iNTRODUCTION TO HOSPITALITY

Hospitality refers to the relationship process between a guest and a host, and it
also refers to the act or practice of being hospitable, that is, the reception and
entertainment of guests, visitors, or strangers, with liberality and goodwill.
Hospitality frequently refers to the hospitality industry jobs for hotels, restaurants,
casinos, catering, resorts, clubs and any other service position that deals with
tourists.

Hospitality is also known as the act of generously providing care and kindness to
whoever is in need.

The word hospitality derives from the Latin hospes, which is formed from hostis,
which originally meant a 'stranger' and came to take on the meaning of the
enemy or 'hostile stranger' (hostilis) + pets (polis, poles, potentia) to have power.
Furthermore, the word hostire means equilize/compensate. Hospitality as a
cultural norm or value is an established sociological phenomenon that people
study and write papers about (see references, and Hospitality ethics). Some
regions have become stereotyped as exhibiting a particular style of hospitality.
Examples include:

• Minnesota nice
• Southern hospitality

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.
 OVERVIEW OF COMPANY

The ITC Maurya, New Delhi has been the preferred residence of visiting heads of
state and global business leaders for over 25 years. This extraordinary hotel
combines an historic aura with contemporary facilities to create an unrivalled
luxury hotel experience.

Situated in the heart of the exclusive Diplomatic Enclave and surrounded by

views of Delhi’s green belt – the forested ridge, our business hotel is a
convenient 14 kilometers (25 minutes) from the International Airport. An imposing
structure of timeless luxury boasts inspiring architecture and a majestic ambiance
– a tribute to the age of the great Mauryan Dynasty, which created the golden era
of Indian history.

440 rooms, including 29 uniquely-designed suites, are available in a bouquet of

room categories, from the Executive Club which pioneers a tradition in corporate
hospitality to the Towers’ eight luxurious floors of elegance and tranquility. The
Luxury Room combines the best of opulence, space, and service standards and
the ITC One – our premium room category – offers magnificent decor,
impeccable service, and the latest in modern conveniences and amenities.
Behind the lavishness is a crisp efficiency and a deep understanding of the
needs of the global traveler.

One of the most popular dining destinations in the city, ITC Maurya, New Delhi
additionally offers an assortment of internationally acclaimed cuisine.
 HISTORY OF ITC

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco
Company of India Limited'. Its beginnings were humble. A leased office on Radha
Bazar Lane, Kolkata, was the centre of the Company's existence. The Company
celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land
situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata’s, for the
sum of Rs 310,000. This decision of the Company was historic in more ways
than one. It was to mark the beginning of a long and eventful journey into India's
future. The Company's headquarter building, 'Virginia House', which came up on
that plot of land two years later, would go on to become one of Kolkata's most
venerated landmarks.

The Company's ownership progressively undiagnosed, and the name of the

Company was changed to I.T.C. Limited in 1974. In recognition of the Company's
multi-business portfolio encompassing a wide range of businesses - Cigarettes &
Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty
Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting & Stationery
- the full stops in the Company's name were removed effective September 18,
2001. The Company now stands rechristened 'ITC Limited'.
 ITC GROUP OF HOTELS

Hotel Name Star City Address

Category
ITC HOTEL MAURYA 5 Star New Delhi Diplomatic
SHERATON & TOWERS Deluxe Enclave
S.P Marg
New Delhi Delhi
HOLIDAY INN, AGRA 4 Star Agra 16/2/8
Sanjay Place
M.G. Road, Agra
Uttar Pradesh
ITC HOTEL WINDSOR 5 Star Bangalore No. 25
SHERATON & TOWERS Deluxe Golf Course
Road
Bangalore
Karnataka
ITC HOTEL PARK SHERATON 5 Star Chennai 132
AND TOWERS Deluxe T.T.K. Road
Chennai Tamil
Nadu
ITC HOTEL KAKATIYA 5 Star Hyderabad 6-3-1187
SHERATON & TOWERS Deluxe Begumpet
Hyderabad
Andhra Pradesh
ITC HOTEL GRAND 5 Star Mumbai Sahar, Andheri
MARATHA SHERATON & Deluxe (E)
TOWERS Mumbai
Maharashtra
ITC HOTEL SONAR BANGLA 5 Star Kolkata 1, Haldane
SHERATON & TOWERS Deluxe Avenue
Kolkata West
Bengal

