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CHAPTER-2

GROWTH AND PROSPECTS OF HOTEL INDUSTRY IN

GUJARAT

2.1 Introduction of Hotel Industry

2.2 Hotel-The concept

2.3 Origin of the word Hotel

2.4 Background of Hotel Industry

2.5 Hotel Industry in India

2.6 Major Player of Hotel Industry

2.7 Classification of Hotels

2.8 Career Opportunity in Hotel Industry

2.9 Different Departments in Hotels

2.10 Structure of The Hotel Industry in India

2.11 Hospitality Management

2.12 Tourism in The Gujarat State

2.13 Tourism and Gujarat Government

2.14 Recent Trends in Hotel Industry of Gujarat

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2.1 INTRODUCTION OF HOTEL INDUSTRY

One of the fastest growing sectors of the economy of our time is the hotel

industry. The hotel industry alone is a multi-billion dollar and growing

enterprise. It is exciting, never boring and offer unlimited opportunities. The

hotel industry is diverse enough for people to work in different areas of interest

and still be employed within the hotel industry. This trend is not just in India, but

also globally.

Modern hotels provide refined services to their guests. The customers or guests

are always right. This principle necessitated application of management

principles in the hotel industry and the hotel professionals realized the

instrumentality of marketing principles in managing the hotel industry.

The concept of total quality management is found getting an important place in

the marketing management of hotels. The emerging positive trend in the tourism

industry indicates that hotel industry is like a reservoir from where the foreign

exchange flows. This naturally draws our attention on hotel management. Like

other industries, the hotel industry also needs to explore avenues for innovation,

so that a fair blending of core and peripheral services is made possible. It is not

to be forgotten that the leading hotel companies of the world have been

intensifying research to enrich their peripheral services with the motto of adding

additional attractions to their service mix. It is against this background that we

find the service mix more flexible in nature.

The recruitment and training programmes are required to be developed in the

face of technological sophistication. The leading hotel companies have been

found promoting an ongoing training programme so that the personnel come to

know about the use of sophisticated communication technologies.

2.2 HOTEL – THE CONCEPT

At the outset, we go through the concept of hotel. The common law says that

hotel is a place where all who conduct, themselves properly and who being able

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and ready to pay for their entertainment, accommodation and other services

including the boarding like a temporary home. It is home away from home where

all the modern amenities and facilities are available on a payment basis.

It is also considered to be a place where tourist stops, cease to be travellers and

become customers. The definition presented by hotel operators to authorities of

the National Recovery Administration in Washington is found to be a more

comprehensive definition, presented by Stuart McNamara. The definition states

that, “ Primarily and fundamentally, a hotel is an establishment which supplies

boarding and lodging not engaged in inter – state commerce or in any intra –

state commerce, competitive with or affecting inter – state commerce (or so

related that the regulation of one involves the control of other).”

The hotel may furnish quarters and facilities for assemblage of people for social

business or entertainment purposes and may engage in retaining portion of its

premises for shops and businesses whose continuity (i.e., proximity) is deemed

appropriate to a hotel. The assemblage of people for social business and

entertainment purposes makes it essential that hotels are also furnished with a

big conference hall where the maximum possible accommodation is available.

We also call it the function room.

Initially the term motel was meant for local motorists and foreign tourists

travelling by road. They serve the needs and requirements of these travellers and

meeting their demand for transit and accommodation. Some of the important

services offered by the motels are parking, garage facilities, accommodation, and

restaurant facilities.

Motels are found located outside the city, preferably by the side of high ways

and important road junctions. The accommodation in this is more in the category

of a ‘chalet facility’. In USA, the motel accommodation is ranked at par with

hotel accommodation.

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2.3 ORIGIN OF THE WORD “HOTEL”

Before 1760 people used to go to inns for having their lunch, dinner etc .It was

the place where families used to host their guest inns owner used to provide

lodging and boarding facility service to their guest.

To world “hostel” was used then it was called “hostelier” which means head of

unit or the place. The Norman people invented the word “hotel”. The word

“hotel” was originally in England, officially from 1760. The real growth of

modern hotel was originated in “U.S.A” with opening of “City Hotel” in New

York in the year 1974. This was the first building erected for the hotel purpose.

This period also saw the beginning of chain operation under the guidance of

E.M.STATLER. It involves big investment, big profits and trained professional

to manage business.

The repreciation in 1930 had a disaster effect in a hotel industry after the World

War II and brought a tremendous up surge to hotel industry with continuous

prosperity of hotel industry.

Mass travel is a modern phenomenon that emerged after World War II. Mass

tourism continues to grow as political freedom, economic wherewithal and social

equality spread across the globe. With the economic engine of development

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running at full steam, there was a growth in international travel and thereby

growth in hotel industry.

Estimates abound as to the importance and size of house keeping. Certainly, its

economic contribution is critical to the global economy whether as a service to

the business community.

2.4 BACKGROUND OF HOTEL INDUSTRY

Prior to the 1980’s, the Indian hotel industry was a nascent and slow growing

industry primarily consisting of relatively static, single hotel companies.

However, Asian games in 1982 and the subsequent partial liberalization of the

Indian economy generated tourism interest in India with significant benefits

accruing to the hotel and tourism sector in terms of improved demand patterns.

Fortunes of the hotel industry are tied to the fortunes of tourism and the general

business climate in the country, which is why the economic liberalization

initiatives implemented since 1991, led to a soaring demand and supply gap in

the hotel industry.

HOTEL ACCOMMODATION 23

23

DrM.K.Patel, HRD practice in service Industry, 1st

Edition,p 82)

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The hotel sector forms one of the most important segments of the tourism

industry with high potential for employment generation and foreign exchange

earnings. To give impetus to this sector, the government provides tax benefits

and other incentives. The industrial policy has now placed hotels and tourism

related activities as a priority industry.

The Ministry of Tourism classifies functioning hotels under the star system into

various categories from one to five stars deluxe and a newly introduced category

of heritage hotels. The Ministry also reclassifies these hotels after every three

years to ensure that they maintain the requisite standards. The Hotels and

Restaurants Approval and Classification Committee set up for the purpose has

representatives from the central government, State governments and hotel and

travel industry associations.

2.5 HOTEL INDUSTRY IN INDIA

Hotel Industry in India has witnessed tremendous boom in recent years. Hotel

industry is inextricably linked to the tourism industry and the growth in the

Indian tourism industry has fuelled the growth of Indian hotel industry. The

thriving economy and increased business opportunities in India have acted as a

boom for Indian hotel industry. The arrival of low cast airlines and the associated

price wars has given domestic tourists a lots of options. The “Incredible India”

destination campaign and the recently launched “Atithi Devo Bhavah” (ADB)

campaign have also helped in the growth of domestic and international tourism

and consequently the hotel industry.

In recent years government has taken several steps to boost travel & tourism

which have benefited hotel industry in India. These include the abolishment of

the inland air travel of 15% reduction in excise duty on aviation turbine fuel to

8% and removal of a number of restrictions on outbound chartered flights,

including those relating to frequency and size of aircraft. The government’s

recent decision to treat convention centres as part of core infrastructure, allowing

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the government to provide critical funding for the large capital investment that

may be required has also fuelled the demand for hotel rooms.

