corp., which he calls "an emerging e-Business leader in the automotive industry." Saturn is creating a Web-based information system that will link all 400 of its retail facilities nationwide with each other and with customers and partners. That should make it easier for car buyers to canvas multiple dealerships in search of their exact model choice; it also should help owners schedule service appointments no matter where they are. Get relevant data to your frontline workers as fast as possible: The biggest users of Siebel software are regional sales reps on per diems and call-centre specialists who wear headsets all day long. Their jobs may not be as glamorous as a CEO's -but to Siebel Systems, they are crucial to a company's success. And the only way for those employees to reach maximum effectiveness is to put knowledge on their screens and in their hands.

ICHM

Page 118

Introduction to Hospitality Industry


Siebel approvingly cites computer and telephony integration at the global-accounts call centre for WorldCom, the long-distance and Internet-services company. The system "ensures that a customer's complete account profile automatically appears on screen before an agent takes a call," he says. That avoids exasperating - and unproductive -- calls where call-centre agents struggle to track down relevant information. Instead, that approach should let agents anticipate customers' needs, handling calls faster and more effectively.

6.3 Role of support services an infrastructure The Destination Lifecycle In discussing tourism, the term destination becomes ubiquitous; however, it is not always clear what a destination is. Is it a hotel, a city, a region, or a country? Bierman (2003, P.2) defines a destination as a country, state, region, city or town which is marketed or markets itself as a place for tourists to visit. Regardless of what geographic scope one assigns to the term destination, a destination is a product that must be marketed to its consumers. Like most products, destinations have a lifecycle. In his 1980 article, Butler proposed a widely-accepted model of the lifecycle of a tourist destination. The basic idea of Butlers 1980 Tourism Area Life Cycle (TALC) model is that a destination begins as a relatively unknown and visitors initially come in small numbers restricted by lack of access, facilities, and local knowledge, which is labeled as Exploration As more people discover the destination, the word spreads about its attractions and the amenities are increased and improved (Development). Tourist arrivals then begin to grow rapidly toward some theoretical carrying capacity (Stagnation), which involves social and environmental limits. The rise from Exploration to Stagnation often happens very rapidly, as implied by the exponential nature of the growth curve. ICHM Page 119

Introduction to Hospitality Industry

The possible trajectories indicated by dotted lines A-E in Figure 1 are examples of a subset of possible outcomes beyond Stagnation. Examples of things that could cause a destination to follow trajectories A and B toward Rejuvenation are technological developments or infrastructure improvements leading to increased carrying capacity. Examples of things that could cause a destination to follow trajectories C and D are increased congestion and unsustainable development, causing the resources that originally drew visitors to the destination to become corrupted, or no longer exist. The trajectory in Figure 1 of most interest to this research is trajectory E, which is the likely path of a destination following a disaster or crisis. It is also important to point out that the Law of Diminishing Returns could cause a destination to follow trajectories similar to those of C or D, and that the concepts and practices of destination recovery, as applied to destinations recovering from a disaster, could easily be applied to a destination in Decline as a result of the Law of Diminishing Returns. Butler is not the only researcher to acknowledge this concept; in fact, many tourism researchers have written about it. Stankey wrote about destination lifecycle in his 1985 article, referring to it as recreational succession, which he defines as the gradual deterioration of a camping site as it becomes increasingly popular with visitors (Stankey and McCool, 1985). Iyer (1988, p.30) also eluded to the destination lifecycle in the following quote about Bali, Hardly has a last paradise been discovered than everyone converges on it so fast that it quickly becomes a paradise lost. Mediterranean Tourism Life Cycle Model The life cycle of the tourism product

DISCOV ERY ICHM

LAUNCH

STAGNA TION DECLIN REJUVINA TION Page 120

Introduction to Hospitality Industry

As in other economic sectors, tourism follows a "product life cycle", with a curve similar to that of the above graph. In this process several stages can be identified: STAGE 1: DISCOVERY During the early "discovery stage" of the cycle a small number of unobtrusive visitors arrive seeking "unspoiled" destinations. These early "explorer" tourists generally speak the language and identify with the local culture. The social impact in this stage is generally small and resident attitudes are fairly positive towards tourism. STAGE 2: LAUNCH During this stage the number of incoming tourists increases. The host community responds to the increasing numbers of tourist by providing facilities. Businesses remain family based and the visitor-resident relationship is still harmonious. Later in this stage, visitor numbers increase and the community becomes a tourist resort. Outside interests become involved developing businesses and tourist facilities. This is typically the stage during which TNC (Trans-National Corporations) foreign investment enters the cycle. Migrant workers, attracted by the prospect of tourist-related jobs, may enter the community and reduce resident contact with visitors. The tourist-relationship is converted into one of business as the novelty of new visitor arrivals declines. The more culturally sensitive "explorers" move on to new "unspoiled" areas and are replaced by the mass market. ICHM Page 121

