Summer Training Project

On
“MARKETING MANAGEMENT POLICIES OF SHANGRI-LA”

Submitted To Submitted by:

MRS. APARAJITA DASGUPTA SHREY CHANDHIOK

Sr. Lecturer MBA –(2011-2013)
Enroll no.:A30101910031

AMITY GLOBAL BUSINESS SCHOOL,NOIDA

AMITY UNIVERSITY – UTTAR PRADESH

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 Certificate of origin

This is to certify that Mr Shrey Chandhiok , a student of mba(marketing and

IB) AMITY GLOBAL BUSINESS SCHOOL, noida has worked under the
valuable guidance and supervision of
faculty , amity global business school.

to the best of our knowledge , no part of this report has been reproduced
from any other report and the contents are based on original research.

Signature signature

Mrs Aprajita Das Gupta(Sr Lec)

(faculty guide) Shrey Chandhiok
(student)

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 Acknowledgement

I express my sincere gratitude to my industry guide mrs Aprajita Das Gupta

for his valuable guidance, continuous support and cooperation throughout
my project, without which the present work would not have been possible.

Signature

Shrey Chandhiok

(student)

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 Table of Content

 1-Certificate
 2-Acknowledgement
 3-Hospitality Industry Review
 4-Indian Scenario
 5-Global Scenario
 6-Company Profile
 7-Research Objective
 8-Research Methodology
 9-Data Collection
 10-SWOT
 11-Findings
 12-Suggestions
 13-Conclusion
 14-Questionaire

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Executive summary

The project aims to study the various systems, practices and structures
followed by the Sales Department in the Shangri-la Hotel, New Delhi and
recommended appropriate strategies to the hotel for improving its financial
operations.

The project provides information about the various procedures followed by

the Shangri-la Hotel, New Delhi with managing the flow of finance within
and outside the organization. It will also bring out the process followed to
service the key accounts.

The report on Indian Hotel Industry provides an in-depth view of the sector
in marketing and sales sector. The report starts with the global hotel industry
to give a perspective of the Indian hotel industry in the global context.

'Indian Hotels' is bullish. 'India Hotel Industry' is adding about 60,000

quality rooms, currently in different stages of planning and development and
should be ready by 2012. MNC Hotel Industry giants are flocking India and
forging Joint Ventures to earn their share of pie in the race. Government has
approved 300 hotel projects, nearly half of which are in the luxury range.
Sources said, the manpower requirements of the hotel industry will increase
from 7 million in 2002 to 15 million by 2012.

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In this study I have attempted to analyze the functioning of the various sub –
departments under the marketing and sales department in the hotel by
collecting data from various employees. Valuable information about the
quality of the operations of the sales department towards to timely and
effective fulfillment of the organizational goals were collected and analyzed

The data’s were collected from the employees of the sub – departments of
the marketing and sales department in the hotel and used as samples of the
study. Data’s been collected through personal discussion and structured
questionnaire

As per the study, it is analyzed and found that the operations in the sales
department in the hotel are running smoothly with timely accomplishment of
targets and the employees are also satisfied on the other grounds such as
timely achievement of targets, availability of materials to do the work etc.
As per the responses analyzed, I felt that some of the areas in the department
needs due consideration and need to be carried out in a better manner instead
of following the old ways of doing those things which have been mentioned
in the report.

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 HOSPITALITY INDUSTRY – AN OVERVIEW

The hospitality industry is a 3.5 trillion dollar service sector within the
global economy. It is an umbrella term for a broad variety of service
industries including, but not limited to, hotels, food service, casinos, and
tourism. The hospitality industry is very diverse and global. The industry is
cyclical; dictated by the fluctuations that occur with an economy every year.

Points to be noted:

 Economic liberalisation has given a new impetus to the hospitality

industry.

 It costs an average of US$50-80 million to set up a five-star hotels

with 300 rentable rooms in India. The gestation period is usually
between three and four years. Movements in real estate prices have to
be watched, though they have stabilised in the past three years or so.

 Non-five-star hotels are obviously cheaper and have have smaller

gestation periods, but international chains are expected to go into the
five-star category.