According to a report, hotel industry in India currently has supply of 110000

rooms and thee is a shortage of 15000 rooms fueling hotel room rates across

India. According to estimates demand going to exceed supply by at least 100%

over the next 2 years. Five star hotels in metro cities allot same room, more than

once a day to different guests. Receiving almost 24 hour rates from both guests

against 6-8 hours usage with demand-supply disparity, hotel rate in India are

likely to rise by 25% annually and occupancy by 80 over the next two years.

This will affect the competitiveness of India as a cost effective tourist

destination.

To overcome, this shortage India hotel industry is adding about 60,000 quality

rooms, currently in different stages of planning and development, which should

be ready by 2012. Hotel industry in India is also set to get a fillip with Delhi

hosting 2010 Common Wealth Games. Government has approved 300 hotel

projects nearly half of which are in the luxury range. The future scenario of

Indian hotel industry looks extremely rosy. It is expected that the budget and

mid-market hotel segment will witness huge growth and expansion while the

luxury segment will continue to perform extremely well over the next few years.

2.6 MAJOR PLAYERS IN THE HOTEL INDUSTRY

(i) The Indian Hotels Company

The Indian Hotels Company and its subsidiaries are collectively known as Taj

Hotels Resorts and Palaces, recognized as one of Asia's largest and finest hotel

company. Incorporated by the founder of the Tata Group, Jamsetji N Tata, the

company opened its first property, The Taj Mahal Palace Hotel, Bombay, in

1903. The Taj, a symbol of Indian hospitality, completed its centenary year in

2003. Taj Hotels Resorts and Palaces comprises 59 hotels at 40 locations across

India with an additional 17 international hotels in the Maldives, Mauritius,

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Malaysia, United Kingdom, United States of America, Bhutan, Sri Lanka, Africa,

the Middle East and Australia.

The company has had a long-standing commitment to the continued development

of the Indian tourism and hospitality industry. From the 1970s through the 1990s,

the Taj played an important role in launching several of India's key tourist

destinations. Working in tandem with the Indian government, the Taj developed

resorts and retreats while the government developed roads and railways to India's

hidden treasures.

(ii) ITC/ Sheraton Corporation

ITC's Hotel division was launched on October 18, 1975, with the opening of its

first hotel - Chola Sheraton in Chennai. ITC –Welcome group Hotels, Palaces and

Resorts, is today one of India's finest hotel chains, with its distinctive logo of

hands folded in the traditional Namaste is widely recognized as the ultimate in

Indian hospitality. Each of the chain’s hotels pays architectural tribute to ancient

dynasties, which ruled India from time to time. The design concept and themes of

these dynasties play an important part in their respective style and decor.

With more and more hotels being added at strategic destinations, the group has

joined hands with the Sheraton Corporation to strengthen its international

marketing base. A successful marketing franchise for almost 25 years now, there

are currently 10 ITC – Welcome group Sheraton hotels, and more in the pipeline.

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(iii) The Leela Group

Founded in 1957 by Capt. C.P. Krishnan Nair, the Leela Group is engaged in the

business of ready-made garments and luxury hotels and resorts. The Leela

Kempinski, Mumbai and The Leela, Goa and the newly opened Leela Palace

Kempinski New Delhi are some of the best hotels in India, and have also won

considerable international acclaim.

(iv) The Bharat Hotels Group

The Bharat Hotels group is a major player in India’s tourism and hotel sector. It

operates its hotels under ‘THE GRAND’ banner and its present portfolio of hotels

incorporates FOURTEEN luxury hotels in the five-star deluxe segment. These

include InterContinental ‘The Grand’ hotels in New Delhi, Mumbai, Goa &

Srinagar and The Grand Ashok Bangalore, The Grand Laxmi Vilas Palace

Udaipur and The Grand Temple View Khajuraho.

(v) The EIH Ltd (The Oberoi Group)

Asian elegance is the key to running hotels, if you ask EIH (better known as The

Oberoi Group). The company owns and operates about 20 luxury hotels, about 10

mid-range hotels, and two inland cruises; The Oberoi Group operates primarily in

India, but also in Australia, Egypt, Indonesia, Mauritius, and Saudi Arabia. Most

of the company's luxury properties bear the Oberoi banner.

(vi) India Tourism Development Corporation (ITDC) / The Ashok

Group

India Tourism Development Corporation (ITDC) was established in 1966 as an

autonomous public sector corporation, entrusted with the task of helping develop

tourism infrastructure and promoting India as a tourist destination. The ITDC

Ashok Group of hotel chains manages some of the best five star and luxury tour

hotels in the Indian hospitality industry. The hotels run by the ITDC Ashok

Group of hotel chains may be divided into different categories; these are elite

hotels, comfort hotels and classic hotels. The ITDC Ashok Group of hotel chains

manages 33 hotels in 26 different tourist destinations all over India. The

management of Ashoka Group believes in offering the best in the hospitality

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industry and the staff at each of the hotels run by the group is especially trained to

be courteous and efficient.

(vii) Jaypee Hotels Ltd

Jaypee Hotels Limited primarily engages in the ownership and operation of hotels

in India. The company owns three Five Star Deluxe Hotels, namely Jaypee Palace

Hotel at Agra, and Jaypee Vasant Continental and Jaypee Siddharth Hotel at New

Delhi. It also manages the operation of the hotels Jaypee Residency Manor at

Mussoorie and Jaypee Green Resorts. In addition, Jaypee Hotels involves in

construction operations. The company is headquartered in New Delhi, India.

Jaypee Hotels Limited is a subsidiary of Jaiprakash Associates Limited.

• Foreign Trade Policy

The Foreign Trade Policy announced in April, 2006, offered following incentives

to the hospitality industry: Hotels and Restaurants are allowed to import duty free

equipment and other items including liquor, against their foreign exchange

earnings under the Served from India Scheme. As in previous years, this

entitlement is 5per cent of previous year’s foreign exchange earnings for hotels of

one-star and above (including managed hotels and heritage hotels) approved by

the Department of Tourism and other service providers in the tourism sector

registered with it. The stand-alone restaurants will be entitled to duty credit

equivalent to 10per cent of the foreign exchange earned by them in the preceding

financial year (instead of the earlier 20per cent). Service exports in Indian

Rupees, which are otherwise considered as having been paid for in free foreign

exchange by RBI, will now qualify for benefits under the Served from India

Scheme. Also, foreign exchange earned through International Credit Cards and

other instruments as permitted by RBI for rendering of service by the service

providers shall be considered for the purposes of computation of entitlement

under the Scheme.

Benefits of the Scheme earned by one service provider of a Group company can

now be utilized by other service providers of the same Group Company including

managed hotels. The measure aims at supporting the Group service companies

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not earning foreign exchange in getting access to the international quality

products at competitive price and providing services of international standards.

This new initiative allows transfer of both the script and the imported input to the

Group Service Company. The earlier provision allowed transfer of imported

material only.

• FDI in Hotel and Tourism Sector

100 per cent FDI is permissible in the sector on the automatic route. The term

hotels include restaurants, beach resorts, and other tourist complexes providing

accommodation and/or catering and food facilities to tourists. Tourism related

industry include travel agencies, tour operating agencies and tourist transport

operating agencies, units providing facilities for cultural, adventure and wild life

experience to tourists, surface, air and water transport facilities to tourists, leisure,

entertainment, amusement, sports, and health units for tourists and

Convention/Seminar units and organizations.

2.7 CLASSIFICATION OF HOTELS

(i) Commercial Hotels Cater mainly to business clients and usually offer

room service, coffee shop, dining room, cocktail louge, laundry and valet

service as well as access to computers and tax services.

