Hotel Industry Sakshi

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Introduction to Hotel Industry and Tourism

Over the last decade business opportunities in India had intensified and elevated room ratesoccupancy levels in India. Even budget hotels are charging USD 250 per day. 'Hotel Industry inIndia' success story is only second to China in Asia Pacific. The World Travel and Tourism

Council, says that India ranks 18th in business travel and will be among the top 5 very soon.India's big success stories includes the new model for development and growth; a model that isuniquely made.

Indian Hotel Industry's room rates are most likely to rise 25% annually and occupancy to rise by80%, over the next two years. 'Hotel Industry in India is gaining its competitiveness as a costeffective destination. The 'Hotel Industry' is likely to add about 60,000 quality rooms, currentlyin different stages of planning and development which would be ready by 2012.

MNC Hotel Industry giants are initiating for Joint Ventures to earn their share of pie in the race.

The Indian Government has approved 300 hotel projects, where half are for the luxury range.Analysts says that the manpower required by the hotel industry has increased from 7 million in2002 to 15 million in 2010. More and more IT Professionals are moving into the Metro cities asthe USD 23 billion software services sector pushing into the Indian economy. Indian HotelIndustry is set up to grow by 15% a year. In 2010 as the Delhi capital city of India hosted theCommonwealth Games there were more than 50 international budget hotel chains moving intoIndia. One of the major reasons for the increase in demand for hotel rooms in the country is dueto the boom of information technology, telecom, retail and real estate. India's increasing stockmarket and new business opportunities are always been attractive foreign investors and corporatetravelers to look for business opportunities in the country. From 167 countries, today India has

finally made its mark on the world travel map.

'Hotels in India' have supply of 110,000 rooms. According to the tourism ministry, 4.4 milliontourists visited India last year and at current trend, demand will soar to 10 million in 2010 - toaccommodate 350 million domestic travelers. 'Hotels in India' has a shortage of 150,000 roomsfueling hotel room rates across India. With tremendous pull of opportunity, India is a destinationfor hotel chains looking for growth. The World Travel and Tourism Council, India, data says,India ranks 18th in business travel and will be among the top 5 in this decade. Sources estimate,demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels inmetro cities allot same room, more than once a day to different guests, receiving almost 24-hour

rates from both guests against 6-8 hours usage.

Link: http://business.mapsofindia.com/india-industry/hotel-industry-in-india.html

: http://www.indianmirror.com/indian-izndustries/hotel.html

Hospitality Market
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Hospitality has a very vast market. All those who have stayed in hotels or have plans to stay inhotels or any other lodging establishment can be put under hospitality market. Hence all travelersincluding tourists, visitors, businessmen, leisure travelers, pilgrims and company executives etc-can be the hospitality market. Depending upon the purpose of travel people can be classifiedunder either commercial hospitality market or leisure hospitality market.

Classifying Lodging PropertiesBecause of constant changes, staying current just with who is offering what and where can bedifficult for the guest. The necessity for classifying hotels came about when hotels began todiffer from one another enough to appeal to different group of people. Long gone are the dayswhen the guest had two choicesluxury hotels or budget hotels. Hotel entrepreneurs such asKemmons Wilson created a third option when they built facilities intended to serve middle-classfamilies. These property classes had clear-cut boundaries in the beginning. Potential guests knewthey could expect more services at a luxury hotel than a budget motel, and something in betweenat a midpriced hotel.As the economy in general boomed and room supply increased, hoteliers focused on setting

themselves apart from the crowd by offering specialized accommodations. No longer just a placeto sleep, hotels were appealing to conventioneers, business groups, and special-interest groups.Descriptive hotel classifications helped potential guests locate suitable lodgings, and as such,became a valuable marketing tool.As this diversity flourished, so did competition for customers and brand loyalty. As propertiescontinually upgraded their services, boundaries between the descriptive labels blended into oneanother. Old systems of classification were not as clear. For instance, the Marriott brand, oncerecognizable as a midpriced hotel, began to include hotels classified as economy (FairfeildsInns), business (Courtyard), extended-stay (Residence Inns), all suite (Marriott Suites), andupscale (Marriott Hotels and Resorts). Other chains also began to cater to a myriad of guests from business to pleasure travelers and from individuals to groups. Consequently, lodging

classification became more complex. Facilities were then grouped according to size, amenitiesoffered, price, type of guest (business or pleasure), or type of hotel (luxury, full-service, oreconomy, extended stay to name a few). Many facilities fit two or more categories, and did so inorder to attract different types of guests.

Motels and hotels are the most widely recognized forms of lodging. They can be found almostanywherefrom the center of a huge metropolis to the streets of a small town. For the most part,hotels and motels attract transient guests who need a place to stay for a night or two whiletraveling for business or pleasure. Hotels that specialize in residence or extended-stayaccommodations serve guests looking for more permanent lodging.

Hotels.From the age of grand hotels to the troubled 1990s, the hotels has been the most fabled type oflodging. Varying greatly in style and service, most hotels share a similar structure. Theygenerally have more than two stories with guest rooms located along common hallways. Guestsrooms usually have a bed, bath, telephone, and television. In addition to housekeeping, servicesmay include luggage assistance, access to a business center for use of a photocopier or faxmachine, and availability of recreation facilities, restaurants, or bars. Hotels are most oftenlocated in or near business districts, travel destinations, and airports.


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Motels.

Motels offered fewer amenities and were less expensive to build and operate than downtownhotels. The lower rates, basic accommodations, roadway locations, and lack of a central lobbywere well-suited for the new overnight automobile traveler.

Motels are generally less formal than hotels. Guests usually carry their own luggage, and freeparking is available, often adjacent to the guests room. Many motels provide swimming poolsand restaurant service. Guests who prefer to save money may opt for a budget motel that hassmaller rooms, no pool, and fewer amenities.

All-Suite Hotels.Unlike regular hotels, all-suite hotels rent only suites, often combing living space with kitchenfacilities, or a bedroom section with an attached parlor. To keep rates competitive with otherhotels, many all-suite hotels have small lobbies and no public meeting rooms. Some do not offerrestaurant or bar facilities. As the market has expanded, through, some all-suite hotel hotels havereintroduced public areas and limited foodservice. Amenities such as free breakfast, cocktail

hour, and access to an on-premise health club keep Summerfield Suites Hotel in San Jose,California, at a 98 percent average occupancy rate.

Convention Hotels.Convention hotels provide meeting and banquet facilities for large groups (usually five hundredor more) booked in their guest rooms. Because they target groups, these hotels need large lobbiesto accommodate group arrivals. They also have a high percentage of double-occupancy roomsand emphasize food and beverage services. Convention hotels may also offer concierge floors tocater to individual guests needs.

Levels Of ServiceAt one time, hotels differed distinctly by the services they offered. Recognizing that all guests donot expect the same services nor have the same amount to spend on lodging, the hotel industryoffered a variety of services at different prices aimed at particular markets (groups whosemembers have similar expectations and budgets). Familiarity with these labels is helpful inunderstanding guest perception as the transition is made from one system to another. Also,classifications short history shows how dynamic the industry is and how important service is at

all levels. Classifying hotels by service contains four broad categories: luxury, full-service,limited-service, and economy

Luxury Hotels And Resorts.Traditionally, independent hotels offer the finest accommodations money can buy. Luxuryproperties are descendants of the grand hotels, featuring expensive, lavishly decorated publicareas and the high levels of customer service. They offer the finest cuisine and the full range ofamenities from shampoos and hair dryers to private Jacuzzis and fireplaces. Whether parkingyour car, carrying your luggage, or delivering room service, staff membersincludingconcierges, bell persons, front desk attendants, and wait staffare well-trained and efficient.Luxury resorts offer the finest entertainment and recreational facilities available. A part ofIntroduction to Hospitality Industry ICHM Page 29


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luxury properties attraction is their ability to perpetuate an exclusive image by charging highrates. Hotels in the category include Four Seasons and Ritz-Carlton properties, the Waldorf-Astoria, and the Trump Plaza in New York.Royal Sonesta, a deluxe hotel in New Orleans, Louisiana, spends an estimated $1.5 millionannually on guest service. Their guests must find such service pleasing with an average

occupancy of 75 percent in 1992, the hotel grossed $25 million in sales.Full-Service Properties.Featuring properties operated by Hilton, Hyatt, Westin, and Marriott, this category of hotelsattempts to offer a wide range of services at lower rates than luxury hotels. Full-service hotelsgenerally offer clean, well-decorated hotels with meeting and restaurant facilities, a limitedroom-service menu, and a variety of recreational activities. Although not as extravagant as theluxury properties, full-service hotels generally have large, attractive public areas. The ratio ofservice of the concierge or other staff may be limited to designated VIP floors.Some all-suite and extended-stay hotels with good-sized public areas also fit into the full servicecategory, with amenities like in-room coffeemakers, microwave ovens, and refrigerators.

