Chapter 2: Literature Review

2.1 Introduction

In this chapter we will discuss about the previous published literature related to this
research study, and the theoretical background of the research, in this chapter the
researcher has tried to analyse the work done in the past by various authors, and
researchers worldwide, this chapter also tries to understand their opinions and views
related to the topic.

Review of previous published literature

The concept of the review involves various studies made relating to the research subject
and specialization by different researchers during different times. In this chapter, studies
undertaken by various researchers are studied and a brief report of the observations,
analysis and conclusions, based on the objectives of their respective study, are presented
as review of earlier literature available in the related subject. This research study is
regarding Comparative study of the branded budget hotels versus non branded budget
hotel, the basis of comparison are Marketing strategies i.e. (Customer Relationship
Marketing, Customer Satisfaction) and Human Resource Practices adopted by these
hotels. This study also tries to find out the reasons for the emergence and growth of
branded and non-branded budget hotel and the popularity that it has gained over a
period of time.

In this chapter the researcher has tried to correlate the work done in the past with the
present and the scope for future study, the literature review also tries to ensure that the
topic under study has not been done before. Hence a modest attempt is made to review
the available literature existing on hotel industry in budget segment, focussing mainly
on Marketing strategies, CRM, Customer Satisfaction and HR Practises. Lastly the aim
of this literature review is to highlight gaps and flaws of previous research and throw
light on future prospects.

2.2 Growth and development of branded and non-branded budget hotels

2.2.1 Changing trends in Hospitality Industry, by Singh, .(2013)

25
 24
The author of this article, is of the opinion that the concept of branded and non-
branded budget hotels is fast catching up in India he has mentioned that the main reason
for this is the fact that consumers are expecting great value for their money, the author
have also stated that “Consumers expect better value for their money and they also want
better quality of services,
He has further stressed on three major trends in this industry. According to him Firstly,
there is a growth in terms of focus towards mid segment “value for money” hotels i.e.
budget hotels, This can be witnessed by the large number of domestic and international
brands acknowledging their space in India in budget segment. Secondly, consumers are
becoming more brand and quality consciousness. Thirdly, there is a considerable
increase in discretionary spends towards travel and tourism by Indian consumers the
author has also pointed out that Budget hotels are preferred by small and mid-size
businessmen.

The author further stresses that it will not be right to say that only small and mid-sized
businesses prefer budget hotels. Now a day’s, even the big corporates prefer to consider
budget hotels especially branded budget hotels as these are not only cost friendly but are
also high on services.

2.2.2. Hospitality industry gearing for the change Mice and mid segment hotels on
growth front by K.Pai (2012) In this article the author has mentioned that India has a
huge opportunity of growth in budget segment of hotels. He further states that the
25
hospitality industry is seeing a sluggish demand due to the economic slowdown,
todays hoteliers are of the view that budget hotels have great scope of growth in India’s
market .He describes that Budget hotels also helps the hotel companies to expand their
business to new cities and market faster. The author further states that branded and non-
branded budget hotels can be easily taken to tier-I and II cities, unlike luxury hotels.
Moreover, in tough times, budget hotels can be flexible with pricing and still make
profits.

24
Singh, B. H. (2013) “Changing trends in the Hospitality Industry, Evolution of novel trends,” Hotelier and
Caterer Vol IV no 5 page 4-5

25
Refrence : Pai, K . (2012) “Hospitality industry gearing for the change Mice and mid segment hotels on growth
front” FHRAI Vol x no 4 page 12-14

26
Moreover, in tough times, budget hotels can be flexible with pricing and still make
profits.

2.2.3. Hotel Industry to see Boom in Budget Segment by Keswani,.P ( 2013)

Keswani has expressed that Budget hotels are becoming attractive investment options
for hoteliers in India he believes in this because budget hotels are without 26the luxury
of grand swimming pool, grand lobby, conference rooms and other star facilities.
Moreover he also has stated that branded and non-branded budget hotels can withstand
recession better through flexible pricing without greatly affecting the bottom lines. The
author is MD of Red Fox a famous brand of branded budget hotels, According to him
presently there are three major trends in the hotel industry in India, pertaining to the
branded and Non Branded Budget segment .Firstly there is growth in terms of emphasis
towards not only mid-sized travellers budget `Value for Money` hotels. This can be
exemplified through large numbers of domestic and international brands acknowledging
this space in India. Secondly there has been rising brand and quality consciousness
among hotel guest. Thirdly spending on tour and tourism in India has increased in last
few years. He also emphasises that not only small size business budget hotels but even
large corporates do prefer to consider budget hotels, because of their cost friendliness
and services. He has further stressed that India is emerging as the second fastest
growing tourism economy in the world, the hotel industry is predicted to do well in the
coming years, In India there is still a gap between Luxury hotels and quality branded
and non-branded budget hotels coming under mid segment category and so these hotels
fulfils. This gap as both tourists and the corporate travellers are increasing in number.
The author has further described that Branded Budget Segment as compared to Non
Branded Budget segment hotels has all the trappings of a luxury hotel but at an
affordable Price. He also States that Branded Budget Hotels are an alternative to luxury
hotels, but not a replacement to them.
2.2.4. Emerging trends in global Economy, by Malla .R (2014)

26
Refrence : Keswani , P. ( 2013) “Hotel Industry to see Boom in Budget Segment” Hotel Business Review Vol
iii no 7 page 14-15

27
market, it also confirms that the growth in this sector is due to business travel for MICE
(meetings, Incentives, conferences and exhibitions) the authors further explains that
according to them travellers in India are set to hit almost 70 crores by the year 2021. So,
there is a need to increase the number of hotel rooms available from the current 1.63
lakh, to over 3.4 lakh rooms they are also of the opinion that India has a very strong
domestic leisure and corporate market, which continues to drive the growth rate so the
hoteliers, needs to cater to the needs of this segment of self-sufficient, value conscious
travellers who are looking for a hotel option that gives them what they did-and not
charge them for what they don’t? In this article views of leading hospitality experts
have been taken, out of which R Malla Who is Vice Chairman of Tulips hotels ltd , He
has forecasted that Branded Budget segment in India which is at a nascent stage now,
will be the most demanding segment in the years to come. He believes that with
corporates becoming cost-conscious and leisure travellers always looking at value for
money options, Budget Hotel is emerging as a preferred choice by the customers. A
growing middle class has created demand for affordable avenues for the domestic
travellers. The need for affordable accommodation has leveraged the demand for
Budget hotels in mid -segment category hotels.

He has further addressed that Currently Budget hotels constitute 29% of the total hotels
rooms in India. With economical pricing and reduced cost of construction, this segment
of hotels is a win win prospect for owners, operators and customers. Ideal Budget hotels
would offer an experience that is easy on sensibilities, by creating fusion of comfort and
style for the best of business and leisure travel. Weather one is seeking a restorative
midweek vacation, a weekend gateway, planning a meeting or just out to seek an
adventure, these hotels provide an unforgettable and rejuvenating experience. The
author reveals that in India the demand for hotel rooms is very much there despite the
climate of uncertainty prevailing in the economy and Despite the fact that a few
thousand new rooms are being added in the countries hospitality sector in the last three
to four years, most of them are from mid-segment that is the budget hotel segment, It
has been found that most of the tourists, which include MICE, Leisure and business
prefers Branded and Non Branded Budget Hotels. He has also further stated that
perhaps this could be the reasons that why several International Chains are Promoting
their budget brands in the country. The growth in the hotel industry in India is expected

28
thousand new rooms are being added in the countries hospitality sector in the last three
to four years, most of them are from mid-segment that is the budget hotel segment, It
has been found that most of the tourists, which include MICE, Leisure and business
prefers Branded and Non Branded Budget Hotels. He has also further stated that
perhaps this could be the reasons that why several International Chains are Promoting
their budget brands in the country. The growth in the hotel industry in India is expected
to be riding on the budget hotels in the future, it is claimed that India is the fastest
growing hospitality market after china. Many leading global hotel chains has envisaged
Massive investments in India’s Luxury and Budget segment and so presently the focus
of international chains is on budget segments of hotels, it is estimated that more than
18000 rooms will fall in budget segment of hotels in coming years,. Hospitality experts
say that as the domestic middle-class will make the bulk of tourist population, more
branded and non-branded budget hotels will see brisk business

2.2.6. Hotel Industry World over and Economic down turn, by Gibson. R (2011)

In this report published by the Forbes India Magazine in this article the28 author states
that Post
the 2008 global economic slowdown, there has been an exponential and on-going
growth in the mid segment hotels mostly in branded budget hotels in India. Besides the
rush of newer company’s, even seasoned luxury hotel companies are tapping this
emerging market that is outdoing the growth of the luxury and budget segment.
This report states that international luxury brands generate approximately 40-50% of the
revenues from the international tourists. With global financial meltdown there has been
a dip in the number of business travellers and tourists, budget segment of hotels are
considered to be less vulnerable to economic slowdown. Therefore, due to
apprehensions of further slowdowns, luxury Hotels are strengthening their foundations
by diversifying into budget segment as they provide newer and safer opportunities for
revenue generation.

2.3 Marketing Strategies (CRM)

28
Reference: Gibson, .R. V. (2011) “Economic Slowdown and its effect on hospitality industry” Hospitality
World Vol v page 11-13

29
secret here is that retention cost is very low when compared to the cost of attracting new
customers. Some of the basic problems facing hotels today are provision of better
alternatives to its customers. Generation of more income from non-core based services,
improving the profitability of the hotel system and above all the “Customer Retention”.
The root cause of these problems lies in the failure to adopt marketing approach. This is
so because the marketing concept will facilitate them to be more scientific in solving
their business problems, satisfy their customers’ requirements needs and maintain a
profitable win win relation with their Customers, which will enable hotels to stay closer
to the customers, maintain as well as increase market share and counter the competition
successfully. In order to succeed under Existing conditions, hotels will have to perceive
the needs of its customers and devise better means of fulfilling them. In general, most of
the studies on hotel sector deal with an analysis

of customer loyalty and customer retention which has now changed in the recent years,
even India is feeling that the times have changed, where once upon a time most
customers were only concerned about the basic needs today they are acutely aware of
multitude of aspects due to emergence of competition in this sector, bringing alive to
higher levels of customer service. The Marketing in Budget Hotels should aim at
improving the quality of services rendered by widening the range of products offered,
developing and promoting products which meet the needs of customers and that are
acceptable to them. It should also be at a realistic price which produce a profit when
provide through methods of sales and services that is reliable and cost effective.
Successful hotel marketing depends on not only methods of sales and services that are
reliable and cost effective but also on CRM and Customer strategy and development as
well as commitment at all levels with the customer focus as the base.

In order to keep their clientele satisfied and maintain effective relationships with their
customers hotels have to decide about the nature and extent of the services and facilities
they intend to make available to their customers, and to be able to do this, they have to
constantly keep themselves informed about the changing customers, preferences,
develop and design services that suit those preferences, inform their customers about
their services, suitably price them and deliver them smoothly through a well-established
network. For the budget category of hotels, this would mean reorienting management

30
policies towards greater efforts at the customer satisfaction and retention. For helping
the hotels formulate a customer oriented management philosophy, the adaption of
marketing concept can be of definite assistance of hotels. However, a framework for
CRM implementation is highly lacking in many sectors especially in Budget segment
because this segments of hotels are struggling with management knowledge, managerial
processes, supporting technology capabilities, and alignment of the model with the
business processes

2.3.2 Customer Relationship Management Implementation Strategies in Hotel

Industry, by Kumar, B & Yadav,. K. (2013)

The authors of this article have mentioned about the changing customer behaviour in
29
today’s scenario according to the authors, Customers are becoming price sensitive,
less loyal and more switchers in terms of preferring products and services. Customer
relationship
Management (CRM) is an authoritative tool, which characterizes an imperious role to
attract, retain, and maintain relationship with customers for life time. However, only
successful CRM
Implementation can accomplish the target of attracting, retaining, and nurturing
relationship with customers. CRM is venerated as business strategy, fetched by
organisations to proclaim the strategic relationship with customers, which subsequently
leads to the loyalty among the customers. The evinced work concentrates on the
implementation issues of CRM, which foster the organisations especially in the hotel
industry to retain customers for life time. Today, customers (guests) are laudably
conscious about the price, brand, and competition in the hotel industry. Therefore,
patronage of guest loyalty is a very challenging endeavour in hotel industry as
customers vacillate brands even if they are fully satisfied.

The authors have also mentioned that, the hotel industry is experiencing globalization,
liberalization, increased competitiveness, increased customer switching rate, increasing

29
Reference: Kumar, .B. & Yadav, B.V(2013) “Customer Relationship Management Implementation Strategies
in Hotel Industry” Good Housekeeping Journal

31
patronage of guest loyalty is a very challenging endeavour in hotel industry as
customers vacillate brands even if they are fully satisfied.

The authors have also mentioned that, the hotel industry is experiencing globalization,
liberalization, increased competitiveness, increased customer switching rate, increasing
customer acquisition costs, less brand loyalty, Customer Relationship Management
Implementation Strategies in Hotel Industry. Several studies manifest that the hotels
must concentrate on the implementation of CRM to engorge the guest loyalty, which
ultimately engorged the profitability of the entire organisation. CRM commits to
accumulate and archive information about customers and disseminate this information
throughout the Organisation to ensure creation of customized services by an
organisation to bestow a unique customer experience. CRM has been enriched from
various viewpoints namely satisfaction, loyalty, retention, allocation of recourses for
retaining customers, top management involvement in support of CRM and employee
involvement. According to the authors Guest relationships are a strategic asset of the
organization and customer satisfaction is the starting point to define business objectives.
In this context, positive relationships can create customers higher commitment and
increase their return rate. Long term and reciprocally advantageous relationships
between customers and the hotel are becoming progressively important because of the
highly positive correlation between guests overall satisfaction levels and the probability
of their return to the same hotel.

2.3.3 Customer Relationship Management in Hotel Industry, by Banga, et. al

(2013)
According to the authors, Most of the Organisations have discovered 30and also research
Studies have shown that retaining current customers is much less expensive than
attracting new ones. Companies have come to realize that in order to develop successful
long term relationship
with customers, they should focus on the ‘economically valuable’ customer, while
keeping

30
Reference: Banga, et. al (2013) “Motivations for Customer Relationship Marketing in Hospitality Business”
Hotel Business Review volxi no 4

32
away and eliminating the ‘economically invaluable ones. Proper CRM practices lead to
increased customer retention, thereby increasing customer loyalty. Based on the
observations of the authors, Relationship marketing represents paradigm of changes
which take place in marketing practice. Changes are mainly related to shift from the
focus at relationships. Relationship approach point out relationship continuity which is
to be developed between organization and its consumers, with main focus at consumer
services and standards of quality. The authors have also mentioned in this article that
traditional marketing is mainly focused sales or product-services transactions and,
differently than relationship marketing assume developing relationships not only with
the consumers but also with distributors, suppliers, public institutions, individuals etc.
All marketing strategies are evolving from transactions marketing towards relationship
marketing. Relationship marketing approach is getting higher importance in the view of
evaluating consumer’s loyalty more than market share. As per the authors Relationship
marketing is focussed at relations development, in other words at establishing, keeping
and improving relations with consumers and other target groups in order to gain profit
and reach goals of all involved parties. It could be performed within mutual respect and
delivery promises.
2.3.4 Principles of hospitality marketing by, Kotler et. al (2004) The authors of this
book have described that the basic purpose of31 Customer relationship marketing in a
service organisation is to take care of the service needs of its clients and customers in
such a way that no customer is tempted to move to their competitors. By maintaining
customer relations, the organisation wants to understand its customer and his needs. The
service firm will always like to develop a relationship of trust and mutual dependence
amongst these customers. The authors are of strong opinion that Relationship marketing
such as loyalty programmes can be profitable to both customers and the company; they
have further stated the benefits of loyalty

Benefits of customer loyalty

The author has given a brief description about loyal customers, he has stated that

The costs of serving loyal customer are less

31
Reference: Kotler et.al (2004) Principles of hospitality marketing Tata McGraw Publication

33
interface with the hotel. Every time he spends on the transaction is recorded at each
individual point and is added to the final bill presented to the guest at the end of the
stay. There are certain points attached to the number of rupees spent by the guest. These
points are credited to the account of each guest with the help of the technology. These
are called loyalty points. These accounts having loyalty points are unique to every
guest, the higher the number of points the more loyal is the guest. The points can be
redeemed by the customers for either free stays at the hotels or free gifts as listed by the
hotel or free meals depending upon the number of points accumulated.

