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A Desk Research Report of Semester II

on
Industry Analysis desk research on Hotel Industry

SUBMITTED BY:
1
2
3
4

Rugved Hiswankar
Chaitali Lavate
Siddhesh Shinde
Nishant Modi

B-18
B-28
B-49
B-61

UNDER THE GUIDANCE OF


Prof. Pallavi Sajanapwar
SUBMITTED TO UNIVERSITY OF PUNE
IN PARTIAL FULFILMENT OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

INDIRA INSTITUTE OF MANAGEMENT, PUNE


(2013-2015)
INDEX
1

Chapter.....................................................................................................................................3
1.1

Nature of Industry.............................................................................................................3

1.2

Size of the industry...........................................................................................................3

1.3

Categorization of Hotels in India......................................................................................3

1.4

Classification on the basis of star category:-....................................................................4

1.5

Criteria for top 3 and bottom 3 players in the industry:-..................................................5

1.6

Introduction:-....................................................................................................................6

1.7

Players in Indian hotel Industry........................................................................................8

1.8

Facts and Figures of Indian Hospitality industry:.............................................................8

1.9

Geographical spread........................................................................................................10

1.10

Factors contributing to demand.......................................................................................11

1.11

Supply demand balance :-...............................................................................................11

1.12

Professional trade bodies for hotel industry....................................................................13

1.13

Digital Services...............................................................................................................14

Chapter...................................................................................................................................16
2.1

Management Ethos and Philosophy................................................................................16

2.2

Top Management personnel............................................................................................17

2.3

Brief profiles...................................................................................................................21

2.4

CSR and initiatives towards Environmental Conservation.............................................22

Chapter...................................................................................................................................24
3.1

Controlling Ministry for the Hospitality Industry...........................................................24

3.2

Legal Violations..............................................................................................................25

3.3

Key national issues affecting industry............................................................................26

3.4

Key initiatives by the government to promote hotel industry:-......................................27

Chapter...................................................................................................................................28
4.1

Profitability chart:-..........................................................................................................28

4.2

Revenue...........................................................................................................................28

4.3

Key factors contributing to industry:-.............................................................................29

4.4

Ratio analysis :-...............................................................................................................29

Chapter...................................................................................................................................39
5.1

Challenges.......................................................................................................................39

5.2

Impact of Exim policy on hotel industry........................................................................44

5.3

Technology Trends Revolutionizing The Hospitality Industry.......................................45

BIBLIOGRAPHY..................................................................................................................46

1 Chapter
Industry analysis
1.1

Nature of Industry
The Indian hospitality industry has emerged as one of the key industries driving the growth of the

servicessector and, thereby, the Indian economy. Hotel industry is inextricable linked to the tourism
industry and the growth in the Indian tourism industry has fuelled the growth of Indian Hotel Industry.
Over the last decade business opportunities in India had intensified and elevated room rates occupancy
levels in India. Even budget hotels are charging 15000 Rs. per day.
'Hotel Industry in India' success story is only second to China in Asia Pacific. The World Travel
and Tourism Council, says that India ranks 18th in business travel and will be among the top 5 very soon.
India's big success stories includes the new model for development and growth; a model that is uniquely
made.
1.2

Size of the industry (1)


Indian Hotel Industry has supply of 110,000 rooms. According to the analysis of tourism ministry,

4.4 million tourists visited India year 2009 and has risen to 10 million in 2010 - to accommodate 350
million domestic travelers. The Hotel Industry in India is at the verge of making 150,000 rooms fueling
hotel room rates across India by 2015. There is tremendous opportunity for India as a destination for hotel
chains looking for growth.
1.3

Categorization of Hotels in India

The basic division in India according to the location is as follows:

1 HeritageHotels
These types of hotels reflect the old glory and grandeur of India, they are mostly the old havelis
and mansions of ancient times which have been turned into Heritage Hotels, these provide
tourists with an opportunity to experience royal pleasure in traditional ambiance. They mostly
concentrate in the princely states of Rajasthan, Delhi, and Madhya Pradesh

2 Luxury Hotels
These Hotels are equipped with world class infrastructural amenities, they offer the tourists with a
fine lodging and dining experience. They extend a warm welcome to the customers catering
primarily to the upper class executives.

3 Budget Hotels
These kinds of Hotels are like home away from home, they accommodate customers from upper
middle and middle class. Mostly named as Economy Class Hotel, Business Hotels and Discount
Hotels, the Budget Hotels supports the modern infrastructural facilities for a comfortable and
pleasant stay.

4 Resorts
Resort hotels in India are mostly found in hill stations and sea side tourist destinations. These are
located amidst natural scenic beauty, they are the ideal place to enjoy some valuable time with
family and friends or in solitude.
1.4

Classification on the basis of star category

(2)

:-

One Star Hotels


Hotels in this classification are likely to be small and independently owned, with a family atmosphere.
Services may be provided by the owner and family on an informal basis. There may be a limited range of
facilities and meals may be fairly simple. Lunch, for example, may not be served. Some bedrooms may
not have en suite bath/shower rooms. Maintenance, cleanliness and comfort should, however, always be
of an acceptable standard.

Two Star Hotels


In this classification hotels will typically be small to medium sized and offer more extensive facilities
than at the one star level. Some business hotels come into the two star classification and guests can expect
comfortable, well equipped, overnight accommodation, usually with an en-suite bath/shower room.
Reception and other staff will aim for a more professional presentation than at the one star level, and offer
a wider range of straightforward services, including food and drink.

Three Star Hotels


At this level, hotels are usually of a size to support higher staffing levels, and a significantly greater
quality and range of facilities than at the lower star classifications. Reception and the other public rooms
will be more spacious and the restaurant will normally also cater for non-residents. All bedrooms will
have fully en suite bath and shower rooms and offer a good standard of comfort and equipment, such as a
hair dryer, direct dial telephone, toiletries in the bathroom. Some room service can be expected, and some
provision for business travelers.

Four Star Hotels


Expectations at this level include a degree of luxury as well as quality in the furnishings, decor and
equipment, in every area of the hotel. Bedrooms will also usually offer more space than at the lower star
levels, and well designed, coordinated furnishings and decor. The en-suite bathrooms will have both bath
and fixed shower. There will be a high enough ratio of staff to guests to provide services like porterage,
24-hour room service, laundry and dry-cleaning.

Five Star Hotels


Here you should find spacious and luxurious accommodation throughout the hotel, matching the best
international standards. Interior design should impress with its quality and attention to detail, comfort and
elegance. Furnishings should be immaculate. Services should be formal, well supervised and flawless in
attention to guests' needs, without being intrusive. The restaurant will demonstrate a high level of
technical skill, producing dishes to the highest international standards. Staff will be knowledgeable,
helpful, well versed in all aspects of customer care, combining efficiency with courtesy.

Seven Star Hotels


There is no formal body that awards stars to luxury properties higher than five stars. Some properties
have taken to calling themselves six- or seven-star properties, to indicate their uber luxurious status.
These properties may offer higher quality rooms as well as a range of amenities and services not
traditionally available at hotels. The basic criteria for a saven star hotel is that it is accessible by road, air
and sea.
1.5

Criteria for top 3 and bottom 3 players in the industry:-

Top 3 and bottom 3 hotels:-

Sr no.

Name

Profit 2012-13(3) (in crore)

Oberoi Hotels

12.57

Taj Hotels

3.29

ITC Hotels

0.57

Kamat hotels

-5.66

Sayaji Hotels

-20.83

6
1.6

Hotel Leela
Introduction:-

-433.46

Oberoi Group Of Hotels :The Oberoi Group, founded in 1934, operates 30 hotels, a Nile Cruiser and a Motor Vessel in the
backwaters of Kerala. The Group has presence in six countries under the luxury 'Oberoi' and five-star
'Trident' brand. The Group is also engaged in flight catering, airport restaurants, travel and tour services,
car rentals, project management and corporate air charters.
Oberoi Hotels & Resorts is synonymous the world over with providing the right blend of service,
luxury and quiet efficiency. Internationally acclaimed for all-round excellence and unparalleled levels of
service, Oberoi hotels and resorts have received innumerable awards and accolades.

Taj Hotels
The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectively known as Taj
Hotels Resorts and Palaces and isrecognised as one of Asia's largest and finest hotel company.
Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the company opened its first
property, The TajMahal Palace Hotel, Bombay in 1903. The Taj, a symbol of Indian hospitality,
completed its centenary year in 2003.
Taj Hotels Resorts and Palaces comprises 93 hotels in 55 locations across India with an additional
16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the
Middle East.
Spanning the length and breadth of the country, gracing important industrial towns and cities,
beaches, hill stations, historical and pilgrim centres and wildlife destinations, each Taj hotel offers the
luxury of service, the apogee of Indian hospitality, vantage locations, modern amenities and business
facilities.

ITC Hotels
ITC Forayed into the Hotels business to support the national priority of developing new avenues
of foreign exchange earnings and boosting tourism. Beginning with the Sheraton Chola, Chennai in 1975,
ITCs journey in this business has redefined the face of Indian hospitality.