 The Indian hospitality industry is growing at a rate of 15 percent

annually. The current gap between supply (61,000 rooms) and demand
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 (90,000 rooms) is expected to widen further as the economy opens
and grows.

 The government forecasts an additional requirement of 200,000 rooms

by the turn of the century.

 A rapidly growing middle class, the advent of corporate incentive

travel and the multinational companies into India has boosted
prospects for tourism. India's easy visa rules, public freedoms and its
many attractions as an ancient civilisation makes tourism
development easier than in many other countries.

 Many foreign companies have already tied up with prominent Indian

companies for setting up new hotels, motels and holiday resorts. The
entry of McDonald's, Pepsico's Kentucky Fried Chicken, Domino's
and Pizza Hut have given an international glitz to the hospitality
sector.

 Several international chains including Sheraton, Holiday Inn,

Intercontinental, Hyatt, Radisson, BestWestern, Days Inn, Hilton,
Quality Inn, Ramada Inn, Meridien, Kempenski, Four Seasons
Regent, Accor, and Marriott International are entering or expanding
their hotel network in India.

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 HOSPITALITY INDUSTRY IN INDIAN SCENERIO

Hospitality segment, just like many other segments in India is booming at an

unprecedented pace. India faces a huge challenge of being "under roomed"
while the economy is growing rapidly. This provides for a huge opportunity
for hospitality industry. A lot of large real estate developers are also
investing into this business to bridge the demand-supply gap and leverage
the opportunity.

A number of cities have blossomed with suburban "Silicon Valley" type

Special Economic Zones (SEZs). This is mostly driven due to strong growth
in IT, BPO segments, increase in foreign travelers, emphasized focus on
tourism by government, affordable airlines fares, etc. Several other factors
such as Commonwealth Games in Delhi are fueling the need further. The
middle class is becoming more prosperous and native Indian tourist travel is
growing rapidly, particularly in places such as Goa, Kerala and Rajasthan.

Bangalore, Hyderabad, Chennai, Gurgaon, Pune and the suburbs of Mumbai

are the areas attracting international investment and as expected, are the
cities with the largest development pipelines. Combined, these cities account
for 89 of the 161 projects in the pipeline and 16,734 guestrooms, which is
68% of the rooms in India's total pipeline.

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Of the 161 projects in India's pipeline, 100 will have 4 and 5 star
designations. The other 61 are 1, 2 and 3 star developments. A number of
them are new economy brands recently designed for the Indian market place.
Taj's Ginger Hotels is one such brand, Lemon Tree and Red Fox are others in
this category.

Almost all the major hotel operators such as Starwoods, Hilton,

Intercontinental have significant growth plans for India and have multiple
projects in works or in pipeline. Revenues of Hotel and Restaurant (H&R)
industry in India during the financial year 2006-07 was INR604.32 billion , a
growth of 21.27% over the previous year, primarily driven by foreign tourist
arrivals ,which increased by 14.17%. Currently there are some1980 hotels
approved and classified by the Ministry of Tourism, Government of India ,
with a total capacity of about 110,000 hotel rooms. With tourism industry
showing excellent performance, in terms of foreign tourists arrival and
demand outpacing supply, the hospitality industry, is poised to grow at a
faster rate and reach INR826.76 billion by 2010. It is estimated that over the
next two years 70,000-80,000 rooms will be addedacross different categories
throughout the country.

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 HOSPITALITY INDUSTRY – GLOBAL SCENERIO

MARKET VALUE

The global hotels and motels industry grew by 5.9% in 2005 to reach a value
of $ 448.3 billion.

MARKET VALUE FORECAST

In 2010, the global hotels and motels industry is forecast to have a value of
$554.3 billion, an increase of 23.7% since 2005.

MARKET SEGMENTATION I

The domestic consumer sector dominates the global hotel and motels
industry, accounting for 65.7% of it’s total value.

MARKET SEGMENTATION II

Europe has the most lucrative hotels and motels industry, which accounts for
42.7% of the global value.