Limited-Service Properties.Lodging establishments like Days Inn, Hampton Inn, and Quality Suites & Inns were onceconsidered limited-service facilities. Usual offerings included simple, clean rooms with atelephone, free cable television, swimmingbut some offered a few extra amenities such as complimentary shampoo and lotion to distinguishthemselves from the economy properties. The remaining all-suite hotels fit into this categorybecause of their limited services and amenities, and small public areas. The Days Inn in FortPierce, Florida, has a guest mix of 50 percent business and 50 percent leisure. As the secondmost successful highway facility in 1992, its management renovated its public spaces includingtwo meeting rooms.Economy Properties. Introduction to Hospitality Industry ICHM Page 30Once offering only the basic bed and bath facilities, economy properties focus on more values

for the dollar with clean and low-priced lodging. Economy properties generally did not offermeeting and recreational facilities or food and beverage services, with the possible expectation ofa vending area featuring prepackaged snacks and video games. Staff was limited to only thoserequired to provide basic front office services, security, and housekeeping services. Generally,the smaller guest rooms of the economy hotels offered one or two double beds and a separatebathroom equipped with no more than towel and soap. Properties in this category include EconoLodge, Motel 6, and Daystop. Economy Lodging Systems management company has positionedKnights

Link : http://ichm.edu.np/files/download/Introduction%20to%20Hospitality%20Industry.pdf

The hotel industry in India is going through an interesting phase. One of the major reasons forthe increase in demand for hotel rooms in the country is the boom in the overall economy andhigh growth in sectors like information technology, telecom, retail and real estate. Rising stock
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market and new business opportunities are also attracting hordes of foreign investors andinternational corporate travellers to look for business opportunities in the country.

Hotel industry is also inextricably linked to the tourism industry and its growth has added fillipto the hotel industry. And with Conde Nast Traveller ranking India as the fourth most preferred

travel destination and Lonely Planet selecting the country among the top five destinations from167 countries, India has finally made its mark on the world travel map.

The arrival of low cost airlines and the associated price wars have given domestic tourists a hostof options. The opening up of the aviation industry in India has led the way for excitingopportunities for the hotel industry as it relies on airlines to transport 80% of internationalarrivals.

Moreover, the governments decision to substantially upgrade 28 regional airports in smaller

towns and privatisation and expansion of Delhi and Mumbai airport will improve the business

prospects of hotel industry in India. Substantial investment in tourism infrastructure is essentialfor Indian hotel industry to achieve its potential. The upgrading of national highway connectingvarious parts of India has opened new avenues for the development of budget hotels here.

Link: http://www.financialexpress.com/news/hotel-industry-is-poised-for-a-new-growth-phase/286542

The Indian hospitality industry has emerged as one of the key industries driving growth of theservices sector in India. The fortunes of the hospitality industry have always been linked to theprospects of the tourism industry and tourism is the foremost demand driver of the industry. TheIndian hospitality industry has recorded healthy growth fuelled by robust inflow of foreigntourists as well as increased tourist movement within the country and it has become one of theleading players in the global industry.

Trends in the Industry:

1. Budget Hotels as the next trigger2. Medical Tourism3. New avenues of growth4. Shifting focus to Tier II and Tier III cities

5. Marketing Strategies6. Emergence of Mixed Land Usage7. Huge spurt of international brands8. Innovative operating models

The Indian hotel industry is highly fragmented with a large number of small and unorganized
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players accounting for a lion's share. The major players in the organized segment include IndianHotels Company Ltd, Hotel Leela Venture Ltd, EIH Ltd, ITC Hotels and ITDC.

Link: http://www.researchandmarkets.com/reports/1948962/hotel_industry_in_india_20112015

The Growing Indian Hospitality IndustryIndia has the potential to become the number one tourist destination in the world with thedemand growing at 10.1 per cent per annum, the World Travel and Tourism Council (WTTC)has predicted.

The WTO (World Travel Organisation) predicts that India will receive 25 million tourists byyear 2015.

Major attractions in India are the world's highest mountains, miles of coastline with excellentbeaches, tropical forests and wildlife, desert safari, lagoon backwaters, ancient monuments, fortsand palaces, adventure tourism and, of course, the Taj Mahal.

India currently has over 200,000 hotel rooms spread across hotel categories and guest-houses andis still facing a shortfall of over 100,000 rooms (source: FHRAI).

The country is witnessing an unprecedented growth in hotel constructions and will be addingalmost 114,000 hotel guest rooms to its inventory over the next five years. (source: HVS)

The earlier setbacks in global tourism have strengthened the Department of Tourism's resolve topromote India's tourism through aggressive marketing strategies through its campaign 'IncredibleIndia'.

The 'marketing mantra' for the Department of Tourism is to position India as a global brand totake advantage of the burgeoning global travel and trade and the vast untapped potential of Indiaas a destination.

The Indian Hospitality IndustryAn Overview

The current scenario Existing hotel rooms in India: 202,963, source FHRAI Revenue of the Indian hotel industry FY 2009-10: US$ 137.36 (INR 47,889.03 crore) 30% of this revenue i.e. US$ 41.2 million (INR 14,366.7 crore) went back into the market inFY 2008-09 as operating expenses

Number of hotels and restaurants in India:

Hotel category No. of Hotels No. of Rooms

5 star deluxe/5 star 165 43, 965
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4 Star 134 20, 770

3 Star 505 30,100

2 Star 495 22,950

1 Star 260 10,900

Heritage 70 4,200

Uncategorised 7,078 -

Total 8,707 1,32,885

Restaurants 12,750

What the future holds:

Despite the global recession, inflation, terrorism and other factors, the overall outlook forthe Indian hospitality market is optimistic and will remain so says HVS

India remains the second fastest growing economy in the world and the economic growthof the country is at 7.1% of the GDP as declared by Mr. Pranab Mukherjee, FinanceMinister, India.

The Tourism Ministry, Government of India, has set a target of 10 million tourists toIndia by 2010

The WTO (World Travel Organisation) predicts that India will receive 25 million touristsby year 2015

Projected investments years 2009-015

Rooms being built across hotel categories: 114,000, source HVS

Investment in rupees: INR 40,463.10

Link: http://www.hostsindia.in/index.php?option=com_content&task=view&id=18&Itemid=32

The Indian Hospitality Sector is witnessing one of its rare sustained growth trends. Hotelindustry is inextricable linked to the tourism industry and the growth in the Indian tourismindustry has fuelled the growth of Indian Hotel Industry.A major reason for the demand for hotel rooms is the underlying boom in the economy,particularly the growth in the information technology enabled services and informationtechnology industries. Rising stock indices and new business opportunities are also attractingforeign institutional investors, funds, equity and venture capitalist.

The financial year 200809 was an unforgettable one for the Indian tourism industry with theMumbai terror attacks and the global economic downturn affecting the industrys performance.The Hotel Industry, too, observed an overall decline in occupancy and revenue in most cities inIndia.Foreign Direct Investment in India:The purpose of the Foreign Direct Investment Policy in India is to invite and encourage foreignInvestment in India. Since 1991, liberalized economic policies have transformed India, theworlds, largest democracy, into a shine of global Investment
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For the purpose of FDI in an Indian economy, the following categories assume relevance:

Sector in which FDI is prohibited Sectors in which FDI is permitted

Investment under Automatic Route; and

Investment under Prior Approval Route i.e. with prior approval of the government throughthe Foreign Investment Promotion Board (FIPB).

In the Hotel Industry Sector, Foreign Direct Investment (FDI) has been permitted up to 100%under the automatic route. For foreign technology agreements, automatic approval is granted if:

1. Up to 3 % of the capital cost of the project is proposed to be paid for technical consultancyservices.

2. Up to 3 % of the net turnover is payable for franchising and marketing/publicity fees.

3. Up to 10 % of gross operating profit is payable for management fees, including incentivesfees.

Regulatory Regime:Classification of Hotels:

1. Star Category Hotels: 5 Star Deluxe, 4 Star, 3 Star, 2 Star, 1 Star.

2. Heritage Category Hotels: Heritage Grand, Heritage Classic & Heritage Basic

Approval of Hotel at the Project Stage:

1. The Ministry of Tourism will approve hotels at project stage based on documentation.Project approval is given to a 1, 2, 3, 4, 5 Star Hotels and Heritage Basic Category. Afterbecoming operational the project may seek classification under 5 Star Deluxe/ HeritageClassic/ Heritage Grand category if they fulfill the prescribed norms.

