CHAPTER 2

INTRODUCTION
TO HOTEL
INDUSTRY

2.1

INTRODUCTION TO TOURISM AND HOTEL INDUSTRY

By now we are well versed with what is tourism? Now let
us discuss about Hotels and its Industry.
Hospitality is treating people like you would want to be
treated when you are travelling. In other words, it means
making a tourist feel like tourist feels totally welcome not
only as your guest, but also as the guest of the comple te
family of the hotel. Hospitality is genuine smiling face.
Hospitality can be termed as the deliberate, planned and
sustained

effort

to

establish

and

maintain

mutual

understanding between an organization and the public i.e.

the business of making and kee ping friends, and promoting
an atmosphere of better understanding. As per the Oxford
Dictionary,

Hospitality

Entertainment

of

is

defined

as

Reception

and

guests,

visitors

or

strangers

with

liberality and goodwill.

[1]

The Hospitality industry has spread widely through an

evolutionary process and there is now a large number of its
ramifications of which the most recognised commercial
180

venture are the hotels, Motels, Inns, Restaurants, Coffee

Shops, Cafeterias, Snack-Bars, Beverage Service, variou s
Transport

Catering,

Tourist

Lodges,

Non-Commercial

ventures are the Hospital Catering Industrial Canteens,

Clubs, Army, Navy and Air Force Catering, School meals,
youth Hostels, etc. it is the objectives which distinguishes a
commercial venture from the non -commercial venture.
If

the

objective

is

solely

profitmaking,

it

is

called

commercial venture. All the hotel trade falls in this

category. But if the objective is public service even if
mingled with the element of profit motive, such as ventures
will be termed non-commercial ventures. For example,
Industrial Canteens, the main aim of which is the welfare
of the employees is a non-commercial venture. Such
canteens may be run on profit yet the primary objective is
the welfare of the staff.

[2]

Various definitions of Hotels:

As per Hotel Proprietors Act, 1956 Chapter 62 4 and 5Eliz
2,
181

The expression hotel means an establishment held out by

the proprietor as offering food, drink and, if so required,
sleeping accommodation, without special contract, to any
traveller presenting himself who appears able and willing
to pay a reasonable sum for the services and facilities
provided and who is in a fit state to be received. [ 3 ]
As a result of this definition establishments such as
Hospitals,

Hostels,

Apartments

and

Prisons,

although

provide accommodation to the people yet do not come

under Hotels.
Common Law states that a Hotel is a place where all who
conduct themselves properly and who being able to pay
and ready to pay for their entertainment, are received if
there be accommodation for them and who without any
stipulated engagement as to the duration of their stay or as
to the rate of compensation are while there, supplied at a
reasonable cost with their meals, lodging and other services
and attention as are necessarily in cident to the use as a
temporary home.
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A hotel may be called an establishment, where primary

business is to provide to the general public lodging
facilities and which may also furnish one or more of the
various

services

such

as

food,

beverage,

laundry,

uniformed services, etc. Hence, a hotel may be called as the

home multiplied by commercial activities.
As per the Readers Digest Dictionary,
The term Hotel, refers to a house of entertainment of
travellers.
According to the Encyclopedia Britannica, the wo rd hotel is
of ancient origin but it is used in English for a house
offering lodging and food for travellers is recent. The
hostellers of London took the name of innkeeping in 1473.
The word Hosteller or Ostler having come to mean an
Inn servant.
The term hotel was used in England in about 1760. Hotel or
Inn is defined by British Law is a place where bonafide
travellers can receive food and shelter, provided he is in a
position to pay for and is in a fit condition to be received.
183

A hotel or an Inn may also be defined as an establishment

whose primary business is providing lodging facilities for
the general public and which furnishes one or more of the
following services:
a) Food and Beverages
b) Room Service
c) Uniformed Service
d) Laundry Service
e) And use of furniture and fixtures, etc.
In legal terminology, a hotel is an Inn and is required
under common law to offer to its visitors lodging, food and
protection to their baggage. Hotel services are generally
based on these three fundamental necessities of lif e. In
addition to these modern hotels, provides its visitors many
luxuries of modern urban city living all under one roof.
1. Inn: Public houses in early times in England were called
Inns. Normally, the term Inn was meant for the final
establishments catering to nobilities and clergy. In france,
these were called HOTELLERIES.
184

2. Taverns: The house frequented by common man were

known as taverns. The less important establishment in
France were called CABARETS.
3. Hostel: derived from the word host and was used very late.
The head of the hostel was called Hosteller in French, while
in England he was called Inn Keeper.

[4]

In the language of the writer Mohammed Zulfikar,

An hotel can be defined as a place where a prospective
guest can be provided with the following
a) Accommodation

Place to stay

b) Food & Beverage :

Something to eat and drink

c) Entertainment

To view and enjoy

d) Services

Intangible Element

The place should be provided for a value. The value is

usually

paid

in

the

form

of

PRICE.

Moreover,

the

prospective guest should be in a fit condition to be

received.
Hence,

[5]

hotel

is

place-big,

medium

or

small

to

accommodate guests mostly for a short temporary stay in

185

cities, towns, or adjacent areas or in the vicinity of places

of all sorts of tourist interest or near the Airports or
important Railway Stations. Obviously, the modern hotels
keep a great deal of provisions for their guests and in
particular, besides accommodation, they provide good
food, entertainment programmes, hobby centres, sports and
games, shopping facilities or such other provisions for the
direct participation of guests. Of course, no one expects to
find all these conveniences services or luxuries in every
hotel. The management of each establishment decide what
services are to be provided, based on the demands of the
visitors, the size and character of the hotel and the class of
the patronage. In legal terminology, a hotel is an inn, and
is obligated under common law to offer its guests lodging,
food and protection of their baggage.
2.2

[6]

ORIGIN OF THE WORD HOTEL

The word hotel is derived from the French htel (coming
from htel meaning host),
version

of

which

a townhouse or
186

any

referred
other

to

French

building

seeing

frequent

visitors,

rather

than

place

offering

accommodation. In contemporary French usage, htel now

has the same meaning as the English term, and htel
particulier is

used

for

the

old

meaning.

The

French

spelling, with the circumflex, was also used in English, but

is now rare. The circumflex replaces the 's' found in the
earlier hostel spelling, which over time took on a new, but
closely related meaning. Grammatically, hotels usually take
the definite article hence "The Astoria Hotel" or simply
"The Astoria." [ 7 ]
2.3

HISTORY

OF

HOTELS

AND

ACCOMODATION

INDUSTRY
The history of hotels is intimately connected to that of
civilisations. Or rather, it is a part of that history. Facilities
offering guests hospitality have been in evidence since
early biblical times. The Greeks developed thermal baths in
villages designed for rest and recuperation. Later, the
Romans built mansions to provide accommodation for
travellers on government business. The Romans were the
187

first to develop thermal baths in England, Switzerland and

the

Middle

East.

Later

still,

caravanserais

appeare d,

providing a resting place for caravans along Middle Eastern

routes. In the Middle Ages, monasteries and abbeys were
the first establishments to offer refuge to travellers on a
regular basis. Religious orders built inns, hospices and
hospitals to cater for those on the move.
From antiquity to the Middle Ages - The history of hotels is
intimately connected to that of civilisations. Or rather, it is
a part of that history. Facilities offering guests hospitality
have been in evidence since early biblical tim es. The Greeks
developed thermal baths in villages designed for rest and
recuperation. Later, the Romans built mansions to provide
accommodation for travellers on government business. The
Romans were the first to develop thermal baths in England,
Switzerland and the Middle East.
Later still, caravanserais appeared, providing a resting
place for caravans along Middle Eastern routes. In the
Middle Ages,

monasteries and abbeys were

188

the first

establishments to offer refuge to travellers on a regular

basis. Religious orders built inns, hospices and hospitals to
cater for those on the move.
Inns multiplied, but they did not yet offer meals. Staging
posts were established for governmental transports and as
rest stops. They provided shelter and allowed horses to be
changed more easily. Numerous refuges then sprang up for
pilgrims and crusaders on their way to the Holy Land.
Travelling then became progressively more hazardous. At
the same time, inns gradually appeared in most of Europe.
Some of them have remained famo us, for example, l'
Auberge des Trois Rois in Basle, which dates from the
Middle Ages.
Around 1200, staging posts for travellers and stations for
couriers were set up in China and Mongolia.
In Europe, or more precisely in Belgium, l' Auberge Cour
Saint Georges opened in Gant, while the Angel Inn was
built at Grantham in Lincolnshire, England.

189

The start of the hotel industry - In France, at the beginning

of the fifteenth century, the law required that hotels keep a
register. English law also introduced rules for inns at that
time. At the same time, around 1500 thermal spas were
developed at Carlsbad and Marienbad.
During this epoch, more than 600 inns were registered in
England. Their architecture often consisted of a paved
interior court with access through an arched porch. The
bedrooms were situated on the two sides of the courtyard,
the kitchen and the public rooms at the front, and the
stables and storehouses at the back. The first guide books
for travellers were published in France during this period.

An embryonic hotel industry began to develop in Europe.

Distinctive

signs

were

hung

outside

establishments

renowned for their refined cuisine. At the end of the 1600s,

190

the first stage coaches following a regular timetable started

operating in England. Half a century later, clubs similar to
English gentlemen's clubs and masonic lodges began to
appear in America.
In Paris in the time of Louis XIV, the Place Vendme
offered the first example of a multiple -use architectural
complex,

where

the

classical

faades

accommodated

boutiques, offices, apartments and also hotels.

In the nineteenth century, hotels take over the town -The
industrial revolution, which started in the 1760s, facilitated
the construction of hotels everywhere, in mainland Europe,
in England and in America.
In New York first of all, and then in Copenhagen, hotels
were established in city centres.
At the beginning of the 1800s, the Royal Hotel was built in
London. Holiday resorts began to flourish along the French
and Italian rivieras.
In Japan, Ryokan guest houses sprang up. In India, the
government-run

Dak

bungalows
191

provided

reliable

accommodation for

travellers. The Tremont House in

Boston was the first deluxe hotel in a city centre. It offered

inside toilets, locks on the doors and an " la cart e" menu.
The Holt Hotel in New York City was the first to provide
its guests with a lift for their luggage.
In 1822, in Venice, a certain Giuseppe Dal Niel transformed
an old palace into a hotel and gave it his name, "Le
Danieli". As trains began to replac e horse-drawn transport,
highway inns for stage coaches started to decline.
During this period, the Shepheards Hotel in Cairo was
founded, the result of a complete transformation of an
ancient city-centre harem.
L'Htel des Bergues was built in the spring of 1834 on the
shore

of

the

Lake

of

Geneva.

One

of

its

founders,

Guillaume Henri Dufour, became a famous Swiss general.

In 1840, l'Htel des Trois Couronnes was established in
Vevey in Switzerland and the Baur au Lac in Zurich, fully
refurbished since 1995.

192

In New York, the New York Hotel was the first to be

equipped with private bathrooms.
The "Bayerischer Hof" was built in Munich in 1841,
followed in 1852 by the "Vier Jahreszeiten" . These two
famous establishments were completely renovated after the
Second World War.
Le Grand Htel Paris -The inauguration of the Grand Htel
in Paris took place on 5 May 1862 in the presence of the
Empress

Eugnie.

The

orchestra,

directed

by

Jacques

Offenbach, played the Traviata. This building was designed

by the architect Alfred Armand, in order to "show the lite
of travellers from all over the world the progress made
under

the

Second

Empire

by

the

sciences,

arts

and

industry".
The exterior faades with their high arched doors and their
Louis XIV windows were in the style required for the
surroundings of the Opra.The greatest names in painting
and decoration participated in the completion of this hotel,
the grandest in Europe in its dimensions, luxury and
193

installations. The first hydraulic lift was installed in this

hotel. "Lighting was supplied by 4000 gas jets; heating by
18 stoves and 354 hot air vents.
In 1890, the entire hotel was equipped with electric
lighting.
Due to the installation of steam central heating in 1901,
baskets of wood were no longer sold on the floor s. Some
years later the hotel was renovated. Further renovation
took place in 1970 and 1985.
In 1982, it became a member of the Intercontinental chain.
Since 1992 the hotel has been equipped with a central
Building Management System.
In June 2003, Le Grand Htel Paris has re-opened its doors
following

an

eighteen-month

multi-million

dollar

renovation.
The Fifth Avenue Hotel in New York City was the first in
that period to provide lifts for its guests. 1869 saw the
inauguration, near Cairo, of the Mena House , an oasis of

194

calm and luxury, at the foot of the famous pyramids of

Cheops, Chephren and Mikerinos.
In 1870, the Palmer House Hotel in Chicago was the
grandest of all hotels. Its structure, the first of its kind, was
fire-resistant.
In

1873,

the

Palais

de

Wrtemberg

in

Vienna

was

transformed into a superb luxury residence for the notables

of the epoch, l'Htel Imprial. Kings and queens became
regular visitors to what is without doubt the finest example
of the refined architecture of the Ringstrasse in Vie nna. It is
said that Richard Wagner directed the first productions of
"Tannhuser" and "Lohengrin" there. Two years later in
1875, the Grand Hotel Europe opened its doors in St
Petersburg. This prestigious place where Tchaikoswky
spent his honeymoon and where Shostakovich played a
sonata for Prokofiev in his suite.
In 1880, the Sagamore Hotel on Lake George in the state of
New York was the very first to provide electricity in all its
rooms.
195

The first school for hoteliers was founded in Lausanne,

Switzerland in 1890 by J. Tschumi, Director of the Beau
Rivage in Lausanne, and A.R. Armleder, the "father" of the
Richemond in Genve.
In Monte Carlo, l'Htel Hermitage opened its doors in 1896,
offering its guests the refined and luxurious atmosphere
enjoyed by the rich at the close of the nineteenth century.
Shortly afterwards, the Victoria Hotel in Kansas City
offered bathrooms with every room. The Netherland Hotel
in New York City then became the first to provide all its
guests with their own telephone.
In Athens in 1874, Stathis Lampsas, a chef by profession,
realised his dream by building l'Htel Grande Bretagne.
Athens was suffering at that time from a shortage of water.
It is said that the personnel bought water from carriers in
the street to bring to the 80 bedrooms and ... the two
bathrooms. Of course, the establishment has undergone
several renovations since that time.

196

In 1894, the Grand Htel became the first Italian hotel to

boast an electricity supply.
The Swiss hotelier Caspar Badrutt opened the famous
Palace de Saint Moritz in 1896. In 1898, Csar Ritz, from the
Valais in Switzerland, who became, to quote the famous
phrase of King Edward VII, the "king of hoteliers and
hotelier to kings", opened the hotel which bears his famous
name in the Place Vendme in Paris.
The twentieth century: the age of prosperity -The early
years of the twentieth century were rich in new hotels
which rapidly became prestigious.
Edouard Niiermans, the "architect of palaces", transformed
the Villa "Eugenie", the summer residence of the Emperor
Napolon III and his wife Eugnie de Montijo, in 1900. In
1905, he built l'Htel du Palais in Biarritz. In 1913 his
"Ngresco" was opened in Nice, in the presence of seven
kings!
In Madrid, King Alphonse XIII was anxious that the capital
should have a luxurious and prestigious hotel, and as a
197

result the Ritz was inaugurated in 1910. Seville paid its

own

homage

to

the

king

by

opening

splendid

establishment, constructed by the architect Jos Espiau, the

Alphonso XIII. Not to be outdone, Barcelona inaugurated
its own Ritz in 1919. This was equipped with an unheard of
luxury at that time, bathrooms with hot as well as cold
water!
We could also cite, among many other hotels built in the
same period, the Ritz and Savoy in London, the Beau
Rivage Palace in Lausanne, le Ngresco in Nice, the Plaza
in New York, the Mtropole in Brussels, the Plaza -Athene
and l'Htel de Crillon in Paris, the Taj Mahal in Bombay
and so on. The latter was renovated in 1972 by the Inter Continental chain.

198

The prosperous nineteen-twenties saw a veritable boom in

the hotel industry. Numeros hotels were established in this
decade.

In

1923,

the

architects

Marchisio

and

Prost

constructed a hotel in some wonde rful gardens in the heart

of

Marrakech

in

Morocco,

and

for

decades

it

was

considered the most beautiful hotel in the world: La

Mamounia.

Winston

Churchill

helped

to

forge

its

reputation by becoming a frequent guest.

Hotels were built not only in cities, bu t also in the
mountains. The first ski resorts in Switzerland (Saint Moritz, Gstaad, Montana, etc.) welcomed tourists (often
English ones) to some very comfortable establishments.
The worldwide depression which followed in 1929 did not
prevent the construction of the famous Waldorf Astoria in
New York. This was the greatest hotel edifice of those
troubled times.
After the war, the fifties saw the second boom in the hotel
industry. The Club Mditerrane (G. Trigano) created the
now famous, but then revolutio nary concept of the club
199

village. These years were also notable for the construction

of the first casino hotels. This was also the time when the
airline companies began to develop their own hotels.
In the sixties, new tourist resorts flourished around the
Mediterranean.

From

Spain

to

Greece

and

from

the

Balearics to Yugoslavia, numerous city and beach hotels

opened their doors to summer guests hungry for relaxation
and

good

dose

of

sunshine.

Portugal

and

the

Scandinavian countries soon followed their lead .

1970 saw the beginning of the construction of hotels for
business people. This movement was supported by several
factors. First of all, there was the will of the airline
companies to extend their efforts in the domain of hotels.
Then there was the sudden prosperity, due to black gold, of
Middle Eastern countries which attracted business people
from the entire world. This engendered an important
business travel trend - not limited to this region alone which

initiated

the

development

of

hotels

primarily

designed for business people in Middle -Eastern cities like

200

Dubai, Abu Dhabi, Riyadh and Jeddah, to mention only the

most important.
Hotel chains, attentive to their customers' wishes, started
to offer an increasingly varied range of services. Their
rooms became more spacious and the cuisine more refined.
Gradually, too, various first class hotels (among them
former palaces and city centre hotels) which had fallen into
disrepair began systematic renovation programmes.
The end of the seventies, when China open ed its doors to
foreign

tourists,

also

saw

the

first

congresses

of

international hotel experts.

The third hotel industry boom -The third boom in the hotel
industry

began

in

1980,

marked

by

more

inventive

marketing and the development of hotels increasingly

adapted to a particular type of clientele.
This trend prompted the construction of hotels near
airports, hotels for conferen ces, health hotels, ski holiday
hotels,

holiday

villages

and marina

201

hotels.

The

first

Property Management Systems (Fidelio, Hogatex, etc.)

appear in the hospitality market.
In Istanbul in 1984, work began on the renovation and
transformation into a hotel o f the prestigious sultans'
residence, the Ciragan Palace in Istanbul. The resulting
hotel is no less prestigious than the Ciragan Palace was.
Managed by the Kempinski chain, it opened its 322 rooms
to guests in 1991.
The

first

offering

administrative
hotels

greater

hotel

manageme nt

independence

from

systems,
human

resources, then appeared on the market. The hotel industry

was

becoming

more

and

more

competitive.

Business

travellers and retired people became important target

customers.
In the eighties, too, the Far East began to prepare itself to
welcome both business people and the tourists who were
beginning to discover the countries of the rising sun, such
as

China,

South

Korea,

Thailand

and

Japan.

