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Marketing and Sales Introduction
Hospitality is the relationship between the guest and the host, or the act
or practice of being hospitable. Specifically, this includes the reception and
entertainment of guests, visitors, or strangers. The hospitality industry is a
broad 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 Indian hospitality industry has emerged as one of the key industries
driving growth of the services sector in India. It has evolved into an industry
that is sensitive to the needs and desires of people. The fortunes of the
hospitality industry have always been linked to the prospects of the tourism
industry and tourism is the foremost demand driver of the industry. The Indian
hospitality industry has recorded healthy growth fuelled by robust inflow of
foreign tourists as well as increased tourist movement within the country and it
has become one of the leading players in the global industry
India's
rich
cultural
heritage
and
history,
food,
friendly
people,
architectural monuments, hospitality and services are positive strengths for its
tourism sector, which make it ahead of many of the emerging markets. Today,
tourism is the most vibrant tertiary sectors and has a strong hold on the
economy. The sector contributes 6.23 per cent to the national gross domestic
product (GDP) and 8.78 per cent of the total employment in India. Moreover,
India stands 42nd in the world rankings in terms of foreign tourist arrivals
(FTAs) in the country, according to a report titled 'Competitiveness of Tourism
Sector in India with Selected Other Countries of the World' by Ministry of
Tourism. The World Travel and Tourism Council (WTTC) named India as one of
the fastest growing tourism industries for the next 10 to 15 years.
The constant transformation has made the Indian hotel industry more
functional and practical and has gained a level of acceptance world over. The
standards of facilities and services offered have evolved over the last decade
towards the extensive use of technology, environment friendly services, pricing,
market segmentation, regional preferences, etc. The Indian hotel industry has
1
seen a significant growth in room inventory across categories from upscale
luxury to limited services and boutique & budget hotels. The occupancy and the
room rates have seen continued gains both from the domestic and the
international traveler in both the business and leisure segment
In addition, India has also developed as one of the world's most costefficient medical tourism destinations, and is anticipated that the Indian
medical tourism market will register a compound annual growth rate (CAGR) of
27 per cent during 2011-15, as per a RNCOS report titled 'Booming Medical
Tourism in India'.
Market Size
The amount of foreign direct investments (FDI) inflow into the hotel and
tourism sector during April 2000 to January 2013 was worth US$ 6,561.78
million, as per data provided by Department of Industrial Policy and Promotion
(DIPP), Ministry of Commerce.
FTAs (foreign tourist arrivals) have shown a growth of 2.8 per cent in
March 2013 over March 2012 while the growth rate in Foreign Exchange
Earnings (FEEs) from tourism stood at 21 per cent over the same period in
rupee terms. FTA during March 2013 was recorded at 640,000 as compared to
623,000 during the month of March 2012.
The Visa on Arrival (VoA) Scheme of the Government of India has
registered a growth of 54.6 per cent in February 2013. A total number of 1,947
VoAs were issued last month as compared to 1,259 VoAs issued in February
2012.
Major Developments & Investments
India is among the top five tourism source markets for South Africa. The country
has received 79,306 Indian tourists during January-September 2012, according to the
data released by South African Tourism
Mumbai is among the 10 most affordable destinations in the world, according to a
cost comparison study done by Trip Advisor on common incidental items and services
that travellers purchase while staying at a hotel
The International Tourism Mart organised by the Ministry of Tourism was
inaugurated at Guwahati by Mr Janaki Ballav Patnaik, Governor of Assam. It is the first
international tourism event to be organised in the North Eastern region of India
2
India and Canada plan to strengthen cooperation in tourism sector. Both the
countries will identify areas for working together and explore new opportunities in
tourism sector
India and Japan plan to strengthen cooperation in tourism sector. Both the
countries will identify areas for working together and explore new opportunities in
tourism sector especially in the field of human resource development and investment in
the tourism sector
Egypt has initiated talks with the Tata Group to set up a hotel chain in the African
country
InterContinental Hotels Group (IHG) has signed 13 new hotels in India in 2012,
boosting its existing pipeline of hotels in the country to 47
Marriott International plans to open 52 more properties in India over a period of
four years
Tourism Corporation of Gujarat Ltd (TCGL) and Indian Oil Corporation Ltd (IOCL)
have signed a memorandum of understanding (MoU) to help promote tourism in the State
by offering facilities to tourists at IOCL petrol pumps
Government Initiatives
The Ministry of Tourism, Government of India, has consistently been working on
improving India as a prime destination for tourists. It further aims at promoting various
Indian tourism products vis-à-vis competition faced from various destinations and to
increase India's share of the global tourism market.