LOCATION OF ITC GROUP OF HOTELS

LANDMARKS OF ITC HOTELS
Various landmarks of itc hotels are as follows:-

1. EXPORT HOUSE STATUS FOR TOURISM AND HOSPITALITY

INDUSTRY

The first and probably the most important break through was the
conferring of 'Export House Status' for Tourism and Hospitality Industry. A
series of interactive meetings were organized with the concerned
Ministeries of the Government of India. A high level conclave presided by
none other than Shri Ramakrishna Hegde, the then Hon'ble Minister of
Commerce himself, cleared the decks for getting the official seal of
approval for the action plan that was blue-printed by HAI. This recognition
placed hotels and tourism units at par with industries engaged in export of
products for the purpose of imports of projects and products against their
foreign exchange earnings.This landmark achievement resulted in Indian
Hotels acquiring the ability to provide world class facilities to their clients
and compete with hotels worldwide.

2. TOURISM EXPORT PROMOTION COUNCIL

A parallel achievement to the grant of Export House Status, was the

formulating of the constitution of the Tourism Export Promotion Council
(TEPC) crafted on the 20th of November 1998, it was approved by the
Company Law Board under section 25 of the Companies Act 1956. TEPC
represents an unique experiment in bringing together for the first time, all
constituents of the tourism sector namely hotels, travel agents, tour
operators, transporters airlines and tourism finance companies on a
common platform & under the same umbrella.

3. SAARC HOTEL ASSOCIATION ESTABLISHED

Hotel Association of India has gone beyond National boundaries. By

contacting Hospitality Industry Organisations of Bangladesh, Bhutan,
India, Maldives, Nepal, Pakistan and Sri Lanka, a move has been made
towards extending regional cooperation. HAI played a pivotal role in the
process that took a formal shape in the form of SAARC Hotel Association
launched in Mumbai on 7th April 1999. Nepal was assigned the
responsibility of hosting the SAARC body for the initial two years to be
followed by the rest of the member countries by rotation.

4. INTERNATIONAL CODE OF CONDUCT TO GOVERN RELATIONS

BETWEEN HOTELIERS, TRAVEL AGENTS AND TOUR OPERATORS
 An International Code of Practice governing the relations between
Hoteliers on one part and Travel Agents/ Tour Operators on the other was
signed between HAI and the two National travel trade associations namely
Indian Association of Tour Operators (IATO) and Travel Agents
Association of India (TAAI).The signing of this code sent a clear signed to
the International traveler and travel fraternity that India would adopt global
policies of hotel bookings, cancellations, refunds, claims etc.

5. LEGAL 'FIRST' FOR HOTEL INDUSTRY

HAI sought the intervention of the High Court of Delhi by filing a writ
against an arbitrary and adhoc administrative directive requiring the hotels
in the approved categories, classified by the Ministry of Tourism to follow a
regime of 'Single Tariff'. The industry perspective, presented by HAI was
accepted by the High Court of Delhi which granted a stay in favour of the
hotel industry.This vindicated the industry's system of operation across the
country in a matter of great importance not only to the hotels but also to
the domestic and international travelers staying in hotels.

6. SEEKING REPEAL OF ANTI-WOMEN LEGISLATION

The Punjab Excise Act, passed in 1914 during the British rule in India
contained an archaic and anti-women provision that prohibited the
employment of women in duly licenced premises i.e. bars and restaurants
in hotels. HAI challenged the validity of this legislation before the Hon'ble
High Court, declaring it to be ultra vires under article 226 of the
constitution of India.The 92 year old legal section 30 of the Act was struck
down by the Delhi High Court. HAI thereby achieved a singular judicial
success in providing women equal opportunities for work in hotels across
the country.