On customers retention the authors here have described about Loyalty Programmes they
have described that these programs are designed to reward the loyal guests of the hotels.
The authors believe that Customer satisfaction is a business philosophy which tends to
the creation value for customers, anticipating and managing their expectations, and
demonstrating ability and responsibility to satisfy their needs. The authors have made a
very important point over here that in order to achieve customer satisfaction, it is
important to recognise and anticipate customers’ needs to be able to satisfy them.
Enterprises which are able to rapidly understand and satisfy customers’ needs make
greater profits than those which fail to understand and satisfy them Organisations must
therefore develop and manage a healthy and good customer relationship with all the
entities they have to deal with. The authors have further mentioned that they are of the
view that CRM is a view that emphasizes the importance of the relationships developed
between an organisation and its customers. It involves the strategic and tactical
management tasks to achieve positive communications and long term customer
relationship.

2.3.7 Effective CRM Practices in Hospitality Industry with special reference to

small standalone hotels of Ghana by J. Kenny (2006)

In this research article the Keny presents empirical findings from his32 study which
defines Customer relationship management (CRM) as the organisations attempt to

32
Reference: Kenny, J. (2006) “Effective CRM Practices in Hospitality Industry with special reference to small
standalone hotels of Ghana” International Journal of Hospitality vol Xii no 13 pg 33-37

34
develop a long-term, cost-effective link with the customer for the benefit of both the
customer and the organisation. He also states that Customer Relationship Management
(CRM) is a technique that innovative companies and sectors find useful in addressing
business challenges and especially in improving their interaction with the customers.
The hotel industry stands to benefit from the implementation of CRM as it contributes
to meeting customers’ expectations. The author is of the opinion that Currently the hotel
industry shows a substantial increase in competition, requiring companies seeking to
maintain their relevance and attracting customers to consider models such as CRM to
ensure service quality and customer satisfaction .To ensure a satisfied customer, Kenny
has further stated that companies should further adapt different models and techniques
that promote their competitiveness and survival in the market or industry. A working
technique in CRM is that which refers to all the business attributes that interact with the
customer during the sales and service delivery. These attributes contributes to ensuring
customer loyalty, excellent service deliver quality management. The author has
emphasised the importance of CRM in the success of a business. Through successful
implementation of CRM hotels can built a lasting relationship with their customer. He is
of the opinion that today the customers are becoming more sensitive to prices and their
corresponding services while disregarding brand loyalty, making it necessary to
implement a model such as CRM.

2.4 Customer Satisfaction and Service Quality in Hospitality Industry

2.4.1 Customer Satisfaction and Service Quality by Carry,J. & Grewiss,V. (2006)

This book mentions relationship between customer satisfaction and service33 quality;
the authors have very convincingly stated that, to foster a healthy long-term relationship
with the customers, one must do much more than provide a good product or service.
The organizations must pay attentions to your customers' needs and meet them. There
are always competitors ready to lure your customers away, and there are always
customers who will switch given any slight, perceived or real. The authors have tried to
show the relationship between a satisfied customer and customer retention According to
the authors a highly satisfied customer, further leads to the following.

33
Reference: Carry, J . Grewiss,. V. (2006 ).Customer Satisfaction and Service Quality by eastern press
Bangalore

35
-Stays loyal for long time

-Buys more as the company introduces new products and upgrades existing products

-Talks favourably about the company and its products

-Pays less attention to competing brands and advertising and is less sensitive to price

-Offers product or service ideas to the company

-Costs less to serve than to new customers because transaction are routinized

The authors of this book are of the opinion that a company must be wise to measure
customer satisfaction regularly. Robert mentions here that the company34 could phone
recent buyers and enquire how many are very satisfied, indifferent, dissatisfied and very
dissatisfied. It might lose as much as 80 per cent of the very dissatisfied and very
dissatisfied customers. But it may lose only 1 or 2 per cent of its very satisfied
customers. He has further suggested that every organization must try to exceed
customer expectations, not merely meet them. Some hotels think they are getting a
sincere feedback of customer satisfaction by tallying the customers complaints, the
authors here present a very important point that, 95 per cent of dissatisfied customers
don’t complain Many just stop coming to your hotel. The best thing a hotel can do is to
make it easy for the customer to complain. Suggestion forms and company toll-free
numbers and e-mail addresses serve this purpose. Listening is not enough, however. The
hotels must respond quickly and constructively to the complaints.
The author further states that the customers who register a complaint, between
54 and 70% will do business again with the organisation it their complaint is resolved.
The figure goes up to a staggering 95% if the customer feels that the complaint was
resolved quickly. Customers who have complained to an organisation and have their
complaints satisfactorily resolved tell an average of five people about the good
treatment they received. The authors believe that Customer Satisfaction is the
customer’s fulfilment response to a customer experience, or some part thereof. The
author has further explained that Customer satisfaction is a pleasurable fulfilment

34
Reference: Robert, L & Richard, (1995). Marketing Leadership in Hospitality by Tata Mac-Graw Hill

36
response. Dissatisfaction is a un-pleasurable fulfilment response. The experience, or
some part there or component of the definition suggests that the satisfaction evaluation
can be directed at any or all elements of the customer’s experience. This can include
product, service, process and any other components of the customer’s experience. The
authors have explained that Long Term Customers, in a way could be seen as loyal
customers. People are willing to buy trustworthy product or service, which has met their
expectations earlier; therefore it is important to establish long-lasting relationships with
the customers. Having loyal customers leads a company to better predictions of
revenues, require minimal marketing effort and loyal, Customers are less sensitive to
the marketing efforts of other companies.

2.4.3 Principles of Marketing, by P.Kotler, K.Armstrong (2008)

35
As per the authors customer satisfaction is the result of comparison between
customer’s expectations and customer’s perception. In other words Customer
Satisfaction is seen as difference between expected quality of service and customers
experience or perceptions after receiving the service. According to them Customer
satisfaction depends on such dimensions
as reliability, responsiveness, assurance, empathy and tangibles and on additional
elements like price, personal and situational factors that may occur during service
supply.

2.4.4 Hospitality and Travel Marketing by M. Alistar (2011)

In this book Alistar have clearly mentioned that without doubt, service 36 is an important
factor of Customer Satisfaction. However, in Hospitality Industry measuring of service
quality is complicated, because service itself is an intangible product. The author also
feels
that the most important goal of hotel industry is to analyse future customer’s
requirements and attitudes and after identifying them it is needed to translate them into
hotel service elements. Services are often “invisible” and thus difficult for supplier to

35
Kotler, P. Armstrong, K. (2009) “Principles of Marketing”by Aman Publications
36
Reference: Alistar, A.V (2011). Hospitality and Travel Marketing by Orient Publishers India

37
explain and for customer to access but monitoring quality are significant for a hotel’s
success.

2.4.5 Consumer Behaviour in Travel and Tourism by A Pizam,Y Mansfeld (2005)

The author here has highlighted that customer is the recipient37 and judge of the service
the authors have also stated that in many cases the company’s profile or image acts as
a “filter, meaning that if a company has a positive image, for the customer it is much
easier to overlook small mistakes and it will not have huge effect on company’s image
in the eyes of the customer, and the customer may simply regard mistakes as temporary
disturbances this is the importance of maintaining customer satisfaction on the
organization.

2.4.6 Townsend and Gephardt (1986) speak of “quality in fact” and “quality in
perception”. Townsend and Gebhart mention that the general conception38 of quality in
fact is that established specifications have been met. On the other hand, quality in
perception stands for customer’s feeling of receiving the quality he expected.
Consequently, if quality in perception is not achieved, it does not suffice to attain
quality in fact.

2.4.7 Hospitality Industry in next millennium by M. Madhukar (2009) Madhukar

here states that a hotel is a big system where all the departments are39cooperating and
influencing one another. He has further stated that the reputation of the hotel is a puzzle
which contains different small pieces, if one piece is missing, the whole hotel reputation
will be influenced. Service failure stands for not meeting customers’ expectations and it
is crucial for a hotel industry’s image.

2.4.8 Hotel and Food Service Marketing Cassel (1996)

Reasons for measuring customer satisfaction

37
Reference: Pizam,A. & Mansfeld,Y. (2005).Consumer Behaviour in Travel and Tourism byJaico Publishing
house
38
Reference: Townsend,D. & Gephardt, R (1986). Speak of “quality in fact” and “quality in perception”
by.efficient offset printers UK
39
Reference: . Madhukar, M. (2009) Hospitality Industry in next millennium by Anmol Publishers

38
Cassel has very clearly mentioned that Knowing customer’s requirements 40is essential
because
it provides the service provider with better understanding of the way customers define
the quality of the service and product. If the company understands customers
requirement it is easier for service providers to satisfy them Knowing customer
satisfaction level and their requirements will also help in finding out the best direction
in which company needs to go on.(Hayers,2008) Customers requirements and level of
satisfaction have increased rapidly in the last few decade it in fact, affects a hotel’s
success It is widely accepted that it is easier to sell to an existing new customer than to
find a new one, that is why customer satisfaction level is a very important issue. A
delighted customer is more likely to purchase service again and this customer is having
positive experience with the closest one. So having one delighted customer may lead to
extending the customers segment rapidly.

2.4.9 Hotel, Value for money and Quality in Hotel Industry, by Chand, S. (2010)

Chand in this article claims that a customer accordingly is a means41 to increase the
profit of the Company. A customer is the person who decides whether to purchase
service or goods or not, so their perception is important for the corporate. Lodging
industry is using customer-oriented management system, so the company is hereby
given a chance to adjust what it is offering to the expectations and perceptions of the
customer. By receiving reliable feedback from customer it is possible to guide the
action towards establishing and assuring long-term relationships. Customer satisfaction
is difficult to measure due to the fact that customers are not always honest while filling
out customer satisfaction surveys. In addition to this, delighted customers feel no need
to contact the company and share the experience. On the other hand, dissatisfaction of
the consumer increases the rumours about the company and negative feedbacks. It is a
serious matter to the lodging company and budget hotels, that a dissatisfied consumer is
more likely purchase the service elsewhere in future, Customers are sharing their
positive experiences, but they also share their negative experiences, which may ruin a

40 Reference: Cassel, R. (1996) Hotel and Food Service Marketing by Red Book press UK

41 Reference: Chand, S. (2010) Hotel, Value for money and Quality in Hotel Industry, by Himalaya publishing
house

39
company’s reputation. Requirements for satisfaction are unique for each individual and
they are dependent on many aspects, such as customer’ mood, perceptions and
expectations. The author has further highlighted that if the company is able to set
standardized employees conduction where interaction with customer is concerned, it
will be certainly easier to implement procedure and guidelines by this to ensure
customers satisfaction. The importance of loyal customers is obvious due to the fact
that they are less price sensitive, they are ready to pay a bit more in case of price
increase to get the service they are used to, as they buy more often and they are buying
bigger range of products. Delighted customers provide the company with free
advertising (among friends and relatives) and there is no need to advertise to them as
actively as to others. Satisfied customers purchase at least five times more; it is more
profit to sell to an existing customer than to try finding a new one. Additionally it is
important to keep in mind that the difference between satisfied customers and very
satisfied customers is big enough, these customers repeat their visits more often and this
affects company’s profitability

2.4.10 Marketing in Catering Industry, by Buttle, F. (1997)

Here the author has described how to maintain Service42 Quality in Hospitality Industry
in 5 steps

Ingredient 1: Determine who the guests are being served.

Ingredient 2: Assess exactly what the guest’s desire.
Ingredient 3: Develop practical ways so that systems can be modified or developed
constantly and then deliver what the guests want.
Ingredient 4: Train and empower service staff to please the guests.
Ingredient 5: Implement revised procedure.
Ingredient 6: Evaluate and modify service delivery systems regularly

2.5 Human Resource Practices

The importance of human resources to business success in any context has been widely
recognized. Richard and Johnson (2001) are among the many who argue that human

42
Reference: Buttle, F. (1997). Marketing in Catering Industry, by Macmillan Press ltd London

40
resource Management strategies have huge impact on an organization’s overall
effectiveness, and that the effective utilization of human resources can give an
organization a competitive advantage. The importance of human resources is
particularly significant in a ‘people focused’ industry, such as hospitality industry. In
strongly service-based hospitality industry, human resource management plays
important role because company’s success will depend on its employees’ service-based
attitude. Dealing with people is what hospitality business is all about. When providing
services to guests, primary resource is employees. Successful hospitality managers need
the ability to work with those people who will contribute success.

2.5.1 Marketing of Services by, Hoffman,.K & Bateson,.J (2008)

Hoffman and Bateson have mentioned that a Good HRM practices have 43 a positive
influence on the improvement of service quality, customer satisfaction and hotels
performance, which further leads to creation of customer satisfaction. They have further
stressed that this can be achieved via increasing responsiveness to customers needs and
that the creation of customer value which has a positive impact on the firm’s
profitability, the authors are also of the opinion that good HRM Practices improves
hotel services.

2.5.2 The impact of HRM on service quality, customer satisfaction and

performance in the Indian hotel industry, by Srivas, M. (2010)
44
In this research article the author have stated the problems of the Indian hotel
industry, he
have further described that India’s Hotel Industry is confronted with considerable
challenges imposed by the turbulent and rapidly changing external environment that it
operates in. The author has mentioned that, this has increased competition and has
forced many hotels to find ways to retain current customers and attract competitor’s
customers. The author believes that the increase in service quality, customer satisfaction
and hotel performance though HRM practices is a viable way for the hotels to remain

43
Reference: Hoffman, K. & Bateson,J . (2008). Marketing of Services by Tata Mac Graw-Hill

44
Reference: Srivas, N . (2010) “The impact of HRM on service quality, customer satisfaction and performance
in the Indian hotel industry” Journal of Hospitality Studies and Education vol iv no 4

41
competitive. The author have further stressed that service quality is typically intangible
and non-standardized Because of these two attributes, the evaluation of service quality
depends heavily on the effectiveness with which front line employees deal with
customer. The efforts to promote service quality must therefore be based
on a professional approach to promote” service quality to management of operations
particularly on the area of human Resource development (HRD).Such an approach is
crucial considering the staffing problems the industry is facing currently. Significant
difficulties in attracting and retaining quality staff result in employers to be confronted
with acute skill shortage, a tightening attitude (behaviour) and high levels of staff
turnover. The author in this article has further mentioned that the significance of
customer-employee, contact is creating and providing quality services.