(ii) Airport Hotels are located near airport and are a conveniently located to

provide any level of service from just a clean room to room service and

they may provide bus or limousine service to the air lines.

(iii) Conference Centers are designated to specifically provide meeting space

from groups, they provide all service and equipment necessary to handle

convention.

(iv) Economy hotels provide a limited service and are known for clean rooms

at prices meeting just the basic needs of travelers.

(v) Suite or All-Suite Hotels are hotels which offer spacious layout and

design. Business people like the setting which provides space to work and

entertain separate from bedroom.

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(vi) Residential Hotels used to very popular typical residential hotel offers

long term accommodations.

(vii) Casino Hotels are often quite luxurious. Their main purpose is in support

of the gambling operation. Casino hotels often offer top name

entertainment an excellent restaurant.

(viii) Resort Hotels are the planned destination of guests, usually vacationers.

This is because resorts are located at the ocean or in the mountains away

from inner cities. Resort hotels may offer any form of entertainment to

keep their guests happy and busy.

• GENERAL CLASSIFICATION OF HOTEL INDUSTRY

(A) ON THE BASIS OF STANDARDS Like most of the countries in world, India also has hotels divided in different

categories depending on their location, facilities, infrastructure and amenities

provided. All the star hotels in India are government approved with continuous

control on the quality of services offered.

(i) Five Star Hotels: The most luxurious and conveniently located hotels in

India are grouped under Five Star Deluxe Hotel categories. Five Star Deluxe

in India are globally competitive in the quality of service provided, facilities

offered and accommodation option. These are top of the line hotels located

mostly in big cities. These hotels provide all the modern facilities for

accommodation and recreation matching international standards in

hospitality. In such type of hotel HR department are established separately

and to execute and to follow the concept of HR strictly, HR professional are

hired.

(ii) Four Star Hotels: A rung below five star hotels are Four Star Hotels, these

hotels provide all the modern amenities to the travelers with a limited budget.

Quality of services is almost as high as the five stars and above categories.

These kinds of hotels are there for the travelers with limited budget or for the

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places which might not get the tourist traffic associated with larger cities. In

such type of hotel concept of HR is more or less followed.

(iii) Three Star Hotels: These are mainly economy class hotels located in the

bigger and smaller cities and catering to the needs of budget travelers. Lesser

in amenities and facilities, these hotels are value for money and gives good

accommodation and related services on the reduced price. Services would be

stripped down version of higher categories of hotels but sufficient to fulfill

customer basic needs. In such type of hotel concept of HR may or may not be

present. If present all functions of HRD is curtailed.

(iv) Two Star Hotels: These hotels are most available in the small cities and in

particular areas of larger cities. Catering to the backpacker tourist traffic,

these hotels provide all the basic facilities needed for general accommodation

and offers lowest prices. In this type of hotel concept of HR is absent.

(v) One Star Hotels: The hotels with most basic facilities, small number of

room’s locations in the far-flung areas are grouped under One Star Hotel

category. These hotels are best when customer is looking for cheapest

available accommodation option. In this type of hotel concept of HR is alien

words.

(B) ON THE BASIS OF NATURE

(i) Heritage Hotels24

Heritage hotels in India are best if one is looking for sheer elegance, luxury and

loyal treatment. They are not just another accommodation options but tourist

attractions in themselves. Exquisitely designed and decorated, meticulously

24

DrM.K.Patel, HRD practice in service Industry, 1st

Edition, P 83)

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preserved, high standards of service and ethnic cultural motifs helps the tourists

get the complete experience of an India.

A new classification of heritage hotels has been introduced to cover functioning

hotels in a palaces, havelis, castles, forts and residences built prior to 1950. As

the traditional structures reflects the ambience and lifestyle of the bygone era and

are immeresly popular among the tourists, the scheme is aimed to bring such

properties not to be lost due to decay or unused.

(ii) Beach Resorts Hotels

Peninsular India bounded by Arabian Sea, Bay of Bengal, Indian Ocean and the

two emerald archipelagos of Lakshadweep and Andaman and Nicobar have a

long coast line of around 7500 km, offering an amazing array of beaches, some

popular, some not so well known. Thus location of resort is the basic point of

attraction for tourists.

(iii) Wild Resorts Hotels

A wildlife tour is incomplete if one does not actually live in a forest for a few

days. It means living in a rest house or a tent the midst of the dense wilderness

and waking up to the twittering of birds.

(iv) Government Approved Hotels

These are the hotels, which might not have applied for star categorization or

small enough to find them in the list. Many of the wildlife resorts, lodges and

hostels are government approved providing a minimum level of accommodation

facilities at far off places.

(v) Residential Hotels

The residential hotels work as apartment house. Often we call them apartment

hotels. The hotels charge rent on monthly, half – yearly, or yearly basis. They are

generally located in big cities and towns where no meals are served to the

customers. Initially, the residential hotels were developed in the USA. The

services offered here are comparable to an average well managed home.

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(vi) Commercial Hotels

The commercial hotels are meant for the people who visit a place of trade and

commerce or business purposes and therefore these hotels are found located at

the commercial or industrial centers. They focus their attention on individual

travelers and are generally run by owners.

(vii) Floating Hotels

The floating hotels are located on the water surface. The places are sea, river,

and lake. These hotels provide with all the facilities and services made available

in a good hotel. In the leading tourist generating countries of the world we find

the practice of using old luxury ships as floating hotels.

(C) WORLD RECORD SETTING CLASSIFICATIONS 25

(i) Largest

In 2006, Guinness World Records listed the First World Hotel in Genting

Highlands, Malaysia as the world’s largest hotel with a total of 6,118 rooms.

(ii) Oldest

According to the Guinness Book of world Records, the oldest hotel still in

operation is the Hokshi Ryoken, in AwazuOnsen area of Komastu, Japan which

opened in 718.

(iii) Tallest

Burj Al Arab in United Arab Emirates is the tallest building used exclusively as

a hotel. However, the Rose Tower, also in Dubai, which has already topped Burj

Al Arabs height at 333 m (1,093ft), will take away this title upon its opening.

25Atulsrivastava, Tourism Planning and Management, 1stEdition, p 170)

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2.8 CAREERS OPPORTUNITIES IN THE HOTEL INDUSTRY

(i) The industry offers more career options than most: - No matter what kind

of work we enjoy and wherever our aptitudes lie, there is a segment of the

industry that can use ours talents.

(ii) The work is varied: - Because hotels and restaurants are complete

production, distribution and service units, and managers are involved in a

broad array of activities.

(iii) There are many opportunities to be creative: - Hotels and restaurants

managers might design new products to meet their needs of their guests;

produce training programs for employees; or implement challenging

advertising, sales promotions and marketing plans.

(iv) Hospitality jobs are not nine-to-five jobs: - Hours are highly flexible in

many positions.

Many more opportunities are waiting in a queue. With these the role of HR is

drastically change. Its fields of operation in today’s worlds knew no boundary.

Each day it is confronted with new challenges in new division of hotels.

Therefore before knowing the role of HR it is essentials to know different

department of the hotels as well their functions.

