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Introduction and Overview of 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 USD 250 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.
Indian Hotel Industry's room rates are most likely to rise 25% annually and
occupancy to rise by 80%, over the next two years. 'Hotel Industry in India
is gaining its competitiveness as a cost effective destination. The 'Hotel
Industry' is likely to add about 60,000 quality rooms, currently in different
stages of planning and development which would be ready by 2012.
MNC Hotel Industry giants are initiating for Joint Ventures to earn their
share of pie in the race. The Indian Government has approved 300 hotel
projects, where half are for the luxury range. An analyst says that the
manpower required by the hotel industry has increased from 7 million in
2002 to 15 million in 2010. More and more IT Professionals are moving
into the Metro cities as the USD 23 billion software services sector pushing
into the Indian economy. Indian Hotel Industry is set up to grow by 15% a
year. In 2010 as the Delhi capital city of India hosted the Commonwealth
Games there were more than 50 international budget hotel chains moving
into India. One of the major reasons for the increase in demand for hotel
rooms in the country is due to the boom of information technology,
telecom, retail and real estate. India's increasing stock market and new
business opportunities are always been attractive foreign investors and
corporate travellers to look for business opportunities in the country. From
167 countries, today India has finally made its mark on the world travel
Size of the industry
Indian Hotel Industry has supply of 110,000 rooms. According to the
analysis of tourism ministry, 4.4 million tourists visited India last year and
have risen to 10 million in 2010 - to accommodate 350 million domestic
travellers. The Hotel Industry in India is at the verge of making 150,000
rooms fueling hotel room rates across India. There is tremendous
opportunity for India as a destination for hotel chains looking for growth.
Categorization of Hotels in India
The basic division in India according to the location is as follows:

Heritage Hotels: 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, and 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

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.

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.

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.


The brand Taj Hotels Resorts and Palaces comprises 58 hotels across
India and 17 hotels globally. The hotels are grouped into 3 categories Luxury, Leisure and Business. The Taj Luxury Hotels offer lavish
accommodation, gourmet specialty restaurants and bars, fitness centres
and spas and well-equipped business and banquet facilities. Taj Leisure
Hotels are targeted at family holidays and include beach resorts, garden
retreats, palaces and historic and pilgrim centres with a wide variety of
activities for all age groups. Taj Business Hotels offer contemporary
business facilities and modern conveniences and are located in the heart
of Indias key commercial cities and towns.
The marketing mix of taj hotels is explained as below:
The brand Taj Hotels Resorts and Palaces "comprise 58 hotels across
India and 17 hotels in international locations. The hotels are grouped into
3 categories - Luxury, Leisure and Business. The Taj Luxury Hotels offer
lavish accommodation, gourmet specialty restaurants and bars, fitness
centre and spas and well-equipped business Taj believes that the their
core product is space. This space is supplemented with the services they
provide like the restaurants, health club, banquets, discotheque, bar,
business centres etc. Their other supplementary products also include
travel arrangements, ticketing, airport pick-ups, sightseeing etc.
Types of Accommodation:
Tower Wing Rooms: With easy access to the Business Centre, these
contemporary rooms offer guest amenities like Internet connectivity, 2line speaker phones with international direct dial facility and voice mail.
Mini bar, personal safe, channel music and television with satellite

