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Service sector industry is growing in India and it contributes 57 % of total GDP (Central
Statistical Organization, India). Hospitality is one of the service sector industries which are
booming.
Presently, in all category of hotels in India around 1, 10,000 rooms are available which is
expected to increase by 100 percent by year 2015 (HVS, 2007). All global players had planned to
tap Indian market and big player like Starwood, Hilton Group, Westin and Accor had already
either directly invested in India or they made collaboration with any Indian company. Also IT &
ITES2 and low cost domestic airline fueled hotel industry in India.
Hospitality is all about offering warmth to someone who looks for help at a strange or unfriendly
the commercial context refers to the activity of hotels, restaurants, catering, inn, resorts or clubs
who make a vocation of treating tourists. Helped With unique efforts by government and all
other stakeholders, including hotel owners, resort managers, tour and travel operators and
employees who work in the sector, Indian hospitality industry has gained a level of acceptance
world over. It has yet to go miles for recognition as a world leader of hospitality. Many take
Indian hospitality service not for its quality of service but India being a cheap destination for
leisure tourism with unlimited tourism and untapped business prospects, in the coming year¶s
Indian hospitality is seeing green pastures of growth. Availability of qualified human resources
and untapped geographical resources give great prospects to the hospitality industry. The number
of tourists coming to India is growing year after year. Likewise, internal tourism is another area
with great potentials.

Ã
 
 



o| The Indian hotel industry, a significant stakeholder of the tourism sector, witnessed the
trickledown effect of the global crisis.
o| Jo of foreign tourist arrival in India is around 5.11 million in 2009 (Ministry of Tourism).
o| oreign Tourist Arrivals in India during the Month of July 2010 were 4.52 lakh as compared
to TAs of 4.35 lakh during the month of July 2009 and 4.32 lakh in July 2008.
o| oreign Exchange earning from tourism during the month of July 2010 were Rs.5444 crore
as compared to Rs.4983 crore in July 2009 and Rs.3870 crore in July 2008.
o| Over 42,000 new rooms are expected to be added to current inventory across 10 cities by
end-2012.
 3
3
 


According to an estimate, international tourist inflow in India by 2020 would be 10 million

(World Trade Organization, 2002). This makes the country one of the fastest growing tourist
destinations in the world. India accounts for 0.5% of world tourism (HVS, 2007). Strong GDP
growth, improving infrastructure, confidence in the country¶s economic prospects, open sky
policy and the 'Incredible India' campaign has improved the outlook for India. This positive
outlook would increase the tourist arrival in the country. Hence hotel industry is expected to be
the major beneficiary. Even domestic tourism is gaining momentum. Rising disposable incomes,
cheaper airfares and better connectivity would continue to increase the demand for rooms. Many
international hotel chains either have or are on the lookout for setting up shop in the country.
This clearly shows that India is on the international tourism radar. The five star hotel segments
have grown the fastest during the last five years clocking a CAGR 3 of 12% (World Trade
Organization, 2002).
Economic liberalization has given a new impetus to the hospitality industry. The current gap
between supply and demand expected to widen further as the economy opens and grows
(DATAMOJITOR, 2009). The country is ranked fourth among the world¶s must see countries
(HVS, 2007).

The financial year 2008/09 was an unforgettable one for the Indian tourism industry with the
Mumbai terror attacks and the global economic downturn affecting the industry¶s performance.
The hotel industry, too, observed an overall decline in occupancy and Revenue per Available
room (RevPAR) in most cities in India. Indian Hotels industry has successfully passed the
downturn. The recovery started in the latter half of  '10 (October 2009) with steady increase in
the foreign tourist arrivals better than expected and completely recover in by the end peak season
(March 2010). oreign Tourist Arrivals (TAs)
to India has grown 1.7% to 3.54 lakh for the
month of April 2010 over 3.48 lakh in April
2009. oreign exchange earnings (EE) during
April 2010 recorded impressive 11.3%% rise in
Indian rupee terms to Rs 4518 crore from Rs
3773 crore in April 2009. World Travel and
Tourism Council, India, data says, India ranks
18th in business travel and will be among the top
5 in this decade. The hotel and tourism industry¶s contribution to the Indian economy by way of
foreign direct investments (DI) inflows were pegged at US$ 2.1 billion from April 2000 to
March 2010, according to the Department of Industrial Policy and Promotion (DIPP). According
to industry data, India is expected to double the number of branded hotel rooms from 100,000
now in just three years.
  