The Government of India allows 100 per cent foreign direct investment (FDI) in
the hotel sector on automated basis.
The allocation for Ministry of Tourism in the Union Budget 2013-14 has been
increased by Rs 87.66 crore (US$ 16.03 million) to Rs 1,297.66 crore (US$ 237.23
million).
Moreover, the Indian companies in the hotel sector, with a total project cost of Rs
250 crore (US$ 45.70 million) or more, irrespective of their geographical location, have
been allowed to tap the external commercial borrowing (ECB) route. The maximum
ECB by an individual company or group, as a whole, has been restricted to US$ 3
billion.
The fourth meeting of ASEAN and India Tourism Ministers was held in Vientiane,
Lao People's Democratic Republic (PDR). A protocol to amend the memorandum of
understanding (MoU) between ASEAN and India to strengthen tourism cooperation was
also signed.
3
Mr Chiranjeevi, Union Minister for Tourism, Government of India, has
complimented the Government of Madhya Pradesh for becoming the first State in the
country to fully utilise plan funds released to them by the Ministry of Tourism,
Government of India for the development of tourism infrastructure at various tourist
sites in the State.
In a bid to give a boost to tourism in Uttarakhand, the State Government has
identified 21 places endowed with natural beauty to develop them into major tourist
destinations.
The Ministry of Tourism has also sanctioned central finance assistance (CFA)
worth Rs 43.87 crore (US$ 8.02 million) for the development of Solapur mega circuit in
Maharashtra.
Road Ahead
The tourism sector can also be considered as the backbone for allied
sectors, like hospitality, civil aviation, and transport. Domestic tourism is very
huge in the country, promoted by various intents. Pilgrim and leisure tourism
are two very important sectors.
The Ministry of Tourism has also played an important role in the
development of the industry, initiating advertising campaigns such as the
'Incredible India' campaign, which promoted India's culture and tourist
attractions in a fresh and memorable way. The industry has been witnessing an
upswing for last few years partially due to an excellent 'Incredible India'
campaign and is expected to increase up to US$ 431.7 billion by the end of
2020.
On the other front, India has the potential to develop the rural tourism
industry. This can benefit the local community economically and socially, and
enable interaction between tourists and locals for a mutually enriching
experience. The people know that the restaurant/hospitality industry can be a
truly unique and fun workplace, and diverse in the scope of responsibilities that
one can attain. As well as being a source for a very respectful income. It's
obvious there are many career options in the hospitality/restaurant industry.
Each person will know, in their own mind, which, if any, restaurant or
hospitality career appeals to them.
Growth drivers
4
The fortunes of the hospitality industry are closely linked to the tourism
industry and hence tourism is one of the most important growth drivers. In
addition, all factors that aid growth in the tourism industry also apply to the
hospitality industry. The Indian hospitality industry has recorded healthy
growth in recent years owing to a number of factors:
Increased tourist movement: Increased FTAs and tourist movement within
the country has aided growth in the hospitality industry. Healthy corporate
profits and higher disposable incomes with easier access to finance have
driven the rise in leisure and business tourism, thus having a positive
impact on the hospitality industry.
Economic growth: India is one of the fastest growing economies in the
world. It recorded healthy growth in the past few years, at more than 9%
each during FY06-FY08. Despite the global economic slowdown, the Indian
economy clocked growth of 6.7% and 7.4% in FY09 and FY10 respectively.
Attractiveness of India has encouraged foreign players to set up their
operational facilities in the country. Domestic industries have also made
heavy investments to expand their facilities through green field and brown
field projects.