2.5.3 Human Resource Practices in Tourism and Hospitality Industries

45
As per the author customers enjoy the best services due to the diligence and
dedication of the employees of the organisation. The customers speak well about the
organisation because of them, and hence they contribute in terms of attracting new
customers. Thus it will not be wrong according to the author that employees are the
most important factors of the organisations.

2.5.4 Human Resource Management-Best Practices at Marriott International by

Wellis, D., V. Griffit (2004)

In this article the authors have explained about the moment of46 truth that occurs during
the service procedure, according to the authors the interaction that takes place between
the front employee and the customer at the place of service delivery that has also been
referred to as the moment of truth is highly significant for the organisation. It can either
retain the customer of a long time to come and motivate him to come back for services

45
Reference: Menon, J. (2003) Human Resource Practices in Tourism and Hospitality Industry by Tarang
Publishers

46
Reference: Wellis,. D & Griffit,.V(2004)“Human Resource Management-Best Practices at Marriott
International” Indian Journal of Hospitality and Tourism Research”

42
time and again or it can simply put him off and take him away to the competitors. Thus,
in a way the employee behaviour needs to be groomed, channelized and directed
towards the building relationship marketing by the organisation. Employers in the
service organization do understand that customer does not deal with machine or gadgets
alone. The authors have further stated that a Customer has to interact with the humans
on almost every step of the service delivery. That is why organisations have been
developing elaborate training programs, grooming sessions for the frontline employees
a very good example of this could be the hospitality industry where the grooming
standards of the service personnel have to be maintained every time they come in
contact with the customers and so, the organisations have to arrange the training,
development programs and orientation sessions for all its employees to make sure the
customer at the moment of truth gets with the best face of the organisation according to
the authors, hospitality Industry is one Industry where the contact of the service
personnel with the customers takes place for a longer time and at frequent intervals.

2.5.5 Strategic human resource management in Malaysian five star hotels: Human
resource practices system differentiation and its outcomes, by Ahmed, R. (2010)

In this thesis the author has discussed about the traditional47 and recent HR Practices in
Hospitality Industry in this study the author has discussed the personnel problems in the
tourism and hospitality industry out of which some of them areas follow: low pay, no
fixed hours and shift, poor career growth, seasonal employment, informal recruitment
methods lack of good HR Practice, high attrition rate and difficulty in retaining
employees. In this thesis the author has explained that employers' and the organizational
representatives consider employee turnover in the industry as not the major issue
according to them it is the part of working they have not realized that what are its causes
and reasons, retaining staff is costlier than hiring new for them. When the organizations
will realize that poor HR practices like low pay & benefits, lack career opportunities,
work life imbalance are the main reason employee turnover. That day the organizations
will be successful in real terms. It is to a great extend clear from the above researches
which support the fact that tourism and hospitality industry is a poor employing sector.

47
Reference: Ahmed,. R. V. (2010) “Strategic human resource management in Malaysian five star hotels:
Human resource practices system differentiation and its outcomes” International Journal of Management Vol V
no3

43
The author has further given references of researchers like Kelliher &Perrett (2001)
Kelliher and Johnson (1997) who clearly believe that it is not surprising to see a long
history that supports the fact that hospitality industry still remains a poorly employing
sector. The author in this thesis has further pointed out that, hotels have now started to
take HRM Practices seriously as their main aim is to achieve customer satisfaction
which is possible only through strong employee commitment. In fact, he says that the
management has become very serious regarding the policies and practices of HR
According to him the hotels have started experimenting with innovation approaches,
like quality enhancement of HRM policies and practices. The hotel industry is planning
to pay well, revise appraisal system, develop proper training programs for employees
skills development, schemes for proper balance between work and life, special
advantages to women, job rotation, employee empowerment, performance based pay,
teamwork etc., the implementation of all these policies and practices helps in gaining
employee commitment and customer satisfaction and hence the hotel industry should be
able to attract and retain enthusiastic, competent staff.

2.5.6 Managing Human Resource by John, S. (2000)

The focus of hospitality industry should be on48 delivering quality service; and should
consistently focus on high performance. Organizational commitment is the backbone of
the modern HRM philosophy. The more committed employees are to the organization,
the more motivated they would be and more willing to work ‘above and beyond
contract.' Committed employees feel greater responsibility, reducing the manager's need
to monitor and supervise. Committed employees are expected to be less likely to leave
the organization, resulting in the reduction of recruitment and selection expenditures.
HRM practice can contribute significantly to organizational commitment. Performance
appraisal has emerged as the significant predictor of organizational commitment. The
new HR Practices in hospitality industry are now offering organizations with a
comprehensive approach to talent management including on boarding, appraisals, pay
for performance, job descriptions, succession planning and learning management. A
genuine love for the business of hospitality and the desire to excel as a hotelier are
slowly giving way to aspirations for better work-life. The author further also mentions

48
Reference: John, S. (2000) Managing Human Resource by Orient publishing house

44
that worldwide researches have suggested that employee turnover is among the highest
in the hospitality industry. Studies have shown that the average turnover level among
non-management hotel employees in the US is about 50%, and about 25% for
management staff. Estimates of average annual employee turnover range from around
60 to 300 %, the author have further stated that according to research conducted by the
American Hotel and Motel Association. Retention experts say hotels spend thousands
every year for each new employee they must train to replace a seasoned worker who
leaves. It is no longer a startling fact that the cost of losing an employee is between half
and one-and-a-half times their annual salary! The reasons and motivations behind the
decision for a job change - from one hotel to 6another or from the industry to another
sector - highlight a well-known reality: that people are inherently driven to maximize
benefits or satisfaction, and that they assume a lifetime perspective when making
choices concerning job changes. The author is a firm believer that the expected benefits
or utility for the employee comes in the form of higher future earnings, increased job
satisfaction and enrichment over one’s lifetime and a greater appreciation of his
personal interests people are being paid less than what they might in another industry,
for a comparable position, adds to this sense of frustration. There are studies that
support the fact that employees leave an organization for many reasons, but two
common causes are the quality of the selection system and the quality of leadership. It is
a well-known fact that the overwhelming majority of people who leave any hotel leave
because of the way they are treated every day. Poor pay structure, Lack of appreciation,
lack of teamwork and the perception that the company doesn't care about employees are
consistently the highest-rated reasons for low job satisfaction.
2.5.7 “Innovative Management and Invigorating HR Strategies in the Hospitality
Industry by Mishra, K. ,V. Arvindo (2012)

49
Innovative management has resulted in major organizational and individual
improvements in other industries by recognizing that potential employees are as
interested in intangibles such as fairness, equity, wellbeing and caring, as they are in

49
Reference: (2012) by Mishra,V.& Arvindo, A. “Innovative Management and Invigorating HR Strategies in
the Hospitality Industry” Journal of Hospitality Application &Research Vol.7,Issue 4 Department of HMCT
Chandigarh

45
competitive salaries, retirement plans, training, and recognition programs. The authors
have stated in this article that there is a clear need for consistent and aligned human
resource practices, programs and policies to help achieve the hotel’s strategic
objectives. While many in the hospitality industry maintain that people are the key to
customer satisfaction and competitive advantage, the authors argue that, often human
resource practices in hotels diminish the effectiveness of getting the most out of their
people. Attrition at the middle level is the foremost issue for today's hotel managers.
Studies show that many employees leave for reasons that have little to do with money or
benefits, but rather with central human resource issues such as improper career path
planning, less motivation

2.5.8 HR Concepts in Hotel Industry towards Employee Training and

Development by Amritraj, D., S. Kalist, .V. Vembar (2011)

The authors have explained the importance of training; according50 to the authors
training provides a mechanism for establishing and building a strong company culture,
inculcating core company values and reinforcing key business objectives. Thus
employee training is the key success factor to improving their performance. It may be
through any mode like classroom or e-platform training, mentoring, coaching, paid
memberships, and company libraries Turnover is the consequence of a complicated
series of dynamics, which include the obvious ones of job dissatisfaction and limited
organizational commitment that influence employee attitude and ultimately affect
employee behaviour the reasons for turnover in general include dissatisfaction with
work; availability of attractive alternatives; external factors like housing, transportation,
or physical environment; and personal factors like illness or injury added poor
supervision, a poor working environment, and inadequate compensation to that list.
They further suggested that some managers do not understand the relationship between
employee retention and company profitability, and accept turnover as a necessary evil.
The issue of turnover has attracted many researchers’ attention in different countries.

50
Reference: V.Vembar et al (2011) “HR Concepts in Hotel Industry towards Employee Training and
Development ” Indian Journal of Applied Hospitality &Tourism Research BCIHMCT New Delhi Vol.3
January 2012

46
They suggested that the most effective mechanisms for minimizing turnover are Initial
recruitment and selection; the author also recommended a greater focus on internal
recruitment and development, which creates career path options, as a means to reduce
staff turnover levels. They also noted induction and socialization that effectively
acculturate newcomers into the Organization, training and development demonstrates
the willingness of an organization to invest in people who in turn lead to an increase in
employees’ commitment and job satisfaction. The author’s further states that in the
hotel industry, besides the turn over issue, service quality is another concern since
hotels are a Service-oriented industry. The delivery of hotel service to customers
primarily involves personal contact and so the relationship between HRM effectiveness
and customer service is likely to be very strong the author further argues that service
quality focuses on the nature of the interaction between the individual employee and the
customer at the point of service, in terms of politeness, and overall professionalism.

2.6 Theoretical Framework

Introduction

This research study is related to comparative study between Branded Budget Hotels
Versus Non Branded Budget Hotels, in order to understand this concept the basis for
comparison used over here are Marketing strategies adopted by branded and non-
branded budget hotels, and Human Resource Practices followed by both these category
of hotels. This section of the study tries to define what is branded and non-branded
budget hotel, Branding, star rating systems of the hospitality industry it also tries to
explain the important concepts of CRM in relation to the hotel industry, customer
satisfaction and various dimensions of Quality as well as Human Resource Practices
followed in these hotels.

2.6.1Budget Segment Strategy

According to Sethi the budget segment strategy targets51 hotel guests who are motivated
primarily by price. These target customers expect a very basic level of quality,

51
Reference: Sethi,. K. (12 May 2011) “Successful brands join Budget segment in India” FHRAI Vol vii no page
22-24

47
According to him the main driver of competition in budget hotels is room price, which
means that to succeed with this strategy hoteliers must try to keep prices low to make a
profit. And so the margins will typically be lower, so budget hotels must work to
increase guest volume if they are to make large profits, however branded budget hotels
may have higher tariff because they provide more frills as compared to non-branded
budget hotels

2.6.2Advantages of Budget Hotels

Advantages of Budget Hotels is consistency a hotel52 that provides good

accommodation, modern rooms, and also free breakfast with free high speed Internet
access. As per corporate houses a company can eliminate quite a lot of additional
expenses if their employees has to stay in upper end hotel, because if their customers
stay in budget hotels the company don’t have to pay for breakfast or internet access, and
quite a lot of properties provide free telephone services too, so all these benefits can
help the company to reduce their costs, and most importantly, the Average daily rate is
relatively lower of budget hotels as compared to upper scale hotels

2.6.3 Branding Kotler has defined Brand as "name, term, design, symbol, or any other
feature that identifies one seller's product distinct from those of other sellers. A brand is
a name given to a product and or service such that it takes on an identity by itself. In
today's market place teeming with thousands of products and services, all of which are
being rapidly commoditized, a brand stands out from the clutter and attracts attention. A
brand name can create and stand for loyalty, trust, faith, premium or mass-market
appeal, depending on how the brand is marketed, advertised and promoted. A brand
differentiates a product from similar other products and enables it to charge a higher
premium, in return for a clear identity and Greater faith in its function. A brand is also
likely to survive longer than just n differentiated product emotion and intelligence. All
these are conferred by the owner of the brand and needs to be continuously looked at to
keep the brand relevant to the target it intends to sell to. Brands are used in business,
marketing, and advertising. Initially, livestock branding was adopted to differentiate one
person's cattle from another's by means of a distinctive symbol burned into the animal's
skin with a hot branding iron. A modern example of a brand in the hospitality industry
52
Reference: (www.india hospitality revew.com/news/budget growth in India)

48
is Taj Hotels a brand for the Indian Hotel Company owned by the Tata’s. In accounting,
a brand is defined as an intangible asset and is often the most valuable asset on a
corporation's balance sheet. Brand owners manage their brands carefully to create
shareholder value, and brand valuation is an important management technique that
ascribes a money value to a brand, and allows marketing investment to be managed.

2.6.3.1 Advantage of Brand Name- Maw and Thomson, have specified the53
importance of brand they have stated that an organisation highlights a brand name since
it offers a number of advantages helpful in identifying a particular product and
distinguishes a product from those of the immediate competitors. It also acts as a cue to
the purchasers in their task of making purchase decisions. It indicates to the buyers the
exact level of quality they expect from the specific brand product. This is due to the fact
that a range of products marketed under the same brand name carry similar expectations
of the quality. This makes it essential that hotels branding their products exercise a
strong control over quality. Further, in the hotels where we find most of the product of
intangible nature, the purchase of branded product helps customers in avoiding risks.

2.6.3.2 The word "brand" is often used as a metonym referring to the company54 that
is strongly identified with a brand communications. Larry explains that an effective
visual brand identity is achieved by the consistent use of particular visual elements to
create distinction, such as specific fonts, colours, and graphic elements. At the core of
every brand identity is a brand mark, or logo. Brands are used in business, marketing,
and advertising, Colour is a particularly important element of visual brand identity and
colour mapping provides an effective way of ensuring colour contributes to
differentiation in a visually cluttered marketplace

2.6.3.3 Expanding role of brand

Talking of the role of the brands Lashley and Morrison have expressed55 their view that
brands were meant to make identifying and differentiating a product easier, while also
providing the benefit of letting the name sell a second rate product. Over time, brands
came to embrace a performance or benefit promise, for the product, certainly, but
53
Reference: Maw, S. & Thomson, P. (2000) The fundamentals of Hospitality by Eris publications Singapore
54
Reference: Larry, Y. (2004) The International Hospitality Business Efficient offset Printers
55
Reference: Lashley, C. Morrison, M. (2001) In search of Hospitality by Replica Press pvt ltd, Delhi

49
eventually also co-opted as powerful symbols in differentiating the products which are
in the market thereby helping the consumer to make choice and decisions of purchasing
more comfortably.

2.6.3.4 Importance of Branding in Hospitality Industry

S. Simon and Kotler Giving a product a brand name is found essential56 to add
perceived values and differentiate the product from its immediate competitors. Branding
adds great value to a product. It is an intrinsic aspect of product strategy. It is a name,
term, sign, symbol, design or a combination of all which is intended to identify the
goods or services of one seller or group of sellers and to differentiate them from its
competitors. Branding a product is one of the oldest marketing techniques which, of late
has emerged as a potent marketing tool. Like goods manufacturing industries, the
service-generating industries also find this tool significant. Familiar logos of various
Hotel Chains such as Taj, Welcome Group, ITC, Holiday Inn are proven testimony to
the proposition that brand name has been appreciated and opted for the successful
marketing of goods and services The design of the logo may be registered as trade
mark. The brand name is that part of the brand which can be vocalised.

2.6.4 Indian Middle Class The rapid growth of the Indian economy over the past three
decades has 57led to a substantial expansion of India’s “middle class”. This has triggered
a robust debate over who in India actually belongs to the “middle class,” its size,
composition, political and social behaviour. This is a debate with serious implications
for economic growth and governance since a range of scholarship in diverse settings has
shown that the middle class is an important driver of a country’s economic, political and
social development. But is the middle class anything more than simply a large group
whose income makes it neither rich nor poor. The author has taken monthly income as a
parameter to classify middle class population.

