Introduction to Hospitality IndustryThe hospitality industry is part of a larger enterprise known as the travel and tourism industry. It is one of the oldest industries in the world. In early days, traders, explorers, missionaries and pilgrims needed a break in their journeys requiring food, shelter and rest. People opened their homes and kitchens to these weary travelers, and an industry was born. Although accommodation today is varied and their services have changed and expanded over the ages, one thing about the hospitality industry has remained the same, guests are always welcome! From a friendly greeting at the door, room service, breakfast, to a host of facilities' the hospitality industry offers travelers a home away from home. Hospitality is defined as “the friendly reception and treatment of strangers". For most people, hospitality means entertaining guests with courtesy and warmth. Hospitality is also an industry made up of businesses that provide lodging, food and other services to travelers. The main components of this industry are hotels, motels, inns, resorts and Restaurants. In a broad sense, the hospitality industry might refer to any group engaged in tourism, entertainment, transportation or lodging including cruise lines, airlines, railways, car rental companies and tour operators. However the two main segments are the lodging industry also called the hotel industry, and the food and beverage industry, also called the restaurant industry. The lodging industry is made up of businesses providing temporary housing, and such a business is called a lodging establishment and the people who stay in it are called guests or clients.

India hotel occupancy

This statistic shows the occupancy rate of hotels in India from 2000 to 2014. In 2013/14, the occupancy rate of all hotels in India was 58.9 percent, up from the 57.8 percent seen in the previous year.

Classification of Hotels

Hotels are classified into five main types:• Economy / limited -service hotels• Mid-market hotels• All-suite hotels• First class or executive hotels• Luxury or deluxe hotelsFor the purpose of our research, Economy and Executive hotels are selected.

Normally hotels have four rate categories: (1) Rack rates, (2) Group and tour rates, (3) Special and promotional rates and (4) package rates.

(1) Rack rates are normal room rates. It is based on the category of the room, type of bedding and occupancy. Unless specified, guests are quoted the rack rates and are charged for the same.

(2) Group and Tour rates are a discounted room rate for an organisation, which has blocked a large numberof rooms. Most hotels have group rates that are lower than the rack rates. This rate is generally extended to a trade association or fraternal organisation that has scheduled a meeting, seminar or conference at the hotel. Discounts are also offered to a tour operator, in return for a commitment to purchase a minimum number of rooms over a given period of time.(3) Special and promotional rates are offered to corporate travellers, traveling sales representatives, military personnel, airlines staff or other regular clients. Sometimes special rates are also offered along with an advertising campaign or to promote the hotel during lean periods.(4) Package rates are offered to the public along with other services such as banquet or a ball, or recreational facilities or a special event. Such a package normally includes accommodation, tickets to the concerned event and transportation from hotel to the venue and back. Other popular packages offered by hotels are honeymoon, weekend, Christmas, New Year or any other sports activity. The package rate is normally lower than the combined component or rack rate.

Dynamics of Competition in the Hotel Industry

The metros, Delhi and Mumbai accounted for 49 percent of the premium room capacity, and the four metros, for 59 percent. Taking all rooms into account, Delhi and Mumbai accounted for 25 percent of the room capacity while 12 major cities accounted for around 60 percent capacity. The Five Star and the Five Star Deluxe categories accounted for 30 percent of the total available room capacity in the country. In recent years the percentage of three and four star categories seemed to be on the increase. Exhibit 4 gives the distribution of rooms in different categories in India between the years 1990-1993 and 1996-98.Generally the facilities in all the five star or deluxe category of hotels were comparable. However, each hotel tried to provide some uniqueness with respect to each of its facilities. They tried to provide this uniqueness through décor, personalized service, menus, room service and customization of offerings. Since essentially the facilities, the general quality of service, the general quality of food, and sometimes even the taste of food were very similar among all the five star hotels, differentiating a hotel from its competitors was not easy. Each hotel tried to provide a certain atmosphere and a standard of service that could be called unique to it. This involved systematic training of its staff of different categories, but since turnover of staff from one hotel to another was common, the service styles etc., also tended to be more similar than dissimilar. In this situation, the following were thought to be important factors for success in this industry.

