RESEARCH PROJECT REPORT

QUALITY OF WORK LIFE IN HOTEL INDUSTRY

Compiled by: APARNA KAPOOR 3 RD YEAR IHM, LUCKNOW GUIDES CERTIFICATE

I have the pleasure to certify that

a student of

____________________ has pursed his research work and prepared the PROJECT under my supervision

and guidance . The work is the result of this own research to the best of my knowledge. This is

being submitted to the Institute for Integrated in Learning Management for the Partial fulfillment of the requirements of the three year full- time

degree in hotel Management.

Guides Signature

ACKOWLEDGEMET

I gratefully thank ________________ who guided me for the complication of this project. He gave us all the important information required for the project. Without his help the project would not have been possible. I am grateful to all the people who have given suggestions to improve the project.

OBJECTIVE

 To find the Characteristics of Hotel Industry To find the Service quality To find the Service Marketing To find the Human Resource Strategies. To find the Training & Development To find the Working Condition To find the Welfare Association To find the Action Plan To find the Factors Affecting Demand & Supply To find the SWOT Analysis of Hotel Industry

CHARACTERISTICS OF HOTEL INDUSTRY

A H otel is a funny industry. Almost every businessman uses their services, but a few know how they really work. Never before has the hotel industrys bottomless bulged so much from the boom in tourism, business or otherwise. Though the fact remains, the hotel industry depends on the tourism sector. The major characteristics of Hotel Industry are: a) The Hotel Industry is a labour intensive requiring skilled labour, being a service-oriented industry. b) The industry is also highly capital intensive due to soaring real estate prices and has a gestation period of 3 to 5 years. c) The industry is seasonal in nature, especially for hotels in tourist places where the occupancy rate touches 100% in peak season and 30-40% in off season. d) Most of the approved hotels have collaborations with foreign hotels and have Franchise agreements with international hotel chains.

In India, hotels can be broadly classified in two categories viz. Approved by Department of Tourism (DOT), Government of India and non approved hotels. Hotels are categorised into a number of segments. The Department of Tourism has assigned ratings to the hotels from 1 star to 5 star deluxe depending on the facilities offered. Department of tourism has also added one more category of Heritage class hotels which comprises old palaces converted into hotels. Hotels have various working codes . T hese are referred

to in packages designed for the consumers: 1. Category of Rooms i) (a) Normal (b)Deluxe (c)Executive (d) Suite (g) Elite (e)Deluxe Suite (f) Presidential Suite (h) Classic (i) Comfort

ii) Air-conditioned or Non Air conditioned rooms.

2.

Plans of Hotels Hotels have various Meal plans which they work on: EP (European Plan) Room only basis CP (Continental Plan) Room plus Breakfast basis MAP (Modified American Plan) Room Plus

Breakfast, plus one meal i.e. launch or Dinner. Also called Half Board. AP (American Plan) Room plus three meals (Breakfast, launch & Dinner). Also full board. 3. Tariff of Hotels are presented as follows: FIT (Free Independent Traveller). This is applied for individual travelling.

INTRODUCTION The 3 commandments of this philosophy are:

The Customer is the King In God only we trust, rest all gather data Variation is the enemy of all processes

Manufacturing, automobile, aviation, medical transcription, software, ITES, banks and even other financial institutions are following this methodology. The question then is why not Hotels? If the first commandment of Six Sigma talks about the customer, how can we leave out an industry which is the epitome of customer service and thrives purely on achieving customer delight consistently.

In an industry where customer interactions occur on an hourly basis, each customer touch point is critical for building personalised service credibility and developing customer affinity. Some of the areas/ processes where this approach may add value: -

Hotel-wide

Enhance Customer Loyalty Reduce Employee attrition Productivity/Efficiency Improvement Improve Work-life balance Reduce Billing errors/losses Developing better performance measures/ metrics Increase Revenue Reduce Cost Capture 'Voice of Customer' data

Front Office Operations/ Sales & Marketing

Reduce wait time during peak check-in time Reduce wait time during peak check-out time Eliminate billing errors and improve accuracy Reduce No shows Increase Occupancy Optimal utilisation of the current product mix (rooms) to increase revenue

Increase customer delight at the Executive Club Reduce/eliminate loss calls (Operators area) Accuracy of information

Food and Beverage Service / Production

To maintain optimal inventory Minimise wastage/pilferage Standardised output of Food and Beverage Reduce the time from order to service Optimal utilisation of current product mix (F&B/Outlets) to increase revenue

