Hospitality industry of India project for management studies.
Chapter 1 Introduction
1.1 What is Hospitality?
Hospitality refers to the relationship process between a guest and a host, and it also refers to the act or practice of being hospitable, that is, the reception and entertainment of guests, visitors, or strangers, with liberality and goodwill. Hospitality frequently refers to the hospitality industry jobs for hotels, restaurants, casinos, catering, resorts, clubs and any other service position that deals with tourists.
1.2 What is Hospitality Industry?
The hospitality industry consists of land category of fields within the service industry that includes lodging, restaurants, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry. The hospitality industry is a several billion dollar industry that mostly depends on the availability of leisure time and disposable income. A hospitality unit such as a restaurant, hotel, or even an amusement park consists of multiple groups such as facility maintenance, direct operations (servers, housekeepers, porters, kitchen workers, bartenders, etc.), management, marketing, and human resources. The hospitality industry covers a wide range of organizations offering food service and accommodation. The industry is divided into sectors according to the skill-sets required for the work involved. Sectors include accommodation, food and beverage, meeting and events, gaming, entertainment and recreation, tourism services, and visitor information. The hospitality industry is one of the most dynamic industries and continues to grow year after year. The World Travel Organization predicts that it will triple in size by the year 2020, becoming one of the largest industries in the world. This growth will provide many employment opportunities for people with the right qualifications. Even when the world economy is showing a sluggish growth with uncertain employment prospects, the fast growing hospitality industry is heralding a pivotal change in career options with an exciting variety of career choices thereby increasing scope and future prospect of hospitality and tourism industry.
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1.3 History of Hospitality Industry in India
The history of the hotel industry is as old as the history of tourism and travel industry. In fact, both are two sides of the same coin. Both are complementary to each other. Hotel is an establishment which provides food, shelter and other amenities for comfort and convenience of the visitors with a view to make profit. Hotel is a commercial establishment and intends to provide visitors with lodging, food and related services with a view to please them so as to build goodwill and to let them carry happy memories. In general, a "hotel" is defined as a public establishment offering visitors against payment two basic services i.e. accommodation and catering . However, during the last few years great changes have taken place in the scope of hotel industry. During 6th century BC, hotels were known as "inns" or "dharamshalas" and were providing only food and overnight stay facilities. At that point of time the standard of an inn was quite normal with earth or stone floor, common bedroom and simple food. As travel became easier, inns grew in size and number. The spirit of competition raised the standard of inns. Industrial revolution and trade expansion resulted into increase in the number of visitors crossing international border. In this era, room furnishing and catering received greater attention. Emphasis was made on accommodation with spacious assembly hall and dining hall for organising functions and parties etc. But the real growth of the modern hotels started in the last decade of the eighteenth century with the establishment of City Hotel in New York. After that a large number of hotels of various types and grades came into existence in different countries to meet the requirements of different categories of visitors. Modern hotels provide a number of services to the visitors. The services vary according to the aim, location, type, size and grade of the hotel. Generally, the important activities of a hotel include –(1) Direction (2) Reception (3) Provision of accommodation rooms/floors (4) Cuisine Meals and Refreshments (5) Restaurant (6) Bar (7) Bell to provide information to the guests (8) Entertainment and Recreation (9) Sightseeing (10) Transport facilities (11) Parking space(12) Swimming pool(13) Bathroom facilities (14) Lounge facilities (15) Garden (16) Shopping facilities (17) News stand (18) Tobacco and Cigarettes (19) Telephone (20) Television (21) Radio (22) Laundry and Cleaning (23) Telex service (24) Sporting installations, Tennis court, Golf and Squash (25) Installation for children (26) Banquet hall (27) Conference facilities (28) Convention facilities (29) Exhibition areas (30)Health club (31) Business centre etc.
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1.4 Classifications of Hotels
A hotel is an establishment that provides paid lodging, usually on a short-term basis. India’s hotel industry comprises the following four main categories. Star hotels: This category is based on the standards of location, facilities, infrastructure and amenities provided. Star rating is given by HRACC (The Hotel & Restaurant Approval & Classification Committee of Ministry of tourism, India). They form 30% of the industry size. The star ratings are Five Star Deluxe, Five Star, Four Star, Three Star, Two Star and One Star. The first 2 types are usually located in business areas of metro cities and cater to foreign tourists, business travelers, top government officials and political brass, offering luxury at a high price. The next 2 types are in tier II cities and tourist destinations preferred by midlevel executives and leisure tourists. The last 2 types are found in smaller cities and around tourist spots, preferred by domestic tourists. Reputed Indian veterans include ITC, Indian Hotels Company (Taj group), East India Hotels (Oberoi group), Hotel Leela Venture and ITDC hotels. Foreign hospitality players include Marriott, Radisson, Sheraton, Meriden, Hyatt, Four Seasons Regent, Carlson group, Jumeirah and Mandarin Oriental and Dubai’s Istithmar Heritage hotels: This category is on the basis of the nature. They operate from forts, palaces, castles, jungle and river lodges and heritage buildings. These are ideally suited for vacations, relatively affordable and fun places. The classification includes Heritage Classic, constructed between 1920 and 1935, Heritage Grand, existing before 1920, and Heritage, set up around 1935 to 1950. Most Indian hotel groups mentioned above operate Heritage hotels at historical sites across India. The other types in this category includes beach resorts, wildlife resorts. Budget hotels: They’re usually preferred by domestic travelers seeking economical accommodation. These are reasonably priced, offer limited luxury, seasonal discounts and decent services. Budget hotels are preferred by business travelers contributing to greater ARR(average room rate) than leisure travelers. Increased demand and healthy occupancy has fuelled the growth of budget hotels in a short time. Unclassified hotels: They’re motels spread across the country. They form 19% of the industry size. Low price is their only USP (unique selling proposition).Some other such categories include: Airport Hotels, Ecotels , Service Apartments, Timeshare, Modular Hotel, Forest Apartments, Agriculture destination resort, condotel, holiday homes, Spas (residential, urban, ayurvedic, Medi, Chocolate etc)
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1.5 Characteristics Of Hospitality Industry:
a) Perishability: If the full capacity of the services is not utilized the services becomes perishable. b) Variability: The quality of service varies to great extent. c) Inseparability: Service is inseparable form the provider. d) Intangibility: Hospitality is intangible but hotel industry in tangible you can touch, taste and feel the product.
