Operation Management

Hospitality Industry

Submitted to: Dr. Somonnoy Ghosh

Submitted by:
16DM046 - Ashish Pandey
BIMTECH
 HOSPITALITY SECTOR IN INDIA
Supply
India has an estimated 1,70,000 hotel rooms. Even with the expected
addition of another 60,000 hotel rooms over the next 3-5 years, the industry
is expected to fall short of meeting the long term demands of an economy
growing at 7-9% p.a.
Demand
Largely depends on business travellers but tourist traffic is also on the rise.
Also, there is seen an increasing demand for medical tourism. Demand
normally spurts in the peak season between November and March.
Barriers to Entry
Economic risks, high capital costs, competition in the industry, poor
infrastructure facilities and scarcity of land.
Bargaining Power of Suppliers
Limited due to higher competition, especially in metros.
Bargaining Power of Customers
Higher in metros due to increasing room supply.
Competition
Intense in metros, slowly picking up in tier-2 and tier-3 cities. Competition
has picked up due to the entry of foreign hotel chains.
NEED FOR NEW SERVICE OFFERING
• Travellers demanding innovative alternatives because they
are constantly bombarded with run-of-the-mill service
offerings.
• Hospitality industry is still facing various challenges like Poor
understanding of guest’s habits, dropped guest requests,
traditional way of communication, outdated rooms etc.
• Hospitality market is flooded by many similar & easily
substitutable service offerings. So, we can attempt to face this
challenge by offering new and innovative features for
customers.
• The hospitality industry is rapidly changing due to
accelerations in information technology. So, we can make
proactive changes which focus even more intensely on
customer preferences, quality, and technological interfaces.
• Travelers instead of showing brand loyalty, are choosing to
patronize hotels that offer the best value proposition under
existing budgetary constraints. We can face that challenge by
understands customers’ preferences.
 DESIGNING OF A NEW SERVICE

Service Industry: Hospitality Industry

Service: 4 Star Hotel
Hotel Name: Belmont Hearne Hotel
Positioning of “Belmont Hearne Hotel”:
“Future of Travel”
Something happens when you stay at a Belmont Hearne
Hotel. We're here to make your stay as comfortable and
augmented as possible, right from the start. Maybe it's all the
little things we do to show we care, from thoughtful touches
and friendly service to our warm chocolate chip cookie
welcome.
Targeting: Our target customers would be middle class and
upper middle class people.
Type of Rooms in Hotel:
Junior Suite, Suite, Premium, Superior
 DESIGNING OF A NEW SERVICE
Innovation in “Belmont Hearne Hotel”:
•We are going to provide Wearable Tech band for our guests to
unlock their room (Key Less Entry). It will benefit us in 2 ways:
work as a word of mouth for us and collect the data and other
statistics of guests. It would be helpful for our guests’ also
because they now need not to take care of their keys, can order
anything easily, can access to other staffs like maintenance &
housekeeping easily.
•We will install 2 tablets outside the hotel and 3 at the reception
so that guests’ would be able to check the availability of rooms
without waiting in a line. They could also be able to pay through
that and could be able to see the 360 degree virtual view of
rooms without even entering.
•We will start an online portal called Belmont Portal which would
be an internal communication hub and knowledge base for
everything that Belmont Hearne hotel comprises, represent
practices and offers to all the employees. It will be a virtual
space for sharing and dissemination of information.
 DESIGNING OF A NEW SERVICE
Other Facilities at “Belmont Hearne Hotel”:
•Reception opened 24 hours, multilingual staff
•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
•Wi-Fi facility, HD LCD TV
•Safe in the room
•Soundproof Windows
•Ironing service (return within 1 hour), shoe polish service
•Turndown service in the evening
 LOCATION FACTOR RATING
A number of sites are available in India for a hotel positioned like us but
we have has narrowed the choice to five locations: Mumbai, Goa,
Jaipur, Delhi, and Bangalore.

Location Factor Rating Weight Hotel Location Scores (0 to 100)

Mumbai Goa Jaipur Delhi Bangalore

Annual tourist population 0.4 70 90 70 65 60

Cost 0.2 75 80 55 60 70

Road proximity to best

tourist destinations 0.15 65 85 60 70 60
Quality of tourist destinations 0.05 70 85 75 60 55
Infrastructure 0.05 80 70 65 85 65
Shopping and restaurants 0.05 65 70 75 90 70
Crowdedness 0.05 45 55 75 40 45

Other attractions 0.05 75 85 90 80 60

 LOCATION FACTOR RATING
So, Site 2 (Goa) has the highest Location Factor Rating compared with
the other locations. However, this evaluation would have to be used
with other analysis.

