How did Hotels came into existence??

In the past, hotels were just normal houses offered for guests to stay in. Some were in the form of inns. Various hotels were situated near ports for sailors to spend their night during their short breaks in the country. Usually the room just consisted of a bed that was big enough for two people. The first American inn existed way back in 1607. The first advertised hotel was advertised in 1792 and was called the City Hotel. This hotel was situated in New York. The next popular hotel which was build afterwards was located in

 Size of the Hotel Industry USD 3.8 Billion Share of premium segment in the overall hotel market (2008) USD 2.3 Billion Expected growth rate from 2008 to 2009 12 percent Key Players Indian Hotels, Leela Ventures, ITC Hotels, Oberoi Hotels, Bharat Hotels,

Kamat Hotels. Rooms Current Supply About 110,000 rooms Current Demand About 150,000 rooms

Annual Growth Rate = 24 % The Average Room Revenues (ARRs) in some metro hotels in India has increased by 15 % from the last year According to the estimates of the World Tourism Organisation, international tourist inflow in India would be 10 million by 2020. According to Government estimates, India needs about 80,000 rooms in all categories over the next two or three years at an estimated cost of about US$ 8 - 9 billion. A major reason for the growing demand for hotel rooms is the underlying boom in the economy. As new rooms are being added, the manpower requirement of the hotel industry is also increasing. There will be a requirement of about 14.8 million people in the hotel Industry in India. The industry needs manpower, which is highly qualified, has leadership qualities and a quest to lead the Indian Hotel industry. 'Hotels in India' have supply of 110,000 rooms. According to the tourism

 '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. Sources estimate, demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, Hotel India room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. 'Hotel Industry in India' is eroding its competitiveness as a cost effective destination. However, the rating on the 'Indian Hotels' is bullish. 'India Hotel Industry' is adding about 60,000 quality rooms, currently in different stages of planning and development and should be ready by 2012. Therefore, with opportunities galore Future Government has approved 300 hotel projects, nearly halfthe of which are in the luxury range. Scenario of Indian Hotel Industry looks rosy. With the USD 23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities.

 Taj Group Inter Continental Le Meridien Group of Hotels Oberoi Group of Hotels The Park Group of Hotels Welcome Heritage Group of Hotels ITC Welcome group of Hotels

Best Hotel Chains Of India Taj Group of hotels in India: The most popular name that is almost synonymous to hospitality in India is that of the Taj Group. Offering the best hotels across various genres like business hotels, heritage resorts, luxury hotels and even sea resorts, the Taj Group is definitely the best in the field. The Oberoi Group of Hotels in India: One of the most prominent names among the hotel chains of India is the Oberoi Group. It also owns several properties in exotic places like Australia and Mauritius. With its world class facilities and efficient staff to manage and play the perfect Indian hosts, the Oberoi hotels is no doubt a great feather on the grand cap of tourism in India. Le Meridien Group of Hotels: The Le Meridien Group of Hotels has played an instrumental role in playing the perfect host to the millions of tourists and guests coming here. It is a luxury brand of great fame and reflects the inherent Le Meridien touch of elegance and class through all its properties in India. It is no wonder one of the exclusive hotel chains of India. Best Western Group: A world famous name when it comes to hospitality and service, the Best Western Group owns several properties across India. Each of the hotels has been equipped with numerous features to enable a cozy comfortable stay to the guest.

Rooms : The rooms in hotels are based on the Category of the hotel. The facilities in the rooms are based on the type of hotel and price of the rooms are based on the type and facilities provided in the room. Conference Rooms: The conference rooms are provided by hotels for the meetings and other requirements as per the request by the customers. The price depends on the facilities, space and time utilized. Banquets & Halls: Banquet halls are provided by hotels for parties and functions. These halls provide extra revenue for the hotels. Restaurants & Bar : Along with the rooms hotels provide restaurants and bars which are charged separately. This adds revenue as well as a facility for the customers who are staying in hotels. Recreation facility

Friends or relative houses, Youth hostels, Paying guests Dormitories Lounges in airports,
railway stations, bus shelters. Private guest houses and R&B guest houses

ost breakup of building hotels In India

Cost Structure in Hotel Industr

Area Average in India ( % sales) Ideal ( % sales)

Food Costs
Manpower Fuel/Energy Telephone PMS Balance

35-40
15-18 20-25 1-2 2 27-13

28-30
12-15 15-17 1 2 42-35

The table excludes hotels in the unorganized sector that have a significant presence across the country and cater primarily to economy tourists.