-Lower Middle Class = person earning 20,000 to 30,000 per month

-Middle Class = person earning 30,000 to 80,000 per month

56
Reference: Simon, K .,P Kotler, (2004) Marketing hospitality Services Dorling by Kindersley Noida
57
Reference: (www.daily mail.co.uk/India home/ June 2015 “The myth of great Indian Middle class”)

50
-Upper Middle Class = person earning 80,000 to 1, 50, 000 per month

2.6.5 Mid-Level Travellers

The mid-level business travel market is the fastest growing market in the hospitality
industry, today, accounting for over half of all hotel room revenue That figure continues
to escalate each year as more business travellers-and the increasing number of business
trips-continue to affect the hospitality industry.

A recent survey on business traveller market reported that.92% of all business travellers
spent at least one night away from home on their trip73% stayed in hotels. The average
length of stay is 2-4 nights; these statics explain why more and more properties are
developing special amenities and services to attract business travellers. Of all the
different types of travellers, business travellers are perhaps the most knowledge and
sophisticated and they have definite preferences regarding the selection of hotel.

1. A convenient location- Approximately 78% of all business travellers rated this factor
as the prime reason for choosing a hotel.

2. Clean, comfortable rooms- This factor came in second (67%) and was in all
probability influenced by the growing number of women traveller, who rate cleanliness
high on their list of priorities. Several years ago, cleanliness was low on this list of
selection factors-although it has remained consistent as a primary factor in whether
someone returns to a hotel.

3. Room Rates –over 55% of all business travellers cited room rates as factor in hotel
selection, although this priority is likely to change as a new influx of upwardly mobile
affluent travellers enters the business traveller market.

4. Recommendation of friends and colleagues

5. Previous experience with the property-
Business travellers can be divided in to two categories, occasional business travellers
and frequent business travellers they are responsible for approximately 50% of all
business Generated by business travellers and more targeted than occasional business
travellers. Many of the programs and services developed easily for frequent business
travellers can be utilized by occasional business travellers. Frequent business travellers

51
frequent business travellers spend average 21 nights a year away from home on business
and use budget hotels .They are typically employed in mid-level category in their
management and are well educated while this group is largely male, an increasing
number of women are becoming frequent travellers, a static that should lead to
increased revenues because women are traditionally higher users of in-house food and
beverages than their male counterparts.

2.6.6 Marketing of Hotel Services

2.6.6.1 According to Rai and Kumar marketing in hotels should aim at improving the
quality of services rendered by widening the range of products offered, developing and
promoting products which meet the needs of customers and that are acceptable to them.
It should also be at a realistic price which produce a profit when provide through
methods of sales and services that is reliable and cost effective. Successful hotel
marketing depends not only on marketing strategy and development but commitment at
all levels with the customer focus as the base. In order to keep their clientele satisfied
and maintain effective relationships with their customers hotels have to decide about the
nature and extent of the services and facilities they intend to make available to their
customers, and to be able to do this, they have to constantly keep themselves informed
about the changing customers, preferences, develop and design services that suit those
preferences, and inform their customers about their services, suitably price them and
deliver them smoothly through a well-established network. For the hotels, this would
mean reorienting management policies towards greater efforts at the customer
satisfaction and retention. For helping the hotels formulate a customer oriented
management philosophy, the adaption of marketing concept can be of definite
assistance to the hotels.
58
2.6.6.2) Singh has mentioned that the ultimate aim in marketing is to establish brand
loyalty so that, eventually, the consumer does not only purchase the goods/services
once, but continuously. This is achieved only by the producer following the complete
process of marketing. He further points out that the hoteliers are supposed to evaluate
the overall marketing strategy continually. The main task before hotel and hotel
companies is to pave ways for research to ensure improvement. If the marketing inputs

58 Reference: Singh, A. (2002) Hospitality Marketing Anmol Publication

52
 58
2.6.6.2) Singh has mentioned that the ultimate aim in marketing is to establish brand
loyalty so that, eventually, the consumer does not only purchase the goods/services
once, but continuously. This is achieved only by the producer following the complete
process of marketing. He further points out that the hoteliers are supposed to evaluate
the overall marketing strategy continually. The main task before hotel and hotel
companies is to pave ways for research to ensure improvement. If the marketing inputs
are good and the marketing mix is right, the formulation of an overall marketing
strategy for hotels and hotel companies is found convenient. Systematic, critical and
unbiased appraisal of the basic marketing policies and objectives would keep hoteliers
in making their strategies more effective.

2.6.6.3) According to Morrison the overall marketing is concerned 59 with identification

of opportunities to serve the target markets profitably and even to serve them so
effectively that it becomes difficult for the competitors to take business away on a
profitable basis. In the hotel industry, when we talk about the formulation of an overall
marketing strategy, our Emphasis is on making possible a fair blending of inputs and
outputs. Here, inputs are hotel products, promotion, pricing and placement and the
outputs are the objectives, such as the target return on investment, market share, brand
image and leadership.

2.6.6.4) Jones and Newton have stressed the importance of marketing60in the hospitality
industry they have stated that the major difference in marketing hotels as against other
consumer products is that after a customer has spent money in hotels, he/she has
nothing substantial to show except bills for his/her money as benefits as compared with
buying tangibles, such as television or a refrigerator. If the goods remain unsold, it is
possible to go for a sale programme as and when the circumstances favour. But if the
rooms of the hotel remain vacant, it is unlikely that the same can be sold even
tomorrow. This makes it essential that marketing practices for the hotel services be
given a transcendental priority. The growing significance of managerial proficiency in

58 Reference: Singh, A. (2002) Hospitality Marketing Anmol Publication

59 Reference: Morrison, A. (2002) Hospitality and Travel Marketing by Krishna offset

60 Reference: Jones, U. & Newton, S. (1996) Hospitality and Catering by The bath press UK

53
2.6.6.5) Promotional Strategies for Hotel industry

Tear have stated the importance of 61the promotion strategy, according to them the
promotional strategies are found effective in raising the magnitude of sensitivity. The
authors are of the opinion that in the hotel industry, the expectations of customers are
based on intangibles qualities like atmosphere and image. Before buying, the customers
have high expectations. Here, it is impact generating that customers have high
expectations are identified and efforts are made to fulfil the same. Failing it, the image
problem aggravates and the marketing decisions become irrelevant and insensitive. The
promotional tools like folders, cards, price list and list of general and special items to be
served, published in attractive form throw a positive impact on customers. The authors
feel that, the prime motive of publicity is to enrich market information. Here it is
important that promotional methods and publicity methods are innovated in the face of
changing life styles and environmental conditions. The selection of a suitable strategy
for advertising, the composition of advertisement slogans, the messages to be
communicated etc. Are found helpful in transforming the potential customers into
regular customers.

2.6.6.6) Market Segmentation in Hotel

Cassel has explained the importance of market segmentation in hospitality62 industry;

he States that the process of segmentation simplifies the task of hotels and hotel
companies. The hoteliers find it convenient to identify the level of expectations with the
task of reaching to the target customers getting simplified. According to Cassel the
following points are a mute testimony to this proposition that by segmenting the market,
the marketing strategies would prove effective. Designing of sensitive marketing
strategy Market segmentation makes possible the formulation of a sound marketing
strategy. The division of the market simplifies the task of hoteliers. They find it
convenient to study the behaviour of different groups of customers and marketing
activities are programmed in an effective way.

61
Reference: Teare ., R ( 2007) Sales for Hospitality Customer by oxford university press
62
Reference: Cassel, R. (2011) Marketing for Tourism and Hospitality by red books press UK

54
2. Knowing the lifestyle: The segmentation is found effective even in knowing the
lifestyles when the segment is small, it is convenient to know the lifestyles and the task
of satisfying the customers is simplified considerably.

3. Identify the potential customers: A segment wise study of potential guests is needed
for transforming short-term customers into long-term customers. The main thing is to
identify the potential guests and tap the market potential considerably. This makes
essential for the marketers to know that different guests visit hotels with different
motives, identify their habits and preferences and make concerted efforts to satisfy
them.

4. Marketing strategies can be tailored to the competitor’s strategies: Strategies simplify

the task of achieving the target to satisfy potential customers successfully, of, late
market has become more competitive. Most of the hotels are now found innovating their
marketing strategies much in advance than its competitive organisations. Any change in
the product, pricing and promotion can be made possible by market segmentation. This
would ensure the effectiveness of marketing decisions.

2.6.6.7 Hotel Distribution Strategy:

The ‘distribution chain’ denotes the methods by which product or service 63 is

distributed from producers to the consumers. As per Singh, the middlemen are the link
and if the link is strong, the producers find it convenient to increase the occupancy ratio
of the rooms in a hotel. The middle men are the wholesalers, buying hotel rooms in bulk
and then selling the same to the retailers, i.e. the travel agents. In the hotel industry the
tour operators are found acting as wholesalers, they package the service products and
then sell either to the travel agents or even directly to the tourists.

2.6.6.8) Positioning Strategies

63
Reference: Singh, .S . (2008) Tourism Management and Marketing-by Himalaya publication

55
According to the authors Positioning refers to customer’s perception64 of a product
image or benefit that distinguishes it from the competition. A widely accepted view of
product differentiation is that it refers to the Product itself, where the product offer
includes features that are different from the usual offerings of competitor’s .Another
view of differentiation is related to marketing Communication, where advertising
messages packaging and other marketing tactics are used to make the company’s
product appear superior to that of the competition. On relate product differentiation to
segmentation strategies that is, offering different products to different market segments.

The Positioning Process

-The Positioning Process consists of a set of key elements that provide a foundation for
designing the marketing mix consistent with the chosen market-segmentation strategy.

-Identify the target market(s) to be pursued.

-.Determine the specific customer needs, wants, and benefits desired by each target
market.

-Analyse the attributes and perceived images of each present and potential competitor in
each target market

-Compare your position with that of competitors on each important dimension desired
by customers.

-Identify a unique position that offers a combination of benefits that is desirable to the
target market

-Design a marketing program that will persuade customers that there are good reasons
to buy from the communicating firm rather than from its competitors.

-Continue to assess and reassess present and potential target markets and competitors, as
well
64
Reference: Kotler, P. John, B. James, M. (2002) Marketing for tourism and hospitality by Dorling
Kindersley Noida

56
As the marketing efforts to reach them.

-Continue to monitor the market for segments with unmet needs where there is an
opportunity for your firm to introduce a better offering that will displace or replace
present competitors.

2.6.6.9) Customer value and Positioning

The value-proposition concept focuses on creating customer65 value and goes beyond
the classic definition that positioning is based solely on communication. The value
statement can also be used internally to communicate to the entire organisation the
reason they are in business, thus focusing everyone’s efforts on a common purpose of
satisfying the targeted customers.

The value proposition or positioning statements addresses three questions;

1. Who is the target customer?
2. Why should the customer buy?
3. What are we selling?

2.6.6.10) Value-Added Marketing Strategies- The right combination of quality,

service, and value is the key to market success, As per Cassel customers generally
perceive value as high quality at a reasonable price, but not necessarily the lowest price.
Quality includes both product features and the quality service that is delivered before,
during and after the sale. Hoteliers are increasingly concerned with preventing quality
glitches before the services reach the customers away forever in their quest for quality,
service and value.

2.6.6.11) Value Added Service

According to the Cassel the term "value added services" is used to refer to options that
complement but a core service offering from a company but are not as vital, necessary
or important. This term is used in many industries, most notably the
telecommunications industry. Value added services are often introduced to customers

65
Reference: Vassel, P. (1995) Hospitality Marketing by Red wood printers UK

57
after they have purchased the core services around which this ancillary offer Benefits
Value added services provide advantages for both the customers and the service
providers. Customers have the opportunity to receive something above and beyond their
basic needs. Providers benefit from an increased rapport with the client, which could
translate into more revenue. These additional custom services often cost the company
little extra but have the potential to significantly enhance the growth and the reputation
of the company. Value added services play vital role in the hospitality industry because
these services are a source to attract and retain customers in the hotels some of the
Value added services provided by hotels include surprise gifts in the form of
complementary bottle of wine on arrival free gifts such cakes, chocolates, salads, any
beverage, providing free pick and drop from airports or railway stations, discounts on
food and beverages during happy hours concierge services including shoe polishing and
pressing, complementary newspaper, magazines Complimentary drinks, cocktails and
canapés etc.

2.6.6.12 Internal Marketing Strategies - Organizations are beginning to 66recognize that

one of the most valuable customers segments is their own employees. Jha has
emphasised the importance of employees of the organization he has stated that
comprehensive internal marketing programs that motivate employee to focus on the
external customer should be directed towards Employees at all levels because service is
everybody’s business leading The payoff comes in the form of more satisfies employees
and customers, added value for the brand and more profitability for the company.
Internal marketing can lead to high employee retention, which generally means that a
company has a work force that understands its customers’ needs and can be highly
productive In other words, to retain valued customers, it is necessary to retain valued
employees. Internal marketing includes, but is not limited to higher pay. Employees are
motivated when management listens to and acts on their suggestions for serving internal
and external customers more effectively. Although we no longer seem to be in an era of
guaranteed job security and deeply held company employee loyalty many companies
have recognised the need to market themselves as desirable places to work.

2.6.6.13 Customer Retention

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Reference: Jha, S. (202) Hotel Marketing by Himalaya publishing house A to Z printers

58
Buttle have quoted on the importance of customer he further 67states that

A customer is the most important person in our Establishment

A customer is not dependent on us …..We are dependent on him

A customer is not an interruption of our work…he is the purpose of it. We are not doing
a favour by serving him… he is doing us a favour by giving us the opportunity to do so.

A Customer is not someone to argue or match with. Nobody ever won an argument with
a customer

A Customer is a person who brings us his wants. It is our job to handle them
profitability to him and to ourselves.

Today, more and more companies are recognizing the importance of satisfying and
retaining current customers. Here are some interesting facts bearing on customer
retention, acquiring new customers can cost five times more than costs involved in
satisfying and retaining current customers. It requires a great deal of effort to induce
satisfied customer to switch away from their current suppliers. The average company
loses 10 present of its customers each year.

2.6.7 Customer Relationship Management

Seth in his book Relationship Marketing has defined Customer Relationship

68
Management as managing detailed information about individual customers and
carefully managing customer “touch points” in order to maximize customer loyalty.
Most companies are awash in information about their customers. Seth has stated the
importance of touch points as per him, smart companies capture information at every
possible customer touch points. These touch points include customer and interesting
findings about customers. These findings often lead to marketing opportunities. By
using CRM to understand customers better, companies can provide higher level of
customer service and develop deeper customer relationships. They can use CRM to
pinpoint high-value customers, target them more effectively, cross-sell the company’s
products, and create offers tailored to specific customer requirements.
67
Reference: Buttle, F. (2002) Marketing of Services in Hospitality Industry by Offset Publishers UK
68
Reference: Seth, V. (2005) Relationship Marketing by Orient Publications

59
 69
2.6.7.1 As per Nath General Manager of Marriott’s Delhi, the hotel industry is
experience in globalization, liberalization, increased competitiveness, increased
customer switching rate, increasing customer acquisition costs, less brand loyalty,
Customer Relationship Management Implementation Strategies in Hotel Industry,
several studies manifest that the hotels must concentrate on the implementation of CRM
to engorge the guest loyalty, which ultimately engorged the profitability of the entire
organisation. CRM commits to accumulate and archive information about customers
and disseminate this information throughout the organisation to ensure creation of
customized services by an organisation to bestow a unique Customer experience. The
CRM has been defined by several scholars from different points of view. The concept of
CRM has been enriched from various viewpoints namely satisfaction loyalty, retention,
allocation of recourses for retaining customers, top management Involvement in support
of CRM, employee involvement, effective chain management, after sale services to
customers, organisational learning, organisational structure etc. The concept and
definition of CRM is very fragmented and spread in several areas from information
technology to loyalty and from customer satisfaction to customer retention.