 

India¶s GDP recorded a growth rate of 6.7% for the financial
year 2008-09 (Central Statistical Organization, India) after
recording growth above 9% for three consecutive years. The
economic recovery of the country can be further kept on course
by a stable political environment provided by the Congress-led
United Progressive Alliance (UPA) returning to power through
a comfortable majority in the general elections last year.
Policies of the newly elected government of leaning
towards disinvestment and infrastructure development have
helped sustain economic growth. The increased spending on
infrastructure development will boost the tourism industry and backbone of tourism i.e.
Hospitality will also grow.

Although the last year began under high inflationary pressures, there were concerns about
negative inflation towards the year end. This financial year saw low inflation levels and even
fears of deflation due to the dropping of the WPI. In its downward slide from the previous year's
all-time high of 12.38 % (August 2008), W PI for June 2009 turned negative (-1.3%) The drop in
commodity prices can benefit hotel developers, who can take advantage of cheaper construction
materials. This week period is probably the best time to make investments into the hotel sector.
Leading macroeconomic indicators GDP are correlated to the performance of the hotel industry.
However, though the hotel industry is amongst the first to be hit by a downturn, it is amongst the
slowest to recover since the spending on travel is considered as discretionary for most leisure
travelers and some business ones as well. The increased spending on infrastructure
development will boost the tourism industry and backbone of tourism i.e. Hospitality will
also grow.


If the country is able to sustain its economic growth especially in the service sector, it will have a
direct influence on the hotel industry. This is directly related to the incoming foreign
investments, not just in the hotels but the economy as a whole. Also equally important is the fact
that India has now discovered the power of marketing and with campaigns like Incredible India,
there are also the various large scales regional and global events like the upcoming
Commonwealth Games, Asian Games and the recent Indian Premiere League that builds interest
about the nation... Apart from these external factors there are other factors where the industry can
be given a great boost. or instance if land prices became more realistic, the process of getting
approvals and licenses to build and operate hotels are streamlined, together with strong
infrastructure development and investment and more tax/levy incentives being provided to build
hotels, it would prove very fruitful for the industry.


 
 

Ministry of Tourism compiles monthly estimates of oreign Tourist Arrivals (TAs) in

India and oreign Exchange Earnings (EE) from tourism on the basis of data received from
major airports. ollowing are the important highlights, as regards these two important indicators
of tourism sector for July 2010.


! " !# 
o| TAs in India during the Month of July 2010 were 4.52 lakh as compared to TAs of
4.35 lakh during the month of July 2009 and 4.32 lakh in July 2008.
o| There has been a growth of 4.1 % in July 2010 over July 2009 as compared to a growth
of 0.6 % registered in July 2009 over July 2008.
o| The growth of 4.1 % in July 2010 is lower than the growth of 8.0 % in June 2010. But the
number of TAs in July, 2010 increased to 4.52 lakh from 3.70 lakh in June, 2010.
o| TAs during the period January-July 2010 were 30.85 lakh with a growth rate of 9.8 %,
as compared to the TAs of 28.10 lakh and a negative growth rate of 7.6 % during
January-July 2009 over the corresponding period of 2008.