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Chapter 2 Indian Hospitality & Tourism Industry Prior 1991
2.1 Development of Hospitality Industry in India
The concept of travel and halting facilities is quite old in India. In ancient times, people used to travel for pilgrimage or business purposes. For ages, India has been known for its hospitality. Endowed with rich historic heritage, cultural diversity, natural resources and geographical advantage, India remained a big attraction for foreigners. In ancient times, the need of travelers for food and accommodation was met mainly by hospitable householders which are still in existence in interior areas of the country. Domestic tourists were looked after by the pandas or priests. They used to accommodate their clients in dharamshalas or in their own houses at places of pilgrimage like Banaras, Haridwar, Puri and Mathura etc. In general, the attitude of the ancient Indians towards visitors was influenced by the 'Atithi Devo Bhavah'. It means guest is like God and should be treated accordingly. The market for the hotel industry is largely dependent on the trends in tourism and the socio-economic climate in the country as well as beyond the borders of the country. Prior to 1980s, the Indian hotel industry had slow growth, as the economy was not in a liberalized era. Few stages in the development of hospitality Industry: • In the eighteenth century, there were plenty of taverns in the country (a tavern mean an archaic or literary inn) where travellers from long distances took shelter and food. During this period, a number of dharamshalas were built by Kings for encouraging travel all over the country. Apart from dharamshalas, "Sarais" were introduced by the Muslim rulers which provided the best possible facilities like food, accommodation etc. to travellers. • After this, the British came to India and Sarais took the form of western style hotels in the important cities of India like Mumbai and Kolkata. During this period, on one hand, we find western style hotels for foreigners and on the other, Indian style hotels for the people belonging to upper and middle class income groups. The old type dharamshalas were still having their importance to serve the needs and requirements of the poor classes.
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• In the nineteenth century, western style residential hotels were developed in India by British and Swiss families mainly for their own use or for foreign visitors. Mr. Pallonjee Pestonjee is called as the pioneer of the western style hotel in India who opened the first – western style hotel under the name of British Hotel in Mumbai in 1840. By the end of the nineteenth century, many western style hotels were established in India. These hotels were very much popular for their efficient management, unsurpassed cuisine and the excellence of beers and wines. • The twentieth century may be called as the beginning of star hotels in India. In this century, big and modern hotels came into existence on account of the advent of big businessmen and new entrepreneurs. Affluent tourists also contributed a lot to the development of star culture. The major star hotels in India are in private sector. The high profile hotels include The Indian Hotels Company Ltd., East India Hotels Ltd., ITC Hotels Ltd., Bharat Hotels Ltd., Asian Hotels Ltd., Hotel Leela venture Ltd. and Jay Pee Hotel Ltd. etc. The only public sector enterprise is India Tourism Development Corporation Ltd. which runs country’s largest accommodation chain, The Ashoka Group of Hotels. The hotel industry in India is making a remarkable progress in private sector. The hotels have shown distinct improvement in operating techniques, catering and service. • 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, the 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. The 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. This enabled Indian hotel companies to increase their average room realizations (ARR) by almost 50% between April 1994 and April 1997 and still enjoy extremely high occupancies of above 80% for most of this period. During this time the ARR’s of Indian 5 Star hotels were comparable to those prevailing in Singapore and Hong Kong and were among the highest in the region.
With the partial opening of the Indian economy in mid-eighties, which generated commercial interest in India, significant benefits started accruing to the tourism sector, which gave some pace to the growth of hotel industry. The economic liberalization initiatives of the early 1990s viz. industrial reforms, foreign direct
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investment (FDI) in industries, foreign institutional investment (FII) in bourses, reduction in import duties, rationalization of taxes, etc. intensified trade and investment and consequently caused spurt in both domestic and international business travel.
2.2 Statistical Data:
We often tend to underestimate the massive nature and significance of domestic tourism in the country despite the fact that it generates nearly three-fourth of total tourism revenue and that it acts as the backbone of Indian tourism industry. Needlessly, negating the contribution of the segment could jeopardize overall momentum of growth of tourism sector, both in short and long terms. The domestic tourist data further reveals a pattern of a few states garnering a larger chunk of the growing traffic. For instance, top five states namely Andhra Pradesh (155.8 mil), Uttar Pradesh (144.4 mil), Tamil Nadu (111.6 mil), Maharashtra (48.5 mil) and Karnataka (38.2 mil) constitute around 67% of the total traffic in 2010. This is indicative of a trend in spatial concentration of tourist activities, which indeed has been consistently observed over many decades owing perhaps much to the religious/pilgrim tourism and location of important cultural attractions in those states.