Changing consumer dynamics and ease of finance: The country has
experienced a change in consumption patterns. The middle class population
with higher disposable incomes has caused the shift in spending pattern,
with discretionary purchases forming a substantial part of total consumer
spending. Increased affordability and affinity for leisure travel are driving
tourism in India and in turn aiding growth of the hospitality industry.
Emergence of credit culture and easier availability of personal loans have
also driven growth in the travel and tourism and hospitality industries in the
country.
Characteristics of Service Industry
Intangible nature of services: The essential difference between goods
and services is that goods are produced but services are performed.
Inseparability: This means that the act of production and consumption is
simultaneous and takes place in the same environment, not in the
consumer’s home environment. It also means that most of the staff of the
service companies have some consumer contact and are seen by the
customer.
Perishability: Products can be stored for future sale; services cannot.
Services are perishable “like a running tap in a sink with no plug”. The
5
sale of an empty hotel room, airline seat is lost forever. Services, more
importantly, the time available to experience them, cannot be stored. For
example, there is only one chance to enjoy a summer vacation in 1990.
No possibility of creating and holding stocks: Linked with the
inseparability and perishability that it is not possible for a service
producer to create a stock of products to be used to satisfy daily
fluctuations in demand.
Heterogeneity: This means that every service performance is unique to
each customer.
Unique features of hospitality
More use of emotional appeals in promotions.
Because of the
intangible nature of services, customers tend to make more use of
emotional appeals when they buy.
It is not enough to talk about the
number of guest rooms etc., it must be given a distinctive personality to
the product.
E.g. Hilton is associated with the phase of “America’s
Business Address”.
Greater significance of word-of-mouth advertising: Because there are
few sampling or testing opportunities in our industry, customers have to
rely on the advice of others, including friends, relatives, and business
associates. That is why, positive “word-of-mouth” information is crucial to
the success of most hospitality and travel organizations. Providing a
consistent quality of service and associated facilities is a key ingredient in
getting “good word-of-mouth”.
It is also the basic fundamental of
marketing.
Increased importance of consistency: Designing, adapting, promoting
products that can meet the long-run needs, expectations and interests of
prospective customers is the fundamental role of the marketers in the
industry.
Those products should be delivered consistently as well.
Consistency, which ensures that customers leave with a consistent
impression of an organization’s standards, is especially important in
multinational organizations. Because customers tend to make decisions
about the entire company based on their experiences in individual units.
The concept of branding is the result of this fact.
Increased
importance
organizations:
There
of
are
relationships
several
unique
with
complementary
relationships
among
organizations in our industry that have a significant impact on the
marketing of hospitality services. Managing these relationships is an
6
added role that hospitality marketers must play. The others outside the
organization, such as suppliers of facilities, attractions and events,
ground transportation, and other support services in or between travel
destinations, and in addition visitors and residents, have a direct impact
on the customer’s satisfaction.
Seasonality and demand fluctuations: It is a characteristic of most
leisure tourism markets that demand fluctuates greatly between seasons
of the year.
As a result, the occupancies in many tourism businesses
increase to 90 to 100 per cent in the high season but drops to 30 per cent
or less in the low season.
In addition, seasonal closure of many leisure
tourism businesses is common as well.
These demand variations in
tourism is more important because of perishability.
Interdependence of tourism products:
attractions in a destination are linked.
The fortunes of tourism
Since a vacationer chooses
attractions at a destination together with the products of accommodation,
transport, catering etc., all organizations should function in coordination.
High fixed costs of service operations:
In the travel and tourism
industry, it is generally the case that the operations have high fixed costs
and relatively low variable costs. This fact focuses all service operators’
attention on the need to generate extra demand. Since most large scale
businesses are obliged to operate on a very narrow margin between total
cost and total revenue because of intense competition, plus or minus one
percentage point in average load factors makes the difference between
profit and loss.
Fragmented: The Indian hotel industry is highly fragmented with a large
number of small and unorganized players accounting for a lion’s share.
The major players in the organized segment include The Taj, Oberoi, ITC
Hotels, and East India Hotels.