Introduction to Hospitality Industry

STAGE 3: STAGNATION The stage in which saturation is reached. The quality of tourist services falls, demand levels off, and the environmental degradation of the tourist destination begins to be obvious and worrying. The tourist destination at this stage is said to have reached 'maturity'. STAGE 4: DECLINE which represents the current state of mature tourist destinations on the Costa Brava in Spain. Falling profits lead to foreign-owned businesses withdrawing and the community is left to "pick up the pieces". The three A of tourism 1. Tourist attraction

A tourist attraction is a place of interest where tourists visit, typically for its inherent or exhibited cultural value, historical significance, natural or built beauty, or amusement opportunities. The Eiffel Tower in Paris, France, a popular tourist attraction. Almost 7 million visit the tower each year. A tourist attraction is a place of interest where tourists visit, typically for its inherent or exhibited cultural value, historical significance, natural or built beauty, or amusement opportunities. Some examples include historical places, monuments, zoos, aquaria, museums and art galleries, botanical gardens, buildings and structures (e.g., castles, libraries, former prisons, skyscrapers, bridges), national parks and forests, theme parks and carnivals, ethnic enclave communities, historic trains and cultural events. Many tourist attractions are also landmarks. Tourist attractions are also created to capitalise on unexplained phenomena such as a supposed UFO crash site near Roswell, New Mexico and the alleged Loch Ness monster sightings in Scotland. Ghost sightings also make tourist attractions.

ICHM

Page 122

Introduction to Hospitality Industry


Ethnic communities may become tourist attractions, such as Chinatowns in the United States and the black British neighborhood of Brixton in London. In the US, owners and marketers of attractions advertise tourist attractions on billboards along the side of highways and roadways, especially in remote areas. Tourist attractions often provide free promotional brochures and flyers in information centres, fast food restaurants, hotel and motel rooms or lobbies, and rest areas. While some tourist attractions provide visitors a memorable experience for a reasonable admission charge or even for free, others can have a tendency to be of low quality and to overprice their goods and services (such as admission, food, and souvenirs) in order to profit from tourists excessively. Such places are commonly known as tourist traps

ICHM

Page 123

Introduction to Hospitality Industry


2. Accessible tourism

Is the ongoing endeavour to ensure tourist destinations, products and services are accessible to all people, regardless of their physical limitations, disabilities or age. It encompasses publicly and privately owned tourist locations. The improvements not only benefit those with permanent physical disabilities, but also parents pushing buggies, elderly travelers, people with temporary injuries, such as a broken leg, and their relatives, friends and other companions. As of 2008, there are more than 50 million persons with disabilities in Europe, and more than 600 million around the world. When expanded to include all beneficiaries of accessible tourism, as defined above, the number grows to some 130 million people in Europe alone.[1] In addition to the social benefits, the market represents an opportunity with new investment opportunities and new service requirements, rarely provided by the regular travel agencies, transport providers and other key players in the tourism sector. According to ENAT, the European Network for Accessible Tourism, accessible tourism includes:
[1]

Barrier-free destinations: infrastructure and facilities Transport: by air, land and sea, suitable for all users High quality services: delivered by trained staff Activities, exhibits, attractions: allowing participation in tourism for everyone Marketing, booking systems, Web sites & services: accessible for all (i.e. accessible information) Specific needs and requirements Specific problems found by the disabled tourist when booking a holiday include: ICHM Inaccessible, or only partly accessible, web sites Lack of accessible airport transfer Lack of wheelchair accessible vehicles Lack of well-adapted hotel rooms Page 124