Accommodation Operation (Housekeeping)

Reduce the turnaround time of making/turning down a room

Standardisation of cleanliness across areas

Purchase/Stores

Reduce Inventory surplus Cost Benefit Analysis between cost of inventory and cost of storage of products where prices vary seasonally

Standardise the operating procedure of issuance to various departments

Reduce the turnaround time of issuance to various departments

Human Resources/ Personnel

Accuracy of payroll Documentation management Reduce the turnaround time of recruitment Reduce the turnaround time of relieving Increase the employee satisfaction rate

Leveraging the approach of the Starwood group, our leading hotel chains in India viz. Oberoi, Taj, Hyatt, Meridien, Intercontinental, ITC, Leela, Park etc can also benefit from this program. In order to enhance Customer Experience and Reduce Cost, all they need

to do is welcome Six Sigma with open arms and make it a part of their culture.A number of Hotel Management graduates like me are today a part of the Six Sigma galaxy and we wait for the day when Six Sigma becomes a household name in the hotel fraternity - an industry which launched their careers, an industry which would remain their first love.

SERVICES MARKETING THE CONCEPT OF SERVICES To define service narrowly as only relating to service industries is clearly incorrect. Today there is an increasing trend to attempt to differentiate product by service elements. Understanding the position of a particular service on each continuum, and the position of competitors, is an important step towards finding possible sources of competitive advantage.

POSITIONING AND DIFFERENTIATION OF SERVICES The positioning of a restaurant is a very important aspect for the marketers since it helps them to recognize the component characteristic of the services the customers need. Combining an analysis of customer needs on a segment-by-segment basis with an understanding of competitive offerings enables the marketer to identify opportunities for serving a particular segments needs better than anyone else. If offering such a service is seen as compatible with the organizations resources and value, then the firm should be able to develop a profitable niche for itself in the market. Here we have to understand that the buyers have different needs and hence they are attracted to different offers. It is therefore, important to select distinguishing characteristics, which satisfy the following criteria.

Importance the difference is highly valued to a sufficiently

large market.

Distinctiveness- the difference is distinctly superior to other

offerings, which are available.

Communicability it is possible to communicate the

difference in a simple and strong way.

Superiority the difference is not easily copied by

competitors.

Affordability the target customer will be and is willing to

pay for the difference. Any additional cost of the distinguishing characteristic(s) will be perceived as sufficiently valuable to compensate for any additional cost.

Profitability the company will achieved additional profits

as a result of introducing the difference

It is very important for the restaurants to position their services and products to recognize the component characteristic of the services the customers need. It helps the Hotel managers to identify opportunities for serving a particular segments needs better than anyone else.

SERVICE QUALITY: One of the major ways a service firm can differentiate it is by delivering consistently higher quality than its competitors do. Studies have shown that service quality affects customer satisfaction, which in turn affects buying intentions. Outstanding service quality can give a service company to superior sales and profit performance. The key is to exceed the customers service quality expectations. Productivity: There are seven approaches to improve service productivity. 1. Work more skillfully. 2. Increase the quantity of service by surrendering some quality. 3. Industrialize the service by adding equipments and standardizing production.

4. Make obsolete the need for a service by inventing a product solution. 5. Design an effective service. 6. Present customers with incentives to substitute their own labor for company labor. 7. Harness the power of technology.

HUMAN RESOURCE STRATEGIES The subject matter of personnel policies is as wide as the scope of personnel management. In most companies, polices are established regarding various functions of personnel management which are as follows:
1.

Employment: this function.

All policies concerning recruitment, Employment policies should provide

selection, and separation of employees are included in clear guidelines on the following points: a. Minimum hiring qualifications. b. Preferred sources of recruitment. c. Reservation of seats for scheduled castes, scheduled tribes, handicapped persons and ex-servicemen. d. Employment of local people and relations of existing staff. e. Reliance on various selection devices such as university degrees, tests, interviews, reference checks, physical examination, etc.

f. Basis (length of service or efficiency) to be followed in discharging employee. g. Probation period. h. Layoff and rehiring. 2. Training and Development: a. Attitude towards training- whether it is regarded as a device overcome specific problems or as a continuing relationship between superior subordinate. b. Objectives of training c. Opportunities for career development. d. Basis of training e. Methods of training - on the job or off the job. f. Programmes of executive development. g. Orientation of new employees. and

3. Transfer and Promotions: a. Rationale of transfer. b. Periodicity of transfer. c. Promotion from within or outside the organisation. d. Seniority required for promotion. e. Relative weightage to seniority and merit in promotion. f. Seniority rights. g. Channels of promotion.