• FACILITIES AVAILABLE IN HOTELS

• Room service

• Self parking

• 24-hour front desk

• Hair salon

• Business services

• Bar/lounge

• Parking (free)

• Business center

• Safe-deposit box - front desk

• Laundry service

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• Babysitting or child care

• Restaurant(s) in hotel

2.9 DIFFERENT DEPARTMENTS IN HOTELS

The departments are classified on accounts of it function. They are as follows:-

(A) CORE FUNCTIONING DEPARTMENT

(i) Food and Beverage (F&D) Department

F & B deals mainly with food and beverage service allied activities. Different

divisions are there in F & B like Restaurants, Speciality Restaurants, Coffee

Shop (24 hrs.), Bar, Banquets, Room service etc. Apart from that they have

Utility services (Cleaning).

(ii) Front Office Department

The front office is the command post for processing reservations, registering

guests, settling guest accounts (cashiering), and checking out guests. Front

desk agents also handle the distribution of guestroom keys and mail,

messages or other information for guests. The most visible part of the front

office area is of course the front desk. The front desk can be a counter or, in

some luxury hotels, an actual desk where a guest can sit down and register.

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(iii) Housekeeping Department

The housekeeping department is another important department in hospitality

world. Housekeeping is responsible for cleaning the hotel’s guestrooms and

public areas. This department has the largest staff, consisting of an assistant

housekeeper, room inspectors, room attendants, a house person crew, linen

room attendants and personnel in charge of employee uniforms. They may

also have their own laundry and valet service. Hotels with laundry and valet

equipment may use it only for hotel linens and uniforms and send guest

clothing to an outside service where it can be handled with specialized

equipment.

(iv) Food Production Department

Food production deals with the preparations of food items. It basically

engaged in preparing those dish, which are ordered by the guest and

afterwards is catered by the F&B department. Cuisine like Indian,

Continental, Thai, Italian, Konkani (Coastal Sea Food), South Indian,

Chinese, Mexican, etc. Different Chefs are appointed for the specialty

cuisine.

(B) SUPPORT DEPARTMENT (COST CENTERS)

(i) Marketing & Selling Department

Sales and marketing has become one of the most vital functions of the hotel

business and an integral part of modern hotel management. It includes

packaging for selling, sales promotion, advertising and public relations. The

marketing division is charged with the responsibility of keeping the rooms in

the hotel occupied at the right price and with the right mix of guests.

(ii) Engineering and Maintenance Department

The energy crisis throughout the world has given a great importance to the

engineering department of a hotel. This department provides on the day-to-

day basis the utility services, electricity, hot water, steams, air-conditioning

and other services and is responsible for repair and maintenance of the

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equipment, furniture and fixtures in the hotel. The engineering department

has an important role in satisfying the guest- demand and helping to maintain

the profit level of the hotel. The cleaning, up-keep, repair, replacement,

installation and maintenance of property and its furnishing, machinery and

equipment are the joint responsibilities of Engineering/Maintenance and the

Housekeeping Department.

(iii) Finance, Accounting and Control Department

A hotel’s accounting department is responsible for keeping track of the many

business transactions that occur in the hotel. The accounting department does

more than simply keep the books-financial management is perhaps a more

appropriate description of what the accounting department does. Whereas the

control department is concern with cost control guidelines by way of

reducing in investment, reduction in operating cost, control of food service

costs, control of beverage costs, labour cost control, etc.

(iv) Safety and Security Department

The security of guests, employees, personal property and the hotel itself is an

overriding concern for today’s hoteliers. In the past, most security

precautions concentrated on the prevention of theft from guests and the hotel.

However, today such violent crimes as murder and rape have become a

problem for some hotels. Unfortunately, crime rates in most major’s cities are

rising. Hence today security department also concentrate on these additional

criminal activities too.

(v) Administration Department

Top organizational members usually supervise the Administration

Department in a hotel. This department is responsible for all the work

connected with administration, personnel, manpower, employee’s welfare,

medical, health and security.

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(vi) Human Resource Development

This department has newly taken step in hotel industry and within a short

span of time it has become a very important part of the organization. It plays

the role of facilitator between the bargain able cadre and non-bargain able

cadre.

This department is the topic of our discussion. The practice, which this

department and their staff perform, is going to be learned in the light of

following project.

TABLE: 2.1

2.10 STRUCTURE OF THE HOTEL INDUSTRY IN INDIA

As of December 2005 (available figure) there are following number and category

of hotels. Table: 0.00 show the structure of hotel industry before five year.

Sources: Ministry of Tourism, Government of India.2005

Hotel Chains

They comprise major players including Indian Hotels Company Limited (the Taj

Group) and associate companies, EIH Limited (the Oberoi Group), ITC Hotels

Star Category No. of Hotels No. of Rooms

5-Star Deluxe 82 18764

5-Star 92 11332

4-Star 132 9401

3-Star 704 31039

2-Star 587 19031

1-Star 212 695

Heritage 83 2216

To be classified 50 5127

Total 1934 103973

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Limited (the ITC Welcome Group), Indian Tourism Development Corporation

(ITDC) and Hotel Corporation of India (HCI) (the latter two being under the

Public Sector). Most of these chains had an established presence in one or more

metro cities prior to the tourism boom of the 1980s. Subsequent to the tourism

boom, these chains aggressively expanded their presence in other locations. The

private players among the hotel chains are industry leaders and have well-

established brand identities across the different industry segments.

2.11 HOSPITALITY MANAGEMENT

Hospitality and hotel management are two most important segments

interdependent and interlinked to each other. Without hospitality it would have

been very difficult for hotel business to survive. It is therefore, very essential that

both these industries should be managed professionally and in a particular

manner. Hotel management has in fact become a science itself and several new

strategies and innovations are being introduced in hotel industry to make it at par

with international standard.

The hospitality industry has traditionally hired people from many different

cultural and ethnic backgrounds. Within hotel and restaurant companies with

international operations, managers have to deal with cultural diversity of the

work force and the guests. It is obvious that effective managing of this diversity

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is a requirement at all levels of a hospitality organization, and that the companies

in the forefront of managing diversity will have a competitive edge.

Human relation skills are the ones most needed and most used by any hospital

manager at any level, though lower level managers use more technical skills, and

upper level managers use more conceptual skills. Human relation skills are

required at all the level of management along with other skills. These involve the

ability to interact effectively with many different people. Poor interpersonal

skills represent the single biggest reason for failure, especially in the early and

middle stages of a manager’s career.

• SERVICES IN THE HOSPITALITY INDUSTRY 26

The first step in managing service is to make it an important part of the mission

statement of the company. A mission statement typically describes what kind of

business the company is in, what its mission, or purpose is, and what it believes

in. for instance, the holiday inn chain of hotels offers convenience at moderate

price. The hotels are conveniently located near airports or city centers and either

has a restaurant or are near eating places, the rooms are clean and comfortable.

Implicit in its mission are various service objectives, the organization must be

sure to know and understand its customers.

Once the mission statement and service objectives are clear, a service strategy

must be developed to clarify and implement them. A key part of the plan should

be to establish service performance standards. Performance standards translate

work requirements into levels of acceptable or unacceptable performance, and

they need to built into the job descriptions and and evaluation forms. For

example.

(i) Customers are greeted within one minute of sitting down.

26DrM.K.Patel, HRD practice in service Industry, 1stEdition, p 91

91

(ii) Customer complaints are resolved immediately, and the dinning room

manager is notified.

(iii) The server looks directly at the customers when speaking to them.

(iv) The server checks back with each party at least once during the meal.

(v) Meals are accurately served.

(vi) Refills are taken back before the customer orders them.

(vii) The server is always in proper uniform.

• USERS OF HOTEL INDUSTRY

In marketing hotel services, it is important to know about the different types of

users availing the services with diverse aims and objectives. This would ease the

task of marketers specially while studying the behavioural profile.