2. Project approval will be valid for 5 years. The project approval would cease 3 months beforethe date of expiry of project approval or from the date the hotel becomes operational, evenif all its rooms are not ready. The Hotels have to apply for classification within 3 months ofcommencing operation.

Taxation:Tax Holiday in respect of Hotels:

A deduction of an amount equal to 100 % of the profit and gain for the first 5 consecutiveyears to an undertaking deriving profits from the business of a hotel or from the businessof building, owning and operating a convention centre, in specified areas, if such hotel /

convention centre is constructed and has started or start functioning before 31st

July,2010.


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A deduction of an amount equal to 100 % of the profit and gain for the first 5 consecutiveyears to an undertaking derived profit from the business of a hotel located in the specifieddistrict having a World Heritage Site. If such hotel is constructed and has started

functioning before 31

st

March, 2013.

Recent changes in Fringe Benefit Tax:

Finance Bill, 2009 has proposed to abolish Fringe Benefit Tax with effect from 1st

April 2009.Fringe Benefit Tax is a tax payable by the employer on benefits (provided or deemed) thatemployees received as a consideration of their employment. Fringe benefit tax was applicable onseveral benefits such as travel and tour, entertainment, provision of hospitality, conference, salespromotion including publicity, use of hotel, boarding or lodge, aircraft, festival celebration, useof health club, scholarship, free or concessional ticket for private journey, etc.The abolition of the FBT has become major advantage to the Hospitality industry.

Opportunity & Challenges:

Opportunity:In the Financial Year 2008-2009, Indias GDP recorded a growth rate of 6.7 % according to theCentral Statistical Organization. The GDP growth in the 2008-2009 can be attributed to a strongservice sector, steady foreign direct investment, as well as the government policies that helped tosustained growth rate.

The market size of Hotel industry has more than doubled from about USD 1 billion in 2004 toUSD 2.3 billion in 2008. It is estimated that India is likely to have around 40 international hotelsbrands by 2011.The growth of the Hotel Industry is largely due to the rising business opportunities, strong

economic performance and cross border investments. India has currently base of 110,000 hotelsrooms and still face the shortage of 150,000 rooms. There is a mismatch between demand andsupply, leading to higher occupancies and average room rates.Occupancy rates across India have improved from 52 percent in 1999 to 67 percent in 2007-2008. Average Room Rates across cities have improved from USD 51.6 to USD 76.4 in the sameperiod.Despite the global economic recession, foreign tourist arrival increased to 5.37 million in 2008from 4.98 million in 2007.Sports events like IPL and the Commonwealth games have a potential to create demand for bothTourism and Hospitality industry in India.

Challenges:

Statistical DataIndian Hotel IndustrySize of the Hotel Industry USD 3.8 Billion

Share of premium segment in the overall hotel market(2008)

USD 2.3 Billion


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Expected growth rate from 2008 to 2009 12 percent

Key Players Indian Hotels, Leela Ventures, ITCHotels, Oberoi Hotels, Bharat Hotels,ITDC, Kamat Hotels.

RoomsCurrent SupplyCurrent Demand

About 110,000 hotels roomsAbout 150,000 hotels rooms

Link: http://www.newdevtprojects.com/ilo/iloPdf/indianhotelindustry.pdf

Market Size

The amount of foreign direct investments (FDI) inflow into the hotel and tourism sector duringApril 2000 to January 2013 was worth US$ 6,561.78 million, as per data provided byDepartment of Industrial Policy and Promotion (DIPP), Ministry of Commerce.

Link: http://www.ibef.org/industry/tourism-hospitality-india.aspx

Major Developments & Investments

Egypt has initiated talks with the Tata Group to set up a hotel chain in the Africancountry

InterContinental Hotels Group (IHG) has signed 13 new hotels in India in 2012, boostingits existing pipeline of hotels in the country to 47

Marriott International plans to open 52 more properties in India over a period of fouryears

Link: http://www.ibef.org/industry/tourism-hospitality-india.aspx

ICRA expects the Indian Hotels industry to finish 2011-12 on a weaker note with subduedpricing power eroding margins. Although some revival in operational metrics was witnessedduring late 2010-11, the industry continued to lack the pricing power to drive out of its currentstagnancy.

Globally weak macroeconomic scenario, the European sovereign debt crisis, geo-politicalturmoil in the Arab countries, high interest rates, inflation and a muted domestic corporateperformance during the current fiscal (year to March 31, 2012) have sapped the industrys ability

to sustain inflation adjusted Average Room Realizations (ARRs).

Muted ARRs and high costs have led to one of the weakest nine month (9M) periods (April-December-11) in over five years.
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With uncertainty continuing to cloud the near term, wavering business/consumer confidence anda sluggish economy, there is no significant trigger for the industry during the next two-threequarters. While the start of the next season (in Q3, 2012-13) may bring some relief to theindustry in some specific markets, we expect real traction to return to the industry only by 2013-14; overall, we expect this to be a slow and long slog to recovery.

We expect ARR growth during the current fiscal to be limited to around 5%, followed by around5-8% during 2012-13. In the current inflationary environment, RevPAR growth of around 6-7%is required to maintain profitability levels.

All the same, we remain optimistic on the long term growth story for the Indian hospitalityindustry. The improving demographics, rising affluence and the current under penetration throwup significant growth opportunities for the hospitality sector. This is further reinforced by theIndia-centric growth strategy several global hotel majors are following.An uneasy calm prevails in the global markets; consumer confidence lowOver the past few quarters, the global economy has been affected by various natural, social and

economic headwinds; the earthquake in Japan during March-2011, the floods in Thailand duringOctober-2011 or the civil unrest in the Arab countries and most importantly the ongoingeconomic crisis in the EU. Despite these upheavals, foreign tourist arrivals (FTA) to India grewby 8.8% to 62.9 lakh tourists while international tourist arrivals grew by 4.4% to 980 milliontravellers during CY2011 (Calendar year - Period ending December-11). The pace was howeversignificantly slower than the 11.8% (FTA) and 7.0% (international travellers) of the previousyear. Growth in arrivals to Africa and the Middle East was weak while arrivals to Europe, Asia,the Pacific and Americas led the international traveller growth during CY2011. Withstrengthening regional business ties, South and South-East of Asia witnessed strong intra-regional demand during the period.

As is the case with industries that depend on discretionary spending, the performance of thehotels industry is intrinsically knit with the economic growth. However, we have in the pastwitnessed periods of decoupling between the hotels industry and GDP growth; particularlyduring periods of recession and the early phases of recovery. During the economic down cycle,the faster pace of deceleration in the hotels industry, as witnessed during 2009, can take theindustry to deep troughs. While the climb during the initial phases of recovery is faster than theeconomic revival, a strong underlying economy is a pre-requisite for a sustained recovery.

Domestic demand continues to be relatively healthier; Visa on Arrival (VoA) eases travel toIndiaAs witnessed during the previous fiscal, domestic travel continued to support demand across theIndian sub-continent during the current fiscal also. With a weaker rupee undermining pricingpower in the Indian subcontinents, cost of outbound travel has increased by over 12% during thepast twelve months alone. This would have supported intra-regional travel to an extent.Additionally, this is expected to have driven higher inbound traffic into the country. Despiteincremental room inventory in several markets, occupancies sustained at previous year levelsduring YTD December-11 for some markets, while certain heavily supplied markets like theNational capital Region (NCR) witnessed a 5-10% decline in occupancy.


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Certain measures like the VoA scheme by the GoI has a long term positive impact on drawingtravellers. At present , India has extended the VoA facility to nationals of 13 countries includingFinland, Japan, Luxembourg, new Zealand and Asian countries of Singapore, Cambodia,Indonesia, Vietnam, the Philippines, Laos and Myanmar. Contemplation on adding over 14 newcountries including Malaysia, Thailand, Brunei, Spain, France, Germany, Sweden, Russia,

Ukraine, Kazakhstan, Brazil and South Africa to this scheme is also underway. Since this facilitywas introduced in January 2010 (and the list expanded in January 2011), over 6,500 VoA s havebeen issued in 2010 and over 12,000 VoAs in 2011. This has facilitated easy travel and planning

at short notices for tourists.

Link: http://icra.in/Files/ticker/Indian%20Hotels%20Industry%2030032012.pdf

At present hotel industry in India has entered the global arena, supported by its potentialeconomy and the growth of India tourism.