Today, ITC Hotels is one of largest hotel chains in the Country with over 90 hotels in more than
70 destinations. Symbolised by its distinctive Namaste logo, ITC Hotels integrated Indias fine tradition
of hospitality with globally benchmarked services.
With a string of firsts to its credit, ITC Hotels pioneered the concepts of branded accommodation,
branded cuisine, environment and guest safety. ITC Hotels is an exemplar in sustainable hospitality with
all its premium hotels being LEED Platinum certified.
As one of Indias premier corporations, ITC Hotels seeks to fulfill a larger role by enlarging its
contribution to the society of which it is a part. The trusteeship role related to social and environmental
resources, aligned to the pursuit of economic objectives, is the cornerstone of its Environment, Health &
Safety philosophy for which it has won many awards and accolades.

Hotel kamat
Kamat Hotels (India) Limited was incorporated on 21st March, 1986 in the State of Maharashtra
by Late Mr. Venkatesh Krishna Kamat and his associates with the main object of setting up and running
of hotels and related business. The Company obtained the Certificate of Commencement of Business on
31st March, 1986.
Kamat Hotels (India) Ltd. (KHIL),is engaged in the business of hospitality and allied businesses,
and its activities may be broadly categorized into (i) operation of hotels owned by the Company, (ii)
management of hotels owned by other parties under contract (iii) catering services and (iv) timeshare.
KHIL has firmly established four hotel brands viz. The Orchid An Ecotel Hotel in the 5-Star
segment and VITS Luxury Business Hotel in the 4-Star segment, Gadh Hotels and Lotus Resorts. The
focus of the Company is in positioning its hotels to the business segment in the mid to up-market
category. In addition, the Company consciously follows the policy of environment conservation in the
operation of its hotels in all aspects viz. design, construction and operations. This environment
positioning gives a duel advantage to the Company in terms of marketing & visibility coupled with lower
cost of operations.

Hotel Sayaji
After the start of first Sayaji hotel in Baroda followed by Indore, Pune and barbeque nation chain
of restaurants nationwide, Mr. Dhanani founder of Sayaji hotels, decided on two tenets for Sayaji
Change is the rule of Game and Customer First. These values were instituted in every step of

Sayajisaga. Sayaji provides and serves the very best facilities in luxury and cuisine to its guests and ,is the
only hotel in the world which calls itself Truly Yours.

Hotel Leela:The Leela Palaces, Hotels and Resorts is an Indian luxury hospitality group founded in 1986
by Captain C. P. Krishnan Nair, who named it after his wife. Currently The Leela - as it is commonly
referred

to,

is

group

of

seven

luxury

palaces

and

hotels,

located

in Mumbai, Goa, Bangalore, Trivandrum, Gurgaon, Udaipur and New Delhi. The group has plans to open
new hotels in Chennai (2011) and later in Coimbatore and Agra, Lake Ashtamudi (Kollam, Kerala)
and Jaipur.
1.7

Players in Indian hotel Industry


Indian Hotel Industry has been booming business and has also given a boast to tourism business

in the country. Radisson Hotels India, Taj Group of Hotels, Park Group of Hotels and ITC Hotels are
some of the known hotels in the hotel industry that are famous for unique amenities and superb
accommodation arrangements.
There are also the ITC Maurya Delhi, ITC Maratha Mumbai, and Fort Radisson of Radisson
Group in Kolkata, Radisson Jass Hotel Shimla, The TajWestend, Bangalore, Taj Coromandel, Chennai.
The major cities like Bangalore, Hyderabad, Chennai, Gurgaon, Pune Goa and the suburbs of
Mumbai are the areas most attractive for the international investment and as expected these are the cities
with the largest development pipelines. Combined these cities account for 89 of the 161 projects in the
pipeline and 16,734 guestrooms, which is 68% of the rooms in India's total pipeline

1.8

Facts and Figures of Indian Hospitality industry (4):


1. As per the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum,
India is ranked 12th in the Asia Pacific region and 68th overall, on the list of the world's attractive
destinations. It is ranked the 14th best tourist destination for its natural resources and 24th for its
cultural resources, with many World Heritage sites, both natural and cultural, rich fauna, and
strong creative industries in the country. India also bagged 37th rank for its air transport network.
The India travel and tourism industry ranked 5th in the long-term (10-year) growth.

2. The Hospitality industry is the third-largest foreign exchange earner, accounting for 6.23% of
Indias GDP and 8.78% of Indias total employment, according to a report by the Planning
Commission.
3. Tourism in India is the largest service industry. The travel and tourism sector currently employs
49 million people, or 1 in every 10 jobs, and this is projected to increase to 58 million.
4. Travel and tourism is a USD 32.7 billion business in India, according to industry estimates; in
addition, the hospitality sector is sized at USD 23 billion and is expected to grow to US$ 36
billion by 2018.
5. It is expected that the hospitality sector will witness an inflow of USD 12.17 billion in
investments over the next two years, according to market research company Technopak Advisors.
6. According to the Planning Commission, the hospitality sector creates more jobs per million
rupees of investment than any other sector of the economy. The World Travel & Tourism Council
(WTTC), which says Indias travel and tourism sector is expected to be the second-largest
employer in the world, employing 40,37,000 people, directly or indirectly, by 2019.
7. The Indian hotel industry is likely to witness a revenue growth of about seven per cent in 201213.
8. Foreign Tourist Arrivals (FTAs) to India increased from 5.17 million in FY09 to 5.78 million in
FY10, thereby resulting in a increase of 11.8%
* The share of India in international tourist arrivals in 2010 was 0.61%, which is 0.02%
improvement over 2009. India's rank improved to 40th in 2010, from 41st in 2009.
9. According to the latest Tourism Satellite Accounting (TSA) research, released by the World
Travel and Tourism Council (WTTC), the demand for travel and tourism in India is expected to
grow by 8.2 % between 2010 and 2019. This will place India at the third position in the world.
India's travel and tourism sector is expected to be the second largest employer in the world.
Capital investment in India's travel and tourism sector is expected to grow at 8.8 % between 2010
and 2019. The report forecasts India to get more capital investment in the travel and tourism
sector and is projected to become the fifth fastest growing business travel destination from 2010

through 2020.

10. India has been ranked the "best country brand for value-for-money" in the Country Brand Index
(CBI) survey conducted by Future Brand, a leading global brand consultancy. India also claimed
the second place in CBI's "best country brand for history", as well as appears among the top 5 in
the best country brand for authenticity and art & culture, and the fourth best new country for
business. India made it to the list of "rising stars" or the countries that are likely to become major
tourist destinations in the next five years, led by the United Arab Emirates, China, and Vietnam.
1.9

Geographical spread

Hotel Name
Oberoi group of hotels

Taj Hotels

India
New Delhi, Banglore, Kolkata,

Global
Dubai, Mauritius, Egypt, Saudi

Mumbai, Gurgaon, Agra, Jaipur,

Arabia.

Udaipur, Shimla, Kerala.


Agra, Ahmedabad, Aurangabad,

Sydney, Maldives,

Marrakech

banglore, chandigadh, Chennai,

London,

capetown,

Goa,

Dubai, New York, San Francisco,

Hyderabad,

Lucknow,

Jaipur,

Mumbai,

Nashik,

Colombo,

Boston, Lusaka.

Pune, New Delhi, Surat, Udaipur,


Shrinagar, Vishakhapatanam.
ITC

Agra, Ahmedabad, Aurangabad,


banglore, chandigadh, Chennai,
Goa, Hyderabad, Jaipur, Jodhpur,
Kozikode, Lucknow, Mumbai,
Nashik, Pune, New Delhi, Surat,
Udaipur,

Shrinagar,

Vishakhapatanam.
Kamat Hotels

Pune, Mumbai, Nashik, Goa,


Aurangabad,

Sayaji Hotels
The Leela hotels

Nagpur,

Jaipur,

Bhuvaneshwar.
Pune, Indore, Vadodara
Mumbai, Banglore, Chennai,
Gurgaon, New Delhi, Udaipur,

10

Goa

1.10 Factors contributing to demand(4)


1. Domestic expenditure on tourism is expected to rise due to the growing income of households
2. A number of niche offerings such as medical tourism and eco tourism are expected to create more
demand
3. AtithiDevoBhavah is one of the successful initiative taken by the Ministry of Tourism to create
awareness about the effects of tourism and sensitise people about our countrys rich culture
4. Strong growth in per capita income in the country is driving the domestic tourism market
5. A shift in demographics with rising young population (coupled with changing lifestyles) is
leading to greater expenditure on leisure services
6. The ministry set up a Hospitality Development and Promotion Board, which will monitor and
facilitate hotel project clearances/approvals
7. The ministry in consultation with state/UT administrations has proposed to employ tourist police
at prominent tourist spots
8. January 2010, the government launched the Visa on Arrival Scheme for citizens of five
countries Finland, Japan, Luxembourg and New Zealand to attract additional foreign tourists
9. In January 2012, the government further extended this scheme to the citizens of six countries:
Cambodia, Indonesia, Vietnam, the Philippines, Laos and Myanmar
10. The scheme registered an average growth of 56.7 per cent over 201012
11. Incredible India is an international marketing campaign by the Government of India to promote
tourism in India in 2002 internationally
12. Foreign tourist arrivals grew at a CAGR of 7.8 per cent during 200512 to 6.6 million in 2012
13. In 2012, India Tourism has launched two new campaigns : an International Campaign called
Find What You Seek and a Domestic Campaign called Go Beyond
14. India currently attracts 0.63 per cent of world tourist and the government aims to increase it to
one per cent