The following is the classification of different categories of domestic and

foreign users.

• DOMESTIC:FOREIGN:

Pilgrims Political representatives

Students Trade representatives

Officials Educationists

Film stars etc.Tourists, Sportsmen etc

Executives NRI

VIP

92

2.12 TOURISM IN THE GUJARAT STATE

A separate Tourism Department was established in 1973 to identify and develop

the tourism potential in the State. This was followed by the creation of Tourism

Corporation of Gujarat Limited in 1978 which was entrusted with the task of

undertaking and developing tourism-related commercial activities. The

Corporation is presently engaged in a variety of activities such as creation of

lodging and boarding facilities for the tourists and other aspects of tourist

acilitation such as transportation, packaged tours, wayside catering along the

National and State Highways, arranging cultural festivals, organizing exhibitions

and producing and distributing maps, posters, brochures and pamphlets. The

Corporation has set up accommodation facilities at Chorwad, AhmedpurMandvi,

Porbandar, Veraval, Hajira, Ubharat and Tithal. Similar facilities at pilgrimage

centres like Palitana, Somnath, Dwarkja, Pavagadh and Dakor have also been set

up by the Corporation. One of the recent tourist attractions introduced by the

Corporation in collaboration with the Indian Railways is a special tourist train.

The Royal Orient Train which connects up various tourist destinations straddling

the Gujarat and Rajasthan State. However, the Corporation has suffered losses

due to a number of organizational constraints. In order to minimize these losses

and also to provide better services to the tourists, the Government has

undertaken privatization of some of the commercial property units of the

Corporation.

93

In spite of possessing a variety of tourist attractions such as wildlife, scenic

beauty, pilgrimage centers, exotic traditional crafts and festivals, beaches,

hospitality of the region and a varied healthy and tasteful cuisine, the State has

not been able to accelerate the pace of tourism in comparison to other states. In

1991, the State did declare a tourism policy but it did not elicit adequate

response from the private sector since the policy contained only a handful of

benefits while the implementation was tardy due to legal and administrative

constraints. This was at a time when the Government of India had already

declared tourism as an industry and a large number of states had followed suit.

This enabled the tourism industry to avail of incentives, reliefs, benefits

available to the industry in those states.

While other state Governments made successful efforts in developing tourism

within their states, the relative inability of the Gujarat State to harness and

develop its full tourist potential may be attributed to a combination of factors

such as lack of effective policies, inadequate infrastructure, ineffective

marketing and lack of decent facilities for the tourists.

The main rationale for formulating a comprehensive tourism policy is rooted, on

one hand,in the convergence of socio-economic spread benefits, environment -

friendliness and employment potential of tourism industry and on the other, in

the growing demand for tourism products in the State, brought by a rapid

industrial growth in the State during the recent years that has led to tremendous

increase in number of business travelers.

World class supporting infrastructural facilities substantially influence the

quality of tourism services but ultimately, it is quality of human resource that

significantly govern the development process. The significant development in

the field of tourism industry of information super highway has been found

changing the perception of everything. The motive of managing human resource

is to make available to the tourism world class professionals besides making the

process of development of human resources cost-effective.

94

The tourism industry in India has become one of the most efficient and

dependable earners of precious foreign exchange revenue for the country. Not

only the centre but the state government too has begun to invest in tourism.

Infrastructure and facilities to capitalize on this growing industry. Tourism is one

of the largest industries in the world. Scores of countries buse their economy

upon it. Even in India it is the second largest foreign exchange earner (Rs.11,000

crores a year). We propose to set up a new goal of attracting at least 10 million

tourists to India within 5 years, so that we can earn at least 50,000 crore rupees

as foreign exchange every year.

• GUJARAT THE TOURIST HUB Gujarat is a proactive government & aggressive marketing, untapped tourism

opportunity, strategic location unique blend of pilgrims, adventure hill station,

beaches, heritage, desert etc available in the state.

(i) Business Tourism

Gujarat is most industrialized state in the country with high performance of

Indian and global companies. It includes 18 new sezs under implementation

along with various other industrial parks.

(ii) Archeological & Heritage tourism

The state having a wide variety of historical forts, places, dargahs, temples and

places of historical importance in India’s freedom struggle. These sites are still

virgin and have a huge potential for developments also include world heritage

sites like lothal and dholaveera, champaner and the heritage walk.

(iii) Cultural tourism

Gujarat state has a unique art & handicraft like bhandani, kutchhiwork,bamboo

craft and khadi unique festivals and fairs like navratri, makarsankrati,

sharadpoornima, mahashivratri and tarnetar festival.

95

(iv) Religious tourism

Gujarat is home to multitude devotional centers and temples with famous

religious centers like Dwarka, Dakor, Ambaji, Palitana, Somnath, Shamlaji,

Bahucharaji, Pavagadh, Akshardham, Swaminarayantemple, Jain temples

recently made a Mahatma mandir in Ghandhinagar.

(v) Fun tourism

The state include availability of beaches, diverse, landscape from forests to

deserts ,hills to plain land, modern tourism sites like dirve-in, science city, water

parks, theme based parks, and others like parks, zoos, lakes, museums, libraries,

shopping malls and multiplexes.

(vi) Wild life tourism

Gujarat is habitat for the world’s rarest as well large number of fauna & flora,

Founa includes Asiatic lions, wild ass, blackbucks, bears, monkeys, nilgai,

paradise, flycatcher, Chinkaras, doplhins, whale shark and migratory birds like

flamingoes, pelican, starks, flora includes species of khair, sadad, timru, babul,

salai, khakro, ber, asundro and bordi.

The state also has national park/sanctuaries at gir national park, vansada national

park, nalsorovar bird sanctuary, Kutch bustard sanctuary and velawadar black

buck sanctuary.

TOURISTS ATTRACTIONS

• FAIRS & FESTIVALS OF GUJARAT

Various fairs and festivals are celebrated in every month in Gujarat. Some of the

main festivals which are celebrated in Gujarat are the Kite Flying Festival or

Makar Sankranti, Navaratri Festival, Sarkhej Fair and Tarnetar Fair. The

Navratri festival is celebrated during September-October and devoted to the

three goddesses of the Hindu mythology. The Kite Flying Festival is celebrated

96

on 14th January. On this day, the people of every age fly kites of various shapes

and sizes.

• GIR NATIONAL PARK

The Gir National Park and wildlife sanctuary is located about 65 km south east

in the Junagadh district of Gujarat. Gir National Park is one of the India’s finest

wildlife sanctuaries located in Gujarat. This national park is set up in an area of

1412 square km. of lush deciduous forests. This national park was established on

18th September 1965 as a Forest Reserve to conserve the Asiatic lion. This

sanctuary is the final refuge of the rare Asian lions which roamed freely two

centuries ago throughout Middle East and some parts of India. Sasan, with a

forest rest house, is the headquarters of the sanctuary. Various deciduous forests,

grasslands, acacia scrub, wetlands and the seven rivers forms the topocharty of

this wildlife sanctuary.

• SABARMATI ASHRAM

“Being a Gujarati, I thought I should be able to render the greatest services to the

country through the Gujarati language. And then as Ahmedabad was an ancient

centre of hand loom weaving, it was likely to be most favourable field for the

revival of the cottage industry of hand spinning. There was also a hope that, the

city being capital of Gujarat, monetary help from its wealthy citizens would be

more available than any other place”.