Indian Nationals Going Abroad and Number of Domestic Tourists Visits to All States and Union Territories in India
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Not that Indians are touring only within its national limits. It is rather interesting to observe two main features of their overseas travel patterns. First and foremost is a consistent increase in the numbers of Indians taking international vacation travel over the years, which above Table would suggest growing from 4.42% in 2000 to 12.07% in 2010. Even when the global tourist movements fallen substantially as a result of global recession, Indian outbound traffic has been growing with consistency and stability. The phenomenal growth in outbound travel could be a by-product of many economic and social factors, most important being material prosperity and urge for travel and life styles. Other contributing factors being ease of travel documents like passport, visa, relaxation in foreign exchange regulations, better awareness of destinations and benefits of travel etc. As regards travel segments, the MICE (Meetings, Incentives, Conferencing, Exhibitions) and business travel are arguably growing faster compared to the leisure segments. The quantum of Indian nationals on overseas vacations increased from 4.42 million in 2000 to 12.07 million in 2010. The Govt. of India, Ministry of Tourism launched interest subsidy scheme in 1973 for setting up hotel projects in 1,2,3-star category and heritage hotels with an objective to promote tourism. Due to the procedural issues in the scheme, it was discontinued in the April 2002 and the one-time capital subsidy scheme was introduced .The scheme would be operational upto the end of the 10th five-year plan i.e 31st March 2007. To decide on the approach during the 11th five-year plan, Ministry of Tourism decided to review the existing scheme and its impact on the budget segment. Availability Of Hotels Before Launch Of Capital Subsidy Scheme Category-wise Distribution of Hotels
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Availability Of Hotels After Launch Of Capital Subsidy Scheme
Availability Of Rooms After Launch Of Capital Subsidy Scheme
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Chapter 3 Indian Hospitality & Tourism Industry After 1991
Hotel Industry in India has witnessed tremendous boom in recent years. Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel industry. The Thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. The ‘Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' (ADB) campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry. Over recent years government has taken several steps to boost travel &tourism which have benefited hotel industry in India. The opening up of the aviation industry in India has exciting opportunities for hotel industry as it relies on airlines to transport 80% of international arrivals. The government's decision to substantially upgrade 28 regional airports in smaller towns and privatization & expansion of Delhi and Mumbai airport will improve the business prospects of hotel industry in India. Substantial investments in tourism infrastructure are essential for Indian hotel industry to achieve its potential. The upgrading of national highways connecting various parts of India has opened new avenues for the development of budget hotels in India.
3.2 Tourism Policy
In order to develop tourism in India in a systematic manner, position it as a major engine of economic growth and to harness its direct and multiplier effects for employment and poverty eradication in an environmentally sustainable manner, the National Tourism Policy was formulated in the year 2002. Broadly, the “Policy” attempts to: • • • • Position tourism as a major engine of economic growth Harness the direct and multiplier effects of tourism for employment generation, economic development and providing impetus to rural tourism Focus on domestic tourism as a major driver of tourism growth
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• • • • • • • •
Position India as a global brand to take advantage of the burgeoning global travel trade and the vast untapped potential of India as a destination Acknowledges the critical role of private sector with government working as a pro-active facilitator and catalyst Create and develop integrated tourism circuits based on India’s unique civilization, heritage, and culture in partnership with States, private sector and other agencies Ensure that the tourist to India gets physically invigorated, mentally rejuvenated, culturally enriched, spiritually elevated and “feel India from within”. The Government’s major policy initiatives include: Liberalization in aviation sector Pricing policy for aviation turbine fuel which influences internal air fares Rationalization in tax rates in the hospitality sector Tourist friendly visa regime Immigration services Procedural changes in making available land for construction of hotels Allowing setting up of Guest Houses
• • • • • • •
The Indian Ministry of Tourism has identified 31 villages across the country to be developed as tourism hubs. The states in which these villages have been identified include Himachal Pradesh, Gujarat, Maharashtra, Bihar, Karnataka, Madhya Pradesh, Andhra Pradesh, Kerala, Tamil Nadu, Orissa, Assam, Sikkim, Rajasthan and West Bengal.
3.3 Club Mahindra:
Company Mahindra Holidays & Resorts India Ltd., (MHRIL) is a part of the Leisure and Hospitality sector of the Mahindra Group and brings to the industry values such as Reliability, Trust and Customer Satisfaction. Started in 1996, the company’s flagship brand ‘Club Mahindra Holidays’, today has a fast growing customer base of over 147,000 members and 40 beautiful resorts at some of the most exotic locations in India and abroad.
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Parentage Mahindra Holidays & Resorts India Limited is part of the USD 15.4 billion multinational Mahindra Group. With over 140,000 employees in 100 countries across the globe, the Group is also among India’s top ten Industrial Houses with interests in aerospace, aftermarket, agribusiness, automotive, components, consulting services, defense, energy, farm equipment, finance and insurance, industrial equipment, information technology, leisure and hospitality, logistics, real estate, retail, and two wheelers.
3.4 Goa Tourism:
Tourism and Goa are synonymous with each other. Goa is one of the most preferred places of holiday in India. It may not be the state to receive maximum number of tourists in India but the state is well known to receive international tourists on a large scale, more than probably any other state in the country. Thus, it is evident that tourism is the main source of income for the state government as well as residents who rely heavily on the tourists to boost of their trade. Notably, Goa is the state with the highest GDP in India. Tourist Attractions in Goa What is that helps the state to make such a strong impact on the tourists that brings them back time and again? The sun kissed beaches of the state are an obvious attraction. Agonda, Candolim, Calangute, Dona Paula are some of the Goa beaches that are most inviting. However, these are not the only beaches in the state. The beaches are known to witness a massive footfall throughout the year. Besides, the churches in the state are the living reminiscent of the Portuguese rule in the state of Goa. The beautifully adorned churches are one of the major contributors that led the state earn the sobriquet of "Pearl of the Orient". Few of the most renowned churches in the state include Basilica of Bom Jesus, St. Augustine church, Church of St Francis of Assisi among several others. The State is infamous for its unending carnivals and parties. The New Year, Christmas parties and the Sunburn festival in the state of Goa are centre of attraction for a massive crowd, many a times comprising of celebrities all across India.