4. Compensation a. Job evaluation system. b. Minimum wages and salaries. c. Method of wage payment.

d. Profit sharing and incentive plans. e. Non monetary rewards f. Executive stock option plan g. Procedure for getting pay h. Whether to pay prevailing or more than prevailing salary scales.

5. Working Conditions: a. Working hours. b. Number and duration of rest intervals. c. Overtime work. d. Shift work. e. Safety rules and regulations. f. Leave rules.

g. Employee Services and Welfare: a. Types of services - housing, transportation, medical facilities, education of children, group insurance, credit facilities, purchase of company's products at discount, company stores, social security, etc. b. Financing of employee services c. Incentives to motivate.

6. Industrial Relations: a. Handling of grievance b. Recognition of trade union. c. Suggestions schemes. d. Discipline and conduct rules. e. Workers' participation in management. f. Employees' news sheet and house journals.

Present Marketing Strategies of Major Players As occupancy rates is premium hotels drop, and the demand for mid range and budget hotels is growing, most hotel chains are now turning to the less glamorous segments for growth. Falling occupancy rates, at an average of 10-15% in the past year, has made it clear that hotels can no longer rely on their premium categories alone to rake in the kind of money that they were: Consider the case of The East India Hotel owned Oberoi chain of hotels, that is investing Rs. 1500 crore over the next four years. The thrust of this investment will be for leisure destination properties & budget hotels in Jaipur, Cochin, Delhi, Udaipur, Mysore, Madras, Coimbatore, Varanasi Jaisalmer & Jodhpur. When East India hotels, which is known for its strictly luxury - oriented hotels, concentrates the better part of its future investment on the budget segment, it implies that, while on the micro level, the hotel majors are chalking out strategies to counter the slump with aggressive marketing by the way of discount & freebies, on the macro level, a distinct trend is shaping up. The trend is - Hotel majors are looking towards expanding

their base hence, looking down towards the mid-market category. The Taj Group of Hotels, part of the Indian Hotel Company Limited (IHCL), has definite future plans for its Gateway & Residency brand to keep pace with its competitors. Its Rs. 800-900 crore, 5 year expansion plans includes the setting of one hotel in Rajasthan. In a market a particular service industry does marketing based on three basic strategies. They are: DIFFERENTIATION SERVICE QUALITY PRODUCTIVITY

Differentiation This can be done through: a) Offer b) Delivery

c) image The offer can include innovative features to

distinguish it from competitors offers. What the customer expects is the primary service package and to this can be added secondary service features. E.g., the high-tech travelers can be provided with computers, fax machines, e-mails, by a hotel in their accommodation. A service company can distinguish its service delivery quality by having more able and reliable customercontact people than its competitors. E.g., in a hotel, a more attractive physical environment can be developed in which the services are delivered. Service companies can also work on differentiating their image. They often do this through symbols and branding. E.g., the Taj Group of Hotels have their own symbols which they use in their stationery, crackers, bed-sheets, advertisements and incluvery tangible that is included in their service.

Hotels Low Occupancy in a Row IT was a year of waiting for the Indian Hotel Industry for the guests who never came and the Government that dithered and stumbled as it tried to put forward a tourism policy to lure foreign tourists to India. The year saw the red carpet rolled out for foreign tourist with their dollars but only 2.55 million of them are expected to touchdown by the end of the year as per the Government estimates - a dismal performance by any standards. With the turn around in the economy in the second half of the year and a new Government installed things will hopefully be better in the new year as foreign investment creeps up slowly. A silver lining was offered by the domestic tourists whose number continued to swell as the Indian middle-class zig zagged across the country discovering and rediscovering the eternal tourist dream foreign Indian hoteliers to recognise the home market.

