Indian Hotel Industry

Indian Hotel Industry

Presented by Ayyappan.R(07MBA020) J.Karunanithi(07MBA053) Mahendran.S(07MBA059) Nithya.S(07MBA069)

• 'Hotels in India' have supply of 110,000 rooms of which 5 Star category accounts for approx. 30%. • India’s luxury rooms availability lower than even smaller East Asian countries

Source: Compendium of Tourism statistics, WTO

• 5 million tourists visited India last year • India needs an additional 50,000 rooms in the next 2 or 3 years to service projected tourist arrivals • Manpower requirements of the hotel industry will increase from 7 million in 2002 to 15 million by 2010

Main Characteristics Location No:of rooms Affiliation/Ownership Market Segment Mix Service Positioning Occupancy rate Rooms sold Average room rate Conference facilities/F & B outlets Physical facilities & services

Users of Hotel Services

Economic impact of the Trav el & Tourism Secto r

WORLD South Asia India

% Share of World Travel & Tourism Demand

Travel & Tourism Economy as % of Total GDP

Travel & Tourism Economy Jobs as % of Total Employment

10.1 6.5 6.5

9.9 6.1 6.1

8.4 5.9 6.4

Market Segmentation in

Key Operating Characteristics Average Occupancy(%)

Average Rate(Rs)

Fluctuations in Demand: From Excess Demand to Excess Four conditions potentially faced by fixedcapacity services: Excess demand Too much demand relative to capacity at a given time Demand exceeds optimum capacity Upper limit to a firm’s ability to meet demand at a given time Optimum capacity Point beyond which service quality declines

•

Variations in Demand Relative to Capacity

•

VOLUME Dema nd exce ed s (business is

CAPACI TY

Demand optimum exceeds (quality capacity declines)

Maxi mu m Capa Op timu m (Demand and Supply

Excess

(wasted resources)

Lo w (May Send Bad TI ME

TI ME

Capacity Constrained: Defining Productive Capacity in Services Physical facilities to contain customers Physical facilities to store or process goods Physical equipment to process people, possessions, or information Labor used for physical or mental work Public/private infrastructure

Alternative Capacity Management Strategies Level capacity (fixed level at all times) Stretch and shrink Offer inferior extra capacity at peaks Vary seated space per customer Extend/cut hours of service Chase demand (adjust capacity to match demand) Schedule downtime during periods of low demand

Demand L evels Can B e Managed: Alter nativ e D ema nd Ma nagement Take no action  Let customers sort it out Reduce demand  Higher prices  Communication promoting alternative times Increase demand  Lower prices  Communication, including promotional incentives  Vary product features to increase desirability  More convenient delivery times and places

Alternative Demand Management Strategies • Use price and other costs to manage demand • Change product elements • Modify place and time of delivery – No change – Vary times when service is available – Offer service to customers at a new location

• Promotion and education

Challenges faced.. • Slow in implementation: Lack of adequate recognition for the industry despite being one the biggest generator of employment has been hampering growth prospects. Infrastructure development, though happening, continues to languish. Amidst improving fundamentals, India could lose out to other countries if the pace is not accelerated. • Regional hubs developing: Though India has the potential in the tourism sector, competition is more global. The rapid growth of China, select South East Asian countries, the pace of development in the Middle East could affect India, in terms of its ability to attract tourist into the country. • Susceptible to geo-political events: Since tourism is a global phenomenon, any adverse developments on the geo-political front are likely to impact global tourist flows. India is no exception to the same, as was evident during events like Parliament attack, sequential blasts etc.

Scope of the industry.. • As a tourist destination: Though India accounts for a fraction of global tourist flows currently, the country is expected to increase its market share over the long-term. The recognition of tourism as an industry in the recent past has paved way for opening up to competition. • Infrastructure development: The road development project along with other aspects like airport modernization and port development is likely to result in increased economic activity. • Increased competition: In the hotel sector, a number of multinationals have entered/strengthened their presence in the country. Besides, Indian hotel chains are expanding in international market. A combination of all these factors could result in a strong emergence of the budget hotels.

n a Th k . u Yo .