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3.5 Kerala Tourism:
Kerala, God's Own Country Until the early 1980s, Kerala was a relatively unknown destination, with most tourism circuits concentrated around the north of the country. Aggressive marketing campaigns launched by the Kerala Tourism Development Corporation—the government agency that oversees tourism prospects of the state—laid the foundation for the growth of the tourism industry. In the decades that followed, Kerala Tourism was able to transform itself into one of the niche holiday destinations in India. The tag line Kerala- God's Own Country was adopted in its tourism promotions and became a global superbrand. Kerala is regarded as one of the destinations with the highest brand recall.In 2010, Kerala attracted 0.66 million foreign tourist arrivals With the Arabian Sea in the west, the Western Ghats towering 500-2700 ms in the east and networked by 44 rivers, Kerala enjoys unique geographical features that have made it one of the most sought after tourist destinations in Asia. An equable climate. A long shoreline with serene beaches. Tranquil stretches of emerald backwaters. Lush hill stations and exotic wildlife. Waterfalls. Sprawling plantations and paddy fields. Ayurvedic health holidays. Enchanting art forms. Magical festivals. Historic and cultural monuments. An exotic cuisine. All of which offer you a unique experience.
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Chapter 4 Impact of Globalization
4.1 Impact of Globalization on the Hospitality:
Globalization has both positive and negative impacts on the hospitality industry. The Positive Impacts of Globalization are as follows: 1. Exposure to different cultures: Due to Globalization the managers of the hospitality industry are able to learn about different cultures – as they get to mingle with people from various walks of life – and thus, increase their knowledge. 2. Larger Market: Due to Globalization the customer base has increased greatly. People travel not only for holidays, but business, health and various other purposes too. Thus, this has increased the market for the hospitality industry, which gets its major income is from international visitors. 3. Boosts the economy: Visitors come in and spend money –multiplier effect – and foreign exchange increases. Thus it is of great value to the economy as Globalization helps to pump in money into the country. 4. Technology Advancement: Since one wants to attract as many tourists as possible, hospitality organizations constantly need to upgrade and improve their products and services Example: Singapore Flyer, using faster and newer technology in hotels to so that the customer is satisfied. 5. Promotes Creativity: Organizations are constantly thinking of new and creative ideas to attract more tourists. 6. More Job Opportunities: Due to Globalization, more visitors come into our country and thus more people are needed to serve and cater to their needs. So, with the advent of globalization, there are a lot of more jobs available for people within the hospitality industry.
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7. Boosts the Travel Industry: Due to globalization more people move around, to facilitate this, the travel industry needs to grow as well. People who come into our country – by air, or ship, or land - use the transport services offered as well. 8. Variety of International Services/Cuisines: Since there are a lot of different visitors with various cultures, customs, cuisines, and languages, the hospitality industry includes recipes and various other services to cater to them. These services are available to the locals too, which makes it even better. The Negative Impacts of Globalization are as follows: 1. Language Barriers: Due to Globalization, the hospitality Industry can employ people from different countries – as it is usually cheaper – they may sometimes have problems in communicating with the customers. Many customers get quite irate as a result of this. 2. Cultural Barriers: As there are people from various cultures, one needs to be careful not to offend them. For Example, a Muslim will not eat pork – one needs to make sure not serve food which contains pork. (Unless specifically asked). What is acceptable by one culture may be frowned upon by another? 3. Events/Disasters in other Countries: A disaster or even taking place in one country may affect our country (the home country) also. For example, the financial crisis makes less people want to spend money or travel; due to increase in terrorism some visitors get are not ready to travel to certain countries. 4. Seasonal Employment: During peak periods, a lot of jobs are available but as soon as the tourists go back the jobs disappear as well. For example: Goa – India; the locals in Goa get their income only during the peak season, (Dec- Feb and April – July) after which they have no jobs and no income. 5. Increasing use of technology to communicate: Due to international barriers, there has been a steady increase in the use of technology for communication (through the internet, voice recordings). This removes the human touch. 6. Developing Countries: Countries that are unable to keep up with the advancement in technology tend to lose out. Example: Africa does not have the infrastructure or technology as yet to welcome large amount of foreign visitors, though it does have a lot of natural attractions. To increase the flow, it would
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have to improve conditions; otherwise tourists have a vast sea of areas to choose from. 7. Increase in Crime Rate: With the increase in tourists, crimes increase too. Example: pick-pocketing, hustling, rape, smuggling. 8. Bad Habits: People from other countries sometimes influence the local youth in a bad way. Increase in drugs and promiscuous behavior, etc. 9. Environmental Depletion: Globalization causes an imbalance in the eco system. People usually throw their garbage around everywhere which could cause sicknesses, to encourage more visitors, areas of greenery are cleared and wildlife killed - which is a major cause for global warming. 10. Loss of Cultural Pride and Values: To suit customer needs one needs to change or modify various services and products. For example: Certain food dishes are changed (in taste, names become more westernized) to make them more attractive to visitors. This, in a way, leads to the loss of culture as one wants to become and behave like the tourists that come into our country.
4.2 Impact of Globalization on the Tourism:
1. Economic Benefits: The main positive economic impacts of sustainable (coastal) tourism relate to foreign exchange earnings, contributions to government revenues, generation of employment and business opportunities. Some of the most important economic benefits that sustainable tourism brings along are mentioned here. Further information on economic contributions of tourism can be found on the website of the World Travel and Tourism Council. 2. Foreign exchange earnings: Tourism expenditures, the export and import of related goods and services generate income to the host economy. Tourism is a main source of foreign exchange earnings for at least 38 % of all countries (World Tourism Organisation). 3. Employment generation: The rapid expansion of international tourism has led to significant employment creation. For example, the hotel accommodation sector alone provided around 11.3 million jobs worldwide in 1995. Tourism can generate jobs directly through hotels, restaurants, taxis, souvenir sales and indirectly through the supply of goods and services needed by tourism-related businesses.