2.6.7.2 As per Fournies Relationship marketing is attracting, 70maintaining and in multi-

service organizations enhancing customer relationships. It is the means by which the
seller, and in some cases the buyer, tries to move from a single transaction to a longer
term, mutually profitable partnership behaviour. A profitable exchange for both parties
is central to the concept of relationship marketing.

2.6.7.3 Customer relationship marketing has been defined as the71relationship marketing

attracting, maintaining, and in multiservice organisations enhancing customer
relationships.’(Berry and Parasuraman1991) Similarly Chrostopher and Mcdonald are
of the opinion that purpose of relationship marketing is to identify, and maintain and
enhance-achieved through a mutual exchange and fulfilment of promises, it is a
business strategy that maximizes profitability, revenue and customer satisfaction by

69
Reference: Nath ,. P. (2013 “Implementation of modern crm methodologies in hotels” Food and Hospitality
World Vol 3 no-12
70
Reference: Fournies, F. (2007) Why customers don’t do what they are supposed to do by Tata-Mac Grawhill
USA
71
Reference: Christopher , .M. & Mcdonald, .M. (1995) Marketing an introductory text by Macmillan press ltd
London

60
organizing around customer segments, fostering behaviour that satisfies customers and
implementing customer centric process. Purchases, sales force contacts, service and
support calls, Web site visits, satisfaction Surveys, credit and payment interactions, and
Market Research studies-every contact between the customer and the company.
Customer Relationship Management (CRM) has a much narrower data-management
meaning it refers to capturing and using customer data from all sources to manage
customer interactions and build Customer Relationships. CRM consists of sophisticated
software and analytical tools that integrate customer information from all sources,
analyse it in depth, and apply results to build stronger customer relationships. CRM
integrates everything that a company’s sales, service, and marketing teams know about
individual customers to provide a 360-degreee view of the customer relationship.

2.6.7.4 The authors have stated the importance of CRM analyst is to develop72 data
warehouses and use sophisticated data mining techniques to underneath the riches
hidden in customer data. A data warehouse is a companywide electronic database of
finely detailed customer information that needs to be sifted through. The purpose of a
data warehouse is not just to gather information, but to pull it together into a central,
accessible location. Then, once the data Warehouse brings the data together, the
Company uses high-powered data mining techniques to sift through the mounds of data
and digs into it.

73
2.6.7.5 Effective direct marketing begins with a good customer database Customer
Relationship Management. A customer database is an organized collection of
comprehensive data about individual customers or prospects, including geographic,
demographic, psychographic, and behavioural data. A good customer database can be a
potent relationship-building tool. The database gives companies a 360-degree view of
its customers and how they behave. A company is no better than what it knows about its
customers. In the Hospitality sector the customer database might contain customer’s
demographics (age, income, family members birthdays), psychographics (activities,
interests, and opinions) and buying behaviour(buying preferences and the , frequency,
and monetary value-RFM- of past purchase).In business to business marketing, the
72
Reference: Verma ,. H . (2008) Services Marketing Text &Cases Dorling Kindersley
73
Reference: kotler, P. Armstrong, G., & Praullaagnihotri. (2002) Principles of marketing by Metropolitan
Printers India

61
customer profile might contain the products and services the customer has bought, past
volumes and prices, key contacts(and their ages, birthdays, hobbies, and favourite dish,
drink if any. Companies use their database to locate good potential customers and to
generate sales leads. They can use this database to learn about customers in detail, and
then fine-tune their market offerings and communications to the special references and
behaviour of target segments or individuals. In all the company’s database can be an
important tool for building stronger long-term customer relationships.

2.6.7.6 Advantage of Customer relationship marketing74 to the organizations

-Retention of Customers
-Increased Revenues and Sales Turnovers
-Reduction in Service Promotional Expense
-Reduction in the Service Understanding Gap
-Establishment of Understanding between the Customer and the Front Office Staff
Advantages to the customer
Availability of Personal Attention
Saves Search Time and Efforts in case he wants to avail services.
The main characteristics of Relationship marketing could be summarized as
following:
Focus on customers
Product benefits orientation
Long terms
Focus at customers services
High level of consumer’s involvement
High level of contacts with consumers

2.6.7.7 CRM helps hotels to service their customers and be cost effective, thus making it
a must for the hotel. Customer focus can be achieved by this relatively new concept
wherein all the activities involved are aimed at creating value for the customers. With
the advent of hyper completion, the need for survival and success has compelled hotels
to find out varied ways to be more and more competitive and reach their customers
efficiently. The only mantra to be competitive is to be cost effective. CRM strategy is a
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Reference: Kumar, A. (2007) Customer Relationship Management Concepts and Applications, by Sudha offset

62
strategy as well a tool in this direction. The concept of customer relationship
management has a broader focus not only serving the Customer but also creating the
customer retaining him for measurable and substantial returns. CRM is a vast subject
where the concept of one to one marketing is supported by Database Marketing.
“Customer Relationship is a process of managing customer relations on an organized
way”. They aim at managing “each moment of truth”. That is experienced by the
customer. ‘Touch points in the CRM language are considered important as there is
direct interaction with the customer and they provide valuable input to the hotels. The
input provided by the customer has to be captured in such a way that it becomes
information and can be used by the various processes within the hotel.

Preferences develop and design services75 that suit those preferences, inform their
customers about their services, suitably price them and deliver them smoothly through a
well-established network. For the hotels, this would mean reorienting management
policies towards greater efforts at the customer satisfaction and retention. For helping
the hotels formulate a customer oriented management philosophy, the adaption of
marketing concept can be of definite assistance to hotels.

2.6.7.8 Service Quality and Hospitality Industry

S. Andrews has given 6 essential ingredients for maintaining76 quality in the hospitality
industry

Ingredient 1: Determine who the guests are being served.

Ingredient 2: Assess exactly what the Guests (customer) desire.

Ingredient 3: Develop practical way that systems can be modified or developed to

constantly deliver what the guests want

Ingredient 4: Train and empower service staff to please the guests.

Ingredient 5: Implement revised procedure.

75
Reference: Chaturvedi , M. &. A., Chaturvadi. (2008) Customer Relationship Management An Indian
Perspective
by Hans Publication

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Reference: Andrew,. B. (2007) Tourism and Hospitality Industry, by Tata McGraw Hill

63
Ingredient 6: Evaluate and modify service delivery systems as necessary.

Service and Moments of Truth in Hospitality industry

2.6.7.9 Moments of truth

“Anytime a customer comes into contact with any aspect of a business,

however remote, is an opportunity to form an impression”

Davidson reveals that In the Hospitality Industry, there are a77 minimum of twenty or
thirty moments of truth in its provision of service. As per him a moment of truth is
when an interaction occurs between customers and the service provider that can leave a
lasting positive or negative impression on the customer, Moments of truth in a hotel, for
example, will undoubtedly (but not be limited to) booking the room, check-in, check-
out, dinner reservations, dinner ordering, dinner presentation, eating (quality and
quantity of food) and laundry receipt.

These are the opportunity’s that guests have to form an impression about the hotel
While the moment of truth can involve an employee (for example ,excellent or rude
service,) there does not need to be human interaction for example negative impressions
are formed when guests walk through a garbage-cluttered parking lot that is full of foul-
smell, or a positive impression is formed by the guests when the guest walks in the hotel
lobby and beautiful flower arrangements are kept at the reception and lobby area and a
“wow” factor created when one of these fresh flowers stems are given to a lady guests
as they are seated.

What impacts on the Moments of truth?

As per the author there are three personal factors and the general environment impact on
perception of service these personal factors are.

The level of concern shown for the individual customer

The level of friendliness shown towards the customer

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Reference: Buttle, . F. (1997) Strategic Hospitality Management, Silver line printers UK

64
The level of civility shown towards the customers Service and Moments of Truth in
Hospitality industry

The author has described that Moments of truth, are opportunity’s that guests have to
form an
impression about the hotel While the moment of truth can involve an employee (for
example ,excellent or rude service,) there does not need to be human interaction for
example negative impressions are formed when guests walk through a garbage-cluttered
parking lot that is full of foul-smell, or a positive impression is formed by the guests
when the guest walks in the hotel lobby and beautiful flower arrangements are kept at
the reception and lobby area and a “wow” factor created when one of these fresh
flowers stems are given to a lady guests as they are seated.

The author’s further states that having someone wait in line at check-in can cause a
negative impression showing genuine concern at the length of the wait and helping to
make the net
Interaction after check-in easy in a friendly and helpful manner can reduce that negative
impact to zero. By understanding what the target segment requires at the moments of
truth relevant to the segment enables organisations to develop and execute plan to
improve the perception and the memory of the interaction that are important, the authors
have further revealed that with this the customers are more likely to be genuinely
satisfied and return.

2.6.8 Service Quality

A service is ‘a type of economic activity that is intangible, it is not stored and does not
result in ownership. A service is consumed at the point of sale.’ Given this definition,
the new Ps added to the model gain new importance. Since the service cannot be owned
and is consumed at the point of delivery, the process through which it is delivered, the
person who delivers it, and the environment in which it is delivered become an indicator
of whether a customer leaves satisfied and if they will want to return.

2.6.8.1 Fundamental Characteristics of a Service

65
As per Kotler and Armstrong there are five fundamental defining78 characteristics of a
service.
And as per them these characteristics are the basis of the 7 P model for marketing.
These are:

1. Intangible – Primary to the definition of a service is the notion that there is no

tangible result of the service in the customer’s hand. The customer does gain something
when they leave. This may be legal advice or a check-up by a doctor or information
given by a receptionist in the hotel. Tangibility needs to be created within the
experience and this is done through the environment in which the service is delivered.

2. Heterogeneous – All service experiences are unique. This means that there is a
variety that needs to be anticipated and catered for. Factors external to a customer or a
service provider such as traffic or a storm can impact the service experience. In
addition, factors internal to either of the two participants can also have an impact such
as personality traits or a bad day. Apart from this, the same person may react to the
same situation differently on two different days, for example service done by the same
waiter next day in the same hotel can differ, and all these factors make it hard to provide
a standard service experience.

3. Production and Consumption – A service is created and used up at the same point in
time. This means that the customer and the employee are both part of the process and
are equally important to the experience. The employee needs to be trained extensively
while the customer’s expectations can be managed through marketing communication
activities.

4. Perishable – A service cannot be stored, returned or resold. This means that it is

immediate and bound by time. Proper processes need to be in place to make sure that
service provision capacity is utilized to an optimum degree, to mitigate periods of high
or low demand example of this could be an unsold room of the hotel.

5. Lack of Ownership – Because the customer does not end up retaining ownership of a
tangible product, they have nothing to take away from the service except their
experience. This means that over time, once the experience memory has diluted, there
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Reference: Kotler , P. (2007). Marketing Management by Tata McGraw Hill

66
may be an issue with comparing brands. Companies are constantly trying to
differentiate themselves from their competitors to build a loyal customer base.

2.6.8.2 Ps Elements

The 7Ps includes the traditional elements, plus three new elements.79 In the services
marketing

Concept, these are defined as following

The Traditional Elements

1. Product

In the service industry, the production and consumption of the product are simultaneous
and the product is intangible, diverse and perishable. The nature of this ‘product’ allows
for on the spot customization. This also means that the point at which this activity is
occurring becomes very important. Ideally, to ensure repeat experiences of similar
quality and a spot customization. This also means that the point at which this activity is
occurring consistently good user experience, most service providers aim to give some
customization within an overall standardized mode of delivery.

2. Pricing

Since a service cannot be measured by what material goes into its creation nor is the
actual tangible cost of production measurable, it can be challenging to put a price tag on
it. There are some tangibles of course, such as the labour costs and overheads. But
additionally, the ambiance, the experience and the brand name also factor into the final
price offering.

3. Place

As mentioned, the service is produced and consumed in the same place. It cannot be
owned and taken away from the location. This is why the place at which this transaction
occurs is of vital importance. The location of the service provision is carefully analysed
to allow ease of access and the desire to make the effort to reach it. Fast food restaurants

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67
and sales and service centres may be located in busy main streets to allow walk in
customers, while a fine dining restaurant may be located in a quiet street to maintain
exclusivity and privacy.

4. Promotion

Promotion fulfils the same role as it does in any other marketing context. A service may
be more easily replicated than a physical product. To prevent a service becoming
Interchangeable with its competitors, it becomes vital to create a desirable brand image
and name in the market. Differentiation becomes a key goal in order to attract both new
and repeat customers

5. People

This is a vitally important element of the service marketing mix. When a service is
being delivered, the person delivering it is not unique from the service itself. When
dining at a restaurant, if a rude waiter is encountered, the entire experience will be
labelled as bad service. This is why many businesses invest in defining the right kind of
person to fill their service role and then making efforts to find or train people to fit this
definition.

6. Process

Since service provision needs to strike a balance between customization and

standardization, the processes involved in the activity require special mention and
attention. A process needs to be clearly defined for the service provider. This basic
process should ensure the same level of service delivery to every customer, at any time
of day, on any day. Within this process, there should be defined areas where a customer
preference can be accommodated to provide a unique experience.

7. Physical Evidence

The location of the service delivery also takes on significance. The level of comfort and
attractiveness of a service location may make a lot of difference to the user experience.
A calm and soothing environment with thoughtful comfort measures may provide a
sense of security to a new customer which will make them return.

68
37) Service Marketing Mix – 7 p’s Extended Marketing Mix

Important Questions in Designing a 7 P Model

80
When setting out to design or improve a marketing mix for a service provider, the
marketer should ask the following questions:

1. How can we develop our ‘product’?

2. How can we price fairly?

3. How can we provide the right place for the customer to access and experience our
product?

4. How can we promote our product to create an impact, differentiate from competitors?

And further brand image?

5. What is the process we will use to deliver our service to the customer?

6. Who are the people who represent us and what are the skills that they need?

7. How can we provide physical evidence of the superior nature of our product?

2.6.8.3 SERVQUAL model

According to .Zeithmal and Bitner SERVQUAL model81 became the model with the
most widespread application in the process of the measurement of service quality. The
basic characteristic of the Gap model is that it actually puts an accent upon the over
sight since the quality between the guest and service provider and are directly connected
with the attitudes towards the perception and expectations. The authors have further
stated that this model demonstrates the process of the development of the service
quality. The model was presented for the first time in 1985, when the service quality
was defined as a difference between the way how a customer experienced a service

80
Reference: Boraon, . S. & K, . Harris .(2003) Services Marketing Replica Publishers, India
81
Reference: Zeithmal .V, & Bitner , M. (2000) Services Marketing by to Tata McGraw-Hill

69
(perception) and expectations which a customer created before using the service.
Oversights, i.e. variations in the process of service offer according to this model are as
follows ( Parasuraman et al., 1985)

•Gap 1 – Variation between actual expectations of customers and the way how the

Management understands their expectations (management does not understand what

Customers expect from a service).

•Gap 2 – Represents variation between perceptions of the management about the

Expectations of customers and specifications of service quality, i.e. management of

Company realized the actual customers’ expectations but has not developed a system

Of measures which will enable the delivery of a desired quality.