From builders, contractors, real estate companies, real estate developers have most branded

hotels in India are at the top end of the market, the hotel industry is top heavy. A number ofcompanies are addressing the requirements of the increasing domestic market for moreeconomical hotels, hotel projects, 5 star hotel construction, 5 five star hotel India, hotelaccommodations and luxurious hotels.

The Domestic Factor for Hotel Development

Among the excellent features of the Indian hotel industry is the overwhelming volume of thedomestic market. As a rule hotels receive double the number of domestic clients thaninternational clients.

India is likely to witness a steady and continued trend of boom in expenditure, fuelled by higherdisposable incomes. This is excellent news for the hotel industry as higher disposable incomesenhance the concept of traveling.

A healthy domestic demand and sustained foreign tourist inflow shall facilitate popular leisuredestinations in absorbing potential hotel developments, 5 star hotel construction, 5 five star hotelIndia as a hotels projects thus continuing the current trend of value appreciation.

Several hotel projects in the Indian Hospitality sector have been steadily coming up with respectto the viability of hotel business in India. Nevertheless, the real estate and hotel industry of Indiahave also been aligning their roadmap in quite a rhythmic way.

Opportunities in Tier-II and Tier-III cities too are looking great. Analysts estimated that there areabout 16 cities like Jaipur, Agra, Goa, Pune, Ludhiana, Chandigarh, Ahmedabad and Cochin thathave potential for a strong hotel industry.

India is a very famous holiday destination in the world and provides plenty amenities as far aslodging is concerned. It has state of the art hotels to cater to its ever booming travel and tourismindustry. Hotel Development India have popped up in India over the last few years to cater the
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accommodation needs of everybody. India is dotted with hotels that fit in every budget. Thereare hotels ranging from luxury hotels to economy hotels.

Metro cities markets have witnessed strong demand from the extended stay and domesticbusiness travel segments. The surfacing of relatively new feeder markets and steady demand for

quality lodging across most business destinations from niche markets, like the extended staysegment, ensures that hotels now have a base demand that guarantees certain minimum level ofoccupancy. This type of demand is advantageous to hotels because it provides a base level ofhotel reservation, hotel accommodations and luxurious hotels over an extended period thatusually includes weekends and slow seasons.

The International Factor in Hotel Era

Even though the international market is considerably smaller than India's domestic market, italso shows potential for growth. Tourism in India including hotel accommodations also benefitsfrom the stronger economy of India's major source markets - the United Kingdom and the United

States. Presently business travel dominates the international arena.The global financial crisis may cause a temporary depression in demand for hotel rooms in India,but foreign hotel chainsbetting on the countrys enduring growth say their expansion plansremain on track.

People the world over are nervous because of the financial crisis, and investments are the last

thing on their mind, said Ray Stone, senior vice-president of sales and marketing at Accor AsiaPacific. IN INDIA THAT IS DESTINED TO EXPAND, IT WOULD BE UNWISE NOT TOINVEST.

Hotel Services

Hotel services, their number and the amount of people engaged in them depends on the size of thehotel as well as on its status. Typically, the basic hotel services include reception guests, roomservice, food service, including restaurants in the hotel, and security. Sometimes in the smallhotels the duties of security, a cook and a cleaner are performed by the owner himself.

Other services offered to guests of the hotel, can be considered as bonuses. These are the laundry

service, massage room, fitness gyms, conference rooms, lock boxes for valuable assets and manyother things. These services can be included in the price of the room or paid separately.

Recently, the hotel industry trends towards separating the services sector between hotels. Manyhotels nowadays offer recreation for a particular group of tourists. Popular family hotels, hotelsfor the newlyweds and hotels for people with disabilitieseach of them has its unique set ofservices. For example in the family hotel clients are offered services of child care and game
http://www.pacificacompanies.co.in/real_estate_india/hotels-projects-india/5star-ahmedabad/hotels_ahmedabad.htmlhttp://www.pacificacompanies.co.in/real_estate_india/hotels-projects-india/5star-ahmedabad/hotels_ahmedabad.htmlhttp://www.pacificacompanies.co.in/real_estate_india/hotels-projects-india/hotels.htmlhttp://www.pacificacompanies.co.in/real_estate_india/hotels-projects-india/hotels.htmlhttp://www.pacificacompanies.co.in/real_estate_india/hotels-projects-india/5star-ahmedabad/hotels_ahmedabad.htmlhttp://www.pacificacompanies.co.in/real_estate_india/hotels-projects-india/5star-ahmedabad/hotels_ahmedabad.html


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rooms. In the hotel for the newlyweds there is a special service for weddings. In the hotel fordisabled persons there is medical support service.

Among the services that are indirectly related to the customers, that means that they are notinvolved in direct care of guests, are marketing service and bookkeeping of the hotel.

Reservation, once considered one of the main hotel services, today has become an anachronism.Nowadays, in order to book a hotel clients use services of the major tour operators. Onlinebooking through the numerous tourist online services is getting increasingly popular.

Often the responsibilities of some hotel services are assigned to the other companies. In theUnited States and Western Europe the network of special hotel firms, which offer their services tothe hotels, is widely developed. Typically, if the hotel uses the services of such companies, theprice of the rooms will be slightly lower than in a hotel that provides a full range of hotel serviceson its own.

Link: http://www.city-of-hotels.com/165/hotel-services-business.html

Luxury Hotel Concierge Services

Local results for Extended Stay in your cityHyperLocal search for Extended StayHelloLocal.com

Concierge services are normally found in higher end hotels. Using hotel concierge services is likehaving a personal assistant. The goal of the concierge is to anticipate problems that hotel guestsmay encounter and find solutions. For business and leisure travelers who are in a rush, a hotelconcierge can save them both time and energy in an unfamiliar city.

Basic Concierge Services

Basic hotel concierge services involve giving hotel guests information, such as restaurantrecommendations, city maps and directions. Concierges can also tell hotel guests what is going onin town. If the downtown area will be closed for a holiday parade, the concierge should know andtell the guests, as well as suggest alternative ways to avoid traffic.

Concierges may also offer additional services. For example, business travelers often need to lookpolished during an important meeting, and concierge services can help in emergency situations.Some hotel concierge services keep a stash of extra socks, buttons, pantyhose, ties, cuff links,stain remover and other last minutes fixes for any wardrobe malfunctions.

The hospitality service
http://www.city-of-hotels.com/165/hotel-services-business.htmlhttp://clicks.superpages.com/ct/clickThrough?SRC=vertgoogle&target=SP&PN=1&C=Hotels&PGID=dalas106.8083.1371309882719.25822944606&ALG=111&TS=bulls&ACTION=log,red&TR=1&bidType=CLIK&relativePosition=5&position=5&PGSN=E0&MT=D&DID=yfrMVs2QL5wwfrFN4WSgow%3D%3D&acid=fILpKhYIQ8I6be3ehlerxg%3D%3D&cid=7051718&bid=0&EM=0&MDID=OCd9kCDtkIw%3D&RS=0.6375677&FL=url&TL=off&LOC=http://www.HelloLocal.com/supermedia/?q=Extended%20Stayhttp://clicks.superpages.com/ct/clickThrough?SRC=vertgoogle&target=SP&PN=1&C=Hotels&PGID=dalas106.8083.1371309882719.25822944606&ALG=111&TS=bulls&ACTION=log,red&TR=1&bidType=CLIK&relativePosition=5&position=5&PGSN=E0&MT=D&DID=yfrMVs2QL5wwfrFN4WSgow%3D%3D&acid=fILpKhYIQ8I6be3ehlerxg%3D%3D&cid=7051718&bid=0&EM=0&MDID=OCd9kCDtkIw%3D&RS=0.6375677&FL=url&TL=off&LOC=http://www.HelloLocal.com/supermedia/?q=Extended%20Stayhttp://clicks.superpages.com/ct/clickThrough?SRC=vertgoogle&target=SP&PN=1&C=Hotels&PGID=dalas106.8083.1371309882719.25822944606&ALG=111&TS=bulls&ACTION=log,red&TR=1&bidType=CLIK&relativePosition=5&position=5&PGSN=E0&MT=D&DID=yfrMVs2QL5wwfrFN4WSgow%3D%3D&acid=fILpKhYIQ8I6be3ehlerxg%3D%3D&cid=7051718&bid=0&EM=0&MDID=OCd9kCDtkIw%3D&RS=0.6375677&FL=url&TL=off&LOC=http://www.HelloLocal.com/supermedia/?q=Extended%20Stayhttp://clicks.superpages.com/ct/clickThrough?SRC=vertgoogle&target=SP&PN=1&C=Hotels&PGID=dalas106.8083.1371309882719.25822944606&ALG=111&TS=bulls&ACTION=log,red&TR=1&bidType=CLIK&relativePosition=5&position=5&PGSN=E0&MT=D&DID=yfrMVs2QL5wwfrFN4WSgow%3D%3D&acid=fILpKhYIQ8I6be3ehlerxg%3D%3D&cid=7051718&bid=0&EM=0&MDID=OCd9kCDtkIw%3D&RS=0.6375677&FL=url&TL=off&LOC=http://www.HelloLocal.com/supermedia/?q=Extended%20Stayhttp://www.city-of-hotels.com/165/hotel-services-business.html


