hotels proj ssm

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Introduction

What Is A Hotel?

A hotel is an establishment that provides paid lodging, usually on a short-term basis. It is an

establishment that provides lodging along with meals and other services for travelers and other paying

guests. Hotels may be classed as transient, residential, or resort hotels. With the growth of suburban

centers and the increase of travel by automobile, a form of transient hotel, called a motel, became

popular. In the 1990s, the extended-stay hotel for guests who need a room for at least five nights

was developed, especially for business travelers who preferred more apartment-like accommodations for

longer stays.

Concept Of A Hotel

The word hotel is of ancient origin. It is derived from the Latin word hospital and an old French

Osterie. In the 18th century the term referred either to a very large private residence, to a public

government office or residence, or a hospital. The concept of Hotel has remained elusive in the sense

that there is no live and evolving entity, the earliest form being the English inn or the IndianDharamshala or Sarai. In modern usage, a hotel is an institution, an establishment or building providing

lodging, food and other related services to the transient traveling public and paying guest on commercial

basis at stipulated charges. The hotel is primarily a public service institution operated for profit.

In the modern trends Hospitality can be associated with four qualities:

It is conferred by a host on a guest, away from home

It is interactive, involving the coming together of a provider and receiver

It comprises a blend of tangible and intangible factors

The host provides for the guests security and psychological and physiological comforts

These four attributes, if put to practice; deliver the desired feeling of at home.
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History Of The Hotel Industry In India

While the railways were always the lifeline of the masses as well as the classes during and after the

Indian independence, at that point of time, international travel was a sojourn by a steamer, till the birth

of Indian aviation in 1933, when the aviation department of Tata Sons was set up. As people set out to

travel, both domestic and inbound, accommodation was as good as non-existent, and unavailable. But

over half a century the landscape mirrored the change experienced by the world, and the reverberations

altered the landscape to the next century.

1940s And Before

Unraveling the industry's origin, in its rudimentary form, it was an insipid combination of boarding andlodging, and perhaps food. Exceptions to the post-independence appearance of home-grown brands are

two of hospitality's biggest institutions - Indian Hotels Company Limited owned - Taj Hotels, Resorts

and Palaces and the East India Hotels owned - Oberoi Hotels. Ironically, the aforementioned

discriminatory policy gave birth to the Taj Hotels, Resorts and Palaces set up by Jamsetji Tata, who was

denied entry into one of the city's hotels(exclusive Green's Hotel ) because of his Hindustani

antecedents. He built what would change the history of Indian hospitality at the Gateway in Mumbai,

eponymous with luxury and style, and open to all his brethren.

The 1950s And 60s

Impoverishment, destruction of the cottage industry, rampant famines, and illiteracy - the relics of

partition and the curse of colonization loomed over the task of nation building, bringing in cohesion of

560 semi-independent princely states. Given this bleak scenario, the socialist state had more than

tourism on its mind, and rightly so in hindsight, with the country's infrastructure vulnerabilities exposed

in the wars. Tourism was considered an elitist activity, a folly admitted in the tenth year plan.

The initial five-year plans, formulated by the planning commission, concentrated on building India's

industries and rebuilding rural India. But Nehru's vision of tourism was futuristic, taking the onus of

development and setting up Vigyan Bhavan (infrastructure) for MICE tourism, concurrently with the

Ashok Hotel (hotels) in Delhi. This led to a critical development with India Tourism Development

Corporation (ITDC).


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But the geopolitical situation in the 60's was terse, with two wars having a debilitating effect on the

economy, and the problem of scarcity compounded by rising fuel prices. However, the latter part of the

60's saw the green revolution propelling the nation towards self-sufficiency. The silver lining on the

somber cloud was Goa's inclusion in India after the war with the Portuguese, a state which would soon

attract the great unwashed during the decade of decadence.

The 1970's And The 80's

This period saw a gentle push by the government. Approximately 18 crore went to ITDC for hotel

expansions and constructions, clearly pointing out its critical role for building necessary infrastructure,

for much part of the history of independent India, until the foray of private players into the industry. In

1975, ITC entered the fray with the Chola Sheraton in Chennai, and eventually entered into a marketingalliance with Starwood, a relationship that stood rock solid for its length.

The 90's And The Current Decade

The changing hospitality landscape saw the eventuality that was to be with the government shouldering

operational responsibilities in a highly competitive environment - the disinvestment of ITDC's thirty-

three hotels through outright sale or lease. The government rightly identified its role as a facilitator,

pointing out an impending role change for ITDC.

The private sector was seeing an influx of franchising; a phenomenon emerging as a viable option for

standalone hotel chains and operators to leverage their partners marketing database while enjoying the

convenience of a well-accepted international brand name. The 10th five-year plan (2002-2007) allocated

2900 crore as tourism outlay for the period, while the barriers to growth were the usual suspects of lack

of consensus and priority, with little investment. But the private sector has been quick to uptake the

growth potential, with hotels moving towards asset light policies and towards management contracts. A

special breed of investors is emerging, focusing primarily on hotel development, hoping to make a

killing given the high inflationary rates and escalating land and construction costs. If one were to go by

the special report on Hotels in India by HVS International in 2004, Assessing Trends and

Opportunities, there might still be hope. The report noted that the available rooms of all approved and

unapproved hotels were estimated to be close to 90,000. And taking into account an estimated demand

growth of approximately 18 per cent over the next few years, another 65,000-80,000 rooms will need to

be added, across the country, in the next five years. It speaks of a great growth story, compared to

Western markets where templates of growth are stale with disuse in oversaturated markets.


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PEST Analysis

Organizations operate within an environment. There are many variables that operate within an

organizational environment that have a direct or indirect influence on their strategy. A successful

organization is one which understands and which can anticipate and take advantage of changes within

their environment.

The organization's marketing environment is made up from:

1. The internal environment e.g. staff (or internal customers)

2. The microenvironment e.g. our external customers, agents and distributors, suppliers,

our competitors, etc.

3. The macro-environment e.g. Political (and legal) forces, Economic forces, Socio-

cultural forces, and Technological forces. These are known as PEST factors.

Pest is an acronym for political, economic, social and technological factors of the macro-environment.

The purpose of carrying out a PEST analysis is to analyze the external environment in which the

organizations operate and to identify how these factors influence the organizations marketing decisions.

Philip Kotler claims that a PEST analysis is a useful strategic tool for understanding market growth or

decline, business position, potential and direction for operations.

There are many factors that affect the hotel industry despite of which the hotels in India are establishing

its brand name and seeking an opportunity for the benefit for their operations which will eventually

provide them better returns. The various Political, Economic, Socio-cultural and Technological factors

having a positive or a negative impact on the hotel industry are explained below:

Political Environment

The political factors refer to all the legal and regulatory conditions that are imposed on the hotel

industry. It includes employment laws, laws governing consumer protection, environmental regulations,

industry-specific regulations, competitive regulations, inter-country relationships/attitudes, war,

terrorism, political trends, governmental leadership, taxes, and government structures. The political


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arena has a huge influence upon the regulation of businesses, and the spending power of consumers and

other businesses.

The current political situation of hotel industry in India is given below:

The State Government of India has proposed to spend almost Rs. 1 crore for the

promotion of tourism industry. As hotel and tourism industries are inter-related it will also impact

positively on hotel industry.

Luxury tax and service tax on accommodation is levied by the central government.

Tariff includes luxury tax. For example, if a room for a nights stay comes up to Rs. 5000, it includes

luxury tax but the service tax is added separately to the bill which is 12.36%. The tax levied on the

restaurant and food and drink i.e. VAT is levied by the state government which is 12.5%.

But this year i.e. in 2007, the escalation in tariffs is expected to be between 5-10%

against the over 20% increase seen over the last 3 years. Some markets like Bangalore and Delhi

could see a marginal or no increase in tariffs this year. Thats because 5 star hotels in some markets

are already seeing a plateau of growth whereas occupancies in some markets have begun to see some

dip. Industry experts say 5 star tariffs have started pinching even corporate clients who are now

reducing their lengths of stay. For instance people visiting Bangalore and Mumbai are now staying

on an average for a day and a half as against two or two and a half days.