•Gap 3 – Represent difference between specification of service quality and attributes

Of the process of service production and delivery, i.e. difference between what
managers

Have defined as standard of service quality and the way how a service was actually

Delivered.

•Gap 4 – Represents variation between delivered service and what customer was
actually told about the service itself.

•Gap 5 – Represents difference between customers’ expectations regarding the service

And their perception about the specific service. The last gap is the result of all the
previous gaps.

2.6.8.4 Dimensions of service quality

The next in the series is focussed on developing a procedure for quantifying customer’s
service quality. The research suggested that service quality can be measured on the
following five dimensions:
Reliability: The ability to perform the promised service dependably and accurately.

70
Tangibles: The appearance of physical facilities, equipment, personnel and
communication materials.
Assurance: The knowledge and courtesy of employees and their ability to convey trust
and confidence.
Empathy: The caring, individual attention provided to the customer.

2.6.9 Human Resource Management

2.6.9.1 Denis has stated that People the fifth P, refers to the participants at the service
function systems. These participants include the entire official employed by the services
firm at the front office and at the back office in any service organisation, according to
him they are responsible for delivering quality services to the customers as per their
expectations, and so they also act as the organizations ambassadors they need to
understand the expectations and the needs to exert a positive influence on the perception
and satisfaction of the customers.
These participants handle the interactive components of the services marketing mix.
They are the contact personnel with the customers and the fifth component of the
service marketing mix. People will involve the employees, who are a part of the
services team; they need to have a clear vision of the service strategy of the firm and the
service along with the complete understanding of the customer expectations. They must
be made an integral part of their organisation.

Introduction to Human Resource Management

82
2.6.9.2 The author has specified the importance of human force he states that behind
the production of every product or service there is a human mind, effort and man hour
(working hours), no product or service can be produced without help of human being.
Human being is the fundamental resource for making or constructing anything. Today
many experts claim that machines and technology are replacing human resource and
minimising their role or effort. But even machines and technology have been built by
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Reference: Dennis, N. (2004) ) Human Resource Management for hospitality and tourism by Prentice Hall

71
the human aid and besides companies have been continuously in search for talented,
skilled and qualified professionals to further develop latest machines and technology,
which again have to be controlled or used by humans to bring out products.

Human Element in Services Marketing

2.6.9.3 The author has specified the importance of the human83 element in services
marketing, it refers to all the staff employed by a service organisation to deliver services
in its front offices, and other departments and all people involved in the process of
services, all efforts of the human resource department, also been renamed as internal
service department, are directed towards sourcing and attracting the best talent,
arranging their training to best fit them in the organisation, and motivating them to
deliver their best to both the organization, as well as, to the customer to convert the visit
of the customer into a profitable situation for both. The process of internal marketing is
implemented by the organisation to develop such individuals and teams, who can
deliver to the satisfaction of the customer, attract more customers by such delivery, and
create a better corporate image and perception for larger profits. He further refers to it
that precisely is the reason why ‘investments in creating good employees are the key
drivers of sustained business success in the companies’

2.6.9.4 According to the author Human resource is important for providing84 quality
service to the customers. Organizations develop the quality of the manpower employed
by them by institutionalizing an internal marketing policy; this is a process of viewing
employees as internal customers, and viewing their jobs as internal products he has
explained that Services marketing and managing human resource is an effort that is
directed towards over coming organizational resistance to change and to align, motivate,
and inter-functionally coordinate and integrate employees towards the effective
implementation of corporate and functional strategies in order to deliver customer
satisfaction through a Process of creating motivated and customer-oriented employees.

BEST HR PRACTICES FOR HOTEL INDUSTRY

83
Reference: Bhushan, E. (2010) Training manpower in Hospitality Industry, by Rajat Publications
84
Reference: Jarry,. G. (2002) Human Resource Management by Rajkamal Press

72
directed towards over coming organizational resistance to change and to align, motivate,
and inter-functionally coordinate and integrate employees towards the effective
implementation of corporate and functional strategies in order to deliver customer
satisfaction through a Process of creating motivated and customer-oriented employees.

BEST HR PRACTICES FOR HOTEL INDUSTRY

2.6.9.5 The author has suggested some of the best HR practices that should be85
implemented by in the hospitality industry in order to keep their employees satisfied
because satisfied employees tend to perform better which ultimately results in customer
satisfaction. The following are some of the HR policies.

Manpower Planning and Selection

1. Organizations must ensure that there is optimal manning of all positions to maximize
profitability.

2. Organizations must provide the employee/workman with job enrichment and

responsibility in their work assignments and must utilize the potential of an individual
to the fullest.

3. Management must provide scope for growth and development of the employees.

5. Salary slabs/grades should be justifiable

6. Management must take proper sanctions for filing new requirements, including for
filling replacement vacancies.

Recruitment and Selection

1. Proper process to be followed to ensure the timely availability of high quality

manpower.

2. Professional methods in recruitment like personal interviews should be followed by

the organizations.

3. Manpower requirement Advertisement must be released professionally.

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Reference: Dessler,.G.(2007).Human Resource Management, Prentice Hall

73
4. Temporary employees must be paid on daily wages, which will be fixed by the
Management.

Remuneration

1. Management must offer a competitive salary in order to attract and retain the best
talent in the Hotel Industry.

2. Qualifications and experience should be the basis for salary fixation of new entrants.

3. Salary progression plan has to be designed by the management to encourage high

1. Induction plays a very important role because the impressions that a new employee
forms during his/her first few days in the organization plays a vital role in determining
the overall feeling that he/she develops towards the organization and time duration
which employees would get to know their colleagues.

2. The first part of induction should be generic and should be applicable to all
employees irrespective of functional specialty. It would consist of an exposure to the
organization’s genesis, its mission, objectives, policies, and work systems.

3. The second part of individual requirements specific to a particular role or function in

order to facilitate effectiveness on the job.

4. Induction program for new employees are designed by management and coordinated
by the supervisors of various departments.

Grooming86

1. Grooming standards should be maintained within the organization premises while

interacting with the customers/guests grooming is the most important requirement of the
Hospitality industry.

2. All the employees must be in proper uniform according to their position and grade.

86
Reference: Kumar, H .(1996) Everyday guide for managing staff in Hotels and Restaurant by metropolitan
printers India

74
1. Hotel Staff should be provided with lockers to place uniforms, clothing and necessary
belongings.

2 Hotel Staff should be provided facility of canteens to have their breakfast, lunch and
dinner.

Development and Career path

1. Growth in carrier should be based only on performance and available opportunities.

2. Performance and potential must be analysed by means of an objective of a fair

appraisal system.

3. People who join the organisation should have the capacity to learn and they should be
willing to work on their own development. On its part, the company should do its best
to provide every opportunity possible etc., to its employees to ensure their continuous
development.

4. Career development may consist of a combination of job enrichment as well as both

lateral and vertical movers

5. The HR department must set the base of the performance and potential appraisal
system.

6. Based on their performance and potential opportunities available, career paths must
be

drawn up for employees and shared with them.

Performance Management

1. Performance and potential is analysed by means of an objective and fair Performance

and potential appraisal system.

2. The head of the department must set the base of the performance and potential
appraisal system.

3. The organization expects its employees to extend every effort possible to convert
their performance and potential into a reality.

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Working hours

1. The organization has to fix the working hours based on the customer’s convenience.

2. Working time will vary from department to department based on shift.

3. Weekly off should be provided to the employees.

4. The management and respective head of the department should fix in advance the
information as to work timings and weekly off.

Over Time / Holidays/Leave

1. Staff may be required to work over- time only when there is really a need and not as
per the wish of the staff or management.

2. OT approval has to be taken the concerned of head of department with the consent of
the Hotel Management.

3. OT may be compensated in form of cash or compensatory leave

4. The list of holidays must be put on the notice board.

4. Cards to be filed to HRD at the end of the month to avoid loss of working hours.

Appreciation: -

1. Management must occasionally take efforts to appreciate their employees

There must be occasions where the company should appreciate its employee.

2. Non-monetary or monetary awards must be presented for services provided by the

employees.

Grievance Handling and Counselling

1. Grievance Meeting and counselling of the employees must be held regularly.

2. All grievances must be resolved with the spirit of problem resolution immediately in
a fair and reasonable manner.

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3 Dissatisfied, Demotivated and Non-Performing employees must be counselled
properly and counselling should be carried on regular basis.

Cultural Activities: -

1. Employees must be made to feel that work is fun and not fun is work

2. Regular cultural activities for the staff like quizzes, games, competitions, outings etc.,
must be conducted to keep the staff motivated.

3 Social get-togethers must be held at periodic intervals.

Harassment, including Sexual Harassment.

The Organisations must be committed to providing a work environment that is free of

discrimination and unlawful harassment. Actions, words, jokes, or comments based on
an individual’s sex, race, ethnicity, age, religion, or any other legally protected
characteristic should not be tolerated. If an Employee believes that he/she have been the
victim of harassment, or know of another Employee who must, report it immediately to
the management for immediate actions.

Exit Interview

An exit interview should be conducted by the Head of HRD to take a feedback from the
staff who wishes to resign, to elicit frank opinions about the organization and its
personnel policies and also to seek suggestions for improvements.

2.6.10 INTRODUCTION TO HOTEL INDUSTRY

The Hotel Industry is perhaps one of the oldest commercial 87endeavours in the world. It
was in the 16th century that the advent of the first hotel run by a family in England was
evolved todays Hotels caters to all the needs and wishes of a guest and future holds
promise for a further mushrooming of modern hotels. The Hotel and Catering or Food
Service Industry now quiet widely also called the Hospitality Industry is the key
member of service sector. The

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Reference: Agarwal, A. (1993) An Introduction to Hospitality, McGraw-Hill International Edition Singapore

77
Hospitality Industry is identified by its output of products which satisfy the demand for
Accommodation, Food and Beverage away from Home; these are the essential care
products of the Industry. The structure of the hotel industry may not be the same but it
may be change from time to time but the basic aim of hotels remains the same i.e. to
provide a friendly welcome and attention to those who require accommodation, food,
drink and rest. One of the fastest growing sectors of the economy of our time is the
hotel industry. The hotel industry alone is a multi-billion dollar and growing enterprise.
It is exciting, never boring and offers unlimited opportunities. The hotel industry is
diverse enough for people to work in different areas of interest and still be employed
within the hotel industry. This trend is not just in India, but also globally.
Modern hotels provide refined services to their guests. The customers or guests are
always right. This principle necessitated application of management principles in the
hotel industry and the hotel professionals realized the instrumentality of marketing.

2.6.11 Hotel – The Concept

According to the Author Hotel is a place where an individual or group of people

conduct, themselves properly and who being able and ready to pay for their
entertainment, accommodation and other services including the boarding like a
temporary home. It is home away from home where all the modern amenities and
facilities are available on a payment basis.

It is also considered to be a place where tourist stops, cease to be travellers and become
customers. The definition presented by hotel operators to authorities of the National
Recovery Administration in Washington is found to be a more comprehensive
definition, presented by Stuart Mc Namara. The definition states that, “Primarily and
fundamentally, a hotel is an establishment which supplies boarding and lodging not
engaged in inter –state commerce or in any intra – state commerce, The hotel may
furnish banquet facilities for assemblage of people for social, business or entertainment
purposes and may engage in retaining portion of its premises for shops and businesses
whose continuity known as shopping arcade. The assemblage of people for social
business and entertainment purposes makes it essential that hotels are also furnished
with a big conference hall where the maximum possible accommodation is available.

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2.6.12 Origin of the word “Hotel”

Before 1760 people used to go to inns for having their lunch, dinner etc. It was the place
where families used to host their guest inns owner used to provide lodging and boarding
facility service to their guest. To world “hostel” was used then it was called “hotelier”
which means head of unit or the place. The Norman community from England invented
the word “hotel”. The word “hotel” was originally in England, officially from 1760. The
real growth of modern hotel was originated in “U.S.A” with opening of “City Hotel” in
New York , this was the first building erected for the hotel purpose. This period also
saw the beginning of chain operation under the guidance of E. M. Statler, it involves big
investment, big profits and trained professional to manage the hotel business.

2.6.13 Origin of Hotel Industry

The repreciation in 1930 had a disaster effect in a hotel industry88 after the World War
II and brought a tremendous up surge to hotel industry with continuous prosperity of
hotel industry.
Mass travel is a modern phenomenon that emerged after World War II. Mass tourism
continues to grow as political freedom, economic wherewithal and social equality
spread across the globe. With the economic engine of development running at full
steam, there was a growth in international travel and thereby growth in hotel industry
Estimates abounds as to the importance and size of housekeeping. Certainly, its
economic contribution is critical to the global economy whether as a service to the
business community Prior to the 1980’s, the Indian hotel industry was a nascent and
slow growing industry primarily consisting of relatively static, single hotel companies.
However, Asian games in 1982 and the subsequent partial liberalization of the Indian
economy generated tourism interest in India with significant benefits accruing to the
hotel and tourism sector in terms of improved demand patterns. Fortunes of the hotel
industry are tied to the fortunes of tourism and the general business climate in the
country, which is why the economic liberalization initiatives implemented since 1991,
led to a soaring demand and supply gap in the hotel industry.

2.6.14 GENERAL CLASSIFICATION OF HOTEL INDUSTRY

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Reference: Williams, .P .(2001) Hospitality Management, Oriental Publishers. India

79
Classifications of hotels

On the basis of standards:

Like most of the countries in world, India also has hotelsdivided in different categories
depending on their location, facilities, infrastructure and amenities provided. All the star
hotels in India are government approved with continuous control on the quality of
services offered.

Five Star Hotels: - The most luxurious and conveniently located hotels in India are
grouped under Five Star Deluxe Hotel categories. Five Star Deluxe in India are globally
competitive in the quality of service provided, facilities offered and accommodation
option. These are top of the line hotels located mostly in big cities. These hotels provide
all the Modern facilities for accommodation and recreation matching international
standards in hospitality. In such type of hotel HR department are established separately
and to execute and to follow the concept of HR strictly, HR Professional are hired.

Four Star Hotels: - A rung below five star hotels are Four Star Hotels, these hotels
provide all the modern amenities to the travellers with a limited budget. Quality of
services is almost
as high as the five stars and above categories. These kinds of hotels are there for the
travellers with limited budget or for the places which might not get the tourist traffic
associated with larger cities. In such type of hotel concept of HR is more or less
followed.

Three Star Hotels: - These are mainly economy class hotels located in the bigger and
smaller cities and catering to the needs of budget travellers. Lesser in amenities and
facilities, these hotels are value for money and gives good accommodation and related
services on the reduced price. Services would be stripped down version of higher
categories of hotels but sufficient to fulfil customer basic needs. In such type of hotel
concept of HR may or may not be present. If present all functions of HRD is curtailed.

Two Star Hotels: - These hotels are most available in the small cities and in particular
areas of larger cities. Catering to the backpacker tourist traffic, these hotels provide all

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the basic facilities needed for general accommodation and offers lowest prices. In this
type of hotel concept of HR is absent.

One Star Hotels: - The hotels with most basic facilities, small number of room’s
locations in the far-flung areas are grouped under One Star Hotel category. These hotels
are best when customer is looking for cheapest available accommodation option. In this
type of hotel concept of HR is alien words.

Different Facility’s provided by the hotels

One Star & Two Star:

These are located in major cities as well as in small city and other tourist destinations.
Their customers include usually the domestic tourists. Services provided by one star &
two star hotels.