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Link: http://www.superpages.com/supertips/concierge-services.html

Various images showing hotel services:
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Link:https://www.google.co.in/search?q=hotel+services&tbm=isch&tbo=u&source=univ&sa=X&ei=e4i8UYfhBsvNrQeDzIDoAg&ved=0CFYQsAQ&biw=1024&bih=625

Statement of Problems in Hotel Industry

Link:http://classof1.com/homework_answers/hospitality_management/issues_and_problems_concerning_hospitality_industry/

Three big Technology issues in Hotel Industry

Technology enables service. Thats the idea, anyway. In the hotel industry, thousands ofcompanies worldwide provide hundreds of software applications to help hotels and hotel

companies manage operations to provide better guest service.

But which technology or use of technology really provides strategic value for a hotel or hotelcompany?
https://www.google.co.in/search?q=hotel+services&tbm=isch&tbo=u&source=univ&sa=X&ei=e4i8UYfhBsvNrQeDzIDoAg&ved=0CFYQsAQ&biw=1024&bih=625https://www.google.co.in/search?q=hotel+services&tbm=isch&tbo=u&source=univ&sa=X&ei=e4i8UYfhBsvNrQeDzIDoAg&ved=0CFYQsAQ&biw=1024&bih=625http://classof1.com/homework_answers/hospitality_management/issues_and_problems_concerning_hospitality_industry/http://classof1.com/homework_answers/hospitality_management/issues_and_problems_concerning_hospitality_industry/http://classof1.com/homework_answers/hospitality_management/issues_and_problems_concerning_hospitality_industry/http://classof1.com/homework_answers/hospitality_management/issues_and_problems_concerning_hospitality_industry/https://www.google.co.in/search?q=hotel+services&tbm=isch&tbo=u&source=univ&sa=X&ei=e4i8UYfhBsvNrQeDzIDoAg&ved=0CFYQsAQ&biw=1024&bih=625https://www.google.co.in/search?q=hotel+services&tbm=isch&tbo=u&source=univ&sa=X&ei=e4i8UYfhBsvNrQeDzIDoAg&ved=0CFYQsAQ&biw=1024&bih=625


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The answer depends on many factors, but a group of hospitality associations has identified threekey technology issues that are having, and will continue to have, a direct strategic impact on thehospitality industry:

PCI (payment card industry) compliance Unique identification numbers for hotels Support for guests with disabilities

The HTSIC (Hospitality Technology Strategic Initiatives Council) is an informal affiliation ofassociations and other entities whose combined memberships represents every aspect of the

hospitality industrynot only hospitality professionals, and hotels and hotel companies, but alsomost companies that provide technology and technology services to the global hospitalityindustry.

Because of this, the organizations on the council have a full and broad view into the technologyissues facing the industry.

1. PCI Compliance

One of a hotel CIOs biggest nightmares is getting a phone call that one of their systems has been

hacked by credit-card thieves. The fragmented nature and location of hotel systems means a

guests credit card number could exist in multiple systems in formats of varying security inlocations of varying security.

PCI compliance across all levels of a hospitality company has become critically important for thefinancial stability and market credibility of the hospitality industry.

Members of the HTSIC have addressed this issue in a coordinated approach:
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HTNG has set up a workgroup that will a framework that will enable hotels to concentratethe storage of sensitive card data in a single system, managed securely by a vendor or thehotel company. The objective is to get every other hotel system out of the scope of PCI byshielding it from real credit card numbers. The initial goal of this workgroup, which islimited to hoteliers for the initial phase, is to document the framework so that all hotels

can present it to their preferred vendors and partners as their vision of the path forward. HFTP has set up a taskforce aimed at educating hoteliers about the implications of PCIcompliance on property-based operations and systems, including building a knowledgebase, an ongoing series of articles, and a series of educational boot camps and conferencesessions.

Other council member organization initiatives include a white paper authored byAH&LA, a payment technologies committee established by HEDNA, and the support byOpenTravel of needed XML specification changes as required by the industry.

2. Unique Global Identification Numbers

The idea of a single global unique identifier for a hotel has been around for a long time, one ofthose holy grail items like single-image inventory or the mythical super-PNR.

Originally, it was seen as a benefit for distribution channels that aggregate information andinventory from hundreds or thousands of properties, and for payment processors to moreefficiently collect commissions from hotels.

The prevailing argument for the initiatives slow progress has been the lack of a compellingcommercial reason for a hotel to care about this kind of identifier.

HTSIC believes the changing nature of the travel business has provided those compelling reasons.

Search is one (I wrote about this more in depth recently); it has become critical for hotels toappear correctly and accurately in search results, as search engine sites have essentially becomethe gateway to travel research and inspiration.

Search engine optimization is a great thing, but not when the propertys address is incorrect in

Google, or the property is still listed under its previous flag in Bing.

Interestingly enough, PCI compliance is emerging as another driver for the global identifierinitiative, as hotels work with their trading partners through the lifecycle of the transaction toensure compliance.

Heres a likely scenario as an example when a distributor creates a guaranteed reservation for ahotel, they will need to contact the hotels designated token issuer for a token to replace the creditcard. This requires being able to unambiguously identify the hotel so the hotel is able to chargethe card and receive funds.

HEDNA, HTNG, HFTP, HSMAI and OpenTravel are all directly supporting this initiative andholding conversations with interested companies, with the objective to identify possible partnersand governance structure and organization.
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3. Support for guests with disabilities

In both Europe and the US, regulations are being released and revised to provide support toguests with disabilities. These are requiring hotels and hotel companies to review most aspects oftheir operations, from distribution to construction, to ensure compliance.

With the increase in electronic distribution of hotel information and transactions, hotels areworking to provide better information and service to guests with disabilities.

Initiatives specific to distribution include the creation of standard room definitions anddescriptions, guaranteeing accessible guest rooms and removing the accessible guest room frominventory when booked. HEDNA has worked on creating this vocabulary, and OpenTravel hasrevised its hotel schema, annotations and code list to reflect these changes.

Link: http://www.tnooz.com/2011/10/07/news/what-are-the-three-big-technology-issues-for-the-hotel-industry/
http://www.tnooz.com/2011/10/07/news/what-are-the-three-big-technology-issues-for-the-hotel-industry/http://www.tnooz.com/2011/10/07/news/what-are-the-three-big-technology-issues-for-the-hotel-industry/http://www.tnooz.com/2011/10/07/news/what-are-the-three-big-technology-issues-for-the-hotel-industry/http://www.tnooz.com/2011/10/07/news/what-are-the-three-big-technology-issues-for-the-hotel-industry/


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Top 10 Global Issues & Challenges in Hospitalityby Gerald Oliver

At the recent International Society of Hospitality Consultants (ISHC) Annual Conference heldin London, members identified their top 10 global issues and challenges for the hospitality

industry for 2005. Their focus is of particular importance for those involved in hoteldistribution: customer issues and distribution channel management all feature strongly, with astrongly worded warning on technology - "the industry must learn to better utilize technologyin marketing to guests, training employees, yield management, and meeting customerrequirements". While there were dozens of issues discussed, in the final voting themembership identified eleven (there was a tie for number ten) issues as the ones that can beexpected to potentially have the greatest impact on the industry in 2005. As published by theISHC, the details are as follows:

1. Global UncertaintyWhile the global hospitality industry continues to recover following the effects of the terrorist

attacks of September 11, 2001, SARS, the war on terrorism in Afghanistan, and the war inIraq, global uncertainty remains a major concern. Terror attacks are the most direct example ofglobal uncertainty, however, there are other areas of concern such as geopolitical relations,governmental travel restrictions and currency exchange rates. The industry needs to take aproactive approach in addressing these issues and their potential impact.2. Human ResourcesHuman resources is an area that is growing in importance. As the industry continues torecover, it needs to focus on its employees and their roles as service providers. Increasingdemand requires increased staffing levels at a time when the labour pool is shrinking. Toaddress this issue, the industry must attempt to work with the unions as allies, devote moretime and money to recruitment and training and educate politicians as to the impact of

governmental economic and immigration policy on the industry.3. Branding IssuesThe society notes the following brand issues facing the industry in 2005: A proliferation ofbrands and branded hotels worldwide that is leading to the commoditization of the hotelproduct. Increased competition between the brands is leading to amenity creep, and diverginginterests between owners and brands. Instilling authenticity of local culture into brandstandards remains a challenge.4. Financial ViabilityThere is a significant amount of capital currently flowing into the hospitality industry. Notonly are investors betting on a strong recovery, but also in some cases they are not performingrealistic projections and investment analyses. Should expectations not materialize, then sub-

par returns could damage the overall financial credibility of the lodging industry.5. TechnologyThe hospitality industry must do a better job of managing technology and addressing thechallenges posed by new and changing technology. Specifically, the industry must aligntechnology investment with business objectives, address aging and inadequate infrastructure(at both the corporate and the property levels); and learn to better utilise technology inmarketing to guests, training employees, yield management, and meeting customerrequirements.