The luxury tax has been retained at 6% and 4% only, in spite of pressure from finance

department to increase it.

50% of profit, earned by convention center is exempted from income tax for a period of

three years. 50% of foreign earning by hotel is also exempted from income tax.

Tax benefits are also given to the financial institutions lending to hotel companies. The

incentive to finance hotel projects is likely to boost investment as projects would now cost around

30-40 per cent less.

The hotel industry is heavily taxed. Expenditure tax, luxury tax and sales tax inflate the

hotel bill by over 30%. Effective tax in the South East Asian countries works out to only 4-5%. As

these taxes are the domain of the state government, the rates vary accordingly.


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Terrorism has been a major factor in the reduction of tourism which has also affected

the hotel industry. The bomb attacks in states like Kashmir, Mumbai and Delhi, have reduced

tourism in such places. Riots in states like Gujarat also causes a fall in the number of tourists in such

places and causes a bad market for the hotel industry.

Economic Environment

In the countries like India wherein the people are having more disposable income, the

hotel industry is standing to gain a larger share of the pie of the expenses of the expenses made by

the people.

The hotel industry in India is targeting investment of Rs.25000 crores in the next 3-4

years. But such large-scale investment can only be possible if the government helps remove the

hurdles to this.

Easy bank loan for holidays and active promotion by the travel companies which are

felling growth in this sector.

The economic liberalization of the early 90s led to a boom in the hotel industry,

especially in 1994.

Foreign Direct Investment (FDI) is entering Indian shores and foreign institutional

investors (FIIs) are increasing their exposure to India. All these positive signals spell more business

travelers and better times for the hotel industry.

These units will be allowed to import capital goods under the EPCG scheme at zero

duty, the minimum amount of imports being capped at Rs10mn.

The difference in currency has always been a great problem in this industry. The hotel

industry depends on tourists and travelers from foreign countries, with the variation in currency

there is a great problem for customers as the price would fluctuate every time the value of the

currency would increase or decrease.

The hotels are a major source of foreign income as well as economic development for a

developing country; this industry is also a major source of income and employment.


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Employment: At present, about 6.8 million persons are directly employed by hotel

industry. This is about 2.1% of the total work force of the country. In addition, the industry provides

indirect employment to about 25 million persons. Though they are providing employment to a

massive number of people but retaining them in the organization has been seen as a major threat inhotel industry.

Social Environment

Socio-cultural environment influences consumers purchase and consumption behavior. So this

where the hotels must tap the rich heritage culture of India and benefit from it in the form of

attracting new customers and retaining the old ones.

The hotel markets its business with the help of the local festivals and long trusted & cherished

Indian culture like Ayurveda in Kerala, Beaches in Goa and traditional melas.

Consuming beef is considered as a taboo for Hindus. Similarly, India being the place of domicile

for 24 crore Muslims ranking 2nd only to Indonesia in the world is highly influenced by the Islamic

culture and Pork is considered as a taboo for Muslims. But, Beef is a part of the daily food for the

foreign tourists. Hence, the hotelier has to cater the needs of various people from both Occidental

and Oriental culture.

Consumer Tastes & Preferences: Since India is a land of extremes, there are people from various

religions and castes and hence their preferences & taste also vary. In todays society, most people

want to achieve the highest possible standard of living and as such, consumers are becoming even

more demanding as standard of living rises. Hotels also have to keep in mind the demand by various

groups. For e.g. A Jain would be satisfied with the service only if he is served Jain food and it

should be kept in mind that the customers next to him are also Jain or at least vegetarian.

Changing Lifestyle: Lifestyles are becoming less predictable, more fragmented, and we have

more active but riskier lives. People are working most of the time & due to this changing lifestyle,

changing habits, they prefer going on a short trip to reduce the level of stress. Earlier people used to

go on a vacation only during the summertime & at the most twice. But now it is observed that people

go for a trip to Matheran or Lonavala often to reduce the level of stress & spend some quality time


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with their family or friends. Thus this in boosting the domestic travel & the hotels industry is

benefited the most.

Consumer Beliefs: Most hotels generate large quantities of solid waste including bottles andfood packaging, Kitchen and garden waste, old furniture and equipment and potentially hazardous

wastes such as asbestos and solvents. The solution is to recycle and reuse waste materials wherever

possible, and by safely disposing of residual wastes. The Orchid Hotel in Mumbai, India, provides a

particularly good example of innovative recycling and waste disposal. Virtually all in-room products

are reusable or recyclable; paper usage is kept to a minimum.

Many tourists feel good knowing that they have spent a low-impact holiday and used the services of

environment conscious operators. The feel-good factor is not limited to tourists it can also extend to

employees. In fact, good environmental stewardship has been found to reduce employee turnover, and

motivate employees to become environment-conscious citizens. Many hotels are even trying to position

themselves as eco friendly hotels. Hotel Maurya Sheraton and Towers is the first hotel in India to be

awarded the Golden Peacock Environment Management Award for 2001 by the World Environment

Foundation. It won this award again in 2004.

Technological Environment

In earlier days, it was said that in order to succeed, all a hotel needed was a scenic location and good

cuisine. But in todays competitive environment, a mistake as trivial as not taking down a customers

order can prove disastrous. As the hospitality industry started looking for ways to improve efficiencies,

efforts and investments in the field of information technology intensified. One of the first deployments

of IT began at the front desk when receptionists began checking the name of the customer and then

allotted a room to him. Big hotels also started putting in place accounting systems and back office

software to improve processes. The industry has moved from the traditional transaction-based processes

such as check-in and reservations to features that are built and designed specifically for the customer.

Services like providing wireless Internet access to guests will only increase in the future.

Technology affecting hotel industries are:

Technology has revolutionaries the booking system in hotels. One of the major source of

booking is Global Distribution System (GDS) where the travel operator can book for various hotels


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though it. Also, hotels provide online booking systems where the hotelier tries to personalize the

booking and minimize the customer interaction.

The hotel is now equipped with all the modern facilities which adds to the service offering.

System allocation is the key to any hotels success. The frontline service provider should be able tosatisfy customers demands. E.g.: - Hotels provide LCD, Laptop & conference facilities.

The availability of sufficient parking is the basic requirement for accrediting with the STAR

category. But the cost of property is soaring like the rising sea. The introduction of elevated parking

is a blessing as its more convenient & cost effective to the hotelier.

Wireless Technologies: One of the best examples of the use of wireless technologies is the hotel

industry. Major hotels are betting on wireless services as a new lure for business travelers who rely

on high-speed Internet connectivity and wireless services to conduct day-to-day business. Initially,

wireless technology in big hotels was traditionally confined to the guest room, the business centre or

conference rooms. Hotels have started looking at using wireless Internet services throughout the

hotel. Another significant use of this technology is seen in wireless-equipped handheld phones called

digitally enhanced cordless phones, which serve the purpose of tracking a person anywhere in the

hotel premises. This phone is especially useful for mobile staff who can attend to a complaint

immediately.

CRM: Customer Relationship Management is also being adopted in a big way by almost all the

big hotel chains in India. At present, every major hotel chain in India is investing in comprehensive

systems that store complete profiles of their customers. The moment a guest checks in, he fills a

form indicating his various preferences. If he is a regular client, the hotel immediately knows of his

preferences and serves him accordingly. Every hotel has a major chunk of its revenue coming from

its regular clientele. The hotel industry has recognized this and has deployed customer information

systems (CIS) to service the customer in a better way. The same CIS can be accessed through any of

the groups properties. A CIS enables the hotel to keep a record of the exact profile of the customer

and keep a tab on his preferences during his subsequent visits. CIS creates guest-centric processes

that are essential for CRM. And since it focuses on preferences, requests and problems of different

customers, it is a boon to the hotel management. Earlier, data management systems contained only

static information, which was used only to enhance efficiency of the hotel staff. But today, with the

help of analytical tools, we can provide consistent service quality. CRM and software tools for front

line staff have enhanced successful one-to-one relationships.