Introduction to Hospitality Industry


issues scooters) Brief history Europe and United States of America share the majority of the existing companies in this niche. However, around the world many companies are starting to appear as the result of a growing need, largely driven by "senior tourism" due to increasing life expectancy in developed countries. Portugal, Spain, the United Kingdom, Germany, France and other northern European countries are increasingly prepared to receive tourists in wheelchairs, and to provide disability equipment and wheelchair accessible transport. 3. Tourist amenity Lack of reliable information about a specific attraction's level of accessibility Lack of accessible restaurants, bars, etc Lack of adapted toilets in restaurants and public places Inaccessible streets (cars parking in the stepwalk, etc) Lack of disability equipment (wheelchairs, bath chairs, toilet raisers, electric (church, castle, exhibition, etc.) Lack of professional staff capable of informing and advising about accessibility

Tourist amenity refers to the accommodation on tourist spots which may include hotels, motels, resorts, lodges etc. REVIEW QUESTIONS 1. 2. 3. Who are the major players in the hospitality industry? Write in detail What are the existing and emerging markets of the hospitality industry/ Write a note on the role of support services an infrastructure in the hospitality industry

ICHM

Page 125

Introduction to Hospitality Industry


B.Sc. (HOSPITALITY AND CATERING MANAGEMENT) INTRODUCTION TO HOSPITALITY INDUSTRY UNIT 7 7.1 Impact of international and national events, Present scenario and future projection of HR issues an technology in industry Careers in Hospitality Management Choosing the right career can sometimes be a difficult decision for the recent high school graduate. The best way to start your decision-making process is to do a self-evaluation to determine what you would enjoy doing and whether that career would lead to your personal success. Successful people are highly motivated individuals who have confidence in themselves and their abilities. They dont view their profession as a grind, but look on it as fulfillment. Hospitality Management, including the Food Service Industry, is one of the fastest growing occupations in the world. There are predictions that by the year 2005 there will be 12 million workers in this industry. Food Service personnel are needed at the rate of one to every 10 to 12 positions, and the industry is seeking those with a culinary and hospitality education to meet the complex demands of the 21st century. How will you know if you would be good in these careers? The hospitality industry is comprised of friendly, courteous, and helpful individuals who are willing to deliver great customer service with a passion. If you possess these qualities and have good communication skills, then this exciting industry could be for you. Upon graduation, students of Hospitality Management and Culinary Arts schools may seek employment in hotels, restaurants, catering, resorts, cruise ships, casinos, and entertainment venues, just to mention a few. Jobs in hospitality operations can be found in almost every community in the United States and abroad. Earning potential varies and is limited only by your ability and willingness to succeed. Starting wages are $8 to $16 per hour; however, this can increase substantially with ICHM Page 126

Introduction to Hospitality Industry


experience and perseverance. Many Hospitality Management positions offer benefits such as health insurance, paid vacations and sick days, and reduced rates on accommodations, food, and travel. Annually, travel and tourism employers around the world pay more than $1.6 trillion in wages and salaries and create 12.5 million new jobs. Hospitality is an industry that is known for promoting from within and for having a large number of young managers. If youre talented and demonstrate a good work ethic, you can advance quickly. There is no limit to where your dreams and ambitions can take you in the exciting and fascinating world of Hospitality Management. Remember, it is not where you start that matters, its where you finish. It is important for you to select an industry segment appropriate to your ability and personality. Skills Inventory. One of the best ways to select a career niche you will be happy with is to start by listing your own skills. What are the tasks you do best? Most skills fall into one of three areas: skills dealing with data, skills dealing with people, or skills dealing with things. You will probably find that the majority of your skills will fall into one or two of these areas. People whose skills fall into the data group are often good in subjects such as math and science and enjoy working with computers. They tend to like such activities as analyzing information, comparing figures, working with graphs, and solving abstract problems. Such individuals might enjoy doing feasibility studies for a hospitality management consulting firm. They might also be happy in the corporate planning departments of large hotel and restaurant chains, where data is analyzed and demand is forecast. Most auditors and accountants fall into the data-skills group. If you like to deal with people, you probably enjoy helping them and taking care of their needs. You can take and give advice and instructions. You may also enjoy supervising and motivating other people, and may find that they respond to your leadership. Individuals with people skills are often good at negotiating and selling-they like to bargain and are not afraid ICHM Page 127