Market Segmentation in Indian Hotel Industry

Key Operating Characteristics

Average Occupancy(%)
City All India Mumbai
Delhi

Average Rate(Rs)
2003-04 2,689 3,063 4,247 2,061 985 1,293 2004-05 3,413 4,307 5,498 2,384 931 1,531 2005-06 3,227 4,615 6,699 3,080 1307 1,686

2003-04 59.7 66.3 69.1 61.6 51.3 70.1

2004-05 63.6 74.9 76.6 73.3 46.1 80.6

2005-06 64.1 75.8 74.8 78.0 71.0 77.2

Chennai Nagpur Visakhapatnam

The fortunes of the hospitality industry are closely linked to the tourism industry and hence tourism is one of the most important growth drivers. In addition, all factors that aid growth in the tourism industry also apply to the hospitality industry. The Indian hospitality industry has recorded healthy growth in recent years owing to a number of factors: 1.Increased tourist movement Increased FTAs and tourist movement within the country has aided growth in the hospitality industry. Healthy corporate profits and higher disposable incomes with easier access to finance have driven the rise in leisure and business tourism, thus having a positive impact on the hospitality industry. 1.Economic growth India is one of the fastest growing economies in the world. It recorded healthy growth in the past few years, at more than 9% each during FY06-FY08. Despite the global economic slowdown, the Indian economy clocked growth of 6.7% and 7.4% in FY09 and FY10 respectively. Attractiveness of India has encouraged foreign players to set up their operational facilities in the country. Domestic industries have also made heavy investments to expand their facilities through greenfield and

1.Changing consumer dynamics and ease of finance The country has experienced a change in consumption patterns. The middle class population with higher disposable incomes has caused the shift in spending pattern, with discretionary purchases forming a substantial part of total consumer spending. Increased affordability and affinity for leisure travel are driving tourism in India and in turn aiding growth of the hospitality industry. Emergence of credit culture and easier availability of personal loans have also driven growth in the travel and tourism and hospitality industries in the country. 1.Measures undertaken by the government Various policy measures undertaken by the Ministry of Tourism and tax incentives have also aided growth of the hospitality industry; some of them include: Allowance of 100% FDI in the hotel industry (including construction of hotels, resorts, and recreational facilities) through the automatic route Introduction of Medical Visa for tourists coming into the country for medical treatment Issuance of visa-on-arrival for tourists from select countries, which include Japan, New Zealand, and Finland Promotion of rural tourism by the Ministry of Tourism in collaboration with the United Nations Development Programme Elimination of customs duty for import of raw materials, equipment, liquor etc

According to a report, Hotel Industry in India currently has supply of 110,000 rooms and there is a shortage of 150,000 rooms fuelling 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.

Marketing Strategies
1.BRANDING: During the 1980s, the hotel industry saw an explosion of new brands, , Market segmentation has served as one of the most powerful drivers in the creation of more and more branded products a trend that became a popular marketing concept in the 198Os and remains so today. Seen as a vehicle for growth by a number of hotel companies that tapped a virtually limitless supply of capital in those years.

1.TECHNOLOGY: In the hospitality industry, as in all arenas of commerce, technology represents one of the strongest forces for change, while having had a significant impact on brand marketing. Hotel reservation systems have been shifting from voice to electronic Global Distribution Systems and are now on the verge of consumer access via the Internet. The increasing role played by the Internet should slowly affect booking patterns in the future as inexpensive consumer access to hotel product becomes available. This, of course, has potential implications for the benefits associated with the branding of hospitality products..

1.Pricing: One of the single greatest challenges facing independent hotels today is pricing. Pricing the inventory effectively can lead to profitability and helps lay the foundation for long term success. But, pricing the inventory ineffectively can lead to disaster. During the last decade; two simultaneous factors impacted the market place and customer buying practices: (1) the dramatic drop in demand (2) and the widespread use of the Internet for booking rooms. Capitalizing on this situation, third party Internet companies seized the opportunity to grow their businesses. Hotels were eager to work with them, and customers were eager to use them as confidence and security in buying goods and services on-line increased.
1.Service Innovation :Hotel industry is continuously using the concept of technology to develop its image and occupancy ratio. Though the hotel industry is a service industry it is continuously innovating the way the services are provided. Many hotels have a category of rooms which are different in the space and facilities each one having their own specialties and range of price. Hoteliers are now running their business according to the taste and preferences of the customers continuous feed back from the customers are helping the management to innovate in the services provided by the. Few hotels are providing an services in their unique way to get into