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SWOT Analysis

"SWOT" is a simple acronym forStrengths, Weaknesses, Opportunities and Threats. SWOT analysis

consists of the following two activities:

. An assessment of the organizations internal Strengths and Weaknesses and

. An assessment of the Opportunities and Threats posed by its external environment

SWOT analysis provides a framework for visioning by helping the planners to identify and prioritize the

organizationsGoals and to further identify the strategies of achieving them.

Every business with global prospects in the multi dimensional, volatile atmosphere has to formulate its

strategies taking into consideration the strengths, weaknesses, opportunities and threats. The hotel

industry also has to undertake smart and innovative moves to woo its clientele who expect best possible

service at competitive rates.

Strengths

Rich Cultural Heritage: The major strength of the Indian hotel industry lies in Indias rich culture

heritage. With a historical backdrop of 5,000 years, India is one big package of diverse cultures and

traditions that never fail to captivate the imagination of the visitor.

Hyatt has proved this point correct by manifesting the rich culture of our land, in terms of the food,

ambiance, people, equipments, etc. this has given an edge over and above its competitors and has

attracted more customers and also helped in retaining the older ones. This fact is also visible from the

stores in the hotel selling ethnic wears and other such stores replicating the Indian culture.

Demand Supply Mismatch: The demand-supply gap of the rooms is also proving a positive sign for

the hotel industry in the country. The Indian hotel industry is currently facing a mismatch between the

demand and supply of rooms leading to higher room rates and occupancy levels.

All these factors are extremely beneficial to the Indian hotel industry. Thus, there has been a continuous

rise in the number of hotels which has led to a stiff competition in the market and providing a wide

range of options to the guests to choose from.


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With such a derivation in the demand supply gap in the availability of the rooms, The Hyatt has played

a smart move by placing two hotels in the city of Mumbai, i.e. one at Santa Cruz and the other in

Andheri. Both these locations have their own merits as mentioned in the project. Hyatt offers a variety

of rooms to choose from which gives its customers a choice which would suit their pocket as well.

Weaknesses

Capital-Intensive: This industry is rather very capital-intensive. It involves huge expenditure for the

building of humongous structure, employees and latest technology required for its smooth functioning.

Hyatt is also no exception to this. The two hotels that it has erected in the city are made glass and the

interiors are also constructed with expensive marble, which further inflates the cost of the entire

structure. This requires immense capital and the payback period of the capital invested is also longer

which generally, pulls back the investors to help the industry grow.

Lack Of Adequate Man Power: In India, the entire service sector is growing rapidly, contributing

nearly 52 per cent to the GDP growth. The average employee to room ratio is 1.8 in hotels in India,

across all the categories, except in the three-star category, where the ratio drops to 1.5 per room. As new

rooms are being added, the manpower requirement of the hotel industry is also increasing. It is furtherreported that jobs in accommodation and food services as a whole are expected to increase by 17 percent

between 2004 and 2014.

There is a high demand for Indian hotel managers and staff in the international hotel industry,

particularly in the Middle East. The manpower shortage is also being felt in Europe (including the UK),

the US, Australia, Singapore, Hong Kong, etc. They like to hire Indian hotel and restaurant managers

because of their high level of education and experience in the industry. It's estimated that around 20%

hotel management graduates go to foreign countries.

The shortage of manpower, especially of skilled staff, is a key reason for the hike in salaries. According

to the HR heads of various hotels in India, only 20 % fresh hotel management graduates choose to work

in hotels, with a major chunk opting for airlines and BPOs. This choice is generally due to long an

erratic working hours that professionals have to put in as a part of hotel industry.


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Non-Availability Of Land: Considering the ever increasing population of India, there is lack of

availability of land to build hotels. Also, any hotel should be located in an area which gives an exotic

view from the guests rooms to give a good start of the day. In this case, the Grand Hyatt of Mumbai

lacks a good location due to the non-availability of land. The hotel is located the dharavi slums of

Andheri (east).

Long Gestation Period: The overall period to construct and commence the operations of the hotel takes

a relatively long period. The aspiration for the future prospects of the hotel diminishes till the project is

completed as the trends, economy, competitors strategies, customers expectations keep changing

constantly.

Poor Infrastructure And Cleanliness: India is currently spending a miniscule amount vis--vis itsneeds, on infrastructure. In 2003, the total capital spending on electricity, roads, airports, seaports and

telecom was US$150 billion in China (10.6 % of GDP), compared with US$21 billion in India (3.5 % of

GDP). However, over the past 2-3 years, the government has realized the importance of infrastructure

and has focused on improving it.

Opportunities

Government Help: The Incredible India campaign is a product of the realization to promote tourism.

The focus on infrastructure, modernization of airports, open sky policy, development of new tourist

destinations and circuits, more fund allocation towards tourism are some of the initiatives taken by the

government to promote tourism. The hotel industry in India can grab this opportunity to cater to the

tourist.

The hotel industry can use the boom in tourism, privatization of airlines, tie ups with international hotel

chains, increase in disposable incomes and boost in tax concessions as opportunities to expand its scope.

The hospitality industry is expanding with exciting career prospects, both local and international. It

comprises a variety of interconnected sectors, including hotels, recreational activities (theme parks,

cruises and the like), and food services. Its champagne time for India's hotel industry, thanks to a

booming economy and the resulting surge in business. The robust demand for accommodation has led to

higher room tariffs and is attracting foreign investment.


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According to the 2002 estimates of the World Tourism Organization (WTO), international tourist inflow

in India by 2020 would be 10 million, which means the tourist influx has to grow at a CAGR of 6.5 %

for the next 14 years. This makes the country one of the fastest growing tourist destinations in the world,

second only to China.

According to Government estimates, India needs about 80,000 rooms in all categories over the next two

or three years at an estimated cost of about US$ 8 - 9 billion. Several major international hotel chains

are seeking to set up shop in India. The Hilton and the Hyatt group have already tied up with local giants

East India Hotels and Asian Hotels.

Threats

Competition Among Countries: The hotel industry is very sensitive to disturbances in the country;

competition from other Asian countries whose official currencies have fallen drastically, high service &

luxury taxes may render India as an unviable destination and lack of trained entrepreneurs pose as

threats to the Indian hotel industry.

Reliance On Foreign Tourism: Dependency on foreign tourism can be a double-edged sword as travel

decisions are based on global patterns and disruptive events that happen elsewhere can have serious

impact on the performance of the hotel sector. Events such as 9/11, the SARS outbreak, the wars in

Afghanistan and Iraq have severely impacted the tourism industry in the past and the threat remains.

Global hospitality majors like the Four Seasons, Shangri-La and Aman Resorts are all making their

entry into the Indian market. They are not the only ones who are turning their attention to India. The

Hilton Group is deciding on a comeback and has tied up with the Oberoi Group, besides others. This

will increase the competition for the existing Indian hotel majors.

Competition Among Hotels: A threat for Hyatt group of hotels is this competition from its various

rivals. Its Hyatt competitors such as Washington, D.C.-based Marriott International Inc. are building

high-end facilities, but they're enlarging their potential customer base by extending their brand to other

segments, such as the mid-priced Courtyard by Marriott and lower-priced Fairfield Inn. Marriott

International is the most formidable competitor of Hyatt Hotels. It is also doing everything to push its

efficiency. Marriott is pushing all its efforts to compete in all the segments of the hotel market. Apart

from Marriott, its other competitors are ITC Grand Maratha Sheraton and Leela.


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Hotel Industry

Based On

the Star

RatingSystem

Based On

Business

Type

Based On

Quality

Levels

Industry Structure

In the early days, hotels were grouped together based on their range of services and facilities however

this is an inexact science as the distinction between availability and quality was often blurred. This led

to the need for an accurate classification system within the hotel industry and hence various rating

systems have been suggested and implemented which consider not only the hotel facilities but also their

quality assessment and conformity with certain minimum standards.