Location Factor Rating Weighted Score for the Location of Hotel

Mumbai Goa Jaipur Delhi Bangalore
Annual tourist population 28 36 28 26 24
Cost 15 16 11 12 14

Road proximity to best tourist

destinations 9.75 12.75 9 10.5 9
Quality of tourist destinations 3.5 4.25 3.75 3 2.75
Infrastructure 4 3.5 3.25 4.25 3.25
Shopping and restaurants 3.25 3.5 3.75 4.5 3.5
Crowdedness 2.25 2.75 3.75 2 2.25
Other attractions 3.75 4.25 4.5 4 3

Total Score 69.5 83 67 66.25 61.75

SERVICE BLUEPRINT
FOR
“Belmont Hearne Hotel”
FUNDING MECHANISM
Cost incurred in Innovation:
•Wearable Tech band and gate unlocking sensor would cost
us approx. 3000 for one band and one unlocking sensor.
There would be a total cost of (66 rooms*3000)=
Rs.1,98,000.
•We will take Tablet Booking Devices on rent first from Teem
Event Board. It would cost us Rs.4000/ month for one device
including all the required software's. Total cost incurred on
these would be 5 tablets*4000= Rs.20000/month.
•The online portal that we are required for our employees
would not cost us more Rs.6000-8000/ month.
FUNDING MECHANISM
So, total initial cost for us would be Rs.2,25,000 and
then monthly cost would be around Rs.28000.
According to our analyzation, these costs will not take
much time to recover as:
•These technologies would act as a worth of mouth
for us (probably become a trend).
•Save our employees effort so that they would be
able to focus more on delivering values to our
guests’.
•After analysing the data we could be able to find
some trends in guests’ behaviour and that would help
us in finding opportunities or loopholes in our service
delivery.
EMPLOYEE MANAGEMENT SYSTEM

We have categorised all our human resources into 4 departments:

FRONT OFFICE
•The staff of this department is very visible to the guests and directly
interacts with the customers when they first arrive at the hotel.
•The basic responsibilities of front office employees involve Creating
guest database, Handling guest accounts, Coordinating guest service,
handling in-house communication.
•Candidates for this role with a hotel management degree and
exceptional oral and written communication skills will be selected
through strict rounds of aptitude tests and personal interviews.
HOUSEKEEPING
•Housekeeping is an operational department in the hotel, which is
responsible for cleanliness, maintenance, aesthetic upkeep of rooms,
public area, back area and surroundings.
•The effort that a housekeeping department has a direct bearing on the
guest’s experience in a hotel.
•Housekeeping is a 24 x 7 x 365 operation.
•We are selecting candidates who have diploma in housekeeping
operations and are hardworking candidates.
EMPLOYEE MANAGEMENT SYSTEM

FOOD AND BEVERAGE SERVICE

•The food and beverage service department is an integral place in any
hotel which is responsible for the systematic and the actual service of
food and beverage to the customers.
•The staffing pattern of this department is basically divided into two
parts: the service staffs and the kitchen staffs.
•Kitchen staff basically involves people who are into food preparation
i.e. Chefs. For these roles professional chefs are recruited so that taste
and quality of food is not compromised.
•Service staff involves people who bring the food and beverages
services to the customers. Apart from a professional degree, the
candidate must possess excellent communication, listening and
teamwork skills. Such candidates will be selected.
BACK OFFICE & OTHERS
•Employees who are involved with promoting the hotel come under this
department.
•Candidates who have a degree in Sales and Marketing and those who
possess effective communication and creative skills will be selected
through interviews and aptitude tests.
EMPLOYEE MANAGEMENT SYSTEM

EMPLOYEE ENGAGEMENT PROGRAM

•In hospitality, employees are the most important asset for
any business and therefore, we will train our employees
on regular basis so that they will learn that how to deal
with the various customers and will be aware of all
moment of truth.
•We will also train them to learn interpersonal skills.
•Yearly performance appraisal system will be incorporated
but briefing will be given to employees on daily basis, so
that they can upgrade themselves regularly.
•We will start an online portal called Belmont Portal which
would be an internal communication hub and knowledge
base for everything that Belmont Hearne hotel comprises,
represents practices and offers to all the employees.
CUSTOMER MANAGEMENT SYSTEM

