- AMIT SEKHAR

Renaissance Hotels

History & Introduction

• Incorporated in 1887, The Straits Trading

Company Limited is an investment company.

• It has its stakes in real estate, hospitality,

resources and investments that span the Asia

Pacific region.

• Into the hospitality industry since early 1993.

• Hospitality eventually grew to a network of

13 hotels strategically located in key

destinations across Asia Pacific.

• It has majorly 2 brands of Hotels i.e.

Renaissance Hotels and Resorts International

and The Marque .

• Renaissance Hotels and Resorts

International is the Subsidiary of The

Strait Trading Company Limited having

the base in Sydney, Australia.

“New hotel group committed to creating an

exceptional hotel environment equaled only

by a culture and philosophy centered on

service and genuine value.”

• Renaissance is at the forefront of Business

Class Hotel Brands.

• It includes 4 star and 5 star properties.

Background of the Case

• RHI worked out with XS Real Properties with the intention ofinternational expansion. JVCO known as Renaissance India HospitalityPvt. Ltd.

• XS Real has been prominent property developers in Chennai since 1995.

• RHI owns 51% of JVCO. XS Real Prop. support it in:

- Understanding Local market conditions

-Developing contacts

-Business and Brand building strategies and

-To ensure a secure and prosperous entry for RHI in dynamic Indianmarket.

Reason for entering India

• As a strong regional player with an international hotel brand

Renaissance Hotels cannot afford not to have a presence in India.

• The demand from hotel segment is growing and Renaissance feel

there are huge opportunities to be exploited from Indian market.

• Both the brand targets at the business and luxury segments which

present the largest opportunities in India, where, for now,

company believes, the five-star segments seem to dominate.

Plot of the Market Expansion

• Industry analysis

• Analysis of past, current and future demand and supply

• Challenges

Phase 1

• Region Analysis (Kerala)

• Site Analysis (Kochi)

• Industry Analysis of Kochi

Phase 2• Economic

Development

• Economic Indicators

• Findings

Phase 3

Phase 1: Indian Hotel Industry Analysis

Number of Tourist Arrivals in India (in Millions)

Source: Ministry of Tourism India

5.44 5.16

6.71

8.36

9.95

11.74

13.26

14.38 14.37

17.85

0

2

4

6

8

10

12

14

16

18

20

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

No. of Tourists (In Million)

Average Occupancy & Rate Per Room (2005 – 2010)

0

1000

2000

3000

4000

5000

6000

7000

8000

2005 2006 2007 2008 2009 2010

5300

7000

8000 7800

6200

6800

Average Room Rate (in Rs.)

54%

56%

58%

60%

62%

64%

66%

68%

70%

72%

2005 2006 2007 2008 2009 2010

69%

71%

68.50%

60%

65%

67%

Occupancy % ageSource: CWT Travel Management

Institute , HVS International

Outcome of Phase 1:

• RevPAR (Revenue per available room), ARR and Occupancy Rate risingdue to lack of room availability and even due to increase in average roomrates by better pricing power in the hands of hoteliers.

• Demand is going to exceed supply by 100% over the next few years. Sincethe tourism industry is in the boom phase having the record of 17.85Million tourists in 2010.

• In next 10 years new hotel development will be high in cities like Delhi,Mumbai, Bangalore, Hyderabad where as less focus on Kochi, Agra,Ludhiana, Mysore and Coimbatore.

• Observed that occupancy rate declined by 10 to 15% in premiumsegment in 2008, while budget hotel maintained their previous level.

Challenges in the Study

• The Mumbai Terror Attack in late 2008 had a direct impact

on the hospitality sector, since it had targeted premium

category hotels and foreigners.

• Global Economic crisis in 2008 , most of the domestic

companies drastically reduced their conferences/conventions

and business trips in order to reduce pressure on their

margins.

Remedy to the Challenges

• Since, the given challenges are Uncontrollable and External

in nature . It is suggestible that every company should

maintain a specific financial reserve to utilize it in such

uncertain situations of crisis.

• However, Issues like Terrorism is a safety issue for the

whole nation. The hotels should have intensive security

systems installed. Confidence building measures should

also be undertaken by way of organizing road shows to

ward off unnecessary fear of terrorism from a distance.