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According to the World Tourism Organisation tourism supports some 7 % of the world’s employees. 4. Stimulation of infrastructure investment: Tourism can induce the local government to improve the infrastructure by creating better water and sewage systems, roads, electricity, telephone and public transport networks. All of this can improve the quality of life for residents as well as facilitate tourism. 5. Contribution to local economies: Tourism can be a significant, even essential part of the local economy. Because the environment is a basic component of the tourism industry’s assets, tourism revenues are often used to measure the economic value of protected areas. There are other local revenues that are not easily quantified, as not all tourist expenditures are formally registered in the macroeconomic statistics. Money from tourism is earned through informal employment, such as street vendors and informal guides. The positive side of informal or unreported employment is that the money is returned to the local economy and has a great multiplier effect as it is spent over and over again. The World Travel and Tourism Council estimate that tourism generates an indirect contribution equal to 100 % of direct tourism expenditures. 6. Direct financial contributions to nature protection: Tourism can contribute directly to the conservation of sensitive areas and habitat. Revenue from parkentrance fees and similar sources can be allocated specifically to pay for the protection and management of environmentally sensitive areas. Some governments collect money in more far-reaching and indirect ways that are not linked to specific parks or conservation areas. User fees, income taxes, taxes on sales or renal of recreation equipment and license fees for activities such as hunting and fishing can provide governments with the funds needed to manage natural resources. 7. Competitive advantage: More and more tour operators take an active approach towards sustainability. Not only, because consumers expect them to do so but also because they are aware are that intact destinations essential for the long term survival of the tourism industry. More and more tour operators prefer to work with suppliers who act in a sustainable manner, e.g. saving water and energy, respecting the local culture and supporting the well being of local communities. In 2000 the international Tour Operators initiative for Sustainable Tourism was founded with the support of UNEP.
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4.3 Commonwealth th Games 2010:
The Commonwealth Games were held from 3rd to 14th October 2012 in Delhi, It officially known as the XIX Commonwealth Games, A total of 6,081 athletes from 71 Commonwealth nations and dependencies competed in 21 sports and 272 events, making g it the largest Commonwealth Games to date. It was also the largest international multi-sport sport event to be staged in Delhi and India, eclipsing the Asian Games in 1951 and1982. Organisation: It was organised by the Indian Olympic Association vice-chairman vice Raja Randhir Singh. Costs: The initial total budget estimated by the Indian Olympic Association in 2003 for hosting the Games was 1,620 crore (US$293.22 million). In 2010, however, the official total budget soon escalated to an estimated 11,500 crore (US$2.08 billion), a figure which excluded non-sports-related non infrastructure development. Business Today magazine estimated that the Games cost 60,000 crore (US$10.86 billion), The 2010 Commonwealth Commonwealth Games are reportedly the most expensive Commonwealth Games ever.
4.4 Atithi Devo Bhava a
Guest is God: The verse is from the Taittiriya Upanishad, who says: "Matru devo bhava, Pitru devo bhava, Acharya devo bhava, Atithi devo bhava". It literally literal means “The Mother is God, the Father is God, the Teacher is God, and the guest is God." Campaign by the Government of India: India attracts millions of tourists each year, 3.3 million in 2003, but lags far behind other destinations. To attempt to improve impr the number of tourists travelling to India, the Tourism Department of India started the Atithi devo bhavah campaign with the theme Incredible India. 'Atithi Devo Bhavah' is a Social Awareness Campaign aimed at providing the inbound tourist a greater sense of being welcomed to the country. The campaign targets the general public, while focusing mainly on the stakeholders of the tourism industry. The campaign provides training and orientation to taxi driver, guides, immigration officers, police and other other personnel who interact directly with the tourist.
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Bollywood actor Aamir Khan is the brand ambassador of the 'Atithi Devo Bhavah' campaign for the Ministry of Tourism. Guest is god. The tourism industry is one of the most profitable industries in India and is also credited with contributing a substantial amount of foreign exchange. It is the largest service industry in India, with a contribution of 6.23% to the national GDP and 8.78% to the total employment in India. India witnesses approximately 3 million annual foreign tourist arrivals every year.
4.5 Gujarat Tourism
Indian Economy The process of economic reforms initiated since 1991 has been providing an investor-friendly environment through a liberalised policy framework spanning the whole economy. The Indian economy has transformed into a vibrant, rapidly growing consumer market, comprising over 300 million strong middle class populations with increasing purchasing power. India provides a large market for consumer goods on the one hand and imports capital goods and technology to modernize its manufacturing base on the other. An abundant and diversified natural resource base, sound economic, industrial and market fundamentals and highly skilled and talented human resources, make India a destination for business and investment opportunities with an assured potential for attractive returns. Farreaching measures introduced by the government over the past few years to liberalize the Indian market and integrate it with the global economy are widely acknowledged. If on one hand agriculture received the immediate attention on the other side industrial sector was developed at a fast pace to provide employment opportunities to the growing population and to keep pace with the developments in the world. The Indian economy itself has been undergoing a remarkable transformation since the reforms of 1991, which deregulated the economy, internally, while liberalising trade and investment policies. Over the past decade, India has been one of the fastest-growing major economies in the world and, in recent years, has reached a growth trajectory of 8-9 per cent a year. Though this growth slowed down a little in the aftermath of the global economic crisis, our economy has rebounded. After dipping to 6.7 per cent in 2008- 09, in the year 2009-10 it was revived to 8.0 per cent. The economists lauded the 6.7 per cent growth and 8.0 per cent growth rate of the Indian economy in 2008-09 and 2009-10, despite the global financial crisis. The 8.9 per cent GDP growth in the first half of 2010-11 suggests that the
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economy is operating close to its trend growth rate, powered mainly by domestic factors. The kharif harvest has been good and AN OVERVIEW OF ECONOMY IV SocioEconomic Review, Gujarat State, 2010-11 rabi prospects look promising. Good agricultural growth has boosted rural demand. Export performance in recent months has been encouraging. The RBI has made baseline projection of real GDP growth at 8.5 percent but with an upside bias. While as per the advanced estimates of Central Statistics Office for National Income, released on February 7, 2011, the growth in GDP during 2010-11 is estimated at 8.6 per cent as compared to the growth rate of 8.0 percent in 2009-10. This estimate is boosted by increased farm output. A robust monsoon and strong harvest this year has seen the sector flourish. The government’s estimates for agriculture and allied activities growth this year stands at 5.4 per cent compared to the previous year’s 0.4 per cent. Manufacturing, meanwhile, estimated to retain a steady growth of 8.1 per cent and services will hold its ground at 9.6 percent. When it comes to issues such as food security, health, poverty alleviation, climate change, disaster management, women’s empowerment, and economic development, today, with sustained high economic growth rates over the past decade, India is in a better position. However, an uncertain external environment calls for a continued focus on the domestic growth drivers. To sustain high growth over an extended period, it will be vital to pursue reforms to make the economy more competitive and the economic regulatory and oversight systems more efficient and sensitive to new developments, as well as delivering fiscal consolidation. India’s macroeconomic context is different from that of advanced and other EMEs (Emerging Market Economies) in at least four respects. One, India is facing rising inflationary pressures, albeit largely due to supply side factors. Two, households, firms and financial institutions in India continue to have strong balance sheets, although there is a need to encourage domestic consumption and investment demand. Three, since the Indian economy is supply-constrained, pick-up in demand could exacerbate inflationary pressures. Four, India is one of the few large EMEs with twin deficits - fiscal deficit and current account deficit.