Occupancy Rates: Since a very large portion of the expenses of a hotel was fixed, being

(i) financial costs for the property (ii) maintenance costs (iii) establishment costs and(iv) day to day running costs,

It was very important to get a good occupancy rate. Occupancy rates tended to be higher in hotels with a good location, with a good brand image and a higher proportion of business and airline occupants. To enhance occupancy through a build up of client loyalty, hotels started loyalty programmes whose members obtained preferred hotel rooms, lower rates and other benefits.

Location: Location was considered important but the degree of its importance depended on the target audience. Hotels located close to airports, for instance, tended to have airline crew, transit passengers and tourists as their dominant clientele; those situated in business districts tended to have business clientele due to their proximity to probable places of business interactions; while those situated in quiet locations attracted conventions and conferences. The cost of property generally being the lowest in the first category, these hotels could also offer larger discounts to their clients.

Brand image: The image of a hotel in terms of service orientation, status commanded, expense category, overall ambience, customer types and progressiveness affected the nature of customers and the demands made by them on the hotel. Hotels tended to build this brand image through advertisements in TV, news papers, magazines (especially in flight magazines and travel guides) and direct mailing to prospective clients and corporate managers dealing with hotel bookings. The hotels also tried to build relationships with administrative staff of corporations through personal visits and presentations. The idea was to create a pull from the occupants to prefer the hotel rather than another.

Alliances: Forming alliances, with related activity or service providers, was another instrument to drive business. Alliances with other companies provided mutual benefits. The most common alliance was with airlines, with the hotel giving a discount, or a free extra night stay (especially over a weekend) on production of a boarding pass, and the airline giving bonus points to its frequent fliers for staying at their partner hotels. Other alliances were with other hotels and trading establishments for discounts on production of their "club" cards.

Real Estate: Real estate costs constituted a very significant cost in the overall cost structure of any hotel. This made the hotel industry highly capital intensive. The maze of land regulations made expansion through green field projects very time consuming, and their eventual outcome, highly uncertain. The tariffs of hotels, especially five star hotels in India were among the highest in the world, even higher than in many western cities for comparable hotels. The most important reason for this was the very high cost of urban real estate, leading to a cost of construction of Rs.5 million and more per room. The costs, of course, varied a great deal depending on location. Thus choosing a location and control over cost of construction and the time taken for construction were very critical factors determining the profitability of a hotel.

Executive Summary

Radisson Hotel belongs to Carlson Group which owns numerous other brands like Regent and Country Inn and Suits. The company has numerous properties of Radisson among them Radisson Blu Hotel Delhi is the oldest of the Delhi. The property is of high repute which has served numerous guests who have also been the guest of our country. It is still considered the best hotel near the Airport. When the hotel was constructed there was no other hotel near the Airport. Now, numerous other hotel chains have come up near the Airport.The project discusses the competition set of hotels of Radisson Blu Hotel Delhi. Now, the hotel is facing some stiff competition from other hotels that are functional near it. Although, the list is quite long if we count the number of hotels functional near the Airport. But, the hotel has set up a competition set for its own. We have also discussed the parameters on which the competition set is made. It is understood by the facts and data provided by relevant sources in the project that the industry is growing at a considerable rate. At last, I have discussed the areas on which the hotel needs to work on to maintain its sam market share.

Key Trends

This section is divided into two parts: Country Trends and City Trends. In the first subsection, an overview is provided of the broad trends along with Survey findings related to key operating statistics that have been observed in the country in the past year. This is followed by the City Trends, which reflect HVS’s perception of each city, as well as our expectations with regard to its future performance. An interesting trend to note is the correlation between the supply and demand growth, with the supply 1 growing at 17.8% compounded annual growth rate (CAGR) and demand at 17.3% from 2008-09 to 2012-13. The fact that occupancy levels remained generally stable during this period despite strong increases in supply, is indicative of the healthy growth in demand. However, the occupancy performance is only part of the story; there appears to be a trend where hotels are dropping average rates to attract customers in the face of increased supply. As a result, HVS is of the opinion that a new customer mindset is emerging that is sensitive to the price instead of the traditional one, which was more loyal to a hotel/brand. As operators battle increasing departmental costs and owners struggle with debt service payments, hotel companies need to reconsider their rate strategies.Country Trends