The

international chains (American for the most part) prepa red

202

expansion plans for Europe, the Middle and Far East which
were mainly aimed at congress participants and business
people.
The nineties: technology starts to make an impact -The
early nineties were characterised by a recession in the hotel
business,

without

doubt

caused

by

reductions

in

multinationals' travel budgets and the growing crisis in the

Gulf.
The Gulf War helped to create great insecurity for both
individuals and business. 1991 is considered to be the black
year of the hotel trade. It forced ho teliers to become more
creative in finding ways of attracting guests (special
programmes,

offers

for

"frequent

travellers",

high

performance reservation systems) and thus emerge from

the crisis with the minimum damage.
For the first time, the environment a nd energy conservation
played an important role in the marketing activities of
numerous chains (thanks in part to the green movement)

203

and even helped to win the loyalty of numerous clients

while safeguarding assets at the same time.
Reservation systems became more efficient and offered the
hotelier a new dimension in the creation of customer
loyalty,

the

individual

database.

history

The

have

records

helped

of

create

each

guest's

individualised

marketing programmes and have enabled hotels to satisfy a

guest's personal needs from the moment of his arrival.
Hotel Adlon Berlin is a legend reborn. From its opening in
1907, until it was destroyed in 1945, it was a symbol of
Berlin, a lavish host for royalty, heads of government, stage
and screen stars, and the gre ats of literature and science.
Now, it has been rebuilt (1997) on its original site, the
corner of Unter den Linden and Pariser Platz, facing the
Brandenburg Gate. Outside, it is a virtual replica of the
original;

inside

it

operators

(in

this

is

testimony

case

the

to

what

Kempinski

smart
group)

hotel
can

accomplish with an investment of $260 million. The hotel's

337 rooms and suites are the ultimate in luxury. Interiors,
204

designed by England's Ezra Attia and Sweden's Lars

Malmquist, dazzle with marble, sands tone, stained glass,
gold leaf, stuccowork, cherry wood panelling, and damask
draperies. This hotel is today equipped with the most
advanced

technology

with

regards

to

the

Room

Management System communicating with the Property

Management System.
Since 1992, the most important international chains have
been vying with each other in ever greater imaginative
feats related to the vital process of renovating their
establishments worldwide.Technology has started to take
its rightful place in hotel administration (simplification of
check-in and check-out procedures, global reservation
systems, marketing management etc.). In 1995, the first
Hotel

Room

Management

System

is

launched

at

the

European level. It is linked to the most popular Property

Management Systems to make the front desk more efficient
and near to the guests.

205

At

International

Technology

Forums,

speakers

unanimously, underlined the impact of technology on hotel

rooms.
Hotel chains have been searching for alliances and some of
them. For example: Holyday Inn, Intercontinental, and
Crown Plaza have merged to form Six continents hotels
Chain;

Marriot

absorbed

Renaissance

and

Ramada

International; Sol Melia opened a new line of Boutique

hotels, Accor signed several joint ventures in the East and
the Far East, etc.) Forte acquired Mridien to reinforce its
global position. Starwoods (Sheraton) absorbed the Italian
Ciga chain and Westin.
The main expansion zones for the hotel industry in 1994
remained Asia (particularly China and India), the Middle
East (above all, the United Arab Emirates and Egypt) and
Latin America.
In Europe, hotel enterprises in the eastern countries
(Russia,

Croatia,

Slovakia,

etc.)

decided

to

renovate

dilapidated palaces built at the turn of the century. All the

206

European capitals started t o invest in preparations for the

major event of this fin de sicle period, that is, the
celebration of our entry into the third millennium.
The 3 star hotel Millennium enjoying top level of On -line
Room Management System is situated at the best site in
Opatija at the Mediterranean coast. Opatija in Croatia
corresponds, in terms of reputation, to the level of St.
Moritz in Switzerland.
Capitals throughout the world were busy developing the
necessary infrastructure to welcome the millions of tourists
for the celebration of this event.
Major hotel chains are drawing up development plans in
almost all parts of Europe. These plans primarily involve
the renovation of numerous prestigious hotels in both
western and eastern European countries. Gradually, the
great capitals of Europe have been endowed with hotels
boasting

three,

four

and

five

stars,

offering

quality

services, innovative architecture, style, charm, and interior

design (city Boutique hotels). Specialised hotels offer
207

wellness programs including health a nd beauty centres,

personalised

services

and

treatments,

revitalising, regenerating programs, etc.

2.4

anti -stress,

[8]

DEVELOPMENT AND GROWTH IN INDIA

A Brief Discussion:
In India, which is a vast country with countless religious
spots, travelling grew fast among pilgrims and priests to
quench their religious thirst. The priests used to be the
ruling

lords

of

the

holy

places.

These

lords

made

arrangements in most cases for food and shelter for the

pilgrims. In this process many Dharamshalas sprang and
gradually the affluent society got involved in the making of

208

such Dharamshalas in the hope of acquiring virtues. Even

to this day such Dharamshalas exist but more ameniti es
have been added. While the Dharamshalas were most free
to the pilgrims in the earlier years, reasonable service
charges

in

many

of

such

Dharamshalas

have

been

introduced now-a-days. In order to answer to the needs of

the travelling public many inns and taverns were set up in
the western countries.
With the passage of time, the growing importance of
military, diplomatic and political missions and consequent
needs

thereof

the

importance

of

travelling

began

to

increase. As a result, the hospitality ind ustry got a very big

scope to develop.
About the middle of the nineteenth century the trend of
modern hotels could be seen in India. The British Hotel
came up in 1840 in Bombay followed by the Great Eastern
Hotels in Calcutta in 1843. The original name of this latter
hotel was Auckland Hotel. Thereafter the Esplanande
Hotel in 1871, the Taj Mahal Hotel in 1903 in Bombay
209

and the Grand Hotel in 1923 in Calcutta and so on were

established.
In spite of all these developments in the hotel sector, the
industry could not develop rapidly as revealed by the rate
of growth registered. It was only when the importance
shifted from the national to the international scene the
tourism evoked by a good deal of socio -economic and
cultural consideration and also a rapid growth of the world
population

and still

rapider

means

of

transport

and

communication that an acute need for the development of

hotels in large number of modern lines was felt in India.
Even then the private sector was a litt le hesitant in taking
initiative in the development of the industry because of
heavy capital investment. The Government of India decided
to

make

concrete

plans

and

programmes

for

the

establishment of more and more hotels both on the private

and public sector in the interest of boosting up Indias
economy

through

earning

of

foreign

exchange.

The

government gave attractive incentives to the private sector

210

for coming forward with the initiative to start new ventures

or extend their existing business where nece ssary. As a
result, we can now see the private sector hotels have
progressed throughout the length and breadth of the
country or even abroad. The pioneering organisations in
the private sector on the front rank at present are the
Oberoi Group, The Taj Group, The ITC and The Asian
Group. The Government itself has set up the India Tourism
Development Corporation at the state level. As a result, of
all the efforts by the government, there has been a
tremendous development in the field of the hotel industry.
The speedy mobility of the people of the world by the grace
of

railways, cultural heritage and the virgin

natural

beauties on the other hand have attracted foreign tourists

in the country in larger numbers. There is still a very wide
scope for further progress in this industry. In fact, even
though we have done a lot, this is not commensurate with
the over-all need. Truly speaking more and more efforts are

211

necessary for coping up with the ever increasing demands

of both the domestic and foreign tourists. [ 9 ]
As for the Indian Hotel Industry is concerned, there are
basically five groups or chains of hotels namely,
The Ashok GroupIndian Tourism Development Corporation
The Welcome GroupIndian Tobacco Company
Taj Group of HotelsThe Indian Hotel Co. Ltd.

Oberoi Group of HotelsThe East India Co. Ltd.

Centaur GroupHotel Corporation of India

Apart from the above mentioned there are a number of

companies

which

have

contributed

immensely

to

the

growth of Indian economy in general and foreign exchange

earning in particular. These companies are as follows:

212

[10]

Asian Hotels

Jindal Hotels

Mac Charles

Benaras

Bharat Hotels

Leela Venture

Sayaji Hotels

Oriental
Hotels

U.P. Hotels

Jaypee Hotels

Guestline
Hotels and
Resorts

Iggi Resorts

Suman Motels

Shree Krishna

Growth and Development

The Indian hospitality industry has emerged as one of the
key industries driving growth of the services sector in
India. It has evolved into an industry that is sensitive to the
needs and desires of people. The fortunes of the hospitality
industry have always been linked to the prospects of the
tourism industry and tourism is the foremost demand
driver of the industry. The Indian hospitality industry has
recorded healthy growth fuelled by robust inflow of foreign
tourists as well as increased tourist movement within the

213

country and it has become one of the leading players in the

global industry. Foreign tourist arrivals (FTAs) into the
country increased steadily from 2002 to 2008. FTAs dipped
in 2009, due to the global economic slowdown; however,
the impact on the Indian industry was much lower than
that on the global counterparts. FTAs are expected to
increase in 2010. On the other hand, domestic tourist
movement within the country was the highest in 2009.
Industry Characteristics
Major characteristics of the Indian hospitality industry are:
1. High seasonality
The Indian hotel industry normally experiences high
demand
monsoon

during
months

OctoberApril,
entail

low

followed
demand.

which

the

Usually

the

December and March quarters bring in 60% of the years

turnover for Indias hoteliers. However, this trend is
seeing a change over the recent few years. Hotels have
introduced various offerings to improve performance
(occupancy) during the lean months. These include
214

targeting

the

conferencing

segment

and

offering

lucrative packages during the lean period.

2. Labour intensive

Quality of manpower is important in the hospitality

industry. The industry provides employment to skilled,
semi-skilled,

and

unskilled

labour

directly

and

indirectly. In India, the average employee -to-room ratio

at 1.6 (2008-09), is much higher than that for hotels
across the world. The ratio stands at 1.7 for five -star
hotels and at 1.9 and 1.6 for the four -star and three-star
categories respectively. Hotel owners in India tend to
over-spec their hotels, leading to higher manpower
requirement. With the entry of branded international
hotels in the Indian industry across different categories,
Indian hotel companies need to become more manpower
efficient and reconsider their staffing requirements.

3. Fragmented

215

The Indian hotel industry is highly fragm ented with a

large

number

of

small

and

unorganised

players

accounting for a lions share. The major players in the

organised segment include The Taj, Oberoi, ITC Hotels,
and East India Hotels. The fragmented nature of the
Indian hospitality industry is ref lected in the Herfindahl
Index of Concentration, which was at 0.062 in FY07.

Growth drivers

The fortunes of the hospitality industry are closely linked

to the tourism industry and hence tourism is one of the
most important growth drivers. In addition, all factors that
aid growth in the tourism industry also apply to the
hospitality industry. The Indian hospitality industry has
recorded healthy growth in recent years owing to a number
of factors:
Measures undertaken by the government

216

Various policy measures undertaken by the Ministry of

Tourism and tax incentives have also aided growth of the
hospitality industry; some of them include:
1. Allowance of 100% FDI in the hotel industry (including
construction

of

hotels,

resorts,

and

recreational

facilities) through the automatic route

2. Elimination

of

customs

duty

for

import

of

raw

materials, equipment, liquor etc

3. Capital subsidy programme for budget hotels
4. Exemption of Fringe Benefit Tax on crches, employee
sports, and guest house facilities
5. Five-year income tax holidays for 2-4 star hotels
established in specified districts having UNESCO declared 'World Heritage Sites'.
Trends in the industry
1. The hospitality industry recorded healthy growth in early 2000, leading to a rise in occupancy rate during 2005/06
and 2006/07. Consequently, average rates for hotel rooms
also increased in 2006/07. The rise in average rates was
217

also a result of the demand-supply gap for hotel rooms,

especially in major metros. Hotels were charging higher
rates, at times much higher than that those charged by
their counterparts in other parts of the world.
2. Lured by higher returns experienced by the hotel industry,
a number of players, domestic as well as international,
entered the space. India became one of the most attractive
destinations for such investments.
3. While on the one hand, investments continued to flow into
the hotel industry, hit by sharp rise in rates, corporates
started

looking

for

alternate

cost -effective

lodging

options. This led to emergence of corporate guest houses,

especially in major metros, and leased apartments as
replacements for hotels. While average room rates rose in
2007/08,

occupancy

rates

dropped.

Occupancy

rates

plunged sharply next year, as demand declined following

the global economic slowdown and the terror attac ks in
Mumbai. As a result, hotel rates declined during 2009 -10.

218

4. The hospitality industry reported improvement in 2009 -10,

with domestic tourist movement in the country being at a
high. While average rates remained lower, occupancy rates
rose, supported by surge in domestic tourist movement.
The industry is expected to report healthy growth in
2010/11,

with

expected

increase

in

domestic

tourist

movement and rise in international tourist arrivals.

5. A major trend in recent times is the development of the
hotel industry in cities other than major metros. As real
estate

prices

have

been

soaring,

setting

up

and

maintaining businesses and hotels in major metros is

becoming more expensive, leading to search for other
cities entailing lesser costs. Consequently, hotel markets
have emerged in cities such as Hyderabad, Pune, and
Jaipur. This has led to increase in hotel development
activity and expansion of hotel brands within the country.
6. The industry has also seen development of micro markets,
especially in primary cities. As cities grow larger and
more office spaces come up across the city, travelers
219

prefer to stay at hotels closer to the place of work/visit to

save on time. This has led to the same hotel company
setting up hotels across different location within a cit y.
7. Marketing strategies in the hospitality industry have
changed drastically over the past decade. A decade back,
the brand name of the hotel was a major driver. However,
with

the

arrival

of

well

educated

and

experienced

travelers, hotel companies have had to change/realign

their

marketing

marketing

strategies.

strategies

are

Today,

hotel

differentiation,

companies
consistency,

customer satisfaction, delivery of brand promises, and

customer retention. Development and use of technology
have also changed the way hotel companies operate,
creating

the

need

for

online

marketing.

Travelers

increasingly conduct basic research on the Internet. Blogs,

networking sites, and travel sites are therefore being used
for making choices and the information provided tends to
influence opinions and choices. Several travel portals have

220

emerged in recent times and travelers are increasingly

using these portals to make hotel reservations.
Opportunities
The prospects for the hotel industry in India are bright.
With revival in the global economy, international tourist
inflow into the country is expected to rise. Additionally,
hosting of international sports events and trade fairs and
exhibitions in the country are expected to aid both inflow
of international tourists and domestic tou rist movement.
The upcoming industrial parks, manufacturing facilities
and ports across the country provide a good opportunity
for budget and mid-market hotels. Although around 89,500
additional rooms are expected to come up in India in the
next five years, the supply of branded/quality rooms in
India is much lower compared to other countries across the
globe. Hence, there exists huge potential for investors and
operators across all the segments of hotel industry in India.
The increase in room inventories i s expected to make the
hotel industry more competitive and hotels would be under
221

pressure

to

competitive

maintain
prices.

quality

Competitive

and

service

pricing

levels

amongst

at
the

branded hotels along with the addition of more budget and

mid-market hotels would make the hotel industry cost
competitive with other destinations. This would aid the
growth of segments such as MICE, amongst others.
Sports events like IPL and the Commonwealth games have
a

potential to create demand for

Hospitality industry in India.

both

Tourism and

[11]

At present hotel industry in India has entered the global arena,

supported by its potential economy 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 of companies are addressing the
requirements of the increasing domestic market for more economical
hotels, hotel projects, 5 star hotel construction, 5 five star hotel India,
hotel

accommodations

and

222

luxurious

hotels.

The Domestic Factor for Hotel Development

Among the excellent features of the Indian hotel industry is the
overwhelming volume of the domestic market. As a rule hotels receive
double the number of domestic clients than international clients.
India is likely to witness a steady and continued trend of boom in
expenditure, fuelled by higher disposable incomes. This is excellent
news for the hotel industry as higher disposable incomes enhance the
concept of traveling.
A healthy domestic demand and sustained foreign tourist inflow shall
facilitate popular leisure destinations in absorbing potential hotel
developments, 5 star hotel construction, 5 five star hotel India 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 respect to the viability of hotel business in India.
Nevertheless, the real estate and hotel industry of India have 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 are about 16 cities like Jaipur, Agra, Goa, Pune,

223

Ludhiana, Chandigarh, Ahmedabad and Cochin that have potential for

a strong hotel industry.
India is a very famous holiday destination in the world and provides
plenty amenities as far as lodging is concerned. It has state of the art
hotels to cater to its ever booming travel and tourism industry. Hotel
Development India have popped up in India over the last few years to
cater the accommodation needs of everybody. India is dotted with
hotels that fit in every budget. There are hotels ranging from luxury
hotels to economy hotels.
Metro cities markets have witnessed strong demand from the extended
stay and domestic business 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 stay
segment, ensures that hotels now have a base demand that guarantees
certain minimum level of occupancy. This type of demand is
advantageous to hotels because it provides a base level of hotel
reservation, hotel accommodations and luxurious hotels over an
extended period that usually includes weekends and slow seasons.

224

The International Factor in Hotel Era

Even though the international market is considerably smaller than
India's domestic market, it also shows potential for growth. Tourism in
India including hotel accommodations also benefits from 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 chains betting on the
countrys enduring growth say their expansion plans remain 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 Asia Pacific. IN INDIA
THAT IS DESTINED TO EXPAND, IT WOULD BE UNWISE NOT TO
INVEST. [12]
2.5

HOTEL BUSINESS AND SERVICES

A hotel organizational structure, like other organizational structures,
are a type of 'tree' that delegate responsibilities to specific
225

departments. These typically include accountancy departments who

are responsible for measuring cash flow. They also routinely include
customer service protocols to measure client satisfaction, which is
delegated to a front end department. [13]

Basic concerns in Hotel industry [14]

Customer Service
Excellent service is one of the hospitality industry's primary
objectives. Hotel visitors rely on hospitality staff for many of their
travel needs. Hotel staff comes through in a pinch when a traveler

226

forgets to pack his toothbrush or seeks a recommendation for a

local hotel. Similarly, diners often ask restaurant wait staff to
recommend a particular meal or to accommodate a dietary
restriction. Hospitality providers often measure performance rates
of their customer objectives by surveying their customers. They
encourage customers to visit a survey website, and often provide
incentives, such as discount coupons, for customers who complete
online surveys.
Product Quality
Customers love good service, but the hospitality industry must
also provide quality products to satisfy customers. Goals based on
this important objective vary from restaurant to restaurant and
from hotel to hotel. Patrons of a restaurant demand fresh,
delicious food. Customers also desire consistency. They want a
cheeseburger from a fast food chain to taste the same in San
Francisco as it does in their hometown. Hotel guests look for quiet,
clean and comfortable rooms where they can get a good night's
sleep and spotless, spa-like bathrooms.