MARKET OVERVIEW

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Market definition
The hotels and motels market value consists of all revenues generated by
hotels, motels and other accommodation providers through the provision of
accommodation and food service. The value does not include any revenues
generated through other interests, such as casinos, shops and
telecommunication services. The market is segmented according to the
origin of the revenues ( domestic consumers, domestic business and
international business and consumers). Any currency conversions included
within this report have been calculated using constant annual average
exchange rates.

MARKET ANALYSIS

The global hotels and motels industry has grown by 15.1 % over the past
five years and is set to grow by further 23.7 % by 2010. Therefore, the
industry is expected to expand by 42.3% over the course of the research
period. There was slow growth at the beginning of the period attributable to
the global slowdown in the economic growth, and the effect on the travel
and tourism of the 9/11 attack.

The global hotel and motel industry generated a total revenue of $ 448.3
billion in 2005, representing a compound annual growth rate (CAGR) of
3.6% for the five – year period spanning 2001 – 2005. The European
industry accounts for 42.7% of the global market and grew at a CAGR of
2.4%. The Asia – Pacific market is the most rapidly expanding industry and
grew at CAGR of 4.7 %. This is partly due to the boost in the consumer
incomes within the region, especially in China.
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Domestic consumers form the leading revenue source for the global industry,
amounting to $294.7 billion in 2005, equivalent to 65.7% of the total
industry value. In comparison the international sector was worth $85.3
billion, which represented a 19 % share of the industry’s value. The business
customer sector is expanding both in revenues and volumes, but tends to be
a high – end market, it’s development is currently overshadowed by the
volume growth in the consumer market.

Looking forward, the industry is forecast to accelerate it’s current

performance, with an anticipated CAGR of 4.3% for the 2005 – 2010 period
expected to drive the industry to a value of $554.3 billion by the end of
2010. Year on year growth is expected to be strong due to the steady growth
in the consumer incomes and the fall in the cost of transportation. This is to
be combined with the price – skimming behavior of high – end hotels
targeting the business world.

MARKET VALUE

The global hotels and motels industry grew by 5.9 % in 2005 to reach a
value of $ 448.3 billion. The compound annual growth rate of the industry in
the period 2001 – 2005 was 3.6%.

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Company profile

Shangri-La Asia Ltd. is the Asian region's leading and fastest-growing

luxury hotel group. The company, part of Malaysia's Kuok Group, operates
45 hotels throughout Asia. In 2005, the company also began a drive into the
European and North American markets, including the launch of construction
on its first European hotel, in London, expected to be completed in 2009.
The company also has opened its first hotel in the Middle East, in Dubai,
and in the Maldives. Mainland China, however, forms the heart of the
company's empire, with more than 20 hotels in operation, and at least 15
more expected to open before 2010. Shangri-La is unusual among
international hotel companies in that it owns a significant proportion of its
hotels; of the hotels under the group's management not wholly owned by the
company, most are owned by other companies in the Kuok Group, and
especially by Shangri-La's own major shareholder, Kerry Properties Ltd.
Shangri-La hotels primarily operate under the luxury, five-star Shangri-La
brand. The company also operates a smaller number of mid-range, business-
oriented Traders hotels. Listed on the Hong Kong and Singapore Stock
Exchanges, Shangri-La remains a tiny part of the Kuok business empire.
Nonetheless, founder Robert Kuok holds an active interest in the group, and
has stated his desire to see Shangri-La reach 100 hotels in his lifetime. In
2004, the company posted revenues of $726 million.
Kuok Family Origins in the 1970s