7. SURVEYS ON THE IMPACT OF TRAVEL ADVISORIES IN

HOSPITALITYINDUSTRY

Foreign missions embassies often issue travel advisories to their citizen.

Issued from time to time with respect to certain countries, these advisories
discourage citizens to undertake travel to these countries on account of
perceived threats like disease / epidemics, political instability, security
concerns, etc.Travel advisories have been issued against travel to India
on several occasions. Most foreign tourists surveyed, conducted among
hotel guests the survey viewed these advisories as coloured by political
considerations' and based on 'inadequate knowledge of ground realities'.
The results of this survey when conveyed to the embassies facilitated their
governments in reviewing and in certain cases withdrawing the advisories.
8. FIRST AFRO-ASIAN INFOTECH HOTELS EXPO

An initiative led by HAI resulted in the Afro Asian Region’ and Conference
cum Exposition on Information Technology being institutionalized as an
‘annual event’ in New Delhi for the South Asian Region countries. The first
conference organized from 10/11 April 2000 at the ITC Maurya Sheraton
Hotel, was supported by United Nations Economic and Social Commission
for Asia & the Pacific & the SAARC Tourism Council. Support was also
extended by the Ministries of Tourism and Information Technology,
Government of India who Co-sponsored the event.

9. CREATING A NATIONAL NETWORK OF HAI CHAPTERS

Having established itself in New Delhi in April 1997, the Association

proceeded towards enlisting co-operation of hoteliers from across the
country. Support poured in by way of local chapters from twenty-five
states and fifty-three cities, on a completely voluntary basis. Each of these
chapters monitors hospitality related developments in its region enabling
the Association to address the concerns of the hotel industry at grass root
level.

10. GOING GLOBAL WITH KNOWLEDGE EXCHANGE PARTNERS

In addition to establishing Chapters at a state and city level, the

association has forged partnerships and alliances with several
International Bodies in the field of Tourism and Hospitality, to mention a
few World Travel and Tourism Council (WTTC), the Pacific Asia Travel
Association (PATA), World Tourism Organization (WTO), the International
Hotel and Restaurant Association (IH & RA), The united Nation Economic
and Social Commission for Asia and the Pacific (UN-ESCAP), the South
Asia Association of Regional Countries (SAARC), the World Health
Organization (WHO) and the European Union's South Asian Integrated
Tourism Human Resource Development Programme (EU-SAITHRDP).
The affiliations enable exchange of knowledge on several subjects helping
the Association in its effective functioning.

11. INTER-SECTORAL LINKAGES WITH APEX NATIONAL FORA

Hotel Association of India has not limited itself to the Tourism Industry
alone. It has also developed working relationships with apex industry
bodies of the country. It liases with Federation of Indian Chamber of
Commerce and Industry (FICCI), Associated Chamber of Commerce and
Industry of India (ASSOCHAM) and the Confederation of Indian Industry
(CII).
12. MAKING INDIAN HOTELS DISABLED FRIENDLY

The Association took the initiative of formulating a comprehensive set of

guidelines to make hotels more accessible and comfortable for the
disabled. The guidelines related to provision of facilities in parking and
approach areas, lobby, public areas, lifts, rooms and bathrooms and
undertaking of special fire prevention measures.

13. SPECIAL PROMOTION WITH NATIONAL CARRIER

HAI galvanized the entire hospitality industry to come together under a

single banner and offer as many as 62 special promotional packages in
association with Air India. Launched in the Gulf Region, these packages
provided a wide choice to the traveler from Middle East to India.

14. STUDY PROJECTS

A study project was initiated by the Association to assess and thereafter

improve upon, the skills of staff, particularly in smaller hotels to handle
foreign tourists by sensitizing them to cultural differences across countries.

15. ENCOURAGING INVESTMENTS

Hotel Association of India orchestrated the strategy that led to increased

availability of funds for the hotel industry. Benefits on loans to hotels in the
category of three stars and above were announced in the Union Budget of
2003-04. The benefits allowed under Section 10(23)g of the Income Tax
Act facilitated the lending institutions to give loans at reduced interest
rates to the hotels by giving them a tax break on interest earned on hotel
project loans.