1.11 Supply demand balance(4) :1. The Indian hotels industry appears to have embarked on a recovery cycle, triggered largely by
the revival in domestic travel (both leisure and business) since the second half (H2) of fiscal
2009-10; FTAs have also improved since December 2009, and were up 7.9% to 55.8 lakh
travellers during CY2010. Although the October 2010
2. Commonwealth Games were expected to provide a strong demand push to the Indian hotels
industry, weak planning and execution diluted the benefits to hotels in the NCR and the rest of
the country.
11

3. On the other hand, the Cricket World Cup in the fourth quarter (Q4) of 2010-11 provided a much
stronger demand impetus, with hotels reporting high occupancies in Chandigarh, New Delhi and
particularly Mumbai (during the Finals in early April 2011). FTAs have remained strong during
the first six months of CY2011, growing by 10.9%. In this context, while the return of foreign
tourists clears the deck for the much-needed ARR premiums, the importance and stability the
domestic traveller imparts to the Indian hotels industry remains intact.
4. Despite the worrying signals from the global economy, ICRA expects demand in several Indian
markets to report healthy growth during 2011-12, supported both by domestic and foreign
travellers. The Formula 1 racing event scheduled to be staged in the NCR in October 2011 is an
enabling factor in this regard.
5. Globally, the Asia-Pacific region is one of the key areas expected to witness a large addition to
room supply during the next few years. Two regions in Indiathe NCR with a pipeline of over
9,900 rooms (across categories), and Mumbai with a active pipeline of around 3,800 roomsare
two of the busiest hotel construction markets in the Asian sub-continent at present.
6. A significant part of the NCR pipeline was conceived with some sporting mega-events of 2010
and 2011 in sight: the Commonwealth Games (October 2010), the Cricket World Cup (Q4, 201011), the annual Indian Premier League matches, and the Formula 1 race (October 2011). Thus,
the NCR witnessed a significant increase in room capacity uring 2010-11 itself, with the
inventory of premium rooms increasing to over 10,000 (as of March 2011). Going by the plans
announced and the site visits made, ICRA expects the NCR to add another 5,000
premium/luxury rooms or so by 2015. The figure takes into account the 13 hotels being
constructed within the hospitality district of Delhi International Airport's 'Aerocity'; these are
expected to be commissioned during 2012-13.
Conclusion :ICRA expects NCR and Mumbai, both being gateway regionsand the countrys national and
financial capital, respectivelyto witness strong demand in the coming years. However, with supply also
being strong, especially in the NCR (where supply is expected to grow by 50%), ICRA expects this
market to experience a weak recovery, with tariff growth likely to be anaemic during 2011 and 2012.
Besides, the viability of certain high-cost hotel projects in the NCR is also uncertain. High real estate
prices and increase in the costs of construction materials and commodities have pushed up the project
costs and break-evens for these new hotels significantly.

1.12 Professional trade bodies for hotel industry

12

Federation of Hotel and Restaurant Associations of India


FHRAI, is the Apex Body of the four Regional Associations representing the Hospitality
Industry. FHRAI provides an interface between the Hospitality Industry, Political Leadership,
Academics, International Associations and other Stake Holders.

South India Hotels & Restaurants Association (SIHRA )


The South India Hotels & Restaurants Association was incorporated in 1951 as a company under
Companies Act without having any share capital. The objective is to encourage, promote and
protect the interests of proprietors and other persons concerned with and interested in hotels,
restaurants and boarding houses.

Hotel Association of India (HAI)


Provides information advisory, consultative and representative services to the industry
and Government. HAI serves as a national point of reference for the industry in India.

Hotel and Restaurant Association of Northern India


Founded by the legendary RaiBahadur M. S. Oberoi on October 6, 1950.HRANIs constant
endeavor is to promote the standards and quality of the services extended to the tourism sector of
the country for integrated growth of the industry.

Hotel & Restaurant Association ( Western India )


The Association over the last several years has taken effective steps to encourage, promote and
protect the interest of member establishments. It has been rendering professional assistance from
time to time to all its members on topics of vital importance. The Association admits & assists
members operating in the Western India Region viz. in the states of Maharashtra, Gujarat, Goa &
Madhya Pradesh and the adjoining Union Territories.

1.13

Digital Services

Not too long ago, getting a hotel accommodation meant making a direct
reservation or approaching an agent for a booking. Things have now changed
dynamically, and the one single enabler for this has been the web. Today, with high

13

levels of internet penetration, it is normal to make online reservations for


accommodation.
In the current competitive hospitality scenario, a hotels website needs to be
viewed as the hotels most important salesperson, avers SaurabhRaiBhatnagar,
regional director, India, and director global sales, India, Middle East & Africa,
Preferred Hotel Group.
Gone are the days when a website used to be more of an electronic brochure
of the hotel; today, under no circumstances can a hotel afford not to have a
dynamic and fully functional website.
Websites are designed in a manner that allows you to take virtual tours of the hotel from the
comfort of your home, and are increasingly being viewed as online marketing platforms.
Says Tarandeep, head, marketing and communications, JaypeeVasant Continental, New Delhi: A
hotel without a strong web presence means losing out on an average 60% of potential customers. The
hotel website not only helps us to shift from passive to interactive relationships with many customers, but
also to deliver unique valuable offers and products, and work out a differentiated approach to key
customers.
Abhijit Beej Das, senior director development India, Hilton Worldwide, says that web
presence is an incredibly potent sales and marketing tool.
According to him, Hilton Worldwide and the web sites for the entire portfolio of brands are
perhaps the webs most searched hotel sites. He stresses that web content should be constantly reviewed,
re-imagined, and refreshed, and real-time responses are important.
Mamta Sharma, owner of The Estate, a bed-and-breakfast based out of New Delhi, attributes a
large part of the webs growing popularity and success to a decision she took of having the right online
presence to market her business, which included using a dotcom address.
We were focused on being prudent about the way we showcase ourselves online, that being the
only marketing tool we intended to use. For a small business that does not have a big marketing budget, a
website is a must-have. It is one of the most effective ways of reaching out to audiences globally on a
shoestring budget, she says.

14

Over time, hotel websites have become the nucleus of all marketing programmes and activities.
Declares Nikhil Kapur, general manager, Ista Bangalore: Reservations are on the increase; 20% of total
bookings are now online. It is therefore imperative for a hotel to have a website. We see about 300-400
unique visitors per day, and we answer queries within the same working day as received. The ratio we are
seeing is 70:30 foreign to Indian guests.
I would say the ratio is 70/30%, international to domestic, agrees RomilRatra, general manager,
Intercontinental Marine Drive.

References
(1)

Indian Hotel Industry Survey 2011-2012 - HVS.com

(2)

www.tourism.gov.in

(3) www.moneycontrol.com

(4) www.hospitalityindia.com

15

2 Chapter
Promoters And Management Ethos
2.1

Management Ethos and Philosophy

Taj Hotels
Since its inception the Taj had always exhibited people oriented philosophy. The group always
hired fresh graduates from leading hotel management institutes from all over India so that it could shape
their attitude and develop their skills that fitted its needs and culture. All new employees of the group
were placed in an intensive two-year program, which familiarize them with business ethos of the group,
management of the organization and the working of the cross functional of the departments. The group
believed that talent management is utmost important to develop a sustainable competitive advantage.

ITC Welcome group


ITC is a professionally managed organization and the core value underlying our corporate
philosophy is "trusteeship".They recognize society as an important stakeholder in this enterprise and
therefore it is part of our responsibility to practice good corporate citizenship.All directors, senior
management and employees have the obligation to conduct themselves in an honest and ethical manner
and act in the best interest of the Company at all times.

The Oberoi Hotels


The Companys philosophy on governance is documented in The Oberoi Dharma
which is the fundamental code of conduct of the Company and in its MissionStatement.The code
ofConduct which puts the customer first, the Company second and the self last.

The Leela Hotel


Corporate Governance is based on the principles of integrity, fairness, equity,transparency,
accountability and commitment to values. Good governancepractices stem from the quality and mindset
of the organization.Companiesstand to gain by adopting systems that bolster the stakeholders trust
throughtransparency, accountability and fairness.

16

Kamat Hotels
The Company strongly believes in adopting and adhering to good corporate governance practices.
It upholds the values of transparency, professionalism and accountability and endeavors to maintain these
values on ongoing basis.The directors are eminent personalities in their respective fields like, hoteliering,
banking, finance, and management, accounting and general administration. This combination has helped
the company to take the benefit of rich experience and expertise of the directors in their core areas of
competence.

Sayaji Hotels
Effective corporate governance practices constitute the strong foundations on which successful
commercialenterprises are built to last.Strong leadership and effective corporate governance practices
have been the Companys hallmark and it has inherited these from the Sayaji culture.The Company has a
strong legacy of fair, transparent and ethical governance practices.