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The Kuok family immigrated to Malaysia, then under British control, from
the Fujian province in China in the first decade of the 20th century. Under
patriarch Kuok Keng Kang the family entered the trading business, dealing
in rice, flour, and sugar. Kuok, like many successful Chinese emigrés, sent
his children overseas to study. Son Robert, born in 1927, went to the Raffles
school in Singapore, where he became good friends with Tun Abdul Razak
and Tun Hussein Onn, both of whom later became Malaysian prime
ministers, and Lee Kuan Yew, who became the first prime minister of
Singapore after its independence.
Although his education was cut short by World War II, Robert Kuok's
friendships were to play an important role in his later career. Kuok's use of
"guanxi" (which in Chinese refers to having a network of prominent allies)
enabled him to build his empire rapidly both during and after the war. Kuok
also was gifted with the ability to spot opportunity, and especially to see into
the long term. During the Japanese occupation of Malaysia and Singapore
during the war, Kuok went to work for Mitsubishi, where he learned
Japanese. This enabled him to emerge as an important supplier of basic
foodstuffs.
Following the war, Kuok recognized that heavy competition and low
margins had made the rice trade unattractive. Instead, Kuok switched his
efforts to the sugar trade, and moved to England, where he learned his way
around the commodities markets before returning to Malaysia. Following
Malaysia's independence in 1957, Kuok's guanxi enabled him to build a true
sugar empire, developing significant plantations. In 1959, Kuok entered
sugar refining as well. Before long, Kuok had established a reputation as the
"Sugar King," controlling as much as 10 percent of the world's sugar supply.

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Despite remaining a minority in Malaysia, the ethnic Chinese community
had long dominated the country's economy. Growing demands for a more
equitable distribution of wealth in the country led Kuok to transfer his
business empire to Singapore in the late 1960s and early 1970s. Nonetheless,
Kuok supported the need to establish a more equitable distribution of wealth,
if only to ensure the country's political and economic stability.
At the same time, Kuok had begun to expand his business interests into other
areas. In the mid-1960s, for example, Kuok entered flour milling and
trading. The Kuok Group, as Kuok's business empire came to be known, also
added interests in palm oil (PPB Oil Palms Bhd.), tanker operations
(Malaysian Bulk Carries Bhd.), and even media interests, particularly the
South China Morning Post. Yet among Kuok's most significant and most
successful ventures was his entry into the real estate and property
development sector in the early 1970s. Kuok's Kerry Properties became his
real estate flagship, emerging as one of the leading property groups in Hong
Kong, with significant real estate holdings and developments throughout the
Asian region, including the Chinese mainland, as well as Australia and
elsewhere.
Among Kuok's early real estate purchases was a hotel property in Singapore.
Built in 1971, this property became the starting point for the later Shangri-La
luxury hotel chain. Initially, the Kuok group turned over the management of
its hotel property to Westin Hotels. In 1981, however, the company added its
second hotel, in Kowloon. The new hotel marked Kuok's entry into direct
hotel management, as well as ownership. Launching the Shangri-La brand,
Kuok founded a new company for its hotel interests, Shangri-La Hotels &
Resorts, in 1982. An important factor behind Shangri-La's later success was
Kuok's willingness to turn over its direction to hotel industry professionals
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David Hayden and Robert Hutchinson, both of whom had worked for
Westin.

Claiming the Chinese Mainland in the 1990s

The combination of Kuok's guanxi and the market experience of Hayden and
Hutchinson enabled the company to make a significant move in the mid-
1980s. In 1984, the company opened its first hotel on the Chinese mainland,
in Hangzhou, on the eastern coast, becoming a pioneer in the country's
virtually non-existent luxury hotel market. The company's choice of that
market also revealed its ability to plan for the long term. Rather than simply
target China's major and most well-known markets, such as Beijing and
Shanghai, Shangri-La saw potential in developing its position in lesser-
known and smaller cities. In this way, the company's properties became the
first--and often only--luxury hotel in a given area. Many of these cities
nonetheless had populations of five million or more, and represented
important industrial growth areas.
Shangri-La launched a second hotel brand in 1989, with a first site in
Beijing. Called Traders, the new hotel chain gave the company a mid-range
brand, with sparser accommodations. Nonetheless, the company installed the
same level of luxury services at the new Traders hotel, as a part of its
creation of a bridge level between the four-star and five-star hotel grades.
Traders represented part of the group's long-term strategy as well, targeting
locations with no luxury hotels. By introducing the Traders brand, the
company hoped to develop a market for luxury hotel services, paving the
way for the entry of its Shangri-La brand as well.