• Hotel Industry Performance – Growth in Demand and Supply: In 2012-13, the country experienced a 2 slowdown in growth across sectors, as reflected in GDP growth of 5% . Despite this slowdown, the year saw hotels maintain occupancy

levels at a steady 60.4% (60.9% in 2011-12). HVS estimated that major cities across the country witnessed a growth of 11% in hotel room supply in 1 2012-13, while demand exhibited a strong increase of 9.2% during the same period. The nationwide results of this year's Survey, however, reveal that the average rates declined by 3.6% when compared to those in 2011-12 (Exhibit 1).EXHIBIT 1: Occupancy and Average Rate – 2008-09 to 2012-13

Increasing Utility Costs: Energy costs continue to rise and pose a challenge to the hotel industry. The Survey, this year, has revealed a rise of 13% in PAR energy costs (`1,82,067) over that in the previous year (`1,61,479). Additionally, the Survey results show that only 26% of the hotels surveyed have an energy management system in place across India (Table 1-10). The rise in Energy costs coupled with the limited conservation measures employed highlight the dire need for sustainable practices to be used in the industry.2 HVS is currently tracking a proposed supply of 84,650 branded rooms , of which 60% is actively under development and is expected to enter the Indian hotel market over the next five years. Given the anticipated increase in hotel room supply, together with a high inflationary environment, HVS reemphasises the need for operational efficiency and sustainable practices in order to curtail further decline of profitability. Going forward, companies like HVS Sustainability can assist hotels in improving their financial performance along with the environmental and social one.• Continuing High Manpower to Room ratios: Employee-to-room ratios in India continue to be on the higher side when compared with global benchmarks, almost twice as much. The all India average of employee-to-room ratio stands at 1.6. This can be attributed to the large chunk of four star and three-star hotel respondents, which have an average employee-to-room ratio of 1.7. Typically, hotels in India provide services and facilities beyond their positioning; hence, they require more manpower.Introduction

In this section, we present key operating statistics and other data for the Survey participants according to thenumber of rooms. The participating hotels have been classified into three categories: 'Less than 50 rooms', '50to 150 rooms', and 'More than 150 rooms'. We have also drawn a comparison between Chain Affiliated andIndependent hotels.Trends• Room Profile and Facilities: Chain Affiliated hotels tend to offer more expansive facilities (116 roomsand 4.5 Food & Beverage outlets on an average) as compared to independent ones (49 rooms and 3.1Food & Beverage outlets on an average). Suites constitute a higher percentage (11%) of the total roominventory of hotels with less than 50 rooms as compared to the other categories. This is because heritageproperties, with their small room count and relatively large suite inventory form a large portion of thiscategory. We note that there is a distinct difference in the facilities of chain affiliated and independenthotels.• Total Employees per Hotel: It is interesting to note that there is not much difference in theemployee-to-room ratio between differently sized hotels, which suggests some amount of inefficiencyespecially in the smaller sized ones. However, in India even hotels with small inventories providevarious facilities such as F&B outlets, laundry, and room service amongst others, which leads to theseratios.• Profitability: The Net Income percentage of chain affiliated hotels is observed to be higher than that ofindependent hotels. This is primarily because the chain hotels are better at managing departmentalcosts through strong standard operating procedures and trained staff. FHRAI results have also shown

the benefits of economies of scale that larger hotels achieve, and control both departmental andoperating expenses effectively.• Marketing Media: The Survey reveals a greater percentage usage of loyalty card programmes, hotelwebsites, blogs, merchandising and telemarketing by the chain affiliated hotels as they are able toleverage on their brand name and reach.• Technology: Larger-sized hotels focus on yield management systems, management informationsystems and other technology such as electronic key cards and LAN networks. Hotels with smallerinventories continue to use more traditional accounting systems with the adoption of othertechnologies being limited. Typically, the chain affiliated hotels tend to have larger inventories, andstandardised procedures and strong information management systems, hence, recording a greaterusage of technologies when compared with independent hotels.