 $  " # % 
 
&'

o| EE from tourism during the month of July 2010 were Rs.5444 crore as compared
to Rs.4983 crore in July 2009 and Rs.3870 crore in July 2008.
o| The growth rate in EE in Rupee terms in July 2010 over July 2009 was 9.3 % as
compared to growth rate of 28.8 % in July 2009 over July 2008.
o| EE during the period January-July 2010 were Rs.36817 crore with a growth rate
of 24.1 %, as compared to EE of Rs.29676 crore with a negative growth of 0.1
% during January -July 2009 over the corresponding period of 2008.
o| EE in US$ terms during the month of July 2010 were US$ 1163 million as
compared to EE of US$ 1028 million during the month of July 2009 and US$
904 million in July 2008.
o| The growth rate in EE in US$ terms in July 2010 over July 2009 was 13.1 %.
o| EE during the period January-July 2010 were US$ 8005 million with a growth
rate of 32.6 % as compared to EE of US$ 6035 million with a negative growth
of 17.2 % during January - July 2009 over the corresponding period of 2008.
(
) ! *")!#  + ,
As a facilitative measure to attract more foreign tourists to India, Government has launched a
Scheme of ³Visa on Arrival´ (VoA) from January 2010 for citizens of five countries, viz.
inland, Japan, Luxembourg, Jew Zealand and Singapore, visiting India for tourism purposes.
o| During the period January-July 2010, total number of VoAs issued under this Scheme
was 3516.
o| The number of visas issued under this scheme, during January-July 2010 for nationals of
the five countries were Singapore (1164), Jew Zealand (856), inland (847), Japan (625)
and Luxembourg (24).
o| Total number of VoAs issued during July, 2010 were 365 with country wise breakup as
inland (45), Japan (104), Jew Zealand (88), Singapore (124) and Luxemburg (4).
o| During the seven month period of January±July, 2010, the maximum number of VoAs
were issued at Delhi airport (1838), followed by Mumbai (769), Chennai (727) and
Kolkata (182).
Y  

à 
 

-
Three key parameter in measuring industry health like Occupancy rate, Average Room Rate
(ARR) and Revenue per Available Room (RevPAR) are showing improving signs(Source: HVS
Hotel in India)

%  !  .  %
"%!%#
A performance metric in the hotel
industry, which is calculated by
multiplying a hotel's average daily room
rate (ADR) by its occupancy rate. It may
also be calculated by dividing a hotel's
total guestroom revenue by the room
count and the number of days in the
period being measured. The reason for downturn in 2008-09 is global downturn and Mumbai
attack but the tourist arrival rate shows that in 2010 will improve the condition.

/ 0 1
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o| Commercial establishment providing lodging, meals, and other guest services. (Business
Dictionary.com)
o| A hotel is an establishment that provides lodging, usually on a short-term basis.

 
 

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2
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2

3
1 $ Restricted to the 4th largest metro oreign business and leisure travelers,
areas and other major cities senior biz executives and senior govt.
officials
4
56
 Located in major cities as well as Middle level biz executive and leisure
tourist destinations travelers
/
5 Located in major cities as well as Domestic tourists

 tourist destinations

 It comprises of odd places, forts Primarily foreign leisure travelers
,residences converted in to
hotels,Eg.Jaipur,Mysore
|

T
Analysis

Of

Hotel

Industry

As per the Travel and Tourism Competitiveness Report 2009 by the World Economic orum,
India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places 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 and is expected to be the second largest employer in the world by
2019.
 




o| Variety of Hotels in India

o| International players in the market such as

Taj and Oberoi & International Chains

o| Cheap manpower cost

o| A readymade tourist destination with the

resources

o| Jatural and cultural diversity

o| Government support

7 8

o| The cost of land in India is high at 50% of total project cost as against 15% abroad.

o| High tax structure in the industry makes the industry worse off than it¶s international.

o| SUPPL GAP- Only 97,000 hotel rooms are available in India today.

o| Limited value added services

o| Poor support infrastructure

o| Susceptible to political events.