• Understanding of customers as well as customer behaviour

is the key success factor in marketplace for any business.
• We have positioned our Hotel as the customer driven
hospitality provider and our target customers would be
middle class and upper middle class people.
• We have chosen this segment because there are still many
flaws in service delivery in hospitality and many hotels are
not able to deliver the values.
• We will determine guests’ preferences through primary
research, secondary research and feedback which can help
us in anticipating guest's common needs.
• We also need a CRM software system as economies and
information technology infrastructures are progressing at
breakneck speed and a whole range of opportunities are
opening up for the hotel industry in terms of how connections
can be established.
CUSTOMER MANAGEMENT SYSTEM

We are segmenting the moment of truths in 2 parts:

•The internet is the new big thing in today’s world so
we have decided to make a clean and positive image
over the internet (Social Media, Travel Guides,
Review Sites, and our Website etc.) like on
Facebook, TripAdvisor, Yatra.com, and
MakeMyTrip.com etc. and they will act as the first
moment of truth for our customers.
•The second moment of truth is when the guest
arrives in the hotel and during their entire stay. We
will take care of only one thing and that is to deliver
what we have communicated. This would give us an
edge over all other hotels in our segment.
CUSTOMER MANAGEMENT SYSTEM

Forecasting of the success of the hospitality industry

in Goa using historical data:
•The total domestic tourist estimated was 18.99 L,
foreign tourists 3.48 L, and total tourists 22.47L
•The number of domestic tourists and foreign tourists
checked in accommodation units were 18,68,294 and
3,48,370 respectively.
•Number of bed nights spent by domestic tourists
was 77,69,396 while foreign tourist’s bed nights spent
was 15,48,370.
•Total AC rooms highest is in three stars followed by
four and above stars (3/4 Star to 5 star ratio is 3:1).
•Tourist’s major item of expenditure was ~30.4%
(Rs.450 crores) was on accommodation service.
CUSTOMER MANAGEMENT SYSTEM

Tourists Visits are maximum in the Avg. Tourist

month of November and Visits in Goa
December. Month (2016)
January 358622
The correlation between Domestic February 292737
and Foreign Tourists is very high March 334424
(closer to 1). We have found the April 310508
correlation between them using May 297277
CORREL function which returns
June 203659
the correlation coefficient between
July 97475
two data sets.
August 260036
Correlation = 0.935028
September 282339
So, our service would be attractive
for both domestic and October 327762
international tourists because of November 391979
the quality of our service delivery December 442133
and innovation in hospitality.
CUSTOMER MANAGEMENT SYSTEM

We have used FORECAST function of excel to anticipate the number of

tourist in the coming years (2017 & 2018). FORECAST function
calculates a future value along a linear trend by using historic values.
So, it is forecasted that the tourist industry will increase in Goa such
that there is a need of more hotels in Goa to meetup the demand.

Number of Tourists
Year Domestic Foreign Total
2010 9,76,804 2,91,709 12,68,513
2011 13,25,296 2,71,645 15,96,941
2012 21,27,063 3,25,677 24,52,740
2013 22,67,098 3,76,455 26,43,553
2014 22,05,002 4,56,773 26,61,775
2015 23,37,499 4,27,890 27,65,389
2016 28,89,444 4,93,894 33,83,338
2017 31,38,353 5,27,741 36,66,094
2018 34,18,362 5,65,246 39,83,608
 REFERENCES

• INNOVATION SERVICE DESIGN IN TOURISM AND HOSPITALITY

OPERATIONS by Budsakayt Intarapasa and Thayuth Thongpan
• Customers’ Ethical Behaviour towards Hotels by Professor, Department of
Marketing, TEI of Thessaloniki
• Operations Management by Albert Porter
• Operations Management by Russell & Taylor
• Service design in hotels by Meryem Akoğlan Kozak and Dilek Acar Gürel
• Service Design and Operations Strategy Formulation in Multicultural Markets
by Madeline E. Pullman
• Service Innovation and Customer Choices in the Hospitality Industry by Liana
Victorino
• incredibleindia.org
• www.tourism-of-india.com
• Ministry of tourism India
• http://crmsolutions.crmnext.com
• http://www.managementstudyguide.com
• https://www.equitymaster.com/research-it/sector-info/hotels/Hotels-Sector-
Analysis-Report.asp
• Collection of Domestic Tourism Statistics for the State of Goa
• A Study on Growth of Hotel Industry in Goa
THANK
YOU