227

 Volume
Another primary objective of the hospitality industry is customer
volume. A restaurant owner wants to see 100 percent of her tables
filled during any given service period. Empty tables mean fewer
orders, and without sufficient table traffic, restaurant staff may
have to throw away perishable food items at the end of a shift. In
the hotel business, 100 percent room occupancy is a primary
objective. If you see a "no vacancy" sign at a hotel, motel or resort,
management has achieved its volume goal for that day.
Ratings
Publicly available ratings can reflect the success of a hospitalitybased company in meeting its performance objectives. There are
well-known trade-specific rating guides in both the restaurant and
hotel industries, and managers strive for recognition in them.
Establishments seek coveted mentions on the "best of" lists local
newspapers and weekly magazines publish. A positive reputation
on Internet travel and restaurant review sites is as important as it
is on the high-profile rating systems, because Internet reviews are

228

accessible to the entire world, and reviews can remain online for
years. [14]

Hotel Business section is a sort of guide to the basic terminology

in the hotel industry. Many new expressions appear annually in
the tourist industry. Even so, hundreds of words, concerning hotel
business, are still unknown by the most of the tourists.
In this section we give that part of terminology that can be met by
a tourist during his /her journeys. It is no secret that the hotels in
different countries have their own peculiarities. Even such a
common place as a registration desk can be called absolutely
differently. Of course, basically that concerns small private hotels.
In the hotels of the huge international chains such as Hilton or
Accor, you wont need much effort to determine the location of the
main hotel services. [15]
Hotel Chains
229

Hotel chains nowadays form the basis of world tourist business.

There are currently several hundreds of hotel chains in the world.
Among them giant corporations can be distinguished, which
hotels can be found almost anywhere in the world. Their names
are well-known even to the ordinary tourist: Radisson, Best
Western,

Hyatt,

Marriott,

and

Hilton.

According to World Tourist Organization, one in five hotels

belongs to a particular hotel chain. If you take into account that
the approximate amount of hotel on the planet is about 16 million,
the

number

will

be

really

impressive.

Hotel chains are still considered to be a novelty for a hotel

industry with its long history. The first hotel chains appeared in
the late 30-s of the 20th century in the USA. Since then the USA
holds the lead in the amount of the hotels, which belong to a
particular hotel chain. About 70 % of hotels in the USA belong to
hotel

chains.

Hotel chains put forward a wide range of offers on the market. At

this point we can say that, the hotel chain market is at the final
formation stage. And if the niche of luxury hotel is more or less
230

divided between the major players like Radisson and the others,
the hotel chains of 3* level are still rapidly developing.
Continuously increasing demand for B&B hotels (Bed and
Breakfast) has led to the appearance of dozens B&B hotel chains.
One of the latest innovations in the world tourist industry
agritourism also managed to acquire its own rural hotel chains.
Among the countries where such hotel chains have been widely
development can be distinguished Italy, Britain, France, Spain and
Portugal.
Meanwhile, hotel chains in various countries can differ in size as
well as in the principles of their operation. For example hotel
business in Italy considered to be a family business for centuries,
that is why Italian hotel chains are usually of smaller size and can
be found more seldom that in other countries of Western Europe.
Several big hotel chains have already developed in Russia. Among
them are Heliopark chain, which owns several hotels in Moscow
region, and Azimuth hotel chain, which hotels can be found in St.
Petersburg, Vladivostok, Samara and many other Russian cities. [16]
Major Hotel Chains in India: [16]
231

HRH Group of Hotels

CGH Earth

Oberoi Group of Hotels

Taj Group of Hotels

Clarks Group of Hotels

Welcome Heritage Group of Hotels

Park Group of Hotels

Meridien Group of
Hotels

Radisson Group of Hotels

Grand Hotel

Sheraton Group of Hotels

Fortune Hotels

Ambassador Hotels

Aman Resorts

ITC Welcome Group

Royal Orchid Group

Sarovar Hotels

Hotel Services

232

Taj Safari Lodges

It is important to understand what service means in the hospitality

industry as it varies from industry to industry. To have a better
understanding of the service one needs to find out what kind of
service a customer would expect. It could mean a variety of
services put together like the way the phone is answered or the
way the Receptionists greets the customer or the way a complaint
is handled and what remedial action is taken etc. etc. Customer's
expectations are always high and before you advertise for a
particular service in the hospitality service it is necessary to find
out whether all the other components will back up the service on
offer.
The components will consist of staff and tangible and intangible
services. Eventually whatever the product or the service may be,
what matters is how the product and service is being delivered.
Staff play a very important part of the delivery of this service and
their behavior and attitude is sometimes able to cover up other
shortcomings. To provide the quality service then we need to
break

the

product

into

small

components.

We need to first understand what the product itself is. For

233

example if the product is the Front Office, then what are the
expectations of a guest from the Front Office. Front Office is the
place which is the first focal point of a customer when a customer
walks in. How is that handled. Is it courteously with a smile or in
a haphazard way. This is where the service quality is going to
make the difference as this will be the product that will back the
main product. If it is a telephonic reservation the courtesy and
warmth should be felt as the guest cannot see your smile. If the
reservation is made by a fax or letter the duration for the response
will then become the service that backs the product. Will the
response be within 24 hours or will it take days to reply as there is
sufficient time for the arrival. What would impress a guest. If the
first contact is not prepared to serve beyond the standard accepted
you would find the guests assuming that everything else on offer
may

be

on

line

with

the

same

quality

of

service.

Service on offer should be offered with all the trimmings as

present day customers have much to choose from. Service offered
should be provided with the staff being prepared to go that extra
mile. Making customers happy is the motto of the Hospitality
234

service. It is a service that requires to be done with a smile. People

of all walks of life, will at some stage or the other be able to enjoy
being

served

by

someone

or

the

other.

Whether greeting a customer at the Reception or serving a drink at

the bar, the service has to be provided in a way that the customer
is felt special as the slightest dissatisfaction from any quarter may
warrant a complaint and may have consequences for the hotel and
the staff concerned. This may lead to the customer not wanting to
visit again. Service personnel should be those who are willing to
serve without expecting reward. Reward may come in different
ways but if the expectations of the staff are appreciation then they
are bound to be disappointed. It is better to be prepared for this. If
the customer is happy, then the he or she becomes the best
advertisement to the organisation. [17]
Hotel services, their number and the amount of people engaged in
them depends on the size of the hotel as well as on its status.
Typically, the basic hotel services include reception guests, room
service, food service, including restaurants in the hotel, and
security. Sometimes in the small hotels the duties of security, a
235

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 many
other 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. Many hotels nowadays offer recreation for
a particular group of tourists. Popular family hotels, hotels for the
newlyweds and hotels for people with disabilities each of them
has its unique set of services. For example in the family hotel
clients are offered services of child care and game rooms. In the
hotel for the newlyweds there is a special service for weddings. In
the hotel for disabled persons there is medical support service.
Among the services that are indirectly related to the customers,
that means that they are not involved 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
236

services of the major tour operators. Online booking through the

numerous tourist online services is getting increasingly popular.
Often the responsibilities of some hotel services are assigned to the
other companies. In the United States and Western Europe the
network of special hotel firms, which offer their services to the
hotels, is widely developed. Typically, if the hotel uses the services
of such companies, the price of the rooms will be slightly lower
than in a hotel that provides a full range of hotel services on its
own. [18]
Concierge services are normally found in higher end hotels. Using
hotel concierge services is like having a personal assistant. The
goal of the concierge is to anticipate problems that hotel guests
may encounter and find solutions. For business and leisure
travellers who are in a rush, a hotel concierge can save them both
time and energy in an unfamiliar city.

237

Basic Concierge Services

Basic hotel concierge services involve giving hotel guests
information, such as restaurant recommendations, city maps and
directions. Concierges can also tell hotel guests what is going on in
town. If the downtown area will be closed for a holiday parade,
the concierge should know and tell the guests, as well as suggest
alternative ways to avoid traffic.
Concierges may also offer additional services. For example,
business travelers often need to look polished 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.
Luxury Concierge Services
Many

five

themselves

star
on

luxury
providing

hotels

pride

exceptional

concierge services. Usually, a luxury hotel

concierge will try to fulfill whatever requests
the guests have, as long as it is legal.
238

However, the more time the concierge has to make arrangements,

the more likely a guest will get their request fulfilled. For big
requests, many concierges prefer the guests call prior to their trip.
That way, the concierge can spend more time on these requests
and can keep in touch via email. Luxury hotel guests may request
all kinds of services from the concierge. Requests can include:
finding a particular brand/ type of microwave popcorn, delivering
valuable documents left behind in the hotel, creating a fully
custom tuxedo, buying a super luxury sports car, or booking a
private plane for the ride home. A concierge should not be
surprised by any request.
Some hotel concierge services also have
exclusive

agreements

or

special

relationships with other local businesses

or restaurants. Sometimes guests can get a table at on a busy night
at an exclusive downtown restaurant if the hotel has an agreement
with them. Luxury hotel concierges may also belong to
professional concierge associations, where they network with
other concierges and trade requests. [19]
239

2.6

STATEMENT OF PROBLEMS
Issues and Problems Concerning Hospitality Industry
Hospitality Industry is a much sought after section while interacting
with people. Issues & problems concerning hospitality industry are
well discussed with in the following lines. These problems would
include recruiting and retaining skilled labor, demographics, wage
levels, lack of importance given to training and satisfaction. The
rising costs of construction are another bothering issue. These
construction costs would affect the number of hotels in the industry.
This would disable construction contractors from providing
maximum benefits. When the construction project is delayed
subsequently many other aspects get affected simultaneously. The
changes in the process affect both the funding and the completion
time aspects.
Problems Rising from Technology and demographics
The customer interface technologies are being difficult to be replaced
with more comprehensive and well planned systems which get
affected by minor defunct. Check-in kiosks and guestroom
technology is difficult to understand. Another danger of technology
240

is the guest identity profile data creating identity thefts since attacks
on computer gets more sophisticated. The changing status statistics of
world demographics also are one of the Issues & problems
concerning hospitality industry. The hotels that were connected to
the seniors should change and adapt to accommodate the current
generation. The pre-determined packages should be made flexible so
that user has choices.
Hotel Profits and Online Management Problems
This is one of the Issues & problems concerning hospitality industry
where hotel profits are affected from the increasing operational and
labor costs. The change in general lifestyles compel the management
to provide more wages for the labor. Through this hotel profits get
strained. Another problem is targeting consumers whose tastes keep
changing. Owing to this brand power suffers. Distribution through
online has become complicated where one finds it difficult to
understand, manage and market online consumers.
Travel permit restriction is another major problem that has been
come across by the hotel industry. What was easily available and less
expensive is growing more complicated as countries change their
241

policies. Such travel permit restrictions have become tight. Multi

generation travelers like those of Asians where the entire family with
various age groups travel together would find it difficult to be
accommodated by western travel operators. Cultural considerations,
staffing and shopping are other problems in hospitality industry. The
lowering returns of the asset liquidity would also affect the
hospitality sector. Retaining quality workforce is another major
problem that the hospitality industry faces. Environmental issues
and conservation problems also add up to the challenges that are
faced. [20]
Three big Technology issues in Hotel Industry

Technology enables service. Thats the idea, anyway. In the hotel

industry, thousands of companies 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 hotel company?

242

The answer depends on many factors, but a group of hospitality

associations has identified three key technology issues that are
having, and will continue to have, a direct strategic impact on the
hospitality 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 of associations and other entities whose
combined memberships represents every aspect of the hospitality
industry not only hospitality professionals, and hotels and hotel
companies, but also most companies that provide technology and
technology services to the global hospitality industry.

243

Because of this, the organizations on the council have a full and

broad view into the technology issues 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 in locations of varying security.
PCI compliance across all levels of a hospitality company has
become critically important for the financial stability and market
credibility of the hospitality industry.
Members of the HTSIC have addressed this issue in a coordinated
approach:
HTNG has set up a workgroup that will a framework that will
enable hotels to concentrate the storage of sensitive card data in
a single system, managed securely by a vendor or the hotel
company. The objective is to get every other hotel system out of
the scope of PCI by shielding it from real credit card numbers.
The initial goal of this workgroup, which is limited to hoteliers
244

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 PCI compliance on property-based
operations and systems, including building a knowledge base,
an ongoing series of articles, and a series of educational boot
camps and conference sessions.
Other council member organization initiatives include a white
paper authored by AH&LA, a payment technologies committee
established by HEDNA, and the support by OpenTravel 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 of those holy grail items like singleimage inventory or the mythical super-PNR.
Originally, it was seen as a benefit for distribution channels that
aggregate information and inventory from hundreds or thousands

245

of properties, and for payment processors to more efficiently

collect commissions from hotels.
The prevailing argument for the initiatives slow progress has
been the lack of a compelling commercial 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 to
appear correctly and accurately in search results, as search engine
sites have essentially become the 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 identifier initiative, as hotels work with their
trading partners through the lifecycle of the transaction to ensure
compliance.

246

Heres a likely scenario as an example when a distributor creates

a guaranteed reservation for a hotel, they will need to contact the
hotels designated token issuer for a token to replace the credit
card. This requires being able to unambiguously identify the hotel
so the hotel is able to charge the card and receive funds.
HEDNA, HTNG, HFTP, HSMAI and OpenTravel are all directly
supporting this initiative and holding conversations with
interested companies, with the objective to identify possible
partners and governance structure and organization.
3. Support for guests with disabilities
In both Europe and the US, regulations are being released and
revised to provide support to guests with disabilities. These are
requiring hotels and hotel companies to review most aspects of
their operations, from distribution to construction, to ensure
compliance.
With the increase in electronic distribution of hotel information
and transactions, hotels are working to provide better information
and service to guests with disabilities.

247

Initiatives specific to distribution include the creation of standard

room definitions and descriptions, guaranteeing accessible guest
rooms and removing the accessible guest room from inventory
when booked. HEDNA has worked on creating this vocabulary,
and Open Travel has revised its hotel schema, annotations and
code list to reflect these changes. [21]
Major hurdles faced in Indias Hotel Sector:
Lack of Skilled Labour
In a country where branded hotel supply has tripled during the
past decade, a quality workforce has failed to keep up, speakers
said
The biggest challenge is to create skills, said Amitabh Kant,
CEO and managing director of the Delhi Mumbai Industrial
Corridor Development Corporation, during a session titled
Getting back on track.
His comments echoed those of Vijay Thacker, director of Horwath
HTL India, who earlier in the day questioned the commitment of
public

and

private

institutions

to

address

the

issue.

Human resources are critical for our industry. Are we training

248

our people adequately? he asked attendees during a session titled

Outlook for the Indian hotel market.
Utility Costs
Energy costs are hurting every hotel, Thacker said, pointing to
arbitrary increases in expenses in many Indian states.
Thats going to be a huge noose around the industry, he added.
Ashish Kumar Singh, secretary to the chief minister for the
government of Maharashtra, addressed the complaints during a
panel discussion titled Solving the challenges and creative
initiatives for growth.
Costs have risen in the Indian state of Maharashtra because it
promises its residents uninterrupted power 24/7. To do so,
however, the government buys extra power reserves from other
states in the countrys utility exchange, which adds costs, he
explained.
But, as Singh pointed out, the extra utility feeswhich can range
from 6% to 7% of a hotels total operating expenseis still less
expensive than installing and operating an on-site generator.
Taxation
249

Unfortunately hotel projects are being viewed as juicy pieces of

enterprise through which the maximum can be extracted through
taxes or otherwise, Thacker said.
Airlift
Like many of its fellow emerging countries, Indias airlift lags
growth in demand, several speakers said.
Kant called on the government to keep opening the skies to
stimulate economic growth. Because India is a long-haul
destination, travelers typically stay longer and spend more money
in the country than they do in other destinations, he added.
Capacity Building
India lacks the taxi drivers, tour guides, travel managers and other
key positions necessary to facilitate travela challenge Kant
referred to as capacity building.
Not-so-Incredible India
Indias highly-regarded Incredible India tourism board has
generated a significant amount of global inbound travel, speakers
said. However, the message must evolve or risk becoming stale.

250

You need to constantly, aggressively unleash new campaigns

into the market, Kant said.
To compete on the global marketplace, new campaigns must
target niche sectors and segments within specific markets, he
added. And to do so, they must receive more funding from the
private sector.
Branding of a country cannot be in the hands of only the
government Kant said. This has to be a private-public
partnership over a long period of time. The private sector has to
play a far greater role.
Cost of Land
The rapid rise of development during the past decade has seen
land costs skyrocket, sources said. The outrageous prices can now
account for upwards of 45% of expenditures for hotel
constructionor higher when plots of land are opened via
auction.
Bidding of land in urban cities for hotel purposes is a no go,
Singh said bluntly.
Singh said an alternative option would have state governments
251

identify plots for hotel development and offer them to investors at

a discounted price in exchange for revenue sharing. The
arrangement has found success, as long as the deal is structured in
a transparent, competitive manner, he added.
Government red tape
Any given hotel project requires 70 to 120 permits, said Nikhil
Desai, director of tourism for the government of Goa.
Not only does this web of bureaucracy add costs, but it extends
the typical development cycle to five or seven years, sources said.
Vying for Visas
India has made some headway in making visas more accessible,
but the government still has a long way to go, according to
panelists. [22]
2.7

CLASSIFICATION OF HOTELS

The hotel industry is so vast and therefore Classification is

based on many criteria. Hotels may be categorized upon
different factors:

252

Location
Size of Property

Basis of
Classification
of Hotels

Type of Pricing Plan

Level of Service
Length of Stay
Type of Clientele
Target Market

Based on Theme

1. On the Basis of Location:

[23]

On the Basis of Location

Downtown

Suburban

Resort

Airport

Motel

Camps

a) Downtown:
Downtown hotels are located at the centre of the city in
busy commercial and shopping districts. Their features
show that they are:
Close to government and private offices , shopping
malls and entertainment centres.

253

 Expensive with high room rates as the land to make

the hotel is costly.
Quality hotels to cater to a moneyed clientele,
usually the business and corporate community
Transient for guests who come on short visits to a
maximum of one week stay.
Premium brands of hotel chains or independent
deluxe hotels of a very high quality.
The

centre

of

entertainment

with

leading

restaurants, bars and night clubs.

Multi-purpose nowadays with shopping malls, food
courts, Cineplex, childrens play areas, etc.
Community

builders

by

adding

residential

apartments and commercial office buildings within

their precincts.
Tower blocks and skyscrapers due to paucit y of
space, they build upwards to create space and
business opportunities.

254

 Challenged by parking space. Most have basement

parking.
Best example to fit in this category is Hyatt regency New
Delhi.
b) Suburban Hotels
Suburban hotels are located on the outskirts of a city
where land is cheaper than downtown locations. Their
features are as follows:
They

are

sprawling

constructions

with

ample

parking spaces.
They

attract

clientele

that

are

cost -conscious,

though not necessarily budget travellers.

Promote

their

facilities

for

training

programs,

conferences and seminars because of a leisurely

ambience.
Have better room rates and facilities for groups like
large lobbies and dining halls.
Ideal Hotels for Groups
c) Resort Hotels
255

Resort hotels are located at natural and manmade

vacation sites, e.g. Hill Stations, seaside resorts, ski
resorts, canyons, waterfalls, safari parks, etc. Disney
Land, Lego Land, Universal Studios in Hollywood and
Dam reservoirs are good examples of manmad e marvels.
Historical monuments like Taj Mahal in India, Pyramids
of Egypt, etc. are other sites for resorts which cater
specifically to the visitors of those sites. They have the
following features:
Highly seasonal depending upon climates and
holidays to get their clientele. They have to make
most of those times and charge well.
Provide heavy off-season discounts to attract the
budget conscious.
Geared towards families and couples.
Would possibly have one all -purpose dining room
with

meals

that

vegetables.
d) Airport Hotels
256

depend

on

local

seasonal

Airport hotels are located in the precincts of an airport.