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Chapter 5 Future Of Hospitality And Tourism
5.1 SWOT Analysis Of Hospitality Industry
Strengths 1. Natural and cultural diversity: India has a rich cultural heritage. The "unity in diversity" tag attracts most tourists. The coastlines, sunny beaches, backwaters of Kerala, snow capped Himalayas and the quiescent lakes are incredible. 2. Demand-supply gap: Indian hotel industry is facing a mismatch between the demand and supply of rooms leading to higher room rates and occupancy levels. With the privilege of hosting Commonwealth Games 2010 there is more demand of rooms in five star hotels. This has led to the rapid expansion of the sector 3. Government support: 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. 4. Increase in the market share: India's share in international tourism and hospitality market is expected to increase over the long-term. New budget and star hotels are being established. Moreover, foreign hospitality players are heading towards Indian markets. Weaknesses 1. Poor support infrastructure: Though the government is taking necessary steps, many more things need to be done to improve the infrastructure. In 2003, the total expenditure made in this regard was US $150 billion in China compared to US$ 21 billion in India. 2. Slow implementation: The lack of adequate recognition for the tourism industry has been hampering its growth prospects. Whatever steps are being taken by the government are implemented at a slower pace.
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3. Susceptible to political events: The internal security scenario and social unrest also hamper the foreign tourist arrival rates.
Opportunities 1. Rising income: Owing to the rise in income levels, Indians have more spare money to spend, which is expected to enhance leisure tourism. 2. Open sky benefits: With the open sky policy, the travel and tourism industry has seen an increase in business. Increased airline activity has stimulated demand and has helped improve the infrastructure. It has benefited both international and domestic travels. Threats 1. Fluctuations in international tourist arrivals: The total dependency on foreign tourists can be risky, as there are wide fluctuations in tourism industry. 2. Increasing competition: Several international majors like the Four Seasons, Shangri-La and Aman Resorts are entering the Indian markets. Two other groups the Carlson Group and the Marriott chain - are also looking forward to join this race. This will increase the competition for the existing Indian hotel majors.
5.2 Hospitality in the Indian Economy
The contribution of the entire travel and tourism sector in India to Gross Domestic Product is estimated to rise from 8.6% (USD 117.9 billion) in 2010 to 9.0% (USD 330.1 billion) by 2020. Between 2010 and 2019 the demand for travel and tourism in India is expected to grow annually by 8.2%, which will place India at the third position in the world. Travel and tourism in India also accounts for 49,086,000 jobs in 2010 (about 10% of total employment) and is expected to rise to 58,141,000 jobs (10.4% of total employment) by 2020. Within the travel and tourism sector, the Indian hospitality industry is one of the fastest growing and most important segments, revenue-wise as well as employment-wise. According to an estimate of the Economic Survey of India and
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Technopak, the Indian hotel industry accounts for USD 17 billion, 70% (USD 11.85 billion) of which take their origin from the unorganised sector and the remaining 30% (USD 5.08 billion) from the organised sector. In 2000, India hosted only 2.6 million international visitors. By 2009, the figure had already increased to 5.13 million arrivals. Compared to other tourism markets in nearby Asian countries, this is still a limited success, but one with the potential to develop into a tremendous success story.
5.3 Scope And Future Prospect Of Hospitality And Tourism Industry.
In the Indian context, the hospitality industry contributed only 2% of the GDP in 2003-04. However, it is projected to grow at a rate of 8.8% by 2016, which would place India as the second-fastest growing tourism market in the world. This year the number of tourists visiting India is estimated to have touched the figure of 4.4 million. With this huge figure, India is becoming the hottest tourist destination. The arrival of foreign tourists has shown a compounded annual growth of 6% over past 10 years. Besides, travel and tourism is the second highest foreign exchange earner for India. Moreover, it is also estimated that the tourism sector will account for nearly 5.3 per cent of GDP and 5.4 per cent of total employment. Tourism in expected to grow further over the next few years due to the changes taking place on the demand and supply sides. The factors that will account for the further growth of tourism will include the following:
• • • • •
Change in standards of living More disposable income Better education Long leisure time Aging population
Owing to growth of tourism sector, infrastructure will improve, competition will increase, new products will enter the market and better services will be provided. Today, all the major international hotels like Holiday Inn, Radisson, Le Meridien, Accor, Ibis, TGIF, Hyatt, and Hilton are present in India. With all the positive signals, hospitality industry in India is getting consolidated and has many more opportunities to grow further.
