Professional Documents
Culture Documents
Feasibility of 5 star
Hotels in Mumbai
2010
Service sector industry is growing in India and it contributes 57 % of total GDP (Central
Statistical Organization, India). Hospitality is one of the service sector industries which are
booming.
Presently, in all category of hotels in India around 1, 10,000 rooms are available which is
expected to increase by 100 percent by year 2015 (HVS, 2007). All global players had planned to
tap Indian market and big player like Starwood, Hilton Group, Westin and Accor had already
either directly invested in India or they made collaboration with any Indian company. Also IT &
ITES2 and low cost domestic airline fueled hotel industry in India.
Hospitality is all about offering warmth to someone who looks for help at a strange or unfriendly
the commercial context refers to the activity of hotels, restaurants, catering, inn, resorts or clubs
who make a vocation of treating tourists. Helped With unique efforts by government and all
other stakeholders, including hotel owners, resort managers, tour and travel operators and
employees who work in the sector, Indian hospitality industry has gained a level of acceptance
world over. It has yet to go miles for recognition as a world leader of hospitality. Many take
Indian hospitality service not for its quality of service but India being a cheap destination for
leisure tourism with unlimited tourism and untapped business prospects, in the coming year’s
Indian hospitality is seeing green pastures of growth. Availability of qualified human resources
and untapped geographical resources give great prospects to the hospitality industry. The number
of tourists coming to India is growing year after year. Likewise, internal tourism is another area
with great potentials.
The financial year 2008/09 was an unforgettable one for the Indian tourism industry with the
Mumbai terror attacks and the global economic downturn affecting the industry’s performance.
The hotel industry, too, observed an overall decline in occupancy and Revenue per Available
room (RevPAR) in most cities in India. Indian Hotels industry has successfully passed the
downturn. The recovery started in the latter half of FY'10 (October 2009) with steady increase in
the foreign tourist arrivals better than expected and completely recover in by the end peak season
(March 2010). Foreign Tourist Arrivals (FTAs)
to India has grown 1.7% to 3.54 lakh for the
month of April 2010 over 3.48 lakh in April
2009. Foreign exchange earnings (FEE) during
April 2010 recorded impressive 11.3%% rise in
Indian rupee terms to Rs 4518 crore from Rs
3773 crore in April 2009. World Travel and
Tourism Council, India, data says, India ranks
18th in business travel and will be among the top
5 in this decade. The hotel and tourism industry’s contribution to the Indian economy by way of
foreign direct investments (FDI) inflows were pegged at US$ 2.1 billion from April 2000 to
March 2010, according to the Department of Industrial Policy and Promotion (DIPP). According
to industry data, India is expected to double the number of branded hotel rooms from 100,000
now in just three years.
Indian Economy and Hotel Industry:
India’s GDP recorded a growth rate of 6.7% for the financial
year 2008-09 (Central Statistical Organization, India) after
recording growth above 9% for three consecutive years. The
economic recovery of the country can be further kept on course
by a stable political environment provided by the Congress-led
United Progressive Alliance (UPA) returning to power through
a comfortable majority in the general elections last year.
Policies of the newly elected government of leaning
towards disinvestment and infrastructure development have
helped sustain economic growth. The increased spending on
infrastructure development will boost the tourism industry and backbone of tourism i.e.
Hospitality will also grow.
Although the last year began under high inflationary pressures, there were concerns about
negative inflation towards the year end. This financial year saw low inflation levels and even
fears of deflation due to the dropping of the WPI. In its downward slide from the previous year's
all-time high of 12.38 % (August 2008), W PI for June 2009 turned negative (-1.3%) The drop in
commodity prices can benefit hotel developers, who can take advantage of cheaper construction
materials. This week period is probably the best time to make investments into the hotel sector.
Leading macroeconomic indicators GDP are correlated to the performance of the hotel industry.
However, though the hotel industry is amongst the first to be hit by a downturn, it is amongst the
slowest to recover since the spending on travel is considered as discretionary for most leisure
travelers and some business ones as well. The increased spending on infrastructure
development will boost the tourism industry and backbone of tourism i.e. Hospitality will
also grow.
Hotel- Definition
Commercial establishment providing lodging, meals, and other guest services. (Business
Dictionary.com)
A hotel is an establishment that provides lodging, usually on a short-term basis.
Type of Hotel:
T
Analysis
Of
Hotel
Industry
As per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum,
India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places on the
list of the world's attractive destinations. It is ranked the 14th best tourist destination for its
natural resources and 24th for its cultural resources, with many World Heritage sites, both
natural and cultural, rich fauna, and strong creative industries in the country. India also bagged
37th rank for its air transport network. The India travel and tourism industry ranked 5th in the
long-term (10-year) growth and is expected to be the second largest employer in the world by
2019.
Strengths
Government support
Weaknesses
The cost of land in India is high at 50% of total project cost as against 15% abroad.
High tax structure in the industry makes the industry worse off than it’s international.
SUPPLY GAP- Only 97,000 hotel rooms are available in India today.
Opportunities
Threats
Political turbulence in the area reduces tourist traffic and thus the business of the hotels
The economic conditions of a country have a direct impact on the earnings in hotel industry.
Swine flu
In India, Opportunity of hotel industry is very huge. It calles for right marketing strategy and
govt support. India, as tourist destination, is very popular.
Marketing Mix for Hotel
Industry………
The hotel industry is dependent on tourism and travel industries, and together they constitute the
hospitality industry. The demand variation in the hotel industry depends on various factors like
the economy, socio-political conditions, government regulations, business cycle, weather and
seasonal changes, festivals etc. The hotel service is a perishable service with a fixed or limited
supply. It is characterized by high investment and low variable costs.
Pricing, promotion, place, process, people and physical evidence, all have to be handled with
discretion and innovativeness. The recent trends in the hotel industry owing to the technological
developments and the changing demographics have had a major impact on the way hoteliers
conduct their business. The Indian hotel industry has also come of age and is ready to set new
standards in customer service.
•Room and leaisure services
•Foods
•Saloon and Spa
•Amenities
•Brand name
Product •Quality
•Safety
•other value added services
•Room Charges
•Discount offer
•seasonal Fair
•Duties and texes
•special package
Price
•Price flexibility
•Price discrimination
•Pricing strategy (skim, penetration, etc.)
•Location
•Market coverage
•Safe and convenient locations
•Easily reachable and associated with market
Place •Transportation Facility
•Near to Acciliary organization, such as Hospital, market, banks etc.
The above chart shows you the possible marketing mix for a hotel Industry. To meet the global
standards and customer expectations, service providers in the hotel industry have to adopt
technological developments. They also have to be customer-oriented in their approach if they
have to withstand the competition in the market, which has further increased with the entry of
global players. Marketers have to adopt the marketing mix elements to suit their marketing
needs. For example, the product should carry more augmented services to differentiate itself
from other service packages in the market.