Their features are typified because they:
Cater mostly to transient airline passengers who
may be catching another flight to complete their
journey. Such guests need only a room to sleep
before the next flight.
Cater also to the passengers with cancelled flights
or delayed flights. Airlines provi de hotel facilities
in such circumstances rather than keeping them
waiting at the airport.
Provide accommodation to transient airline crews
who find the airport hotel convenient between
flights.
Have a 24-Hour coffee shop for quick meals. Such
coffee shops will be large to accommodate a full
flight.
Unlikely

that

these

hotels

will

have

gourmet

restaurants but some do to attract local diners.

257

 Will have an all purpose drug store and a few

emporiums with local arts and crafts for passengers
who really do not have time for city shopping.
Have sound wake-up call services to help guests
awake to catch next flights.
Have a cyber-caf for passengers to communicate
by e-mail.
Are linked to airport screened air traffic schedules
for passengers to check their flight a rrivals and
departure timings.
Provide a shuttle coach service to the airport and
the city.
Provide left luggage facilities for those who have
little more time to visit the city.
Simple in construction possibly with two floors
with the least frills but co mfortable.
e) Motels
Motels are located on principle highways and road
junctions. Their features are:
258

 Some lodging facility with 15 -100 rooms for the

automobile traveller.
Guests have independent access to their floors and
rooms after they have registered t hemselves at the
reception.
Low buildings maybe a story or two at most.
Provide ample spaces sometimes in front of their
rooms. Guests do not have the tedium of unloading
and reloading their transport with this facility.
Rooms are equipped with tea/ coffee kettles, tea/
coffee satchets, creamers and sugar to make their
own hot beverages.
Microwave ovens to heat their own foods.
Supplement eating facilities with food and beverage
dispensers at convenient sports on the floo r.
Previously motels provided garage facilities for
earlier cars that frequently broke down. Modern
cars do not need this facility. Motels may have
petrol filling stations nearby.
259

 Rooms are simple and clean with hot and cold

shower or bath facilities.
Guests stay overnight at the most.
f) Camps
Camps are located on trekking routes. The earlier camps
had plots at picturesque spots to pitch tents with crude
toilet and shower facilities. Food was cooked around a
campfire. Other variations are the forest lodges in
remote locations that are fully equipped for self cooking,
bed linen and water supply, though not necessarily hot
water. Payment for the use of the lodge is done at the
nearest village office. Some lodges may have a caretaker
from the local village to meet the needs of the guests.
Automobile travel has revolutionised the way people
trek. Families hire or own caravans which are mobile
homes and move from camp to camp equipped to h andle
such travel. At each camp trekkers could take interior
routes by foot to scenic spots. The features of mosern
camps are they:
260

 Large parking lots where caravans are parked.

Water

hydrant connection and electricity plug -in

point for the caravans to be services at each parking

lot.
The camp will have common toilet and both facilities
with hot and cold water.
Guests sleep in their own caravans
Perhaps an all purpose diner with a bar
Snack food dispensers
Barbeque pits
Landscaped surroundings
Potable drinking water fountains
2. On the Basis of Size of Property:
Lodgings can be categorised by the number of rooms they
have:
25 and less

Small

26-100

Medium

101-300

Large

301-1000

Very Large
261

Above 1000

Mega

The size of the property depends upon the financial

strength of the investor:
Small

Category:

breakfast

Most

Motels,

establishments,

etc.

lodges,
come

bed

and

under

this

category where individual families supplement the

tourism

departments

requirement

for

additional

accommodation in season.
Medium Sized Category: More ambitious individual
entrepreneurs may establish medium -sized properties
as a regular business which must give the investor a
return on investment. These properties would still be
closely held by the families to keep total contr ol on
operations and expenditures.
The Large and Very Large Properties enter a different
league where the entrepreneur raises additional funds
from Banks, Financial Institutions, and partners in
addition to his own contribution.
262

 Mega

Properties

are

financed

by

public

limited

companies who raise finance of large proportion s

from the market by issuing shares.
3. On the Basis of Type of Pricing Plan:
Pricing plans are another way to categorise hotels. A
pricing plan is an all-inclusive price for rooms and meals .
The various pricing plans are unique to the lodging
industry.

On the basis of Pricing

Plan
European
Plan

American
Plan

Modified
American
Plan

Continent

Bed &
Breakfast

European Plan (room charges only)

This is found in downtown hotels where guests want
flexibility of eating out.
American Plan (Room+ All Meals)
263

This

plan

is

found

in

resort

properties

where

vacationers prefer to avail of all the meal options so

that they can concentrate on holidaying and relaxing.
We may have this plan at sub -urban hotels that gear
themselves

for

training

programs,

seminars

and

conferences. Participants may prefer to concentrate on

their study than be worried about where to get the
next meal.
Modified American Plan (Room + Breakfast + lunch
or dinner)
This pricing plan is found in hotels that cater to tour
groups who like to start the day with a hearty
breakfast before proceeding on their sightseeing tours
only to return in the evening to a warm dinner.
Continental Plan (Room + Continental Breakfast)
This plan is found in Europe mostly, or for European
traveller visiting other countries, who are used to
continental

breakfasts.

264

The

continental

breakfast

consists of variety of bread rolls, with butter, jam,

marmalade and honey and tea or coffee.
Bed & Breakfast (Room + English Creakfast)
This

meal

option

if

offered

by

sole

proprietors

running small lodging places or city hotels where

guests prefer the flexibility of eating out for lunch and
dinner for friends and office colleagues. The English
breakfast

is

more

elaborate

that

the

continental

breakfast with juices, cereals, eggs, meats, tea or

coffee.

[23]

4. On the Basis of Level of Service:

[24]

This is the most important criteria for classifying hotels.

Hotels can be classified into economy, mid -market or semi
economic hotel and luxury hotels. This is done on the basis
of the level of service they offer.

Economy Hotels: these are also known as Budget hotels in

this hotels guest is provided by a clean and comfortable
room with the minimum required amenities.

265

Mid-market

hotels: It offers small living room with

appropriate furniture and small bed room 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 room has entire facility with
antique furniture and special artwork. These hotels have
variety of restaurant and lounges; it even has concierge
service

and

business

centre,

shopping

arcade,

sports

facility etc. The prime market for these hotels are mainly
celebrities, business man, corporate head and high ranking
political figures. Example: Hyatt Regency, Mumbai.

5. On the Basis of Length of Stay:

[24]

[25]

According to the permanency of their guests, hotels can be

basically of two types:
Transient; and
Residential

266

Transient Hotels provides shelter to the passing travellers

temporarily for a day, or a week or a month. These
travellers are on the move either for pleasure hunting or
for any kind of business.
Residential Hotel on the other hand, is an apartment
house with full hotel services. It can be called the official
residence of a guest rather than a home away from
home with or without a lease agreement with the guest.
The hotel which includes features of both transient and
residential hotel is semi-residential hotel.
6. On the Basis of Ownership:

[26]

Another way to classify hotels is to examine the ownership

through which a hotel can be classed. The classification is
as follows:

267

Independent
Hotels

The
Concept of
Franchise

On the
Basis of
Ownership

Chains

Management
Contractual
Hotels
Independent Hotels
These hotels are on ownership basis and do not have
any affiliation or contract through any other property.
And also they do not have any tie up with any other
hotels with regard to policy, procedures, and financial
obligations. The advantage in this type of hotel is that
they need not maintain a particular image and they
are not bound to maintain any set targets, but can
independently adopt quickly to the changing trends.
They are usually autonomous.
Management Contractual Hotel

268

Another type of chain organization which operates

properties

owned

by

individuals

or

partners

is

management contract hotels. The contract is entered

on long term basis between the owner and the
operator and usually as per the contract
- Owner

retains

the

legal

and

financial

responsibilities.
- Operator pays for the operating expenses and
recovers from the owner an agreed upon fees.
- Owner is responsible for paying taxes, insurance
and debts.
Chains
There are many single owned hotels, yet more and
more hotels and motels are now getting affiliated to
each other. This gives them the advantage of a large
central organisation providing reservation system,
management

aids,

financial

strength,

expertise,

manpower specialities, merchandise and promotional

help.
269

Affiliation:
- Two or more operations belonging to some
organisations,

for

example,

Holiday

Inns,

Ramada, Sheraton Corp., Hyatt, etc. Within one

chain the type of affiliation may vary.
- A Referral chain is made up of independently
owned and operated hotel and motel provid es
shared advertisement, joint reservation system
and standardized quality. Virtually no shared
managements or financial functions.
- Another

chain

operation

is

Multi -Unit

Company usually with a head office and several

operations across the country and abr oad.
The Concept of Franchise
The word franchise means that one company ties up
with

another

company,

taking

help

of

another

company to run a business. It is a method of

distribution

where

by

one

property

that

has

developed a particular pattern of doing business gives

270

the benefit to other properties. Further F ranchise can

be called as system of distribution in which the
franchises

owner

grants

another

the

rights

or

privileges to merchandise the product or services for

specified returns. The most important benefit is of
belonging to one already known group.
Franchise is a system in which the franchise owner
grants another the right or privilege to merchandise a
product or service for a specified return.

[26]

7. On the Basis of Type of Clientele: [ 2 4 ]

Hotels are categorized into group hotels, commercial hotels and
family hotels. This categorization is mainly based on the type of
stakeholders.
Group hotels: these types of hotel generally cater to groups and
therefore use American plans. Vacationers are their biggest
clientele.
Commercial hotels: these types of hotel cater mostly to business
man and therefore use European plan in their hotels.

271

 Family hotel: these types of hotels are situated in resort cities and
they cater families therefore they use American plan.
8. On the Basis of Target Market:
Commercial hotel: they target clientele are businesses men who
visit these types of hotels for business purpose. These hotels are
located in busy commercial areas especially 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 attend
these events. Hotel with largest convention centre in India is Le
meridian, Cochin.
Suite hotels: These hotel offer compact kitchenette along with
rooms. They cater guest who has to stay away from home due to
their business they keep on relocating from one place to another.
These types of clientele are lawyers and executives.
Casino hotels: This type of hotel has gambling facilities with guest
room, food and beverage. These hotels operate 24 hours a day and
272

365 days a year. They cater leisure and vacation travellers. Las
Vegas in United State is Famous for Casino hotels.
9. On the Basis of Theme:

[24]

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 stylish accommodation and antique furniture. These
hotels cater to corporate travellers. The Park Bangalore is a
boutique hotel in India.
Spas: This is a luxury hotel resort which offer therapeutic bath,
massage and therapies along with other hotels offerings. Ananda
spa in Himalaya is the most popular Spa.
Heritage hotel: these are hotels which are converted from heritage
properties. These hotels give glimpse of the earlier tradition of a
particular region. In this hotel rooms are offered with their
history.

Traditional

cuisine is

served

to

the

guest

and

entertainment is done by folk artist. Jai Mahal palace in Jaipur.

10.

Classification by the Ministry of tourism

273

The Ministry of Tourism has formulated a voluntary scheme for

classification of operational hotels into different categories, to
provide contemporary standards of facilities and services at hotels.
Based on the approval from the Ministry of Tourism, hotels in India
can divided into two categories:
1. DoT (Department of Tourism) classified hotels
2. DoT (Department of Tourism) unclassified hotels
Classified hotels
Hotels are classified based on the number of facilities and services
provided by them. Hotels classified under the Ministry of Tourism
enjoy different kinds of benefits such as tax incentives, interest
subsidies, and import benefits. Due to lengthy and complex processes
for such classification, a significant portion of the hotels in India still
remain unclassified. The Ministry of Tourism classifies hotels as
follows:

Star category hotels

Heritage hotels

Licensed units
Star category hotels
274

Within this category, hotels are classified as five-star deluxe,

five-star, four-star, three-star, two-star and one-star.
Heritage hotels
These hotels operate from forts, palaces, castles, jungles, river
lodges and heritage buildings. The categories within heritage
classification include heritage grand, heritage classic and
heritage basic.
Licensed units
Hotels/establishments, which have acquired approval/license
from the Ministry of Tourism to provide boarding and lodging
facilities and are not classified as heritage or star hotels, fall in
this category. These include government-approved service
apartments, timesharing resorts, and bed and breakfast
establishments.
Unclassified hotels
- Branded players
This segment mainly represents the branded budget hotels in the
country, which bridge the gap between expensive luxury hotels
and inexpensive lodges across the country. Budget hotels are
275

reasonably priced and offer limited luxury and decent services.

Increased demand and healthy occupancy have fuelled growth of
budget hotels. These hotels use various cost control measures to
maintain lower average room rates without compromising on
service quality. Ginger Hotels, ITC Fortune, Hometel, and Ibis are
some of the popular budget hotels.
-

Other smaller players

These are small hotels, motels and lodges that are spread across
the country. This segment is highly unorganised and low prices
are their unique selling point.

276

2.8

OBJECTIVE OF THE STUDY

The objective of study is to prepare the detailed report on
the overall working of hotel industry. The hospitality
industry consists of a range of service providers that
includes bars, restaurants and lodging establishments. A
wide

spectrum

exists

within

these

categories.

The

restaurant category alone runs the gamut from fast food to

fine dining, and the lodging category includes economy
motels, casino hotels and resorts. Performance objectives
for hospitality providers are interrela ted and, to some
extent, dependent upon one another. The above study
provides one to have a great knowledge regarding the hotel
industry. The study helped to a great extent on getting
information regarding the history, growth, development,
various kinds of services provided by the hotel industry,
their contribution towards the growth and the various
methods used for classification. Thus the above study is
conducted to have deep knowledge regarding the hotel
industry.
277

Hotels are vital and essential part of t he tourism industry.

Without an adequate development of hotel resources, all
the national flora and fauna, the climatic virtues and all the
sporting and recreational facilities will not be enough to
sustain a good volume of tourist trade.
2.9

NEED AND JUSTIFICATION OF THE STUDY

The hospitality industry is one of the worlds most dynamic
industries and continues to grow year after year. This
growth will provide many employment opportunities for
people with the right qualifications, provides exactly the
type of education and skills that the future hospitality
managers require to succeed. A career in the hospitality
industry includes opportunities in many different areas
including, events (sporting, cultural, concerts, exhibitions,
etc.) conferences, banqueting, t heme parks and attractions,
restaurants, catering, resorts (golf, ski, beach, spa, etc.)
airlines and cruise lines and many more service -related
industries.

278

Many careers await students who choose to work in the

hospitality industry. This industry comprise s businesses
that

provide

food

and

beverage,

accommodation

and

entertainment services for their guests or clients.

Hospitality Studies develops critical awareness of the
social, cultural, environmental and economic factors that
affect the hospitality industry, while promoting efficient,
creative and entrepreneurial skills and a commitment to
service.
The above study introduces students to hospitality sectors
and environments, issues, management practices and skills
as they engage in operational and theoret ical frameworks
relevant to the industry. They create, implement and reflect
on hospitality events, and examine and evaluate hospitality
industry issues, exploring the possibilities for a sustainable
future for the industry.
Hospitality Studies gives students a foundation that, with
further development of their skills and understandings of
hospitality, could lead to professional hospitality careers in
279

food

and

beverages,

catering,

accommodation,

entertainment, resorts, tourist attractions, casinos and

gaming entertainment, festivals and events of tourism.

KEY FINDINGS
1. The majority of the international and domestic tourists stay
in 3star and guest house accommodations.
2. Price is the most important criteria for choosing a hotel.
Location

and

cleanliness

are

the

second

criteria

for

selection.
KEY STATISTICS AND SURVEY
Introduction
The Indian hospitality industry has emerged as one of the key
industries driving the growth of the services sector and, thereby,
the Indian economy. Results of the survey will empower
industry stakeholders such as owners, investors, operators,
business analysts and researchers with information on the
operational aspects of the industry. It will also help owners
benchmark the performance of their operations against industry
280

standards and seek professional help if corrective measures are

required.
Data Collection
The data is collected by conducting survey with 150 hotels. A
questionnaire was presented to each of these members and the
responses are analysed and presented in this report.
Methodology
The data received from hotels participating in the survey is
sorted and filtered according to the objectives of the survey. The
data is then processed and analysed to extract important
information

pertaining

to

the

performance

of

the

Indian

hospitality sector across crucial parameters. These parameters,

such as guest segmentation, hotel finances, marketing, sources
of

reservations,

and

seasonality,

among

others,

are

then

presented under the following categories:

Star: Five-Star Deluxe, Five, Four, Three, Two, One -Star
and Heritage hotels along with other hotels (which are not
classified under any star rating).

281

 Inventory: Number of rooms in hotels are categorised as

Less than 50 Rooms, 50-150 Rooms, and More than 150
Rooms.
Affiliation: The two types of affiliations used to categorise
hotels are Affiliated to Chain, and Independent.
Primary Markets: The seven major cities covered in this
report are Bengaluru, Chennai, Goa, Kolkata, Mumbai,
Delhi-NCR, and Pune.
Secondary Markets: Twelve secondary cities presented in
this report are Ahmedabad, Bhopal, Coimbatore, Gurgaon,
Hyderabad, Indore, Jaipur, Jodhpur, Kochi, Kottayam,
Udaipur, and Vadodara.
Qualifying Conditions
While it is endeavour to represent all the cities in India, we
are limited by the data received from the hotels. In order to
make the study relevant, we present data for only those
categories

for

which

we

participating hotels.

282

have

minimum

of

four

 Hotels

across

characteristics

different
have

categories

been

combined

showing
un der

similar

the

same

category when sufficient responses are not available for

each category.
To facilitate better evaluation of data across comparable
groups, the financial statements are presented through Net
Income, before any deduction of depreciation and inter est,
which are hotel/owner specific.
Limiting Condition
In some cases, there are large fluctuations in the data and
this noise in the data may be attributed to the changing
participation in the survey and may not be an accurate
representation of market per formance.
Presentation of Financial Data
Percentage of Revenue is an assessment of costs as a
percentage of revenue. Departmental expenses are portions
of individual revenue heads while Operating and Fixed
Expenses

are

deducted

from

Gross

Hotel

following the international accounting guidelines.

283

Revenue

 Amount

per

Available

Room

(PAR)

is

the

financial

performance of a single room and is based on the total

inventory.
Amount per Occupied Room (POR) is the performance of a
single occupied room.
All amounts presented in this report have been rounded to the
nearest whole number and are in Indian rupees for the fiscal
year 2011-12 (April-March). In the financial statements, rupee
amounts are provided as amounts per available room (PAR) and
per occupied room (POR) in order to eliminate differences in the
size of hotels surveyed.
KEY TRENDS
This section is divided into three parts: Country Trends, Key
Highlights and City Trends. In the first subsection, an overview
is provided of the broad trends that have been ob served in the
country in the past year. The second subsection highlights the
trends related to revenue and income generation, and presents
the survey findings related to Key Operating Statistics. This is
followed by the City Trends, which reflect our perception of
284

each city, as well as our expectations with regard to its future

performance.
COUNTRY TRENDS
Overall Performance: The year 2011-12 was a period of
resilience for the Indian hotel industry. A slowing Indian
economy coupled with depressed global economic conditions
posed a threat to the industry. Nationwide occupancy,
however, witnessed only a marginal decline of 1.9% in 2011 -12
as compared to 2010-11. Average rate, on the other hand,
increased by 2.2% in 2011 -12 over that in 2010-11. We estimate
that while hotel supply across major cities witnessed a growth
of 15% in 2011-12, demand exhibited a strong increase of 12%
during

the

same

period.