This was an explanation given by Gandhiji for choosing Ahmedabad as is hub of

activities. Gandhiji selected a place on the bank of the river Sabarmati very close

to the Saint Dadheechi’s temple as well as from Jail and a crematorium. Gandhi

used to remark, "This is the right place for our activities to carry on the search

for Truth and develop Fearlessness for on one side are the iron bolts of the

foreigners and on the other, thunderbolts of mother nature." After building a few

essential structures, activities in ashram stated full fledged in 1917.

97

Gandhiji had driven all the major activities of independence as well as upliftment

of the society from this Ashram which was popularly known as Sabarmati

Ashram. He stayed in the ashram for many years before he finally proceeded for

a march to Dandi to break the salt law on 12 March 1930. Before starting the

march to Dandi, Gandhiji declared that he will not return to the ashram before

the independence of the country.

• NAGOA BEACH

Nagoa Beach is located in the Nagoa hamlet of the Bucharwada village in Diu.

Diu Island lies on the offshore of Gujarat mainland, yet it has the feeling of

being on a Mediterranean island. Nagoa Beach stretches for about 2 km from one

end to the other. This long, palm-fringed beach is very beautiful and quiet and is

in the horse-shoe shape. This beach is one of the most beautiful, white sanded,

crescent shaped beach and perfect for swimming, wading, relaxing and for water

sports like jet skiing, knee board surfing, pony and camel riding.

98

TABLE: 2.2

TOURIST VISITED GUJARAT 27

Month 2010- 11

From Gujarat

Tourist from other States

Total Domestic

Tourists

NRI Tourists

Grand total

April 1132638 383240 1515878 30878 1546756

May 1165967 321925 1487892 33507 1521399

June 1197942 345542 1543484 28641 1572125

July 1116881 321318 1438199 27186 1465385

August 1149078 336822 1485900 25200 1511100

Sept 1291769 333846 1625615 26524 1652139

Oct 1250286 367457 1617743 30610 1648353

Nov 1270707 369853 1640560 31815 1672375

Dec 1403329 436605 1839934 38571 1878505

Jan 1389479 373638 1763117 40474 1803591

Feb 1372279 306588 1678867 38127 1716994

Mar 1341832 236695 1578527 34885 1613412

Total 15082187 4133529 19215716 386418 19602134

As far as concern with tourist visiting a Gujarat the statement showing present

tourists flow of state. The tourist come from the different city of Gujarat between

months April to March is 15082187, and tourist flow come from the different

27Gujarat Tourism Report.2010-11

99

state of India is 4133529.The total domestic tourist flow is 19215716.As far as

concern with tourist flow in Gujarat NRI/NRG ratio is 386418.

• HOTELS IN GUJARAT

The large number of hotels in Gujarat offers a wide range of accommodation

option to the tourists. The hotels in Gujarat welcome tourists with warm

hospitality and admirable service. Tourists can be at case in choosing from the

wide a range of hotels in Gujarat, which ranges from a luxurious five star hotel

to a cheap budget hotel accommodation. These hotels are designated to suit the

budget. The hotels in Gujarat are equipped with modern comforts and are

beautifully decorated. The hotels of Gujarat also provide facilities for dining,

business and recreating to the guests coming in.

The rooms and suites of the hotels in Gujarat are tastefully furnished to make the

tourists feel at home when they are away on a leisure tour or on a business tour.

Although the amenities provided at the Gujarat Hotels differ with the star

category of the hotels, but the basic facilities that are required by a tourist while

touring are provided to the guests in all the hotels in Gujarat.

Hotels in Gujarat also venture out to provide excellent business facilities to the

corporate travelers. The conference halls and the board rooms of the hotels

facilitate the guests organize business meetings, corporate events and formal

banquets.

We see seven types of hotels in Gujarat commercial hotel, airport hotels,

conference hotels, economy hotels, suite or all suite hotels, resident hotels and

also a resort hotel.

100

2.13 TOURISM AND GUJARAT GOVERNMENT 28

According to a report, in a bid to boost tourism industry, the Gujarat government

has announced a policy which encourages promotion in hospitality sector and

Medical Tourism.

Nitin Patel, Urban Development Minister, Gujarat said, "Gujarat is fast

developing both in industrial and agricultural sector. It is moving towards

becoming an economic hub and in this backdrop the state government wants to

provide latest facilities to industrialist and tourists. The state government is also

keen on promoting Medical Tourism in the state so as to provide advanced

healthcare facilities at affordable prices. For promotion of hospitality and

medical services we have announced a new policy that would encourage

stakeholders to make more investments."

As per the policy, hoteliers and those desirous of setting up hospitals can

construct buildings up to 22 floors, for which necessary changes have been made

in building rules. Special provisions and relaxation have been introduced for

constructing hospitals and hotels, as part of this policy. For hotels, relaxation has

been given in parking space, Floor Space Index (FSI), swimming pools, and

structural designs. For hospitals also similar provisions and relaxation have been

made in the policy such as FSI, parking space and location of hospital in

correlation to road width. Now hospitals can be constructed alongside of a 30

meter wide road.

28The Times Of India

101

• HERITAGE HOTELS IN GUJARAT SEEK BREATHING SPACE 29

In spite of having over 300 potential heritage hotel properties, the state of

Gujarat has roughly 15 such hotels. The heritage hotel industry, too, is facing

stagnancy as no new properties are coming up.

"They have been telling the government to preserve the heritage properties. To

give typical feeling of heritage hotel we need interest free loans but nothing has

been done so far. Currently loans are not viable for most of the owners," says

Harendrapal Singh, secretary of Heritage Hotels Association of Gujarat

(HHAG).

While the annual expenses could be around Rs 8-9 lakhs on variables like

electricity, wages and other running expenses, the annual turnover is also around

Rs 10-15 lakhs for an average heritage hotel in Gujarat. Owners feel better loans

and better marketing could help the industry garner more tourists which is

mostly attracted to the neighbouring state of Rajasthan.

"It is frustrating at times because the growth is slow in heritage hotels industry in

Gujarat. Moreover, while Kerala and Rajasthan’s government have helped

the industry a lot in marketing, in Gujarat the industry receives kind of a step

motherly treatment," adds Singh.

According to HHAG, there are about 32 members in the association and 15

heritage hotels in Gujarat with about 180 rooms.

Industry experts say that the season for these heritage hotels begin from October

15 till March 15. However, while recession time saw some footfalls in these

hotels, the same has almost dried up this year. For instance, Rajmahal Palace

Wadhwan in Surendranagar, is having a tough time generating its running costs.

"Footfalls were there during the recession time. But this year business has been

stagnant. And maintenance and other running expenses become difficult to bear

29Report Writen by VinayUmarji | 2010-09

102

especially when the footfalls are less," says SiddharthSinh of Rajmahal Palace

Wadhwan.

Moreover, while properties in places like Jambughoda and Poshina grew from 6

and 5 rooms in 1994 and 1995 to 20 and 30 in 2010, respectively, expansion of

properties has almost come to a standstill.

"The need for support from government in terms of incentives is at the highest

among these heritage hotel owners. This has also kept new hotels from joining

the bandwagon as well," says an industry expert.