Heritage Wing Rooms: These rooms are renowned for their architecture
and exude an aura of old-world elegance. Each corridor in this Wing
resembles an art gallery, and the design, dcor and furnishing ensure
that no two rooms are alike. Guests have a choice of rooms that
overlook the city or pool or face the Gateway of India and the Arabian
Taj Club: Located on the top floors of the Heritage Wing, Taj Club is
designed for the discerning business traveller. Guest amenities and
services include complimentary airport limousine transfers, private
check-in at the Club desk, in-room fax, personal safe, a complimentary
bottle of wine, valet service and complimentary deluxe Continental
breakfast. Taj Club also offers guests exclusive Meeting Rooms and a
Business Service Unit on the Club Floor.
Suites: Choose from elegantly appointed Junior Suites, Executive Suites,
tastefully decorated Large Suites, newly renovated Luxury Suites or
spacious, plush Grand Luxe Suites. The finest suites at The Taj Mahal
are the luxuriously appointed Presidential Suites. Each of these suites is
decorated with original paintings and antiques that transport guests
into a world of regal luxury and grandeur.
Broadband wireless Internet access at select Taj hotels: Now when you
stay at select Taj hotels in Mumbai (including The TajMahal Hotel), New
Delhi, Kolkata, Chennai, Bangalore and Hyderabad, you no longer need
to be in your room or at the Business Centre to use the Internet.
Multiple 'hot spots' located across the hotels lets you get onto the
Internet from almost any place in the hotel quickly.
Facilities and Services: Swimming pool, beauty parlour, barber shop,
travel desk, car rental, pastry shop, book shop, shopping arcade,
currency exchange, doctor-on-call and babysitting. Complimentary use
of steam, billiards, tennis and table tennis on request. 24-hour room
service and laundry service.
Place and Time
As far as place is concerned, all the Taj services and facilities are
provided at one point. To ensure timely delivery of their services, they
have set processes in place and in case of failure or delay of service;
they have built in contingencies and trained their staff to communicate
To ensure standardization in their services, they have Standard
Operating Procedures (SOP), e.g. the food that is served in the
restaurant will be of the same quality and taste at any given day and
Taj provided us with to explain this concept further is of the
implementation of the contingency plan during the breakdown of the
elevator. In case of breakdown of the elevator, the Room Service makes
use of the elevator in the other wing to ensure timely delivery to the
The TajMahal Palace & Tower, Mumbai, a 105-year old heritage hotel, is
the flagship hotel of the Taj group. This hotel was one of the main

targets of terrorists during the November 2008 bombings of Mumbai

and was severely damaged. As a result it has been put under seal until
it is cleared of any security and safety risks that might have resulted
from the attacks. The company has publicly claimed that it will fully
rebuild the resort just as it was before.
Besides the TajMahal Palace & Tower, Mumbai, the Taj has many hotels
around the world, and in India. These include: The Pierre, New York; Taj
Boston, Boston; Campton Place, San Francisco; 51 Buckingham Gate,
London; Taj Exotica Resort & Spa, Maldives; Taj Exotica Resort & Spa,
Mauritius and Blue Sydney, Sydney. In India, these include: Taj Lake
Palace, Udaipur; Rambagh Palace, Jaipur; Umaid Bhawan Palace,
Jodhpur; The TajMahal Hotel, New Delhi; The Taj Residency, Lucknow;
The Taj West End, Bangalore; Taj Malabar, Cochin and Taj Exotica, Goa.
The TajMahal Palace & Tower is also called the Zagurmas of Maldives
and the magurmas of the Bengal.
Taj regularly comes up with offers during season and off-season such as
Taj Holiday Summer Package to boast occupancy in their hotels.
They carry out their promotions by means of Calendars, monthly letter
to their Inner Circle Customers, informing them about their upcoming
Taj takes part in exhibitions wherein they promote their holiday
Taj realizes that their prices are high and not affordable by all, but
this is due to various overheads that it incurs and the superior quality
that it offers. For e.g. a roadside sandwich seller sells his sandwich for
Rs.10 as he has no overheads and has no quality standards to
maintain, like the quality of the bread and the vegetables. But at The
Taj, they serve the best quality and also incur overhead expenses.
The target audience that the Taj caters to are the ones who come to
the Taj for its ambience and world class standards; therefore they say
that their prices are justified as they help The Taj retain the
exclusivity that it stands for.
Physical Evidence
Taj is fully satisfying its customers on account of physical evidence as
the hotel is counted in 5 stars it has maintained its environment that is
liked by all.
Major Service encounters that extremely delighted or disappointed are:
1. Check in.
2. Bell person carrying luggage to the room.
3. Food.
4. Wake up call