Thus,

although

nationwide

occupancy decreased in 2011-12, it is vital to note that it was

primarily due to supply pressure and not due to an absolute
decrease in demand.
The more serious challenge currently facing the hospitality
industry is inflation, which was recorded at 8.8% in 201112.
High

inflation

levels

throughout
285

the

year

resulted

in

increased overhead costs. Consequently, although the top line

improved in 2011-12 over 2010-11, the net income percentage
declined by 3.1%. In particular, the increase in departmental
expenses as a percentage of revenue together with the PAR
increases in Administrative & Gen eral and Energy costs
resulted in the reduction in bottom lines.
Shortfall of Trained Manpower: The hotel industry is at an
interesting

stage,

where

it

is

witnessing

flood

of

international and domestic hotel companies opening new

hotels across market positioning and locations. Additionally,
with the growing disposable income of the Indian consumer,
we see that the domestic traveller is becoming far more
discerning and demands superior products and services. One
of the biggest challenges facing most hotel companies today
as they try to keep pace with the growing supply of new
hotels is the recruitment of trained manpower, to maintain
quality and professional service delivery and product up keep. This year's survey reveals that the average percentage
of trained employees per hotel is 83.3%. While this average
286

has witnessed a growth of 6% over that in the previous year,

none of the staffing levels (manager/supervisor/staff) have
achieved an average of 100%. Going forward, we believe that
with supply expected to increase by nearly 111% in the next
five years1, the demand for high quality professionals will
continue to increase and will also lead to a steady rise in
compensation levels. Additionally, we have noticed a decline
in the quality of service offered by hotels in India confirming
the lack of trained manpower. We also note a shortage of
skilled staff in the two-star and three-star categories of
hotels. In order to cultivate a suitably trained workforce,
more vocational institutions will need to be set up. Moreover,
hotels would need to maintain considerable focus on training,
development and multi-skilling of their manpower to ensure
efficient utilisation and to cope with rising manpower costs.
Changing Market Segmentation: The Indian hotel industry at
large caters to more business guests as compared to leisure
travellers. This is mainly because a major portion of the hotel
supply is located in key metropolitan cities which are
287

primarily business destinations. This year's survey reveals an

interesting trend: a decline in the ratio of business travellers
to leisure travellers. The percentage of business guests
decreased to 58.8% from 60% last year. The increasing use of
internet and videoconferencing tools to conduct meetings
coupled with cost-cutting initiatives in a depressed global
economic scenario has resulted in a decline in overall
business travel. Also, the average length of stay of business
guests decreased to 2.7 nights from 3.0 nights last year.
The Leisure segment, on the other hand, grew by 3% over last
year. Additionally, the overall average length of stay of
leisure guests has improved from 2.3 nights last year to 3.0
nights this year. This increase has been led mainly by
domestic travellers who, as mentioned earlier, have improved
disposable incomes and a greater keenness to travel. The
domestic leisure segment is drawing more and more attention
from

the

industry,

with

family

vacation

packages

and

wellness and rejuvenation holidays marketed extensively by

hotels and travel companies, especially du ring the summer
288

months when schools break for holidays and over long

weekends and festivals.
With respect to foreign leisure travellers, the average length
of stay declined from 3.4 nights last year to3.2 nights this
year. Also, average spend witnessed a d ecline as reflected by
the decreasing Foreign Leisure FIT segment, typically a
higher yielding market segment within Leisure demand.

Mix of Country of Origin of Guests: The United Kingdom

and

the

United

States

of

America

remain

the

largest

international source markets for the Indian hospitality sector,

contributing 24% of the overall demand. Although these
countries continue to contribute the biggest portion in
percentage terms, their share has declined by 14% since
2007/08. While we expect this trend to continue in the future,
demand
countries

from
has

the

SAARC

grown

nations

steadily.

and

Also,

Middle

hotel

Eastern

guests

from

countries such as China and Japan have shown healthy

increases over last year (8% each). The rise in visitation from
Asia and Middle Eastern regions may be attributed to
289

improved connectivity, easier visa norms, infrastructure

development, and strong marketing efforts. Increasing use of
Internet: Internet is increasingly becoming an important
medium for communication, generating reservations, and
marketing across hotel categories. Nearly 95% of the hotels
participating in this year's survey have reported to using e mails for communications. At the p roperty level, while direct
enquiries continue to contribute the maximum share of
reservations, online sources such the global distribution
systems, hotel websites, online travel agencies and other
online

reservations

systems

are

slowly

gaining

share.

Presence on online channels enhances a property's visibility

and

reach,

two

vital

components

required

to

generate

business in a highly competitive environment. Within online

marketing, hotel managers are beginning to use tools such as
search engine optimisation, pay per click, mobile website
marketing, social marketing, and viral marketing. Moreover,
having a dedicated online marketing team either at the
property level or chain level that focuses on reputation
290

management,
website

adoption

analytics

is

of
a

multi

rising

channel

trend

initiatives

within

the

a nd

Indian

hospitality industry.
Sustainable Operations: This year's survey reveals an overall
increase of approximately 9% in energy costs on a PAR basis
as compared to the previous year. Given the increasing
demand and cost of electricity and the rapidly declining
water table levels, it has become essential for hotels to invest
in environmental sustainability. The impact of increasing
demand for electricity can result in non -fiscal consequences
as well, such as mandatory reduction in power consumption
stipulated by local electricity boards, or the simple non availability
Practices"

of
have

fresh

potable

been

proven

water.
to

lower

Adopting
operating

"Green
costs,

resulting in improved GOP margins by 1 -3% as seen by us.

Sustainability Services through their investment grade audits.
This vertical provides a range of business -driven consulting
services that enable hospitality firms to identify utility cost
savings opportunities, enhance operational efficiency, and
291

demonstrate positive commitment to the environment to

guests, investors and other relevant stakeholders.
KEY HIGHLIGHTS
We are of the opinion that there is a strong positive
correlation between growth in supply and growth in demand.
A 15% increase in supply in 2011-12 across major cities was
accompanied by a 12% increase in demand, which confirms
this trend. It also indicates the presence of a large quantum of
unaccommodated demand that was absorbed as new lodging
options entered the market. However, despit e an increase in
the overall gross revenues, net income as a percentage of
total revenue continued to decline in 2011 -12 mainly on
account of high inflation that resulted in increased overhead
costs.

The HVS is tracking a proposed supply of 93,355

branded rooms of which 58% is actively under development

and is expected to enter the Indian hotel market over the next
five years2. A more competitive market together with a high
inflationary environment stresses the need for hotels to focus
on improving their operational efficiencies to curtail further
292

erosion of their net incomes. The following exhibits highlight

some key emerging trends.
Exhibit 1 draws attention to the fact that 2011 -12 was indeed
a year of resilience where all -India average rates increased by
2.2% as compared to the previous year and occupancies
declined slightly by 1.9% despite a double-digit growth in
room supply across major cities.
Nationwide Occupancy and Average Rate Performance: [27]
Table 1
Year

Occupancy

Average Rate

2006-07

71.4%

7,071

2007-08

68.8%

7,989

2008-09

60.3%

7.837

2009-10

65.0%

6,426

2010-11

68.0%

6,800

(Exhibit 1)

293

Average Rate
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

Occupancy
Percentage
75.00%
70.00%
65.00%
60.00%
55.00%
50.00%

Exhibit 2 presents the PAR trends in revenue and net income

over the past five years. While total revenue increased by 7.0%,
net income recorded a decline of 3.1% as a percentage of revenue
over the previous year.
This could be attributed to an increase in departmental expenses
as a percentage of revenue, together with the PAR increases in
Administrative & General and Energy costs. These trends
augment the need for independent assessment and unbiased
reviews of existing processes affecting the operational efficiency
of hotel assets, by professionals having industry experience.

294

T
(Exhibit 2)
Exhibit 3 illustrates that in 2011/12 the percentage of revenue
from Food & Beverage (F&B) including Banquets increased to
38% from 37% in 2010/11. Also, income from Minor Operating
Departments and Rentals increased from 6% of total revenue to
7% in 2011-12. This could be due to essentially two reasons: the
overall decline in room revenues as a perc entage of total
revenue in 2011-12, and the increase in social events and
corporate functions being hosted in hotels. In our previous
reports, we have highlighted the opportunities for restaurants
and banquets in India, especially since these revenues are
typically insulated from the prevailing economic conditions that
295

affect hotel occupancies to a large extent. Going forward, as the

competition increases in the market, we expect F&B revenues to
continue to contribute a large portion of gross revenues as they
are not solely driven by occupancies. Additionally, as discussed
earlier, the growing propensity to spend of India's middle and
upper income sections will continue to augment demand for F&B
across cities in India.
(Table 2: Source of Revenue 2007-08 to 2011-12)
Year

Rooms

F&B Banquets

Other

2007-08

61%

34%

5%

2008-09

60%

35%

5%

2009-10

56%

38%

6%

2010-11

57%

37%

6%

2011-12

55%

38%

7%

Exhibit 3

296

100%
90%
80%
70%
60%
Other
50%

F&B and Banquets

40%

Rooms

30%
20%
10%
0%
2007-08

2008-09

2009-10

2010-11

2011-12

Table 3: Key Trends in Operating Statistics

Table 3.1: Composition
Composition

2007-08

2008-09

2009-10

2010-11

20112

68

69

72

72

77

16,732

15,143

15,174

15,768

16,864

Average Occupancy Per Hotel

69.4%

63.1%

59.9%

62.1%

60.9%

Average Rate per Hotel (INR)

4,605

4,487

4,149

4,578

4,677

Average

Total

Rooms

per

Hotel
Average Occupied Rooms per
Hotel

Table 3.2: Statement Showing Percentage of Revenue

Particulars

2007-08

2008-09

2009-10

2010-11

20112

61.2

60.5

56.7

57.2

55.2

REVENUE
Rooms

297

Food & Beverage

25.4

25.9

28.7

27.0

27.9

Banquets & Conferences

8.1

8.6

8.8

9.6

10.4

Telephone and Other

0.6

0.6

0.6

0.5

0.4

Minor Operated*

2.6

2.2

2.7

2.6

3.1

Rental and Other Income

2.1

2.2

2.5

3.1

3.0

100.0

100.0

100.0

100.0

100.0

Rooms

9.8

9.0

9.7

9.2

10.0

Food & Beverage

17.3

19.0

21.0

19.4

21.8

Telephone and Other

0.6

0.4

0.5

0.5

0.4

Minor Operated*

1.6

1.6

1.8

1.8

1.8

Rental and Other Income

0.3

0.2

0.2

0.4

0.2

Total (B)

29.7

30.3

33.3

31.3

34.1

Departmental Income

70.3

69.7

66.7

68.7

65.9

Administrative and General

7.4

8.7

9.1

9.6

10.2

Management Fee

2.5

2.7

2.6

2.8

2.7

Marketing

2.9

2.7

2.6

3.7

3.1

Franchise Fees

0.4

0.5

0.5

0.3

0.5

Property Operations &

4.9

5.4

5.7

6.1

5.6

Total (A)

Departmental Expenses

(A-B) = (C)

Operating Expenses

298

Maintenance
Energy

7.3

8.5

8.9

8.5

8.7

Total (D)

25.4

28.5

29.4

31.0

30.9

House Profit (C-D)= (E)

44.9

41.2

37.3

37.7

35.0

Property Taxes

0.6

0.6

0.8

0.9

0.7

Insurance

0.3

0.3

0.4

0.3

0.3

Other Fixed Expenses

0.9

1.1

1.4

2.8

1.5

Rent

1.2

1.3

1.0

1.4

1.1

Total (F)

3.0

3.4

3.5

5.4

3.6

Net Income** (E-F)

41.9

37.9

33.8

32.4

31.4

Fixed Expenses

Table 3.3: Statement showing Amount per Available Room

(INR)
Particulars

2007-08

2008-09

2009-10

2010-11

20112

REVENUE
Rooms

1,140,130

985,310

876,919

997,815 1,026,910

Food & Beverage

472,834

417,248

443,367

471,013

519,739

Banquets & Conferences

150,827

144,054

137,353

168,253

198,211

10,919

9,154

8,618

8,600

7,158

Telephone and Other

299

Minor Operated*

48,325

36,360

43,594

45,823

57,221

Rental and Other Income

39,921

36,743

37,885

54,294

56,586

Total (A)

1,862,950 1,628,870 1,547,737 1,745,800 1,860,820

Departmental Expenses
Rooms

183,116

146,192

149,683

160,980

185,231

Food & Beverage

322,623

310,165

325,793

337,840

406,005

Telephone and Other

11,907

7,291

7,776

8,945

6,775

Minor Operated*

29,233

25,554

28,555

32,254

32,827

6,002

3,553

3,285

6,124

4,195

552,881

492,755

515,092

546,142

635,033

Rental and Other Income

Total (B)

Departmental Income

1,310,070 1,136,110 1,032,645 1,199,660 1,225,790

(A-B) = (C)

Operating Expenses
Administrative and General

138,316

141,121

140,057

167,965

189,533

Management Fee

45,572

44,133

40,243

49,008

50,767

Marketing

54,727

44,439

39,920

65,375

58,263

8,074

8,496

7,795

5,317

10,014

90,665

87,780

88,550

105,099

103,827

Energy

135,077

138,749

138,097

147,899

161,479

Total (D)

472,431

464,717

454,661

540,662

573,883

Franchise Fees
Property Operations &
Maintenance

300

House Profit (C-D)= (E)

837,642

671,396

577,985

658,996

651,908

11,217

10,031

11,819

15,310

13,478

5,933

4,522

5,355

5,727

5,297

Other Fixed Expenses

17,027

18,365

21,935

48,282

27,797

Rent

22,464

21,784

15,392

24,044

20,803

Total (F)

56,640

54,702

54,500

93,363

67,374

781,001

616,694

523,484

565,633

584,534

Fixed Expenses
Property Taxes
Insurance

Net Income**(E-F)

Table 3.4: Table showing Amount per Occupied Room (INR)

Particulars

2007-08

2008-09

2009-10

2010-11

20112

REVENUE
Rooms

4,605

4,487

4,149

4,578

4,677

Food & Beverage

1,910

1,900

2,098

2,161

2,367

609

656

650

772

880

44

42

41

39

33

Minor Operated*

195

166

206

210

261

Rental and Other Income

161

167

179

249

258

7,525

7,418

7,322

8,009

8,476

740

666

708

739

844

Banquets & Conferences

Telephone and Other

Total (A)

Departmental Expenses
Rooms

301

Food & Beverage

1,303

1,412

1,541

1,550

1,849

48

33

37

41

31

118

116

135

148

150

24

16

16

28

19

Total (B)

2,233

2,244

2,437

2,506

2,892

Departmental Income

5,292

5,174

4,885

5,504

5,583

Administrative and General

559

643

663

771

863

Management Fee

184

201

190

225

231

Marketing

221

202

189

300

265

33

39

37

24

46

366

400

419

482

473

546

632

653

679

736

Total (D)

1,908

2,116

2,151

2,480

2,614

House Profit (C-D)= (E)

3,384

3,058

2,734

3,023

2,969

Property Taxes

45

46

56

70

61

Insurance

24

21

25

26

24

Telephone and Other

Minor Operated*
Rental and Other Income

(A-B) = (C)

Operating Expenses

Franchise Fees
Property Operations &
Maintenance
Energy

Fixed Expenses

302

Other Fixed Expenses

69

84

104

222

127

Rent

91

99

73

110

95

229

249

258

428

307

3,155

2,808

2,477

2,595

2,662

Total (F)

Net Income** (E-F)

* Minor Operated departments include laundry, gift shop,

business centre, news stand, sports, health club, garage, parking
and so on.
** Net Income is before depreciation, interest payments and
taxes.
CITY TRENDS
As highlighted earlier in the survey, most hotel markets in India
witnessed a strong growth in supply and demand in 2011/12. In
some cities, supply outpaced demand resulting in a decline in
occupancy in 2011/12 as compared to 2010/11. Average rates,
however, continued their growth in 2011/12 supported by the
rising demand. Increase in demand was primarily driven by the
growth in the Domestic Leisure (Tour Groups and FIT), Business
Traveller Domestic, Airline Crew, and Tour Groups Foreign
segments. It should be noted that since the respondent sets are
303

not the same every year, comparison of performance between

years across hotel markets is not entirely accurate. Table 4
illustrates average occupancy and rate for 3 cities of the Golden
Triangle, namely, Delhi, Jaipur and Agra
Table 4: Average Occupancy and Average Room Rate: Golden
Triangle
Average Occupancy Rate (in percenta ge)
City

2007-08

2008-09

2009-10

2010-11

2011-12

Delhi

78.0%

64.8%

64.6%

59.0%

61.4%

Jaipur

63.0%

61.4%

57.7%

64.0%

59.4%

Agra

62.8%

54.8%

57.0%

63.2%

68.3%

All India

69.3%

63.1%

59.9%

62.1%

60.9%

(Exhibit 4: Average Occupancy Rate in percentage)

304

90.00%
80.00%
70.00%
60.00%
Delhi

50.00%

Jaipur

40.00%

Agra

30.00%

All India

20.00%
10.00%
0.00%
2007-08

2008-09

2009-10

2010-11

2011-12

Average Room Rate (INR)

City

2007-08

2008-09

2009-10

2010-11

2011-12

Delhi

9,728

6,087

6,985

6,763

7,319

Jaipur

5,460

4,472

4059

3,071

3,447

Agra

3,307

4,211

2,482

3,968

3,974

All India

4,556

4,487

4,149

4,578

4,677

(Exhibit 5: Average Room rate)

305

12,000

10,000

8,000
Delhi
Jaipur

6,000

Agra
All India

4,000

2,000

0
2007-08

2008-09

2009-10

2010-11

2011-12

Delhi (Top 7) and Jaipur (subsequent 12) are among the major
cities. A brief discussion:
1. Delhi:
The NCR comprises hotels located in Delhi, NOIDA,
Greater NOIDA and Faridabad. As the administrative
capital of India and the premier growth city of the countr y
Delhi, despite moderate supply pressures in the next few
years, continues to be a strong market for hotels. Scarcity
of

land

and

subsequently

high

costs

help

Delhi

in

positioning itself as a high-barrier-to-entry market. Going

forward, a 53% increase in supply is 4 expected over the
next five years. A majority of this supply is in the upscale
306

and mid-market segments and is concentrated around the

DIAL Aerocity area which consists of 15 hotels that are
either under construction or in advance planning stage s. In
the short term, Delhi continues to be a strong market and
the phased introduction of the DIAL hotels from early 2013
to 2016 is likely to further induce demand into the city.
NOIDA and Greater NOIDA have gradually developed over
the

past

decade

into

hubs

of

industrial

activity.

Historically, the two towns have supported a very small

base of hotels resulting in a large quantum of demand
being accommodated by the Delhi hotels. Improvements in
infrastructure and the construction of new residential
projects have made the areas attractive for investment. HVS
is tracking a proposed supply of 5,522 rooms of which 37%
are actively under development and are expected to open
over

the

next

five

years5.