Introduction to Hospitality Industry


to make decisions. In the hospitality industry, general managers and marketing and sales managers of hotels often fall into this category. So do independent restaurant owners, catering managers, and dub managers. Careers in the Hospitality Industry Why do people go into the hospitality industry? If you were to ask people who have spent their careers in this business what they like most about it, you would get a wide variety of answers. Some of the most popular are: The industry offers more career options than most. No matter what kind of work you enjoy, and wherever your aptitudes lie, there is a segment of the industry that can use your talents The work is varied. Because hotels and restaurants are complete production,

distribution, and service units, managers are involved in a broad array of activities. There are many opportunities to be creative. Hotel and restaurant managers might

design new products to meet the needs of their guests; produce training programs for employees; or implement challenging advertising, sales promotion, and marketing plans. This is a "people" business. Managers and supervisors spend their workdays satisfying Hospitality jobs are not nine-to-five jobs. Hours are highly flexible in many positions. There are opportunities for long-term career growth. If you are ambitious and energetic,

guests, motivating employees, and negotiating with vendors and others. (Some see this as a disadvantage, however. you can start with an entry-level job and move up. The industry is full of stories of people who started as bellpersons or cooks and rose to high management positions or opened their own successful businesses.

ICHM

Page 128

Introduction to Hospitality Industry


There are perks associated with many hospitality jobs. If you become- the general

manager of a resort, you can dine at its restaurants with your family and friends,and use its recreational facilities. Airline and cruise employees get free or reduced-fare travel. Despite these advantages, there are some aspects of the business that many people don't like: Long hours. In most hospitality businesses the hours are long. The 40-hour workweek is Nontraditional schedules. Hospitality managers do not work a Monday through-Friday

not the norm, and 50- to 60-hour workweeks are not unusual. schedule. In the hospitality field you will probably often find yourself working when your friends are relaxing. As one manager told his employees, If you can't come to work Saturday or Sunday, don't bother to come in on Monday. Pressure. There are busy periods when managers and employees are under intense Low beginning salaries. Entry-level jobs for management trainees tend to be low-paying pressure to perform. compared to some other industries. Travel-Related Sectors Offer Wide Variety of Jobs, Including Executive Level Eating And Drinking Places Eating and drinking places are the leading source of travel industry jobs. This is due to the labor intensiveness of the industry and the high proportion of traveler dollars spent on food. During 1995, eating and drinking places employed 7.35 million workers. Approximately 25 percent of these jobs were directly attributable to travel and tourism. Eating and drinking places provide a variety of job opportunities, including, but not limited to: Executive Chefs District Managers Accountants Waiters Unit Managers Advertising Specialists Food Preparation Hosts Workers and Hostesses ICHM Page 129

Introduction to Hospitality Industry


General Managers Controllers Public Relations Dieticians Food Service Managers Purchasing Agents Bartenders Personnel Directors

There is a great deal of diversity in eating and drinking establishments, including hundreds of thousands of small businesses and many large chain-owned restaurants. The types of jobs available in smaller independent restaurants consist almost entirely of cooks, cashiers, and waiters/waitresses. Managers tend to be promoted from within by excelling in entry-level positions. Larger restaurants employ general managers as well as assistant managers. At the top of the restaurant spectrum are luxury restaurants, which are for the most part owned and operated by independent entrepreneurs. Within the trade, these restaurants are sometimes called "white tablecloth" restaurants. Most of their patrons are on expense accounts. Chain-restaurant Chain restaurants recruit the majority of their managers from hospitality schools. Entry-level jobs for graduates with hospitality degrees are often on the assistantmanager level, with progression to manager, then district manager responsible for a group of restaurants, and then regional manager. Restaurant chains are the fastest growing part of the restaurant business today. Many of these chains are made up of fast-food restaurants or, as they prefer to be called, quickservice restaurants. Menus rarely change in these restaurants. Their strategy calls for delivering a large number of meals at fairly low prices. These firms, however, offer a variety of executive and management positions in the following career path: Management Trainee to Assistant Manager to Unit Manager to District Manager to Regional Manager