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6. Customer IssuesCustomer issues present a challenge to the industry in several ways:

Increasing loss of control over the customer - use of the Internet, homogenisation ofthe hotel product and increased corporate oversight has reduced the amount of controlthat operators have over the customer.

Changes in the customer - hotel customers are changing due to demographics (theaging of the baby boomer generation) and due to lower transportation costs thatpromote travel.

Changes in customer expectations - these are changing as consumers become moresophisticated and better educated.

7. Operating Cost CreepWhile the industry has experienced strong growth this past year, with revenues expected toapproach 2000 levels, bottom line performance has eroded dramatically (i.e. over 30%) since2000, due to escalating expenses.In recent years "non-controllable" costs such as utilities,insurance and government regulation have increased significantly. These costs along withinterest rates are expected to increase in 2005. In addition, there is the potential for increases in

controllable costs such as payroll, staffing, brand requirements, and amenity creep. Theindustry must be cognizant of these increases, and take steps to address them.8. SupplyThere are three supply related issues facing the industry:

Increasing alternative forms of supply such as time-share, fractional ownership,second homes,camping, cruising and waterparks.

"Under demolished" (functionally obsolete) supply is, and will remain, a challenge forowners and operators, particularly in Europe where new construction is expensive anddifficult.

In the United States, the use of public funds to develop hotels and resorts presents achallenge for existing private owners and operators.

9. Safety and SecurityThe threat of terrorist attack remains a major concern for the industry. Hotel operators mustmake every effort to protect their guests while encouraging tourism.10.Distribution Channel ManagementIn 2005, Distribution Channel Management as an issue must be viewed in a much broadercontext than in the past. Whereas most hospitality organizations have devoted extraordinaryefforts to managing electronic channels, a broad-based distribution management strategy nowmust consider the following challenges. In 2005 it is expected that price sensitivity willcontinue to drive consumer buying behaviour in virtually every segment.Pricing structures willneed to demonstrate price integrity across all distribution channels-not just electronic ones.The potential challenges are formidable: lead times to booking continue to shrink; the move

toward real time inventory becomes paramount, impacting technology, product categories,segments and channels; and the desire to track and manage every revenue stream in everychannel means that distribution channel management transitions to a focus on the mostprofitable customer.

Airlines in the 21st CenturyIt is important to closely monitor the fundamental changes occurring in the airline industry andtheir potential impact on the hotel industry for the viability of the hotel industry depends


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greatly on airline lift capacity, service and convenience in travel as well as the cost of airlinetravel. Travelling by air today is a major inconvenience for many travellers and securityremains a huge challenge and very costly undertaking for the industry.Customers have becomemuch more "value" focused and most major airlines have experienced a substantial decline inrevenues per passenger mile primarily due to the erosion in high end/priced business travel. In

addition to the escalating cost of fuel, many airlines are also struggling to address labourissues. With several carriers worldwide in bankruptcy and/or severe financial distress it is anenormously challenging time for the airline industry. In light of these financial challenges wecan anticipate that carriers of necessity will need to reevaluate route structures, lift capacity incertain markets and well as rethink pricing on certain routeschanges that can be expected torepresent potential challenges for some hotels/markets and opportunities for others. ISHC is aprofessional society of 175 members in 16 countries who are leading consultants in thehospitality industry. ISHC members have expertise in over 30 different specialty areas in thehospitality industry and collectively have experience with many leading independent hotelsand over 100 brands worldwide.

Link: http://www.hedna.org/pdf/EMEA_Newsletter_Dec_2004--Top_10_Global.pdf

10 major hurdles faced in Indias Hotel Sector

1. 1111111

Link: http://www.hotelnewsnow.com/articles.aspx/9735/10-major-hurdles-facing-Indias-hotel-sector

Assessment of the various risks and challenges lying ahead for the hospitality industry inachieving optimal performance from their hotel assets:

1. If the market conditions were to further deteriorate, and indications are that they will,

there will be a significant impact on demand growth, revenue performance and

profitability of hotel companies. Performance pressures will continue to push industry

players to explore more efficient business models and forge new partnerships. The

industry will embark upon a journey of consolidation and we could witness

conversions, mergers and acquisitions, more out of compulsions than out of choice.

2. A new set of competitive pressures through correction in the demand-supply

imbalance will lead to improved choices and lead to fragmentation of demand. Further,

the overall slowdown in economic activity will have a direct impact on demand across

segments and feeder markets. Businesses are likely to adopt stringent austerity

measures and discretionary spends on travel will be a sure victim. These measures are

likely to erode demand, bring about substantial rate correction, rationalize spends on
http://www.hedna.org/pdf/EMEA_Newsletter_Dec_2004--Top_10_Global.pdfhttp://www.hotelnewsnow.com/articles.aspx/9735/10-major-hurdles-facing-Indias-hotel-sectorhttp://www.hotelnewsnow.com/articles.aspx/9735/10-major-hurdles-facing-Indias-hotel-sectorhttp://www.hotelnewsnow.com/articles.aspx/9735/10-major-hurdles-facing-Indias-hotel-sectorhttp://www.hotelnewsnow.com/articles.aspx/9735/10-major-hurdles-facing-Indias-hotel-sectorhttp://www.hedna.org/pdf/EMEA_Newsletter_Dec_2004--Top_10_Global.pdf


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MICE events and lead to sub-optimum revenue performances across hotels.

3. The executive management at hotels will have to constantly innovate and adopt

dynamic business practices to bring about inherent flexibility in operating cost

structures. While hotels have already rationalized key fixed input costs like payroll and

raw materials, continued improvements will be difficult to come by and hence guestsatisfaction levels and employee morale will be negatively impacted. The commodity

price cycle has already bottomed out and a weak rainfall is likely to further fuel

inflation leading to increase in average service cost for each occupied room.

Innovations in supply chain management and outsourcing will become crucial and

would have to be focused upon. Customization, re-alignment and re-engineering of

processes will play a pivotal role in determining the extent to which a company is

geared operationally to deliver consistent profitability.

4. The rapidly changing macroeconomic environment and rationalization in asset valueswill provide attractive opportunities for acquisitions of hotel assets. However, to

leverage opportunities for growth and expansion, it will be necessary to focus on

immediate improvements in the health of the organizations balance sheet. A key

challenge would be the implementation of debt restructuring strategy and plan for long-

term capital availability.

5. There is likely to be a prolonged period of relative inactivity in the real estate sector

and this will have a direct impact on hotels as a preferred asset class for investments.

Further, non-availability of quality sites for hotel development will force international

brands keen to establish themselves in emerging markets market to become moreflexible in terms of their product specifications. The development activity for new

hotels will rapidly shift to Tier II and Tier III locations. The average inventory count

for new-builds will be significantly lower and in our assessment the biggest

development opportunities will be in the mid-market segment with efficient hotels that

provide attractive value-for-money proposition to their respective end-users.

Link: http://prognosisglobal.wordpress.com/2012/08/16/the-hospitality-industrys-challenges-

5-trends-to-watch-out-for/Problems faced and Changes to be made in the Indian Rating System

No system comes without its set of problems. The Indian hotel rating system, even thoughwell executed and forward-thinking, does have a few issues. One major factor affecting hotelsthat have been classified is the ongoing struggle of being taxed on printed tariffs.Yes, we
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understand this problem only too well and were in talks to see how we can resolve this, says

Chaturvedi.

