Assignment for CIA – 2

Service Marketing

Submitted to: Submitted by:

Prof. Rahul Gupta Akshay Thusoo

Faculty – Marketing 0920003 - Marketing

CHRIST UNIVERSITY INSTITUTE OF MANAGEMENT

BANGALORE
Introduction to the industry:

As per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum, 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.

Contribution to the economy

Combining unparalleled growth prospects and unlimited business potential, the industry is certainly on the
foyer towards being a key player in the nation's changing face. Furthermore, banking on the government’s
initiative of upgrading and expanding the country’s infrastructure like airports, national highways etc, the
tourism and hospitality industry is bound to get a bounce in its growth.

The hotel and tourism industry’s contribution to the Indian economy by way of foreign direct investments
(FDI) inflows were pegged at US$ 2.24 billion from April 2000 to November 2010, according to the
Department of Industrial Policy and Promotion (DIPP).

India’s hotel pipeline is the second largest in the Asia-Pacific region according to Jan Smits, Regional
Managing Director, InterContinental Hotels Group (IHG) Asia Australasia. He added that the Indian hospitality
industry is projected to grow at a rate of 8.8 per cent during 2007-16, placing India as the second-fastest
growing tourism market in the world. Initiatives like massive investment in hotel infrastructure and open-sky
policies made by the government are all aimed at propelling growth in the hospitality sector.
Foreign Tourist Arrivals

Ministry of Tourism compiles monthly estimates of Foreign Tourist Arrivals (FTAs) in India and Foreign
Exchange Earnings (FEE) from tourism on the basis of data received from major airports. Following are the
important highlights, as regards these two important indicators of tourism sector for 2010 and December
2010.

 FTAs in India during 2010 were 5.58 million with a growth rate of 9.3 per cent as compared to the
FTAs of 5.11 million during 2009.
 FTAs during the December 2010 was 6,55,000 as compared to FTAs of 6,46,000 in December 2009
and 5,34,000 in December 2008.
 FEE from tourism during 2010 were US$ 14,193 million as compared to US$ 11.39 billion during 2009
and US$ 11.74 billion during 2008. The growth rate in FEE in US$ terms during 2010 was 24.6 per
cent.
 FEE from tourism during the month of December during 2010 were US$ 1.55 billion.

Government Initiatives/policy

According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government
of India, the government has allowed 100 per cent foreign investment under the automatic route in the hotel
and tourism related industry. The terms hotel includes restaurants, beach resorts and other tourism
complexes providing accommodation and /or catering and food facilities to tourists.

The term tourism related industry includes:

 Travel agencies, tour operating agencies and tourist transport operating agencies
 Units providing facilities for cultural, adventure and wildlife experience to tourists
 Surface, air and water transport facilities for tourists
 Convention/seminar units and organizations

The Government of India has announced a scheme of granting Tourist Visa on Arrival (T-VoA) for the citizens
of Finland, Japan, Luxembourg, New 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 upto a maximum of 30 days. During 2010, a total number of 6549 Visa on Arrivals (VoA) were issued
under VoA Scheme.

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

As per the press release by Press Information Bureau (PIB) dated November 15, 2010, the Union Ministry of
Tourism has included Medical Tourism under the Marketing Development Assistance (MDA) Scheme. The
Ministry of Tourism has sanctioned US$ 27,742 as MDA to 10 Medical Tourism Service Providers during
current year.

The Ministry of Tourism has sanctioned 781 projects in 34 States/ Union Territories (UTs) in the country
amounting to US$ 511.82 million during the last three years up to June 2010, as per a press release dated
October 18, 2010.
The Ministry of Tourism has won a PATA Grand Award and two PATA Gold Awards during the Pacific Asia
Travel Association (PATA) Travel Mart 2010 in Macau. The PATA Grand Award was given under the Heritage
category for the Rural Tourism Project at Hodka village in Kutch District of Gujarat.

Medical Tourism

As per a market research report ‘Booming Medical Tourism in India’ by RNCOS, India’s share in the global
medical tourism industry will reach around 3 per cent by the end of 2013. Moreover, medical tourism is
expected to generate revenue worth US$ 3 Billion by 2013, growing at a CAGR of around 26% per cent during
2011–2013. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the
forecast period to reach 1.3 Million by 2013.