As

new

hotels

become

operational, we expect NOIDA and Greater NOIDA to

evolve into individual micro markets.

307

In the short term, we expect NOIDA hotels to face average

rate pressure from the new hotels anticipated to open in the
East Delhi and Ghaziabad areas. Hotels in Greater NOIDA
are expected to focus on building occupancy levels. The
Faridabad hotel market comprises a limited number of
branded hotels, and several unbranded hotels with large
banqueting

facilities.

The

region

obtains

most

of

its

demand from the Faridabad and Ballabhgarh industrial

areas. The market has witnessed low occupancies and rates
in the past two years. We anticipate further pressure on
occupancy with the addition of approximately 300 rooms in
the market in the next three years.
2. Jaipur
One of the key cities on the famous Golden Triangle tourist
itinerary,

Jaipur

is

one

of

India's

primary

leisure

destinations. The city is also one the oldest hotel markets in

the country and offers hotel rooms across all market
positioning catering to dema nd from international tourists
and domestic travellers. In recent times, the city has also
308

become a key MICE destination catering to large incentive

tours, corporate residential meetings, and weddings. Its
accessibility

to

Gurgaon

and

NCR,

much -improved

highway and train connectivity and increased number of

flights to and from key destinations in the country has
made the city far more accessible than the recent past.
Additionally, the competitive rates offered by the hotels,
coupled with the opportunity to use an extra day for
leisure activities for company employees, makes Jaipur a
unique destination to attract MICE demand. Jaipur also
continues to grow as a top draw for hosting weddings in
the city. The city is able to offer the historic splendour and
setting making it ideal for grand Indian weddings. In the
recent past, Jaipur has witnessed a fairly large increase to
its base of hotel rooms. Approximately 500 new hotel
rooms were added to the market in 2011/12 as compared to
just 82 in 2010/11. This result ed in both occupancy and rate
corrections across the city as compared to the previous
year. Going forward, approximately 1,000 more hotel rooms
309

are expected to enter the market by 2014/15 making further

occupancy and average rate pressures imminent. In the
long term, an additional 2,300 rooms are proposed for 8
developments in the city of which approximately 50% are
in the upscale segment. We are of the opinion that city now
faces danger of oversupply in the upscale space. Given the
large quantum of domestic demand the city caters to, we
believe Jaipur requires more rooms in the mid-market and
budget space to be developed to cater to the price conscious domestic traveller.
3. Agra
There is a steady flow of tourists throughout the year. Over
the last few years the hotel industry in Agra has shown a
major growth. Before 1988, there were no hotels in Agra
providing international quality standards and very less
number of other hotels. With the boom in the tourism
sector the number of hotels has increased in Agra. They
include: Taj Group, Welcome Group, Oberoi, Trident,
Jaypee Group etc. These hotels are best in terms of luxury
310

and facilities and target both the luxury and peace oriented
segments. The city has also many economy hotels. lthough
the Taj and Agra fort are major tourist destinations,
thousands of visitors leave Agra without even a night stay
at hotel. Agra is close enough to both Delhi and Jaipur to
visit only as a stopover. Thus a great deal of potential
income is lost.

[28]

INDIAN HOTEL INDUSTRY BY STAR CATEGORY:

This section presents the results of the performance of the hotels
analysed according to the star classification of the hotels
participating in the survey. An overall total of 150 hotels
participated in the survey for 2011 -12.The hotels have been
classified into the eight categories applicable in India.
To provide further comparisons, we have included a column for
All India Averages across all star categories. Each section
includes the total number of respondents for each component of
the survey, allowing the reader to judge the validity of the data
received.

311

The layout has been standardised in each section to enable

consistency throughout the entire document. All figures pertain
to 2011-12 (April-March), and monetary figures are in Indian
rupees (INR).
Trends:
Rooms Profile
The survey results reveal that the proportion of suites to
total room inventory does not differ significantly across
star categories. In five-star deluxe, five-star, and four-star
categories, suites constitute 6 -10% of

the total room

inventory whereas in the lower categories of three to one star, this percentage remains 7 -9%. Consumers associate
higher star categories with luxurious and more expansive
product profiles. However, a 7 -9% allocation to suites in
lower-category hotels is an indicator of ineffici ent space
utilisation and may also have an adverse impact on the
overall yield from rooms. We believe that owners and hotel
developers need to adopt construction of cookie -cutter
hotels in the two and three-star categories which will in 312

turn help in streamlining manpower requirements and also

increase overall profitability.
Departmental Expenses
We note that departmental expenses steadily increase as a
percentage of departmental revenues as we go from five star deluxe to one-star hotels. The Rooms Expense i s as
high as 30.8% and 32.1% respectively, for the two -star and
one-star hotels, as compared to 15 -17% for fourstar, fivestar and five-star deluxe hotels. Poor performance of the
rooms department with respect to occupancy levels and
low average rates result in the departmental expense being
high when represented as a percentage of departmental
revenue. Also, Food & Beverage expenses range from 70%
to 85% of the departmental income in two and one -star
hotels as against 50-55% in five and five-star deluxe
categories. The smaller inventories of the lower category of
hotels do not allow them to achieve economies of scale.
Moreover, Telephone and Minor Operating departments are
becoming

loss

generating
313

departments

in

the

lower

categories of hotels. Increasing us e of mobile phones, data

cards, and tele and video-conferencing facilities have
negatively impacted the revenue generation from these
streams while the hotels continue to incur expenses related
to these departments. We believe that the increasing
operating and manpower costs present an opportunity for
hotels to opt for outsourcing certain operations, such as
laundry, housekeeping and even F&B.
Table 5: Indian Hotel Industry by Star Category
Facilities Analysis and Staffing
Table 5.1: Typical Room Profile o n an Average Hotel
Co mp ositi on

S i ngl e
Do u bl e
S ui te s
S i ngl e
No n - A i rCon di ti o
Do u bl e
ne d
S ui te s
T ot a l A ve ra ge
R oo m
A i rCon di ti o
ne d

Fi ve
St a r
De l ux e
4 5 .5
1 6 0 .7
2 2 .5
0 .0
3 .9
0 .0
2 3 2 .6

Fi ve
St a r

Fo ur
Sta r

Th re e
Sta r

T wo
Sta r

One
Sta r

He rit - a ge

Othe r

All
India

2 3 .3
8 8 .2
7 .1
0 .5
0 .0
0 .0
1 1 9 .0

1 3 .8
7 2 .9
8 .7
0 .3
1 .7
0 .2
9 7 .5

4 .8
4 0 .5
4 .8
0 .5
4 .0
0 .3
5 4 .9

2 .9
2 5 .7
3 .0
1 .6
7 .1
1 .2
4 1 .5

1 .4
1 4 .5
2 .1
2 .4
8 .0
0 .4
2 8 .8

1 .5
2 6 .0
7 .8
0 .3
3 .0
0 .6
3 9 .2

1 .7
2 0 .2
2 .4
0 .7
7 .7
0 .5
3 3 .1

6 .6
4 1 .0
5 .0
0 .8
5 .0
0 .5
5 8 .9

The number of non-air conditioned rooms in lower star category

hotel appears to be higher, partly because many are located in
hill stations where air-conditioning is not provided in hotels.
Table 5.2: Average Number of Food Beverage Outlets per Hotel
314

Co mp ositi on

Re st a ur a n t
Ba rs
Ot he rs
T ota l

Fi ve
St a r
De l ux e
3 .7
1 .7
0 .7
6 .2

Fi ve
St a r

Fo ur
Sta r

Th re e
Sta r

T wo
Sta r

One
Sta r

He rit a
ge

Othe r

All
India

2 .4
1 .1
1 .1
4 .7

2 .1
1 .2
1 .1
4 .3

1 .7
0 .9
1 .1
3 .7

1 .2
0 .7
0 .6
2 .5

1 .2
0 .5
0 .3
2 .0

1 .7
0 .8
0 .6
3 .1

1 .4
0 .8
0 .5
2 .7

1 .7
0 .9
0 .9
3 .4

Table 5.3: Average Number of Total Employees Per Hotel

(Permanent/ Contract/ Full Time/ Part Time)
Co mp ositi on

Ma na ge r s
Supe r vi s
or s
St a f f

M al e
Fe m al e
M al e
Fe m al e
M al e
Fe m al e

T ot a l
A vg . Empl o ye e s/
R oo m

Fi ve
St a r
De l ux e
6 2 .1
1 5 .2
5 9 .3
1 0 .8
2 7 2 .5
3 8 .1
4 5 8 .0
2 .0

Fi ve
St a r

Fo ur
Sta r

Th re e
Sta r

T wo
Sta r

One
Sta r

He rit
a ge

Othe r

All
India

2 4 .4
4 .2
3 0 .7
3 .9
1 3 5 .1
1 8 .1
2 1 6 .3
1 .9

1 6 .7
2 .8
2 1 .9
3 .1
1 1 1 .4
1 2 .3
1 6 8 .1
1 .7

6 .3
0 .8
9 .8
1 .6
6 2 .4
6 .8
8 7 .7
1 .6

2 .9
0 .4
5 .0
0 .8
3 5 .2
3 .6
4 8 .0
1 .2

2 .0
0 .2
2 .6
0 .4
2 0 .2
2 .8
2 8 .1
1 .0

6 .4
0 .7
9 .1
0 .7
5 6 .1
4 .7
7 7 .6
1 .9

2 .6
0 .4
3 .9
0 .5
2 4 .7
2 .7
3 4 .7
1 .1

8 .7
1 .5
1 1 .4
1 .8
6 4 .3
7 .5
9 5 .2
1 .6

Table 5.4: Average Percentage of Trained Employees per Hotel

(in %)
Co mp ositi on

M a n a ger s
S upe r vi so r s
S t aff
T ota l A vg .
T ra ine d
Em plo ye e s
T ota l A vg .
U n- T ra i ne d
Em plo ye e s

Fi ve
St a r
De l ux e
9 0 .5
8 6 .4
7 7 .0

Fi ve
St a r

Fo ur
Sta r

Th re e
Sta r

T wo
Sta r

One
Sta r

He rit a
ge

Othe r

All
India

8 8 .0
8 3 .4
8 7 .1

9 0 .1
8 1 .9
8 2 .6

8 7 .9
8 4 .8
9 1 .4

8 5 .8
7 5 .4
6 0 .2

9 2 .0
8 0 .4
6 2 .8

8 9 .8
8 7 .7
7 3 .4

9 0 .5
8 0 .0
6 2 .5

8 8 .5
8 2 .3
7 9 .0

8 4 .6

8 6 .2

8 4 .8

8 8 .0

7 3 .8

7 8 .4

8 3 .6

7 7 .6

8 3 .3

1 5 .4

1 3 .8

1 5 .2

1 2 .0

2 6 .2

2 1 .6

1 6 .4

2 2 .4

1 6 .7

315

* Trained Employees include those with a minimum one year

certificate course from Hotel Management or equivalent
institution; however, some hotels may have included those with
short-term (in-house) training.
Table 6: Indian Hotel Industry by Star Category
Composition

Average Total
R o o m s p e r Ho t e l
Average
Oc c u p i e d R o o m s
P e r Ho t e l
Average
Oc c u p a n c y P e r
Ho t e l
Average Rate Per
Ho t e l ( I NR )

Five
Star
Deluxe

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

237

119

102

57

44

29

46

26

77

57,732

26,862

22,434

11,857

9,061

6,322

8,393

4,830

16,864

69.0%

65.5%

63.5%

59.5%

60.9%

61.0%

48.5%

59.3%

60.9%

8,206

5,549

4,261

2,800

1,457

1,043

4,248

2,131

4,677

Table 6.1: Financial Report Percentage of Revenue (2011 -12)

Composition

R EV E N U E
Rooms
Food & Beverage
Banquets &
C on f e r e n c e s
Telephone &
O th e r
M i n or O p e r a t e d *
R e n ta l & O t h e r
Income
Total
DEPARTMENTA
L EX P E NS E S
Rooms

Five
Star
Deluxe
%
55.4
26.4

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

%
56.1
26.6

%
57.3
24.3

%
53.3
34.6

%
51.1
34.1

%
55.7
34.4

%
49.8
36.1

%
51.4
38.2

%
55.2
27.9

11.3

10.5

12.9

6.6

6.4

2.8

7.5

5.8

10.4

0.5

0.3

0.3

0.2

0.8

0.3

0.1

0.0

0.4

3.9

3.6

2.3

1.3

2.1

0.7

2.9

0.0

3.1

2.5

2.9

2.9

4.0

5.6

6.1

3.6

4.7

3.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Food & Beverage

9.6
19.1

9.8
20.3

8.8
23.3

10.8
27.3

15.7
28.6

17.9
31.4

9.5
25.3

11.4
33.3

10.0
21.8

Telephone &
O th e r
M i n or O p e r a t e d *

0.3
1.9

0.3
1.4

0.3
1.5

0.8
1.8

0.7
2.4

0.8
1.7

0.2
2.4

0.1
1.0

0.4
2.1

316

R e n ta l & O t h e r
Income
Total
DEPARTMENTA
L I N C OM E
OP ER A T I N G
EX P E NS E S
Administrative &
General
Management Fee
Marketing
Franchise Fees
P r op e r t y
O p e r a t i on s &
M a i n te n a n c e
Energy
Total
H OU S E P R OF I T
F I X ED
EX P E NS E S
P r op e r t y T a x e s
Insurance
O th e r F i x e d
Charges
Rent
Total
N ET I N C OM E

0.1
30.8

0.3
32.1

0.1
34.0

0.7
41.4

0.7
48.0

0.6
52.3

0.4
37.8

0.4
46.2

0.2
34.1

69.2

67.9

66.0

58.6

52.0

47.7

62.2

53.8

65.9

10.7

9.9

10.5

9.2

8.7

8.4

11.5

4.2

10.2

3.4
3.7
0.5

2.6
2.9
0.9

2.1
2.8
0.6

2.0
2.3
0.4

1.3
2.0
0.1

1.1
3.3
0.1

2.1
3.9
0.2

0.6
1.3
0.1

2.7
3.1
0.5

4.6

6.2

7.5

5.5

6.1

4.5

8.0

6.6

5.6

7.5
30.3

9.4
31.9

9.6
33.1

10.7
30.1

10.6
28.9

10.0
27.4

9.1
34.8

11.6
24.5

8.7
30.9

38.8

36.0

32.9

28.5

23.1

20.3

27.4

29.4

35.0

0.6
0.2

0.7
0.2

0.8
0.3

0.9
0.4

1.5
0.6

1.2
0.4

0.4
0.2

0.4
1.7

0.7
0.3

2.1

0.8

1.1

1.0

1.0

0.7

1.3

0.5

1.5

1.3
4.2

0.9
2.6

0.8
3.0

1.0
3.4

0.6
3.7

1.0
3.2

2.9
4.8

2.6
5.3

1.1
3.6

34.6

33.4

29.9

25.2

19.4

17.1

22.6

24.1

31.4

Table 6.2: Financial Report Amount per Available Room

(2011-12)
Composition

Five
Star
Deluxe

Five
Star

Four
Star

Three
Star

2000880
955468

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

1249870
591781

934414
395716

584573
379249

302518
201712

231247
142905

778217
563756

390820
290541

1026910
519739

408931

233853

210344

72322

37960

11428

117650

43942

193211

16984

7291

5223

2525

4743

1174

1141

63

7158

139726

81079

37799

14754

12562

3030

45674

57221

91683

65467

47305

43558

32970

25165

55923

35737

56586

3613680

2229340

1630800

1096990

592465

R EV E N U E
Rooms
Food & Beverage
Banquets &
C on f e r e n c e s
Telephone &
O th e r
M i n or O p e r a t e d *
R e n ta l & O t h e r
Income
Total

317

414947 1562360

761102 1860820

DEPARTMENTA
L EX P E NS E S
Rooms
Food & Beverage
Telephone &
O th e r
M i n or O p e r a t e d *
R e n ta l & O t h e r
Income
Total
DEPARTMENTA
L I N C OM E

345864
688934

219361
452124

143783
380329

118677
299174

93101
169301

74270
130131

147901
395293

87121
253310

185231
406005

9829

6165

4533

8456

3948

3359

3187

435

6775

67906

31710

25219

20155

14174

6881

38030

7776

38827

1981

6460

1119

7661

4135

2392

6082

2982

4195

1114510

715819

554983

454122

284659

217034

590494

351625

635033

2499160

1513520

1075820

642870

307806

197914

971868

409478

1225790

386923

220273

171122

100712

51783

35041

179606

31934

189533

122603
133511
18064

58758
64926
19304

34930
45829
10068

22192
24630
4497

7664
11960
763

4375
13674
534

33219
60878
2285

4611
10069
941

50767
58263
10014

OP ER A T I N G
EX P E NS E S
Administrative &
General
Management Fee
Marketing
Franchise Fees
P r op e r t y
O p e r a t i on s &
M a i n te n a n c e
Energy
Total

164752

137500

121524

60371

36190

18837

124468

50536

103827

270759
1096610

205340
706101

153948
537420

114599
327003

62723
171083

41329
113791

142798
543254

88018
186108

161479
573883

H OU S E P R OF I T

1402550

807423

538398

315867

136724

84123

428614

223370

651908

21780
8144

15140
4280

13363
5134

10044
4668

8592
3728

4824
1657

5569
2907

3239
12995

13478
5297

76503

18415

17181

11240

5861

2685

20682

3933

27797

46626
153053

19545
57380

48505

37047

21885

13316

74577

19678
39845

20803
67374

1249500

750044

489894

278820

114839

70807

354037

183525

584534

F I X ED
EX P E NS E S
P r op e r t y T a x e s
Insurance
O th e r F i x e d
Charges
Rent
Total
N ET I N C OM E

Table 6.3: Financial Report Amount per Occupied Room

(2011-12)
Composition

Five
Star
Deluxe

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

R EV E N U E
Rooms
Food & Beverage

8206
3919

5549
2627

4261
1804

2800
1816

318

1457
972

1043
644

4248
3078

2131
1584

4677
2367

Banquets &
C on f e r e n c e s
Telephone &
O th e r
M i n or O p e r a t e d *
R e n ta l & O t h e r
Income
Total
DEPARTMENTA
L EX P E NS E S
Rooms
Food & Beverage
Telephone &
O th e r
M i n or O p e r a t e d *
R e n ta l & O t h e r
Income
Total
DEPARTMENTA
L I N C OM E
OP ER A T I N G
EX P E NS E S
Administrative &
General
Management Fee
Marketing
Franchise Fees
P r op e r t y
O p e r a t i on s &
M a i n te n a n c e
Energy
Total
H OU S E P R OF I T
F I X ED
EX P E NS E S
P r op e r t y T a x e s
Insurance
O th e r F i x e d
Charges
Rent
Total
N ET I N C OM E