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Shangri-La grew only slowly during the 1980s, however. By the beginning
of the 1990s, the group counted just six hotels. Yet the company had
developed a strong foundation for growth into the new decade. In the early
1990s, the company doubled the number of hotels, owned by Kerry
Properties and other Kuok companies, adding sites in Hong Kong, the
Philippines, and Fiji. In the meantime, the Kuok Group began expanding its
property interests in mainland China, launching 12 new developments,
including hotels, in the early 1990s.
In the mid-1990s, Kuok set up a second property ownership vehicle,
Shangri-La Asia Ltd., which paid the Kuok group HKD $4.2 billion to
acquire the existing Shangri-La properties in 1995. Shangri-La Asia was
then listed on the Hong Kong and Singapore Stock Exchanges, reducing
Kuok's stake to less than 63 percent. The following year, Shangri-La Asia
paid another HKD 2.5 billion ($321 million) to buy up the 12 Kuok hotel
properties under development in China. Then, in 1997, property-owning
Shangri-La Asia took over hotel management company Shangri-La Hotels &
Resorts, becoming an integrated hotel management and ownership group.

By the end of the decade, Shangri-La's portfolio had grown to 39 properties,

including 17 hotels in operation or under development in China alone.
Indeed, the company's early focus on the mainland Chinese market helped
shield it from the worst of the Asian economic crisis in the later half of the
1990s, from which China emerged relatively unscathed. The company's
strategy of investing in relatively unknown areas of the mainland also had
placed it in a strong position to profit from the surge in China's industrial

18
sector and from the country's fast-growing economy in general at the dawn
of the 21st century.
Shangri-La also had begun developing its interests beyond the Asian region.
At the beginning of the century, the company added its first hotel in the
Middle East, in Dubai. The company also acquired its first North American
property, the Pacific Palisades in Vancouver, Canada.
RESEARCH OBJECTIVES

 To identify the functions needed to be performed for carrying out the

job of managing the finance in a hospitality industry.
 To identify the software’s used for carrying out the financial
operations in the hotel.
 To identify the employee perception towards the functions they
perform.
 Extensive study of the system, practices and structures of The ITC
Sheraton Hotel for maintaining the quality of it’s purchases and the
other financial operations.
 To recommend the appropriate strategies to improving the financial
functionality of the hotel.
 To identify the growth of the hospitality sector in India as well as in
the global scenario for the upcoming years.

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RESEARCH METHODOLOGY

Research is a systematic and logical study of an issue or a problem to arrive

at accurate results, research the job of collecting, recording and analyzing
relevant data to arrive at decisions. The present study is systematic, objective
and exhaustive search for studies of the facts Relevant to a problem in the
field of finance.

The search for the facts may be through either

 Unscientific method
 Scientific method

Unscientific method consists of imaginations, blind belief or impression

rather than the facts. Scientific method is the systematic approach to seek
facts. It is objective, precise and arrives at conclusion on the basis of certain
evidences. Hence the research for the facts should be made by scientific
method to arrive at accurate results. The present research study is selected to
study the optimum quality of functioning of a finance department in a hotel.

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DATA COLLECTION

The data information collected from the various sources were divided into
two parts.

They are:

a. Primary source
b. Secondary source

Primary source

a. Face to face interview

b. Questionnaire

See annexure for questionnaire

Secondary source

The secondary data is the information, which already exists. The secondary
data was collected from journals, magazines, books, dissertations, and

21
observation of respondents. The research specific information was less
available more emphasis was given on the primary data.

Method of analysis

The data collected through questionnaire and the records available was
examined in detail. It was further classified and tabulated for the purpose of
analysis to generalize percentages.

SAMPLE DESIGN

Sampling plan:-An integral component of a research design is the sampling

plan, specifically it addresses three questions.

Whom to survey? (Sampling unit)

How many to survey? (Sample size)

How to select them? (Sampling procedure)

SAMPLE SIZE

Ten to Twenty (10 - 20) samples were collected from various sub –
departments in the total integrated finance department for the purpose of
collection of data.

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SAMPLING METHOD

Sampling is a systematic approach of selecting a few elements (a sample)

from entire collection unit (a population) in order to make some reference
about the total population. It is a small specimen or a segment of the whole
population, representing its general qualities as for as possible.

Non probability sampling

In non-probability sampling, the chance of any particular unit in the

population being selected is unknown, since the randomness is not involved
in the selection process. The three most frequently used non-probability
designs are judgment, convenience and quota sampling.

