presentation of hospitality 2
TRANSCRIPT
-
7/30/2019 Presentation of Hospitality 2
1/88
CH INSTITUTE OF MANAGEMENAT AND COMMUNICATION
PRESENTATION ON
HOSPITALIYE AND TOURISM
PRESENTED BY :Umesh patel
Lahar pandeyKiran surageraghvendre shuklaJp rathoreSwati dwivedi
Sandeep pushpadShakti pratap
-
7/30/2019 Presentation of Hospitality 2
2/88
What is Hospitality?
The reception and entertainment of guests, visitors, or
strangers with liberality and good will.
-
7/30/2019 Presentation of Hospitality 2
3/88
Industry profile
It is one of the largest industries in both the global and
national contexts.
It involves cooperative relationships with multiple
organizations.
INDIA being a cheap destination for leisure tourism ,unlimitedtourism and untapped business prospects, we can expect
green pastures of growth in the year ahead
-
7/30/2019 Presentation of Hospitality 2
4/88
Current scenario
India has potential to become the number one tourist
destination in the world, with demand growing 10.1% per
annum.
The hospitality industry is poised to grow at a faster rate and
reach Rs.1500 billion.
The contribution in India to Gross Domestic Product is
estimated to rise from 8.6% (USD 117.9 billion) in 2010 to
9.0% (USD 330.1 billion) by 2020.
-
7/30/2019 Presentation of Hospitality 2
5/88
Three Main Objectives of the Hospitality
Manager
Make the guest feel welcomed
Make sure things (products & services) work for the guest
Make sure the operation continues to provide service
and make a profit
-
7/30/2019 Presentation of Hospitality 2
6/88
Govt. major policy initiatives
include(Tourism policy)
Liberalization in aviation sector.
Pricing policy for aviation fuel which influences international
air fare.
Rationalization in tax rates in the hospitality sector. Tourist friendly visa regime.
Immigration services.
Procedural charges in making available land for construction
of hotels. Allowing setting up a guest house
-
7/30/2019 Presentation of Hospitality 2
7/88
Govt. open skies policy
Permission for domestic airlines to commence international
flights.
Star-up of various low cost carriers.
100% FDI is permissible in this sector
-
7/30/2019 Presentation of Hospitality 2
8/88
Why People Choose to Study HospitalityManagement?
Experience
Interest
Ambition
-
7/30/2019 Presentation of Hospitality 2
9/88
Trends Affecting the Future of the
Hospitality Industry
Increasing competition
Emphasis on service
Customers growing value consciousness
Changes in marketing and management made possible bytechnology
-
7/30/2019 Presentation of Hospitality 2
10/88
Hotel industry is expected to grow from USD 16.7 bn to USD
30.7 bn at 26% CAGR between 2008-13 Indian Hospitality market size (USD bn)
TotalHospitality
22.521.5
26.5
38.8
-
7/30/2019 Presentation of Hospitality 2
11/88
Total Number of Hotels in India, 2010
-
7/30/2019 Presentation of Hospitality 2
12/88
Business and investments: Current
situation of Indias hotels
Hotel Imperial New Delhi: 99.57 % occupancy.
Hotel Trident Hilton, Gurgaon (suburban Delhi): 98.3 %occupancy.
Increase in average room rent for the entire hotel industryover the last year: 35 %.
Unmet demand for hotel rooms: 150 000 rooms. Additionaldemand this year: 15 000 rooms.
Currently Marriott has over 1,000 rooms spread across fourproperties in Mumbai and Goa.
-
7/30/2019 Presentation of Hospitality 2
13/88
Strong economic recovery coupled with governments numerous policies and
incentives will drive the growth in hospitality sector
GROWTH DRIVERS OF HOSPITALITY INDUSTRY IN INDIA
Regulatory Drivers External Drivers Internal drivers
Incentives by Central and the State
governments
Elimination of Customs Duty on
import of raw materials,
equipment, liquor etc
Fringe Benefit Tax exempted oncrche, employee sports, guest
house facilities
Five year income tax holiday
granted to 2-4star hotels
established in specified districts
having UNESCO-declared 'World
Heritage Sites
Exemption of Luxury Tax andSales Tax for 5-7 Years for new
projects
Governments open sky policy has
boosted number of passengers in
India
Introduction of Medical or M-
VISA to boost medical tourism
Strong economic growth
GDP growth of 9% p.a. in 2010.