When a hotel is classified, it has to print its tariff and is taxed on this rate irrespective of thecurrent market rate. Non-classified hotels dodge this. However, classified hotels also get

certain tax incentives that non-classified hotels dont get. This becomes a bit of a catch-22situation.

When hotels are classified, they have to publish their tariff rates and the luxury tax is chargedon this rate card, Chaturvedi explains.

Were taking this up with the government and hopefully we should see a change coming in

soon. Many state governments have already begun to link classification with tax incentives, inorder to promote classification. The ones that are not classified miss out on these incentives.

Apart from tax benefits, Godet says that getting your hotel classified also helps to easily attain

various licenses. If you dont classify your hotel, it has an impact on your license andpermits. In fact, all your licenses are at risk and open to scrutiny if youre not classified.

Another thorn in the side of the hospitality industry is the unorganized sector. The

unorganised sector has been creating problems since day one, says Kumar.These are theguys who create a problem. Some people say we dont want to be classified and theyre happy

providing inferior services. The main culprits her are the one-, two- and three-star hotels alongwith the various guest houses. They should be monitored.

At the moment there is no control over these hotels. Only when you have something badreported on by the media in one of these hotels do people wake up and by that time country

earns a bad reputation for encouraging these sorts of places.Were trying to bring this sector up for the Common Wealth Games. They should be regulatedand governed by the country. And you cant just tag yourself a budget or mid-market orboutique hotel eitherthese are official classifications that are given out.

Also you cannot extend your facilities beyond what your classification is and the tariff shouldbe regulated. They have to adhere to standards or close shop. For example, you know what toexpect from a Ginger or a Lemon Tree. By 2012 or 2013 those who dont toe the line willdefinitely be put of business, he adds.

In an industry where a government body is heavily involved, changes could take a while tocome through. Research is vital and a good place to start would be assessing how many hotelsin the country are classified.

As far as luxury hotels are concerned, 99% of them are classified, says Chaturvedi. But for

others like budget hotels for example its difficult to say, because many of them are happy

with a few customers and continue to provide inferior service.


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According to Chaturvedi, the new guidelines will also focus heavily on environment friendlypractices.

In the current classification guidelines, the minimum requirement across all stars is for hotelsto change bed and bath linen on a daily basis.

This is in stark contrast to current practices in hotels today where guests are encouraged toreuse their towels and bed linen to save on water and energy that goes into the cleaningprocess.

Only a few days ago we had a work shop focusing on sustainable tourism, says Chaturvedi.Apart from saving energy, we looked at ways to cut down on water usage and the bed and

towel issue was brought up. Were moving forward very quickly. In fact for things like this,

we can make the change immediately. We dont have to wait for the next two years.

Kumar who has been on several inspection mission across the country says hotels now-a-days

are professional and environment conscious enough to encourage guests to reuse linen.During our inspection and interaction with professional hotels, weve noticed that they never

fail to demonstrate how theyve improved on energy-efficiency and eco-friendliness. Today ifIm going to a hotel and Im staying for lets say three or four nights, it is absolutely wrong tochange my bed linen daily. I think they can make it alternative.

Link: http://www.hotelierindia.com/article-9328-whats_in_the_stars/1/print/

Classification of Hotels

The hotel industry is so vast and therefore Classification is based on many criteria like

location, size of property,level of service, type of clientele, based on target market,type of

plan, length of stay,based on theme.

Link: http://www.hotelmanagementhub.com/tag/classification-of-hotels-in-india/

Classifying a hotel in India is no easy feat, especially in todays world where the difference

between four and five star hotels is a little opaque. A quick example of this opacity can betested with a basic bath tub - most hotels, four stars upwards, have one, despite it being only adesirable requirement and not a necessary one. Hotel chains are constantly pushing the

envelope and looking to upgrade their facilities in order to attract, retain and sometimes evensteal guests to increase their own businesses.HotelierIndia.com talks to industry veterans togain an insight into important issues including why you should classify your hotel, how to doit and why six and seven star hotels are only as real as Peter Pan.

When one thinks of how hotels are classified, more often than not, ideas of a fashionably posh
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gentleman come to mind.

A gentleman who is wined and dined and outrageously fussed over by innumerable hotel staff;exotic foods are served, champagne becomes the order of the day and waiters dive to grab thenapkin that has fallen from his lap. He is a member of the hotel star-rating committee. He is

king.But any hotel classification committee member will quell this notion for you in a matter ofseconds. In truth, it couldnt be more different. The Indian classification system is consideredby many in the hotel industry to be among the best in the world.

The Indian Ministry of Tourism, a government body, is in charge of classifying hotels acrossthe country. Everyone swears by it including several hotel general managers, hotel chain boardmembers and hotel association members.

Link: http://www.hotelierindia.com/article-9328-whats_in_the_stars/1/print/

Classification of hotels as per the instructions of Ministry of Tourism

1. Hotels are an important component of the tourism product. They contribute in theoverall

tourism experience through the standards of facilities and services offered by them. Withthe aim of providing contemporary standards of facilities and services available in thehotels, the Ministry of Tourism has formulated a voluntary scheme for classification ofoperational hotels which will be applicable to the following categories:

Star Category Hotels: 5 Star Deluxe, 5 Star, 4 Star, 3 Star, 2 Star & 1 Star

Heritage Category Hotels: Heritage Grand, Heritage Classic & Heritage Basic

2. The Hotel & Restaurant Approval & Classification Committee (HRACC) inspectsand assesses the hotels based on the facilities and services offered.

Hotel Projects are approved at implementation stage Operational Hotels are classified under var ious categories

3. Details of the criteria for Project Approval / Classification along with thedocuments required for this purpose are given in this document. Applications for projectapprovals under the category of Heritage, 4 star and 5 star as well as applications for

Classification of operational hotels in the category of 4 star, 5 Star and 5 star Deluxe as well asHeritage (Basic, Classic & Grand) categories along with the requisite fee (paid vide DemandDraft) may be sent to Member Secretary (HRACC)/ Hotel and Restaurants DivisionMinistry of TourismC-1 Hutments, Dalhousie RoadNew Delhi 110011Telefax: 01123012810 / 23792504Revised June 2012 1
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4. For project approval /classification in 3, 2 and 1 Star categories, applicationalong with the requisite fee (paid vide Demand Draft) maybe forwarded to theRegional Director, Indiatourism Office in whose region the hotel / project is located.The offices of the Regional Directors are as under:

Regional Director, Indiatourism (Western & Central Region), 123 Maharshi Karve

Road, Mumbai - 400 020 Regional Director, Indiatourism (Northern Region), 88 Janpath, New Delhi - 110 001 Regional Director, Indiatourism (Southern Region), 154 Anna Salai, Chennai600002 Regional Director, Indiatourism (Eastern Region), Embassy, 4 Shakespeare Sarani,

Kolkata700 071Regional Director, Indiatourism (North Eastern Region), AssamParyatan Bhawan, 3rd Floor, Near Nepali Mandir, A.K. Azad Road, Paltan Bazar,Guwahati - 781 008

5. The detailed Guidelines for Project Approval are at Annexure I and that forClassification / Re- Classification at Annexure II

6. The Ministry of Tourism reserves the right to modify the Guidelines / Terms andConditions from time to time.

Link: http://tourism.gov.in/writereaddata/Uploaded/Guideline/070420120223855.pdf

Classification of Hotel Industry

Classification of Hotels

The hotel industry is so vast and therefore Classification is based on many criteria. Hotels maybe categorized upon different factors:
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1. Location2. Size of property3. Type of Plan4. Level of service5. Length of stay

6. Type of clientele7. Target market8. Based on theme

Location wise:

Downtown hotel or City centre hotels: It is located in the heart of city. Tariffs are highdue to their location advantage as these hotels are near corporate offices, shoppingarcade, business centre, public buildings etc and also to the fact that rate of ROIcalculated on the capital intensive property is considerably high. Normally businessclientele are preferred and it has high occupancy on week days. Best example to fit in

this category is Hyatt regency New Delhi. Motels or Motor hotels: Earlier it was termed as motor hotels now it is known as

motels they are located on highways, they only provide lodging to highway travellersthat means no food and beverage is served in this type of hotel they guest generallyhave an overnight stay and these provide more than enough parking spaces for theirvehicles. Example: KTDC motel in kerala.

Suburban hotels: It has very quite surrounding as they are located in suburban areas;the occupancy is generally having high traffic on weekend. Tariffs of these hotel ratesare reasonably low and therefore it is perfect for budget travellers.

Airport hotels: As name says it is situated near by the airport. They have transit guestwho stay over between flights for few hours. The guests generally prefer these types ashotel as they have to cut down the travelling hours and have very minimum time justfor their work. Tariffs are reasonable here. Example: Centaur hotel in New delhi andMumbai.