This could be gauged from the fact that hoteliers. Including the big hotel chains, have started focussing on budget hotels and four-star hotels exemplified by the Trident Hotels. Major hotel groups have also been on an expansion and revocation spree during the year in preparation for better times in the new millennium. Like ITC Hotels is currently expanding its Maurya Sheraton Hotel in New Delhi besides planning to open one more five-star hotel in the Capital and also in Mumbai by the middle of next year. The year also witnessed major international chains setting up shops in India as the Marriott in Goa readies itself for an opening by the end of this year. The Hilton, Chennai, heralded the return of the American hotel major even as the Radisson group expanded its presence in India through several subbrands. Along with this, all major chains have also expressed interest in acquiring stake in the Government-owned India sale. Tourism Development Corporation (ITDC) managed hotels which have been put on the block for

The New Year will have to see the Government take a final decision on this front if it wants privatisation in the sector to take off. Several States have shown considerable progress on this front, especially Madhya Pradesh which has already put up various properties for long term lease to the private sector as the State Government takes on the role of facilitator leaving actual management of the hotels and resorts to the private entrepreneur. Another problem which remains unresolved during the year was the open sky policy which the entire tourism sector has been advocating to bring in foreign tourists.

Hotel Occupancy Decreases The Indian Hotel Industry has registered a fall in occupancy levels from 52.2 per cent in 1999-2000 to 49.7 in 2000-01. While average room in the same period increased by 2.7 per cent, a decrease in revenues of 2 per cent in 2001-02 was recorded. Inspite of falling revenues, the Indian Hotel Industry showed an inability to manage departmental operating expenses such as rooms, Food and Beverages, telephone etc., with these expenses rising 10.2 per cent during this same period. Undistributed operating expenses like administration, marketing, operation and maintenance too were uncontrolled and rose by 10.9 per cent. Food sales showed a growth of only 0.1 per cent, perhaps reflecting the supply and popularity of independent restaurants in many Indian cities, as well as consumer resistance to the exorbitant pricing and tax levels at in-hotel restaurants. Telephone revenue showed a fall of 8.7 per cent, reflecting the increasing use of Email and mobile phones.

"In the changing market scenario in the country the hospitality industry has to demonstrate an ability to drastically cut costs and improve productivity otherwise many hotels will soon find their existence threatened. There must be paradigm shift towards a value proposition to consumers and the industry must reinvest itself in terms of product, service and pricing. The government must rationalise tax structure, which in some cases as high as 40 per cent. The significance due to reliability and viability of the database drawn from the audited results of participating hotels form almost all the major chain and key independent hotels. The five leading countries on rooms yield are Italy, France, Russia, UK, Sweden, while the bottom five are Egypt, Pakistan, India, Kenya and Morocco. Even in occupancy, India ranks third from the bottom after Kuwait at 42.7 per cent and Kenya at 47.5 per cent. As a result, operating profit recorded a staggering fall of 20 per cent from 40.9 per cent to 33.3 per cent.

Hotel Industry Seeks Service Tax Abolition The hotel and restaurant industry has sought abolition of five per cent service tax. There is no justification in levying service tax as they are already paying 10 per cent expenditure tax and sales tax on the same bill. The revenue collected by the Government by way of service tax is the range of Rs.100-150 crores. The Government had imposed service tax on the industry in 2002, mainly targeting the unorganised sector of caterers, who did not pay any tax on transactions. But the Government exempted service tax for shamiana contractors last years. The hotel and restaurants industry to be included in the list of infrastructural facilities. If the hotel industry is included in the list of infrastructure sectors, then 100 per cent exemption from income tax will be available for the first five years. Loans from financial institutions can also be availed of. On recession in the industry, the industry was hoping to come out of it in 2002; but hopes were dashed since the

growth in the peak season of December to February was just three to four per cent. The industry is expecting a growth rate of over five per cent in the coming years. The trend of brand hotels entering into contracts to manage other hotels seems to be gaining ground and would be a welcome boost to the smaller hotels to become a part of the organised sector.

Hotel Sector Demands All Export Incentives The hotel industry has demanded the status of an export industry with all tax incentives at par with computer software exporters besides withdrawal of expenditure tax on guests making payments in foreign exchange. In its pre-budget memorandum although the hospitality industry had been granted the status of export industry last year, in reality it had only got the status of export industry last year, in reality it had only got the status of export house as the Government had not extended all incentives as available to other exporters. "Hotels and tourism units earning foreign exchange are not treated as exporters and are not treated as exporters and are not given all the incentives available to other exporters. The Government should new give us the balance of the incentives available to exporters. The industry had last year been given income tax incentives facilities of EPCG (Export Promotion Capital Goods) imports, EEFC (Export Earner Foreign Currency) accounts and some other benefits.