Forecasted to grow at a rate of
8.7% p.a. till 2016 thereby
enabling hospitality sector
growth
Increasing FDI inflow
FDI inflow increased due to
allowance of 100% FDI and
better infrastructure availability
Increasing tourist arrivals
Hospitality sector handled 5.58
mn international tourists
arrivals(8.1% Y-o-Y growth) and740.21 mn domestic tourists in
2010 (10.7% Y-o-Y growth)
India tourism campaigns
The Incredible India and
Atithi Devo Bhavah campaigns
have improved foreign tourist
outlook for India
Hosting major sporting events
International sporting events
like Formula One race in the
National Capital Region (NCR)
in 2011 are set to boost
hospitality
Demand-supply imbalance
Ministry of Tourism estimates a
shortage of 0.15 mn hotel
rooms in 2011, of which two-
thirds are in the budget
category
Rising income and spending
Rising disposable incomes,cheaper airfares, changing
consumer lifestyle and ease of
financial transactions leading
Indian
Hospitality
sector
-
7/30/2019 Presentation of Hospitality 2
14/88
Hospitality industry is one of the most liberalized sectors in India with 100%
FDI allowance through automatic route and single window clearance
facilities
FDI has been permitted up to 100% under the
automatic route
Total FDI inflow in hospitality sector between 2000
-10 amounted to USD 2.17 bn
For foreign technology agreements, automatic
approval is granted if:
Up to 3% of the capital cost of the project is
proposed to be paid for technical consultancy
services
Up to 3% of the net turnover is payable for
franchising and marketing/publicity fees Up to 10% of gross operating profit is payable for
management fees, including incentives fees
As of Dec 2010, government has given nod tosingle window clearance for hospitality industry
The Ministry of Tourism approves hotels at project
stage based on documentation. Project approval is
given to a 1, 2, 3, 4, 5 Star Hotels and Heritage
Basic Category
The Hotels have to apply for classification under 5Star Deluxe/ Heritage Classic/ Heritage Grand
category if they fulfill the prescribed norms within 3
months of commencing operation
Project approval will be valid for 5 years
Foreign direct investment (FDI)
Regulatoryand FDI
policies inIndian
hospitalitysector
Tax Holiday available for hotels
Approval of a hotel project
A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel in specified areas, if such hotel / convention
centre is constructed and has started operations before 31st July, 2010
A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel located in the specified district having a World
Heritage Site and has started functioning before 31st March, 2013
-
7/30/2019 Presentation of Hospitality 2
15/88
The unorganized and largely fragmented hotel sector in India is undergoing
a rapid change with entry of foreign players
Key hospitality players in India
INTERN
ATIONALPLAYERS
NATIONALPLA
YERS
-
7/30/2019 Presentation of Hospitality 2
16/88
Hence, hotel room supply is expected to grow at 15% CAGR surpassing
demand which is estimated to grow at 10.3% CAGR during 2010-13
Indian Hospitality Market : No. of Keys * (2010-13)
-
7/30/2019 Presentation of Hospitality 2
17/88
CONT
Room demand distribution in top 10 cities (2013E)
-
7/30/2019 Presentation of Hospitality 2
18/88
CONT
Upcoming room supply (2010-2013)
-
7/30/2019 Presentation of Hospitality 2
19/88
Increasing demand in Tier 2 and Tier 3 cities along
with rising land costs will contribute towards shaping
the future of hospitality
19
Future hospitality trends
Source: HVS Report Hotels in India- Trends and Opportunities 2010, Oct.
2010
The Indian hotel market will remain an expensive market to enter
with the exponential growth in capital land values across the
country
Green Hotels will increase operational efficiencies and bottomlines, inspite of its marginally higher construction costs
Loca -vore: Local cuisines concept that believes in maximizing
benefits to cultural heritage will be adopted in F&B
Relocation of non-revenue generating departments from hotel
premises to off hotel premises will maximize space efficiencies
Growing Importance of healthy and organic food will result in its
introduction in the menus of all day dining and multi cuisine
restaurants
Manpower retention programs will result in marked increase in
salaries across the sector
Hospitality supply in Tier II and Tier III locations will increasebased on the untapped potential of the domestic commercial and
leisure demand
Upcoming Areas
Green Hotels
Resource
Optimization
PersonnelRetention
Healthy & OrganicFoods
Local cuisines inF&B
Hospitality RealEstate
-
7/30/2019 Presentation of Hospitality 2
20/88
Indias hotel industry
India's htel industries Is experiencing an unprecedented boom, driven by increasing
numbers of business and tourist arrivals.But how long can the good times last?
-
7/30/2019 Presentation of Hospitality 2
21/88
Structure of the industry
FIVESTARDELUX
Premium& luxury
segment
FIVE STAR
Mid -Market
Segment
FOUR STAR
Mid -Market
SegmentTHREESTAR
BudgetSegment
TWO STAR
BudgetSegment
ONE STAR
Palaces &Forts
HERITAGEHOTELS
premium
& luxury
segment
-
7/30/2019 Presentation of Hospitality 2
22/88
Consumer segments
The business traveler.
International and national sports& game players
The leisure traveler.
Airline cabin crew.
-
7/30/2019 Presentation of Hospitality 2
23/88
Users of Hotel Services
B i d i t t C t
-
7/30/2019 Presentation of Hospitality 2
24/88
Business and investments: Current
situation of Indias hotels
Some figures
Hotel Imperial New Delhi: 99.57 % occupancy. Hotel Trident Hilton, Gurgaon (suburbanDelhi): 98.3 % occupancy.
Increase in average room rent for the entire hotel industry over the last years 35 %.
Unmet demand for hotel rooms: 150 000 rooms. Additional demand this years 15 000rooms.
The boom has attracted several global players, ranging from Starwood and Mariott toFour Seasons and ShangriLa.
Currently Marriott has over 1,000 rooms spread across four properties in Mumbai andGoa.
-
7/30/2019 Presentation of Hospitality 2
25/88
The engine of growth
Tourism boom
The tourism traffic has been growing between20-28 % every wear for the last four years andthis rate of growth Is expected to continue forthe next few years.
The constant boom and the resultant demand-
supply mismatch has led to sharp increases inthe average room rates and thus pushing uprevenues of industry players
expected to perform very well in futureand theindustry offers an interesting investment
opportunity for long- term investors.
Most of the five-star hotels are seeing morethan 80 % occupancy and some of the lesser-known five-star hotels are overbooked.
-
7/30/2019 Presentation of Hospitality 2
26/88
Incredible India
The Ministry of Tourism is pushing the great Indian story effectively with itssubtle and charming Incredible India campaign
We have spent $5 million on this campaign since December 2002 and plan to
keep it going,Amitabh Kant, the joint secretary at Indias Ministry ofTourism.