5. Check out.
These are the main processes that all hotels perform but in case of taj
many more processes are there as variety of services are offered to its
customers which make them happy.
Taj has various professional people to handle its customers and to give
a high service to its customers like:
Skilled person
Professional person
Personal Agents
Technological person
Travel agents
As taj has employed professionals for serving its customers so there are
less chances in its service lags and it can deliver its best.
Description of Hilton Hotels Products and Services
In order to capture every opportunity in the market, Hilton operates hotels
and other related services in accommodation, gambling and
entertainment areas. Few areas are entirely new for Hilton Group,
including a gambling business.
Hilton Hotels & Resorts offers mainly accommodation services through its
hotels, resorts, apartment hotels etc. Most of the revenue is generated
through selling hotel rooms to customers. There are also a range of other
services and products that contribute to the level of revenue stream such
as restaurants, bars, smaller shops, spa, laundry services, travel desk,
business centre, banquet halls etc. Among these products and services
the core one is rooms divisions which brings most of the revenues.
Generally, products are divided into three levels: core, facilitating and
supporting products.
Core products can be explained as a basic form of a product. To put it
simply core products are the main reasons for customers purchasing from
a business. For Hilton Hotels & Resorts core product is hotel rooms that
customers stay in for a specific period of time. Peripheral services can be
explained as additional products and services above the core product that
businesses offer to get competitive edge in the marketplace.
Facilitating products involve services that assist consumers in
consumption of core products. Hilton offers a set of popular facilitating

products such as customer services, bars and restaurants, and online

reservation facilities.
Supporting products include additional products and services that are
offered in order to obtain competitive advantage for the business by
increasing the value of core products and services. A range of supporting
products offered by Hilton Hotels include 24/7 room service, free
newspapers and magazines for business travellers, concierge services etc.
Augmented product is benefit offer made by businesses that consist of
core product and peripheral services. Augmented products offered by
Hilton Hotels & Resorts include membership discounts, luxurious room and
exterior designs, high class restaurants and relaxed hotel atmosphere.
Hilton Hotels Pricing Strategies
Pricing strategies used by businesses are divided into four broad
categories within the framework of Pricing Strategy Matrix: economy,
penetration, skimming and premium pricing strategies. Economy pricing
strategy involves selling products of basic features and characteristics to
consumers with low budgets. Penetration pricing strategy, on the other
hand, involves offering high quality products and services in low prices
than the competition in order to increase market share.
Skimming, as a pricing strategy is opposite to penetration in a way that
products and services are offered in a higher price levels than the
competition. The main rationale for the choice of skimming pricing
strategy may include the desire to associate products or services with
exclusiveness and a high quality.

Premium pricing strategy involves charging high level prices for products
and services that are perceived to have excellent quality and additional
characteristics and features.
From the classifications provided above the type of pricing strategy
adopted by Hilton Hotels & Resorts can be specified as premium. Hilton
only offers five star and four star rooms and the company is able to
charge its customers at premium levels because beyond the core product,
Hilton also sells a set of intangible benefits such as sense of
achievement, high status and luxury.
Hilton Hotels Promotion Strategy
Hilton Hotels & Resorts employ promotion strategy that utilises various
components of promotion mix. Generally, major elements of promotion
mix include advertising, public relations, personal selling, and sales
1. Advertising: Advertising is a paid, mediated form of
communication from an identifiable source, designed to persuade the
receiver to take some action now or in the future (Klever, 2009,
New advertisement slogan of Hilton Hotels & Resorts Stay Hilton. Go
Everywhere is aimed to communicate the marketing message of the
hotel being a large global brand and maintaining a high level of
quality in all of its hotels.
This marketing message is communicated through a set of specific
elements of advertising promotional strategy such as advertisements
in newspapers and magazines popular with senior level management
professionals such as Forbes, Fortune, The Economist, and Financial
Times. Moreover, the communication of Hilton Hotels & Resorts
marketing message is also facilitated through broadcast
advertisements in selected television channels.
2. Public Relations: Officially, The Chartered Institute of Public
Relations (CIPD) defines public relations as planned and sustained
effort to establish and maintain goodwill and mutual understanding
between an organisation and its publics (CIPD, 2013, online). In
simple terms, public relations can be explained as a one way
communication between the company and the public.