ICHM

Page 130

Introduction to Hospitality Industry


Corporate headquarters of chain-restaurants offer the same type of top executive positions as other large firms across all industries. These include CEOs, COOs, CFOs, and several Vice President levels. Social Caterers. Social catering is another part of the food service industry that many hospitality graduates become interested in. Catering is another business that is most often started by independent entrepreneurs, as it requires very little start-up capital-facilities can be rented as needed, equipment can usually be' leased on a short-term basis from restaurant supply houses, and food servers can be hired as needed. In some cases, caterers provide only food; in others, they are responsible for tables, chairs, utensils, tents, servers, and decorations. Contract Food Companies. Contract food companies are generally hired by orga-nizations whose major business purpose is not food service, but they provide it for some reason. The biggest users of contract food services are large manufacturing and industrial concerns in which workers have a short lunch period. Contractors such as ARAMARK and Sodexho operate cafeterias and executive dining rooms for these companies. The service is often subsidized by the contracting company, which may supply the space and utilities and, in some cases, underwrite some or all of the food costs. Schools and colleges, hospitals, sports arenas, airlines, cruise ships, and even prisons use contract food companies. In the case of airlines, meals are cooked and prepackaged in central commissaries and then delivered to the airplanes for preparation and service as needed. Contract food management is somewhat unusual because the manager must please two sets of employers-the manager's home office and the client that has contracted for the service. Many contract food programs, such as those at schools and hospitals, have strong nutritional requirements as well. Others, such as airline programs, require knowledge of advanced food technology.

ICHM

Page 131

Introduction to Hospitality Industry


Careers in contract food service are attractive to many hospitality majors. Contract food managers work more regular hours and are under less pressure than restaurant managers. Why? Because many of the users of contract food service, such as office building tenants, work a regular 40-hour week, Monday through Friday, which allows the contract food managers to work more normal hours. Also, contract food managers are able to predict with more certainty how many people they are going to feed, what they will feed them, and when the meals will be served. Because of the large volume of meals involved, contract food managers must be highly skilled in professional management techniques and cost control. For this reason, contract food companies usually hire people with experience within their industry and recruit from hospitality schools. Institutional Food Service. Although contract food companies can supply food for schools and hospitals, the majority of these institutions handle their own food service programs. Most public schools belong to the National School Lunch Program established by the federal government in 1946. The purpose of this program is twofold: (1) to create a market for agricultural products produced by Americas farmers, and (2) to serve a nutritious lunch to schoolchildren at a low cost. Public elementary schools tend to offer only those menu items that qualify for government support, but many high schools add items such as hamburgers, French fries, and even diet sodas. High school food managers work hard to come up with creative and innovative menu plans to keep students in school cafeterias. Even the look of school cafeterias has changed as managers have developed new methods of merchandising food. Colleges and universities have also experienced changes in their food service programs. Because more students live off-campus now, there is a trend toward flexible meal plans in which students have a choice of how many meals they wish to purchase from the institution. To compete successfully, many universities have opened special table-service restaurants in addition to their traditional cafeterias. Another move has been to offer a more varied cafeteria ICHM Page 132

Introduction to Hospitality Industry


menu featuring salad bars and popular items such as croissant sandwiches, bagels, lox and cream cheese, and even Belgian waffles for breakfast. Some universities have brought on campus quick-service outlets such as Pizza Hut and Taco Bell Hospital programs are usually administered by a trained dietitian or a professional food service manager working with one. Menus are generally simple and nourishing. In the past, most hospitals had a central kitchen where all foods were prepared and then sent in insulated carts or trays to the patients rooms. Some hospitals have decentralized their food service. With a decentralized system, the hospital purchases frozen and portion-packed entrees and salads and keeps them in small pantries in various parts of the hospital. The meals are then plated and heated in microwave ovens as needed. Another trend has been the attempt to turn hospital food service from a cost center into a revenue center. Some hospitals sell take-home food to doctors and employees and even do outside catering. As you can see, institutions are beginning to compete with commercial food service operations for consumers, This means that there are more opportunities than ever before for hospitality students to enter what is clearly a growing field. Executive employment within eating and drinking places, including top management, general managers, accountants, and auditors, numbered 427,000 in 1994. These top executive-level jobs are expected to grow by 30.8 percent by the year 2005. This compares with a much slower growth rate of 14.9 percent for total U.S. employment. According to the Department of Commerce, over half of all restaurants employ less than ten workers, significantly fewer than businesses in most other industries. This means that restaurants offer a better chance than most industries for self ownership. According to the BLS, there are 276,000 workers in the industry who are self-employed or family workers in a family owned business. This is more employment than provided by the entire steel manufacturing industry in the U.S.