According to estimates, another 150,000 rooms will have to be added acrossthe country in the next five to Severn years to be able to meet the increaseddemand.
At 6,762 rupees, Bangalore had the highest ARR across all categories in the 30cities. New Delhi was the second highest, registering an ARR of 5,498 rupees.All India ARR increased 26.9 % over the previous year. Star categoryoccupancies ranged from 46.3 % to 72.1 %.
-
7/30/2019 Presentation of Hospitality 2
27/88
The future growth
Hospitality experts believe that the Indian hotel industry will witness higherthan usual growth in the coming peak season.
The lean season has been exceptionally good for us. Our room occupancyrate has been around 89 per cent and we are looking at over 95 per centoccupancy for the period September to December, says Kapil Chopra,general manager, Trident Hilton, Gurgaon.
The non-luxury segment in particular has been perking up with more and
more investors spotting the demand supply imbalance, surge in domestictravel and growth in spending among middle-class Indians.
-
7/30/2019 Presentation of Hospitality 2
28/88
Major players in India
HOTEL CHAINS
Indian hotels company LtdEIH Ltd
ITC Hotels LtdITDC Ltd
INTERNATIONAL HOTELCHAINS
Marriotte
StarwoodBerggruen hotels
Emaar MGFLocalized hotel companies
SMALL CHAIN
Hotel leela
Venture
Asian hotels
Bharat hotels
PUBLIC SECTORCHAINS
ITDC
HAI
-
7/30/2019 Presentation of Hospitality 2
29/88
The Competition
The world's leading hotel brands - joining the battle
The country has been flooded by some of the world's leading hotelbrands.
Unitech, which is setting up two hotels in Delhi, has already formeda joint venture with Marriott International to run its three newhotels in India, which are expected to Start operations by 2008.
All other majors including Marriott, Hyatt, Hilton, Accor, FourSeasons etc are briskly rein forcing their presence in India.
-
7/30/2019 Presentation of Hospitality 2
30/88
Indian hotel companies look overseas
The movement is not one-way Cash rich Indian hotel companies have beenacquiring properties overseas. The Tata group's Indian Hotels Comptant is inthe process of acquiring Boston based luxury hotel the Ritz-Carlton foraround $170 million dollars
With growing competition, hotels are under tremendous pressure togenerate new lines of revenue with creative approaches.
Hotels are trying every possible way to generate cash from alternativesources to achieve economies of scale. Reducing transaction costs, increasingproductivity and promoting traditional Indian values
-
7/30/2019 Presentation of Hospitality 2
31/88
Looking for new niche
Many business hotels in India are integrating full-fledged spas on theirpremises, originally a main stay of resort properties.
Another interesting trend in India is that of mixed-use developments.
However, in order to attract more visitors, India still needs to
dramatically increase the number of rooms available.
-
7/30/2019 Presentation of Hospitality 2
32/88
The challenges to face
The lack of adequate infrastructure development.
There is still need to improve air connectivity.
As competition increases, there is a definite pressure on ARR andoperating margins.
Some players are already
preparing for the difficult
times when the ARRs areexpected to fall by 30-40
percent in the next 3-4 years.
-
7/30/2019 Presentation of Hospitality 2
33/88
SWOT Analysis
STRENGTHS
Faster GDP growth
Industrialization.Natural heritage
India as a global player
WEAKNESS
Lake of connectivity.
Lake of publicity.Hectic rules
Influence of politicians
Marketing gap.
-
7/30/2019 Presentation of Hospitality 2
34/88
Cont.
OPPORTUNITIES
Health tourism.
Strong in cultural and
nature aspects.
Commercialization of
sports and games.
FDI policy.
Mismatch of supply
and demand.
THREATS
Poor domest tourism
infra structure
Political conditions
Terrorism
Increase in pollution
Entry of newcompetitors
-
7/30/2019 Presentation of Hospitality 2
35/88
Hospitality Pyramid is Inverted
Economical
Luxury
-
7/30/2019 Presentation of Hospitality 2
36/88
-
7/30/2019 Presentation of Hospitality 2
37/88
Importance
Impetus to other industries
Third largest net earner of foreign exchange.
Contributes to the national integration, preserves natural andcultural environments
Create substantial job opportunities
Its rapidly growing Western-style fast food joints offerunlimited opportunities for foreign food and beverageexporters,
-
7/30/2019 Presentation of Hospitality 2
38/88
Tourism related industries
Travel agencies,
Tour operating agencies
Units providing facilities for cultural, adventure and wild life experience totourists,
Surface, air and water transport facilities to tourists,
Leisure, entertainment amusement, sport and health units for tourists
Convention/seminar units and organizations.
Thomas Cook, Cox & Kings India Limited, Star Luxury Cruises, Queen Mary IICruise Liners etc
f i
-
7/30/2019 Presentation of Hospitality 2
39/88
Forms of tourism
Cultural tourism & Round Trips
Commonwealth Games 2010
Monsoon magic
Rural & village tourism
Medical tourism
Luxury tourism
Adventure tourism
-
7/30/2019 Presentation of Hospitality 2
40/88
-
7/30/2019 Presentation of Hospitality 2
41/88
Role of tourism industry in India GDP
According to the global authority for hotel real estate, LodgingEconometrics, there were 73,793 hotel rooms in the pipeline of which11,207 were due to open in 2009 and 22,522 in 2010
International tourists over 5 million visitors, while domestic market is
more than 500 million.
foreign tourists in India has increased by 12.4 percent in one year 2009 to2010
In 2006, Indian tourist industry witnessed a growth of14.3 percent, whichreached around 3.89 million in 2007
The foreign tourists arrival led to a robust growth in the foreign exchangeearnings that increased from USD 5.03 billion during January-October 2006to USD 6.32 billion during January-October 2007, which is apparently a
25.6 percent rise.
