Professional Documents
Culture Documents
INTRODUCTION
The hotel industry that exists today can be traced back to 3000 B.C. where the
earliest inns were homes with rooms provided for travelers. Conditions improved in
1700s England when the renaissance sparked the desire to travel. The United States
saw its hotel industry created a century later. By this time they had
revolutionized many firsts in the industry including private rooms with locks and
doors, free soap, a trained staff, and a pitcher of water in each room. Indoor
plumbing and the creation of the lobby followed shortly thereafter. The business
of providing strangers with hospitable means has come along way. What once was a
service to fellow man is now the foundation numerous economies throughout the
world.
The modern era of the hotel industry saw its beginnings in 1794 New York where
the first ever hotel was built. Profit potential was recognized with the inception
of the industrial revolution. Stock companies invested in hotels seeking profit
from property value appreciation and room occupancy revenue. Surrounding
communities were promised increase in sales by means of higher volume of people
passing through., the industry creates a multitude of opportunities that now
saturate the industry in the form of spin-offs of these top four hotel companies
creating the most common chains we know of today. History has proven that the
success of this industry has largely to do with two factors, location and
innovative integration, the combination of these two has created a margin between
the larger chains and those who operate on a smaller scale. Soap and locks on
doors were the innovation for their day. Strategic placement and product
differentiation once again guide the success of this industry.
The word hotel is derived from the French hôtel (coming from
hôte meaning host), which referred to a French version of a townhouse or any other
building seeing frequent visitors, rather than a place offering accommodation. A
hotel is an establishment that provides paid lodging on a short-term basis.
Based on location
City center: Generally located in the heart of city within a short distance from
business center, shopping arcade. Rates are normally high due to their location
advantages. They have high traffic on weekdays and the occupancy is generally
high.
Motels: They are located primarily on highways, they provide lodging to highway
travelers and also provide ample parking space. The length of stay is usually
overnight.
Suburban hotels: They are located in suburban areas, it generally have high
traffic
on weekend. It is ideal for budget travelers. In this type of hotel rates are
moderately low.
Airport hotels: These hotels are set up near by the airport. They have transit
guest
who stay over between flights.
Resort hotels: They are also termed as health resort or beach hill resort and so
depending on their position and location. They cater a person who wants to relax,
enjoy themselves at hill station. Most resort work to full capacity during peak
season. Sales and revenue fluctuate from season to season.
Floating hotels: As name implies these hotels are established on luxury liners or
ship. It is located on river, sea or big lakes. In cruise ships, rooms are
generally
small and all furniture is fixed down. It has long stay guest.
Boatels: A house boat hotels is referred as boatels. The shikaras of Kashmir and
kettuvallam of kerala are houseboats in India which offers luxurious
accommodation to travelers.
Rotels : These novel variants are hotel on wheel. Our very own "palace on wheels"
and "Deccan Odessey" are trains providing a luxurious hotel atmosphere. Their
interior is done like hotel room. They are normally used by small group of
travelers.
Small hotel: hotel with 100 rooms and less may be termed as small hotels.
Medium sized hotel: hotel which has 100-300 rooms is known as medium sized
hotel.
Large hotels: hotel which have more than 300 rooms are termed as large hotels.
Mega hotels: are those hotels with more than 1000 rooms.
Chain hotels: these are the groups that have hotels in much number of locations in
India and international venues.
Economy/ Budget hotels: These hotels meet the basic need of the guest by
providing comfortable and clean room for a comfortable stay.
Mid market hotels: It is suite hotel that offers small living room with
appropriate
furniture and small bed room with king sized bed.
Luxury hotels: These offer world class service providing restaurant and lounges,
concierge service, meeting rooms, dinning facilities. Bath linen is provided to
the
guest and is replaced accordingly. These guest rooms contains furnishing, artwork
etc. prime market for these hotels are celebrities, business executives and high
ranking political figures. Example: Hyatt Regency, New Delhi
Transient Hotel: These are the hotel where guest stays for a day or even less,
they
are usually five star hotels. The occupancy rate is usually very high. These
hotels
are situated near airport.