16. RE-STRUCTURING IN HOSPITALITY BUSINESS

At the behest of HAI, the Finance Ministry constituted a working group

under the Chief Commissioner of Income Tax, Mumbai. The working
Group recommended the grant of benefits under Section 72 A of the
Income Tax Act which helped loss-making hotel companies to re-organize
their business. The facility of mergers and acquisition, hitherto available
only to industrial and manufacturing units was extended to hotel
companies as well. This allowed hotel companies to enter into strategic
alliances thereby releasing resources blocked in non-performing assets
and enabled them to improve service standards.
 Growth

In the wake of a fairly good performance in the fiscal year to date, fresh
investments can be contemplated in the ITC stock with a long-term perspective.

But there may be a downside in the near-term, especially in the first quarter of
the next year coinciding with the Budget blues.

ITC would be spending Rs 5,000 crore in the next four to five years on hotel
projects. With 75 hotels (5,500 rooms) under the chain, ITC is expecting to add
another 27 properties (3,000 rooms) under its management in the coming years.

Declining to comment on growth in coming quarters, the head of India's biggest

cigarette maker, Mr Deveshwar, said the company's targets for the next five
years were to double sales, increase operating profits 2.5 times, and net turnover
2.5 times.

With a turnover of almost Rs 15,000 crore ($3.5 billion), the Kolkata based
company also has interest in packaged food, paper, retail, and agarbattis.

Deveshwar said that the company's operating performance was good,

considering the 18 per cent growth in net profit in the first quarter of 1998-99,
over and above the 67 per cent profit growth recorded in the first half of 1997-98.
 Major achievements

Several important achievements emerged from an independent evaluation of ten

years of cooperation between Romania and ITC. Among them:

- Top-ranked trade information services. The Romanian Foreign Trade

Centre, set up in 1996 with the strong support of ITC, has rapidly emerged as the
country’s best provider of trade information services. ITC contributed heavily to
the centre’s conceptual framework, web site development and staff training.

- Nationally-reputed Romanian Association of Purchasing and Supply

Management.
Romanian purchasing experts created this association in 1996, following a series
of ITC training sessions. Over the last five years, the establishment has carried
out dozens of courses, training over 300 Romanian specialists, bringing a new
business efficiency to their companies. For example, BADUC, a privatised
trading house in construction material, credits ITC training as being fundamental
in changing attitudes and introducing modern import techniques.

Today the association has 35 member companies and is Government-accredited

to issue training certificates. Due to their experience and skill, these Romanian
specialists are increasingly being engaged by ITC to conduct training on
international projects in purchasing and supply management.

- New Romanian versions of major international business publications.

Romania is the first country to translate and nationally adapt three of ITC’s top-
selling business publications: the Business Guide to the World Trading System;
Trade Secrets; and Secrets of Electronic Commerce. All three of these practical
guides are aimed at helping the business community improve their export
capacity.

The Business Guide to the World Trading System provides a practical, business-
oriented overview of the WTO agreements, and is accessible to readers. Now in
its second edition, it has been expanded to incorporate recent developments,
including a new section that focuses on six new WTO areas of work:
environment; investment; competition policy; government procurement; and e-
commerce facilitation. Trade Secrets provides answers to the top questions that
first time exporters need-to-know. Building on international research,
development and guidance from ITC, the Romanian Foreign Trade Centre
carried out national research to adapt the questions and answers specifically to
Romania. Secrets of E-commerce provides questions and answers to frequently
asked questions related to e-trade and Internet use by small and medium-sized
exporters.
 92 year old anti-women law struk down
 Issues represented by HAI to the Government of India and Milestones
achieved as reflected in union budget 2003-2004
 Adopting Technology Base
 Stretching beyond the frontier
 Pioneers adoption of Global Code of Conduct
 Towards quality service
 Strengthening our cause
 Better incentives

PERFORMANCE:

The company's earnings performance for the year ended March 2002 was not
impressive. Sales revenues during the period fell 16 per cent to Rs 112.08 crore
over the corresponding previous period. Given the tight economic conditions and
the post-September 11 developments, this was more or less expected. Hoteliers
were hit this year by the drop in tourist travel.
For instance, during April to February 2002, tourist arrivals dropped 2 per cent
and earnings from tourists 10 per cent.