Th i f I di ' i h
-
7/30/2019 Presentation of Hospitality 2
42/88
The impact of India's economic growth on
tourism
Industrialization,
Education,
Higher number of qualified professionals,
Opening up of foreign markets,
Liberal trade policies and better advertising, Strategic marketing,
Strategic planning of excursion packages,
Eco-tourism,
Sports events that bring the spot-light on India,
Greater patronage by greater number of MNC'sheading to our shores,
Diversifications of the Indian open industriesnorm,
-
7/30/2019 Presentation of Hospitality 2
43/88
IMPACT OF RECESSION
In 2009, the country is seen rising 6.5 percent, compared tothe world output, which is seen falling 0.4 percent.
The tourism sector is expected to perform very well in future
and the industry offers an interesting investment opportunityfor long-term investors.
The Indian tourism sector is seen generating $42.8 billion by2017, a 42 percent surge from 2007, according to an industry
research note by auditing and consulting firm Deloitte
Despite the numerous problems, tourism industry was thesecond-largest foreign exchange earner for India.
CHALLENGES
-
7/30/2019 Presentation of Hospitality 2
44/88
CHALLENGES
successfully preserving these in their original form
and making them accessible to domestic and international
travellers.
various categories of tourism products, such as
o Adventure tourismo medical tourism
o Eco-tourism
o Rural tourism
o Cruise tourism
o Meetings
o Incentives
o Conferences
o And exhibitions (MICE) tourism etc.
-
7/30/2019 Presentation of Hospitality 2
45/88
THE SCENE TILL NOW
Some major international events like 9/11, US-led war against terror and SARShit the tourism industry over the past few years.
Cutting down of routes by domestic airlines and increase in airfares last year also
led to a fall in the movement of people in the country.
The Mumbai terror attacks, targeting two premium hotels, also tarnished thecountry's reputation, drastically reducing hotel occupancy levels, and affectingyear-end travel.
Expenses per night of stay for a tourist in India during the SE Asian currencycrisis was $100 whereas it was around $35-40 in the SE Asian countries. This hurtIndian tourism.
High luxury and entertainment taxes and high landing charges applicable in Indianairports.
-
7/30/2019 Presentation of Hospitality 2
46/88
Thank you .
Any question???????
-
7/30/2019 Presentation of Hospitality 2
47/88
It is one of the largest industries in both the
global and national contexts.
It involves cooperative relationships withmultiple organizations.
INDIA being a cheap destination for leisure
tourism ,unlimited tourism and untappedbusiness prospects, we can expect green
pastures of growth in the year ahead
-
7/30/2019 Presentation of Hospitality 2
48/88
The world travel and tourism council(WTTC) haspredicted that India has potential to become the
number one tourist destination in the world, with
demand growing 10.1% per annum.
The hospitality industry is poised to grow at a faster
rate and reach Rs.1500 billion.
The contribution of the entire travel and tourism
sector including hospitality industry in India to GrossDomestic Product is estimated to rise from 8.6%
(USD 117.9 billion) in 2010 to 9.0% (USD 330.1
billion) by 2020.
-
7/30/2019 Presentation of Hospitality 2
49/88
Many higher end hotels in India are realized thattheir key USP in international competition is nottheir high-tech facilities, but rather theiroutstanding staff-to-guest ratios and thelongstanding tradition of Indian hospitality asimmortalized by "Atithi Devo Bhava".
Hospitality is about serving the guests and toprovide them with a "feel-good-effect". Personalizedcomprehensive service, such as suites having theirown personal butler, gives guests that extra feel ofbeing valued by their hosts.
-
7/30/2019 Presentation of Hospitality 2
50/88
Three Main Objectives of the
Hospitality ManagerAs a successful manager in the hospitality industry, you must exhibit many skills
and command much specialized knowledge all directed toward achieving the
managerial objectives listed below:
Make the guest feel welcomed
Make sure things (products & services) work for
the guest
Make sure the operation continues to provide
service and make a profit
Lets explore each objective individually...
-
7/30/2019 Presentation of Hospitality 2
51/88
Brief Summary of Managements Role in the
Hospitality Industry
There were three main objectives of a
hospitality manager:
Make the Guests Feel Welcome
Make Sure Things Work for the Guests
Make sure the operation continues to provide
service and make a profit.
Simply stated, these objectives suggest that managers must be able to
relate successfully to employees and guests, direct the work of their
operation, and achieve operating goals within a budget - that is, to run
a productive operation within certain constraints. (Chapter 1Page 6)
-
7/30/2019 Presentation of Hospitality 2
52/88
PRODUCT:
High class accommodation, food and beverage and
it is a luxury product
PRICES:
Prices are very high and varies as per the season
PROMOTION:
Very effective promotion to the targeted customers
through national and international magazines.
-
7/30/2019 Presentation of Hospitality 2
53/88
PLACE:
located in all metros and follows its own regional
tradition and treats their guests accordingly
PROCESS:
Regular maintenance of the room, keeping the
surroundings clean and hygienic
-
7/30/2019 Presentation of Hospitality 2
54/88
PHYSICAL EVIDENCE:
Deep sleep is more than just the right bed. It is
about an environment that soothes all the fivesenses. Experience our rooms and know how it
feels to sleep like a baby again.