Major players in the Indian Hotel Industry:
Hotel Chains: They comprise major players including Indian Hotels
Company Limited (the Taj Group) and associate companies, EIH Limited (the
Oberoi Group), ITC Hotels Limited (the ITC Welcome Group), Indian Tourism
Development Corporation (ITDC) and Hotel Corporation of India (HCI) (the latter
two being under the Public Sector). Most of these chains had an established
presence in one or more metro cities prior to the tourism boom of the 1980s.
Subsequent to the tourism boom, these chains aggressively expanded
7
their presence in other locations. The private players among the hotel chains are
industry leaders and have well-established brand identities across the different
industry segments.
Small Chains: They are companies that have come up after the tourism
boom of the 1980s and1990s. Due to lack of prior experience in the hotel
industry, these players have preferred to opt for operating/management
arrangements with international players of repute. Some of the companies in
this category are Hotel Leela Venture (with Kempinski), Asian Hotels (Hyatt
International Corporation), Bharat Hotels (formerly with Holiday Inn and Hilton
and now with Intercontinental). As late entrants, most of these hotel companies
have fewer properties, compared with the big chains. However most of these
players have initiated expansion plans during the late 1990s.
Public Sector Chains: ITDC and HCI boast of some of the best locations
in major cities but are relative under performance, as compared with their
private sector counterparts International Hotel Chains. They are also looking at
India as a major growth destination. These chains are establishing themselves
in the Indian market by entering into joint ventures with Indian partners or by
entering into management contracts or franchisee arrangements. Some of
the players who have already entered or plan to enter the Indian market include
Marriott, Star wood, Berggren Hotels, Emaar MGF. Most of these chains have
ambitious expansion plans especially with a strong focus on the budget segment
and tier II cities.
Localized Hotel Companies: They are mainly comprise early entrants
who have an
established localized presence and who preferred not to expand
during the tourism boom but focus on building and catering to a loyal customer
base.
Contribution to 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
8
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 Techno park, the Indian hotel industry
accounts for USD 17 billion, 70% (USD 11.85 billion) of which take their origin
from the un organised 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.
Gross domestic product (GDP) is the market value of all officially recognized final goods
and services produced within a country in a given period of time
9
Hospitality is the relationship between the guest and the host, or the act
or practice of being hospitable. Specifically, this includes the reception and
entertainment of guests, visitors, or strangers. The hospitality industry is a
broad 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 Indian hospitality industry has emerged as one of the key industries
driving growth of the services sector in India. It has evolved into an industry
that is sensitive to the needs and desires of people. The fortunes of the
hospitality industry have always been linked to the prospects of the tourism
industry and tourism is the foremost demand driver of the industry. The Indian
hospitality industry has recorded healthy growth fuelled by robust inflow of
foreign tourists as well as increased tourist movement within the country and it
has become one of the leading players in the global industry
India's
rich
cultural
heritage
and
history,
food,
friendly
people,
architectural monuments, hospitality and services are positive strengths for its
tourism sector, which make it ahead of many of the emerging markets. Today,
tourism is the most vibrant tertiary sectors and has a strong hold on the
economy. The sector contributes 6.23 per cent to the national gross domestic
product (GDP) and 8.78 per cent of the total employment in India. Moreover,
India stands 42nd in the world rankings in terms of foreign tourist arrivals
(FTAs) in the country, according to a report titled 'Competitiveness of Tourism
Sector in India with Selected Other Countries of the World' by Ministry of
Tourism. The World Travel and Tourism Council (WTTC) named India as one of
the fastest growing tourism industries for the next 10 to 15 years.
The constant transformation has made the Indian hotel industry more
functional and practical and has gained a level of acceptance world over. The
standards of facilities and services offered have evolved over the last decade
towards the extensive use of technology, environment friendly services, pricing,
market segmentation, regional preferences, etc. The Indian hotel industry has
1
seen a significant growth in room inventory across categories from upscale
luxury to limited services and boutique & budget hotels. The occupancy and the
room rates have seen continued gains both from the domestic and the
international traveler in both the business and leisure segment
In addition, India has also developed as one of the world's most costefficient medical tourism destinations, and is anticipated that the Indian
medical tourism market will register a compound annual growth rate (CAGR) of
27 per cent during 2011-15, as per a RNCOS report titled 'Booming Medical
Tourism in India'.