2.2

Top Management personnel

The Oberoi Group


Mr. P. R. S. Oberoi
Executive Chairman
Mr. S. S. Mukherji
Vice Chairman and Chief Executive Officer
Mr. VikramOberoi
Chief Operating Officer and Joint Managing Director
Mr. ArjunOberoi
Chief Planning Officer and Joint Managing Director

17

Taj Hotel
Mr. Raymond Bickson
Managing Director & Chief Executive Office
Mr. AbhijitMukerji
Executive Director - Hotel Operations
Ms. DeepaMisra Harris
Sr. Vice President, Sales and Marketing
Mr. PrabhatVerma
Chief Operating Officer - The Gateway Hotels & Resorts
Mr. Beejal Desai
Vice President - Legal & Company Secretary
Ms. JyotiNarang
Chief Operating Officer - Luxury Division
Taj Hotels Resorts and Palaces
Mr. Veer Vijay Singh
Chief Operating Officer - Upper Upscale Hotels
Mr. Mehernosh S. Kapadia
Executive Director - Corporate Affairs
Mr. Anil P. Goel
Executive Director Finance

18

ITC Welcome group


Chairman
YogeshChanderDeveshwar
NakulAnand
PradeepVasantDhobale
KurushNoshir Grant
Rajiv Tandon

Chief Financial Officer


BiswaBehariChatterjee

Executive Vice President & Company Secretary


KannadiputhurSundararaman Suresh

Kamat Hotels
Executive Chairman & Managing Director
Dr. VithalVenketeshKamat
Director
Mr. Ramesh N. Shanbhag
Mr. Vikram V. Kamat
Mr. S. S. Thakur
Mr. VedPrakashKhurana
Mrs. RajyalakshmiRao

19

Sayaji Hotels Limited


ShriRazak D. Dhanani
Chairman
ShriKayum R. Dhanani
Director
Shri Sanjay Ahuja
Nominee Director TFCI
Shri Y.S. Mehta - Nominee
MPFC
Shri T. S. Bhattacharya
Director
CA. T.N. Unni
Director
Capt. Salim Sheikh
Director

Hotel Leela
Chairman Emeritus & Founder Chairman
Capt. C. P. Krishnan Nair 1
Board of Directors
Mr. Vivek Nair 2 Chairman & Managing Director
Mr. Dinesh Nair 2 Co-Chairman & Managing Director
Mr. Venu Krishnan Deputy Managing Director
Mr. Krishna Deshika Director Finance & CFO
Mrs. Madhu Nair Director
Mrs. Anna Malhotra Director
Mr. M. Narasimham Director
Mr. Vijay Amritraj Director
Mr. Anil Harish Director
Dr. K. U. Mada Director
Mr. IndurKirpalani Director

20

Mr. A. K. Dasgupta Director


Mr. M. MadhavanNambiar Director
Mr. Anil Kumar Sharma 3 Director- Nominee of Airport Authority of India
Mrs. UttaraDasgupta4 Director- Nominee of State Bank of India
Mr. T. Ravindranath5 Director- Nominee of Syndicate Bank
2.3

Brief profiles

P.R.S Oberoi
Prithvi Raj Singh Oberoi (born 1935) is the Chairman and Chief executive officer of EIH
Limited, the flagship company ofIndias The Oberoi Group, which runs a chain of luxury hotels, Oberoi
Hotels & Resorts.[1] In 2008, the Government of IndiaawardedOberoi with the Padma Vibhushan, India's
second-highest civilian honour, in recognition of his exceptional service to the country. [2] Popularly
known as "Biki",[3] he took over as the Chairman of EIH Limited with the death of Mohan Singh Oberoi,
his father and the founding chairman of The Oberoi group. [4]
Oberoi was educated in India (St. Paul's School, Darjeeling), the United Kingdom and
Switzerland. He served as a Director ofJet Airways (India) Limited since March 29, 2004. Oberoi is a
graduate in Hotel Management from Lausanne, Switzerland.[5]In 2010, he was recognised as the
Corporate Hotelier of the World by Hotels magazine

Shri Sajid Dhanai


MD, Sayaji group of hotels Is considered to be true debonair and visionary entrepreneur in the
hospitality industry. An astute businessman with a visionary acumen, he introduced several innovations in his
hotels, which have now become industry standard for excellence. He was popularly known as SajidBhai,
decided on two tenets for sayaji change is the rule of the game and Customer first. He instituted these
values in every step of the sayajisaga, he lived his life serving and providing the very best facilities in luxury
and cuisine to his guests and positioned sayaji as the only hotel in the world which called itself Truly Yours.

Raymond Bikson
Raymond Bickson's experience in hospitality spans thirty years and four continents. In January
2003, Mr. Bickson moved to India and joined the Board as Executive Director & Chief Operating Officer
of Taj Luxury Hotels, overseeing the operations of all luxury properties and playing a key role in the

21

global expansion and development of future hotels. He assumed the role as Managing Director & Chief
Executive Officer of The Indian Hotels Company Limited in July 2003 .
2.4

CSR and initiatives towards Environmental Conservation

The Oberoi :Company has supported education founderprivileged children as the cornerstone of its future Corporate
Social Responsibility.The Company contributed to the Commonwealth Human Rights Initiative, an organization
working for the realization of human rights in Commonwealth countries, to Save ourTigers Campaign of the
Wildlife Conservation Trust, and to PurbachalUdayanSanghafor books and medicines to needy women and
children.In response to the green initiative of the Ministry of Corporate Affairs, Governmentof India with regard to
paperless compliance, Company has been sending annualreports and accounts, Annual General Meeting and postal
ballot notices, circularsetc by e-mail.

The Taj :Company believes in undertaking for the societyand play an active role in contribution towards
thesociety and taking the environmental and socialresponsibility sincerely.Don BoscoNavajeevan a
shelter for the streetchildren.Support by purchasing products from different NGOsto provide them
sustainable income was a good steptaken in the right direction. Printing of associatesbirthday cards from
PAWMENCAP, a school for thespecially challenged, purchase of articles made bythe physically
challenged and leprosy affected.
World EnvironmentDay on 5th June is observed worldwide and at the Tajhotels it is the EARTH Environment Awareness andRenewal at Taj Hotels.Each year this day is of huge importance wherein
activitiesinvolving associates are intended and achievementsby the hotels in areas like reducing water
consumption,saving electricity and waste managementis dealt with. Activities included an Eco-walk in
whichassociates of our hotels participated in solidarity forOur Planet Earth, sapling plantation, pollution
checkfor guests and associates vehicles, sales by organizationswho promote and make environment
friendlyproducts and to add a delicious Green Menu at thestaff cafeteria.

ITC :Corporate Social Responsibilityprogrammes primarily in the economic vicinity of itsoperations


towards making a meaningful contribution tosustainable and inclusive growth.Company has been
involvedin the creation of on and off-farm sustainable livelihoodopportunities which empower
stakeholder communitiesto conserve and manage their resources. A recentinitiative in this direction has
been the dairy development programme.

22

KamatHotels :The Orchid along with the Municipal Corporation of Greater Mumbai has initiated the Nirmalya
Project wherein Nirmalya generated duringthe Ganesh festival is collected, segregated and converted into
valuable vermicompost to ensure that the Nirmalya is not dumped. NirmalyaProject was acknowledged
by granting The Golden Star- Most Admired CSR practice of the Year Award by the Stars of the Industry
group.Earth Hour 2013 was observed in The Orchid by switching off non essential lights of the hotel to
accomplish the endeavor to mobilize theentire globe to take action against Climate change.Several events
namely poster competition, wealth out of waste competition, quiz competition, photography competition,
screening ofdocumentaries on the environment, interactive sessions with NGO Green peace on Global
warming and conservation of the environmentwere held to increase awareness of environmental issues.A
silent rally was conducted by Green team members of The Orchid prior to Diwali to urge the public to
reduce air and noise pollution in thecity by not using fire crackers

Sayaji Hotels:The Companys hotels maintain clean and hygienic environmentand keep strict vigilance on their
effluent generation and disposaladhering to standard norms in order to protect the environmentand
surroundings.Health and Safety Management System in the Company aims toreduce, eliminate or control
workplace hazards and associatedrisks of illness or injuries to the employees, customers andcontractors
who might be affected by the Companys workactivities.

The Leela Hotels:This year, each of the TheLeela property further strengthened partnerships with local NGOs in
each destination to ensure charitable donations whereuniforms, books and magazines, kitchen utensils are
donated to underprivileged groups and individuals. Each property also launched a TrainingProgramme,
named Hunar Se RozgarTak, to create employable skills in the local youth from 18-25 years and who
are minimum 8th standard pass.The Company has made substantial investments forimproving energy
efficiencies, and also fresh and waste water management in itshotel properties. The Companys hotel in
New Delhi has been conferred PlatinumLEED Certification, the first new hotel in New Delhi to be so
conferred.The Leela properties to promote greening through plantation, and continued to achieve
reduction inenergy and water consumption, waste management while limiting carbon emission.

23

3 Chapter
External Environment
3.1

Controlling Ministry for the Hospitality Industry.

Ministry of Tourism, Govt. of India(1)


The Ministry of Tourism, is the nodal agency for the formulation of national policies and
programmes and for the co-ordination of activities of various Central Government Agencies, State
Governments/UTs and the Private Sector for the development and promotion of tourism in thecountry.
This Ministry is headed by the Union Minister of State for Tourism (Independent Charge).
The administrative head of the Ministry is the Secretary (Tourism). The Secretary also acts as the Director
General (DG) Tourism. The office of the Director General of Tourism {now merged with the office of
Secretary (Tourism)} provides executive directions for the implementation of various policies and
programmes.