• CHALLENGES FACE BY HOTEL INDUSTRY OF GUJARAT 30

Luxury hotels in Gujarat are facing an acute shortage of manpower. With a

number of new hotel projects checking into the state the number of rooms have

doubled in the past 18 months – existing players are finding it tough to retain

employees.There are around 4000 rooms in premium category hotels in Gujarat

– Ahmedabad has over 1300.0 There are over 1500 additional rooms likely to be

added over the next two years international brands like Aloft, Radission, Park

Plaza, Crowne Plaza, Hyatt among others are set to start operations in the

state.“Existing players have little supply of skilled manpower.

In the last one year, we have doubled salaries. Annual expenses of a hotel’s

salary bill was less than 10% of earlier. Now it accounts for high as 17 to 20%

for a premium category hotel,” said NarendraSomani, President Hotel and

Restaurant Association of Gujarat. Recently, Somani purchased flats in Surat to

offer accommodation to lure qualified people for his recently launched 5 star

hotel in the diamond city. Nearly 200 freshers come out from four to five

recognized hotel manager institutes in Gujarat. However, the demand is for over

2000 people says Rajesh Sinha, a hospitality expert. As a thumb rule two people

get employed per room at a luxury hotel.Sinha, who works as a vice president at

a 5 star hotel has resigned to head an international brand in Ahmedabad. Right

from stewards, senior guest service associate, assistant general manager up to top

30Times of India, 5-11-2011, Tuesday

103

level executives, salaries in Gujarat are 15-20% higher than hotels in

neighbouring state he says.MrinalSarkar, general manager with Le Meridian –

Ahmedabad says cut throat competition and poaching activities have resulted

into unreasonable salaries at all levels.Forget major cities like Ahmedabad,

Surat, Vadodara and Rajkot small place like Sasan would are set to have six

more new luxury hotels over the next two years. “We are finding it difficult to

get staff for our project. People do not want to come to remote places even if

they are being offered higher packages, says chairman of the Rajkot based

Sanjayraj group, which is coming up with a 100 room property near SasanGir.

2.14 RECENT TRENDS IN HOTEL INDUSTRY OF GUJARAT 31

If the memorandum of understanding (MOUs) in the Global Investor’s Summit

is any indication, the hospitality sector here is set to boom in the next two years.

With infrastructure developing rapidly, it is no surprise that at least 10 new

hotels are expected to be set up in the diamond city at an investment of Rs. 2000

corer.

An official from Surat Municipal Corporation (SMC) said, “In most of these

projects, land is already available and in a number of them, the process of

development has already been initiated. Many of these people are builders who

want to diversify.

SanatReliya of South Gujarat Hoteliers Association said, “This is the time when

people see an opportunity to cash in on the future. Major investments for the

hotels up to 3 star levels are talking place in Station cluster area, whereas 3, 4

and 5 star category hotel projects are put up in the airport cluster area.”

31The Times of India Date: 18 January, Tuesday 2010

104

With Surat’s population likely to cross 45 lakh by 2011 end and likely to cross

45 Lakh by 2011 end and likely to double in a decade, investors see tremendous

opportunities in this sector.

However, the high cost of land has inflated the cost of the projects by about 25

percent. “Land is at a premium, but in the hospitality sector, return on

investment is also not so fast. We need a gestation period of five years to break

even. In such a scenario, it is advisable to go in for such projects only if you

have land available with you.” Said a developer, who has signed a MOU for a

150 room hotel project and aims to complete the project in two years time.

Another developer who is planning a 5 star hotel facility and a tie up with an

internationally renowned hotel group said, “The Centre has dragged the issue of

an operational airport and air connectivity of Surat for too long, but we expect

that things will move and we want to be ready to cash in when it happens in

three years.”

SMC has entered into a MOU with three developers for hotel projects in

Abhava, RundhVesu and GaviyarMagdalla whereas about seven developers have

entered into a MOU with the tourism department for developing the properties.

In fact, apart from hotels about three developers have signed MOU’s for

developing huge entertainment parks on the outskirts of the city.

Bangalore-based hospitality group Royal32 Orchid is set to expand its footprint

in Gujarat. The company plans to open one hotel each in Vadodara and surat as

part of its strategy to double the number of hotels in the country over the next

one year.

“Royal Orchid Hotels (ROH) has chalked out a Rs 500-crore investment plan for

calendar year 2010 to expand its presence in India to take the count to 20 from

the current 13,” said ChenderBaljee, chairman and managing director of the

32The Times of India Date: 26 March, Friday 2010

105

company. The company had raised funds through an intitial public offering

(IPO) in 2006 to fund its expansion plans.

“Just few months ago a four-star category hotel Royal Orchid Central became

operational in Ahmedabad at an investment of Rs 42 crore. Now, we are opening

a budget hotel on Race Course Road in Vadodra. We are scouting for land for

another Greenfield project in Surat. “saidBaljee.

He said that recently the company had taken a heritage property on lease near

Mysore form Karnataka government. “we are also looking at heritage properties

in Gujarat to run a hotel on management contract basis,” he added.

ROH owns five hotels in Bangalore, two in Pune and one each in Ahmedabad,

Mysore, Jaipur, Hyderabad, Mysore, Jaipur, Hyderabad and Goa. Five more

hotels are almost on the verge of completion in Navi Mumbai, Jaipur, Mumbai,

New Delhi and Hyderabad. The company is also expanding owerseas as it is

developing aRs 100 crore beach resort project in Tanzania on 30 acres of land.

• Saraf Hotels’ view on the Gujarat Hotel Industry Mr. Amit Saraf from Saraf Hotels recalled his visit to Ahmedabad five years

ago, when he had to decide whether he needed to setup a hotel in the city. Back

then, he had decided against it. However, the vast difference in infrastructure

development and various initiatives from Government since then have finally

resulted in his group coming up with a four star Hyatt hotel at Ashram road in

Ahmedabad.

Mr. Saraf lauded the efforts being taken up by the Government, but he also

remarked that availability of land was indeed a challenge. „With the growth that

the State has seen and is seeing, the private land owners are not willing to sell

land at reasonable rates‟, he expressed his concern. Value of land is very crucial

for hotel projects. He requested the Government to enhance the speed of

approvals because when the project cost is land intensive (which is the case for

hotel industries), the interest component is typically high. The faster a project

can be executed, the better it is for the investor.

106

• SUGGESTIONS FROM ITC

ITC has over 100 hotels and is still counting. ITC hotels operate under the

following four brands:

ITC prefixed hotels (luxury segment – present in most metros); Welcome Hotel Grand (5 star in metros / mini-metors); Fortune (good quality - value for money); and Welcome Heritage Brand (restored palaces, forts and haveli). Mr. Ranvir Bhandari, Vice President, North Region, and GM - ITC Maurya gave

his insights into the following aspects of the hotel industry that Gujarat should be

aware of.

• Investment climate

When the global financial meltdown hurt the world GDP, the hospitality industry

suffered in the process as well. Today, to make investments in this sector, the

right investment climate must exist. Mr. Bhandari complimented the government

by acknowledging that Gujarat has indeed done well to boost investment climate

in the State. „Security and safety is another big issue in this sector, in which

again, Gujarat has done a pretty good job‟, Mr. Bhandari said.

• Training needs “Bricks and mortars don’t make the hotel industry – it is about people‟, Mr.

Bhandari remarked. Gujarat should put greater efforts in ensuring that more

training facilities catering to the hospitality industry are set-up in the State.

• Environmental considerations Today‟s investments are not about economic value alone. In the speed of

development and wealth creation, environment is being depleted significantly.