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5.4 Future In Tourism Industry:
Rising sun with birds chirping in a pleasant wee hours of the morning, denotes a new beginning of a new day, Where it is felt that the last day’s distress and sufferings are washed away with a new day. In the same way the rising in the flow of foreign tourism with delightful tour memories denotes a new beginning for a nation in a global market. But, when we look at India in the context of world’s tourism inflow, we observe that we need to apply more effort wards this issue. From the analysis done prior to 2008 on tourism inflow, we came to know that we cover just 0.5% of the total tourism traffic of the world. This fact does not show a healthy trend. But now Tourism in India is the largest service industry contributing up to 6.23% to the National Gross Domestic Product (GDP) and providing 8.78% of the total employment opportunity in India. In 2008, tourism industry in India generated about USD 100 billion and its now expected to rise up to USD 275.5 billion by 2018, with an annual growth rate of 9.4%. According to World travel and tourism Council, India will definitely be one of the favorite tourist destinations from 2009 to 2018. This statement is hence proved by Travel and Tourism Competitiveness Report, which ranked India at the 6th place in tourism and hospitality. If we compare the data on Foreign Tourist Arrivals (FTAs) for April 2011 from the last two years, then we can see a remarkable growth rate in tourism traffic. In April 2011 FTAs was recorded as 4.17 lakhs tourist arrivals, as compared to April 2010 it was 3.54 Lakhs and just 3.48 lakhs in April 2009. With the rising trend in Tourism, still there are certain issues which are downgrading us. So, we need to work on it. We must need to conserve India’s 5000 years of historical glory, its present heritage and cultural tourism along with medical, business and sports tourism.
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World Tourism Day is celebrated annually on 27 September. Its purpose is to foster awareness among the international community of the importance of tourism and its social, cultural, political and economic value. The event seeks to address global challenges outlined in the UN Millennium Development Goals (MDGs) and to highlight the contribution the tourism sector can make in reaching these goals. This year’s theme is a celebration of tourism’s role in linking together the cultures of the world through travel. With millions of people travelling the world each year, never before have so many people been to so many places, nor been so exposed to other cultures. This interaction between individuals and communities, and their diverse cultures, leads to tolerance, respect and mutual understanding – the building blocks for a more peaceful world. The Egyptian city of Aswan will host the official 2011 World Tourism Day (WTD) celebrations, which will include a High-Level Think Tank on this year’s theme, ‘Tourism – Linking Cultures’ (27 September 2011)
5.5 Future of Tourism Sector In India
India is probably the only country that offers various categories of tourism. These include history tourism, adventure tourism, medical tourism (ayurveda and other forms of Indian medications), spiritual tourism, beach tourism (India has the longest coastline in the East) etc. By 2020, Tourism in India could contribute Rs 8,50,000 crores to the GDP. (Source- WTTC).
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In other words, every man, woman and child could become richer by Rs 7,000. India has yet to realize its full potential from tourism. The Travel and Tourism industry holds tremendous potential for India’s economy. It can provide impetus to other industries, create millions of new jobs and generate enough wealth to help pay off the international debt. That is why we have included Tourism amongst the Core Sectors of the Indian Economy. India on the World Map The Indian tourism industry has not had it so good since the early 1990s. Though the India economy had slowed, it was still growing faster than the rest of the world. In 2009, the country is seen rising 6.5 percent, compared to the world output, which is seen falling 0.4 percent. With Indian economy growing at around 7% per annum and rise in disposable incomes of Indians, an increasing number of people are going on holiday trips within the country and abroad resulting in the tourism industry growing wings. The Indian tourism sector is seen generating $42.8 billion by 2017, a 42 percent surge from 2007, according to an industry research note by auditing and consulting firm Deloitte Touche. It is fast turning into a volume game where an ever-burgeoning number of participants are pushing up revenues of industry players (hotels, tour operators, airlines, shipping lines, etc). Thus, the tourism sector is expected to perform very well in future and the industry offers an interesting investment opportunity for long-term investors.
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Chapter 6 Limitation In Hospitality & Tourism Industry 6.1 Limitation:
1. Weather: Weather has a major affect on H&T, for example a tropical resort may lose customers when it rains or is really windy, so these resorts might have a policy that states if you leave early because of weather there will be no refunded money. Another example of weather affecting H&T is skiing, if you have a really good snow storm a ski hill may double its normal business, also if there is a reported prediction of a good snow year big resorts like Big Sky might have many more reservations made in the off season even before the peak season hits. Natural disasters also affect H&T. Hurricane Katrina and the tsunamis in Sri Lanka in 2005 are good examples of specific disasters that dramatically affected all industries in those areas and the surrounding regions. Tornados, hail storms, mud slides (Beartooth Highway for example), and floods are also examples of how weather and natural disasters affect H&T in communities. 2. Political Conditions: The first idea that comes to mind is 9/11, many people became afraid to fly, and worse, in the United States planes were not even allowed to fly for almost three days. Canceled flights definitely affect H&T. Another instance would be hunting in places like Africa and Pakistan, there are very majestic animals to hunt there, but because of unstable governments and unsafe conditions many people would rather not take the risk. Policy changes such as the reduced number of snowmobiles in Yellowstone Park also affect H& T. When fewer people were allowed into the park on their machines, fewer people visited West Yellowstone in the winter. Another Yellowstone Park example would be the closure of the East Entrance in the winter to snow coaches and snowmobiles which will affect winter traffic in Cody and Cooke City. 3. Economic Conditions: In economic recession people lose jobs or tend to save their money because they do not know when things are going to get better. When people curtail spending due