PEOPLE:Highly professional workers ,internationally
qualified chefs.
-
7/30/2019 Presentation of Hospitality 2
55/88
HOSPITALITY & TOURISM INDUSTRY
development goes hand by hand.
Tourism policy. Governments open skies policy.
Foreign Trade policy.
FDI in HOTEL & TOURISM INDUSTRY.
Other government initiatives.
-
7/30/2019 Presentation of Hospitality 2
56/88
Liberalization in aviation sector.
Pricing policy for aviation fuel which influences
international air fare. Rationalization in tax rates in the hospitality sector.
Tourist friendly visa regime.
Immigration services. Procedural charges in making available land for
construction of hotels.
Allowing setting up a guest house.
-
7/30/2019 Presentation of Hospitality 2
57/88
Permission for domestic airlines to commence
international flights.
Star-up of various low cost carriers.
FDI 100% FDI is permissible in this sector
-
7/30/2019 Presentation of Hospitality 2
58/88
Why People Choose to Study
Hospitality Management
They have experience in the industry and want to
continue growing and changing with the industry.
They are interested in the hospitality industry.
They have ambition and know that they can grow as
a professional in the industry.
-
7/30/2019 Presentation of Hospitality 2
59/88
Trends Affecting the Future of the
Hospitality Industry Increasing competition
Emphasis on service
Customers growing value consciousness
Changes in marketing and management made
possible by technology
Hotel industry is expected to grow from USD 16 7 bn
-
7/30/2019 Presentation of Hospitality 2
60/88
16.7 14.7 17
30.75.8 6.8
9.5
8.1
2008 2009 2010 2013
Restaurant sectorHotel sector
Hotel industry is expected to grow from USD 16.7 bnto USD 30.7 bn at 26% CAGR between 2008-13
60
Indian Hospitality market size (USD bn)
Source: Technopak Report Dissecting the Indian Hospitality Industry 2009, Ma Foi Randstad press release dated 31 March 2011,India Biz News Article dated June 13,2011, Livemint article dated May 2010
The Indian hospitality industry is one of the fastest
growing sectors of the Indian economy; except for a
short phase the during recession and the terrorist
attacks in 2008 and 2009 respectively
As of May 2011 contribution of the hospitality industry
which comprises of hotels, restaurants and allied
services to Indian GDP was 2.2%
In 2010, 30% and 16% of the Indian hotel and restaurant
sectors were in the organized sector
Hospitality industry is one of top employment
generating industries which according to executive
search and HR consulting firm Ma Foi Randstad
generated 160,300 jobs in 2010 and is expected to
generate 218,200 jobs in 2011
According to hospitality consulting firm HVS, there is a
shortage of quality branded hotel rooms in the major
Indian cities as compared to other international cities
and the shortage will be more pronounced as Indian
economy strives toward double-digit growth
Hotel Categories No. of Hotels No. of Rooms
5 Star deluxe/5 Star 165 43965
4 Star 770 13420
3 Star 505 30100
2 Star 495 22950
1 Star 260 10900
Heritage 70 4200
Uncategorized 7078 -
Total 8707 132885
Total Number of Hotels in India, 2010
26% CAGR 12% CAGR
38.8
22.5 21.526.5
Total Hospitality
-
7/30/2019 Presentation of Hospitality 2
61/88
Business and investments: Current situation of Indias
hotels
Some figures : Hotel Imperial New Delhi: 99.57 % occupancy. Hotel Trident Hilton,Gurgaon (suburban Delhi):98.3 % occupancy. Indian hotels are witnessing mindblowing occupancy rates.
Increase in average room rent for the entire hotel industry over the last year: 35 %.
Unmet demand for hotel rooms: 150 000 rooms. Additional demand this year: 15 000 rooms.
The boom has attracted several global players, ranging from Starwood and Mariott to FourSeasons and ShangriLa. The largest hotel company in the world,French chain Accor, hasentered India and is now devising aggressive plans for expansion in the market. Severalothers are racing to increase their presence in India, including the Marriott group.
Currently Marriott has over 1,000 rooms spread across four properties in Mumbai and Goa.
Strong economic recovery coupled with governments numerous
-
7/30/2019 Presentation of Hospitality 2
62/88
St o g eco o c eco e y coup ed t go e e t s u e ouspolicies and incentives will drive the growth in hospitality sector
62
GROWTH DRIVERS OF HOSPITALITY INDUSTRY IN INDIA
Source: Technopak Report Dissecting the Indian Hospitality Industry 2009, TCFI Report Hospitality in India, Oct. 2010
Indian
Hospitality
sector
Incentives by Central and the State
governments
Elimination of Customs Duty on
import of raw materials, equipment,
liquor etc
Fringe Benefit Tax exempted on
crche, employee sports, guesthouse facilities
Five year income tax holiday granted
to 2-4star hotels established in
specified districts having UNESCO-
declared 'World Heritage Sites
Exemption of Luxury Tax and Sales
Tax for 5-7 Years for new projects
Governments open sky policy hasboosted number of passengers in
India
Introduction of Medical or M-VISA to
boost medical tourism
Strong economic growth
GDP growth of 9% p.a. in 2010.