This was mainly on account of the security risk posed by travelling to South Asia
after the act of terrorism in the US on September 11 followed by the start of the
war in Afghanistan.

This came at a time when confidence was slowly building and tourists were
expected to arrive during the Christmas holidays.

But the threat of an outbreak of war and sporadic incidents of terrorism and
communal violence kept security risk high. Eventually, as expected, tourism
declined.

Further, with economic conditions the world over also being tight, business travel
did not lend a helping hand. It is also evident from the numbers that the
company's operational risk profile is on the rise.

Operating profits were down 65 per cent over the previous year and operating
margins declined by around 11 percentage points to 7.76 per cent. These
numbers indicate that the scope for boosting profitability purely on the basis of
cost control may be limited.

At the end of the year, the company has moved into the red. It posted a loss of
Rs 3.12 crore compared to a profit of Rs 10.87 crore the previous year.

In this backdrop, the near-term prospects depend on whether there is an inflow of

tourists and business travellers into the country.

The first half of the financial year is normally not very good for hoteliers.

Therefore, any improvement may be visible only from the company's

performance in the third quarter of 2002-2003.

In this backdrop, only investors with a penchant for risk need consider an
investment. Given the uncertainties, an exit price of around 25-30 per cent from
the entry price can be considered.

FINANCIAL STATUS

Financial Results for the quarter ended 31st December, 2006

23.2% growth in Post-tax Profits

Non-Cigarette businesses now constitute 52% of Net Turnover
ITC’s Net Turnover at Rs. 3166 crores posted a strong growth of 24% driven by
the non-cigarette businesses which grew by 31% during the quarter and now
account for 52% of the Company’s Net Turnover. The key drivers : the significant
growth in the non-cigarette FMCG businesses, higher agri-business revenues
and the continuing strong performance by the Hotels business.

The Company’s pre-tax profit for the quarter ended 31st December 2006
recorded a growth of 26% over last year and crossed the Rs.1000 crore mark.
Post-tax profit at Rs. 717.4 crores grew by 23.2%. Earnings Per Share for the
quarter stood at Rs. 1.91.

The sops given in the Budget to hotels and tourism will also favour ITC. It has 20
per cent of its capital employed invested in hotels and also holds a 71 per cent
stake in ITC Hotels. Earnings of hotels have been badly hit in the last 12 months,
affecting ITC.

MARKET SHARE OF ITC HOTELS

Investors looking for exposures in sectors spanning FMCG, hotels and paper can
consider ITC, utilising the current sharp declines. At current price levels, the ITC
stock, which trades at about 26 times its trailing 12-month earnings, is be a good
bet in the large-cap space.

ITC's hotels division outperformed most of its peers in the hospitality industry in
FY-06, registering a 35 per cent revenue growth; its earnings also registered a
significant rise. Though revenues and earnings from this division are only
marginal, there appears to be a lot of potential for growth. ITC has firmed up
plans to expand its hospitality business by setting up hotels in Chennai and
Bangalore. ITC Hotels Limited, has undertaken a re-branding exercise to enable
consumers identify the various products offered by the company. To further focus
the positioning strategy, hotels in the ITC-Welcomgroup chain at the upper end of
the market would be branded into four categories.

The exercise is part of the company’s strategy to gain dominance in the

upmarket business traveller segment while establishing presence in the mid-
market as well as leisure segments through the Fortune and WelcomHeritage
brands.Work has started on two other projects — the ITC Sonar Bangla at
Calcutta and ITC Grand Towers at Upper Worli, Mumbai, Deveshwar said. The
Calcutta hotel would cost Rs 2.65 billion. The land for the project has already
been acquired.