Facility Facility

Free Parking Accepts Credit Cards

Doctor on call Travel Desk

Tour Planner Money Exchange

A/C and Non A/C Rooms Conference Hall

Restaurant Bar/Lounge

In house laundry / dry cleaning Complimentary newspaper in lobby

Three Star Hotels: - These are mainly economy class hotels located in the bigger and
smaller cities and catering to the needs of budget travellers. Lesser in amenities and
facilities, these hotels are value for money and gives good accommodation and related
services on the reduced price. Services would be stripped down version of higher
categories of hotels but sufficient to fulfil customer basic needs.

Four Star Hotels: - A rung below five star hotels are Four Star Hotels, these hotels
provide all the modern amenities to the travellers with a limited budget. Quality of
services is almost as high as the five stars and above categories. These kinds of hotels

81
are there for the travellers with limited budget or for the places which might not get the
tourist traffic associated with larger cities.

Three Star & Four Star:

These are located in all major cities as well as tourist destinations. Their customer group
ranges from middle level business executives to leisure travellers

Services provided by three star & four star hotel

Facility Facility

24 Hours Front Desk Air Condition

Bar Coffee / Tea Making Facilities

Telephone / Direct Dial Business Centre

Currency Exchange Conference Facilities

Doctor Front Desk Safe Deposit Box

Gymnasium, Laundry Cleaning Service

Restaurant(s) Security

Tour Desk Wakeup Service

Five Star Hotels: - The most luxurious and conveniently located hotels in India are
grouped under Five Star Deluxe Hotel categories. Five Star Deluxe in India are globally
competitive in the quality of service provided, facilities offered and accommodation
option. These are top of the line hotels located mostly in big cities. These hotels provide
all the modern facilities for accommodation and recreation matching international
standards in hospitality. These are restricted to the four metros and some major cities
like Mumbai, Bangalore, and Hyderabad etc. The customers of these hotels are mostly
foreign business and leisure travellers, senior business executives and top government
officials.

Services provided by five star hotels

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Facility Facility

Parking facilities 24 Hours Front Desk

Gymnasium Baby Sitting

Laundry Cleaning Service Bar

Swimming Pool Business Centre

Parking - Coach/Bus Car Rental / Car Hire

Parking / Car Park Cocktail Lounge

Restaurant(s) Conference Facilities

Tour Desk Currency Exchange

Wakeup Service Doctor

Gymnasium, Laundry Cleaning Service

Swimming Pool Parking - Coach/Bus89

Parking / Car Park Restaurant(s)

Tour Desk Wake up Service

2.6.15 International Hotel Rating Systems

Hotel star ratings are systems that rank hotels according to90 quality. Star rating systems
are intended to serve as guidelines for guests who are making hotel reservations. While
star ratings can be helpful when booking hotels rooms, there is no standardized star
rating system. In Europe, hotels are usually ranked on a scale from one to four stars,

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Reference: www.ehow/facts-Hotel Star Rating
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Reference: Retrieved from www.businessdictionary.com/defination/hotel.html 2013(Definition of star hotels)

83
with four stars being the highest rating possible. In the United States, hotels are
generally ranked on a scale from one to five stars, sometimes using half star increments.

Star ratings in Europe are determined by local government agencies or independent

organizations, and they vary greatly from country to country. In fact, star ratings in
Europe can also vary from city to city within the same country, and even between hotels
in the same city. In other words, there is no uniform measure that determines a hotel’s
star rating. Each hotel is rated based on details that often don’t matter to consumers,
such as the amount of tax a hotel pays annually.

Similarly, in the United States, star ratings are conferred upon hotels by several
organizations. National consumer travel organizations and guidebooks assign star
ratings to hotels, but each one uses its own set of criteria to determine the rating.
Additionally, travel websites, consolidators and reservation services often rate hotels as
well. Most U.S. websites and organizations that rate hotels provide an explanation of
their rating system so that consumers can decode the rating. The bottom line, however,
is that a hotel may be given different ratings from different organizations, so it’s
important to inquire about what the rating means.

Even though star ratings can seem arbitrary, they can still be beneficial and can help to
inform you about a hotel. For instance, a four or five star hotel is always going to be
more luxurious than a one or two star hotel. And there are some basic inferences you
can make about American star ratings. A one star hotel is going to be an economy motel
and a two star hotel will be a higher end motel or budget hotel. Even one and two star
hotels will usually have all of the amenities you require for a night’s sleep. However, if
you’re seeking higher end amenities such as room service, Internet access, movies,
plush linens, fitness centre you’ll probably want to look at hotels that are rated three
stars and above. Three star hotels are moderately priced hotels that are comfortable and
absolutely adequate places to stay, but may lack some of the luxury of four star hotels.
A five star rating is reserved exclusively for the country’s highest end chain and
boutique hotels. Expect to pay a premium for five star luxuries.
5-Star Rating: A luxurious hotel, offering the highest degree of personal service.
Elegance and style abound, and rooms are equipped with quality linens, CD player, CD
stereo, Jacuzzi tub and in-room video. There are multiple restaurants on site with

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extensive, gourmet menus, and room-service is also available 24-7. A fitness centre,
valet parking and concierge service round out the experience.

4-Star Rating: Formal, large hotels, with top-notch service. There will usually be other
hotels of the same calibre clustered nearby, as well as shopping, dining and
entertainment. Above-average service, beautifully furnished rooms, restaurants, room
service, valet parking, fitness centre and a concierge are some amenities to expect.

3-Star Rating: Usually located near a major expressway, business centre and/or
shopping area, these hotels offer nice, spacious rooms and decorative lobbies. On-site
restaurants may be average in size but will offer breakfast, lunch and dinner. Valet and
room service, a small fitness centre and a pool are often available these hotels are meant
for budget travellers.

2-Star Rating: These hotels are generally part of a chain that offers consistent quality
and limited amenities. They are small or medium in size and rooms will have a phone
and TV. While you will not have the convenience of room service, there should be a
small restaurant on site.

1-Star Rating: Expect a small hotel managed and operated by the owner. The
atmosphere will be more personal and the accommodations basic. Restaurant service
should be within walking distance, as well as nearby public transportation, major
intersections and entertainment that is reasonable in price One thing to keep in mind is
that a hotel can have everything it needs to be a property but unless it has great
customer service then it will never get past a 3 star rating! The hotels and properties that
get a four star (or higher) excel in customer service.

Now, the highest level of a rating is either 5 stars. The difference between a four star
and a 5star rated hotel is again the level of customer service. At a 5 star property you are
pretty much treated like royalty and well taken care of.

Heritage Hotels: - Heritage hotels in India are best if one is looking for sheer
elegance, luxury and loyal treatment. They are not just another accommodation options
but tourist attractions in themselves. Exquisitely designed and decorated, meticulously
preserved, high standards of service and ethnic cultural motifs helps the tourists get the

85
complete experience of an India. These are characterized by lesser capital expenditure
and affordability and include hotels running in palaces, castles, forts, hunting lodges etc.
The heritage hotels are further classified as:

Heritage classic

A Heritage grand

B Heritage

Heritage Classic:

These include hotels built between 1920 and 1935.

Heritage Grand:

These include hotels built prior to 1920.

Heritage:

These include hotels built between 1935 and 1950.

(3) Budget Hotels: Budget hotels especially cater to domestic travellers who favour
reasonably priced accommodations with limited luxury. These are characterized by
special seasonal offers, low and good services.

Services of budget hotel

Facility

Air condition & non air-condition facilities Refrigerator

Railway picking facilities Currency Exchange

Laundry Cleaning Service Newsstand

Parking / Car Park Restaurant(s)

Wakeup Service Medical help

On the basis of Nature:

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 Beach Resorts Hotels

Peninsular India bounded by Arabian Sea, Bay of Bengal, Indian Ocean and the two
emerald archipelagos of Lakshadweep and Andaman and Nicobar have a long coast line
of around 7500 km, offering an amazing array of beaches, some popular, some not so
well known. Thus location of resort is the basic point of attraction for tourists.

Wild Resorts Hotels

A wildlife tour is incomplete if one does not actually live in a forest for a few days. It
means living in a rest house or a tent the midst of the dense wilderness and waking up to
the twittering of birds.

Government Approved Hotels

These are the hotels, which might not have applied for star categorization or small
enough to find them in the list. Many of the wildlife resorts, lodges and hostels are
government approved providing a minimum level of accommodation facilities at far off
places.

Residential Hotels

The residential hotels work as apartment house. Often we call them apartment hotels.
The hotels charge rent on monthly, half yearly or yearly basis. They are generally
located in big cities and towns where no meals are served to the customers. Initially, the
residential hotels were developed in the USA. The services offered here are comparable
to an average well managed home.

Commercial Hotels

The commercial hotels are meant for the people who visit a place of trade and
commerce or business purposes and therefore these hotels are found located at the
commercial or industrial centres. They focus their attention on individual travellers and
are generally run by owners.

Floating Hotels

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 91
The floating hotels are located on the water surface. The places are sea, river, and
lake. These hotels provide with all the facilities and services made available in a good
hotel. In the leading tourist generating countries of the world we find that Hotel ratings
are often used to classify hotels according to their quality. The development of the
concept of hotel rating and its associated definitions display strong parallels. From the
initial purpose of informing travellers on basic facilities that can be expected, the
objectives of hotel rating has expanded into a focus on the hotel experience as a whole.
Today the terms 'grading', 'rating', and 'classification' are used to generally refer to the
same concept that is to categorize hotels, mostly using stars as a symbol.

European Hotel Classification

2.6.15.1 There are a wide variety of rating schemes used by different organizations
around the world. Many have a system involving stars, with a greater number of stars
indicating greater luxury. Forbes Travel Guide, formerly Mobil Travel Guide, launched
its star rating system in 1958. The AAA and their affiliated bodies use diamonds instead
of stars to express hotel and restaurant ratings levels. Food services, entertainment,
view, room variations such as size and additional amenities, spas and fitness centres,
ease of access and location may be considered in establishing a standard. Hotels are
independently assessed in traditional systems and rest heavily on the facilities provided.
Some consider this disadvantageous to smaller hotels whose quality of accommodation
could fall into one class but the lack of an item such as an elevator would prevent it
from reaching a higher categorization.

In recent years hotel rating systems have also been criticised by some who argue that
the Rating criteria for such systems are overly complex and difficult for laypersons to
understand. It has been suggested that the lack of a unified global system for rating
hotels may also undermine the usability of such schemes.

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Reference: (http//enlightment.com/what is hotel star rating 2015)

88
The more common classification systems include "star" rating, letter grading, from "A"
to "F", diamond or simply a "satisfactory" or "unsatisfactory" footnote to
accommodation such as hostels and motels. Systems using terms such as
Deluxe/Luxury, First Class/Superior, Tourist Class/Standard, and Budget
Class/Economy are more widely accepted as hotel types, rather than hotel standards.
Some countries have rating by a single public standard — Belgium, Denmark, Greece,
Italy, Malta, Netherlands, Portugal, Spain and Hungary have laws defining the hotel
rating. In Germany, Austria and Switzerland, the rating is defined by the respective
hotel industry association using a five-star system — the German classifications are
Tourist (*), Standard (**), Comfort (***), First Class (****) and Luxury (*****), with
the mark "Superior" to flag extras beyond the minimum defined in the standard.

The Swiss hotel rating was the first non-government formal hotel classification
beginning in 1979 It did influence the hotel classification in Austria and Germany. The
formal hotel classification of the DEHOGA (German Hotel and Restaurant Association)
started on August 1, 1996 and proved very successful with 80% of guests citing the
hotel stars as the main criteria in hotel selection. This implementation influenced the
creation of a common European Hotel stars rating system that started in 2010.

2.6.15.2 Hotel classifications in France

In France the rating is defined by the public tourist board of the department using a
four-star system (plus "L" for Lexus) which has changed to a five-star system from
2009 on. In South Africa and Namibia, the Tourist Grading Council of South Africa has
strict rules for a hotel types granting up to 5 stars.

2.6.15.3 Hotel classifications in Britain

In Great Britain, hotels are rated from one-star to five stars, as in many other countries.
The RAC pulled out of accommodation grading in 2008 so the only grading schemes in
operation are those operated by the AA (Automobile Association) and the national
tourist boards; Visit England, Visit Wales, the Scottish Tourist Board and the Northern
Ireland Tourist Board. The schemes were all 'harmonised' to ensure consistency
between the schemes. This applies to all accommodation types apart from Self Catering
that the AA have recently (2009) started offering. The AA criteria are available on its

89
website. In addition to the usual black stars (ranging from one (the lowest) to five (the
highest), the AA awards red stars to the highest-rated, which are deemed 'Inspectors'
Choice'. Each of the national tourist boards has grading explanations on their web sites.

2.6.15.4 European Hotel stars Union

The HOTREC (Hotels, Restaurants & Cafés in Europe) is an umbrella organization for
39 associations from 24 European countries. At a conference in Bergen in 2004, the
partners drafted a hotel classification system in order to harmonize their national
standards. In 2007 HOTREC launched the European Hospitality Quality scheme (EHQ)
which has since accredited the existing national inspection bodies for hotel rating.

Under the patronage of HOTREC, the hotel associations of Austria, Czech Republic,
Germany, Hungary, Netherlands, Sweden and Switzerland created the Hotel stars Union
.On 14 September 2009, the Union classification system was established at a conference
in Prague. This system became effective in these countries in January 2010, with the
exception of Hungary, Switzerland and the Netherlands, who have chosen later dates for
the change. The European Hotel stars Union system is based on the earlier German
hotel stars system that had widely influenced the hotel classifications in central Europe,
with five stars and a Superior mark to flag extras. Instead of a strict minimum in room
size and required shower facilities (e.g. a bath tub in a four-star hotel) there is a
catalogue of criteria with 21 qualifications encompassing 270 elements, where some are
mandatory for a star and others optional. The main criteria are in quality management,
wellness and sleeping accommodation. In the catalogue of criteria each entry is
associated with a number of points - each Hotel stars level requires a minimal sum of
points besides some criteria being obligatory for the level. The minimum requirement
for the Superior flag requires the same sum of points as for the next Hotel stars level
which however was not awarded due to at least one obligatory requirement being left
out.

47 For hotels with three to five stars, the Hotel stars Union checks the service quality
regularly which will include.

• Daily room cleaning

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• 100% of the rooms with colour-TV together with remote control

• Table and chair

• Soap or body wash

• Reception service

• Facsimile at the reception

• Publicly available telephone for guests

• Extended breakfast

• Beverage offer in the hotel

• Deposit possibility

Superior Tourist- The Superior flag is provided when the additional service and
accommodation provisions are not sufficient for the next Hotel star. The bathroom
facilities are usually at the same level as for two stars hotels but built from cheaper
materials. The cost for regular inspection by independent associations is waived as well.

Standard- In addition to the single star (*) hotels:

• Breakfast buffet

• Reading light next to the bed

• Bath essence or shower gel

• Bath towels

• Linen shelves

• Offer of sanitary products (e.g. toothbrush, toothpaste, shaving kit)

• Credit Cards

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Superior Standard-The Superior flag is provided when the92 additional service and
accommodation provisions are not sufficient for the next Hotel star. The Standard-
Superior does usually offer the same service level as three-star hotels but the interiors of
the hotel are smaller and cheaper so that the three stars were not to be awarded by the
inspection body. A two-star superior does not require mystery guesting.