ICHM

Page 133

Introduction to Hospitality Industry


Air Transporation Air transportation represents the largest employment sector of the transportation segment of the transportation segment of the travel and tourism industry. This sector comprised 748,000 jobs in 1994 and 787,000 employees in 1995. Employment in air transportation offers a wide variety of technical and managerial jobs. A brief list of the types of job opportunities available in air transportation includes: Pilots Baggage Handlers Flight Attendants Food Service Workers Controllers Customer Service Representative Aircraft Mechanics Reservations and Ticket Agent Public Relations General Managers CEOs and other top executives Employment within the air transportation industry usually requires specialized skills and training. Jobs such as pilots and mechanics need to be certified by the Federal Aviation Administration. The advancement ladder for a pilot starts as flight engineer followed by copilot followed by captain. Advancement also exists by moving from small airlines to larger airlines. Mechanics require a great deal of technical training and there are opportunities to advance to head mechanic or supervisory positions. Flight attendants need to have good personal interactive skills, as they must deal constantly with the traveling public. Although flight attendants are considered to be limited in advancement, opportunities do exist to become customer service directors, instructors, and recruiting representatives. Like flight attendants, reservations clerks need to deal constantly with the public. Advancement tends to be limited to supervisory positions, although it is possible to advance to district sales managers and into marketing positions.

ICHM

Page 134

Introduction to Hospitality Industry


Executive employment within the air transportation industry, including top management, general managers, and accountants and auditors, numbered 39,000 in 1994. These top-level executive jobs are expected to grow by 16.2 percent by the year 2005. Hotels, Motels, And Other Lodging Places Hotels, motels, and other lodging establishments employed over 1.6 million Americans in 1994 and slightly over 1.65 million in 1995. Nearly all this employment is directly generated by travel and tourism. A brief list of some of the employment opportunities offered within this industry includes: Marketing Representatives Housekeepers Front Desk Clerks General Managers Chief Engineers Reservation Clerks Food and Beverage Directors Bellman Front Office Managers Personnel Directors Meeting/Conference Planner Controllers Concierges CEOs and other top executives

The hotel industry, like the eating and drinking industry, has a great deal of diversity in the types of establishments and, therefore, the types of jobs offered. The smaller "mom and pop" hotels generally offer limited employment opportunities. However, it is important to keep in mind that these establishments are fulfilling small business ownership goals. ICHM Page 135

Introduction to Hospitality Industry

Larger hotels and chain hotel firms offer a large number and variety of job opportunities, as well as advancement potential. Headquarters of chain-hotels, for example, offer the typical top executive positions such as CEOs, COOs, various department heads, and Vice President positions. In recent years, hotel operations have become more service-oriented and have required a great deal more job responsibility for guest contact employees. Demand for persons who have skills obtained in colleges, junior colleges, and technical institutes is increasing, as most upper-management positions require considerable training. Career paths exist within many departments of large hotel properties. Supervisory positions exist in food and beverage operations, front office management, personnel, marketing and accounting department to name a few. Executive employment within the lodging industry, including top management, general managers, accountants and auditors, numbered 123,000 in 1994. These top executive level jobs are expected to grow by 27.8 percent by the year 2005. Would you rather be part of a large chain or work for an independent operation? There are many opportunities in both areas. The arguments for working for a large chain include: Better training. Companies such as Ritz-Carlton and Hyatt have very sophisti-cated operating systems. More Opportunities for advancement. Hotel managers of chain properties who wish to advance might be offered opportunities for promotions within the division in which they work or, if none are available there, in different divisions Better benefits. You are more likely to get superior life and health insurance benefits, more generous vacation and sick time, use of a company car, moving expenses, stock purchase options, and so forth from a large chain.

ICHM

Page 136

Introduction to Hospitality Industry


A career with an independent operation also offers some advantages, however: More chances to be creative. You will have a chance to set standards and initiate changes instead of just adhering to company programs and rules. More control. You are more likely to be in control of your own destiny. In an independent operation, you deal on a regular basis with the people who will be deciding your fate. And, as mentioned earlier, with an independent property you are not likely to b transferred. Better learning environments for entrepreneurs. Independent operations offer better learning environments for entrepreneurs, because all of the financial and operating decisions are made on-site. If you intend to buy your own lodging operation some day, you will learn more at an independent than at a chain operation where data is forwarded to headquarters for analysis.