Forecasted to grow at a rate of
8.7% p.a. till 2016 thereby enabling
hospitality sector growth
Increasing FDI inflow
FDI inflow increased due toallowance of 100% FDI and better
infrastructure availability
Increasing tourist arrivals
Hospitality sector handled 5.58 mn
international tourists arrivals(8.1%
Y-o-Y growth) and 740.21 mn
domestic tourists in 2010 (10.7% Y-
o-Y growth) India tourism campaigns
The Incredible India and Atithi
Devo Bhavah campaigns have
improved foreign tourist outlook
for India
Hosting major sporting events
International sporting events like
Formula One race in the National
Capital Region (NCR) in 2011 are
set to boost hospitality
Demand-supply imbalance
Ministry of Tourism estimates ashortage of 0.15 mn hotel rooms
in 2011, of which two-thirds are
in the budget category
Rising income and spending
Rising disposable incomes,
cheaper airfares, changing
consumer lifestyle and ease of
financial transactions leading
Regulatory Drivers External Drivers Internal drivers
Hospitality industry is one of the most liberalized sectors in India
-
7/30/2019 Presentation of Hospitality 2
63/88
63
with 100% FDI allowance through automatic route and single
window clearance facilities
FDI has been permitted up to 100% under the
automatic route
Total FDI inflow in hospitality sector between
2000 -10 amounted to USD 2.17 bn
For foreign technology agreements, automatic
approval is granted if:
Up to 3% of the capital cost of the project is
proposed to be paid for technical consultancy
services Up to 3% of the net turnover is payable for
franchising and marketing/publicity fees
Up to 10% of gross operating profit is payable for
management fees, including incentives fees
As of Dec 2010, government has given nod to single
window clearance for hospitality industry
The Ministry of Tourism approves hotels at project
stage based on documentation. Project approval is
given to a 1, 2, 3, 4, 5 Star Hotels and Heritage Basic
Category
The Hotels have to apply for classification under 5
Star Deluxe/ Heritage Classic/ Heritage Grand
category if they fulfill the prescribed norms within 3months of commencing operation
Project approval will be valid for 5 years
Foreign direct investment (FDI)
Regulatory
and FDI
policies in
Indian
hospitality
sector
Tax Holiday available for hotels
Approval of a hotel project
A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel in specified areas, if such hotel / convention
centre is constructed and has started operations before 31st July, 2010
A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel located in the specified district having a
World Heritage Site and has started functioning before 31st March, 2013
Finance Bill 2009, which has proposed to abolish Fringe Benefit Tax with effect from 1st April 2009 has become major advantage to the
Hospitality industry
Source: India Law Offices article in 2009
The unorganized and largely fragmented hotel sector in India isd i id h ith t f f i l
-
7/30/2019 Presentation of Hospitality 2
64/88
undergoing a rapid change with entry of foreign players
64
PlayersSegment
Presence Brands Future Expansion Plans
InterContinental
Luxury, mid-
segment and
business
InterContinental
Crowne Plaza
Holiday Inn
Holiday Inn Express
Hotel Indigo
Staybridge Suites
Candlewood Suites
Plans to operate 45 new hotels by
2015
Carlson Luxury, business,
economy and
cruises
Radisson Hotels and Resorts Park Plaza
Country Inns & Suites
Park Inn
Plans to increase its presence in India
to 78 hotels by 2012, from 28 in
2009
Indian Hotels Luxury, mid-
segment and
budget
Taj, Gateway
Vivanta
Ginger
Plans to construct 50 budget hotels
under the Ginger brand over the next
four years
ITC Welcome group
Luxury, budget
and heritage
ITC Hotel Luxury Collection
Welcome Hotel Sheraton
Fortune
Welcome Heritage
To invest USD 2,000 mn over next
few years
EIHBusiness , leisure
and cruises
Oberoi
Trident
Plans to develop 750 additional hotel
rooms under the Trident brand over
the next 2.5 years
The LeelaLuxury and
heritage
Leela penta
Leela palace
Expected to add 349 more rooms in
2012
Key hospitality players in India
Source: TCFI Report Hospitality in India, Oct. 2010
INTERN
ATIONALPLAYERS
NATIONALPLAYERS
Hence hotel room supply is expected to grow at 15% CAGR surpassing
-
7/30/2019 Presentation of Hospitality 2
65/88
65
Hence, hotel room supply is expected to grow at 15% CAGR surpassing
demand which is estimated to grow at 10.3% CAGR during 2010-13
65
The Indian government through Budget 2011-12 has proposed
several measures that will increase investment into hospitality
sector and accelerate the process of development
The huge influx of incremental rooms will result in the occupancylevels of hotels for most of the cities falling considerably except
Mumbai and Goa during 2010-13
Despite a similar quantum of room demand in Mumbai and the
NCR in 2013, the size of Mumbai market, at USD 930 mn, will be
substantially greater than the NCR market size of USD 620 mn5,714
9,625
5,5653,307
1,835
2,363
3,231
1,280
543
1,087
684
743
2010 2011F 2012F 2013F
Economy
Midscale
Upscale
Upcoming room supply (2010-2013)
Source: Knight Frank Report Indian Hotel Market Dec 2010
Indian Hospitality Market : No. of Keys * (2010-13)
(*) Note: Number of keys :The number of guest rooms in a hotel
20102011 F
2012 F 2013 F
32,66035,503
38,789 43,828
53,412 66,487 75,967 81,296
Demand Supply
5,330
8,092
13,075
9,480
24%
24%
6%3%
7%
8%
4%
9%
3%
11%Mumbai
NCR
Pune
Ahmedabad
Goa
Chennai
Jaipur
BengaluruKolkata
Hyderabad
Room demand distribution in top 10 cities (2013E)
Total Rooms
Increasing demand in Tier 2 and Tier 3 cities along with rising land costs
-
7/30/2019 Presentation of Hospitality 2
66/88
g g gwill contribute towards shaping the future of hospitality
66
Future hospitality trends
Source: HVS Report Hotels in India- Trends and Opportunities 2010, Oct. 2010
The Indian hotel market will remain an expensive market to
enter with the exponential growth in capital land values
across the country
Green Hotels will increase operational efficiencies and bottom
lines, inspite of its marginally higher construction costs
Loca -vore: Local cuisines concept that believes in maximizing
benefits to cultural heritage will be adopted in F&B
Relocation of non-revenue generating departments from hotel
premises to off hotel premises will maximize space efficiencies
Growing Importance of healthy and organic food will result in
its introduction in the menus of all day dining and multi
cuisine restaurants
Manpower retention programs will result in marked
increase in salaries across the sector
Hospitality supply in Tier II and Tier III locations will increasebased on the untapped potential of the domestic commercial
and leisure demand
Upcoming Areas
Green Hotels
Resource
Optimization
Personnel
Retention
Healthy & Organic
Foods
Local cuisines in
F&B
Hospitality Real
Estate
-
7/30/2019 Presentation of Hospitality 2
67/88
INDIAS HOTEL INDUSTRY
-
7/30/2019 Presentation of Hospitality 2
68/88
INDIA S HOTEL INDUSTRY
India's htel industries Is experiencing an unprecedented boom, driven by increasing
numbers of business and tourist arrivals.