Federation of Hotel and Restaurant Associations of India(2)


The Federation of Hotel & Restaurant Associations of India, often known by the acronym,
FHRAI, is the Apex Body of the four Regional Associations representing the Hospitality Industry.
FHRAI provides an interface between the Hospitality Industry, Political Leadership, Academics,
International Associations and other Stake Holders. FHRAI is committed to promote and protect the
interests of the Hospitality Industry
By actively seeking better privileges and more concessions for the Industry. FHRAI members are
always kept abreast with the latest trade information and trends, statistical analysis and reports on various
topics that have a direct impact on the Industry, Government notifications and circulars.
FHRAI helps the Hospitality Industry to grow, prosper and keep in pace with the development in
the International scenario.

24

With more than 3824 members comprising of approximately 2484 hotels, 1204 restaurants, 132
associate members and the 4 regional associations, FHRAI is truly the voice of the Hospitality Industry
that brings several million dollars to the exchequer and employs more than 17 million direct workers.

Hotel Association of India(3)


1.

Provides information advisory, consultative and representative services to the industry and
Government.

2.

Serves as a national point of reference for the industry in India.

3.

Functions through a federal three-tier structure at the National level, State level and City level
through Voluntary Chapters.

4.

Acts as a catalyst for industry action in regard to quality, productivity and human resource
development.

3.2

5.

It is represented on all major policy making bodies concerned with the industry.

6.

Organises Seminar, Workshops, Research studies in the interest of the industry.

Legal Violations

The Oberoi Group:The Central Bureau of Investigation on Tuesday carried out searches at residential and official
premises of the vice-president of Hotel Oberoi Maidens and employees of the North Delhi Municipal
Corporation in connection with alleged graft in clearing unauthorized construction.The case related to the
alleged exchange of Rs 10 lakh as bribe to allow an unauthorized construction at the hotel--a 110-year old
heritage building in old city--in violation of norms.

TajHotels :-

25

A Mumbai-based pressure group says that the Taj Group of Hotels has violated the law by having
only 11 instead of 14 independent directors, most of whom are on the boards of too many companies and
are unable to attend shareholder meetings.SES said that if the chairman is a non-executive director, the
companies should have at least 50 per cent independent directors on their boards. Its analysis showed that
IHCL has 11 directors this year as against 14 last year.
A penalty of Rs 25,000 was slapped on Taj Hotel by financial commissioner and deputy
commissioner Brijender Singh for not maintaining proper records and using two underage employees to
serve liquor on its premises.
3.3

Key national issues affecting industry

Increasing Utility Costs:


Energy costs continue to rise and pose a challenge to the hotel industry. TheSurvey, this year, has
revealed a rise of 13% in PAR energy costs (`1,82,067) over that in the previous year(`1,61,479).
Additionally, the Survey results show that only 26% of the hotels surveyed have an energymanagement
system in place across India (Table 1-10). The rise in Energy costs coupled with the limitedconservation
measures employed highlight the dire need for sustainable practices to be used in theindustry.2 HVS is
currently tracking a proposed supply of 84,650 branded rooms , of which 60% is actively
underdevelopment and is expected to enter the Indian hotel market over the next five years. Given
theanticipated increase in hotel room supply, together with a high inflationary environment, HVS
reemphasisesthe need for operational efficiency and sustainable practices in order to curtail further
decline of profitability. Going forward, companies like HVS Sustainability can assist hotels in improving
their financial performance along with the environmental and social one.

Continuing High Manpower to Room ratios:


Employee-to-room ratios in India continue to be on thehigher side when compared with global
benchmarks, almost twice as much. The all India average ofemployee-to-room ratio stands at 1.6. This
can be attributed to the large chunk of four star and three-starhotel respondents, which have an average
employee-to-room ratio of 1.7. Typically, hotels in Indiaprovide services and facilities beyond their
positioning; hence, they require more manpower.
With rising manpower costs, the higher ratios are posing a problem to hotel companies. Hence,
companies are now seeking ways to rationalise employee-to-room ratios and cut down on payroll costs,
which will improve operational efficiency. Effective manpower management is the need of the hour
along with effective training programmes. The training programmes include cross exposure to other

26

3.4

Key initiatives by the government to promote hotel industry (4):-

Incredible India Campaign


To promote India as an ultimate tourist destination on the global tourism map, in 2002, GoI
promoted the Incredible India campaign in the overseas markets. The campaign was an integrated
marketing communication effort to attract tourists to the country. It projected India as an attractive
tourist destination by showcasing different aspects of Indian culture, history, spirituality, and yoga. This
campaign included visible branding in the outdoor media such as advertising at airports, on trams, taxis
and buses and through the print, online and electronic media as well as via participation in travel marts
and road shows. The campaign was conducted globally and received appreciation from industry persons
and travelers.

AtithiDevoBhavah
This is another initiative of the Ministry of Tourism to harness the potential of the tourism
industry in India. It aims to create awareness about the effects of tourism and sensitise people about our
countrys rich heritage and culture, cleanliness and warm hospitality. It intends to instill a sense of
responsibility towards tourists among the stakeholders of the tourism industry. The main components of
the campaign are training and orientation of taxi drivers, guides, immigration officers, tourist police and
other personnel directly interacting with the tourists, while simultaneously creating brand equity for the
trained persons. This concept was designed to complement the Incredible India campaign.

References
(1) & (4) www.tourism.gov.in

27

(2) www.fhrai.com

(3) www.hotelassociationofindia.com

4 Chapter
Financials
4.1

Profitability chart(1):-

Taj
Profit

after

2012-13

2011-12

2010-11

2009-10

2008-09

2007-08

8.78

29.33

43.34

36.27

52.76

70.42

2012-13

2011-12

2010-11

2009-10

2008-09

2007-08

57.2

170.4

217.2

2009-10
4061
2009-10
5.18
2009-10
41.02
2009-10
1.39

2008-09
3264
2008-09
6.14
2008-09
144
2008-09
5.66

2007-08
3120
2007-08

tax

(after
extraordinary
/

prior

period

items)

oberoi
Profit

after

tax

(after

51

122

64.5

2012-13

2011-12

2010-11

7418

6162

4988

2012-13

2011-12

1.14

3.31

2012-13

2011-12

-433.46

18.63

2012-13

2011-12

-5.66

0.99

2010-11
-0.36
2010-11
38.88
2010-11
1.57

extraordinary
/

prior

period

items)
Itc
PAT
Sayaji
Hotel leela
Kaamat hotels

4.2

2007-08
2007-08

Revenue(2)
Taj

oberoi

Itc

Sayaji

Hotel leela

Kaamat hotels

28

Revenue

254.24

1,156.75

117.63

653.86

138.32

(2012-13)

4.3

Key factors contributing to industry:-

Top 10 reasons contributing hotel investments:1 Aligning with the right people
2 Being stable by market cycles
3 Understanding your location or the trends thatcould cause it to weaken over time
4 Underwrting assumptions
5Understanding with expensive capital
6 Getting impacted by cost overruns
7 understanding new competition who may be causing an overbuiltmarket environment
8 Managing working capital reserves reduce productquality, value, profit and lifespan
9 Flexible management
10 Management, service, and property maintenance

4.4

Ratio analysis(3) :-

Ratios of hotel Oberoi


Mar
'13

Mar '12

Mar '11

Mar '10

Investment Valuation Ratios


Face Value

10.00 10.00

10.00

10.00

Dividend Per Share

1.00

2.50

1.50

Net Operating Profit Per Share (Rs)

69.72 95.83

88.55

75.53

3.00

Profitability Ratios

29

Operating Profit Margin(%)

30.10 29.25

31.58

32.38

Profit Before Interest And Tax Margin(%)

23.80 22.14

23.92

24.51

Gross Profit Margin(%)

23.86 22.47

24.23

24.69

Cash Profit Margin(%)

15.79 12.57

14.25

11.86

Net Profit Margin(%)

9.62

7.01

6.83

3.54

Adjusted Net Profit Margin(%)

9.62

7.01

6.83

3.54

Return On Capital Employed(%)

17.67 13.12

12.55

10.58

Return On Net Worth(%)

10.33 11.21

10.68

4.98

Adjusted Return on Net Worth(%)

10.27 9.43

10.93

5.93

Return on Assets Excluding Revaluations

65.13 60.77

57.44

54.21

Return on Assets Including Revaluations

65.13 60.77

57.44

54.21

Return on Long Term Funds(%)