Residential hotels: These are the hotel where guest can stay for a minimum period
of one month and up to a year. The rent can be paid on monthly or quarterly basis.
They provide sitting room, bed room and kitchenette.
Semi residential hotels: These hotels incorporate features of both transient and
residential hotel.
Based on Theme
Depending on theme hotel may be classified into Heritage hotels, Ecotels, Boutique
hotels and Spas.
Heritage hotel: In this hotel a guest is graciously welcomed, offered room that
have their own history, serve traditional cuisine and are entertained by folk
artist.
These hotels put their best efforts to give the glimpse of their region. Example:
Jai
Mahal palace in Jaipur.
Ecotels: these are environment friendly hotels these hotel use eco friendly items
in
the room. Example: Orchid Mumbai is Asia first and most popular five star Ecotels.
Spas: is a resort which provide therapeutic bath and massage along with other
features of luxury hotels in India Ananda spa in Himalaya are the most popular
Spa.
Resort hotels: These leisure hotels are mainly for vacationers who want to relax
and enjoy with their family. The occupancy varies as per season. The atmosphere is
more relaxed. These are spread out in vast areas so many resorts have solar
powered carts for the transport of guest.
Suite hotels: These hotel offer rooms that may include compact kitchenette. They
cater to people who are relocating act as like lawyers, executives who are away
from home for a long business stay.
Casino hotels: Hotel with predominantly gambling facilities comes under this
category, they have guest room and food and operation too. These hotels tend to
cater leisure and vacation travelers. Gambling activities at some casino hotels
operate 24 hours a day and 365 days.
Taj Group of hotels in India: The most popular name that is almost synonymous to
hospitality in India is that of the Taj Group. Offering the best hotels across
various genres like business hotels, heritage resorts, luxury hotels and even sea
resorts, the Taj Group is definitely the best in the field.
The Oberoi Group of Hotels in India: One of the most prominent names among the
hotel chains of India is the Oberoi Group. It also owns several properties in
exotic places like Australia and Mauritius. With its world class facilities and
efficient staff to manage and play the perfect Indian hosts, the Oberoi hotels is
no doubt a great feather on the grand cap of tourism in India.
Best Western Group: A world famous name when it comes to hospitality and service,
the Best Western Group owns several properties across India. Each of the hotels
has been equipped with numerous features to enable a cozy comfortable stay to the
guest.
CHAPTER - 2
PRODUCT LINES AND CONSUMER BEHAVIOUR
2.1 Products
Rooms : The rooms in hotels are based on the Category of the hotel. The facilities
in the rooms are based on the type of hotel and price of the rooms are based on
the type and facilities provided in the room.
Conference Rooms: The conference rooms are provided by hotels for the meetings and
other requirements as per the request by the customers. The price depends on the
facilities, space and time utilized.
Banquets & Halls: Banquet halls are provided by hotels for parties and functions.
These halls provide extra revenue for the hotels.
Restaurants & Bar : Along with the rooms hotels provide restaurants and bars which
are charged separately. This adds revenue as well as a facility for the customers
who are staying in hotels.
Recreation facility
There are several types of rooms provided by the hotels based on their category.
Few types of rooms are explained below
STANDARD: This category usually means the most basic room type offered by the
hotel. It has basic, standard amenities and furnishings. Standard rooms in hotels
with higher categories often have no view or have a poor view over the dumpster or
parking lot.
MODERATE: Usually a slight bit better than standard, but still not deluxe. It may
refer to the room view as well as the size and type of furnishings offered.
DELUXE: These rooms are supposed to be Deluxe in every way: View, location,
furnishings and size.
JUNIOR SUITE: A "junior" suite is typically a larger room with a separate seating
area. Sometimes it's got a small divider between the part of the room that the bed
is in and the seating area, but it is not two separate rooms.