Amusement And Recreation Services The amusement and recreation services sector represents a wide range of products and services from large theme parks to ski areas to water slides to casinos. Many of the types of jobs offered in this sector are seasonal in nature. Types of employment available in this industry are: Ski Instructors Guides Musicians Actors, Actresses Lift Operations Park Managers Information Casino Clerks Workers Due to the variety of establishments in the amusement and recreational services sector and the part-time nature of much of its employment, many jobs have little opportunity for advancement. However, corporations in this sector provide numerous upper-level management jobs which require a college degree and offer opportunities for advancement. ICHM Page 137

Introduction to Hospitality Industry


Since promoting events or facilities is involved for many attractions, a variety of marketing and sales jobs also exist. Amusement and recreation services has been one of the fastest growing sectors of the travel industry, including during the recession of the early 1990s when steady growth was still maintained. Executive employment within this sector is projected to increase 39.8 percent by the year 2005. Large Volume Of Executive Jobs - Now And In The Future Career Accounting Staff Adventure Tour Operator Airline Reservation & Agent Career Exhibits Coordinator Flight Attendant Food & Beverage Manager Approximately Americans executive, were managerial, 684,000 employed in and

Airline Passenger Service & Airport Food & Agent Beverage Staff Airport Meet & Greet Airport Station Manager Assistant Cruise Purser Banquet & Catering Staff Banquet & Sales Manager

administrative positions in four

key travel-related sectors in 1994 Front Desk Agent/Front Office Staff and this number is forecast to Functions Coordinator expand rapidly to nearly 895,000 Gift Shop Staff Ground Host/Hostess by 2005. These are top-level Ground Transportation Representative executive jobs, general managers,

and employees in administrative departments such as marketing, advertising, public relations, and human resources. Administrative support staff is not included in this category. The forecast growth between 1994 and 2005 in executive and managerial jobs in the four key travel sectors is significantly greater than projected total employment for any of the other leading manufacturing segments, mining, and construction. In fact, in the year 2005, executive, managerial, and administrative department employment in these four key travelrelated segments will be greater than the total employment in all but three of the manufacturing segments. Given below is a list of Positions available in travel related businesses Given below is an interesting article about the growth paths in the hotel industry ICHM Page 138

Introduction to Hospitality Industry

What is The Most Rewarding Career Path? Keith Kefgen & Michael S. Kogen The talents required of a hotel General Manager have dramatically changed, as significant advancements in technology are pushing the entire hospitality industry to keep pace with other Fortune 500 industries. The evolution of the Internet, sophisticated yield management applications, expensive training initiatives, increased market competition, and Wall Streets short-term prospective are forcing General Managers to be multi-disciplined. We have investigated the typical career paths of General Managers in the hotel industry, and have determined which is the most lucrative. By conducting an informal survey of our clients, we identified four primary career paths to the GM seat: Finance Food & Beverage Rooms Sales & Marketing While the majority of companies cited multiple career paths of GMs, they expressed a preference for one or two. For example, Hilton had a penchant for Food & Beverage expertise, Marriott was more Sales & Marketing oriented, and Ian Schrager Hotels was Rooms-driven. The data table set forth below illustrates the base salaries for three positions in each of the four departments. The positions start at the Manager level, graduate to the Assistant Department Head, and conclude at the Department Head. For the purpose of comparison, we have also included the salaries of General Mangers. The data was gathered from the 2000 HCE Lodging Property Report and represents all luxury and first-class hotel properties in the database.

Position

Minimum Base Median BaseMaximum Salary Base Salary Average Bonus Salary $23,577.67 $78,944.17 $250,000.00 $7,923.01 Page 139

Dir. of Sales & Marketing ICHM

Introduction to Hospitality Industry


Senior Sales Manager Sales Manager 21,707.76 47,155.34 20,000.00 38,478.76 97,718.76 64,838.59 130,000.00 79,500.00 90,000.00 206,872.83 85,000.00 60,000.00 141,466.02 81,932.40 80,000.00 412,609.21 4,029.31 3,275.20 6,981.15 2,019.75 856.74 10,944.49 1,415.01 600.06 8,176.94 1,174.31 436.95 28,169.94

Director of Food & Beverage 31,000.00 74,269.66 Asst. Director of Food & Beverage 24,520.78 49,513.11 Restaurant Manager Resident Manager Front Office Manager Asst. Front Office Manager Controller Assistant Controller Accounting Manager General Manager 14,146.60 35,366.50 22,398.79 82,521.84 15,325.49 39,276.27 13,008.74 35,375.00 22,842.66 64,838.59 21,762.19 44,595.98 21,219.90 36,754.69 31,877.01 114,833.66