The advantage of such segmentations is that customers can easily recognize the codes and rankingsystems developed and hence can expect certain accommodation standards regardless of the location of

the property.

The classification of the hotel industry can be done on the following broad basis:

I. Based On Star Rating System

The criteria for awarding stars are divided over mandatory standards and voluntary standards. The

voluntary standards are valued by points. The first star is the basis. Every additional star means that a

Based On

Brand

Segments


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hotel offers more facilities and services. These extra facilities and services differ per hotel and also

depend on the type of hotel, eg a business or family hotel. A business that does not meet the criteria of a

1-star hotel may not carry the name hotel.

1. One Star Hotel

Hotels in this classification are likely to be small and independently owned with a simple and standard

interior design. There will most likely be a family atmosphere and the services may be provided by the

owner or family on an informal basis. There will be a limited range of services and fairly simple meals

will be served. It is also possible that one meal of the day, usually lunch, may not be served. Some or all

bedrooms may not have en suite bath/shower rooms however every 10 bathrooms must have one

common bathroom. However hospitable service, cleanliness, maintenance and comfort should be of an

acceptable standard. In terms of the facilities offered all rooms will at least have a bed with matching

bedding, a table with chairs, a cupboard, heating, and a sink with hot and cold running water and soap. It

is possible to lock the room and there is a window and a bedside lamp.

2. Two Star Hotel

In this classification hotels will typically be small to medium sized and offer more extensive facilities

than at the one star level. Some business hotels come into the two star classification and guests can

expect comfortable, well equipped, overnight accommodation, usually with an en-suite bath/shower

room. Reception and other staff will aim for a more professional presentation than at the one star level,

and offer a wider range of straightforward services, including food and drink. Such a hotel is

functionally decorated and the facilities offered may include a colour television in at least half of the

rooms, a telephone with direct line, a guest safe, breakfast in the room, good parking facilities or shoe

polish facility.

3. Three Star Hotel

At this level, the hotel is a comfortably decorated middle class hotel with a separate reception area. Such

hotels hotels are usually of a size to support higher staffing levels, and a significantly greater quality and

range of facilities than at the lower star classifications. The reception and the other public rooms are

more spacious and the restaurant will normally also cater for non-residents. All bedrooms will have fully

en suite bath and shower rooms and offer a good standard of comfort and equipment, such as a hair


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dryer, direct dial telephone and toiletries in the bathroom. Room service can be expected and additional

facilities such as valet parking, relaxation centres and recreation facilities may also be available.

4. Four Star Hotel

Expectations at this level include a degree of luxury as well as quality in the furnishings, decor and

equipment, in every area of the hotel. Bedrooms will also usually offer more space than at the lower star

levels, and well designed, coordinated furnishings and decor. The en-suite bathrooms will have both a

bath and a fixed shower. There will be a high enough ratio of staff to guests to provide services like

porterage, 24-hour room service, laundry and dry-cleaning. The restaurant will demonstrate a serious

approach to its cuisine. This comfortably decorated hotel will also provide for facilities such as internet

connectivity, safety vaults, individually adjusted air conditioning, conference rooms and a swimming

pool.

5. Five Star Hotel

This category of hotels calls for spacious and luxurious accommodation throughout the hotel, matching

the best international standards. The interior design should impress with its quality and attention to

detail, comfort and elegance. Furnishings should be immaculate. Services should be formal, well

supervised and flawless in attention to guests' needs, without being intrusive. The restaurant will

demonstrate a high level of technical skill, producing dishes to the highest international standards. Staff

will be knowledgeable, helpful, well versed in all aspects of customer care, combining efficiency with

courtesy. Additional amenities may include private parking spaces, beauty salons, shuttle services,

gymnasiums, shopping areas and ballrooms.

II. Based On Brand Segments

1. Economy Brand

The economy brand has been developed for the budget traveler in which the market segment does not

rely on producing luxury accommodations but rather focuses on producing quality rooms at a low price.

The customer in this market segment is not requesting exclusive services or accommodations but is

looking for a low rate. Hoteliers experience low costs per room because they are not offering certain

amenities such as complimentary continental breakfast, wireless internet, or a fitness center. This


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accommodation is appropriate for the traveler whose stay will be for a short period of time, and is not in

need of many amenities or additional services.

Example: Travelodge, Red Roof Inn

2. Midscale Market

The midscale market provides travelers with quality accommodations and amenities while paying a

reasonable price. The rooms are most often have interior corridors and are spacious. This market offers

many complimentary amenities and services such as breakfast, Internet access, food and beverage

accommodations, and access to business and fitness centers. This particular market segment is the most

prevalent as these brands best serve the common needs of consumers, but is still not too pricy. In

addition, it is more available for franchisees to build and develop because costs of construction often are

at a reasonable level, which can be covered by the room revenue of this market level.

Example: Holiday Inn, Hampton Inn

3. Extended Stay Market

The extended stay market is a new market segment that has experienced large growth over the past few

years. Each major hospitality organization has released a brand that features guest rooms for the purpose

of extended stay. These guest rooms usually comprise of bedroom, sitting area, and kitchenette or bar.

Extended stay brands are further being developed to provide a home-like atmosphere for travelers

looking to stay for an extended period of time and who are in need of more suitable accommodations.

These properties are more prominent in destination markets where customers spend at least 10-12

nights.

Example: Residence Inn by Marriott, Spring Hill Suites

4. Upscale Market

The upscale market segment generally includes hotels that provide full service and rooms which contain

more ergonomic furniture and modern design. The room rates are much higher than that of the economy

and midscale brands as this market segment offers more in terms of services. Some services, such as

food and beverage or Internet access, are not usually found to be complimentary; however they are

higher in quality than that of the midscale segment. Travelers that are looking to stay in more attractive


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accommodations with higher levels of service and plenty of amenities are sure to choose an upscale

hotel.

Example: Marriott International, Hilton Hotels

5. Luxury Market

This market includes hotels that are luxurious and feature the best accommodations in the lodging

industry. The guest rooms are designed to be very spacious and comfortable with a modern upscale

design. All hotels are full service and have amenities and accommodations that are quite lavish. Services

found in this market level that are not found in others are concierge services, spa, recreational activities,

and entertainment. This segment is intended for travelers willing to pay premium prices for first-class

accommodations and service.

Example: Ritz Carlton, Four Seasons

III. Based On Business Type

1. Limited Service

Such a hotel has no on premise restaurants and it provides only limited guest services. It does havenicely appointed rooms and good quality amenities however the overall range of facilities is limited

though some special services may be available. The hotel can be expected to be clean, comfortable and

functional.

Example: Holiday Inn Express, Country Inns & Suites

2. Midscale

These chains are characterized by nicely appointed rooms, limited but good quality amenities and some

special services may be available. They have an on-property full-service restaurant and more complete

guest services and facilities such as meeting rooms and party halls. They have also have swimming

pools, one or more restaurants and lounges.

Example: Hilton Garden Inn, Holiday Inn Select


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3. Upscale

Such hotels may include suite chains or resorts. They range from upscale to luxury/luxury deluxe. The

bottom range hotels have well integrated dcor, quality furnishings and a high staff-to-guest ratio. The

top range has elegant, distinctive, high quality dcor as well as a full range of first class amenities and

customized services. They may also feature luxurious accommodations, numerous amenities, several

upscale restaurants, beautifully appointed grounds and gardens and the highest standards of service and

comfort.

Example: Bottom Range includes Marriott Hotels, Hilton Hotels

Top Range includes Ritz Carlton, Le Meridien

4. Casinos

These include hotels that focus on gaming. The lower end of the spectrum works to attract high volume

middle class markets while luxury casinos cater to wealthy clientele and high rollers.

Example: Bellagio, Caesars Palace Hotel

5. Resorts

Resorts are hotels located in a desirable vacation spot such as beachfront, lakeside, mountainsides or on

a golf course. They offer fine dining, exceptional service, activities unavailable at most other properties

and many amenities. Resorts may be otherwise indistinguishable from midscale, upscale or casino

brands.