Pointing out that exporters are not required to pay any local taxes on their foreign exchange earnings. Reduction of service tax leveled on the hotel and restaurant industry since 1999. The threshold limit of turnover for service tax should be the same as for exemption of excise duties for small-scale units as a large number of restaurants have a very small annual turnover for services on which the tax is levied.

ACTION PLANS 1. Recruitment Plan: a. Number and type of person required b. Time periods when required c. Possible sources of recruitment d. Selection techniques to be used e. Any special problems anticipated and how they are to be overcome.

2. Redeployment Plan: a. Transferring to other units. b. Retraining for new jobs.

3.

Redundancy Plan: a. Number and names of redundant

b. Departments/units where redundancy exists c. Time of redundancy d. Retraining whenever possible e. Voluntary separation f. Retrenchment and layoff

4. Promotion Plan: a. Ratio of promotion to external recruits b. Basis of promotion c. Reservations, if any, in promotion.

5. Transfer Plan: a. Transfer policy and rules b. Channels of transfer

6. Training and Development Plan: a. Number of people to be trained b. Existing employees to be retrained c. Skill areas for training d. Availability of trainers e. Methods of training f. Training period g. New courses to be developed and changes to be made in existing courses.

7. Productivity Plan: a. Work simplification b. Mechanisation and automation c. Job redesign d. Training and refresher training

e. Incentives and profit-sharing schemes f. Participation g. Productivity bargaining

8. Retention Plan: a. Improving compensation levels b. Providing opportunities for career development c. Changes in work requirements d. Opportunity for participation

ACTIVITY FLOW CHART

Corporate Mission - Strategy Structure

Planning Horizon - HRI System - Inventory Profile

Changes + Needs + Deployment

Need for Defining HRP

Basis for Planning - Demand - Supply - Environment (Ext. - Int.)

Methods - Judgement Ratios

Organisation Process Approvals

Redeployment/Retraining/Voluntary Retirement Scheme

SWOT Analysis of the Hotel Industry

Strengths Indias rich cultural

Opportunities Boom in tourism Privatization of airlines

heritage Second largest forex Increase in disposable incomes Demand exceeds supply Weaknesses Capital intensive Labour intensive Non-availability of land Threats Sensitive disturbances country Competition from in to the

earner

International chains High taxes may render India as an unviable destination.

Factors Affecting Demand & Supply There is an enormous demand supply mismatch in the industry. This is mainly due to the continuously inflow of tourist into the country. On the other hand, there has not been a corresponding increase in the number of rooms. Factors Affecting Demand 1. Corporate Travellers: Large hotel companies have historically earned around 65 per cent of their revenues from foreign travellers. There was pronounced seasonally in tourist arrivals into Indian with April - September accounting for around 40 per cent of total arrivals and the second half for 60 per cent. However, in the post - liberalisation era, with the entry of corporate travellers, off-season occupancies in business hotels in the metros have shot up to around 80 per cent as compared to 60 per cent earlier. As result, most of the hotels in the metros have positioned themselves as corporate hotels. 2. Industrial Activity: With the opening up of the economy, MNCs have made an entry into India and this has led to flurry of industrial

activity in the country. A number of companies are now setting up new hotels to cater to the increase in demand. 3. Service: The industry, being a service industry, has to provide certain facilities and service to its users. There is a direct relation between customer satisfaction and the occupancy rates. The business traveller, who has stayed in international hotels, demands for similar facilities in the domestic hotels thus necessitating tie - ups with international chains. Therefore, hotels are striving hard to provide a home away from home and an office away from office to the customers. To lure the international customer, who expects the best, hotels have introduced various facilities like health club, golf club, etc. Latest communication facilities like E-mail, and fax, are becoming common in most of the 5 star hotels. Management is also paying particular attention to individual / group preferences, as these are return visitors. Companies are also wooing customers by Corporate discounts range giving them discounts.

between 10 to 15 per cent while the discounts to tourists

are around 25 per cent.

In addition, hotels are also

offering innovative value - added series to lure the customer, like the Oberoi's have gone one-step ahead by computerizing all the operations. Others have also set up cyber clubs to enable the tourists to surf the net. Only Hotels offering the best services are expected to survive in the long run. 4. Disposable Income: Given that political disturbances act as deterrent, over relined on foreign tourist might cripple the industry. It is hare that the domestic travellers come to the resource of the industry. Of late, with the rising disposable A 250 incomes, there has been a perceptible shift in the spending pattern of the domestic travellers. the industry. million strong middle class offers a potential market for With the domestic travellers preferring reasonably priced accommodation, the demand for the budget hotels and holidays resorts has increased. Therefore, rising incomes will have beneficial impact on the industry.