Market Size
The amount of foreign direct investments (FDI) inflow into the hotel and
tourism sector during April 2000 to January 2013 was worth US$ 6,561.78
million, as per data provided by Department of Industrial Policy and Promotion
(DIPP), Ministry of Commerce.
FTAs (foreign tourist arrivals) have shown a growth of 2.8 per cent in
March 2013 over March 2012 while the growth rate in Foreign Exchange
Earnings (FEEs) from tourism stood at 21 per cent over the same period in
rupee terms. FTA during March 2013 was recorded at 640,000 as compared to
623,000 during the month of March 2012.
The Visa on Arrival (VoA) Scheme of the Government of India has
registered a growth of 54.6 per cent in February 2013. A total number of 1,947
VoAs were issued last month as compared to 1,259 VoAs issued in February
2012.
Major Developments & Investments
India is among the top five tourism source markets for South Africa. The country
has received 79,306 Indian tourists during January-September 2012, according to the
data released by South African Tourism
Mumbai is among the 10 most affordable destinations in the world, according to a
cost comparison study done by Trip Advisor on common incidental items and services
that travellers purchase while staying at a hotel
The International Tourism Mart organised by the Ministry of Tourism was
inaugurated at Guwahati by Mr Janaki Ballav Patnaik, Governor of Assam. It is the first
international tourism event to be organised in the North Eastern region of India
2
India and Canada plan to strengthen cooperation in tourism sector. Both the
countries will identify areas for working together and explore new opportunities in
tourism sector
India and Japan plan to strengthen cooperation in tourism sector. Both the
countries will identify areas for working together and explore new opportunities in
tourism sector especially in the field of human resource development and investment in
the tourism sector
Egypt has initiated talks with the Tata Group to set up a hotel chain in the African
country
InterContinental Hotels Group (IHG) has signed 13 new hotels in India in 2012,
boosting its existing pipeline of hotels in the country to 47
Marriott International plans to open 52 more properties in India over a period of
four years
Tourism Corporation of Gujarat Ltd (TCGL) and Indian Oil Corporation Ltd (IOCL)
have signed a memorandum of understanding (MoU) to help promote tourism in the State
by offering facilities to tourists at IOCL petrol pumps
Government Initiatives
The Ministry of Tourism, Government of India, has consistently been working on
improving India as a prime destination for tourists. It further aims at promoting various
Indian tourism products vis-à-vis competition faced from various destinations and to
increase India's share of the global tourism market.
The Government of India allows 100 per cent foreign direct investment (FDI) in
the hotel sector on automated basis.
The allocation for Ministry of Tourism in the Union Budget 2013-14 has been
increased by Rs 87.66 crore (US$ 16.03 million) to Rs 1,297.66 crore (US$ 237.23
million).
Moreover, the Indian companies in the hotel sector, with a total project cost of Rs
250 crore (US$ 45.70 million) or more, irrespective of their geographical location, have
been allowed to tap the external commercial borrowing (ECB) route. The maximum
ECB by an individual company or group, as a whole, has been restricted to US$ 3
billion.
The fourth meeting of ASEAN and India Tourism Ministers was held in Vientiane,
Lao People's Democratic Republic (PDR). A protocol to amend the memorandum of
understanding (MoU) between ASEAN and India to strengthen tourism cooperation was
also signed.
3
Mr Chiranjeevi, Union Minister for Tourism, Government of India, has
complimented the Government of Madhya Pradesh for becoming the first State in the
country to fully utilise plan funds released to them by the Ministry of Tourism,
Government of India for the development of tourism infrastructure at various tourist
sites in the State.
In a bid to give a boost to tourism in Uttarakhand, the State Government has
identified 21 places endowed with natural beauty to develop them into major tourist
destinations.
The Ministry of Tourism has also sanctioned central finance assistance (CFA)
worth Rs 43.87 crore (US$ 8.02 million) for the development of Solapur mega circuit in
Maharashtra.