Example: Fairmont Hotels, Park Shore Resort

IV. Based On Quality Levels

There are ten quality levels which are categorized based on the quality of guest accommodations and the

extent of hotel facilities. Every hotel falls into one of the following categories:

A) Deluxe

Super Deluxe

Deluxe

Moderate Deluxe


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B) First Class

Superior First Class

First Class

Limited Service First Class

Moderate First Class

C) Tourist

Superior Tourist Class

Tourist Class

Moderate Tourist Class

These classifications hold the following significance:

Super Deluxe: An exclusive and expensive luxury hotel, often palatial, offering the highest standards of

service, accommodations and facilities. They have elegant and luxurious public rooms and the hotel is a

prestige address. Establishments in this category are among the worlds top hotels.

Deluxe: It is a property offering many of the same features as a Superior Deluxe except in some cases a

small no. of minimum rated accommodations may be of inferior grade. It is slightly less grand andoffers more reasonable rates then the superior deluxe properties yet in many instances may be just as

satisfactory. It is safe to recommend this hotel to most discriminating clients.

Moderate Deluxe: Such a hotel may be a well established name in the hotel industry which is

depending heavily upon past reputation. In some other cases some accommodations or public spaces

may not be upto deluxe standards. The hotel may be heavily marketing to clients especially business

clients with as one having fine accommodation offering deluxe standards in comfort but lacking in

atmosphere or personal service. It may however be overpriced as compared to the service expectation

fulfilled. It should be recommended with caution to fussy clients expecting full deluxe facilities and

much pampering.

Superior First Class: This is an above average hotel which may be an exceptionally well maintained

older hotel, more often a superior modern hotel specifically designed for the first class market with

some outstanding features. The accommodations and public areas are expected to be tastefully furnished


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and very comfortable and it may be recommended to the average client and in most cases it will also

satisfy the discriminating ones.

First Class: This is an average, comfortable hotel with standardized rooms, amenities and public spaces.

It is usually dependable but nothing special. It may have a superior executive wing and it may be safely

recommended to average clients not expecting deluxe faculties or special services.

Limited Service First Class: A property offering full first class quality accommodations but limited

public areas, food service and facilities. Usually moderate in size the hotel often utilizes a residential

scale and architecture. Many offer complimentary breakfast in a small informal restaurant and it is

geared to the individual business/pleasure traveler.

Moderate First Class: It is basically a first class establishment, slightly below average. It generally has

comfortable, simple accommodations and public areas though not always kept upto standards. It may be

lacking in some features for example a restaurant. Some of the rooms or public areas may tend to be

small and functional. It is usually suited for cost-conscious clients but should not be recommended to

the fussy ones.

Superior Tourist Class: Primarily a budget property with mostly well kept, functional accommodations

some up to the First Class standards. Their public rooms may be limited or non-existent. Often just a

place to sleep, it may have charming or intimate features. It may be of good value and will satisfy clients

on a budget.

Tourist Class: It is strictly a budget operation with some facilities or features of the Superior Tourist

class but usually no or very few First Class accommodations. They should not be recommended to

discriminating clients.

Moderate Tourist Class: It is a low budget operation, often quite old and may not be well kept. It is

usually used in a pinch if no other options are available however clients should always be warned as to

what to expect.


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Informal Classifications of Hotels

Hotels are also classified on an informal basis as it is better understood by the common man however

these classifications are not very accurate and nor do they consider the various hotel attributes or quality

levels. There can be many such informal classifications on the basis of various criteria specifically on

size and quality. As per the present market standards hotels can be classified into Small, Medium and

Large Hotels based on the no. of rooms they have. Those hotels with less then 180 rooms are considered

to be Small hotels, those with 180-450 rooms can be considered as Medium sized hotels and those with

over 450 rooms are considered at Large Hotels, however it can be pointed out that certain differences do

exist in this context of classification in different countries. Hotels are also classified based on their price

structure as Expensive, Moderate and Budget Hotels.

Hotels can also be broadly classified depending on if they are National or International hotels and the

expectations from such hotels generally tend to vary because of the brand equity they carry. In

International hotels, people expect a cosmopolitan atmosphere wherein the hotel maintains International

standards of services while in the case of National hotels differences persist especially in the smaller and

less accessible places however today the bigger National hotels tend more and more to be cast from a

common mould, no matter where they are situated.

Another general classification of hotels is based on whether they are part of a Chain of hotels or a Stand

Alone hotel. A hotel chain is is a collection or grouping of hotels under one recognizable brand operated

by a management company. Such a company can add as many holdings as it wishes in different

locations of the nation or world (depending on whether it is a national or an international chain of

hotels). These holdings fall under the same brand name however they may fall under different segments

or star ratings and may also be different in nature such as commercial, residential, resort or heritage

hotels. Here the customers expect a certain level of service to be maintained across all the hotels of that

chain. A stand alone hotel is one which does not have more then one or two holdings and hence it may

not be as well known as a hotel which is part of a Chain, to people who reside in a different location

from where the hotel is.


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Categorizing the Grand Hyatt

The Grand Hyatt can be categorized on the basis of the above mentioned classifications. It falls into

various categories depending on the systems of classification used. In terms of the Star Rating system

the Hyatt is a 5 Star hotel as it meets and exceeds all the minimum standards required for an

establishment to be a 5 Star hotel. If we consider brand segments the Grand Hyatt falls into two

categories, the Extended Stay Market and the Luxury Market. It is part of the extended stay market

because the hotel provides for apartment accommodations for guests who wish to stay for a longer

period of time and it is also part of the luxury market due to the vast variety of facilities and amenities it

provides. The hotels which are part of the Hyatt chain are usually considered to be part of the Upscale

market segment however in India it is one of the top hotels and hence can be considered to be part of the

Luxury segment. If classified according to its business type the Hyatt will once again fall into the

Upscale segment. In terms of segmentation by quality levels the Hyatt shows exemplary quality in all its

departments and hence falls under the Super Deluxe segment.

As per the informal classifications mentioned the Hyatt is a large hotel as it has over 450 rooms, its price

structure can be considered to be expensive and it is an part of an International Chain of hotels and

hence the expectations from the hotel are also much higher then what one would expect from a stand

alone hotel.


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Characteristics Of The Hotel Industry

The following points represent the main characteristics of the hotel industry:-

It is a service oriented industry.

It is a labour intensive industry requiring a high degree of specialized and skilled labour.

There are a few limiting services of the service sector that are colloquially known as the 4 Is. They are

explained below:-

Intangibility

Since services are performances or actions rather than objects, they cannot be seen, felt, tasted or

touched in the same manner as tangible goods can be. Thus as services cannot be readily displayed or

communicated; it becomes difficult for the customer to assess the level of quality that has been provided

to him. Although this is a restricting characteristic of the service industry, the Hotel sector in particular

can overcome this factor through a concept popularly known as Tangibilizing the Intangibles. This

means that the hotel can communicate the quality of the services through their physical evidence and

tangible cues. The Grand Hyatt is named so owing to its gigantic proportions. It is set on a piece of 10acres of land. Thus the Grand Hyatt has ample opportunity to display its tangibles, which can in turn

reflect top-notch quality. Both the interiors as well as the exteriors of the grand Hyatt are done very

tastefully. The interiors have been designed by Chhadha, Seimbieda and Remedios of Long Beach,

California. Apart from the architecture of the Hotel, even the tiniest of details right from the lighting, to

the flooring, to the cutlery, to the quality of the brochures all reflect the quality of the services being

offered to the customer. At The Grand Hyatt each one of these tiny details is paid close attention to and

thus affirms the customer of the high standards of the Grand Hyatt.