Therefore today‟s investments should also create value for the environment by

ensuring that the depleting resources are replenished and societal values are

107

retained. Mr. Bhandari suggested that building designs should look at

monuments of the future. Whilst it is important that the services that are

provided be of world class, the raw materials used should also be friendly to the

environment.

Mr. Bhandari was of the opinion that if Gujarat has to work out a USP, it is very

important that the triple bottomline strategy is adopted (social, economic and

environmental). He informed that in most ITC hotels, one leaves behind zero

carbon foot print because the properties have been turned water positive, waste

water-cleaning positive etc. Two of the ITC properties even have LEED

plaltinum ratings (in Bangalore and Gurgaon respectively).

• Building Design Laws Mr. Bhandari made it clear that some of the Government laws pertaining to

building designs are archaic and need to be looked at afresh. Some States have

moved fast in this regard and therefore Gujarat should try matching the pace.

• Incentives Any investor in the hotel industry would like to bring down the main cost of

building and land which is quite high. Mr. Bhandari requested that the hotel

industry be treated like any other infrastructure industry and therefore the same

incentives and rebates must be given. „This is very fundamental‟, he remarked.

• Fast-track approvals Mr. Bhandari announced that ITC is very happy to invest in Gujarat and is

working to bring all its brands to the State. But he requested the Govenment that

implementation should be put on fast-track mode. In response to Mr. Kamat‟s

question in the same context, he informed that ITC took between 6 to 8 months

to get all the permissions for setting up its latest property in Gujarat – which as

Mr. Kamat remarked, was a long duration. Mr. Kamat further added that if

projects have to be put on fast-track, a single window system should not have

more windows inside it.

108

• Hyatt, Kamat to enter hospitality business in Gujarat Juniper Hotels Pvt. Ltd (JHPL), which has a tie up with Chicago-based Hyatt

Hotels Corp., is setting up a five star hotel in Ahmedabad under the brand name

Hyatt Regency at an investment of Rs 400 crores, while Kamat Hotels (India)

Ltd is planning to set up two three star hotels Gujarat with an approximate

investment of over Rs 50 crore, officials of the firms said.

With tourist inflow rising in Gujarat, hospitality sector players have started

showing their interest in setting up new hotels and restaurant. Juniper Hotels Pvt.

Ltd (JHPL), which has a tie up with Chicago-based Hyatt Hotels Corp., is setting

up a five star hotel in Ahmedabad under the brand name Hyatt Regency at an

investment of Rs 400 crores, while Kamat Hotels (India) Ltd is planning to set

up two three star hotels Gujarat with an approximate investment of over Rs 50

crore, officials of the firms said. "We are setting up a 300 room, five star hotels

in Ahmedabad on Ashram Road. We have already acquired two acres of land for

this project which will be completed by 2013. The hotel will have The company

will invest Rs 400 crore in this project," Amit Saraf, vice president, JHPL, said

on the sidelines of a seminar 'Gujarat Tourism and Civil Aviation Exploring

Investment Opportunities' jointly held by Gujarat government and the Federation

of Indian Chambers of Commerce and Industry (Ficci). JHPL owns Grand Hyatt

in Mumbai. He said with rising tourist arrivals and commercial activities gaining

pace in Gujarat, the demand for good hotels has also gone up.

"They have timely entered the state," Saraf said. Vithal V. Kamat, executive

chairman and managing director of Kamat Hotels Ltd, said the firm which had

pulled out from Gujarat 20 years ago has revived its plans for the state. "We used

to own a hotel in Vapi, (in Valsad district of Gujarat) but we closed it down 20

years ago. However, now with good infrastructure development in the state we

have revived our focus on the state," Kamat said. The firm is currently scouting

land in major towns including Ahmedabad to set up two hotels, he said. "We will

set up a three star hotel with 80 room capacity under the brand name of Orchid

109

while another hotel with same capacity will be set up under the brand name of

Vits," he said. He added per room investment will be Rs 30 lakh which turns out

to be around Rs 50 crore for both the hotels which will come up by 2013. Kamat

said the firm will also set up 10 highway restaurants in the state.

"They are also planning to set up 10 highway restaurants in Gujarat with an

investment of Rs 15 crore. This is a very viable business in Gujarat as demand

for highway food joints in the state is tremendous," he said. Similarly,

McDonalds India, which has 24 highway restaurants across including one in

Gujarat, is planning to add 30 highway restaurants in the state within the next

three years. "We see a bright opportunity in highway restaurants as most tourists

prefer to travel by road in the state. We will be setting up 30 highway restaurants

in the state with an estimated investment of Rs 2.5 crore in each restaurant," said

Nishit Pandey, director alliance, corporate affairs and administration, Hard

Castle Restaurants Pvt Ltd that manages McDonald’s restaurants. However,

viability of more hotels in Ahmedabad is in doubt, said Narendra Somani,

president, Gujarat Hotels Association, a body of hotel owners in Gujarat.

"He don't think that additional capacity will be very viable in Ahmedabad as

total capacity in the city is 2,000 room (three and five star hotels) while average

occupancy rate is only 60%-70%. In peak seasons, the occupancy rate goes up to

80% and some time 100%," Somani said. He said by 2011, another 1,000 room

capacity is likely to be added which will not leave any room for the late comers.

"Mariott Courtyard and Gateway Hotel are the only two five star hotels in

Ahmedabad and these two hotels also reduce their rates considerably during the

off season. If third five star hotel enters then it may create a price war in hotels

during off seasons," he said. Somani is also the chairman of Bhagwati Banquets

and Hotels Ltd which operates hotels in Ahmedabad, Surat and Rajkot under the

brand name of The Grand Bhagwati. He added highway restaurant business is

more viable as very few branded food chains are there in Gujarat. "There are

very few big players in highway restaurants in the state which includes Reliance

110

Fresh and Honest. There is more room for highway restaurants in Gujarat than

three star-five star hotels," Somani said.

• FUTURE TRENDS IN HOTEL INDUSTRY 33

Demand levels are likely to improve in 2010/11 as economic growth gathers

momentum and companies increase spending on travel. With expectations of

healthy salary increases within the corporate world, discretionary spending is

expected to increase further, especially on leisure travel. The amount of new

supply proposed within many markets remains an area of concern, especially as

numerous projects that were proposed during the heady days see completion and

open in the next one year. Previous declines in occupancy levels were mainly the

result of an increase in supply. In the long term, the demand supply gap in India

is very real and that there is need for more hotels in most cities.

The shortage is especially true within the budget and the mid-market segment.

There is an urgent need for budget and mid-market hotels in the country as

traveler’s looks for safe and affordable accommodation. Various domestic and

international brands have made significant inroads into this space and more are

expected to follow as the potential for this segment of hotels becomes more

obvious.

Tourism as an instrument of economic development and employment generation

particularly in remote and backward areas is well organized the world over. It is

a large service industry globally and plays an important role in achieving growth

with equity. During the period 2002 to 2009 India witnessed an increase in the

Foreign Tourist Arrivals (FTA) from 2.38 million to 5.11 million. In 2009 the

growth rates in FTA’s fell by 3.3%. Foreign Exchange earnings from Tourism

increased from Rs. 15064 corers in 2002 to Rs. 54960 corers in 2009 with a

growth rate in earnings of 8.3% in 2009 vis-à-vis 2008. The year 2009-10

witnessed heightened engagements of the Ministry of Tourism with the states to

strengthen initiatives to promote tourism to a new height.

********** 33109th Annual Report 2009-10 by The Indian Hotel Company Ltd.