Source: HVS Executive Search The median salaries of manager-level positions are as follows: Sales Department, Sales Manager: $38,478.76 Food & Beverage, Restaurant Manager: $35,366.50 Rooms Division, Assistant Front Office Manager: $35,375.00 Finance, Accounting Manager: $36,754.69 In addition to having the highest median salary, Sales Managers recorded the most lucrative average annual bonus, at $3,275.20. Accounting Managers had the smallest bonus at a mere $436.95. Restaurant Managers and AFOMs were nearly identical in both salary and bonus. The following information sets forth the median salaries of Assistant Department Heads: Sales Department, Senior Sales Manager: $47,155.34 Food & Beverage, Assistant Director of Food & Beverage: $49,513.11 ICHM Page 140

Introduction to Hospitality Industry


Rooms Division, Front Office Manager: $39,276.27 Finance, Assistant Controller: $44,595.98 The Assistant Department Head of Food & Beverage saw a dramatic jump in median base compensation, rising more than $14,000 from the Manager level. The Rooms Department Head had the smallest increase at nearly $4,000. Sales Managers continued to see the most rewarding average bonuses at $4,000, nearly four times that of the other Assistant Department Heads. The Department Head salaries changed the outlook considerably with median salaries as follows: Sales Department, Director of Sales & Marketing: $78,944.17 Food & Beverage, Director of Food & Beverage: $74,269.66 Rooms Division, Resident Manager: $82,521.84 Finance, Controller: $64,838.59 At the Department Head level, the most impressive increase in median base salary was the Resident Manager, rising nearly $43,000 from Front Office Manager. The largest bonus ($10,944.49) was also awarded to the Resident Manager, followed by the Controller ($8,176.94), the Director of Sales & Marketing ($7,923.01), and the Director of Food & Beverage ($6,981.15). Although requiring prospective General Managers to have years of valuable and assorted employment experiences will remain constant, the path and the accompanying financial rewards may not. Corporate Operations Managers are now seeking professionals who are leaders, are self-disciplined, have a passion for service, and can motivate employees. Manfred Timmel, General Manager of the new Ritz-Carlton Downtown in New York, is a perfect example of a hotelier who worked hard to not only complete a scholastic education, but to also build a rewarding career. Manfred began his diverse career at the age of 14 as an apprentice in Stuttgart, Germany. He subsequently held approximately 17 positions, studying and working at the same time in Germany, France, and Spain before eventually becoming the General Manager of the Peninsula Hotel Groups Marco Polo Singapore Hotel 23 years later. ICHM Page 141

Introduction to Hospitality Industry


Manfred additionally obtained the equivalent of an MBA, further identifying him as a hotelier of high standards. We recommend that aspiring GMs follow in the footsteps of Manfred and other new-breed operators as they look to succeed in this highly competitive industry Your first moves Here's an imaginary scenario. You apply for a job that seems absolutely perfect for you. You send your resume with a cover letter to the prospective employer. Plenty of other people think the job sounds great too and apply for the job. A few days later, the employer is staring at a pile of several hundred resumes. Several hundred? you ask. Isn't that an inflated number? Not really. A job offer often attracts between 100 and 1000 resumes these days, so you are facing a great deal of competition. Back to the prospective employer staring at the huge stack of resumes: This person isn't any more excited about going through this pile of dry, boring documents than you would be. But they have to do it, so they dig in. After a few minutes, they are getting sleepy. They are not really focusing any more. Then, they run across your resume. As soon as they start reading it, they perk up. The more they read, the more interested and awake they become. Most resumes in the pile have only gotten a quick glance. But yours gets read, from beginning to end. Then, it gets put on top of the tiny pile of resumes that make the first cut. These are the people who will be asked in to interview. In this mini resume writing guide, we aim to give you the basic tools to take this out of the realm of fantasy and into your everyday life. While you are still in school, you probably will want to gain some job experience in the hospitality industry. To do that, you will need some basic knowledge of how to prepare a resume and handle a job interview. The following sections contain information that may be useful to you. Note: The above given data gives a fair idea of salaries and may vary due to the present scenario in the hotel industry

ICHM

Page 142

Introduction to Hospitality Industry

REVIEW QUESTIONS 1. 2. What are the career opportunities in the hospitality industry What is the present scenario and future projection of HR issues in the hospitality

industry REFERENCES: Successful Toursim Management, Premnath Seth Principles and Practices of Management, A K Bhatia Tourism Today, Maneed Kumar Indian Economy, Dhingra An Introduction to Travel and Tourism, Jagmohan Negi

ICHM

Page 143