Convenient sampling

As its name implies, convenient sampling refers to collection of information

from the members of the population who are conveniently available to the
research. The convenient sampling method was used for the purpose of data
collection.

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A sample was chosen keeping in mind the objectives of the research and
time constraints, convenience-sampling method was usual for choosing this
sample size. With the use of a series of focus survey of One Hundred and
fifty (150) samples were chosen.

METHOD OF DATA COLLECTION

The data’s were collected by contacting the respondents personally at their

respective places (the various sub – departments viz. purchases, F&B
Control, Credit, Payables, Cash, Stores, Receivables). And few of the
information gathered were through searching on the internet for the
materials related to the topic . The survey was conducted for a period of 58
days from 1st June to 28th May 08.

INSTRUMENT FOR DATA COLLECTION

Data was collected with the help of using questionnaires. A questionnaire,

which is also known familiarly as an interview schedule with a format
containing a list of questions sequentially ordered to obtain information
relevant to the objectives of the study, was
developed. Structure and undisguised questionnaire was chosen as the
questions could be presented with exactly the same order to all the
respondents. The reason for standardization was to ensure that all
respondents were replying to the same question.

The questionnaire for research included a combination of the following

kinds of question
 Close-ended

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  Open-ended
 Direct question
 Multiple choice

The questionnaire proved out to be very helpful in conducting the survey.

DRAFTING OF THE QUESTIONNAIRE

Questionnaire was framed by taking opinion of the staff of the hotel, some
expert opinion and the reference of various articles and research reports.

LIMITATIONS OF THE STUDY

 The study was time consuming.

 The study was confined to few selected areas which were the sample
environment.
 For a survey conducted on subject like this, the sample size should be
big, since time was a major constrain, the sample size was restricted to
20.
 Since the area is vast, I could contact only a limited number of
respondents.
 When a group of respondents are answering the questions their responses
are mutual through cross – reference and this may have caused myopia
in data, which deal individual perception
 I have collected data using the questionnaire and therefore the study is
limited to the data collected.

25
 The results of the study will be applicable only to the respective hotel on
which the report has been prepared.
 The financial operations of the hotel industry are subject to change in the
future due to many reasons.

Graph 3.1 Global hotels and motels industry value: $ billion, 2001 - 2005

MARKET SEGMENTATION I

The domestic consumer sector dominates the global hotels and motels
industry, accounting for 63.7% of it’s total value. The international sector
accounts for a future 19% of the industry.

Table 3.2: Global hotels and motels industry segmentation I: % share, by

value, 2005.
26
27
Category % Share
Domestic consumer 65.70 %
International 19.00 %
Domestic business 15.20 %
Total 100.0 %

Graph 3.2 Global hotels and motels industry segmentation I: % share, by

value, 2005.

MARKET SEGMENTATION II

Europe has the most lucrative hotels and motels industry, which accounts for
42.7% of the global value. The Europe accounts for a further 26.9% of the
global industry’s revenue.

Table 3.3: Global hotels and motels industry segmentation II: % share, by

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value, 2005
Geography % Share
Europe 42.70 %
US 26.90 %
Asia – Pacific 19.60 %
Rest of the world 10.70 %
Total 100.0 %

Graph 3.3: Global hotels and motels industry segmentation II: % share, by
value, 2005

COMPETITIVE LANDSCAPE

High staff turnover is a pressing issue in the hospitality industry. Training

costs are consistently high, and training must reach increasingly high
standards as the industry continues to advance. In addition, the workforce is
depleting in terms of those willing to train in the hospitality industry. This is

29
especially the case in the developed world where the industry is struggling to
present itself as a competitive employer. The demand for staff is also subject
to seasonal fluctuations, leading to the frequent hiring of the agency staff
that are more expensive to employ, and thereby tend to diminish profits.

The hospitality industry is increasingly focusing on the business market,

which continues to grow. There are a greater number of women entering the
workforce, expanding the business segment and reducing the leisure time
available to the couples and families. In addition, the business world is
becoming more integrated globally, with a greater level of cross – border
operations requiring travel. Furthermore, jobs are being designed to include
travel in order to attract staff, especially at entry – mid level. Players in the
global hospitality industry wishing to take care of these trends must be able
to provide conference and communication facilities to attract revenues from
business customers.