Strategies for Increasing Hotel Room Sales

It also includes ideas for fine tuning or overhauling your room sales strategy.‐

Price room rates according to selling point. Inspect rooms for uniqueness, room size, features, location, and guest request. Categorize these elements as a basis for room rate differential from which to sell. For example, a down and out, end room, with Jacuzzi tub, overlooking a wooded stream, which is the most often requested room would sell for more than an upstairs room ‐located farthest away from the stairs. Creating a variety of room rates allows for creative up selling by your staff. Moreover, a variety of room rates allows for a basis of negotiation when booking a reservation.

Spruce up. Examine your property from a guest's point of view for curb appeal. Are potholes filled? Has the parking lot recently been slurried and or seal coated? Are the parking lot stripes fresh? Are all light bulbs shining? Is the grass freshly mowed? Are the flowerbeds alive with annual color?

Draw guests in with price. Not all properties want to compete on price. However, if you need to sell rooms, price is an effective motivator. Consider a changeable letter board or an electronic sign which can display a message. Advertise your lowest possible price. Use price as an opportunity to upsell on the basis of features. As occupancy increases, consider raising rates. This is especially true if, for example, your property’s walk in traffic increases after 6 p.m. (with ‐an average 20 requests) and you have just 15 rooms left to sell at 4:30 p.m.

Empower your clerks to negotiate price. Travelers expect to be able to negotiate‐‐ especially when they see that the parking lots are empty at 10 p.m. at all competing properties. The idea in this case is that any rate above variable cost (the cost for housekeeping, amenities, and laundry) contributes to profit. You set the parameters; your clerks negotiate within those parameters. Bonus guest services agents on room sales.

Allow options for the breakfast question. Many limited service properties have a tough time deciding whether to add eggs and meat products to their complimentary breakfast.

Consider continuing with your continental breakfast being complimentary, but adding a modest charge for the option of eggs and meat products.

Sell to the local community. Advertise your property to the local community in the Shopper as an extra bedroom. Give locals a special rate to encourage them to use your property when out‐of town guests come to visit. Consider blast emailing last minute bargain rates when your sales ‐ ‐fall short of forecast.

Examine the number of tasks that your guest service agents provide. There is always a balance which must be maintained between labor cost and guest service. At some point, however, you lose room sales when clerks are trying to perform too many functions.

Consider, for example, the incoming phone reservation which is missed because the clerk on duty is taking another reservation, cashiering, night auditing, providing room service, replacing an air conditioner, performing wake up calls, taking a message, walking security rounds, room ‐clerking, running the phone console, issuing a key, running the elevator, parking a car, or giving directions to the local diner.

Choose a market niche. In which market are you competing? Successful operators know their market niche and stay within their bounds. There has always been a margin for properties to cross over into competing territories ever since Holiday Inn merged concepts from full service hotels and ‐limited service properties. However, a $59.00 rate likely does not warrant custom toiletries and ‐triple sheeted beds. The limited service category ‐

emphasizes basic room accommodations and minimal public areas. Compete on the basis of providing the best value instead of the most amenities. Your bottom line will thank you and your guests will too. Motel 6 and the early days of the original Volkswagen Beetle revolutionized their industries by utilizing these principles.

Re examine your operating affiliation. ‐ Are you an independent or a flagged property? If you are independent, you may be able to benefit from the advertising, name recognition, centralized reservations system, and operating support of an established brand. On the other hand, your location, operating conditions, and market may suggest that you re think the ‐expense involved in maintaining a flag relationship. The bottom line—does a flag affiliation offer you a net gain?

Establish a program of total quality management. All employees should have an opportunity to be involved in a program to incrementally improve operations at your property. The function of a total quality management program is that operational challenges are addressed at the lowest possible level within the organization, which can yield operational savings, increased employee satisfaction, as well as increased guest satisfaction. W. Edwards Deming, a well‐known US based consultant, was instrumental in helping automobile manufacturers in Japan ‐develop their once cheap cars into world class quality cars. The idea was that every employee ‐within the organization was charged with making one small positive change to his or her workplace. The change could favor the organization, the employee, the manufacturing process, or the customer. Let’s do the math

(stay with me to see how this works out): 10,000 employees working 250 days each year, for 20 years (since he started the program) = 50 million improvements! His motto: A little + done often = a lot. The same can work at your property—no matter how small.

