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Hotel Industry in INDIA

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 uni Table of Contents
PLAC
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REGION
TOUe
RISM

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 uni Latest
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•The
E S
hotel sector
terror attacks.
had a tough 2009 due to the global economic slowdown and

•The growth in 2009 slowed down to just 1%.

•Hospitality industry saw a decline in the foreign tourist arrivals to India
from 5.13 m in FY09 to 5.5 m in FY10
•India occupies the sixty-second position among the top tourist destinations in
the world for 2009.
•To encourage the hospitality sector, the government in FY09, Rs 5.2 bn for
development of tourism infrastructure was allocated. However, it is only 1%
of the total government spending.
•The Centre and States are also working out a PPP (Public-Private-Partnership)
model to increase hotel capacity. 
•Government of India increased spend on advertising campaigns (including for
the campaigns 'Incredible India' and 'Athithi Devo Bhava' - Visitors are
like God)
•According to the latest Tourism Satellite Accounting (TSA) research, released
by the World Travel and Tourism Council (WTTC), the demand for travel and
tourism in India is expected to grow by 8.2 % between 2010 and 2019. This
will place India at the third position in the world

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 uni Porter’s 5 Force
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ES: We have a shortage of 100,000 guest rooms short in the
ØSupply
country. This is expected to keep ARRs high for the next few
years.
ØDemand : Largely depends on business travelers but tourist
traffic is also on the rise. Demand normally spurts in the peak
season between November and March.
ØBarriers to entry: High capital costs, poor infrastructure
facilities and scarcity of land especially in the metros.
ØBargaining power of suppliers : Limited due to higher
competition, especially in the metros.
ØBargaining power of customers : Higher in metro cities due to
increasing room supply.
ØCompetition: Intense in metro cities, slowly picking up in
secondary cities. Competition has picked up due to the entry of
foreign hotel chains.
•

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 uni SWOT Analysis
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Driving Forces for Hotel Industry
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ØAssets & Capital.
ØHealth & Safety.
ØNew Management.
ØMarketing, Distribution 7 Capacity
Management.
ØTechnology.
ØSustainable Development.
ØSocial Issues

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 uni Changing Trends of End Users
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ØMore Emphasis on Value for Money
ØIncrease Spending power
ØIncrease blend of Business travel with leisure
travel
ØWide variety of product option and facilities due
to influx of international brand such as Radisson,
Regent, Nikko..
ØRepresentation of globally a homogeneous force in
tastes, expectation & demands.

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 uni Market Segmentation in India
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Area e S Percentage
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Airline Crew 1.1
Business Traveler-Domestic 39.5
Business Traveler-Foreign 8.1
Complimentary Rooms 1.9
Domestic Tourists 19
Foreign Tourists 9
Meeting Participants (<100) 4.8
Meeting Participants (>100) 1.6
Tour Group-Domestic 5.8
Tour Group-Foreign 6.3
Others 3

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Cost Breakup to make hotel in India
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From Case
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• For Eg: Hotel Leela venture which
bought the land in New Delhi’s Andrew
Ganj, cost the company Rs. 25,000
Lakhs & another Rs. 21,000 Lakhs is
likely to go into building the 300 room
property. Every room in the hotel will cost
the company Rs. 1,500 Lakhs
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PLAC Cost Structure in Hotel Industry
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Area Average in India Ideal
( % sales) ( % sales)

Food Costs 35-40 28-30

Manpower 15-18 12-15
Fuel/Energy 20-25 15-17
Telephone 1-2 1
PMS 2 2
Balance 27-13 42-35

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HR Related Aspects
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ue •Issues
•Strategy to Retain

Talent
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• Low Salary compared to • Give Decent Salaries
other sector (85.7%)
• Improve working condition
• Hard work is not at all (48.81%)
commensurate with
rewards • Adopt transparent appraisal
policies (39.28%)
• Long Working Hours
• Offer better growth
• Six days working week prospects (29.76%)
• Poor job prospects • Start Staff Welfare Schemes
(28.57%)

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PLAC
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Ø We
Ø Special security for single women guest.
Ø Using technology.
Ø Encourage best resources.
Ø Green Hotels
Ø Relationship Management
Ø Internet Marketing
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PLAC How to go green & reduce cost
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ES of waste water
• Recycling
• 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 cost
• Effective use of telephony
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• Thank You

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