Hotels are diversifying their product offering as a result of ‘amenity creep’.

Provision of ever – more numerous facilities as a means of competing for
customers. In order to retain their business clientele, hotels are offering
tailored services in addition to boardroom and conference facilities. For
example, it is now possible to utilize an overnight laundry service as hotels
seek to provide a ‘home from home’ experience. Additions such as gyms and
health spas are also helping to bring in an steady revenue stream from non –
members who live locally and frequent the establishments more often. Such
services allow hotels to become less dependent on the REVPAR, revenue per
available room, increasing their profitability.

30
The nature of the consumer is also changing: there is an ageing demographic
resulting from the ‘baby boom’ generation in the west, which is now
approaching retirement age. Disposable incomes are on the rise and continue
to grow across the emerging world as well. The simultaneous drop in leisure
time among the working population leaves cash – rich, time – poor
consumers who are prepared to pay more to enjoy the holiday time available.
It now costs less to travel due to the proliferation of no – frills, low fare
airlines and other modes of budget travel, which have placed downward
pressure on the overall cost of transport. These drivers of tourism growth
will tend to increase revenues for hospitality players globally.

MARKET VALUE FORECAST

In 2010, the global hotels and motels industry is forecast to have a value of
$554.3 billion, an increase of 23.7% since 2005.
The compound annual growth rate of the industry in the period 2005 – 2010,
is predicted to be 2.3 %.

Table 3.4: Global hotels and motels industry forecast: $ billion, 2005 - 2010
Year $ Billion % Growth
2005 448.3 5.90 %
2006 468.6 4.50 %
2007 489.4 4.50 %
2008 510.8 4.40 %
2009 532.4 4.20 %
2010 554.3 4.10 %
CAGR, 2005 – 2010 4.3 %

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Graph 3.4: Global hotels and motels industry forecast: $ billion, 2005 - 2010

SWOT ANALYSIS

STRENGTHS

 Core business.
 Finance is the central department of the hotel.
 Maintenance of the physical evidence of records avoids legal risks.

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WEAKNESSES

 The accounts store is unorganized.

 Still using the textual interface software’s for accounts.
 The workload not properly divided.

OPPORTUNITIES

 Consolidated business and emerge as hotel major.

 Exploiting the potential of the employees to get innovative ways of
doing work.
 Scope for improvement in the process by implementing ERP.
 Earnings growth expected for the upcoming commonwealth games
and the growth of travel and tourism.

THREATS

 The store of finance department catching fire.

 Risk of experienced employees leaving the department.
 Losing the guests or the companies under contractual agreement to the
competitors.
 The Forex Transactions not settled on timely basis.
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Threat of inflation reducing the number of guests to the hotel

FINDINGS

As I have spent a short span of time in the Finance Department, so it is

difficult to comment on the weak areas of this department, but I personally
feel the following lacking in the department: -

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 As per the workload the payable section is under staffed, any
absenteeism of a staff member of this section can seriously affect the
smooth functioning of the department.
 Lot of paper work is being performed for maintaining the record of
each and every transaction in the department which leads to wastage
of loads of paper on a daily basis.
 Delay in meeting out the payment deadline of the suppliers due to
which the relation between the suppliers and the payables is affected.
 Absence of a corporate culture.
 The profits after tax of the company is expected to rise from 6 crores 7
lakhs in 2007 – 2008 to 9 crore 20 lakhs in 2008 – 2009 which is an
increase of 37.31 %.
 The sales are expected to increase from 17 crore 60 lakhs in 2007 –
2008 to 21 crore 80 lakhs in 2008 – 2009 which is an increase of
23.86 %.
 The important documents like checks which are to be provided as
accommodation for bills to the BTC’s or the Bill to Company’s are not
kept in a proper place which may lead to subsequent consumption of
time to find out the proper stocks.
 All the sub – departments under the whole finance department uses
different sets of software’s for carrying out their operations.
 A proper database is not maintained electronically for the records of
the finance department which could be accessed and viewed from all
the departments.