Inseparability

This characteristic of services reflects the property of simultaneous production and consumption. Unlike

goods that are sold off the shelves and then consumed, services are most often produced and consumed

at the same time. This means that the customer is present while the service is being produced and thus

views and sometimes even takes part in the production process. This implies that the hotel has to be very

careful in rendering any services since the customer will be present at that time and will form an opinion


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immediately. For example, at The Grand Hyatt, they have taken this inseparability a step further by

making all the kitchens of the various restaurants open and free to public viewing, a concept known as

show kitchens. At Celini, for instance, all the ingredients such as the tomatoes, onions, and chilli are

placed attractively in large bowls so that not only can the customers judge the quality but also that it

adds to the dcor of the restaurant. An investment into a Molteni stove has also been made at the Grand

Hyatt. Such stoves are the only ones to be found in the whole of India and cost as much as 70% more

than the average rate of hotel kitchen stoves. Such an investment makes sense simply because the show

kitchen puts so much emphasis on the transparency of activity which has typically been back of the

house. Thus, customers at Celini quite literally consume the service at the same place as it is produced

so much so that they can virtually see the size of the onions being used in their dish, the degree of the

flame on the stove, and the spatula used to stir the food!

Therefore it is evident that the hotel has to take a lot of care about the way in which the services are

produced as the customers will in most times be present at that very moment and any default on the part

of the hotel can translate into dissatisfaction for the customers. What this necessitates is a need for

specialized training since the quality and the customer satisfaction will be highly dependant on what

happens in real time, including actions of employees and the interactions between employers and

customers. For example, if on being asked a query, the employee feels the need to cross check with

another employee and say a debate ensues between the two of them then the customer may feel that the

service provider has been inefficient.

Inconsistency

Since services are performances, performed by humans, no two service experiences will be alike. It is

difficult to standardize services since the performance of the employees may differ from day to day.

Also, the same service may be rendered by different employees owing to the rotations in shift which

may cause a customer to have different service experiences. The heterogeneity also arises since no two

customers are alike; each one has unique demands, and unique expectations. Thus it can be seen that

such a characteristic of services stems from the human factor attached to the service sector. It is for this

reason that a customer, who may have had an extremely pleasurable stay at a hotel in the past, may not

enjoy the same way the next time.

A case in point is with respect to the Grand Hyatt. We called the Grand Hyatt to enquire whether they

had a midnight buffet offer. At the first instance, the person at the other end did not really have the

answers to our questions and we were made to hold twice during the conversation while she confirmed


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the details. However, the second time we called the Hotel regarding the same query, we were met with

an extremely efficient receptionist who knew all the details about the buffet in spite of the information

not being related to his department and then put us on hold only to confirm the prices. It can be seen

from this example that within one day, we had two diametrically opposite experiences, one failing to

satisfy us and the other delighting us.

Quality actually depends on various factors that cannot always be controlled by the service supplier,

such as the ability of the customer to articulate his needs and desires, the ability of the personnel to

satisfy those needs, etc. Therefore the service provider cannot always be 100% sure that the service

delivered is in a manner consistent with what was planned and promoted. Of the two variables

mentioned, the ability of the personnel to satisfy customers needs falls comparatively more within the

control of the service provider by way of training and the motivation given to the employee. Obviously a

well equipped and happy employee can serve a client better than one who is unaware of details and/or is

unhappy with the job, who might then exhibit that unhappiness through nonchalance towards the

customer.

Inventory

Inventory arises from the perishable nature of services. Perishability refers to the fact that services

cannot be saved, stored, resold or returned. A primary issue that marketers face in relation to service

perishability is the inability to inventory. A seat in a restaurant or a room in a hotel that is not used

cannot be reclaimed at a later date. For example, if the hotel has plenty of free rooms in the month of

June, such rooms cannot be inventoried such that at a later date, maybe December, when the demand

tends to peak; the previously empty rooms can be utilized to meet the rise in demand. Services cannot be

inventoried, since they are performed in real time. And time periods during which service delivery

capacity sits idle represents revenue-earning potential that is lost forever. Periods of peak demand

cannot be prepared for in advance by producing and storing services, nor can they be made up for at that

point. A service opportunity occurs at a point in time, and when it is gone, it is gone forever. Thus

demand forecasting techniques and creative planning for capacity utilization become very important

decisions. So, what is done is that hotels tend to overbook the rooms so as to offset any cancellations

that could be made so as to avoid a loss in revenue due to unsold rooms.

Although the Grand Hyatt largely caters to a corporate clientele and thus the vagaries of seasonal

demand are leveled off, it still faces the issue of inventory since it cannot provide those rooms, which

were initially free, to corporate executives when the hotel booking goes full.


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Service Triangle

The services triangle is a strategic framework which reinforces the importance of people in a service

industry in order to keep the promises of the firm has made and to build strong customer relationships.

The triangle speaks of three interlinked groups of people which hold equal importance in the delivery of

a service and hence they are represented by the vertices of an equilateral triangle.

In the hotel industry, these three groups are represented by the Hotel Management, the Employees or the

Service Providers and lastly the Hotel Guests.

In order for a service to be delivered successfully different types of marketing take place among the

three groups and it is the effort of all three marketing strategies that a service provider can fulfill his

promise of service delivery to the customer. The following are the different types of marketing as

represented by the Services Marketing Triangle.

HotelManagement

Employees/Service Providers Hotel Guests


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External Marketing

An external marketing function refers to any information that is communicated to the customer before

the service is delivered. In case of the Hotels, external marketing means the promotional activities and

advertisements done by the hotel via newspapers, travel magazines, television, personal selling, etc.

Thus, in external marketing, the hotel makes promises to the guests to deliver the best possible

services and fulfill customer expectations. In case of the Hyatt, it is their brand name which speaks for

itself and symbolizes quality service. Hence their reputation is such that their brand name becomes a

promise to the customers and they expect quality services from the hotel chain.

Internal Marketing

Every employee represents his service provider and hence his attitude towards his work and the

customers reflects the quality of the organizations service. Especially in the case of the hotel industry it

is very important to keep the employees in satisfied and happy since they are the ones who are in direct

contact with the customers and hence are the actual service agents for the hotel. Their mental state will

be reflected in the way they behave with the customers and hence their passion for their work translates

into better service for the customers. Internal marketing is a tool which should be used by hotels to

develop the skills of employees so that they can successfully interact with and serve the customers thus

enabling them to keep the promises made by the hotel via their external marketing. Such internal

marketing activities of the hotel management include recruiting, training, motivating, rewarding and

empowering the employees.

Interactive Marketing

Interactive marketing takes place between the employees of a service organization and its customers. It

comprises of a series of service encounters which are also called moments of truth. In simple words it is

any episode wherein a customer comes into contact with any aspect of the company, however remote,

and thereby has an opportunity to form an impression. Interactive marketing means delivering the

services to the customers as promised by the company. It is the implementation of marketing policy of

the company. While delivering the service the hotel staff has to see that they are delivering the service as

promised by the hotels and satisfy the expectations of the customers which make them keep coming

back.


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Product

The marketing mix is the combination of marketing activities that an organisation engages in so as to

best meet the needs of its targeted market. The elements of the marketing mix are the basic, tactical

components of a marketing plan.Each component of the marketing mix contributes significantly to the

shape and the outcome of the final marketing plan. This final mix can be altered by varying the

contribution of each of the elements. So for a high profile brand, a marketer could increase the focus on

promotion and desensitize the weight given to price. Traditionally the marketing mix consisted of just 4

Ps, which are listed below:

1. Product

2. Price

3. Place

4. Promotion.

Getting the mix of these elements right enables the organization to meet its marketing objectives and to

satisfy the requirements of customers. In addition to the traditional four Ps it is now customary to add

some more Ps to the mix to give the Seven Ps. The additional Ps have been added because today

marketing is far more customer oriented than ever before, and because the service sector of the economy

has come to dominate economic activity in the country. Thus the modern marketing mix is comprised of

the following ingredients:

1. Product

2. Price

3. Place

4. Promotion

5. People

6. Process

7. Physical evidence

8. Productivity and quality

With the view point of marketing the hotels ammenities, it can be seen that there is no rigid

demarcation when it comes to the elements. The Ps overlap each other, however the centrifugal force


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remains the customer. The combination of core and peripheral services, the creative promotion

techniques, the pricing strategies that help the hotel to maintain commercial viability, the efficient hotel

personnel instrumental in minimizing the gap between the services promised and services offered, and

the education and training programme for the personnel are important decision-making areas which

gravitate attention to the formation of a sound mix for the hotel industry.