 The lack of adequate infrastructure development. The airports at the primary gateway cities of

Regional hubs developing:

Delhi and Mumbai have been privatised, and work has commenced on modernisation. There is still need to improve air connectivity; rail and road connections as well as general infrastructure like power and water. As competition increases, there is a definite pressure on ARR and operating margins. The industry market will definitely shift from being demand-driven to supply-driven and that the hotel companies will need to revisit their strategies and, of course, their prices. Some players are already preparing for the difficult times when the ARRs are expected to fall by 30-40 percent in the next 3-4 years and then the distinguishing factor for the hotels will be the offer in its entirety rather than just the price or the facilities that the hotels offer. Slow in implementation: Lack of adequate recognition for the industry despite being one the biggest generator of employment has been hampering growth prospects. Infrastructure development, though happening, continues to languish. Amidst improving fundamentals, India could lose out to other countries if the pace is not accelerated. Though India has the potential in the tourism sector, competition is more global. The rapid growth of China, select South East Asian countries, the pace of development in the Middle East could affect India, in terms of its ability to attract tourist into the country. Since tourism is a global phenomenon, any adverse developments on the geo-political front are likely to impact global tourist flows. India is no exception to the same, as was evident during events like Parliament attack, sequential blasts etc.

Susceptible to geo-political events:

HR Related Aspects Strategy to Retain

Issues

Low Salary Hard work is not at

compared to other sector all equal with rewards
Hours week

Give Decent
Improve working
Salaries (85.7%)
condition (48.81%) appraisal policies (39.28%)

Talent

Adopt transparent

Long Working
Six days working

Offer better growth

Start Staff Welfare

prospects (29.76%)

1.BARGAINING POWER Of SUPPLIERS The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services. The high class hotels are operating by few hotel chains like-TAJ,EIH,ITC&THE LEELA PALACE so they have a control over the industry. There are no substitutes for spas and five star hotels. The hotels customers are fragmented, so they have to reduce their bargaining power to attract the customers. The Taj, ITC& Oberoi are having various rates and tariffs. Because they are having their own brand image. The hotel chains are operating different services like Spas, Boatels, Resorts, City Centers, Heritage HOTELS, etc. 2.BARGAINING POWER OF CUSTOMERS Similarly, the bargaining power of customers determines how much customers can impose pressure on margins and volumes. The hotel industry is one of the most invested in its fixed assets. So they are trying to recover their amount quickly. The suppliers are providing better information about them to attract the customers .Here the buyers are highly informed. If the hotel price changes are moderate, the Customers have low margins and are price-

Porters 5 Force

1.THREAT of New Entrants The competition in an industry will be the higher; the easier it is for other companies to enter this industry. In such a situation, new entrants could change major determinants of the market environment (e.g. market shares, prices, customer loyalty) at any time. There is always a latent pressure for reaction and adjustment for existing players in this industry. The foreign hotel chains are tied up with Indian hotels to reduce the initial cost and using the latters brand name. Brand loyalty of customers like TAJ, ITC, and LEELA PALACE affects the new entrants. Access to raw materials and Distribution channels are controlled by Existing players like TAJ, ITC, and LEELA PALACE. The cost of land in India is high at 50% of total project cost as against 15% abroad. This acts as a major deterrent to the Indian hotel industry. In India the expenditure tax, luxury tax and sales tax inflate the hotel bill by over 30%. Effective tax in the South East Asian countries works out to only 4-5%. 2.THREAT OF SUBSTITUTES A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for existing players. This category also relates to complementary products. Brand loyalty of customers (TAJ, ITC, LEELA PALACE, etc,) is dominating the substitutes. The hotel relationship with customer and costs also the reasons to switching to substitutes. The price variation of same class hotel services from various brands is one of the reasons to choose a substitute.

1.COMPETATIVE POWER OF RIVALRY PLAYERS This force describes the intensity of competition between existing players (companies) in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry. The top competitors in hotel industry are having the same services like five star, spas, boatels and motels, heritage hotels and palaces. The healthy competition among the all players is helping to increase the industry growth. Intense in metro cities, slowly picking up in secondary cities

We Care Special security for single women guest. Using technology. Encourage best resources. Green Hotels Relationship Management Internet Marketing

Marketing Strategies to be Adopted

How to go green & reduce c

Recycling of waste water Using Environmental friendly cosmetics Reusing the towels & linen Conserving for water Shifting to Environment-friendly technologies Better management of the Inventory Multiskilling to reduce manpower costs MIS & Vigilance to control the fuel and energy
Effective use of telephony
cost