But how long can the good times last?
-
7/30/2019 Presentation of Hospitality 2
69/88
FIVESTARDELUX
Premium& luxurysegment
FIVE STAR
Mid -MarketSegment
FOUR STAR
Mid -MarketSegment
THREESTAR
BudgetSegment
TWO STAR
BudgetSegment
ONE STAR
Palaces &Forts
HERITAGEHOTELS
premium &
luxury
segment
-
7/30/2019 Presentation of Hospitality 2
70/88
The business traveler.
International and national sports& game players
The leisure traveler.
Airline cabin crew.
-
7/30/2019 Presentation of Hospitality 2
71/88
d f d
-
7/30/2019 Presentation of Hospitality 2
72/88
Business and investments: Current situation of Indias
hotels
Some figures : Hotel Imperial New Delhi: 99.57 % occupancy. Hotel Trident Hilton,Gurgaon (suburban Delhi):98.3 % occupancy. Indian hotels are witnessing mindblowing occupancy rates.
Increase in average room rent for the entire hotel industry over the last year: 35 %.
Unmet demand for hotel rooms: 150 000 rooms. Additional demand this year: 15 000 rooms.
The boom has attracted several global players, ranging from Starwood and Mariott to FourSeasons and ShangriLa. The largest hotel company in the world,French chain Accor, hasentered India and is now devising aggressive plans for expansion in the market. Severalothers are racing to increase their presence in India, including the Marriott group.
Currently Marriott has over 1,000 rooms spread across four properties in Mumbai and Goa.
A b i k
-
7/30/2019 Presentation of Hospitality 2
73/88
A booming marketThe established hotel chains
A number of global players are already wellestablished in India. These include Hilton,
Shangri-La, Radisson, Mariott, Meridien,Sheraton, Hyatt, Holiday Inn,InterContinental and Crowne Plaza.
Investments
Now besides hotel companies, even theinvestment firms and private equitycompanies are beginning to get excited
about India. Berggruen Holdings India, asubsidiary of New York-based investmentcompany Berggruen Holdings,hasannounced that it is seed-funding a non-luxury hotel chain in India.
Private equity firm Warburg Pincus haspicked up around 27 % stake in Delhi-basedmid-price hotel chain,Lemon Tree, for $60.2 million.
The engine of growth
-
7/30/2019 Presentation of Hospitality 2
74/88
The engine of growth
Tourist boom
The tourism traffic has been growing between
20-28 % every wear for the last four years andthis rate of growth Is expected to continue forthe next few years.
The constant boom and the resultant demand-supply mismatch has led to sharp increases inthe average room rates and thus pushing uprevenues of industry players (hotels, touroperators, airlines, shipping lines, etc)
The tourism sector is expected to perform verywell in futureand the industry offers aninteresting investment opportunity for long-term investors.
Most of the five-star hotels are seeing morethan 80 % occupancy and some of the lesser-known five-star hotels are overbooked.
-
7/30/2019 Presentation of Hospitality 2
75/88
Incredible India
The Ministry of Tourism is pushing the greatIndian story effectively with its subtle and
charming Incredible India campaign
We have spent $5 million on this campaignsince December 2002 and plan to keep itgoing,Amitabh Kant, the joint secretary atIndias Ministry of Tourism.
According to estimates, another 150,000rooms will have to be added across thecountry in the next five to seven years to beable to meet the increased demand.
At 6,762 rupees, Bangalore had the highestARR across all categories in the 30 cities. NewDelhi was the second highest, registering an
ARR of5,498 rupees. All India ARR increased26.9 % over the previous year. Star categoryoccupancies ranged from 46.3 % to 72.1 %.
The future growth
-
7/30/2019 Presentation of Hospitality 2
76/88
g
Hospitality experts believe that the Indian hotel industry will witness higher than usual growth inthe coming peak season. The good times for the Indian hospitality industry are here to stay, withtop-end hotels experiencing high room occupancy rates even in the lean season.
The lean season has been exceptionally good for us. Our room occupancy rate has been around89 per cent and we are looking at over 95 per cent occupancy for the period September toDecember,says Kapil Chopra, general manager, Trident Hilton, Gurgaon.