1677

1038

959

346

183

52

642

240

880

70

32

24

12

23

33

573

360

172

71

61

14

249

261

376

291

216

209

159

113

305

195

258

14820

9898

7436

5254

2854

1871

8529

4149

8476

1418
2825

974
2007

656
1734

568
1433

449
816

335
587

807
2158

475
1381

844
1849

40

27

21

41

19

15

17

31

278

141

115

97

68

31

208

42

150

29

37

20

11

33

16

19

4571

3178

2531

2175

1371

979

3223

1917

2892

10249

6720

4906

3079

1483

892

5305

2232

5583

1587

978

780

482

249

158

980

174

863

503
548
74

261
288
86

159
209
46

106
118
22

37
58
4

20
62
2

181
332
12

25
55
5

231
265
46

676

610

554

289

174

85

679

276

473

1110
4497

912
3135

702
2451

549
1566

302
824

186
513

780
2966

480
1015

736
2614

5752

3585

2455

1513

659

379

2340

1218

2969

89
33

67
19

61
23

48
22

41
18

22
7

30
16

18
71

61
24

314

82

78

54

28

12

113

21

127

191
628

87
255

58
221

53
177

18
105

19
60

248
407

107
217

95
307

5124

3330

2234

1335

553

319

1933

1001

2662

Table 7: Indian Hotel Industry by Star Category: Market Data

Table 7.1: Market Segmentation
319

Composition

Airline Crew
Business
Traveller
D om e s t i c
Business
Traveller
F or e i g n
C om p l i m e n t a r y
Rooms
D om e s t i c T ou r i s t s / L e i s u r e
FIT
F or e i g n T ou r i s t s / L e i s u r e
FIT
M e e ti n g
P a r ti c i p a n t s ( L e s s
th a n 1 0 0
Attendees)
M e e ti n g
P a r ti c i p a n t s
(Over 100
Attendees)
T ou r G r o u p s D om e s t i c
T ou r G r o u p s
F or e i g n
O th e r
T ota l

Five
Star
Deluxe

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

7.5

3.8

2.6

0.9

0.5

0.6

0.2

0.7

1.4

14.7

20.4

32.7

33.7

37.8

36.2

16.1

34.0

32.1

19.8

14.7

16.1

8.7

6.5

4.3

9.3

6.2

9.3

2.3

2.7

1.3

1.9

1.4

2.3

2.0

2.8

1.9

10.0

18.1

11.5

20.5

22.6

25.7

23.4

26.9

20.5

8.9

8.8

8.3

8.0

6.3

4.7

19.5

7.6

8.1

4.8

3.2

4.9

3.9

4.0

3.1

3.1

2.7

3.8

9.7

10.6

6.9

7.7

5.9

5.7

3.1

6.2

7.1

4.2

4.9

6.7

7.9

9.4

9.2

7.5

6.3

7.7

8.1
10.0

9.5
3.3

6.2
2.8

4.2
2.6

3.2
2.4

1.9
6.3

15.3
0.5

3.2
3.4

4.9
3.2

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

320

Market Segmentation
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Five Star Five Star Four Star Three Star Two Star One Star Heritage
Deluxe

Other

All India

Other
Tour Groups Foreign
Tour Groups - Domestic
Meeting Participants (Over 100 Attendees)
Meeting Participants (Less than 100 Attendees)
Foreign - Tourists/Leisure FIT
Domestic - Tourists/Leisure FIT
Complimentary Rooms
Business Traveller Foreign
Business Traveller Domestic
Airline Crew

Table 7.2: Guest Analysis

Composition

D om e s t i c G u e s t s
F or e i g n G u e s t s
Total

Five
Star
Deluxe

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

51.0
49.0
100.0

56.7
43.3
100.0

64.3
35.6
100.0

78.7
21.2
100.0

82.7
17.2
100.0

85.2
14.8
100.0

52.1
47.9
100.0

82.4
17.6
100.0

75.3
24.7
100.0

321

T ota l B u s i n e s s
G u e s ts
T ota l L e i s u r e
G u e s ts
Total
Average Stay in
days
F or e i g n G u e s t s
D om e s t i c G u e s t s
Business Guests
Leisure Guests
P e r c e n t a g e of
Repeat Guests

62.4

55.2

64.7

60.3

56.9

63.9

27.9

60.9

58.8

37.0
99.4

44.8
100.0

35.2
99.9

39.6
99.9

43.1
100.0

36.1
100.0

72.1
100.0

39.1
100.0

41.2
100.0

3.8
2.2
2.0
2.3

3.0
2.1
2.2
2.0

3.1
2.3
2.5
2.9

3.5
3.5
3.4
2.7

2.8
2.6
2.8
2.3

1.8
2.3
1.8
10.1

4.4
2.4
2.1
2.3

2.6
2.3
1.9
2.2

3.2
2.8
2.7
3.0

37.0

39.1

41.2

47.3

51.9

43.9

27.8

56.4

46.6

Overall Composition of
Tourists (%)

Overall Composition of
type of Guests (%)

Domestic
Tourist

Business
Guests

Foreign
Tourist

Leisure
Guests

Table 8: Indian Hotel Industry by Star Category: Sources of

Reservations
Table 8.1: Source of Advance Reservations
Composition

Chain CRS
( C e n tr a l
R e s e r v a t i on
S y s te m )
Direct Enquiry /
H o te l
Representation
G l o ba l
D i s tr i b u t i on

Five
Star
Deluxe
%

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

8.5

5.6

3.2

4.8

2.3

2.0

9.9

1.7

4.1

42.4

44.8

47.5

49.1

53.2

55.0

29.2

58.3

49.5

12.3

6.3

3.7

1.7

0.7

0.7

0.6

0.7

2.2

322

S y s te m ( G D S )
H o te l / C h a i n
Website
Travel Agent and
T ou r O p e r a t or
O th e r O n l i n e
R e s e r v a t i on
S y s te m s
O th e r W e bs i t e
O th e r

7.2

6.4

9.0

7.8

7.8

7.2

8.2

7.4

7.7

13.3

19.1

19.1

19.9

20.5

18.1

39.8

17.6

20.1

5.7

5.9

4.4

3.7

2.3

1.2

4.1

2.8

3.5

3.9
6.9

5.2
6.9

7.7
5.4

6.2
7.0

6.6
6.7

6.1
9.8

3.3
5.0

5.3
6.2

6.1
6.8

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Total

Table 9: Indian Hotel Industry by Star Category: Marketing

Media
Table 9.1: Marketing Media - Percentage of Hotels Using Each
Media
Composition

B l og s
Direct Mail
H o te l W e bs i t e
L oy a l t y C a r d
p r og r a m
Merchandising
O th e r I n t e r n e t
S i te s
O u td o or
Advertising
Pay Per Click
Print Advertising
P r om o t i on s
Radio
Advertising
Telemarketing
TV Advertising
Viral Marketing

Five
Star
Deluxe
%
24.4
78.1
87.8

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

%
17.9
87.5
94.6

%
15.1
83.9
94.6

%
10.9
82.9
90.7

%
3.5
71.4
81.9

%
5.0
66.7
78.3

%
4.6
88.6
88.6

%
8.5
68.3
75.6

%
10.1
78.9
87.3

85.4
39.0

71.4
35.7

57.0
38.7

28.0
25.1

19.3
15.8

13.3
20.0

31.8
22.7

18.3
15.9

32.9
24.7

75.6

76.8

69.9

68.3

63.2

58.3

68.2

48.8

65.9

51.2
14.6
92.7
85.4

76.8
12.5
96.4
85.7

62.4
12.9
90.3
82.8

61.6
7.7
84.0
72.8

44.4
5.3
80.7
51.5

55.0
6.7
75.0
45.0

59.1
4.6
88.6
75.0

50.0
1.2
74.4
46.3

57.4
7.6
84.0
67.1

29.3
48.8
34.2
7.3

35.7
67.9
23.2
8.9

39.8
62.4
25.8
6.5

24.3
54.7
28.3
7.7

9.4
37.4
13.5
1.2

3.3
31.7
10.0
3.3

9.1
43.2
27.3
4.6

9.8
36.6
15.9
7.3

20.6
49.1
22.9
6.0

323

Percentage of hotels using each media

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Five Star
Deluxe

Five Star Four Star Three Star Two Star One Star

Heritage

Other

All India

Blogs

Direct Mail

Hotel Website

Loyalty Card program

Merchandising

Other Internet Sites

Outdoor Advertising

Pay Per Click

Print Advertising

Promotions

Radio Advertising

Telemarketing

TV Advertising

Viral Marketing

Table 10: Indian Hotel Industry by Star Category: Payment

Methods
Table 10.1: Payment Methods Used
Composition

Cash Sales
Credit Card Sales
Credit Sales
( oth e r t h a n c a r d s )
E l e c tr on i c F u n d
Transfer

Five
Star
Deluxe
%
12.9
46.8

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

%
20.1
40.6

%
26.2
40.3

%
37.5
33.9

%
51.1
28.5

%
60.9
25.0

%
32.9
27.7

%
56.6
23.1

%
40.0
32.6

34.4

31.3

27.0

20.8

14.3

10.5

34.6

14.4

20.7

5.9

8.1

6.5

7.8

6.1

3.6

4.8

5.9

6.7

324

Total

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Table 10.2: Credit Card Used

Composition

American Express
Diners Club
M a s te r c a r d /
Eurocard
Visa
O th e r
Total

Five
Star
Deluxe
%
33.1
2.6

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

%
20.7
2.0

%
13.3
2.8

%
7.5
2.3

%
4.0
1.8

%
2.2
1.6

%
9.5
0.5

%
6.7
1.8

%
9.4
2.1

29.3
33.2
1.9
100.0

40.1
34.4
2.9
100.0

33.9
46.0
4.0
100.0

39.9
45.6
4.7
100.0

41.4
47.5
5.4
100.0

41.8
52.2
2.1
100.0

32.7
48.6
8.8
100.0

40.5
47.0
4.1
100.0

38.8
45.3
4.5
100.0

Table 11: Indian Hotel Industry by Star Category: Technology

Management Practices
Composition

Accounting
S y s te m
Call Accounting
S y s te m
C e n tr a l
R e s e r v a t i on
S y s te m ( C R S )
E l e c tr on i c
Ke y c a r d
Energy
Management
S y s te m
Internet / E -Mail
I n t e r n e t / W e bs i t e
I n tr a n e t S y s t e m
Local Area
N e tw or k ( L A N )
Management
I n f or m a t i o n
S y s te m
P oi n t o f S a l e
S y s te m f or F o o d
and Beverage
P r op e r t y
Management

Five
Star
Deluxe
%

Five
Star

Four
Star

Three
Star

T wo
Star

On e
Star

He r i t a g
e

Ot h e r

All
India

86.1

93.8

93.8

91.6

88.6

84.5

95.1

83.6

90.2

72.2

77.1

81.5

54.8

52.5

37.9

43.9

41.8

56.2

72.2

64.6

53.1

29.3

18.4

10.3

41.5

4.5

30.7

88.9

85.4

70.4

42.7

20.3

20.7

14.6

14.9

40.5

41.7

33.3

46.9

29.1

14.6

6.9

12.2

13.4

25.3

97.2
100.0
75.0

100.0
93.8
52.1

93.8
97.5
56.8

95.3
88.0
52.2

92.4
83.5
32.9

93.1
72.4
29.3

97.6
92.7
63.4

89.6
79.1
44.8

94.5
87.4
48.4

97.2

95.8

95.1

83.2

68.4

55.2

75.6

64.2

79.1

80.6

72.9

84.0

60.1

42.4

24.1

58.5

44.8

56.9

97.2

95.8

96.3

76.8

56.3

37.9

70.7

56.7

72.3

91.7

89.6

80.3

51.4

29.1

10.3

39.0

26.9

48.5

325

S y s te m
Yield
Management
S y s te m
O th e r

52.8

25.0

37.0

22.4

10.1

1.7

17.1

13.4

20.5

13.9

12.5

13.6

8.9

5.7

1.7

2.4

3.0

7.9

INDIAN HOTEL INDUSTRY INVENTORY AND CHAIN

AFFILIATION
Introduction
In this section, we present key operating statistics and other data for the
survey participants according to the number of rooms. The participating
hotels have been classified into three categories: 'less than 50 rooms', '50 to
150 rooms', and 'more than 150 rooms'. We have also drawn a comparison
between Chain Affiliated and Independent hotels.
Trends
Room Profile and Facilities: Suites constitute a higher percentage
(9%) of the total room inventory of hotels with less than 50 rooms as
compared to the other categories. This is because heritage properties,
with their small room count and relatively large suite inventory form
a large portion of this category. We note that there is a distinct
difference in the facilities of branded hotels as opposed to
independent hotels. Branded hotels tend to offer more expansive

326

facilities (113 rooms and 4.4 Food & Beverage outlets on an average)
when compared to independent hotels (49 rooms and 3.2 Food &
Beverage outlets on an average).
Employee Composition: The survey reveals that there is not much
difference between chain affiliated and independent hotels in the
employee-to-room ratio. This may be attributed to the fact that
independent hotels are usually full service hotels and, unlike their
branded counterparts, do not benefit from the use of well-trained
multi-skilled professionals.
Profitability: We have observed that there is a positive correlation
between the net income percentage and room inventory of hotels. Hotels
with higher room inventories are able to achieve better economies of
scale. This is because hotels typically have very high fixed costs that get
rationalised as the inventory increases. Moreover, larger hotels tend to
be chain affiliated; this helps them gain advantages in terms of wellestablished standard operating procedures, control measures, and
trained personnel, to achieve better bottom lines.
Sources of Advance Reservations: An analysis of the sources of
advance reservations of hotels based on the stipulated parameters
327

reveals branded hotels receive reservations from a healthy mix of a

variety of channels ranging from Central Reservation Systems, Global
Distribution Systems, Chain Website, Travel Agent, Other Online
Systems, and Direct Enquires. Independent hotels on the other hand rely
largely on Direct Enquires, Local Sales Teams, and Tour Operators to
generate their room night business.
Table 12: Indian Hotel Industry- Inventory & Chain Affiliation: Facilities
Analysis and Staffing
Table 12.1: Typical Room Profile of an Average Hotel
Composition

AirConditioned
Non-AirConditioned

Single
Double
Suites
Single
Double
Suites

Less than
50
Rooms
2.0
20.7
3.0
0.7
4.6
0.4
31.3

50 to 150
Rooms
9.2
57.8
6.9
1.0
5.6
0.6
81.0

More
than 150
Rooms
44.1
173.2
17.1
1.2
7.1
0.5
243.2

Chain
Affiliated

Independent

20.9
79.0
10.1
0.4
2.5
0.1
113.0

3.9
34.0
4.1
0.9
5.5
0.6
48.9

Table 12.2: Average Number of Food & Beverage Outlets per Hotel
Composition

Restaurant
Bars
Others
Total

Less than
50
Rooms

50 to 150
Rooms

More
than 150
Rooms

Affiliated

Chain
Independent

1.4

1.9

3.2

2.2

1.6

0.8

0.9

1.5

1.1

0.8

0.6

1.1

1.3

1.1

0.8

2.8

4.0

5.9

4.4

3.2

328

Table 12.3: Average Number of Total Employees Per Hotel (Permanent/

Contract / Full Time / Part Time)
Composition

Less than
50
Rooms

50 to 150
Rooms

More
than 150
Rooms

Affiliated

Independent

Male

3.2

11.8

50.0

22.9

5.9

Female

0.5

1.6

12.9

4.7

0.9

Male

4.9

15.9

55.7

26.1

8.5

Female

0.8

2.3

9.0

4.0

1.3

Male

33.3

89.5

248.1

128.6

51.5

Female

3.4

10.1

35.6

14.6

6.0

Total

46.2

131.2

411.4

200.9

74.0

Average Number of
Employees Per Room

1.5

1.6

1.7

1.8

1.5

Managers
Supervisors
Staff

Chain

Table 12.4: Average Number of Trained Employees per Hotel

Composition

Managers
Supervisors
Staff
Total Avg. Trained
Employees
Total Avg. Un-Trained
Employees

Less than
50
Rooms

50 to 150
Rooms

More
than 150
Rooms

Chain
Affiliated

Independent

88.7

88.7

85.2

93.5

87.1

83.5

81.2

79.8

88.0

80.8

85.9

71.6

70.0

86.7

76.9

86.0

80.5

78.3

89.4

81.6

14.0

19.5

21.7

10.6

18.4

Table 13: Indian Hotel Industry - Chain Affiliated vs.

Independent

Average Total Rooms

per Hotel
Average Occupied

Chain
Affiliated
129

Independent

All India

58

77

29,343

12,475

16,864

329

Rooms per Hotel

Average Occupancy per
Hotel
Average Rate per Hotel

62.4%

60.4%

60.9%

6,386

3,264

4,677

Table 13.1: Financial Report (2011-12): Percentage of Revenue

Chain
Affiliated

Independent

All India

REVENUE
Rooms
Food & Beverage
Banquets &
Conferences
Telephone & Other
Minor Operated
Rental & Other Income
Total

%
56.2
26.5
10.9

%
53.6
30.2
9.5

%
55.2
27.9
10.4

0.4
3.3
2.7
100.0

0.4
2.7
3.6
100.0

0.4
3.1
3.0
100.0

DEPARTMENTAL
EXPENSES
Rooms
Food & Beverage
Telephone & Other
Minor Operated
Rental & Other Income
Total

9.7
19.8
0.3
1.8
0.1
31.7

10.3
25.0
0.5
1.6
0.4
37.9

10.0
21.8
0.4
1.8
0.2
34.1

68.3

62.1

65.9

10.9

9.1

10.2

3.6
3.4
0.6
5.2

1.4
2.7
0.4
6.2

2.7
3.1
0.5
5.6

8.6

8.8

8.7

DEPARTMENTAL
INCOME
OPERATING INCOME
Administrative &
General
Management Fee
Marketing
Franchise Fees
Property Operations &
Maintenance
Energy

330

Total

32.2

28.7

30.9

HOUSE PROFIT

36.1

33.5

35.0

FIXED EXPENSES
Property Taxes
Insurance
Other Fixed Charges
Rent
Total

0.6
0.3
2.0
1.1
3.8

1.0
0.3
0.8
1.2
3.3

0.7
0.3
1.5
1.1
3.6

NET INCOME

32.0

30.0

31.0

Table 13.2: Financial Report (2011-12)

Amount per Available Room (INR)
Chain
Affiliated
REVENUE
Rooms
Food & Beverage
Banquets &
Conferences
Telephone & Other
Minor Operated
Rental & Other Income
Total
DEPARTMENTAL
EXPENSES
Rooms
Food & Beverage
Telephone & Other
Minor Operated
Rental & Other Income
Total
DEPARTMENTAL

Independent

All India

1,453,310
684,785
282,995

696,293
391,780
123,594

1,026,910
519,739
193,211

10,500
86,032
68,917
2,586,540

4,567
34,881
47,027
1,298,140

7,156
57,221
56,568
1,860,820

250,896
511,606
6,929
47,805
2,648
819,884

134,319
324,141
6,656
21,214
5,395
491,725

185,231
406,005
6,775
32,827
4,195
635,033

1,766,650

806,417

1,225,790

331

INCOME
OPERATING INCOME
Administrative &
General
Management Fee
Marketing
Franchise Fees
Property Operations &
Maintenance
Energy
Total
HOUSE PROFIT
FIXED EXPENSES
Property Taxes
Insurance
Other Fixed Charges
Rent
Total
NET INCOME