SUITE: A Suite is usually two or more rooms clearly defined; a bedroom and a
living or sitting room, with a door that closes between them. Many hotels use the
word "suite" to define any room with a sofa in it so be sure to check thoroughly
if what you really want are the two or more separate rooms.
STUDIO : This is usually configured like a Junior Suite, but has the added
advantage of a "kitchenette," or cooking facilities
2.4 Substitutes
CHAPTER - 3
GROWTH OF THE INDUSTRY
Commercial Locations
By location along major highways or in business or
industrial districts, hotels and motels benefit from high visibility and proximity
to generators of room night demand. Local colleges, hospitals, attractions,
services and entertainment are examples of “room night” demand generators.
Resort Locations
Hotels and motels in resort areas generate most of their
business form leisure travelers who see the lodging facility and surrounds area as
their “destination.” Access and visibility, while important, are secondary to the
quality of the facility, services, amenities, and nearby attractions.
Business Climate
Hotels and motels that primarily serve business travelers
usually rely on the strength of the local business community.
Tourism Activity
Hotels and motels in resort areas typically rely on local
attractions to bring in customers. Attractions can include both natural and man-
made places of interest.
Business Travelers:
Business travelers represent a large portion of lodging
demand in many market areas. They include people traveling on business
representing commercial, industrial and governmental organizations. Peak business
demand is usually experienced Monday through Thursday nights.
Leisure Travelers:
Leisure travelers may visit an area for a vacation, to
attend sporting or social events, to shop, or to visit friends and relatives. They
might be staying over simply because they are traveling to other destinations.
Leisure travelers may be individuals, couples, families, or small groups.
Travelers visiting hospitals and universities are typically included in this
market segment. Leisure room demand is often seasonal. In larger, more urban
market areas, leisure room demand may be limited to weekends, summer months and
holiday periods.
Other Travelers:
Various lodging customers cannot be classified under the
categories of business, leisure, or group. These travelers may include
construction workers, truckers, utility crews and others.
CHAPTER - 4
TECHNOLOGY OF PRODUCTION AND DISTRIBUTION
SOURCE OF FINANCE
The source of finance available to a hotel development is
similar to those available to real estate developers of others kind of project.
The following are usual method of rising finance for the hotel Industries:-
1. Share capital
2. Preference share capital
3. Equity share capital
4. Borrowed capital
5. Debenture
6. Mortgage
7. Loan from commercial bank
8. Loan from financial institution
9. Trade debt- credit guaranteed by supplier
10. Inter company loans
11. Provision for taxation
12. Public fixed deposit
13. IPO
4.4 Labour
Department of Hotels that are available for guest 24 X 7:-
Hotel Industry Kitchen/ Food Production: Kitchen & food production is a department
of hotel that responsible for food . Even hotels having Coffee Shop provides 24
hour services to the guest.
Hotel Industry Engineering:- If any problems come in room, bulb fuse, A/C not
working , then need to contact Hotel Engineers, they are also available 24 hours.
Hotel Industry Front desk:- Front desk is 1st impression on guest, if guest like
this section then only he will go for other option like restaurant, laundry, etc.
Front desk consists of young and energetic staff who is always (24 x 7) be there
to help guest, they are also responsible for Business Centre, Internet Access.
Front office desk responsible for making C-Form for Foreigner Clients, providing
safety lockers to the guest. Taking Reservation by Telephone, E-Mails, and Fax
from the guest. Also providing guest Money Exchange Services.
Hotel Industry Food & Beverage Service:- They include providing guest the services
whether in rooms, Restaurants or Banquets, or in Conference rooms.
Hotel Industry Travel Desk:- They are responsible for arranging day to day travels
for the guest. They also do the ticket confirmation work, and also provides the
information for sightseeing to the guests.
Gym/ Health Club/ Sports:- Medium and large hotels are providing Gyms, Swimming
Pool, Health Club, Beauty Parlor, Saloon, games like Billiards, Pool, etc
facilities to their guests. Most of the Hotels are providing these facilities
complimentary with the rooms.