Road Ahead
The tourism sector can also be considered as the backbone for allied
sectors, like hospitality, civil aviation, and transport. Domestic tourism is very
huge in the country, promoted by various intents. Pilgrim and leisure tourism
are two very important sectors.
The Ministry of Tourism has also played an important role in the
development of the industry, initiating advertising campaigns such as the
'Incredible India' campaign, which promoted India's culture and tourist
attractions in a fresh and memorable way. The industry has been witnessing an
upswing for last few years partially due to an excellent 'Incredible India'
campaign and is expected to increase up to US$ 431.7 billion by the end of
2020.
On the other front, India has the potential to develop the rural tourism
industry. This can benefit the local community economically and socially, and
enable interaction between tourists and locals for a mutually enriching
experience. The people know that the restaurant/hospitality industry can be a
truly unique and fun workplace, and diverse in the scope of responsibilities that
one can attain. As well as being a source for a very respectful income. It's
obvious there are many career options in the hospitality/restaurant industry.
Each person will know, in their own mind, which, if any, restaurant or
hospitality career appeals to them.
Growth drivers
4
The fortunes of the hospitality industry are closely linked to the tourism
industry and hence tourism is one of the most important growth drivers. In
addition, all factors that aid growth in the tourism industry also apply to the
hospitality industry. The Indian hospitality industry has recorded healthy
growth in recent years owing to a number of factors:
Increased tourist movement: Increased FTAs and tourist movement within
the country has aided growth in the hospitality industry. Healthy corporate
profits and higher disposable incomes with easier access to finance have
driven the rise in leisure and business tourism, thus having a positive
impact on the hospitality industry.
Economic growth: India is one of the fastest growing economies in the
world. It recorded healthy growth in the past few years, at more than 9%
each during FY06-FY08. Despite the global economic slowdown, the Indian
economy clocked growth of 6.7% and 7.4% in FY09 and FY10 respectively.
Attractiveness of India has encouraged foreign players to set up their
operational facilities in the country. Domestic industries have also made
heavy investments to expand their facilities through green field and brown
field projects.
Changing consumer dynamics and ease of finance: The country has
experienced a change in consumption patterns. The middle class population
with higher disposable incomes has caused the shift in spending pattern,
with discretionary purchases forming a substantial part of total consumer
spending. Increased affordability and affinity for leisure travel are driving
tourism in India and in turn aiding growth of the hospitality industry.
Emergence of credit culture and easier availability of personal loans have
also driven growth in the travel and tourism and hospitality industries in the
country.
Characteristics of Service Industry
Intangible nature of services: The essential difference between goods
and services is that goods are produced but services are performed.
Inseparability: This means that the act of production and consumption is
simultaneous and takes place in the same environment, not in the
consumer’s home environment. It also means that most of the staff of the
service companies have some consumer contact and are seen by the
customer.
Perishability: Products can be stored for future sale; services cannot.
Services are perishable “like a running tap in a sink with no plug”. The
5
sale of an empty hotel room, airline seat is lost forever. Services, more
importantly, the time available to experience them, cannot be stored. For
example, there is only one chance to enjoy a summer vacation in 1990.
No possibility of creating and holding stocks: Linked with the
inseparability and perishability that it is not possible for a service
producer to create a stock of products to be used to satisfy daily
fluctuations in demand.
Heterogeneity: This means that every service performance is unique to
each customer.
Unique features of hospitality
More use of emotional appeals in promotions.
Because of the
intangible nature of services, customers tend to make more use of
emotional appeals when they buy.
It is not enough to talk about the
number of guest rooms etc., it must be given a distinctive personality to
the product.
E.g. Hilton is associated with the phase of “America’s
Business Address”.
Greater significance of word-of-mouth advertising: Because there are
few sampling or testing opportunities in our industry, customers have to
rely on the advice of others, including friends, relatives, and business
associates. That is why, positive “word-of-mouth” information is crucial to
the success of most hospitality and travel organizations. Providing a
consistent quality of service and associated facilities is a key ingredient in
getting “good word-of-mouth”.
It is also the basic fundamental of
marketing.
Increased importance of consistency: Designing, adapting, promoting
products that can meet the long-run needs, expectations and interests of
prospective customers is the fundamental role of the marketers in the
industry.
