Competition in hotel industry

By
Malabica Das
Bunty Chatterjee
INDUSTRY OVERVIEW
REVENUE
Revenues of Hotel and Restaurant (H&R) industry in India during the
financial year 2006-07 was INR604.32 billion , a growth of 21.27%
over the previous year, primarily driven by foreign tourist arrivals
,which increased by 14.17%.
Currently there are some 1,980 hotels approved and classified by the
Ministry of Tourism, Government of India ,with a total capacity of
about 110,000 hotel rooms.
With tourism industry showing excellent performance, in terms of
foreign tourists arrival and demand outpacing supply, the hospitality
industry, is poised to grow at a faster rate and reach INR826.76 billion
by 2010.
It is estimated that over the next two years 70,000-80,000 rooms will
be added across different categories throughout the country.
INDUSTRY OVERVIEW
GROWTH DRIVERS AND POTENTIALS
Rising gdp in developing nations is being rapidly followed by rising living
standards in countries such as china, India, Indonesia, Malaysia and Thailand.
Affluence: travel
Asians are on the move.
recent years have seen outbound travel from Asian countries grow by more than
20 %
The middle class: a changed mind set
people now have the money and are willing to spend it, not only on necessities
but also luxury products, travel, adventure and cultural experiences.
Access: technology
online travel market
Only a decade old
Fastest growing distribution channel in Asia
Indian scenario
Annual growth rate is 24%
The Average Room Revenues (ARRs) in some metro
hotels in India has increased by 15% from the last year
According to Government estimates, India needs about
80,000 rooms in all categories over the next two or
three years at an estimated cost of about US$ 8 – 9
billion.
The average employee to room ratio is 1.8 in hotels in
India, across all the categories, except in the three-star
category, where the ratio drops to 1.5 per room.
Indian scenario
'Hotels in India' have supply of 110,000 rooms.
According to the tourism ministry, 4.4 million tourists
visited India last year and at current trend, demand will
soar to 10 million in 2010– to accommodate 350
million domestic travellers.
'Hotels in India' has a shortage of 150,000
rooms fuelling hotel room rates across India.
With tremendous pull of opportunity, India is a
destination for hotel chains looking for growth.
Government regulations
The government has realized the importance of
tourism and has proposed a budget of Rs. 540 crore
for the development of the industry.
The priority is being given to the development of
the infrastructure and of new tourist destinations
and circuits.
The Department of Tourism (DOT) has already
started the "Incredible India" campaign for the
promotion of tourism in India.
Major players in hotel industry
The major players in hotel industry can be broadly
classified into Public Players AND Private Players.
PUBLIC SECTOR PLAYERS:
1. ITDC Hotels
2. Hotel Corporation Of India

PRIVATE SECTOR PLAYERS:

1.ITC Hotels
2.Indian Hotels Company Ltd.(THE TAJ HOTEL RESORTS & PALACES)
3.OBEROI HOTELS (EAST INDIA HOTELS)
4.Hotel Leela Venture
5.Asian Hotels Ltd.
6.Radisson Hotels & Resorts
Future outlook
JOINT VENTURES
MNC Hotel Industry giants are flocking India and forging Joint Ventures to
earn their share of pie in the race. Government has approved 300 hotel
projects, nearly half of which are in the luxury range.
E-BUSINESS
One of the top strategies for hotel e-business is evolving from selling to
engaging the customer. Hoteliers need to think more like retailers. To succeed,
hoteliers need to fulfil the experience expected by customers, not just think of
them as heads in a bed.
Another strategy is engaging the customer through social computing, which is
the fifth generation of electronic distribution. Travel plays a big role in social
computing, making social computing a blend of marketing and distribution.
BUDGET HOTELS
Already, more than 50 international budget hotel chains are moving into India
to stake their turf
Top three players
The Indian hotels company
The Indian Hotels Company and its subsidiaries are
collectively known as Taj Hotels Resorts and Palaces,
recognized as one of Asia's largest and finest hotel
company.
Taj Hotels Resorts and Palaces comprises 59 hotels at 40
locationsacross India with an additional 17 international
hotels in the Maldives, Mauritius, Malaysia,United
Kingdom, United States of America, Bhutan, Sri Lanka,
Africa, the Middle East andAustralia.
Top three players
ITC/ Sheraton Corporation
TC's Hotel division was launched on October 18, 1975,
with the opening of its first hotel-Chola Sheraton in
Chennai.
ITC – Welcome group Hotels, Palaces and Resorts, is
today one of India's finest hotel chains, with its
distinctive logo of hands folded in the traditional
Namaste is widely recognized as the ultimate in Indian
hospitality.
Top three players
The EIH Ltd (The Oberoi Group)
Asian elegance is the key to running hotels, if you ask
EIH (better known as The Oberoi Group).
The company owns and operates about 20 luxury hotels,
about 10 mid-range hotels, and two inland cruises;
The Oberoi Group operates primarily in India, but also in
Australia, Egypt, Indonesia, Mauritius, and Saudi Arabia.
Most of the company's luxury properties bear the Oberoi
banner.
 Differential pricing
Why Do Companies Practice Differential Pricing?
Economists argue that companies engage in differential
pricing in order to maximize sales and thus profits.
First a company establishes a business model that anticipates
a standard price for the product or service that should result in
a profit if sales goals are met.
It’s the market’s way of ensuring that more consumers get
products and services at lower prices and companies make
higher profits—a win-win for both companies and consumers.
Differential pricing
What Is Differential Pricing?
Differential pricing is the practice of charging some
customers or clients more, while charging others less, for
the same product or service.
Virtually every industry and most companies engage in
some form of differential pricing.
For example, the airlines have a range of fares they charge
customers based on when and how they make their
reservation, whether they want to fly first or business class
or coach, or whether they are willing to stay over a
Saturday night. And many passengers fly free by using
frequent flier miles.
Differential pricing
Differential pricing permits companies and individuals to
make their products or services available to people in a
wider range of incomes.

Who Does Differential Pricing Help?

Differential pricing helps low-income people get a product
they could not otherwise afford.
Providing the widest possible access to a product means
permitting—even encouraging—differential pricing.
Eliminating differential pricing ensures that low income
people will have little or no access to the newest, life-saving
drugs.
Conclusion
The hotel industry in India having a tremendous
opportunity in the future because of increasing trends
in the tourism industry and government promoting the
“Incredible India” campaign and other tourism
promotion measures.
Industry is opening gates for the foreign investment
which is a good sign for the industry and industry is
working toward the fulfilment of the demand and
supply gap.
Bibiliography
http://
www.cygnusindia.com/pdfs/Industry%20Insight-India
n%20Hotel%20Industry_final-14%208%2007.pdf
http://
www.scribd.com/doc/27318584/Hotel-Industry-in-Indi
a
http://www.scribd.com/doc/28071438/report-on-Hotel-
industries
http://www.insideronline.org/archives/2003/may03/pri
cing.pdf