Phase 2: Region Analysis and Site Analysis of

Kerala

Earnings from Tourism in Kerala

1 2 3 4 5 6 7 8 9 10 11 12 13

forex in crore 535 706 983 1267155219882641306728533797422245725561

total rev in crore 4500493159386829773891261143131313231734190320432292

0

5000

10000

15000

20000

25000

Rs

(in

Cro

re)

Source: https://www.keralatourism.org/tourismstatistics/tourist_statistics_201320140503101627.pdf

Tourist Hot Spots of Kerala

1. Tea Gardens (Munnar)

2. Kerala Backwaters (Kumarakom)

3. Guruvayur Temple (Guruvayur)

4. Chottanikkara Bhagavathy Temple (Kochi)

5. Athirappilly Waterfalls (Thrissur)

6. Varkala Beach (Varkala)

7. Shri Padmanabhaswamy Temple (Trivandrum)

8. Wonderla Amusement Park (Kochi)

9. Kashi Art Gallery (Kochi)

10. Athirapally Falls (Athirapally)

Kochi

1. Intercontinental Hotel Group made two project :-

Crowne Plaza hotel with KGA group at Maradu.

Mall- Hotel development by the Marriott group.

2. Kochi is responsible for accommodating 60% of

the total tourists from the foreign leisure

segment.

3. Presently , the city has an inventory of 580 rooms

in the premium category.

4. Ayurveda Continues to fuel the growth of Medical

Tourism .

5. The Special Heritage Zone at Fort Kochi

continues to increase its room inventory with a

number of old structures being converted into

heritage hotels.

1. 5-star deluxe category : Hotel casino & hotel

Taj Malabar

2. 5-star category : Hotel Le Meridian,

Renaissance , Taj Residency, Trident Hilton.

3. 4-star category: Gokulam Park Inn, Hotel

Avenue Regent, Presidency Inn.

4. Budget Hotels: The Abad Group had three

hotels , with the ARR of Rs. 1975. And another

one was The Avenue Standard Hotel.

5. Heritage Hotels : Kerala Govt. Declared Fort

Kochi, Mattanchery, Fort Vypeen and Willingdon

Island as heritage zones .

Phase 3: Economic Indicators of Kochi

0 200000 400000 600000 800000 1000000 1200000 1400000 1600000

2001

2011

2021

2026

Projected population of Kochi city

Total Panchayaths-13 Municipalities-2 Cochin Corporation

Source: Center for Population Studies, Cusat

Per Capita Income Of Eranakulam District

Source: http://www.kerenvis.nic.in/Database/Economics_830.aspx.

Department of Economics & Statistics

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2004-05 2005-06 2009-10 2010-11 2011-12 2012-13

36,80040,364

78,351

85,070 86,572

94,392

Per Capital Income(in Rs)

SWOT Analysis of Renaissance HotelsStrengths

- High Quality Development of Services

- Exceptional hotel environment equaled only by culture and genuine value

Weaknesses

- Geographical Presence is not very strong

- Focuses more on Business Customers

Opportunities

- Huge potential to tap Middle level income group in India.

- Growth Opportunities in BRIC Countries

Threats

- Increasing Competitive Pressure

- Hotel Industry : Business Risk

PEST Analysis of Indian Hotel

Industry

Political Environment

1.Industry is getting huge incentives and the stategovernments are supporting the development of thehotels and their growth.

2. Government charges huge amount of tax from theluxury category of hotels and thus has a huge impactwith the political changes that occurs.

3. The Terror attack in Mumbai on Taj and the Oberoi’s

had brought a concern on the faces of the hoteliers.

Economic Environment

1. Guests are willing to pay for the services they getand the more the guests pay , the more the hotel andthe industry would prosper.

2. With the increase in the paying power of the gueststhe need for the good and luxurious hotels hasbecome massive.

3. The per capita income in India has also rose to anew extent enabling the common man to go

to luxurious hotels to have a lunch or a dinner.

Socio-Cultural Environment

1.The hotel markets its business with the help of thelocal festivals and long trusted and cherished Indianculture.

2. “War of meat- Beef and Pork.”

3. Indian customers are highly price sensitive.

Technological Environment

1. Everywhere web based platforms are used forsearch and transactions.

2. India being an IT superpower is capable enoughfor future development of fully technology enabledhotels.

3.The transportation system is still not of

international standards.

Marketing Mix

• Service Mix (Services and Amenities)

1. The Hotel and Resort provides

wide Array of services according to

the guest’s needs and demands. The

Service Basket includes :

Concierge Service, 24*7 Room

Service, Mini Bars, Valet/ Laundry

Service, Business Centre, Wi-fi

Services, Fitness Centre, Pools,

Meeting Lounges, Conference

Rooms, Sauna and Spa, Outdoor

Services, Multi Cuisine Restaurants

and Cafe.