Those products should be delivered consistently as well.
Consistency, which ensures that customers leave with a consistent
impression of an organization’s standards, is especially important in
multinational organizations. Because customers tend to make decisions
about the entire company based on their experiences in individual units.
The concept of branding is the result of this fact.
Increased
importance
organizations:
There
of
are
relationships
several
unique
with
complementary
relationships
among
organizations in our industry that have a significant impact on the
marketing of hospitality services. Managing these relationships is an
6
added role that hospitality marketers must play. The others outside the
organization, such as suppliers of facilities, attractions and events,
ground transportation, and other support services in or between travel
destinations, and in addition visitors and residents, have a direct impact
on the customer’s satisfaction.
Seasonality and demand fluctuations: It is a characteristic of most
leisure tourism markets that demand fluctuates greatly between seasons
of the year.
As a result, the occupancies in many tourism businesses
increase to 90 to 100 per cent in the high season but drops to 30 per cent
or less in the low season.
In addition, seasonal closure of many leisure
tourism businesses is common as well.
These demand variations in
tourism is more important because of perishability.
Interdependence of tourism products:
attractions in a destination are linked.
The fortunes of tourism
Since a vacationer chooses
attractions at a destination together with the products of accommodation,
transport, catering etc., all organizations should function in coordination.
High fixed costs of service operations:
In the travel and tourism
industry, it is generally the case that the operations have high fixed costs
and relatively low variable costs. This fact focuses all service operators’
attention on the need to generate extra demand. Since most large scale
businesses are obliged to operate on a very narrow margin between total
cost and total revenue because of intense competition, plus or minus one
percentage point in average load factors makes the difference between
profit and loss.
Fragmented: The Indian hotel industry is highly fragmented with a large
number of small and unorganized players accounting for a lion’s share.
The major players in the organized segment include The Taj, Oberoi, ITC
Hotels, and East India Hotels.
Major players in the Indian Hotel Industry:
Hotel Chains: They comprise major players including Indian Hotels
Company Limited (the Taj Group) and associate companies, EIH Limited (the
Oberoi Group), ITC Hotels Limited (the ITC Welcome Group), Indian Tourism
Development Corporation (ITDC) and Hotel Corporation of India (HCI) (the latter
two being under the Public Sector). Most of these chains had an established
presence in one or more metro cities prior to the tourism boom of the 1980s.
Subsequent to the tourism boom, these chains aggressively expanded
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their presence in other locations. The private players among the hotel chains are
industry leaders and have well-established brand identities across the different
industry segments.
Small Chains: They are companies that have come up after the tourism
boom of the 1980s and1990s. Due to lack of prior experience in the hotel
industry, these players have preferred to opt for operating/management
arrangements with international players of repute. Some of the companies in
this category are Hotel Leela Venture (with Kempinski), Asian Hotels (Hyatt
International Corporation), Bharat Hotels (formerly with Holiday Inn and Hilton
and now with Intercontinental). As late entrants, most of these hotel companies
have fewer properties, compared with the big chains. However most of these
players have initiated expansion plans during the late 1990s.
Public Sector Chains: ITDC and HCI boast of some of the best locations
in major cities but are relative under performance, as compared with their
private sector counterparts International Hotel Chains. They are also looking at
India as a major growth destination. These chains are establishing themselves
in the Indian market by entering into joint ventures with Indian partners or by
entering into management contracts or franchisee arrangements. Some of
the players who have already entered or plan to enter the Indian market include
Marriott, Star wood, Berggren Hotels, Emaar MGF. Most of these chains have
ambitious expansion plans especially with a strong focus on the budget segment
and tier II cities.
Localized Hotel Companies: They are mainly comprise early entrants
who have an
established localized presence and who preferred not to expand
during the tourism boom but focus on building and catering to a loyal customer
base.
Contribution to 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
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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 Techno park, the Indian hotel industry
accounts for USD 17 billion, 70% (USD 11.85 billion) of which take their origin
from the un organised 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.
Gross domestic product (GDP) is the market value of all officially recognized final goods
and services produced within a country in a given period of time
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