Mine demographic data from registration cards. Watch for patterns and useful information among variables such as zip codes, e mail, company, number in party, arrival days and times, ‐and special requests. For example, zip code patterns suggest areas that you can identify for advertising. E mail addresses allow you to communicate with your guest history easily, quickly, ‐and almost without charge. A recurrence of a particular company would allow you to investigate the possibility of creating special rates and/or bill to accounts. Number in party and ‐special requests can assist you in providing an adequate number of no smoking rooms, rates ‐for late checkouts, rollaways, daytime rates, etc.

Become a female friendly property. ‐ One of the fastest growing sectors of the lodging industry is single female travelers. Tap into this market by making subtle adjustments to your operating standards. For example, clip and maintain all hedges no higher than hood height. This helps provide additional security by reducing hiding places and shadows. Ensure that parking lot and walkway lighting maintains lighting conditions to a minimum of dusk illumination. Change remote corridor entries to operable only with room keys (and remove door props). Position security cameras throughout public areas. Review the amenity package. Review lighting quality and amount in the bathroom/dressing area.

Book returns at check in and check out. ‐ ‐ Train guest service agents to ask about return reservations at check in. For example, it is normal for clerks to maintain a friendly conversation ‐with guests during the check in process. ‐

Offer "special" business packages. Operators are always searching for ways to raise their average daily rates (ADRs). Traditional thinking suggests that frequent business travelers expect discounted rates. Maybe not. Consider this alternative strategy by example: Business traveler Smith stays at the Shady Rest Motel. The rack rate at the Shady Rest is $90; The ADR is $75; and Smith pays $80 for a room. Smith pays with a Corporate American Express card. Over time, the operator, Patel, has come to know Smith and has discovered that Smith's company will pay up to $100 per day for a room. Patel bundles a value added business package for Smith with the following daily features: Best ‐room available at check in, two complimentary drink coupons for the manager reception, ‐complimentary full breakfast, Wall Street Journal, USA Today, and free DVD movies. Smith pays $95 per day.

Consider minimum stays and drastic rate deviation during special events. For example, the Cliff Motel rack rate is $75; The ADR is $59. During homecoming weekend at the nearby university, demand is such that the property charges $100 per day with a two night minimum. ‐This rate and minimum stay holds until 15 days before the event. Inside of two weeks, the property first drops the minimum stay and then the rate in order to help ensure a sellout. Three days before the event, the rate increases to $150, but no minimum stays on remaining rooms. The community accepts the policy due to market conditions. Consider your opportunities for implementing similar strategies.

The hotel gets 95% of its customers as foreign tourists. The occupancy rate in this hostel is 110%. The rooms are occupied for the 365 days in this year. Demand is more than Supply in this hotel. The customers are not provided with any food in this hotel. The hotel does not practice differential pricing for its customers. It charges single price for all of its customers irrespective of different nationality. Tourists generally would like to stay in this hotel for the wonderful service provided by the hotel. Generally the hotel gets repeated customers and the customer loyalty is very good over here.

Marketing Strategies adopted by the hotel to attract more tourists:

• Reservation is done directly without the help of middleman like travel agents.• Hotel provides prompt service to the enquiries of the customer’s mails. Usually the queries are answered within an hour.• The services provided by the housekeepers are also very good. They are excellent in communication and they meet the customer demand promptly.• Generally in this hotel, 80% of the customers are repeated which means there is customer loyalty to the maximum extent.• Usually the hotels provide one room to one customer in a day. But Bentleys uses its perishable capacity 3 times a day for the purpose of maximizing the revenue.

Conclusion

From the research paper and findings, it can be concluded that the future of revenue management will evolve the following aspects:

One-to-one Revenue Management• Sophisticated hotels will evolve to one-to-one revenue management; each individual will be a market segment in themselves• In the future, technology will support calculating the total customer value and the potential total customer spend, based on history and future potential from demographics, to determine what rate and what availability to offer to a potential guest

Total Customer Value Integration• The future of revenue management will include a focus on the Revenue Per Available Guest (RevPAG) and total customer value• The next generation of revenue management systems will create an offer based on the value of, or potential value of, each individual customer

Function Room Yield• Forecasting and yielding of function space will be a focus in the future for hotels• Many large hotel companies and revenue management systems are working to develop effective models in this area.

Cost of Business Analysis• Different revenue streams and channels do not yield the same profit, even when the rate is exactlythe same