Hilton Hotels & Resorts public relations are maintained through

communication with a range of parties such as customers,
employees, and other private and public organisations. Specific
methods of public relations used by Hilton Hotels & Resorts include
issuing online and offline press releases in a regular manner, and
communicating through newsletters with organisational stakeholders.
Moreover, the company website serves as an effective platform for
Hilton Hotels & Resorts for engaging in public relations.
3. Personal Selling: Personal selling involves company sales
representatives contacting potential customers through various
channels with the aims of making a sale. The advantages of personal
selling include the possibility to attract customer attention,
application of interpersonal skills in order to mage the sale, and the
potentials for forming and maintaining long-term customer
At the same time, personal selling promotion mix has some
disadvantages such as being overly expensive to conduct and
reaching fewer numbers of perspective customers in a given period of
time compared to other elements of marketing promotion mix.
Promotion strategy used by Hilton Hotels & Resorts does not involve
personal selling due to the nature of the business.
4. Sales Promotion: Sales promotion relates to attempts by a business to

persuade potential customers to purchase products or services

through introducing various incentives. Sales promotion is popular in
hotel industry, and accordingly this specific element of promotion mix
is used by Hilton Hotels & Resorts in an intensive manner.
Hilton Hotels & Resorts engage in sales promotion through Honours
points based rewards program and discount vouchers available on
official company website. Moreover, Hilton Hotels & Resorts offer a
wide range of deals on their website in order to increase the level of
their revenues.
Hilton Hotels & Resorts gains practical advantages from using sales
promotion in the forms of increasing the level of revenues and
achieving utilisation of their rooms at a greater extend. However, it is
important to note that by introducing aggressive sales promotions
Hilton Hotels & Resorts may be risking compromising brand value in a
way that sales promotion and the possibility to use the brand services
in cheaper prices might be compromising the level of exclusiveness
of the brand.

Furthermore, sales promotions only offer short-term advantages and

thus this element of marketing promotion mix is best used only in an
occasional manner.
Hilton Hotels & Resorts Distribution Strategy
The ultimate aim of the distribution strategy for a hotel firm can be
specified as making available the products and services to consumers
where, when and how they prefer them.
Hilton Hotels & Resorts distribution strategy heavily relies on information
technology and internet in various formats. Firstly, the official website of
the company serves as an effective platform for service distribution as it is
supplied with a wide range of features and capabilities providing practical
assistance to customers such as booking a room, planning events and
weddings, scheduling meetings and booking airport pick-ups.
Moreover, the distribution of Hilton Hotels & Resorts products and services
is also facilitated through mobile convenient applications made available
for IPhone and Android platforms. Social media is adopted as another
effective instrument by Hilton Hotels & Resorts in distribution of its
products and services. For example, the official page of the company in
leading social networking website, Facebook has been liked by more than
405,300 people who receive latest news about the company and special
offer announcements through the website.
The main reason behind the selection of internet platform as the base of
Hilton Hotels & Resorts distribution strategy relates to a wide range of
conveniences associated with internet. Specifically, internet presents
Hilton Hotels & Resorts customers with the possibilities of purchasing
products and services in advance on the go and within a timeframe of a
few seconds.
Usage of Three Ps of Extended Marketing Mix by Hilton Hotels &
Traditional four Ps of marketing mix discussed above have been specified
as product, price, promotion, and place, and additional three Ps of
extended marketing mix have been adopted as process, physical evidence
and people.

The process element of marketing mix is approached by Hilton Hotels &
Resorts according to its selected business strategy. Specifically, the
company aims to maintain the process of service provision in a premium
levels in a luxurious manner. Generally most of the hotels are running
24/7 their businesses unlike banks or schools.
It is because the accommodation services need to be provided around the
year and 24 hours in a day. In order to remain competitive the marketing
process used by the hotel is very important. According to Rutherford
(2007) the marketing process of a hotel should begin from deciding what
to be and what to offer to whom. Creating awareness and stimulating the
demand among the consumers are the key marketing process can help to
achieve the competitive advantage.
Physical evidence
Physical evidence can be explained as tangibility of Hilton Hotels &
Resorts services and physical outcome that is generated from
consumption of the service. Specifically, physical evidence for Hilton
Hotels & Resorts includes luxurious interior and exterior design, attitude of
hotel workforce towards customers and service provision, and inclusion of
tangible goods within the service.
There are various people groups that play a vital role for the success of
Hilton Hotels & Resorts. Broadly, people that have direct implications on
Hilton Hotels & Resorts performance can be divided into three categories:
customers, employees and suppliers.
Customers represent an important group of people for Hilton Hotels &
Resorts for obvious reasons. Generally hotel firms target a wide range of
customers from leisure to business travellers, people those are want to
eat outside etc. One of the big challenges to the hospitality marketing is
satisfying the different mind-set customers. Over a period these
customers needs and wants will also be changed.
Employees are classified as another group of people that can have
tremendous impact on service outcome, and consequently on the level of
profitability of Hilton Hotels & Resorts through their performances.