17.69 18.77

17.04

16.19

Current Ratio

1.15

0.27

0.37

0.34

Quick Ratio

1.03

0.85

0.62

0.59

Debt Equity Ratio

0.46

1.88

2.14

2.34

Long Term Debt Equity Ratio

0.46

1.01

1.31

1.19

Interest Cover

2.38

1.64

1.77

1.36

Total Debt to Owners Fund

0.46

1.88

2.14

2.34

Financial Charges Coverage Ratio

2.99

2.10

2.21

1.73

Financial Charges Coverage Ratio Post Tax

2.57

1.95

1.96

1.59

Liquidity And Solvency Ratios

Debt Coverage Ratios

Management Efficiency Ratios


Inventory Turnover Ratio

26.38 28.21

111.04

111.23

Debtors Turnover Ratio

13.05 13.08

14.13

16.25

Investments Turnover Ratio

26.38 28.21

111.04

111.23

Fixed Assets Turnover Ratio

0.48

0.48

0.45

0.39

Total Assets Turnover Ratio

0.73

0.55

0.49

0.42

Asset Turnover Ratio

0.67

0.54

0.49

0.42

Average Raw Material Holding

--

--

--

--

Average Finished Goods Held

--

--

--

--

Number of Days In Working Capital

45.73 36.83

39.46

22.65

8.49

--

--

--

--

0.65

--

--

Selling Distribution Cost Composition

--

--

8.04

7.78

Expenses as Composition of Total Sales

57.67 60.37

50.45

50.31

Dividend Payout Ratio Net Profit

14.86 43.99

40.75

64.78

Dividend Payout Ratio Cash Profit

9.02

22.53

19.77

20.55

Earning Retention Ratio

85.06 47.67

60.20

45.62

Cash Earning Retention Ratio

90.95 75.47

80.45

80.63

Profit & Loss Account Ratios


Material Cost Composition
Imported

Composition

of

Raw

Materials

Consumed

Cash Flow Indicator Ratios

30

AdjustedCash Flow Times

2.71

9.32

9.61

14.08

Ratios of hotel Taj


Mar 13 Mar '12

Mar '11

Mar '10

Face Value

2.00

2.00

2.00

2.00

Dividend Per Share

0.50

1.50

2.00

2.00

Operating Profit Per Share (Rs)

9.72

12.45

15.37

13.75

Net Operating Profit Per Share (Rs)

40.30

40.50

41.35

36.40

Free Reserves Per Share (Rs)

--

--

43.52

38.90

Bonus in Equity Capital

--

--

--

--

Operating Profit Margin(%)

24.12

30.73

37.16

37.77

Profit Before Interest And Tax Margin(%)

14.20

21.86

29.06

29.04

Gross Profit Margin(%)

14.28

22.03

29.21

29.18

Cash Profit Margin(%)

13.89

20.08

24.53

24.57

Adjusted Cash Margin(%)

13.89

20.08

24.53

24.57

Net Profit Margin(%)

3.45

11.46

16.62

15.81

Adjusted Net Profit Margin(%)

3.45

11.46

16.62

15.81

Return On Capital Employed(%)

6.81

11.34

16.67

16.18

Return On Net Worth(%)

2.54

8.63

13.53

12.45

Adjusted Return on Net Worth(%)

3.03

8.62

13.53

12.61

Return on Assets Excluding Revaluations

55.02

54.20

51.05

46.44

Return on Assets Including Revaluations

55.02

54.20

51.05

46.44

Return on Long Term Funds(%)

7.24

11.34

17.10

16.41

Current Ratio

0.80

0.90

0.53

0.42

Quick Ratio

0.92

0.84

0.56

0.39

Debt Equity Ratio

0.60

0.50

0.44

0.43

Long Term Debt Equity Ratio

0.51

0.50

0.40

0.41

Interest Cover

1.68

3.83

6.77

5.54

Total Debt to Owners Fund

0.60

0.50

0.44

0.43

Financial Charges Coverage Ratio

2.80

5.29

8.58

7.14

Financial Charges Coverage Ratio Post Tax

2.50

4.40

6.61

5.57

Inventory Turnover Ratio

29.12

36.42

96.16

87.42

Debtors Turnover Ratio

33.21

29.81

31.28

34.60

Investment Valuation Ratios

Profitability Ratios

Liquidity And Solvency Ratios

Debt Coverage Ratios

Management Efficiency Ratios

31

Investments Turnover Ratio

29.12

36.42

96.16

87.42

Fixed Assets Turnover Ratio

0.41

0.42

0.53

0.47

Total Assets Turnover Ratio

0.46

0.50

0.56

0.55

Asset Turnover Ratio

0.48

0.52

0.53

0.47

Average Finished Goods Held

--

--

--

--

Number of Days In Working Capital

76.87

-15.23

-38.03

-68.28

--

--

--

--

--

--

--

--

Selling Distribution Cost Composition

--

--

3.67

3.95

Expenses as Composition of Total Sales

27.26

28.65

27.77

27.10

Dividend Payout Ratio Net Profit

35.69

37.26

33.62

40.31

Dividend Payout Ratio Cash Profit

9.32

21.25

22.79

26.16

Earning Retention Ratio

70.08

62.70

66.37

60.21

Cash Earning Retention Ratio

91.13

78.74

77.21

74.06

AdjustedCash Flow Times

5.86

3.32

2.21

2.22

Mar '12

Mar '11

Mar '10

Profit & Loss Account Ratios


Material Cost Composition
Imported

Composition

of

Raw

Materials

Consumed

Cash Flow Indicator Ratios

Ratios for Kamathotel


Mar
'13
Investment Valuation Ratios
Face Value

10.00 10.00

10.00

10.00

Dividend Per Share

--

--

--

Operating Profit Per Share (Rs)

17.29 22.24

25.90

22.85

Net Operating Profit Per Share (Rs)

72.44 74.18

80.25

77.90

Free Reserves Per Share (Rs)

--

--

115.09

112.65

Bonus in Equity Capital

--

--

--

--

--

Profitability Ratios
Operating Profit Margin(%)

23.86 29.97

32.27

29.33

Profit Before Interest And Tax Margin(%)

11.21

17.60

20.11

14.81

Gross Profit Margin(%)

13.20 20.37

21.91

17.03

Cash Profit Margin(%)

1.13

9.67

9.72

11.38

Adjusted Cash Margin(%)

1.13

9.67

9.72

11.38

Net Profit Margin(%)

-3.47

0.60

1.19

1.17

Adjusted Net Profit Margin(%)

-3.47

0.60

1.19

1.17

Return On Capital Employed(%)

8.68

8.28

5.85

5.74

32

Return On Net Worth(%)

-2.30

0.39

0.81

0.83

Adjusted Return on Net Worth(%)

-5.24

0.89

0.14

0.48

131.86

127.25

125.12

131.86

127.25

125.12

9.23

8.32

6.02

5.84

Current Ratio

1.04

1.83

2.42

2.75

Quick Ratio

1.07

1.80

3.48

3.19

Debt Equity Ratio

0.92

1.44

2.32

2.47

Long Term Debt Equity Ratio

0.88

1.44

2.23

2.41

Interest Cover

0.72

1.03

1.11

1.00

Total Debt to Owners Fund

0.92

1.44

2.32

2.47

Financial Charges Coverage Ratio

0.97

1.30

1.49

1.39

Financial Charges Coverage Ratio Post Tax

1.15

1.29

1.42

1.43

Return on Assets Excluding Revaluations


Return on Assets Including Revaluations
Return on Long Term Funds(%)

128.9
0
128.9
0

Liquidity And Solvency Ratios

Debt Coverage Ratios

Management Efficiency Ratios


Inventory Turnover Ratio

32.17 33.62

119.34

110.40

Debtors Turnover Ratio

10.98 11.14

9.95

8.12

Investments Turnover Ratio

32.17 33.62

119.34

110.40

Fixed Assets Turnover Ratio

0.29

0.29

0.31

0.27

Total Assets Turnover Ratio

0.28

0.23

0.19

0.18

Asset Turnover Ratio

0.25

0.23

0.20

0.20

Average Raw Material Holding

--

--

--

--

Average Finished Goods Held

--

--

--

--

Number of Days In Working Capital

68.67 363.54

521.06

480.93

--

--

--

--

0.08

--

--

--

Selling Distribution Cost Composition

--

--

5.05

4.92

Expenses as Composition of Total Sales

9.14

6.51

10.08

14.84

Dividend Payout Ratio Net Profit

--

--

--

--

Dividend Payout Ratio Cash Profit

--

--

--

--

Earning Retention Ratio

--

100.00

100.00

100.00

100.00

100.00

100.00

22.88

34.72

30.28

Profit & Loss Account Ratios


Material Cost Composition
Imported

Composition

of

Raw

Materials

Consumed

Cash Flow Indicator Ratios

Cash Earning Retention Ratio


AdjustedCash Flow Times

100.0
0
122.2
7

33

Ratios for Sayaji hotel

Mar
'12

Mar '11

Mar '10

Mar '09

Investment Valuation Ratios


Face Value

10.00 10.00

10.00

10.00

Dividend Per Share

--

--

--

Operating Profit Per Share (Rs)

21.08 18.77

17.53

18.94

Net Operating Profit Per Share (Rs)

70.29 63.81

63.36

63.96

Free Reserves Per Share (Rs)

--

44.93

35.06

32.22

Bonus in Equity Capital

--

--

--

--

--

Profitability Ratios
Operating Profit Margin(%)

29.98 29.41

27.66

29.61

Profit Before Interest And Tax Margin(%)

19.39 18.32

15.91

22.15

Gross Profit Margin(%)

19.45 18.45

16.02

22.26

Cash Profit Margin(%)

11.62

13.82

11.07

12.69

Adjusted Cash Margin(%)

11.62

13.82

11.07

12.69

Net Profit Margin(%)

0.92

2.94

-0.43

6.27

Adjusted Net Profit Margin(%)

0.92

2.94

-0.43

6.27

Return On Capital Employed(%)

12.88 9.40

5.97

8.00

Return On Net Worth(%)

1.17

3.44

-0.61

9.54

Adjusted Return on Net Worth(%)