Parking/ Shops:- Few Star hotels providing big parking space, shops in the
restaurant itself for the guest conveyance, so that they can get the things in
hotel itself.
CHAPTER - 5
MARKETING
Budget Segment
These comprise 1 and 2 star hotels referred to as ‘Budget
Hotels’. These categories do not offer as many facilities as the other segments
but provide inexpensive accommodation to the highly price-conscious segment of the
domestic and foreign leisure travelers.
Heritage Hotels
In the past four decades, certain architecturally distinctive
properties such as palaces and Forts, built prior to 1950, have been converted
into hotels. The Ministry of Tourism has classified these hotels as heritage
hotels.
Others
At any point in time, applications for classification are usually
pending with the Ministry of Tourism because of which such properties remain
unclassified. The number of hotel rooms pending classification has declined from
historical 15-20per cent to 5per cent of the total rooms available in the recent
past.
Technology
In the hospitality industry, as in all arenas of commerce,
technology represents one of the strongest forces for change, while having had a
significant impact on brand marketing. Hotel reservation systems have been
shifting from voice to electronic Global Distribution Systems and are now on the
verge of consumer access via the Internet. The increasing role played by the
Internet should slowly affect booking patterns in the future as inexpensive
consumer access to hotel product becomes available. This, of course, has potential
implications for the benefits associated with the branding of hospitality
products..
PRICING STRATEGIES
One of the single greatest challenges facing independent
hotels today is pricing. Pricing the inventory effectively can lead to
profitability and helps lay the foundation for long term success. But, pricing the
inventory ineffectively can lead to disaster. During the last decade; two
simultaneous factors impacted the market place and customer buying practices: (1)
the dramatic drop in demand (2) and the widespread use of the Internet for booking
rooms. Capitalizing on this situation, third party Internet companies seized the
opportunity to grow their businesses. Hotels were eager to work with them, and
customers were eager to use them as confidence and security in buying goods and
services on-line increased.
• Rack Rates: Without any affiliations to warrant discounts, the Rack Rated
customer paid the published rate, which was the highest rate.
• Consortia Rates: This was the same customer who booked through a travel
agent using the GDS and received a 5%-10% discount off Rack Rates.
• Corporate Rates: Having met the hotel’s qualifying criteria, such as volume,
businesses were guaranteed discounted rates.
• Group Rates: With a block of rooms, rates varied based on time of year and
the nature of the group.
• Weekend Rates: Individual leisure travelers, usually within a drive distance
to the hotel.
• Promotional rates: These rates were originally used sparingly and used as a
means to stimulate business by using discounted rates to anyone, regardless of
affiliation.
CHAPTER - 6
INNOVATION
Service Innovation
Hotel industry is continuously using the concept of technology
to develop its image and occupancy ratio. Though the hotel industry is a service
industry it is continuously innovating the way the services are provided. Many
hotels have a category of rooms which are different in the space and facilities
each one having their own specialties and range of price. Hoteliers are now
running their business according to the taste and preferences of the customers
continuous feed back from the customers are helping the management to innovate in
the services provided by the. Few hotels are providing an services in their unique
way to get into moonlight. Offering special services respecting the customer’s
traditions and customs and providing the service in their way is new innovation to
attract the customers.
Technological Innovation
The advent of the Internet has opened up many avenues for
the hotel industry, most importantly the ability to book clients. Most if not all
of the hotel chains offer some sort of online reservation enabling the hotel
management and staff to focus their efforts in a variety of different places. It
is reported that 25 percent of all reservations are made online making it a key
tool in room occupancy fulfillment. In addition to room booking, most hotel chains
today utilize the Internet by offering online deals and major advertising
campaigns. Electronic advertisement accompanied with the ability to make
reservations online has made the Internet tremendously valuable. Adapting to e-
commerce transitions such as the implementation multi-purpose computer software
are necessary to cater to the clientele of the next generation. A higher
understanding of market needs will ensure a larger portion of it.