/ 



o| Demand between the national and the

inbound tourists can be easily managed due
to difference in the period of holidays.

o| In the long-term the hotel industry in India

has latent potential for growth.
o| Unique experience in heritage hotels.

o| Rising income level of domestic and

international tourist.

o| Globalization and Liberalization of business

houses that increase business tourism in
India.

o| Common Wealth Games

o| Software services sector pushing the Indian

economy skywards, more and more IT
professionals are flocking to Indian metro
cities

o| Hotels in India' has a shortage of 150,000

rooms fueling hotel room rates across India.

o| Banking on the government¶s initiative of

upgrading and expanding the country¶s
infrastructure like airports, national
highways etc, and the tourism and
hospitality industry is bound to get a bounce
in its growth.

o| The government has allowed 100 per cent

foreign investment under the automatic
route in the hotel and tourism related
industry.

o| The Government of India has announced a

scheme of granting Tourist Visa on Arrival
(T-VoA) for the citizens of inland, Japan,
Luxembourg, Jew Zealand and Singapore.
 The scheme is valid for citizens of the above
mentioned countries planning to visit India
on single entry strictly for the purpose of
tourism and for a short period of up to a
maximum of 30 days

o| The tourism master plan, the first for

Karnataka, envisages initiatives to attract
private investment ranging from US$ 2.2
billion to US$ 4.4 billion in the next three to
five years. The plan is prepared based on the
Vision 2020 document prepared and adopted
by the Karnataka State Planning Board. The
state government aims to generate 200,000
jobs in the tourism sector in the next five
years. The master plan is aimed at making
Karnataka the number one destination for
tourism in the country by 2020, according to
Mr G Janardhan Reddy, Minister for
Tourism and Infrastructure Development

o| Growing popularity of medical tourism in

India.




o| Guest houses replace the hotels.

o| Political turbulence in the area reduces tourist traffic and thus the business of the hotels

o| Changing trends in the west demand similar changes in India

o| The economic conditions of a country have a direct impact on the earnings in hotel industry.

o| Lack of training man power in the hotel industry.

o| luctuations in international tourist arrivals.

o| Increasing competition among international

tourism destination.

o| global economic slowdown

o| terrorist attacks at Mumbai

o| Swine flu

o| Volcanic eruption in Iceland

In India, Opportunity of hotel industry is very huge. It calles for right marketing strategy and
govt support. India, as tourist destination, is very popular.
!
"

3###

The hotel industry is dependent on tourism and travel industries, and together they constitute the
hospitality industry. The demand variation in the hotel industry depends on various factors like
the economy, socio-political conditions, government regulations, business cycle, weather and
seasonal changes, festivals etc. The hotel service is a perishable service with a fixed or limited
supply. It is characterized by high investment and low variable costs.

Pricing, promotion, place, process, people and physical evidence, all have to be handled with
discretion and innovativeness. The recent trends in the hotel industry owing to the technological
developments and the changing demographics have had a major impact on the way hoteliers
conduct their business. The Indian hotel industry has also come of age and is ready to set new
standards in customer service.
 6Room and leaisure services
6Foods
6Saloon and Spa
6Amenities
6Brand name
Œroduct 6Quality
6Safety
6other value added services

6Room Charges
6Discount offer
6seasonal Fair
6Duties and texes
6special package
Œrice
6Œrice flexibility
6Œrice discrimination
6Œricing strategy (skim, penetration, etc.)

6Location
6Market coverage
6Safe and convenient locations
6Easily reachable and associated with market
Œlace 6Transportation Facility
6Near to Acciliary organization, such as Hospital, market, banks etc.

Œromotion

The above chart shows you the possible marketing mix for a hotel Industry. To meet the global
standards and customer expectations, service providers in the hotel industry have to adopt
technological developments. They also have to be customer-oriented in their approach if they
have to withstand the competition in the market, which has further increased with the entry of
global players. Marketers have to adopt the marketing mix elements to suit their marketing
needs. or example, the product should carry more augmented services to differentiate itself
from other service packages in the market.