The Product

Just as businesses exist to sell products, hotels exist to sell services. Being a focal part of the service

industry the main product of this industry is embodied in services rendered to the customers. The hotel

industry provides a fair combination of core and peripheral services. It is right to mention that in almost

all the hotels of the same category by and large the core services are identical and therefore the

peripheral services demand a close attention and provide a powerful avenue for differentiation. Thus, the

more innovative the peripheral services, the more attractive the product mix. This makes it essential for

hotels to assign due weightage to the formulation of an optimal product mix in which peripheral services

prove to be the point of differentiation. . While formulating the product mix for the hotel services, it is

essential that restaurant and cafeteria management, housekeeping, room service, recreational facilities

etc are given due importance.

The Grand Hyatt, Mumbai


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Product Classification

In planning the marketing offering , the service provider must address five product levels. Each level

adds more customer value, and the five constitue a customer value hierarchy. The five levels are

elaborated below:-

Core Benefit

This is the fundamental product level. It reperesents the actual service that the customer is buying. It is

not the tangible, physical product but the benefit that it valuable to the customer and what the customer

is actually paying for. The core benefit provided by the hotel industry is ACCOMODATION. The basic

role of the Grand Hyatt is to provide the basic facilities of rest and sleep.

ACCOMODATION AT THE GRAND HYATT:

The Grand Hyatt is quite aptly named! Going by its epic proportions it is indeed as Grand as grand gets.

The following list demonstrates the accomodation provided by the Grand Hyatt:

547 Rooms and Suites

147 Apartments (for visits of a longer duration) *** A double-storeyed Exclusive Grand Club Accomodation

12 Grand Executive Suites

12 Veranda Suites

4 Diplomatic Suites

7 Grand Suites

3 Presidential Suites.

In addition, the Grand Hyatt offers specially designed rooms for the physically handicapped.

*** The Grand Hyatt provides service apartments as a part of its offering for longer than usual visits.

These 147 fully furnished apartments are spacious, fresh and contemporary in design and offer the

customer a comfortable and stylish place that they can call home. These air-conditioned, fully equipped,

open plan apartments are available in flexible configurations of studio, one, two and three bedrooms as

can be seen from the diagrammatic representation given below:


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*Note the Illustrations of the Floor plans

147 APARTMENTS

1 bhk (22)

Type1B

Type1

Type1C

2 bhk (3)Type 9

Studio Apts.(112)

3 bhk (10)Type 3R & 4R


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Basic Product

This is the second

level of the

product

classification. The basic product is the embodiment of the core benefits that the service provider offers

to the customer. Thus, the marketer has to turn the core benefits into a basic product. Since the basic

product is a representation of the core benefits, a basic product should entail no more than a bed,


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bathroom, a closet and towels. However, The Grand Hyatt is a five-star hotel and thus the core benefits

will be more composite in nature, therefore the basic product has to be up-scaled to include more

amenities.

The following is a list of the basic products offered with respect to the accomodation:

King sized bed

Closet

Oversized work desk

Marble bath

24-hour room service

Cable/satellite TV channels

Dual line phones

Crib upon request

Individual air conditioning control

Morning newspaper

Speakerphone

Voicemail

Robes

25 inch TV

24-hour concierge

Mineral water

Slippers, Guest toiletries

700+ car park

The aforementioned list pertains to the basic facilities with regards to the various classes of rooms

(suites and executive class). Since The Grand Hyatt provides serviced apartments there will be a few

additions to the basic products. The following represents the additional services:

All apartments are fitted with an open plan, western-style kitchen with top of the line

refrigerator, cook top, oven, microwave, washing machine, exhaust hood and dishwasher

All apartments are equipped with household items such as crockery, glassware,

cookware and silverware

Daily housekeeping services


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Flat screen color television with cable TV channels

Direct In Dialing (DID) for each apartment

24-hour Reception Desk and message service

Dedicated Concierge

Round-the-clock security and maintenance

The following is a list of the basic products with respect to the dining requirements of the customers. It

must be noted that we have treated all the restaurants of the Hyatt as a basic offering as they serve the

basic necessity of eating. Moreover, with regards to the international appeal of the various restaurants, it

must be pointed out that the Hyatt is after all an international chain and serves an international clientele.

Therefore having specialty restaurants to serve the diverse palettes will fall under the purview of a basic

product irrespective of the prolific variety.

M

M is the hotels principal Western restaurant with a culinary objective to offer select vegetables, best

cuts of prime meats, seafood and poultry from select locations around the world, using traditional

cooking methods.

Celini

Celini, Grand Hyatt Mumbai's authentic Italian restaurant, embraces traditional Italian recipes and

presents them with a modern approach. Exuding an understated elegance, Celini's interiors are

contemporary and simple using interesting textures of natural wood, stone, matte finished steel and sand

blasted glass.

Soma

Soma, the Indian restaurant at Grand Hyatt Mumbai, offers authentic regional and tandoor grilled

cuisine. The tandoor show-kitchen is the restaurant's central feature where you can see skilled chefs

preparing the food.


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Grand Caf

The Grand Caf, the all day dining restaurant at The Grand Hyatt Mumbai offers Indian and

international cuisine in a casual and lively ambience. This caf is ideal for a light meal of deliciously

fresh ingredients.

China House

The China House was launched recently in May 2007 and is designed to exude the warmth of a typical

Chinese home. China House offers casual dining with a modern approach. The cuisine which is

imaginative yet simple emphasizes on home-style Sichuan cuisine, but also features signature Chinese

delicacies.

Expected Product

At the third level is the expected product. At this level, the marketer fashions the product according to a

set of attributes that customers normall expect. Hotel guests normally expect the following:

Hygiene - Hygiene is a very basic expectation of the hotel guests. Since a hotel is constantly inhabitedby people it becomes very essential for the hotel to make sure that it maintains a sense of utmost

hygiene when it comes to services such as food, linen, restrooms, and additional facilities like the

swimming pool, gymnasium etc.

Quality - This is one of the most important factors in rendering services. The customers expect nothing

less than top notch quality in all facets; right from the kind of linen, to the kind of pillow, to the

mattress, to the napkins, to the room freshener used, to the cutlery used etc. The list is exhaustive. Since

the customers are present during all the service encounters, and since they are also paying through their

nose, they tend to keep a very discerning eye on the surroundings. They seek high quality with every

service encounter and may kick up a fuss if they feel that the hotel has not lived up to its claim of high

quality. In fact, a majority of the customer grievances are a result of lapse in quality.

Ambience - This refers to the mood or the atmosphere that is exuded as a result of the setting, the dcor,

the lighting etc. The customers obviously expect that the hotel they stay in radiates a warm yet luxurious

ambience.


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The Grand Hyatt, being a five star up-scale hotel has obviously taken much care and consideration to

tailor make their services in accordance with the customers expectations. Thus most of the expectations

have already been conditioned into the basic products offered by The Grand Hyatt.

Augmented Product

At the fourth level, the service provider prepares an augmented product that exceeds the customers

expectations. Services that fall under this category are generally the additional services, over and above

the basic product, that are offered to the customers. They serve as the main point of differentiation. By

and large, the core and basic products offered by most of the hotels across the industry tend to be the

same. Therefore, the hotels use this product level to make their package more attractive than the

competitors. The Grand Hyatt uses the following additional facilities to leverage itself.

Given below is the list of augmented products that are specific to the hotel rooms. They appertain to,

and are in respect of, the basic need of accommodation.