Information processing management is another key element that has
contributed to hotel industry success. Understanding and acting on the needs of
clientele will lure travelers away from competitors. Again, most if not all hotel
chains today are utilizing some sort of customer pattern tracking. Complete client
pleasure is dependent upon what you can offer differently from the other guy. The
color of the sheets, the position of an ice machine, the softness of toilet paper;
targeting the very core needs of clientele means they will return to what they are
comfortable with.
CHAPTER - 7
STRATEGIES AND COMPETITION IN THE INDUSTRY
7.1 Internal Rivalry
The degrees of internal rivalry consist of competitors in the hotel industry that
differentiates their strengths, cost, product offering, and positioning within the
industry. In the hotel industry there is a lot of competition that takes place
between different providers. Each company finds their strengths and does
everything in their power to be acknowledged by the customer. Once they uncover
how they can serve their consumers better than leading competitors they position
themselves in the industry that better serves the consumers.
OPPORTUNITIES
• Demand between the national and the inbound tourists can be easily managed
due to difference in the period of holidays.
• In the long-term the hotel industry in India has latent potential for
growth.
• Unique experience in heritage hotels.
• Rising income.
THREATS
• Guest houses replace the hotels.
• Political turbulence in the area reduces tourist traffic and thus the
business of the hotels
• Changing trends in the west demand similar changes in India
• The economic conditions of a country have a direct impact on the earnings in
hotel industry.
• Lack of training man power in the hotel industry.
• Fluctuations in international tourist arrivals.
• Increasing competition
THREAT OF SUBSTITUTES
A threat from substitutes exists if there are alternative products with
lower prices of better performance parameters for the same purpose. They could
potentially attract a significant proportion of market volume and hence reduce the
potential sales volume for existing players. This category also relates to
complementary products.
• Brand loyalty of customers (TAJ, ITC, LEELA PALACE, etc,) is dominating the
substitutes.
• The hotel relationship with customer and costs also the reasons to switching
to substitutes.
• The price variation of same class hotel services from various brands is one
of the reasons to choose a substitute.
• The present demand and supply of hotel rooms is one of the reasons to choose
a substitute.
• More fixed cost and switching costs affects the business.
CHAPTER - 8
BUSINESS ENVIRONMENT
PESTAL Model
Political factors
Rules and laws are apart of citizens everyday life. We have to abide by
certain rules and regulations in order to remain in society. This goes for
corporations as well. All corporations have to face some sort of rules and
regulations. Although each corporation has to face rules and regulations, each
industry faces different rules and regulations. Of course, it would only make
sense to believe that all regulations are negative for corporations because it
takes away from the bottom line.
However, there can be positive affects of the regulations. For example, a ruling
in favor of anti-trust laws will take away from the monopolistic company, but at
the same time, the barriers of entry will become easy leaving opportunity for
other companies to increase their bottom line. An analysis of the hotel industry
has revealed that there are environmental, labor, and food & safety regulations as
well as regulations for merging, which must be looked at before entering into the
industry.
Environment is one aspect the government will always have their eye on, and
they will introduce laws that will protect the environment. Such laws will need to
be looked at as a player in the hotel industry. Hotels are could be liable for
clean up of contamination and other corrective action under various laws,
ordinances and regulations relating to environmental matters. Such laws referring
to keeping the environment in good shape can be quite costly to hotels in the
industry. In Europe, North America, Australia and New Zealand, such prosecutions
can now result in heavy financial penalties, considerable clean-up costs or in
worst instances, jail sentences
Another political factor that can impose a concern for a member in the
hotel industry is the laws regarding labor. For instance, there are laws that
govern minimum wage. Although this might not seem to be a concern, but anytime you
are forced to pay a wage not in plans, which are taking away bottom line. Another
law that can be quite costly is treatment of employees. For example, there are
laws that prevent discrimination, and sexual harassment. If a hotel company
violates these laws, it can lead to severe lawsuits, and at the same time the
hotel will be slicing their revenues. The labor laws are pretty strait forward,
but must be obeyed in order to keep on going profits.