There was an increase of15 % in the number of international tourist arrivals in India and 14 % inthe foreign exchange earnings in the first quarter of 2006 as compared to the same period lastyear.
The non-luxury segment in particular has been perking up with more and more investorsspotting the demand supply imbalance, surge in domestic travel and growth in spending amongmiddle-class Indians.
-
7/30/2019 Presentation of Hospitality 2
77/88
HOTEL CHAINS
INDIAN HOTELS
COMPANY LTD EIH LIMITED
ITC HOTELS LTD
ITDC LTD
SMALL CHAINS
HOTEL LEELA VENTURE
ASIAN HOTELSBHARAT HOTELS
-
7/30/2019 Presentation of Hospitality 2
78/88
PUBLIC SECTOR CHAINS
ITDC
HAIINTERNATIONAL HOTEL
CHAINS
MARRIOTTE
STARWOOD
BERGGRUEN HOTELS
EMAAR MGF
LOCALIZED HOTEL
COMPANIES
The Competition
-
7/30/2019 Presentation of Hospitality 2
79/88
The world's leading hotel brands - joiningthe battle
The country has been flooded by some of theworld's leading hotel brands. New brands such asAmanda, Satinwoods, Banana Tree, HamptonInns, Scandium By Hilt and Mandarin Oriental areplanning to enter the Indian hospitality industryin joint ventures with domestic hotel majors.
Unitech, which is setting up two hotels in
Delhi,has already formed a joint venture withMarriott International to run its three new hotelsin India, which are expected to start operationsby 2008. The three new hotels will be located inKolkata, Gurgaon and Noida. We are investingaround 700 crore rupees to set up these hotels,says Unitech managing director Sanjay Chandra.
All other majors including Marriott, Hyatt, Hilton,Accor, Four Seasons etc are briskly reinforcingtheir presence in India.
Indian hotel companies look overseas
-
7/30/2019 Presentation of Hospitality 2
80/88
The movement is not one-way. Cash-rich Indian hotelcompanies have been acquiring properties overseas. TheTata group's Indian Hotels Company is in the process ofacquiring Boston-based luxury hotel the Ritz-Carlton foraround $170 million dollars (around 765 crore rupees). Duediligence is likely to be completed soon. The hotel will beacquired through the companys New York-basedsubsidiary, says RK Krishna Kumar, vice chairman of IndianHotels.
Indian Hotels is looking to strengthen its presence in theUnited States with this acquisition. It has also set upproperties in the Middle East, the United Kingdom andAfrica. Its fierce rival, Oberoi group, has also been active
overseas with properties in Saudi Arabia, Mauritius, Egypt,Australia and Indonesia, and elsewhere.
With growing competition, hotels are under tremendouspressure to generate new lines of revenue with creativeapproaches. With newer players poised to enter the marketone of the key factors that will drive future demand isalternate revenue streams.
Hotels are trying every possible way to generate cash fromalternative sources to achieve economies of scale. Reducingtransaction costs, increasing productivity and promotingtraditional Indian values
-
7/30/2019 Presentation of Hospitality 2
81/88
Looking for new niche Many business hotels in India are
integrating full-fledged spas on theirpremises, originally a main stay of resortproperties.
Another interesting trend in India is thatof mixed-use developments. While theconcept has proved to be successfulabroad, it is still at the embryonic stage inIndia. In this type of development, the realestate would typically include anapartment block or a commercial block(retail or office) along with a hotel.
However, in order to attract more visitors,India still needs to dramatically increasethe number of rooms available.
The challenges to face
-
7/30/2019 Presentation of Hospitality 2
82/88
The lack of adequate infrastructure development. Theairports at the primary gateway cities of Delhi andMumbai have been privatised, and work hascommenced on modernisation. New privately owned
international airports are expected to be commissionedat Hyderabad (2008) and Bangalore (2009), which willgive a large boost to the economic growth of theseareas.
There is still need to improve air connectivity; rail androad connections as well as general infrastructure likepower and water.
The result of the industry's success. As competitionincreases, there is a definite pressure on ARR andoperating margins. The industry market will definitelyshift from being demand-driven to supply-driven andthat the hotel companies will need to revisit theirstrategies and, of course, their prices.
Some players are already preparing for the difficulttimes when the ARRs are expected to fall by 30-40percent in the next 3-4 yearsand then thedistinguishing factor for the hotels will be the offer in itsentirety rather than just the price or the facilities thatthe hotels offer.
-
7/30/2019 Presentation of Hospitality 2
83/88
STRENGTHS
Faster GDP growth
Industrialization. Natural heritage
India as a global player
WEAKNESS
lake of connectivity.
Lake of publicity. Hectic rules
Influence of politicians
Marketing gap.
-
7/30/2019 Presentation of Hospitality 2
84/88
OPPORTUNITIES
Health tourism.
Strong in cultural andnature aspects.
Commercialization of
sports and games.
FDI policy. Mismatch of supply and
demand.
THREATS
Poor domestic tourism
infra structure
Political conditions
Terrorism
Increase in pollution
Entry of new competitors
-
7/30/2019 Presentation of Hospitality 2
85/88
-
7/30/2019 Presentation of Hospitality 2
86/88
Hospitality
Tourism
Infrastructure
Industrialization
Education
Thankyou
-
7/30/2019 Presentation of Hospitality 2
87/88
Thankyou .
Any question???????
-
7/30/2019 Presentation of Hospitality 2
88/88