Factors Influencing Supply: 1. Land: Land is the Most critical for the growth of the industry. The prices of land in prime cities like. Mumbai, Delhi, Calcutta, Bangalore, etc. are astronomically high. In fact, the land prices in Mumbai are the highest in Asia next only to Hong Kong. Various factors like location importance as a tourism or business center, availability of land, presence of an international airport, etc. have a bearing on land prices. Hotels in centres of business, catering to corporate travellers and foreign tourists usually have high occupancy rates. 2. Regional Concentration: Around 70 per cent of the rooms are situated in 12 manor cities. Mumbai and Delhi alone account for 42 percent of the total rooms, since these two cities have a high incidence of business traffic. This leads to high occupancy rates in these towns resulting in unprecedented increases in average room's rates (ARRs).

The ARRs in these two destinations has grown at an average compound annual growth rate of above 20 per cent in the past. Mumbai has 7,102 rooms while Delhi has 7,328 rooms in 5-star category. In contrast, Hong Kong has more than 40,000 rooms. 3. Occupancy rates and ARRs: The high occupancy rates, as seen above, have led to hikes in the room tariffs leading to higher profitability for the companies. Lured by high profits a number of players are entering the industry.

4. Demand - Supply Gap: With the eight plan target to add 55,000 rooms at an outlay of Rs. 39,000 crore by the end of 1997 out of reach, there is likely to be a shortage of 37,000 rooms which is expected to increase to 70,000 rooms by 2002. The government has estimated that at least 1,25,000 classified hotel rooms are required to accommodate the foreign business and leisure travellers and domestic travellers in the coming years. This clearly represents

the gross demand supply mismatch prevalent in the industry. To meet the demand, the government has approved in all a total of 592 hotel projects (31,026 rooms involving a total investment of Rs. 10,000 crore, which will result in a 66 per cent incase in supply. These projects are expected to come on stream by the year 2005. The 5 star segment accounts for only 20 percent of this increase while 53 per cent of the new rooms are in the 3 star segment. This implies that the new projects are highly skewed towards the budget hotels and on completion, the share of the 3 star segment will increase from 16 per cent to 30 per cent. Even if the existing projects are completed there is expected to be a shortage of about 30,000 rooms.

CUSTOMER SATISFACTION & RETENTION CUSTOMER SATISFACTION Satisfaction is defined as a post consumption evaluation that the chosen alternative is consistent with prior beliefs and expectations (with respect to it). Dissatisfaction, of course, is the outcome when this confirmation does not take place. Consumer satisfaction is the outcome when expectations are matched by service experience, conversely, dissatisfaction occurs when there is a mismatch and expectations are not fulfilled by the service delivered. The Importance of Customer Satisfaction In principle, an organization can increase its turnover in two ways:
1.

Increase sales to existing customers: In order for the organisation to do this, the customers need to be satisfied and still want to buy more products and services from the organisation.

2.

Win new customers: In order to the organisation to do this, the new customers need to form a positive impression of the organisation. This impression may be formed either through marketing and sales initiatives or because satisfied customers

speak favorably of the organisations products, services, and staff. Customer satisfaction is crucial to the organisations future, because: Satisfied customers come back. Dissatisfied customers do not come back. Satisfied customers are often goodwill ambassadors and help the organisation to win more customers. Dissatisfied customers share their dissatisfaction with anyone who will listen and in the process give the organisation a bad reputation. Satisfied customers are usually prepared to buy new products/ services from the organisation. Dissatisfied customers rarely return as customers. Potential customers are more inclined to listen to existing and previous customers than to the organizations marketing campaigns. The information service provided by dissatisfied customers can spoil the effect of even the most powerful marketing campaigns. Satisfied customers are a source of inspiration to the organization and contribute to giving the employees increased job satisfaction.

It is very important for an organization to satisfy the needs and expectations of their customers. The organization should deliver quality products and services to their customers in order to maximize the repeat clientele. Strategically, they should try to provide all the services and products in the same way, which they promised during the campaigns and advertisements.

RELATION BETWEEN EMPLOYEE AND GUEST SATISFACTION Customer satisfaction has emerged as an important component in the bottom-line success of service businesses. business and fosters word-of-mouth advertising. Satisfying customers is especially important because it encourages repeat

Employees feel good when they feel that they are involved in decision making, receive adequate training, and are recognized for their contributions. Empowerment is recognized as an important tool for improving employee morale and performance.