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 SUGGESTIONS

Whatever knowledge I have of the subject on the basis of that I have come
up with the following suggestions for the department.

 The department should carry out office automation.

 Implementation of a corporate culture.

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  Respect for the fellow colleagues is very important, which is a very
important concept in which area this department lacks.
 Breaking the workload of the payable department.
 Proper shelves should be maintained in the accounts stores for
maintenance of the records.
 The hotel should try to implement the modern software’s like ERP for
finance and MRP for purchases for effectively carrying out it’s work.
 A proper training should be provided to all the concerned staff in the
hotel if new procedures are introduced to reduce errors.
 Implementation of the BPR (Business Process Reengineering)
concept.

BUSINESS PROCESS REENGINEERING: -

The fundamental rethinking and radical redesign of the business process to

achieve dramatic improvements is critical, contemporary measures of
performance, such as cost, quality, service and speed.

 Discontinuous thinking.
 Reorganizing and breaking outdated rules and assumptions , organize
around outcomes, not tasks.
 Let users perform the process and put the decision point where work
is being performed.
 Subsume information processing work into the real work that
produces the information.
 Treat geographically dispersed resources as if they were centralized
(virtual corporation).
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  Capture information once, at the source.

By adopting this technology, costs can be reduced to drastic extent. No need

of any more saving of time, although the practical application of this process
is less feasible in the given scenario as physical verification of the bills are
very important in order to have a check upon the payments due to the
suppliers. What is most suitable here is centralizing the purchasing process
as done by Maurya Sheraton, where all the purchase is centralized. So, as
soon as order is placed, every department has a copy of that ready with it,
this way there is less paper work and more saving of time is there.

 Use of company credit cards, also known as "Purchasing Cards" or

simply "P-Cards". P-card programs vary, but all of them have internal
checks and audits to ensure appropriate use.

CONCLUSION

Almost all the major hotel operators such as Starwoods, Shangri-la,

Intercontinental have significant growth plans for India and have multiple
projects in works or in pipeline. Revenues of Hotel and Restaurant (H&R)
industry in India during the financial year 2006-07 was INR604.32 billion , a
growth of 21.27% over the previous year, primarily driven by foreign tourist
arrivals ,which increased by 14.17%. Currently there are some1980 hotels
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approved and classified by the Ministry of Tourism, Government of India ,
with a total capacity of about 110,000 hotel rooms. With tourism industry
showing excellent performance, in terms of foreign tourists arrival and
demand outpacing supply, the hospitality industry, is poised to grow at a
faster rate and reach INR826.76 billion by 2010. It is estimated that over the
next two years 70,000-80,000 rooms will be addedacross different categories
throughout the country.

The study is all about the functioning of the Sales department in the ITC
Sheraton Hotel. To tap the above mentioned opportunities the finance
department in the hotel should function properly. Thus this study will help in
finding out how the financial flow of operations is carried out in the hotel
industry.

QUESTIONNAIRE

Q1) Which method is used by the stores while issuing inventories?

a.) LIFO.
b.) FIFO

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Q2.) Which method is used by the F&B Controls for determining the closing
stock?
a.) Weighted average method.
b.) FIFO.
c.) LIFO.

Q3.) Which method is used by the purchase department when they order
material?
a.) ABC analysis.
b.) Ratio analysis.
c.) None of the above.

Q4.) What is the debt collection period of the hotel?

a.) 7 days.
b.) 15 days.
c.) 20 days.
d.) None of the above.

Q5.) What is the creditors payment period of the hotel?

a.) 7 days.
b.) 15 days.
c.) 20 days.
d.) None of the above.

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OPEN ENDED QUESTIONS

Q6.) What are the main factors responsible for increase in the profit for the
current year as compared to the previous year?

Q7.) Entertainment should be allowed on weekends or not .

Q8.) Should there be a limit for entertainment slip.

Q9.) Should the morning meeting be abolished ?

Q10.) what is ARR?

Q11.) What is the difference between Tentative and permanent block?

Q12.) What growth in sales and growth have you seen in the hotel for the
period you have been working in the hotel?

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