281,527

118,201

189,533

92,646
87,812
16,539
133,573

18,291
35,350
4,954
80,767

50,767
58,263
10,014
103,827

222,133
834,230

114,451
372,014

161,479
573,883

932,423

434,403

651,908

14,866
6,485
50,385
27,794
99,531

12,402
4,376
10,280
15,383
42,441

13,478
5,297
27,797
20,803
67,374

832,893

391,963

584,534

Table 13.3: Financial Report (2011-12)

Amount per Occupied Room (INR)

REVENUE
Rooms
Food & Beverage
Banquets &
Conferences
Telephone & Other
Minor Operated
Rental & Other Income
Total

Chain
Affiliated

Independent

All India

6,386
3,009
1,244

3,264
1,836
579

4,677
2,367
880

46
378
303
11,366

21
163
220
6,084

33
261
258
8,476

332

DEPARTMENTAL
EXPENSES
Rooms
Food & Beverage
Telephone & Other
Minor Operated
Rental & Other Income
Total
DEPARTMENTAL
INCOME
OPERATING INCOME
Administrative &
General
Management Fee
Marketing
Franchise Fees
Property Operations &
Maintenance
Energy
Total
HOUSE PROFIT
FIXED EXPENSES
Property Taxes
Insurance
Other Fixed Charges
Rent
Total
NET INCOME

1,103
2,248
30
210
12
3,603

630
1,519
31
99
25
2,305

844
1,849
31
150
19
2,892

7,763

3,780

5,583

1,237

554

863

407
386
73
587

86
166
23
379

231
265
46
473

976
3,666

536
1,744

736
2,614

4,097

2,036

2,969

65
29
221
122
437

58
21
48
72
199

61
24
127
95
307

3,660

1,837

2,662

Table 14: Indian Hotel Industry -Inventory

Composition

Less
Than 50
Rooms

333

50 to 150
Rooms

More
Than
150

All India

Rooms
Average
Hotel
Average
Hotel
Average
Average

Total Rooms per

32

86

253

77

Occupied Rooms Per

6,575

18,803

58,527

16,864

Occupancy Per Hotel

Rate Per Hotel (INR)

59.4%
2,215

61.8%
4,080

66.6%
6,944

60.9%
4,677

Table 14.1: Financial Report (2011 -12): Percentage of Revenue

Composition

Less Than
50
Rooms

50 to
150
Rooms

%
50.2
38.9
5.5
0.4
1.0
4.1
100.0

DEPARTMENTAL EXPENSES
Rooms
Food & Beverage
Telephone & Other
Minor Operated*
Rental & Other Income
Total
DEPARTMENTAL INCOME

REVENUE
Rooms
Food & Beverage
Banquets & Conferences
Telephone & Other
Minor Operated*
Rental & Other Income
Total

OPERATING EXPENSES
Administrative & General
Management Fee
Marketing
Franchise Fees
Property Operations &
Maintenance
Energy
Total

All India

%
56.4
27.6
10.0
0.3
2.6
3.1
100.0

More
Than
150
Rooms
%
55.1
26.1
11.7
0.5
3.9
2.8
100.0

13.0
29.4
0.4
2.0
0.9
45.7

9.9
22.3
0.4
1.6
0.2
34.5

9.4
19.9
0.3
1.8
0.1
31.6

10.0
21.8
0.4
1.8
0.2
34.1

54.3

65.5

68.4

65.9

8.4
2.8
2.2
0.3

10.4
3.1
2.7
0.6

10.5
3.1
3.7
0.6

10.2
2.7
3.1
0.5

6.0

6.5

4.7

5.6

11.0
30.7

9.5
32.8

7.7
30.1

8.7
30.9

334

%
55.2
27.9
10.4
0.4
3.1
3.0
100.0

HOUSE PROFIT

23.6

32.8

38.3

35

FIXED EXPENSES
Property Taxes
Insurance
Other Fixed Charges
Rent
Total

0.9
0.7
1.4
1.3
4.2

0.7
0.3
1.4
1.1
3.4

0.7
0.2
1.6
1.1
3.7

0.7
0.3
1.5
1.1
3.6

19.5%

29.3%

34.6%

31.4%

NET INCOME

Table 14.2: Financial Report (2011 -12):

Amount per Available Room
Less Than
50
Rooms

50 to 150
Rooms

More Than
150 Rooms

All India

REVENUE
Rooms
Food & Beverage
Banquets & Conferences
Telephone & Other
Minor Operated*
Rental & Other Income
Total

454,734
351,803
49,637
3,267
8,764
37,161
905,366

890,858
436,309
157,438
4,857
41,432
48,905
1,579,800

1,606,390
759,645
340,532
13,241
112,647
81,236
2,913,700

1,026,910
519,739
193,211
7,158
57,221
56,586
1,860,820

DEPARTMENTAL
EXPENSES
Rooms
Food & Beverage
Telephone & Other
Minor Operated*
Rental & Other Income
Total

117,536
266,377
3,426
18,469
7,713
413,521

156,225
352,794
7,001
25,973
2,801
544,793

274,502
580,076
8,584
53,297
4,304
920,764

185,231
406,005
6,775
32,827
4,195
635,033

DEPARTMENTAL INCOME

491,845

1,035,010

1,992,930

1,225,790

OPERATING EXPENSES

335

Administrative & General

Management Fee
Marketing
Franchise Fees
Property Operations &
Maintenance
Energy
Total
HOUSE PROFIT
FIXED EXPENSES
Property Taxes
Insurance
Other Fixed Charges
Rent
Total
NET INCOME

75,587
22,220
20,006
2,535

164,518
44,875
42,983
9,168

304,425
78,281
107,281
16,249

189,533
50,767
58,263
10,014

54,373

102,808

137,348

103,827

99,783
274,504

149,482
513,834

223,150
866,735

161,479
573,883

217,341

521,172

1,126,200

651,908

7,675
6,059
12,313
11,660
37,707

11,119
4,303
21,546
17,375
54,343

20,908
6,419
47,476
32,057
106,860

13,478
5,297
27,797
20,803
67,374

179,634

466,829

1,019,340

584,534

Table 14.3: Financial Report (2011 -12):

Amount per Occupied Room
Composition

Less Than
50
Rooms

50 to 150
Rooms

More
Than
150 Rooms

All India

REVENUE
Rooms
Food & Beverage
Banquets & Conferences
Telephone & Other
Minor Operated*
Rental & Other Income
Total

2,215
1,713
242
16
43
181
4,410

4,080
1,998
721
22
190
224
7,235

6,844
3,284
1,472
57
487
351
12,594

4,677
2,367
880
33
261
258
8,476

DEPARTMENTAL
EXPENSES
Rooms
Food & Beverage

572
1,297

715
1,616

1,187
2,507

844
1,849

336

Telephone & Other

Minor Operated*
Rental & Other Income
Total

17
90
38
2,014

32
119
13
2,495

37
230
19
3,980

31
150
19
2,892

DEPARTMENTAL
INCOME

2,396

4,790

8,614

5,583

368
108
97
12

753
206
197
42

1,316
338
464
70

863
231
265
46

OPERATING EXPENSES
Administrative & General
Management Fee
Marketing
Franchise Fees
Property Operations &
Maintenance
Energy
Total

265

471

594

473

486
1,337

685
2,353

965
3,746

736
2,614

HOUSE PROFIT

1,059

2,387

4,868

2,969

FIXED EXPENSES
Property Taxes
Insurance
Other Fixed Charges
Rent
Total

37
30
60
57
184

51
20
99
80
249

90
28
205
139
462

614
24
127
95
307

NET INCOME

875

2,138

4,406

2,662

Table 15: Indian Hotel Industry Inventory and Chain Affiliation: Market Data
Table 15.1: Market Segmentation

Composition

Less
Than 50
Rooms

50 to 150
Rooms

337

More
Than
150

Chain
Affiliate
d

Indepen
dent

Airline Crew
Business Traveller
Domestic
Business Traveller
Foreign
Complimentary Rooms
Domestic - Tourists /
Leisure FIT
Foreign - Tourists /
Leisure FIT
Meeting Participants
(Less than 100
Attendees)
Meeting Participants
(Over 100 Attendees)
Tour Groups
Domestic
Tour Groups - Foreign
Other
Total

%
0.6

%
1.8

Rooms
%
7.2

34.7

30.1

21.8

25.8

33.7

6.6

12.0

18.7

16.4

7.7

1.9

1.9

2.5

1.8

1.9

24.9

15.8

8.3

13.2

22.2

8.0

8.2

7.7

8.8

7.9

3.4

4.4

3.9

4.2

3.7

5.8

8.7

8.6

9.2

6.6

7.6

8.2

4.7

5.8

8.1

3.9
2.8
100.0

6.0
3.0
100.0

7.7
9.2
100.0

6.9
4.3
100.0

4.5
2.9
100.0

%
3.6

%
0.9

Table 15.2: Guest Analysis

Less Than
50
Rooms

50 to 150
Rooms

Domestic Guests
Foreign Guests
Total

79.8
20.1
100.0

71.5
28.4
99.9

More
Than
150
Rooms
52.9
47.1
100.0

Total business
Total leisure
Total

56.6
43.3
100.0

60.1
39.8
99.9

68.7
30.8
99.6

Composition

Average Stay in
Days

338

Chain
Affiliated

Independ
ent

62.2
37.8
100.0

78.3
21.7
100.0

61.3
38.7
100.0

58.1
41.9
100.0

Foreign Guests
Domestic Guests
Business Guests
Leisure Guests

3.0
2.8
2.8
2.6

3.4
3.0
2.8
3.5

3.8
2.0
2.2
2.3

2.1
2.2
2.9
2.1

3.0
2.9
3.3
3.2

Percentage of
Repeat Guests

48.5

44.4

41.9

36.5

48.8

Table 16: Indian Hotel Industry - Inventory and Chain

Affiliation: Sources of Advance Reservation

Composition

Chain CRS
(Central
Reservation
System)
Direct Enquiry /
Hotel
Representative
Global
Distribution
System (GDS)
Hotel / Chain
Website
Travel Agent &
Tour Operator
Other Online
Reservation
Systems
Other Websites
Other
Total

Less
Than 50
Rooms

50 to 150
Rooms

More
Than
150
Rooms

Chain
Affiliated

Independent

3.9%

4.2%

5.7%

8.0%

3.2%

51.1

47.7

46.4

44.4

50.7

1.1

2.6

10.9

6.2

1.3

8.3

6.9

7.8

7.8

7.7

19.9

21.5

12.5

17.3

20.7

2.7

4.6

3.6

6.5

2.8

6.1
6.9
100.0

6.1
6.4
100.0

5.2
7.9
100.0

4.7
5.1
100.0

6.3
7.2
100.0

Table 17: Indian Hotel Industry - Inventory and Chain

Affiliation:
339

Marketing Media- Percentage of Hotels Using Each Media

Composition

Blogs
Direct Mail
Hotel Web site
Loyalty Card
Program
Merchandising
Other Internet
Sites
Outdoor
Advertising
Pay Per Click
Print Advertising
Promotions
Radio
Advertising
Telemarketing
TV Advertising
Viral Marketing

Less
Than 50
Rooms

50 to 150
Rooms

%
7.3
7 7.3
84.1

%
13.1
80.8
90.8

More
Than
150
Rooms
%
17.0
81.1
94.3

2 2.4

41.5

19.4

Chain
Affiliated

Independent

%
19.0
81.0
93.9

%
7.9
78.3
85.7

75.5

64.3

25.3

30.9

34.0

36.9

21.8

6 2.0

70.2

75.5

75.4

63.7

54.9

61.6

52.8

60.9

56.5

4.5
8 0.6
59.6
13.9
43.1
21.2

10.6
88.0
75.2
28.4
57.4
24.5

17.0
88.7
84.9
32.1
50.9
28.3

9.5
89.4
84.9
27.9
58.7
24.0

7.1
82.6
62.9
18.8
46.8
22.6

4 .9

7.8

3.8

8.9

5.3

Table 18: Indian Hotel Industry Inventory and Chain

Affiliation: Payment Methods
Table 18.1: Payment Methods Used

Composition

Less
Than 50
Rooms

50 to 150
Rooms

340

More
Than
150
Rooms
%

Chain
Affiliated

Independent

Cash Sales
Credit Card Sales
Credit Sales
(Other than Cards)
Electronic Fund
Transfer
Total

46.8
29.7

33.2
35.0

17.0
45.7

23.2
41.3

44.0
30.6

16.6

25.2

31.3

28.4

18.9

6.9

6.5

6.1

7.1

6.6

100.0

100.0

100.0

100.0

100.0

Chain
Affiliated

Independent

20.2
2.9

6.6
1.9

Table 18.2: Credit Cards Used

Composition
American Express
Diners Club
Mastercard/
Eurocard
Visa
Other
Total

Less
Than 50
Rooms

50 to 150
Rooms

5.5
2.0

11.9
2.1

More
Than
150
Rooms
25.6
2.8

40.1

38.0

32.8

34.0

40.0

47.6
4.8
100.0

44.0
4.2
100.0

34.6
4.3
100.0

38.5
4.4
100.0

47.0
4.5
100.0

Table 19: Indian Hotel Industry - Inventory and Chain

Affiliation: Technology in Hotels Percentage of Hotels Using Each Technology

Composition
Accounting
System
Call Accounting
System

50 to 150
Rooms

More
Than
150
Rooms

Chain
Affiliated

Independent

89.2

92.2

86.7

92.6

89.7

47.0

67.7

73.3

72.1

52.5

Less
Than 50
Rooms

341

Central
Reservation
System (CRS)
Electronic Keycard
Energy
Management
System
Internet / E-mail
Internet / Website
Intranet System
Local Area
Network (LAN)
Management
Information
System
Point of Sale
System for Food
and Beverage
Property
Management
System
Yield Management
System
Other

21.3

40.1

64.4

65.8

22.5

25.9

56.1

86.7

70.2

33.5

18.4

33.5

40.0

35.4

22.9

94.0
84.1
42.7

95.0
90.9
55.2

95.6
97.8
62.2

95.7
96.3
70.2

94.2
85.3
43.3

72.5

87.2

93.3

94.4

75.5

45.6

71.5

75.6

80.8

51.3

61.7

85.0

95.6

92.6

67.5

34.8

63.0

93.3

84.5

40.1

14.7

24.8

53.3

36.7

16.8

5.6

10.7

13.3

13.7

6.6

SURVEY RESULTS
Accommodation is the largest single expenditure for foreign
tourists in Golden Triangle.

342

Distribution of International tourists'

expenditure, n=63
Accommodation

11%

Visit to cultural sites &

entertainment

35%
21%

Food and Beverages

Transport inside India
20%

Shopping

13%

On an average, accommodation represents one third of an

international tourists total budget.
Food and beverages, and transport represent each around 20% of
their expenditures.
The

majority

of

international

tourists

stay

in

cheaper

accommodation and make their booking independently, either

with the hotel or via the internet.

343

Accomodation by type, n=107

11%
31%

Heritage Hotels

11%

5 star and above

4 star
3 star

16%

Hotel/ Guest House

31%

Methods of Booking accomodation, Number

of repondents, n=107
4%
26%

22%

Travel Agencies
Tour Operators
Directly with the Hotel
At the Station

3%
7%

Internet
Others

38%

Price,

location,

and

cleanliness

are

the

top

influencing international tourists choice of Hotel

344

three

factors

Main factors influencing international

tourists' choice of hotel (%), n=107
Brand

16

Comfort

41

Cleanliness

60

Location

61

Price

65
0

10

20

30

40

50

60

70

Whilst hotel brands do not feature prominently the decision

making of international tourists, the arrival of major chains is
likely to alter their preferences.
KEY STAKEHOLDERS
Understanding the behaviour and preferences of inte rnational
tourist is important for the key stakeholders in tourism
industry.

345

We have highlighted the main implications from our survey for

each of the major stakeholders in tourism industry.

1. With around 60% of international tourists perceiving

golden triangle cities as dirtyand polluted, measures to
improve air quality and sanitize public spaces could reap
dividends for the cities international appeal.

346

2. With 74% of respondents describing the places as noisy

and 49% as crowded, strategies to impr ove mobility
around the cities and to reduce traffic near prime cultural
sites

would

improve

the

experience

of

international

tourists.
3. With an average stay of only 6 to 7 days, reducing journey
timesbetween the cities in the region could increase the
likelihood of a visit as well as extending time spent in the
city. This would create increased opportunities for Golden
Triangles tourism industry to generate extra revenue.
4. As more and more international tourists use the internet as
their primary resource for planning and booking their
holiday in India, providing online reservation and payment
facilities for public transportation and cultural sites should
be a priority.
5. With international tourists regularly complaining of being
hassled by vendors and touts and being subjected to
attempted scams, better enforcement by public authorities
could improve the visitorexperience.
347

1. With 70% of those surveyed using guide books to plan their

trip, having a presence in this go to resource for
international tourists is paramount.
2. As

only

one

third

of

international

tourists

booking

theiraccommodation via tour agents and operators, an

online presenceand the ability to book directly over the
internet is increasinglyimportant as more visitors plan their
trip independently.
3. Cleanliness and price are the overriding priorities of
internationaltourists when choosing their accommodation.
4. A location close to the main cultural sites is important
given theshort length of stay of international tourists.
5. With night time activities bar ely featuring in our survey,
hotels couldboost their revenues from international tourists
by providing latenight dining, drinking and entertainment.
348

6. With Delhi Airport acting as a gateway for 80% of

international

touriststhe

capitals

transport

hubs,

culturalsites and hotels appear to be a strategic place for

promoting a stay.

1. Because guide books are the primary source for planning a

stay, a presence in this popular resource is the primary
generator of international tourist business for bars and
restaurants in the city.
2. With cleanliness a major concern for international tourists,
having

high

hygiene

standards

and

effectively

communicating these standards to foreign tourists would

be a good way for restaurants to attractinternational
clientele.
3. While the majority of international tourists are content
with the number of restaurants in the city, bars and other
evening activities barely feature in their stay. Increasing
the range of evening leisure activities targeted at the
349

international

tourist

market

could

be

lucrative

for

thehospitality sector.

1. 60% of international tourists list shopping as a major

activity during their stay in Golden Triangle. However, it
represents only 11% of their average expenditure. It clearly
demonstrates that there is room to generate increased
revenues from this activity.
2. With a short average stay, the proximity of retailers to
prime cultural sites and hotels as well as their presence in
guide

books

are

an

important

factor

in

generating

international tourist revenues.

3. Furthermore, as Golden Triangle only features as a short
part of a wider trip around the region and /or India, goods
that are both durable and compact are more likely to
capture the interest of international tourists.
4. With some international tourists reportin g being subject to
attempted scams by retailers, an industry code of conduct
350

with an identifiable logo for participants could attract

international tourists to the majority of retailers who
comply with ethical business practices.

1. With international tourists increasingly booking transport

and

accommodation

through

the

internet,

local

tour

operators and travel agents will need to increase their

online presence.
2. As local travel accounts for almost one third of an
international tourists daily budget, tr avel agents and tour
operators will need toensure that pricing is competitive
and communicated clearly.
3. As organized players enter the sector, local travel agents
and tour operators will face stiffer competition. Obtaining
internationally recognized status such as IATA membership
will increase theconfidence of international tourists when
booking with localagents.

351

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