Pay and benefits are a strong consideration in employee satisfaction, and most employees feel that they are underpaid for the job they do regardless of their compensation. Pay and benefits, however, are only one factor among many. A study by Bruce and Blackburn, for instance, indicated that the absence of those economic factors will lead to discontent, but their presence will not add to long-term satisfaction. On the other hand, jobenrichment factors, such as recognizing contributions, employee involvement in decision making, and management keeping the lines of communication open, continue to be important factors in employee satisfaction.

On the other hand the guests feel strongly about the treatment they receive from the hotels employees, and guests are happier if employees respond to guests individual needs. We can thus conclude that a happy employee does influence the guests attitude towards the hotel and thereby increasing customer loyalty.

CUSTOMER RETENTION Companies must be customers centered to be successful in current market scenario. They must deliver superior value to their target customers and must become adept in building customers and not just building products. Many companies think that obtaining customers is the job of the marketing or sales department. But in reality although marketing plays a leading role, it can be only a partner in attracting and keeping customers. Customer satisfaction measures how well a customers

expectations are met. If customers received what they expected, they are satisfied. If their expectations were exceeded, they are extremely satisfied. Customer loyalty, on the other hand, measures how likely customers are to return and their willingness to perform partnershipping activities for the organization. Customer satisfaction is requisite for loyalty. The customers

expectations must be met or exceeded in order to build loyalty. But the real issue is retention of customers that all marketers need to consider. The restaurant industry benefits from continued patronage of loyal customers because of reduced marketing costs, decreased price sensitivity of loyal customers, and partnership activities of loyal customers. The restaurant requires fewer

marketing dollars to maintain a customer than to create one and the creation of new customers through the positive word of mouth of loyal customers thereby reducing marketing costs. Reichheld and Sasser found that a 5% increase in customer retention resulted in a 25 to 125% increase in profits in nine service industry groups they studied. It is found that that building a relationship with customers should be a strategic focus of most service firms. As the competition is strong and often there is little differentiation between products in the same product class in the restaurant industry it becomes imperative to reatin customers. Increased competition with little differentiation between core product is one of the factors that led to the development of relationship marketing in the 1990s. Relationship marketing enables Developing companies to build loyalty with their customers.

customers as partners is different from traditional marketing, which is more transactions-based. Beyond building a stronger relation with their partners in the supply chain, thus companies today must work to develop stronger bonds and loyalty with their ultimate customers. Thus relationship marketing is a useful tool to retain customer,

RECOMMENDATIONS The Hotel Industry as a whole must understand the importance of Customer Satisfaction and Loyalty and make all efforts to retain customers.

Hotel must be given a higher ratio of importance as future trends signify that the mentioned sector will be a cash cow for the investors.

Advertising costs should be minimized as they account for nearly 10 percent of a businesses profit.

Ensuring exceptional guest care by each and every employee should be the norm. working as a team. To ensure this, flatter structures are recommended to stimulate communication process and close

Staff levels must be offered better pay packages since they are the ones in direct contact with your customers. Competitive pay packages will also help in retention of staff and better services to the customers.

 Empower employees, encourage and -support them in their decisions to build confidence. This will lead to better customer service at guest contact points.

Outsourcing options should be considered seriously, and in as many services as possible. This will definitely lower payroll costs and may also improve efficiency of operations.

LIMITATIONS

The dissertation is based on the use of secondary data. It gives us a birds eye view of the Hotel Industry.

Time was a biggest constraint but all efforts were made by me to collect all the relevant information for the dissertation.

BIBLIOGRAPHY 1. Various Publications and Journals By Confederation of Indian Industry [CII] 2. Various Magazines and Newspapers 3. Various Journals and Magazines By British High Commission Library 4. Various Journals and Magazines By INSDOC Library 5. Human Resource Management By Frederick E. Schuster 6. Publications and Journals By Various Hotels

Trade journals & magazines: 1. Hotelier and caterer 2. FHRAI magazine 3. Cornell Hotel and Restaurant administration Quarterly 4. Journal of Marketing 5. Business Week Magazine 6. Indian Journal of Marketing

Websites www.fhrai.com www.hotelinteractive.com www.thomsonlearning.co.uk www.hcima.com www.ehotelier.com