Tea/coffee making facilities

Fruit

Safe large enough to store and charge laptops

Hairdryer

Minibar

Video on demand

Data port

Technology concierge

Phone in bathroom

High-speed Internet access

Complimentary chocolate box

Bottle of wine

Self contained work desk

Kitchenette

In room fax machine

Printer Copier


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DVD Player

In room safe

Private Concierge

3 / 4 Phone lines

The following is a list of the common augmented products provided by the Grand Hyatt. They are

available to all the guests irrespective of the type of room they occupy or the nature of their visit to the

hotel i.e. as a guest or a visitor.

Dedicated swimming pool

Baby-sitting service

Convenient access to the complex's 24-hour Business Centre for private meeting

rooms, secretarial services, translation facilities and laptop rentals

Grand Ballroom- 30,000 square feet of conference and meeting space - amongst the

largest and most sophisticated facilities in the city.

Convenient access to Club Oasis - Fitness Centre and Spa

Gourmet Store within the complex for homemade jams, chutneys and sauces, a variety

of cheese, cold cuts, olives and wine as well as freshly baked breads, cakes, tortes and cookies

Catering and home delivery from Grand Hyatt Mumbai's restaurants

Beauty Salon

Tennis Courts

Grand Hyatt Plaza A Multilevel shopping plaza featuring over 50 boutiques of Indian

and international brands.

Over and above the list mentioned above, we have classified the Lounges and Bars as augmented

products. This is because the hotel, in order to satisfy the basic needs of accommodation and dining,

already has 547 rooms and suites as well as 5 restaurants. Thus the lounges and Bars serve as additional

and extra facilities that the hotel provides to the guests. The following is a list of the Lounges and Bars

of the Grand Hyatt:

M Bar


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Recreation &

Health

Hotel FacilitiesDining

The Grand H att

The M Bar with Mumbais most extensive Martini list offers the city a choice of more that 40 different

kinds of Martinis making it the perfect haven for a Martini lover.

The Bar

The Bar is centrally located at the lobby level, adjacent to all the restaurants making it an ideal place to

sit back and unwind with pre and post dinner drinks.

Potential Product

The potential product includes all the possible augmentations and transformations the product may

undergo in the future. Here is where companies can seek new ways to satisfy customers and distinguishtheir offering. Now at the Grand Hyatt, potentiality will correspond to the up-gradation of their

technology and equipment as and when there is advancement in the technology. Also the company could

make use of benchmarking practices so as to emulate the service offerings of the best hotels in the

world. One of the most potential augmentations that can be made is to use technology and digitalize as

many operations as possible such as touch screens, check-in kiosks, blue tooth enabled bathtubs and air-

conditioners( to adjust water and room temperatures before arrival of the guest) etc.

Product Mix

A product mix or product assortment is a set of all the products and services offered by the service

provider. A product mix consists of various product lines , which refer to the kind or the variety of

services offered. A product mix has a certain length, width and depth. The width of a product mix refers

to how many different product lines the company has. The length of a product mix refers to how many

services or products fall within a single product line. The depth of a product mix refers to how many

variants are offered of each product in the line. And finally, the consistency of a product mix refers to

how closely related the product lines are in terms of end use, production requirements, distribution

channels etc. Shown below is a diagrammatic representation of the product mix of the Grand Hyatt.

Accommodation


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Product Line: Product lining is the marketing strategy of offering for sale several related products. A

line can comprise related products of various sizes, types, colours, qualities, or prices. Thus the Hyatt

has various product lines. The Accomodation product line comprises of the different kinds of rooms

they have, which may be different in size, price or type however their basic purpose is to provide a place

Rooms

Grand King

Grand Queen

Grand Twin

Apartments

Studio Apts

1 BHK

2 BHK

3 BHK

Grand Club

Accommodations

Club King

Club Queen

Club Twin

Suites

Grand Exec. Suites

Veranda Suites

Diplomatic Suites

Grand Suites

Presidential Suites

M

Celini

Soma

Grand Caf

China House

M Bar

The Bar

Swimming

Pool

Club Oasis

(Fitness Centre& Spa)

Gourmet

Store

Beauty

Salon

Tennis

Courts

Grand Hyatt

Plaza

(Shopping

Centre

24 Hours

room

Service

24 Hour

Concierge

700+ Car

Park

Technology

Concierge

High Speed

Internet

Service

Baby Sitting

Service

24 Hour

BusinessCentre

Grand

Ballroom


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to stay. The Dining line comprises of all the restaurants at the Grand Hyatt and hence they are related

as the basic purpose of the products in this line is to serve food. The Health and Recreation line

comprises of those facilites which provide entertainment or are related to the guests well being. Finally

the Hotel Facilities line is a list of all the additional services the hotel provides along with the

aforementioned ones.

Line Consistency: This refers to how closely the products that make up one line are. We can see above

that the products in the various lines are consistent and closely related given that their basic purpose

remains the same.

Line Depth: This refers to the no. of product variants in a line. Thus we can see that in the

Accomodation line, the number of variants are 15 and hence this is the Line Depth.

Product Width: The number of different product lines which a company has is known as the product

width. In this case the Grand Hyatts product mix has a width of 4 i.e. it has 4 different product lines.

Product Length: The total number of products sold by a company, in all its lines, is called Product

Length. In this case the Grand Hyatt has a product length of 36 or in other words the sells a total of 36

different products.

Positioning

In a highly competitive environment, theres a risk that customers will perceive little real difference

between competing alternatives and so make their choices based on price. Positioning strategy is

concerned with creating and maintaining distinctive differences that will be noticed and valued by those

customers with whom the firm would most like to develop a long-term relationship. Successful

positioning requires managers to understand both their target customers preferences and thecharacteristics of their competitors offerings.

A hotel should design its products and services in such a manner that it matches up to the kind of image

it desires to portray to the market. In this case, Grand Hyatt, Mumbai, positions itself as a business class

hotel. All the amenities and services provided are suitable for the business class. The hotel provides

office space, wherein the guest can make use of computers, printers, and scanners and can do their work

peacefully. They also have the facility for their guests to hire laptops. This kind of facility is not

provided by many hotels.


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Grand Hyatt provides its guests with one of the largest ballrooms in India and multiple conference

rooms. Since it is a business class hotel, the kind of facilities it provides revolves round it. The hotel

does not have a nightclub but has a lounge. Unlike, other 5 star hotels like J.W. Marriot which portray a

Bollywood image, the Grand Hyatt believes in serving mainly the corporate class. With their newly

launched Chinese restaurant, China House, which welcomes many celebrities, it has helped the Grand

Hyatt to become a part of the social world. The celebrities visiting the hotel are treated just like any

other guests visiting the hotel. There is not much media attention, people bothering them for their

photographs or autographs, etc. are few reasons why they prefer coming to Grand Hyatt. One might

think that it is restrictive only to the business class people but it has helped the high profile celebrities

visiting the hotel to be left alone and peaceful.

P rice


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Price can be considered as the assigned numerical monetary value of a service. It is a tool that matches

the supply and demand. Price influences the demand for a product, which in turn determines volume

sales. Therefore, setting an appropriate price is one of the most critical factors in demand and revenue

management. Like other organizations, hotels also need to make critical pricing decisions. The existence

and prosperity of hotels are substantially influenced by the quality of pricing decisions.

To be able to have an effective pricing strategy there are a few important factors to be kept in mind,

which can be termed at the Cs of pricing. Each of them is crucial in deciding the final price in a service

sector.

The first determinant of price is the Cost. The approach to pricing could be based on total cost or direct

cost. The hotel pricing structure firstly needs to be structured such that it covers its costs such as the landand building costs which in India is 60% of the total cost of the entire hotel project. The land rates in

Mumbai being exorbitant force hotels to up their prices making it extremely tough for a budget or

economy segment hotel to sustain its low prices for long. Along with this the hotel overheads also add to

the costs, these being the costs of electricity, furnishings, equipment, salaries, taxes etc.

The second important factor is the Customer. Pricing must be adjusted such that the customer feels that

hotels proj ssm

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