Indian Hotel Industry

Presented by
Ayyappan.R(07MBA020)
J.Karunanithi(07MBA053)
Mahendran.S(07MBA059)
Nithya.S(07MBA069)
• 'Hotels in India' have supply of 110,000 rooms of
which 5 Star category accounts for approx. 30%.
• India’s luxury rooms availability lower than even
smaller East Asian countries

Source: Compendium of Tourism statistics, WTO

• 5 million tourists visited India last year
• India needs an additional 50,000 rooms in the
next 2 or 3 years to service projected tourist
arrivals
• Manpower requirements of the hotel industry
will increase from 7 million in 2002 to 15
million by 2010
 Main Characteristics
Location
No:of rooms
Affiliation/Ownership
Market Segment Mix
Service Positioning
Occupancy rate
Rooms sold
Average room rate
Conference facilities/F & B outlets
Physical facilities & services
Users of Hotel Services
 Economic impact of the
Trav el & Tourism Secto r
Travel & Tourism Travel & Tourism
% Share of World Economy as % Economy Jobs as
Travel & Tourism of Total % of Total
Demand GDP Employment

WORLD 10.1 9.9 8.4

South Asia 6.5 6.1 5.9
India 6.5 6.1 6.4
Market Segmentation in
 Key Operating
Characteristics
Average Occupancy(%) Average Rate(Rs)
Fluctuations in Demand: From
Excess Demand to Excess

Four conditions potentially faced by fixed-

capacity services:

Excess demand
Too much demand relative to capacity at a
given time
Demand exceeds optimum capacity
Upper limit to a firm’s ability to meet demand
at a given time
Optimum capacity
Point beyond which service quality declines
 Variations in Demand Relative to
• Capacity
•

VOLUME
Dema nd exce ed s
(business is
CAPACI TY
Demand
Maxi mu m optimum
Capa exceeds
(quality
capacity
Op timu m declines)
(Demand and
Supply

Excess
Lo w (wasted resources)
(May Send Bad

TI ME TI ME
Capacity Constrained: Defining
Productive Capacity in Services

Physical facilities to contain customers

Physical facilities to store or process goods
Physical equipment to process people, possessions,
or information
Labor used for physical or mental work
Public/private infrastructure
Alternative Capacity Management
Strategies
Level capacity (fixed level at all times)

Stretch and shrink

Offer inferior extra capacity at peaks

Vary seated space per customer

Extend/cut hours of service

Chase demand (adjust capacity to match

demand)

Schedule downtime during periods of low

demand
Demand L evels Can B e Managed:
Alter nativ e D ema nd Ma nagement

Take no action
 Let customers sort it out
Reduce demand
 Higher prices
 Communication promoting alternative
times
Increase demand
 Lower prices
 Communication, including promotional
incentives
 Vary product features to increase
desirability
 More convenient delivery times and places
Alternative Demand Management
Strategies

• Use price and other costs to manage

demand
• Change product elements
• Modify place and time of delivery
– No change
– Vary times when service is available
– Offer service to customers at a new
location
• Promotion and education
 Challenges faced..
• Slow in implementation: Lack of adequate recognition for the
industry despite being one the biggest generator of employment has
been hampering growth prospects. Infrastructure development,
though happening, continues to languish. Amidst improving
fundamentals, India could lose out to other countries if the pace is not
accelerated.
• Regional hubs developing: Though India has the potential in the
tourism sector, competition is more global. The rapid growth of
China, select South East Asian countries, the pace of development in
the Middle East could affect India, in terms of its ability to attract
tourist into the country.
• Susceptible to geo-political events: Since tourism is a global
phenomenon, any adverse developments on the geo-political front
are likely to impact global tourist flows. India is no exception to the
same, as was evident during events like Parliament attack,
sequential blasts etc.
 Scope of the industry..
• As a tourist destination: Though India accounts
for a fraction of global tourist flows currently, the
country is expected to increase its market share
over the long-term. The recognition of tourism as an
industry in the recent past has paved way for
opening up to competition.
• Infrastructure development: The road
development project along with other aspects like
airport modernization and port development is likely
to result in increased economic activity.
• Increased competition: In the hotel sector, a
number of multinationals have entered/strengthened
their presence in the country. Besides, Indian hotel
chains are expanding in international market. A
combination of all these factors could result in a
strong emergence of the budget hotels.
 a n
Th
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