1.43

3.44

-0.68

8.20

Return on Assets Excluding Revaluations

55.58 54.93

45.06

42.22

Return on Assets Including Revaluations

55.58 54.93

45.06

42.22

Return on Long Term Funds(%)

13.65 9.70

6.09

8.14

Current Ratio

0.48

1.05

1.31

2.14

Quick Ratio

0.48

1.39

1.62

1.98

Debt Equity Ratio

0.94

1.37

2.94

3.23

Long Term Debt Equity Ratio

0.83

1.30

2.86

3.27

Interest Cover

1.10

1.34

1.15

3.02

Total Debt to Owners Fund

0.94

1.37

2.94

3.23

Financial Charges Coverage Ratio

1.69

2.01

1.78

2.10

Financial Charges Coverage Ratio Post Tax

1.64

1.93

1.70

1.95

14.27

193.19

Liquidity And Solvency Ratios

Debt Coverage Ratios

Management Efficiency Ratios


Inventory Turnover Ratio

14.91 16.85

34

Debtors Turnover Ratio

10.35 11.60

12.85

12.35

Investments Turnover Ratio

14.91 16.85

14.27

193.19

Fixed Assets Turnover Ratio

0.44

0.45

0.35

0.42

Total Assets Turnover Ratio

0.66

0.49

0.36

0.35

Asset Turnover Ratio

0.59

0.49

0.35

0.42

Average Raw Material Holding

--

--

--

--

Average Finished Goods Held

--

--

--

--

51.70

83.06

129.63

9.10

9.35

9.49

6.87

--

--

--

--

Selling Distribution Cost Composition

--

0.76

1.17

0.35

Expenses as Composition of Total Sales

7.65

10.31

7.89

5.06

Dividend Payout Ratio Net Profit

--

--

--

--

Dividend Payout Ratio Cash Profit

--

--

--

--

100.00

--

100.00

100.00

100.00

100.00

8.46

18.73

16.73

Mar '12

Mar '11

Mar '10

Number of Days In Working Capital

119.55

Profit & Loss Account Ratios


Material Cost Composition
Imported

Composition

of

Raw

Materials

Consumed

Cash Flow Indicator Ratios

Earning Retention Ratio


Cash Earning Retention Ratio
AdjustedCash Flow Times

100.0
0
100.0
0
6.37

Ratios for hotel Leela


Mar
'13
Investment Valuation Ratios
Face Value

2.00

2.00

2.00

2.00

Dividend Per Share

--

--

0.15

0.20

Operating Profit Per Share (Rs)

2.69

0.48

4.36

3.56

Net Operating Profit Per Share (Rs)

15.62 14.73

13.57

11.38

Free Reserves Per Share (Rs)

--

-1.66

17.11

16.46

Bonus in Equity Capital

--

--

--

--

Profitability Ratios
Operating Profit Margin(%)

17.23 3.25

32.12

31.25

Profit Before Interest And Tax Margin(%)

-3.93

-14.23

18.20

14.29

Gross Profit Margin(%)

-3.97

-14.64

19.12

15.36

Cash Profit Margin(%)

-44.79 -48.68

19.64

24.44

Adjusted Cash Margin(%)

-44.79 -48.68

19.64

24.44

35

Net Profit Margin(%)

-65.62 3.17

7.03

8.87

Adjusted Net Profit Margin(%)

-65.62 3.17

7.03

8.87

Return On Capital Employed(%)

-0.45

2.71

2.65

Return On Net Worth(%)

-35.45 1.22

4.37

4.95

Adjusted Return on Net Worth(%)

-35.54 -25.43

4.51

5.39

Return on Assets Excluding Revaluations

29.20 39.36

22.94

21.91

Return on Assets Including Revaluations

29.20 39.36

54.22

54.37

Return on Long Term Funds(%)

-0.49

-1.30

2.91

2.74

Current Ratio

0.20

0.39

0.75

0.72

Quick Ratio

0.23

0.40

1.21

0.86

Debt Equity Ratio

2.49

2.29

4.28

3.48

Long Term Debt Equity Ratio

2.22

2.24

3.90

3.32

Interest Cover

-0.05

-0.21

2.21

4.02

Total Debt to Owners Fund

2.49

2.29

4.28

3.48

Financial Charges Coverage Ratio

0.29

0.11

2.86

4.90

Financial Charges Coverage Ratio Post Tax

0.27

1.38

2.57

4.22

Inventory Turnover Ratio

9.17

9.54

47.63

62.76

Debtors Turnover Ratio

14.66 11.08

12.07

12.39

Investments Turnover Ratio

9.17

9.54

47.63

62.76

Fixed Assets Turnover Ratio

0.11

0.11

0.11

0.10

Total Assets Turnover Ratio

0.15

0.11

0.11

0.12

Asset Turnover Ratio

0.14

0.10

0.10

0.09

Average Raw Material Holding

--

--

--

--

Average Finished Goods Held

--

--

--

--

108.59

-2.72

4.25

4.98

36.99 33.90

23.40

17.75

Selling Distribution Cost Composition

--

7.69

3.91

Expenses as Composition of Total Sales

44.91 34.03

33.04

39.81

Dividend Payout Ratio Net Profit

--

--

17.39

21.48

Dividend Payout Ratio Cash Profit

--

--

6.30

8.05

Earning Retention Ratio

--

100.00

83.18

80.29

Cash Earning Retention Ratio

--

--

93.78

92.21

AdjustedCash Flow Times

--

--

35.01

25.47

-1.28

Liquidity And Solvency Ratios

Debt Coverage Ratios

Management Efficiency Ratios

Number of Days In Working Capital

814.6 -348.90
4

Profit & Loss Account Ratios


Material Cost Composition
Imported

Composition

-of

Raw

Materials

Consumed

5.53

--

Cash Flow Indicator Ratios

36

References
(1) &(2)

(3)

Balance sheets and P & L account

www.moneycontrol.com

5 Chapter
Recent Developments
5.1

Challenges

Various challenges/issues faced by the domestic travel and tourism industry in India:
1.

Lack of proper infrastructure

2.

Human resources

3.

Service levels

4.

Lack of adequate marketing and promotion

5.

Taxation

6.

Security

7.

Regulatory issues

8.

Opportunities

9.

Prospect

37

1. Lack of proper infrastructure


Infrastructure needs for the travel and tourism industry range from physical infrastructure such as
ports of entry to modes of transport to urban infrastructure such as access roads, electricity, water supply,
sewerage and telecommunication. The sectors related to the travel and tourism industry include airlines,
surface transport, accommodation (hotels), and infrastructure and facilitation systems, among others.
Access and connectivity
To harness Indias tourism potential, several efforts are being taken for opening new destinations
and exploring niche segments. However, infrastructure facilities such as air, rail, road connectivity, and
hospitality services at these destinations and the connecting cities are inadequate. This remains a major
hurdle for development of tourism. Roadways form a vital network in the tourist industry with almost
70% tourists in India travelling by road. Moreover, many tourist circuits depend on roads. Despite
numerous efforts to improve road infrastructure, connectivity remains a major problem. There is a
greater need for strengthened road and rail network, development of more expressways, and touristspecific routes to improve connectivity to various locations across different regions.
Aviation infrastructure is also critical since it is a major mode of entry for inbound tourism.
Passenger traffic is expected to increase in the coming years; however infrastructure facilities at airports
are cause for concern. Expansion and development of airports at major gateway cities is underway to
cater to the increasing passenger traffic. However, in addition, airport facilities at important secondary
cities and tourist destinations also need to be improved to be able to handle greater passenger traffic.
Amenities
Amenities available at various tourist locations and en route need to be improved. These include
basic amenities such as drinking water, well maintained and clean waiting rooms and toilets, first aid and
wayside amenities (to meet the requirement of the tourists travelling to tourist destinations) such as
lounge, cafeteria, and parking facilities, among others.
India scores poorly in terms of availability of these infrastructure facilities. Inadequate infrastructure
facilities affect inbound tourism and also could lead to an increase in the outflow of domestic tourists
from India to other competitive neighboring countries. Hence, for the industry to register healthy growth,
issues concerning all the related sectors need to be addressed.

38

2. Human resource
Availability of skilled manpower is a major challenge faced by the travel and tourism industry,
one of the largest employment generators in the country. To sustain growth in the travel and tourism
industry, trained manpower/ workforce is required at every level managerial, supervisory, skilled or
semi-skilled. Challenges faced at each level are different. At mid and senior management levels, the
industry faces talent crunch and at the front-line staff level, although human resources are adequate, a
boom in other service industries such as banking, retail, airline and BPO have resulted in shortage of
manpower at this level for the travel and tourism industry. Thus, we have a demand-supply mismatch
with respect to manpower in the travel & tourism and hospitality sector in India. A study conducted by
Ministry of Tourism suggests that existing supply of human resources do not cater to even 40% of the
demand. Thus, the industry has no alternative but to fill the void with untrained resources. Such a high
proportion of untrained manpower would adversely affect quality of services offered to the tourists.
Attrition, shortage of tourism training infrastructure, qualified trainers, and lack of proper
strategies and policies for human resource development also affect the industry. The industry needs to
address these problems at the earliest.