• Price Mix

1. The Hotel Charges the price

according to the BTC as well as

according to the rooms availed.

2. Generally the rate ranges

average from $AUD164 to

$AUD284* per night per person.

Depending upon the Room type.

3. The Hotel also have strategy to

charge group rates . If there are

five or more rooms availed.

* Because rates may vary outside of

the range

• Place Mix

80 properties with over 13,000

rooms under management across

25 locations.

Prime Locations in Asia Pacific

regions like:

Hong Kong

Australia

Singapore

Thailand

China

New Zealand

• Promotion Mix

1. Free! All children under 12

years stay free of charge when

using existing beds.

2. International and Regional

Trade shows and events- access to

leisure and corporate

accommodation programs.

3. Different slab rates while

booking from different portals like

Booking.com, Expedia.com

4. The Hotel Promotes itself under

the title

“Stay Like a Local”

Segmentation ,Targeting and Positioning

Geographic

Demographic

Psychographic

Asia Pacific Region

High Income Group

Outdoor and Culture Oriented Customers

Positions itself as a property with high Global Standards

along with pro-standardizations and certifications.

Exceptional hotel environment induced only by culture and

philosophy centered on service and genuine value.

Demand Estimation of Tourism Market in Kerala

for the benefit of RHI

Year

Foreign Tourist Arrivals

(5% Annual Growth)

Domestic Tourist Arrivals

(3.5 % Annual Growth)

2010 309000 6900000

2011 324000 7141000

2012 340000 7391000

2013 357000 7650000

2014 375000 7918000

2015 394000 8195000

2016 413000 8481000

2017 434000 8778000

2018 456000 9086000

2019 479000 9404000

2020 503000 9733000

2021 528000 10073000

2022 554000 10426000

Tourist Traffic Projection (2010-2022)

Source: http://tourism.gov.in/CMSPagePicture/file/marketresearch/statewise20yrsplan/Kerala.pdf

Growth Strategy for Renaissance

(Model of Growth)

1. EXPANDING THE

TOTAL MARKET

2. DEFENDING THE

MARKET SHARE

3. EXPANDING THE

MARKET SHARE

•The company should

expand its business in the

BRIC countries where there

is still huge potential to

explore the markets and the

customers.

•Enhancing Branding Skills,

Hospitality Skills and

Positioning in the market.

•Designing Room Booking

Packages and giving

promotional offers to the

business class.

•Focus on the Occupancy

Rate so as to increase the

more number of guests in

the property.

•The more the services

consumed- the more will be

market share.

Findings of the Study

• Tourism Affected due to Economic Slowdown and Mumbai Attacks.

• Cochin expected the 0.2 million Volvo Ocean Race tourists but terror

attacks reduced inbound foreign tourists. Owing to this hotels reduced tariff

rated by 10-15% during its peak.

• India, Hot Destination for hotel chains is looking for growth. WTTC of

India ranked INDIA on 18th in business travel and estimated it will be in

top 5 in next decade.

• Indian Hotel Industry adding 60,000 quality rooms by next coming 2 years.

• Government approved 300 hotel projects , half of it were of luxury range.

• More than 50 international budget hotel chains moving to India.

• Kochi had the most number of new hotel developments .By 2012, Kochi wasestimated to have 4% of the overall supply of rooms in 5-star deluxe, 5-star and 4-star category.

• Kochi is constantly developing city. Kochi Corporation will have populationincrease of 10% per decade. Ernakulam district had highest per capita income inKerala of Rs. 40,364.

• Ernakulam district is among leading in terms of tourist arrivals, transportsystem(only city connected by roadways, airways and a seaport. Hence it’s aGateway to Kerala.

• Kochi has witnessed a shift from being a transit and a leisure destination to abusiness destination. MICE segment is becoming major source of revenuesgeneration.

• The Hotels in the Premium segment had an average occupancy of 54% over theyear.

• International Players were adding 1,081 rooms in the premier category.

Conclusion

Since Kochi is considered as a Business destination , it has a

huge potential of tourists. The demand and supply vividly

shows the need for more rooms in 5 star deluxe, 5 star and 4

star category. It has huge opportunity for the Renaissance to

open up its operations along with the competitive

environment.

Within the limit of study it is possible conclude that

Renaissance India with its years of experience can carve out its

portion of hospitality in Kochi Market.