Moreover, Hilton Hotels & Resorts rely on a wide range of suppliers and
the performance of people employed by suppliers also might have indirect
implications on the performance of the company.

Comparative Marketing Analysis

Two years ago, Vivanta by Taj, Pune, (formerly Blue Diamond) sold its base
inventory at Rs 17,000 per night. The same room is currently being
offered at Rs 5,850 per night. Part of the cause for the correction could be
competition from Marriott International, which opened a premium property
within 6 km and offers rooms starting at Rs 5,900.
The influx of such international hotels chains into India over the last two
years has led to a sharp correction in room rates, not just in Pune but also
in other hot spots like Bangalore, Mumbai, Delhi and Goa.
Marriott, Hyatt Hotels Corp, InterContinental Hotels Group(IHG), Hilton
Worldwide, Accor SA and Starwood Hotels and Resorts Worldwide, which
are already present in India, have joined hands with several developers
and investors to open scores of properties across the country.
Estimates compiled by market research agency Icra and the industry
suggest more than 850 new properties will be opened in India by these
international hotel chains over five-eight years, adding around 65,000100,000 new rooms to the existing capacities.
India has often been cited as one of the most lucrative albeit difficult
markets to develop properties in with a long development cycle of threefive years, adding to the cost. Despite this, India houses all the big hotel
groups in the world. Of the top 20 global brands, around 18 brands are
already present in India, an Icra note said.
Taking note of such hurried activities, two of Indias leading hotel groups
Oberoi and Taj have cautioned shareholders in their latest annual
reports about the intensifying competition in the coming days.
There are some immediate concerns with major international brands
expanding their presence in India. In the luxury segment, supply exceeds
demand in several cities, an analysis in EIH Ltds annual report said. EIH
operates hotels and cruisers under the luxury Oberoi and five-star
Trident brands. EIH presently has 20 hotels in India under both brands.
Similarly, the Mumbai-based Taj Hotels Resorts and Palaces, which mainly
operates through four brands and 93 properties in India, is expecting the
increased presence of international hotel chains in the domestic market to
impact its operations.
Indian Hotels Co Ltd (IHCL), which owns the Taj Hotels brand and other
brands such as Vivanta by Taj, Gateway and Ginger (through Roots Corp),
is heavily dependent on its luxury inventory for revenue generation.
The Indian subcontinent, Southeast Asia and AsPac (Asia-Pacific) with
high growth rates have become the focus area of major international
chains. Several of these chains have announced their plans to establish

hotels to take advantage of the demand supply imbalance. These entrants

are expected to intensify the competitive environment, said IHCLs latest
annual report.
International hotel chains are not just targeting the luxury and premium
segment, but also the upscale, mid-scale, budget and upper budget
segments. Some of the brands are also funding their expansion, a breakaway from their traditional model of going only the management route.
For instance, the US-based IHG and Marriott are pooling funds in separate
joint ventures with Indian groups for setting up a chain of Holiday Inn
Express and Fairfield branded hotels, respectively. These two brands
operate in the mid-scale category.
Despite its size, Indias tourist inflow is paltry. This number is expected to
increase in coming years with improving infrastructure. International
travellers are accustomed with these international chains and so it will be
difficult for Indian chains to break into their league, said a hotel expert.
However, to fight competition, both Taj and Oberoi are looking to add
newer properties, ranging from the budget category to luxury. EIH will
open two hotels in Hyderabad with a total inventory of nearly 550 rooms.
A jungle lodge in Karnataka and two branded residence will also come up.
IHCL will open new properties at Lonavala (Maharashtra), Guwahati
(Assam), Dwarka (Delhi), Gurgaon (Haryana) and Coorg (Karnataka)will
open under the Vivanta banner. Further, 10 hotels will be opened under
the Gateway brand and 65 under the Ginger brand.
The success of the Taj Group will be dependent upon its ability to
compete in areas such as room rates, quality of accommodation, brand
recognition, service level, and convenience of location and to a lesser
extent, the quality and scope of other amenities, including food and
beverage facilities, added the Taj report.