Comfort- In addition to the standard star (**) hotels:

• Reception opened 14 hours, accessible by phone 24 hours from inside and outside,
bilingual staff (e.g. German/English)

• Three piece suite at the reception, luggage service

• Beverage offer in the room

• Telephone in the room

• Internet access in the room or in the public area

• Heating facility in the bathroom, hair-dryer, cleansing tissue

• Dressing mirror, place to put the luggage/suitcase

• Sewing kit, shoe polish utensils, laundry and ironing service

• Additional pillow and additional blanket on demand

• Systematic complaint management system

Superior Comfort- The Superior flag is provided when the additional service and
accommodation provisions are not sufficient for the next Hotel star. The
accommodation facilities for a superior hotel need to be on a modern level and fully
renovated which is checked regularly.

First Class- In addition to the comfort star (***) hotels:

• Reception opened 18 hours, accessible by phone 24 hours from inside and outside

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92
• Lobby with seats and beverage service

• Breakfast buffet or breakfast menu card via room service

• Minibar or 24 hours beverages via room service

• Upholstered chair/couch with side table

• Bath robe and slippers on demand

• Cosmetic products (e.g. shower cap, nail file, cotton swabs), vanity mirror, tray of a
large scale in the bathroom

• Internet access and internet terminal

•"À la carte"-restaurant

First Class Superior- The Superior flag is provided when the first class hotel has a
proven high quality not only in the rooms. The superior hotels provide for additional
facilities in the hotel like a sauna or a workout room. The quality is checked regularly
by mystery guest of an external inspection service.

LuxuryIn addition to the first class (****) hotels:

• Reception opened 24 hours, multilingual staff

• Doorman-service or valet parking

• Concierge, page boy

• Spacious reception hall with several seats and beverage service

• Personalized greeting for each guest with fresh flowers or a present in the room

• Minibar and food and beverage offer via room service during 24 hours

• Personal care products in flacons

• Internet-PC in the room

• Safe in the room

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• Ironing service (return within 1 hour), shoe polish service

• Turndown service in the evening

• Mystery guesting

Superior Luxury-The Luxury star hotels need to attain high expectations of an

international guest service. The Superior Luxury star is only awarded with a system of
intensive guest care.

World hotel rating

This section is out dated. Please update this article to reflect recent events or newly
available information. (June 2012)

There is so far no international classification which has been adopted. There have been
attempts at unifying the classification system so that it becomes an internationally
recognized and reliable standard, but they have all failed.

It has been considered that, as it has been the case in other areas (e.g. international
accounting standards), hotel classification standards should result from a private and
independent initiative. This may be the case of the World Hotel Rating (WHR) project,
which notably aims to set international classification standards and rating criteria along
the lines of a world star-rating system. It will also establish an information platform on
the hotel industry which will be multilingual and multicultural. WHR intends to play a
key role in the development of quality hotel services, as well as equitable and
sustainable tourism, and the protection of the world's cultural and natural heritage. In
addition, WHR will develop labels to promote hotels distinguished by specific features,
such as a family and child-friendly disposition. A test period was scheduled for 2010.

2.6.16 Six- and seven-star hotels of Dubai

Some members of the hospitality industry have claimed a six or seven-star rating for
their operation. As no traditional organization or formal body awards or recognizes any
rating over five-star deluxe, such claims are meaningless and predominantly used for
advertising purposes. The Burj Al Arab hotel in Dubai is widely described as a "seven-
star" property, but the hotel says the label originates from an unnamed British journalist

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on a press trip and that they neither encourage its use nor do they use it in their
advertising. The Town House Galleria is a hotel located in Milan, Italy. It describes
itself for marketing purposes as the world's first seven-star hotel, citing the private
inspection company Société Générale de Surveillance, although official star
classification in Italy includes no rating.

2.6.17 BUDGET HOTEL

Budget hotels are no frill hotels catering to the travellers taking care of consumer
demand93 Today budget hotels are fastest growing segment of hotels in the hospitality
Industry, budget hotels caters to the need of mid-level travellers, such as mid-level
executives, families travelling for leisure purpose ,these hotels don’t have luxury of
swimming pools, banquet halls and food and beverage outlets today, these segment of
hotels are growing very fast and a high rise is expected in future, todays travellers
prefer a simple safe hotel room located near their desired destination with affordable
room charges Budget or Economy hotels were first developed in the United States.
Popular brand includes Accor Hotels, Choice Hotels, Bergurren group of hotels and
many more these brands are attractive to owners and the investors because they are
relatively inexpensive to build and very easy to operate. Budget hotels operates on low
room rates, and in many cases, they are located on convenient locations, few amenities
are offered by these hotels like some branded hotels offer continental breakfast and food
service are offered in the lobby or small room near lobby, a relatively new term, lobby
food services, all the branded hotels offer internet access to their guests, success of
budget hotels is because it offers clean and safe rooms, low prices and few frills.

2.6.16 Information on Pune City

Pune, Maharashtra’s second largest city after Mumbai,94 has been a hub for the
engineering industry for over five decades. But it is in the last two odd decades that it

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Reference: www.suportbiz.com/articles/tapingbudgethotels-potential(april2012)
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Reference: www.punemirror.in/index (history and growth of pune)

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has seen a virtual metamorphosis, evolving from a quiet peaceful town that offered
harried Mumbai Kars a pleasant weekend getaway to a mini metro bustling with
industrial activity. Today, Pune wears many caps leading IT destination, logistics hub
and a renowned centre for the auto, design and white goods industries, amongst others.

On the industrial front, the progress first began with the setting up of Kirloskar Oil
Engines, Tata Motors and Bajaj Auto in the 1950s and 1960s. The Swedish Group
Sandvik Asia, Atlas Copco, Alfa Laval, SKF Bearings followed suit and were amongst
the earliest settlers on the erstwhile two-lane Bombay-Poona Road. Pune is now known
as growing industrial city of India. Because Mumbai was full of industries and now it is
locked by the Government of Maharashtra. So the industrialists in Mumbai preferred
Pune for starting industries. Now a days numbers of industries were stated along the
Mumbai-Pune highway some of them are Bajaj Auto, Bajaj Tempo, Telco, Crompton
Greaves, Thermax, Alfa-Laval, The Kirloskar group of companies like Kirloskar Oil
Engines, Kirloskar Brothers, Garware group companies, Garware wallrope, Garware
Nylons, Philips, Thermax and many more leading companies are settled in pune. At
Bhosari, Hadapsar, and Nagar road the industrial estates have been developed.

Industrial activity grew gradually as more units were established, including Finolex
Cables, Forbes Marshall, the now defunct Garware Nylons and Bajaj Tempo (now
Force Motors), amongst others on the same stretch. The road itself is now a wide four-
lane boulevard with a series of underpasses and fly-over bridges to ensure a smooth,
unhindered drive from the city centre to its industrial outskirts.

The proliferation of the auto industry gave a fillip to a host of auto ancillaries to
mushroom. The Pune region has a buzzing auto components industry ranging from
innumerable micro, Small and medium scale units to Bharat Forge, now the largest
forgings company in the world.

IT REVOLUTION

With the coming of the Information Technology Age, the last decade of the 20 th
century saw Pune discover newer pastures. The Mahratta Chamber of Commerce,
Industries and Agriculture (MCCIA) set up a software technology park where many IT
businesses were incubated. The State government persuaded home grown IT major

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Infosys into setting up base at the freshly minted IT industrial estate of Hinjewadi, and
the rest, as they say, is history. Around the same time, set up Persistent Systems,
established the forerunner to what is now KPIT Cummins. A significant part of the
success of these enterprises and a multitude of smaller IT and ITES companies can be
attributed to the skill sets generated within the city. In the years since, almost every
significant name on the national and international IT map has set up a campus here —
Wipro, Tech Mahindra, Cognizant, IBM, Mphasis, Veritas, BMC Software to name a
few - have set up large campuses, and a large fraction of India’s IT revenue is generated
from the Pune region.

While India’s largest vehicle manufacturer Tata Motors and second largest two-wheeler
maker Bajaj Auto have been residents of Pune for decades, it was the arrival of global
OEMs like Mercedes Benz, Piaggio, Skoda, General Motors, Volkswagen and Fiat that
helped forge its identity as an important destination in India’s, and, indeed the world’s
auto story. Predictably, there are many elements to Pune’s growth story and its now
significant position on the Indian industrial chart. In addition to its geographical
advantages, the importance of its proximity to Mumbai and accessibility to ports for the
entry and exit of raw materials and finished goods cannot be understated. And of
course, it is much cheaper to set up a business here than in any of the metros. The
setting up of new well planned industrial estates by the Maharashtra Industrial
Development Corporation in the last few years has helped manufacturers find land for
setting up of units. This has also played a major role in the development of Pune as an
industrial hub. MIDC’ industrial estates at Ranjangoan, Hinjewadi, and Hadapsar and in
the Talegaon-Chakan belt are relatively recent feathers in Pune’s cap.

An integral part of the eco-system needed for the proliferation of industry is the
adequate availability of unskilled, skilled and managerial workforce and opportunities
for recreation for its employees. The large number of institutions of higher learning is
supported by the presence of several Industrial Training Institutes that churn out an
industrially trained labour force. To boot, the city has seen no significant labour troubles
for over 25 years.

Pune city a centre of learning

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A place for quality education with the advent of British, the British educational system
of formal school and colleges was started. Vishrambagwada. This is now converted in
to present day Deccan College (1851 Thousands of students from outside pune get
admission and after taking education from such colleges, university, there is various
institutions are established like Ncl, Niv, IUCAA,C-DAC,IAT which now the well-
known research institutions. Now days there is various new and recognized institutions
are started in pune. In pune well established and organised Maratha Chamber of
Commerce and industries and Agricultural has also very good stock market.

The Pune Stock Exchange monitors its transactions. Pune city is linked by air to
Ahmedabad, Bangalore, Delhi, and Mumbai and also to other cities in India with good
telecom network. Even now a days internet network in Pune made Pune's institutions,
industries, home so close to the world of information. The most important thing is that
for industrial growth knowledgeable and skilled technical manpower and peaceful
environment avoiding enmities among the workers and so that they can work very
actively. Multinational companies have spread their net by establishing branches in
Pune, finding increasing market for their products.

2.6.16.1 Information on changing Pune

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Pune is changing according to the various fields. Peoples attracted towards Pune for
best education or for employment opportunities there is increasing nature to outside
eating. Hence dining halls are flourishing Pune, Maharashtra’s second largest city after
Mumbai, has been a hub for the engineering industry for over five decades. But it is in
the last two odd decades that it has seen a virtual metamorphosis, evolving from a quiet
peaceful town that offered hurried Mumbai Kars a pleasant weekend getaway to a mini
metro bustling with industrial activity .With global recession now having faded to being
nothing more than a bitter memory, the one city that has bounced back with a firmer
resolve than ever for brisk growth is Pune. Today, Pune wears many caps — leading IT
destination, logistics hub and a renowned centre for the auto, design and white goods
industries, amongst others. The arrival of the automobile and information technology
giants in Pune has given the city a ‘hub’ branding that will drive its growth at a faster
rate. “Post-recession, many global players are setting up base in India and Pune is a
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natural choice. Pune being an open city that welcomes emigrants and it being an
educational hub and a good talent pool gives the city an edge over the others.” The road
itself is now a wide four-lane boulevard with a series of underpasses and fly-over
bridges to ensure a smooth, unhindered drive from the city centre to its industrial
outskirts. According to Dr Abhay Firodia, President, Mahratta Chamber of Commerce
Industries and Agriculture (MCCIA) and Chairman, Force Motors Ltd, “The period
between 2006 and 2008 was the best of its kind for Pune when around Rs 12,000 crore
was spent on projects in the region. And now we may see an inflow of around Rs
40,000 crore for the period between 2008 and 2013.” Pune is the toast of the season as it
is being hailed as the fastest growing industrial hub with both manufacturing and IT
sector fuelling its popularity as a preferred industrial destination. Entrepreneurial
history, location, education levels, work culture and climate are some of the elements
that have ensured that Pune has and will continue to be the premium choice as a
business destination. In the past year, several global automobile companies have
announced new projects in India. Many of these are being located near Pune, a clear
indication of the city’s emergence as a global automotive manufacturing hub. Global
companies such as General Motors, Daimler AG, Volkswagen AG, Tata-Fiat,
International Truck and Engine Corporation (ITEC), Piaggio Vehicles, Hyundai Heavy
Industries have recently set up manufacturing operations in the Pune region. The
presence of a strong local component manufacturing industry has obviously been a
crucial factor in determining their choice of location. Equally important is the
availability of high-quality, skilled knowledge resources that is attracting these global
companies.

“Pune has a large supplier base, The Nhava Sheva port is just two hours’ drive away.
Also, the western region is our second-largest market after the north, what has also
helped is the presence of the Automotive Research Association of India (ARAI) in Pune
which is India’s premier automotive R&D, testing, and certification organisation. It has
now tied up with TUV Rhineland, a 130-year-old German multinational and one of the
world’s largest testing, inspection, and certification agencies, to offer testing and
homologation solutions to the Indian and international automotive industry. With this
association, the Indian manufacturers will have an edge in exports of vehicles and

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vehicle parts as all the aspects of testing and certification as per international standards
like EEC/ECE will be handled locally by qualified.

What has added a boost to the city’s growth factor is the buoyancy of the special
economic zones (SEZs). Pune will have SEZ-notified zones in Manjiri, Phase III
Hinjewadi, Kharadi and Magarpatta and will be home to the first Biotech Park by the
Poona Walla Group. Talking about the growth in hospitality sector in last decade Pune
has witnessed a Quantum growth in the field of hospitality almost all the multinational
brands of hotels have been settled in Pune to name same are Vivanta by Taj, Meridian,
Westin, Hytt, Westin, Holiday Inn, Sun and Sand, O hotel, Marriott and Convention
Centre, Exotica Inn, and many more brand of luxury hotels are in the pipeline these are
hotels in luxury segment and in branded budget segment almost 22 hotels have made
presence felt in Pune region to name a few are lemon tree, Noorya homotel, citrus,
Formulae1, Ginger, Keys and many more, apart from branded budget and luxury
segment many budget hotels in non-branded category have also been developed in
recent years to cater to the needs of the people. All the above mentioned industrial
growth, growth in IT Industry, Education and other business activity has been a reason
for increase in the travellers in and around Pune and this has in fact triggered the growth
of branded and non-branded budget hotels in Pune.

2.7 Concluding Remark:

The growth of nouveau middle class population with more disposal income, and
appetite for travel and leisure has created demand for quality and affordable
accommodation in the country. The last one decade in Pune saw the rise of many
branded and non-branded budget hotels. The growth in new hotels was majorly in
budget segment. The present study was to find out the reasons for the growth of branded
and non-branded budget hotels and to make a comparison between branded and non-
branded budget hotels on the parameters of Marketing Strategies pertaining to CRM
and Customer satisfaction Strategies and HR Practices followed in these hotels since
hospitality industry is a people oriented industry these are very important factors which
effects the success of the organization This chapter covered the complete framework
related to Growth of branded and non-branded budget hotels, CRM in hospitality
industry, Customer satisfaction, HRM Practices in the hospitality, Branding and its

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advantages in hospitality industry, Indian Middle class, Mid- level travellers, Marketing
and Promotional Strategies for hotels, Positioning strategies, Value added services,
CRM, Service Quality and SERVEQUQL model, HRM Practices in the hospitality
Industry, Introduction to Hospitality Industry, Classification of hotels, International star
rating systems, Information on Pune City. This chapter also covered the complete
framework to understand the Emergence of branded and non-branded budget hotels in
recent times as well as various aspects related to Marketing Strategies and HR Practices.
This chapter leads to the understanding of the Industry profile of branded and non-
branded budget hotels of Pune City and PCMC in next chapter.

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