hospitality final

8/2/2019 Hospitality Final

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Facts and Figures of IndianHospitality Industry


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Overview According to Economic Survey of 2010-11 the average annual growth rate of hoteland restaurant sector has been 8.8 per cent for the period during2007-2016

The Hotel and tourism industrys contribution to the Indian economy by way offoreign direct investments (FDI) inflows were pegged at US$ 2.35 billion fromApril 2000 to February 2011, according to the Department of Industrial Policy andPromotion (DIPP)

Thus domestic hospitality sector is expected to see investments of over US$ 11billion by 2012, with 40 international brands making their presence in the country

in the next few years.


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Sector Status

Several studies have highlighted the demand-supply gap in hotel rooms in India.Most of them have estimated a gap of 150,000 hotel rooms

Since the construction of hotels is capital intensive with a long gestation period,the Government is making efforts to stimulate investments in this sector andspeed up the approval process to attract private sector investments.

The World Travel and Tourism Council, India, data says, India ranks 18th inbusiness travel and will be among the top 5 in this decade


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Although, organized sector contributes only one-third of revenue of theoverall revenue of the industry but several well known hotel chains have linedup aggressive expanding plans for India

An upward trend in growth of the overall hotel sector is expected in the nextfew years, whereby the industry is expected to grow to US$ 36 billion by 2018.


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Key Points

India occupies the sixty-eighth position among the top tourist destinations in the world,according to the Travel and Tourism Competitiveness Report 2011

In the general budget for 2011-12, Rs 11.7 bn for development of tourism

infrastructure and promotion of tourism was allocated. This figure is higher by Rs 1.0 bnas compared what was allocated in the previous year. The Centre and States are alsoworking out a PPP (Public-Private-Partnership) model to increase hotel capacity.

Government of India increased spend on advertising campaigns (including for thecampaigns 'Incredible India' and 'Athithi Devo Bhava

The ministry granted Tourist Visa on Arrival (T-VoA) for the citizens of Finland, Japan,Luxembourg, New Zealand and Singapore

It also promoted India as a safe tourist destination and undertook various measures,such as stepping up vigilance in key cities and at historically important tourist sites


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SupplyAs of January 2011, the total count of hotel rooms in India is 120,000 and thecountry is expected to require additional 80,000. The shortage is more prominent inbudget and mid market segment. This will support improvement in ARRs (AverageRoom Rates) in this segment for the next few years.

DemandLargely depends on business travelers but tourist traffic is also on the rise. Demandnormally spurts in the peak season between November and March.

Barriers to entryHigh capital costs, poor infrastructure facilities and scarcity of land especially in themetros.

Bargaining power of suppliersLimited due to higher competition, especially in the metros.

BargainingpowerofcustomersHigher in metro cities due to increasing room supply.

CompetitionIntense in metro cities, slowly picking up in secondary cities. Competition has

picked up due to the entry of foreign hotel chains.


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Key Players

Public Players

ITDC Hotels HotelCorporation ofIndia

PrivatePlayers

ITC Hotels Limited Indian Hotels Company The Oberoi Group (EIH) Hotel Leela Venture Ltd. Asian Hotels Limited Radisson Hotels & Resorts


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Indian hospitality industry International

players International players include Hilton, Shangri-La, Radisson, Mariott,Meridian, Sheraton, Hyatt, Holiday Inn, InterContinental and Crown Plaza.

Global Brands who are planning to enter India in joint venture with

domestic players include Amanda, Satinwoods, Banana Tree, HamptonInns, Scandium by Hilt and Mandarin Oriental


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Someannouncements

Carlson Group is bringing Regent to Gurgaon by 2013. To tie-up with PioneerUrban Land and Infrastructure that will invest US$ 49 million.

The Leela plans to open six more properties by 2013.

ITC Ltd expects to add 8-10 hotel sin India in the next 3-5 years.

The Thailand-based hospitality major, Amari, plans seven 4-star hotels near

major airports in the country


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MARKETLEADER

ITC Limited

ITC is one of India's foremost private sector companies with a marketcapitalisation of over US $ 33 billion and a turnover of US $ 7 billion

ITC Hotels

ITC Hotel Maurya Sheraton & Towers, New Delhi

ITC Hotel Grand Maratha Sheraton & Towers, Mumbai

ITC Hotel Sonar Bangla Sheraton & Towers, Kolkata

Welcome Hotel Mughal Sheraton, Agra

Welcom Heritage ( These hotels are spread over all over india and arecurrently operating in Rajasthan, Punjab, Himachal Pradesh, Madhya

Pradesh, Uttaranchal, Jammu & Kashmir, West Bengal, Tamil Nadu,Haryana and Karnataka.)


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THE FOLLOWER

The Indian Hotels Company Limited (IHCL) Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the

company opened its first property, The Taj Mahal Palace Hotel, Bombay in1903

The Taj, a symbol of Indian hospitality, completed its centenary year in 2003

IHCL operate in the luxury, premium, mid-market and value segments

Taj Hotels

Taj (luxury full-service hotels, resorts and palaces) Taj Exotica

Taj Safaris

Vivanta by Taj Hotels & Resorts

The Gateway Hotel

Ginger


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1. Shortage of skilled employees

2. Retaining quality workforce

3. Shortage of rooms

4. Intense competition and image of India:

5. Customer expectations

6. Manual back-end

7. Human resource development

CHALLENGES FOR HOSPITALITY INDUSTRY


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Future tense

TRENDS IN HOSPITALITY SECTOR

Low Cost Carriers

Budget Hotels

Service Apartments

Technology

Loyalty Travel


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Prospects

The Indian hotel industry is still in the nascent stages of recovery

Despite an anticipated revival in room demand, hotels will not be able to hikeARRs significantly as the expected additions to room inventory will intensifycompetition.

Chennai, Pune and Hyderabad are expected to be among the worst-hitdestinations

The industry is yet to witness a sustained and significant improvement inoccupancy levels and ARRs.

In the long-term, the outlook for the sector is very promising. Demand levelsare likely to improve as economic growth gathers momentum and companiesincrease spending on travel


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The number of foreign tourists is expected to reach 6.2 m during 2011 andfurther to 11.1 m by 2021

Investment in Travel & Tourism is estimated at Rs 1.2 trillion in 2011 and isexpected to reach Rs 2.8 trillion by 2021 (implying a CAGR of 8.7%), accordingto World Travel and Tourism Committee (WTCC) estimates

In light of the cash crunch and high interest rates, the players are approachingfresh expansion projects with caution.

While the long term fundamentals remain strong, the sector is highlydependent on external factors which could possibly mar its performance.


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