Floating hotels: These are the type of hotel are generally which floats. These hotels areestablished on luxury liners or ship generally located on lakes, rivers and sea. These arecruise in this rooms are generally small and all furniture is fixed down. It has long stayguest and have all the facilities which a normal hotel has for example food andbeverage services, laundry, bar etc. Travelling is not the main purpose of this ship.Boatels are also a kind of floating hotels they are generally a house boats. They alsooffer luxurious stay to their guest. Example for floating hotel is Royal caribbean cruiseships and shikaras of Kashmir for boatels.

Inns: They are located inside or outside the city. They are smaller in size and just havelodging facility. It has reasonably very low tariff and its generally for budgeted


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clientele. The length of stay is from one to two days.

Rotels: These are hotel on wheel. These are in form of buses as well as trains. Theyproviding a luxurious hotel atmosphere to the travellers they are like hotel room andhave facility of food and beverage. They are normally used by small group of

travellers. Examples are palace on wheels and Deccan Odessey.

Resorts: These leisure hotels are located at the beaches or in the hills. They are alsotermed as health resort or beach hill resort and so depending on their position andlocation. They are for vacationers it generally cater a person who wants to relax, enjoywith their families. They include adventurous trip. Most resort has high occupancyrates during peak season. Sales and revenue fluctuate from season to season. Examplesare: Raj vilas jaipur, vanya vilas ranthambore etc.

Level of service:

This is the most important criteria for classifying hotels. Hotels can be classified intoeconomy, mid market or semi economic hotel and luxury hotels. This is done on the basis ofthe level ofservice they offer.

Economy Hotels: these are also known as Budget hotels in this hotels guest is providedby a clean and comfortable room with the minimum required amenities.

Mid market hotels: It offers small living room with appropriate furniture and small bedroom with king sized bed they facilities provided in this hotel are swimming pool,health club etc. These hotels are called as suite hotels.

Luxury hotels: These types of hotels provide world class service to the guest. The roomhas entire facility with antique furniture and special artwork. These hotels have varietyof restaurant and lounges; it even has concierge service and business centre, shoppingarcade, sports facility etc. The prime market for these hotels are mainly celebrities,business man, corporate head and high ranking political figures. Example: HyattRegency, Mumbai.

Length of Stay:

The classification of hotel is also classified by the length of stay of a guest. It is categorized

into transient, residential and semi residential hotels. Transient Hotel: Airport hotels can be termed as transient hotels. In this type of hotel

the guest stays for a day or even less. The occupancy rate is usually very high.

Residential hotels: In this type of hotel guest stay for a minimum period of one monthand up to a year. The lease is signed with a guest and rent can be paid on monthly orquarterly basis. They room is provided bed room and kitchenette. The tariff is


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reasonably low in these types of hotels.

Semi residential hotels: The hotel which include features of both transient andresidential hotel.

Type of clientele:

Hotels are categorized into group hotels, commercial hotels and family hotels. Thiscategorization is mainly based on the type of stakeholders.

Group hotels: these types of hotel generally cater to groups and therefore use Americanplans. Vacationers are their biggest clientele.

Commercial hotels: these types of hotel cater mostly to business man and therefore useEuropean plan in their hotels.

Family hotel: these types of hotels are situated in resort cities and they cater familiestherefore they use American plan.

Target Market:

Commercial hotel: they target clientele are businesses men who visit these types ofhotels for business purpose. These hotels are located in busy commercial areasespecially in the heart of city therefore it gets high business.

Convention hotels: these hotels are used for conventional purpose. Seminars,conferences, events, education and job fairs, exhibitions, events take place here. They

have large convention complex and cater to group of people who are there to attendthese events. Hotel with largest convention centre in India is Le meridian, Cochin.

Suite hotels: These hotel offer compact kitchenette along with rooms. They cater guestwho has to stay away from home due to their business they keep on relocating fromone place to another. These types of clientele are lawyers and executives.

Casino hotels: This type of hotel has gambling facilities with guest room, food andbeverage. These hotels operate 24 hours a day and 365 days a year. They cater leisureand vacation travellers. Las Vegas in United State is Famous for Casino hotels.

Based on Theme: Ecotels: These hotels are eco friendly and amenities provided in these hotels are

environmental friendly. Orchid Mumbai is Asia first and most popular five star ecotel.

Boutique hotels: This hotel offer themed rooms to the guests. They provide stylishaccommodation and antique furniture. These hotels cater to corporate travellers. The


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Park Bangalore is a boutique hotel in India.

Spas: This is a luxury hotel resort which offer therapeutic bath, massage and therapiesalong with other hotels offerings. Ananda spa in Himalaya is the most popular Spa.

Heritage hotel: these are hotels which are converted from heritage properties. Thesehotels give glimpse of the earlier tradition of a particular region. In this hotel rooms areoffered with their history. Traditional cuisine is served to the guest and entertainment isdone by folk artist. Jai Mahal palace in Jaipur.

Link: http://www.hotelmanagementhub.com/2011/07/25/classification-of-hotels/

Hotel Rating

Hotel ratings are often used to classify hotels according to their quality. The development ofthe concept of hotel rating and its associated definitions display strong parallels. From the

initial purpose of informing travellers on basic facilities that can be expected, the objectives ofhotel rating has expanded into a focus on the hotel experience as a whole.[1]Today the terms'grading', 'rating', and 'classification' are used to generally refer to the same concept, that is tocategorize hotels, mostly using stars as a symbol

There are a wide variety of rating schemes used by different organizations around the world.Many have a system involving stars, with a greater number of stars indicating greater luxury.Forbes Travel Guide, formerly Mobil Travel Guide, launched its star rating system in 1958.The AAA and their affiliated bodies use diamonds instead of stars to express hotel andrestaurant ratings levels.

Food services, entertainment, view, room variations such as size and additional amenities, spasand fitness centers, ease of access and location may be considered in establishing a standard.Hotels are independently assessed in traditional systems and rest heavily on the facilitiesprovided. Some consider this disadvantageous to smaller hotels whose quality ofaccommodation could fall into one class but the lack of an item such as an elevatorwouldprevent it from reaching a higher categorization.[2]

In recent years hotel rating systems have also been criticised by some who argue that the ratingcriteria for such systems are overly complex and difficult for laypersons to understand. It hasbeen suggested that the lack of a unified global system for rating hotels may also underminethe usability of such schemes.

Standards of hotel classification

The more common classification systems include "star" rating, letter grading, from "A" to "F",diamond or simply a "satisfactory" or "unsatisfactory" footnote to accommodation such ashostels and motels. Systems using terms such as Deluxe/Luxury, First Class/Superior, TouristClass/Standard, and Budget Class/Economy are more widely accepted as hotel types, rather
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than hotel standards.

Some countries have rating by a single public standardBelgium, Denmark, Greece, Italy,Malta, Netherlands, Portugal, Spain and Hungary have laws defining the hotel rating. InGermany, Austria and Switzerland, the rating is defined by the respective hotel industry

association using a five-star systemthe German classifications are Tourist (*), Standard(**), Comfort (***), First Class (****) and Luxury (*****), with the mark "Superior" to flagextras beyond the minimum defined in the standard. The Swiss hotel rating was the first non-government formal hotel classification beginning in 1979[3]It did influence the hotelclassification in Austria and Germany.[3]The formal hotel classification of the DEHOGA(German Hotel and Restaurant Association) started on August 1, 1996 and proved verysuccessful with 80% of guests citing the hotel stars as the main criteria in hotel selection.[4]This implementation influenced the creation of a common European Hotelstars rating systemthat started in 2010 (see below).

In France, the rating is defined by the public tourist board of the department using a four-star

system (plus "L" for Luxus) which has changed to a five-star system from 2009 on. In SouthAfrica and Namibia, the Tourist Grading Council of South Africa has strict rules for a hoteltypes granting up to 5 stars.

Link: https://en.wikipedia.org/wiki/Hotel_rating

The Indian Rating SystemThe hotel rating system in India is considered by many hoteliersthose who have worked inthe country and abroadto be one of the better rating systems in existence.

Speaking to Hotelier India, the Ministry of Tourisms additional director general Devesh

Chaturvediwho is also the gentleman in charge of the classification guidelinesfeels thatthe Indian system is very functional.

He says: It works well and is efficient because it is an evolving system. We move with thetimes and the necessities of the moment. We revise it every two years so that were not aredundant system.

Apart from the law-makers, even those who are on the receiving end feel the syst

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