3. Service level
In addition to tour operators and hotel staff, tourists interact with persons from different
backgrounds, occupations and experience. Such people include staff at bus/railway station, immigration
staff at airports, taxi/coach operators, ticketing/ travel agencies, small hotels, dhabas/roadside eateries,
staff at heritage sites, and tour guides, among others. The degree of service offered by these various
stakeholders has a significant impact on determining the tourists overall experience of India as a tourist
destination. The government has taken initiatives to promote responsible tourism by sensitising key
stakeholders of the tourism industry through training and orientation, to develop a sense of responsibility
towards tourists and inspire confidence of foreign tourists in India as a preferred destination. One such
major initiative is the AtithiDevoBhava campaign. More such efforts are required to improve the
degree of service across various operators.

4. Marketing and promotion


Marketing and promotion of India as a major tourist destination is critical for the industry to
achieve its potential. Lack of adequate budgetary support for promotion and marketing, compared with
competing tourist destinations, is a major reason for India lagging behind as a tourist destination.

39

Marketing under the Incredible India campaign helped place India as a good tourist destination on the
global tourism map. Indian tourism products are promoted primarily by the Ministry of Tourism with the
involvement of state governments through the State Tourism Development Corporations. Newer tourism
concepts, which include cruise tourism, adventure tourism, agri tourism or rural tourism, are emerging in
India and these require support to develop and flourish. Hence, greater marketing push for these different
products is required. To remain competitive in the fiercely competitive field, India needs to change its
traditional marketing approach to a more competitive and modern approach. There is a need to develop a
unique market position and the brand positioning statement should capture the essence of the countrys
tourism products: i.e., they should be able to convey an image of the product to a potential customer.

5. Taxation
Travel and tourism in India is a high-taxed industry, which makes India expensive as a tourist
destination. This is affecting the growth of the industry in India and India is losing out to other low-cost
destinations. Inbound tourism is the one most affected. Various taxes are levied across the entire industry
right from tour operators, transporters, airline industry to hotels and these include service tax, luxury tax,
tax on transportation, tax on aviation turbine fuel (airline industry), and various taxes on transportation.
In addition, these tax rates tend to vary across different states in the country.

6. Security
Security has been a major problem as well for growth of tourism for a number of years. Terrorist
attacks or political unrest in different parts of the country have adversely affected sentiments of foreign
tourists. Terror attacks at Mumbai in November 2008 dealt a strong blow to tourism in the country. The
terror attacks raised concerns of safety. In addition, insurgency in different parts of the country also mars
Indias image as a safe destination. Following the terror attacks in Mumbai, security at tourist spots,
airports and hotels has been beefed up to regain confidence of tourists. However, the government needs
to take a proactive approach in addressing these issues and in averting the potential impact on the
industry.
Cybercrime is another major challenge the travel industry faces. Use of Internet in the travel and
tourism industry has increased rapidly in recent years and has emerged as one of major segments for
online spends. However, some of the biggest frauds have been detected in this segment and the issue of
online security has assumed significant importance. While the online travel industry has registered
robust growth, major concerns relating to security of online transactions persist. The industry needs to

40

take measures to make the process of online bookings more secure and transparent and also needs to
create awareness regarding this.

7. Regulatory issues
For inbound international tourists, visa procedures are seen as a hindrance. A number of countries
competing with India for tourists provide visa on arrival. India should provide visa on arrival for more
countries or for certain categories of tourists for a specific duration.
A number of projects in the tourism infrastructure segment and in the hotels industry are delayed
due to non-attainment of licenses and approvals on time. The government recently cleared the longstanding proposal for single window clearance for hotel projects to hasten the process of infrastructure
development. Implementation of this proposal would help development of tourism and hospitality
infrastructure in the country. There is a greater need for speedier clearances and approvals for all projects
related to the industry.

8. Opportunities
Indias size and massive natural, geographic, cultural and artistic diversity offers enormous
opportunities for the travel and tourism industry. The promotion and aggressive marketing measures
undertaken by the government is expected to aid influx of tourists. The industry would also benefit from
introduction of new forms of tourism and development of niche segments.
Medical tourism in India has gained considerable popularity in recent years. India has a major cost
advantage in this field compared with other countries. In addition to cost advantages, Indian healthcare
industry offers state-of-theart equipment, technological advancement, qualified and experienced medical
personnel and a blend of modern and traditional medicines. Thus, medical tourism has immense
potential in India.
Opportunities also exist in ecotourism, adventure tourism, and cruise tourism. Eco-tourism is
increasing in popularity, evident in the development of eco-friendly hotels and tour packages. With
increasing environment awareness and consciousness among tourists and given efforts undertaken by the
government and private players, the ecotourism segment is expected to record handsome growth in the
coming years.

41

India holds immense potential in adventure and cruise tourism. Indias greatest adventure tourism
assets are Himalayas and its mighty rivers. The peak period for adventure tourism is the lean period of
cultural tourism. Development of adventure tourism can make India a round-the-year tourist destination.
The cruise industry is one of the most promising industries in India. However, strong efforts need to be
made to develop this industry. Other forms of tourism such as agri tourism, pilgrimage tourism, heritage
tourism, and MICE tourism also hold enormous potential.

9. Prospects
Healthy economic growth recorded in past few years, especially in the services industry, has led
to increase in business travel. Higher disposable income and affordability have increased domestic
leisure travel in India. Foreign tourist arrivals in India have also grown. The industrys performance was
hit in 2009 due to the global economic slowdown, terror attacks in Mumbai (November 2008) and H1N1
virus. However, the industry has shown signs of recovery in the first half of 2010. This is a clear
indicator that the long-term prospects for the Indian travel and tourism industry are bright. India is
expected to witness increased tourist activity both in the business and leisure segments in the coming
years. International inbound traffic is expected to grow rapidly with increasing investment and trade
activity. India has been identified as one of the fastest-growing countries in terms of tourism demand.
5.2

Impact of Exim policy on hotel industry


THE hotel industry has welcomed the mini Exim policy announcement permitting duty-free

imports by the hospitality industry as it would bring down the difference in the rates of food and
beverages being charged by five-star and other category of hotels.
According to the policy notification issued by the DGFT, heritage hotels, one and two-star hotels
and standalone restaurants have been extended the benefits of duty-free imports admissible to the tourism
sector. However, the entire benefits will have to be passed on to the customer.
Reacting to the announcement, MrLalitSuri, President, Hotel Association of India, felt that the
food and beverage intake in the categories covered in the policy is likely to go up. "The discrimination
between the rates charged by the five-star hotels and other categories would decrease and it would
encourage foreigners to use these hotels," he said.
The Secretary-General of the Federation of Hotels and Restaurants Associations of India,
MrShyamSuri, said that the measures announced were very good but felt that the statutory requirement of

42

passing on the price benefits to customers was not a fair one. "We are not happy with the clause that
hotels must pass on the concessions to the customer as we are already passing on the benefits to them.
This kind of clause has not been fixed for any other industry," he said.
The Exim policy clearly states that hotels, heritage hotels and standalone restaurants approved by
the Department of Tourism and other service providers registered with it would be entitled for duty-free
imports equivalent to five per cent of the average foreign exchange earned by them in the preceding three
licensing years. For one and two-star hotels and standalone restaurants, the foreign exchange earned
through international credit cards only shall be taken into account for entitlement under the scheme.
The duty-free entitlement shall be used for import of any capital goods, including spares, office
equipment and professional equipment, office furniture and consumables. However, agriculture, dairy
products, motor cars, sports utility vehicles and all-purpose vehicles would not be allowed to be imported
under the entitlement.

5.3

Technology Trends Revolutionizing The Hospitality Industry

1. Cloud / Software as a Service (SaaS)


Software delivered as a service, rather than held on premise is already a mainstream technology topic
and despite being a new concept in the hospitality sector, it is already big news. At Infor, I would
estimate around 85% of the queries we see from hospitality companies and hotels include a serious look
at cloud computing. Two main factors are behind this.

2. Mobility
Mobile is the new face of computing as devices such as tablets and smartphones revolutionise the way
we interact with technology. Hospitality is no exception to this revolution, in some cases leading the
way.

3. Social
Social media has had a profound impact upon the hospitality industry. Trip Advisor has become one of
the main sources of information for people researching holidays, hotels and leisure facilities.
Meanwhile, newer social tools like Facebook or Twitter are quickly becoming just as influential. For
any hotel to not at least monitor social media is tantamount to willingly flying blind.

4. Personalised systems
43

Customers expect their experience within a hotel to be totally personalised to them: from the welcome
message on the television screen and food preferences to additional services such as personal training or
flowers in the room.

5. Integration
Hotels span many functions - from accommodation and event catering to specialised facilities such as
golf or health spas. Each of these areas has, traditionally, operated an individual software system. Whilst
this approach has delivered specific functionality, it has also led to silos of information.

6. Globalisation
The last major trend currently in the hospitality industry is globalisation. In the 21st century, hotel
companies will need to adopt different management approaches to survive and develop amidst high
levels of economic uncertainty. As international trade and business expand, there is no question that
international links will become more important for the hotel industry. This means that the technology
systems in use - especially those in large chains - must account for the global perspective.

6 BIBLIOGRAPHY
www.eihltd.com
www.tajhotels.com
www.itcportal.com
www.khil.com
www.sayajihotels.com
www.theleela.com
www.moneycontrol.com
www.hospitalityindia.com
www.fhrai.com
www.hotelassociationofindia.com
www.tourism.gov.in
www.ibef.org

44

www.icra.in

45