MAJOR COMPETITORS
 • TAJ GROUP OF HOTELS
• HILTON HOTELS
• RADISONS
• BAUER PALLADIO HOTEL AND SPA
• BOSCOLO DEI DOGI HOTEL
• APEEJAY SURENDRA GROUP
• PARK HOTEL
• HOTEL PRESIDENCY
• HOTEL LE LODGE
• HOTEL MERIDIEN

Future Plans

As part of its growth plans, construction of two more business hotels, one at
Mumbai and one at Kolkata, has already commenced. When they open, the
Grand Towers at Mumbai and the ITC Hotel Sonar Bangla at Kolkata will add
500 more rooms to the ITC - Welcomgroup chain. The 400-room ITC Hotel
Grand Maratha which opened for guests in February 2001 is being perceived as
the finest property in Mumbai. The company has planned investments to
augment the total room capacity of the chain by building hotels at Kolkata,
Jaisalmer and other locations. It has added 80 rooms to ITC Maurya Sheraton,
Delhi. It has opened up a new Hotel Welcome in Saket with a capacity of 220
rooms. Other projects at Bangalore and Hyderabad are in pipeline. It is also
looking at Chennai seriously. The company is planning to invest Rs15bn in the
next three years starting FY02. The investment in Mumbai and Kolkata is
expected to be Rs5bn (Rs2.5bn in each project). The company's strategy at
present is to concentrate on India and after expanding in all major locations of
India, it will look at the international market. Similar projects such as the
Hyderabad golf project are not likely to happen in the near future.

FUTURE PROSPECTS OF ITC HOTELS

Realising the importance of the Tourism and Hotels sector in contributing to

economic growth and to significant employment generation and foreign exchange
earnings in particular, a number of policy level initiatives were taken further to
those contained in the Union Budget 2003 and the Exim policy thereafter. These
include (a) earmarking Rs. 2,500 crores for setting up world-class convention
centers (b) enabling cheaper domestic air travel (c) planned outlays towards
upgradation of airport infrastructure etc. Earnings from incoming tourists is
targeted at Rs.22,000 crores for 2004 - a growth of nearly 30%. Even at these
levels, travel and tourism would constitute barely 2% of India's GDP, well below
the world average of 10.7%.
Hotels constitutes critical infrastructure to support the growth of trade, commerce
and industry. India is grossly under-roomed in relation to the growth potential of
the Indian economy. Even at conservative GDP growth assumptions, the current
room supply of approximately 90,000 rooms would need to increase to at least
130,000 rooms by 2008. The accommodation sector therefore presents attractive
growth opportunities for companies like ITC that can sustain the impact of capital
intensity through the strength of its balance sheet.

The expected growth of Indian economy is the wake of continuing reforms will
lead to increase business travel in the India. Itc is well praised to seize the
unfolding opportunities.

The consolidated ITC is not much larger than the cigarette company -- the total
sales of the group is Rs 8,600 crore against ITC's Rs 7,950 crore. ITC's paper
and hotels businesses are small while it is yet to take up real-estate development
on any significant scale. The contribution of cigarettes to the total group revenues
continues to be a significant 80 per cent.

http://www.hinduonnet.com/businessline/iw/2000/10/29/stories/0229b103.htm
http://www.itcportal.com/the_itc_profile/history_evolution.html
http://www.thehindubusinessline.com/2007/04/13/stories/2007041304710200.htm
http://www.indianexpress.com/res/web/pIe/ie/daily/19980813/22550664.html
http://www.intracen.org/docman/PRSR1530.htm
http://www.hotelassociationofindia.com/milestones.htm
http://www.thehindubusinessline.com/iw/2002/05/12/stories/2002051200240800.htm
http://www.itcportal.com/newsroom/press_releases_31jan07.htm
http://en.wikipedia.org/wiki/Hospitality
http://www.thehindubusinessline.com/iw/2006/06/11/stories/2006061101150900.htm
http://www.thehindubusinessline.com/iw/2003/03/09/stories/2003030900310900.htm

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