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to an economic recession, the first thing they stop spending money on is luxury items. These items include: going out to eat at restaurants, going on trips, and basic recreation. These three activities are part of H&T; therefore, the H&T Industry is one of the first industries to get hurt when the economy recesses. In economic expansion people have more money and tend to spend more money on things like vacations, going to eat at restaurants, and recreation. 4. Places : Limitation in places means there some place which affects the tourism sector. 5. Past bad Impression : It means when any foreigner went there nation with bed impression, that time always he talk about their experience. 6. Poor support Infrastructure: Though the government is taking necessary steps, many more things need to be done to improve the infrastructure. In 2003, the total expenditure made in this regard was US $150 billion in China compared to US$ 21 billion in India 7. Fluctuations in international tourist arrivals: The total dependency on foreign tourists can be risky, as there are wide fluctuations in international tourism. Domestic tourism needs to be given equal importance and measures should be taken to promote it. 8. Problem of Seasonality: Hotel is indeed a seasonal business. There is seldom 100 percent occupancy Except in peak season. In India on an average, it is 59.7 percent. Therefore, a hotel cannot use its property fully and it accounts for low income. The problem is aggravated in case occupancy is adversely affected owing to bad weather or any other reason such as slump in business, international crisis or disturbances etc. Food cannot be stored due to its perishable nature. Similarly, hotel staff cannot be reduced temporarily at the time of poor demand of rooms. All these account for poor earnings. 9. High Consumer Expectations: Consumer satisfaction is key to success for hotel industry. In these days, consumers are well informed and their expectations go on changing very
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frequently. Therefore, satisfying a consumer is a most challenging task as it depends not only on tangible but on intangible factors as well. The best of room comfort and the choicest products of culinary art fail to satisfy some people. Services have to be highly personalized in this industry. This makes the hotel industry the most difficult one from the marketing point of view. 10. Low Profitability: Revenue mainly comes from the rooms and sale of food & beverage in the hotel industry. Average occupancy level and average room rate have been found very low as indicated in table 1.2. However, slight increase has been noted in both in 2003-04. But it is not sufficient to increase the profitability level of the hotel industry up to mark. Further, on one hand food & beverage revenue is low while on the other hand food & beverage cost as well as labour cost is high as shown by below table which affect the profitability of the hotel industry adversely. 11. High Direct and Indirect Taxes: The hotel industry is unfavorably treated from taxation point of view. Hotels do not get tax benefits as enjoyed by other industrial enterprises. Rebates in corporate income tax, service tax, custom duty, municipal taxes etc. are offered to other industries. The hotel industry does not get these benefits despite its $ low return on investment. Therefore, the industry cannot keep pace with inevitable changes in market trends. 12. Problems of Raising Funds: Most of the hotels are built in the heart of towns where land is very costly further, cost of constructing a new hotel building or renovating an existing facility is also very high. Therefore, huge capital is required to complete construction or to renovate the existing one. It is indeed very difficult to mobilize huge funds from various sources. The poor financial viability of the hotel industry has further aggravated the position. The solution of these problems needs a very high degree of managerial skill and expertise.
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6.2 Mumbai attack in 2008:
The 2008 Mumbai attacks were 11 coordinated shooting and bombing attacks across Mumbai, India's largest city, by Islamist terrorists. who were trained and came from Pakistan. The attackers allegedly received reconnaissance (race) assistance before the attacks. Ajmal Kasab, the only attacker who was captured alive, later confessed upon interrogation that the attacks were conducted with the support of Pakistan's ISI. The attacks, which drew widespread global condemnation, began on Wednesday, 26 November and lasted until Saturday, 29 November 2008, killing 164 people and wounding at least 308.
Eight of the attacks occurred in South Mumbai: at Chhatrapati Shivaji Terminus, the Oberoi Trident, the Taj Mahal Palace & Tower, Leopold Cafe, Cama Hospital (a women and children's hospital),the Nariman House Jewish community centre, the Metro Cinema, and a lane behind the Times of India building and St. Xavier's College. There was also an explosion at Mazagaon, in Mumbai's port area, and in a taxi at Vile Parle. By the early morning of 28 November, all sites except for the Taj hotel had been secured by Mumbai Police and security forces. On 29 November, India's National Security Guards (NSG) conducted Operation Black Tornado to flush out the remaining attackers; it resulted in the deaths of the last remaining attackers at the Taj hotel and ending all fighting in the attacks. Ajmal Kasab disclosed that t the he attackers were members of Lashkar-e-Taiba, the Pakistan-based based militant organisation, considered a terrorist organisation by
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India, Pakistan, the United States, the United Kingdom, and the United Nations, among others. The Indian government said that the attackers came from Pakistan, and their controllers were in Pakistan. On 7 January 2009, Pakistan’s Information Minister Sherry Rehman officially accepted Ajmal Kasab's nationality as Pakistani. On 12 February 2009, Pakistan's Interior Minister Rehman Malik asserted that parts of the attack had been planned in Pakistan. A trial court on 6 May 2010 sentenced Ajmal Kasab to death on all the 86 charges for which he was convicted. On his appeal against this verdict, Bombay High Court on 21 February 2011 and Supreme Court of India on 29 August 2012 upheld his death punishment. 11 July 2006 Train bombings at the Mahim station
One of the bomb-damaged coaches at the Mahim station in Mumbai during the11 July 2006 train bombings. There have been many bombings in Mumbai since the 13 coordinated bomb explosions that killed 257 people and injured 700 on 12 March 1993. • On 6 December 2002, a blast in a BEST bus near Ghatkopar. On 6 December 2002, a blast in a BEST bus near Ghatkopar station killed two people and injured 28 • A bicycle bomb exploded near the Vile Parle station 27 January 2003. A bicycle bomb exploded near the Vile Parle station in Mumbai, killing one person and injuring 25 on 27 January 2003, a day before the visit of the Prime Minister of India Atal Bihari Vajpayee to the city.
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Chapter 7 Conclusion
Tourism industry in India is growing and it has vast potential for generating employment and earning large amount of foreign exchange besides giving a fillip to the country’s overall economic and social development. But much more remains to be done. Eco-tourism needs to be promoted so that tourism in India helps in preserving and sustaining the diversity of the India's natural and cultural environments. Tourism in India should be developed in such a way that it accommodates and entertains visitors in a way that is minimally intrusive or destructive to the environment and sustains & supports the native cultures in the locations it is operating in. Moreover, since tourism is a multi-dimensional activity, and basically a service industry, it would be necessary that all wings of the Central and State governments, private sector and voluntary organizations become active partners in the endeavor to attain sustainable growth in tourism if India is to become a world player in the tourism industry.