Technological factors
In order for a hotel to prevent obsolescence and remain technologically
advanced, the hotel must be up to date with all the latest technological changes
that are taking place that might have an impact on the industry. As it moves
through the twenty-first century, it is evident, that there is a strong focus on
technology.
Today, the Internet is increasingly being used. Consumers are shopping on
the Internet, from music to travel and anything one can think of. For the hotel
industry, they need to take this into consideration. The reason is that if hotels
don’t have a well developed website, they will possibly loose potential consumers.
Not only do they need to alternate their distribution channels of information,
they also need to advertise aggressively on the Internet. Discussing in further
detail of what the computer has brought is using it for organizing the hotel
operation. The day of having everything on paper is obsolete. So, in order for a
hotel to have a competitive advantage, they need to have a very high tech
information system.
While the computer is changing the way hotels in the industry can offer
information to their potential consumers and the way a hotel organizes their
operations, materials supplied to the hotel are starting to become obsolete. For
example, in most hotels, you will still find stereos, VCRs, and regular
televisions. However, things have changed in the way people access music, movies,
and of course T.V. Today’s society, individuals have moved away from those big
boxes and adopted the use of digital technology. So, for a hotel to prevent
obsolescence the must change from the suppliers that are supplying them with
stereos, VCRs, and regular TVs and look for suppliers that will offer them ipods,
DVDs, and digital HDTV for room use. Moving in this direction will make the hotel
much more attractive, thus the revenues will increase.
The final technological factor that needs to be looked at is the rising costs of
energy. These are uncontrollable costs, thus the only thing that can be done to
limit the impact of these increasing costs is for hotels to manage the use of
energy efficiently. A strategy of how to manage it would be one thing; however, a
hotel must also look at the alternatives of energy that are coming into the world.
For example, with high-energy costs some businesses are thinking innovation. Solar
Cities will be the successes of the 21st century.
Ecological factors
Environment is something we as human beings come in contact with everyday.
The condition of the environment will often guide decisions. For instance, if it
is really smoggy outside, the chances of going for a hike or to an amusement park
are very small. So, it would only make sense as a member of an industry that is
looking to increase the demand of consumers to fully understand what environmental
factors for their industry might impose an impact on the customer’s decision.
For example, during hurricane season, the customer decision to stay in a hotel
on the east coast is not as likely as it was before these natural disasters.
Global warming is another ecological factor calls for concern. The ozone is slowly
being exhausted by human actions while leaving the earth degrees warmer. The
uncertain climate can have a direct impact on hotels that are in areas of ski
resorts. However, even though this is a definite concern, it should be a concern
for long term planning the time frame for such effects is more likely to happen in
the future. A way that could allow this not to be an impact for other hotels is to
build a strong image in the consumers mind. Such image would come from being eco-
efficient by improving resources to prevent pollution.
CHAPTER - 9
CRITICAL SUCCESS FACTORS
9.1 Factors influencing Success in the Industry
Demand Drivers.
The hotel and restaurant industry of India was Rs. 658.89 billion
during 2007-08.
Travel & Tourism Industry of India was valued at US$35.73 billion in 2007,
contributing 3.56% to India’s GDP. The number of foreign tourists arriving to
India reached 5.08 million compared with 4.45 million in the year 2006, showing
growth of 14.16%. India’s share in international tourist arrivals at global level
gradually improved from 0.46% in 2004 to 0.49% in 2005 and further to 0.52% in
2006 and 0.56% in 2007.
The number of domestic tourists in India was 526.57 million
compared with 461.76 million in 2006, showing growth of 14.03%. There are 1,437
hotels approved and classified by the Ministry of Tourism, Government of India,
with a total capacity of 84,327 hotel rooms as on December 31, 2007. Indian hotel
industry is currently adding about 60,000 quality rooms, which are expected to be
ready by 2012.