Factors such as, low cost, scale and range of treatments provided by India differentiate it from other medical
tourism destinations. The growth in India’s medical tourism market will be a boon for several associated
industries, including hospital industry, medical equipments industry and pharmaceutical industry.

Domestic medical tourism in the country has also seen growth in the recent years. As per the report
‘Domestic Tourism in India, 2008-09’ released by the National Sample Survey Office (NSSO), trips for ‘health
and medical’ purposes formed 7 per cent of overnight trips in the rural population and about 3.5 per cent in
the urban population. ‘Health and medical’ purposes accounted for 17 per cent of same-day trips in rural
India and 8 per cent in urban India. Expenditure on medical trips accounted for 30 per cent of all overnight
trip expenditure for rural India and 15 per cent for urban.

Recently, the Union Ministry of Tourism has included Medical Tourism under the Marketing Development
Assistance (MDA) Scheme. The Ministry of Tourism has sanctioned US$ 27,400 as MDA to 10 Medical Tourism
Service Providers during 2010.

Hospitality

The current count of hotel rooms is 130,000, and the country is expected to require an additional 50,000
rooms over the next two to three years, according to World Travel and Tourism Committee (WTCC) estimates

 US-based hotel chain, Marriott International, plans to expand its network in India to 100 hotels over
the next five-years, stated Arnie Sorenson, Chief Operating Officer, Marriott International. At
present, the group operates 11 properties across the country.

 Roots Corporation, a subsidiary of Indian Hotels Company (IHC), plans to open 60 to 70 budget
hotels, known as Ginger Hotel, in 23 locations across the country.

 ITC, the Kolkata-based cigarette major, also projected its plan to open 25 new hotels under the
Fortune brand over the course of next 12-18 months (or by 2011).

The Road Ahead

The Indian hospitality sector is certainly the most apt replication of the belief 'Atithi devo bhava'- touch of
tenderness, a helping hand and a welcoming visage.
According to the Tourism Satellite Accounting (TSA) research, released by World Travel and Tourism Council
(WTTC) and its strategic partner Oxford Economics in March 2010:

 The contribution of travel and tourism to Gross Domestic Product (GDP) is expected to increase from
8.6 per cent (US$ 117.9 billion) in 2010 to 9.0 per cent (US$ 330.1 billion) by 2020.

 Export earnings from international visitors and tourism goods are expected to increase from US$ 11.1
billion in 2010 to US$ 33.6 billion in 2020.

 Travel and tourism investment is estimated at US$ 34.7 billion or 7.2 per cent of total investment in
2010. By 2020, this should reach US$ 109.3 billion or 7.7 per cent of total investment.

Ministry of Tourism aims to create a comprehensive and coordinated framework for promoting golf tourism
in India, capitalising on the existing work that is being carried out, and building upon the strength of India’s
position as the fastest growing free market economy.

Hotel Industry Structure:

Hotels in India are broadly classified into 7 categories (five star deluxe, five-star, four star, three star,
two star, one-star and heritage hotels) by the Ministry of Tourism, Government of India, based on the
general features and facilities offered. The ratings are reviewed every five years. As of December
2005 (latest available figure) there are following number and category of hotels.
 Star Category No. of Hotels No. of Rooms
5-Star Deluxe 82 18764
5-Star 92 11332
4-Star 132 9401
3-Star 704 31039
2-Star 587 19031
1-Star 212 695
Heritage 83 2216
To be classified 50 5127
Total 1934 103973

Premium and Luxury Segment

This segment comprises the high-end 5-star deluxe and 5-star hotels, which mainly cater to the business and
upmarket foreign leisure travelers and offer a high quality and range of services. The segment accounted for
29per cent of the total hotel rooms in the country in December 2005.

Mid-Market Segment

This segment comprises 3 and 4 star hotels, which cater to the average foreign and domestic leisure traveler.
This segment also caters to the middle level business travelers since it offers most of the essential services of
luxury hotels without the high costs since the tax component of this segment is lower compared with the
premium segment.

Budget Segment

These comprise 1 and 2 star hotels referred to as ‘Budget Hotels’. These categories do not offer as many
facilities as the other segments but provide inexpensive accommodation to the highly price-conscious
segment of the domestic and foreign leisure travelers.

Heritage Hotels

In the past four decades, certain architecturally distinctive properties such as palaces and forts, built prior to
1950, have been converted into hotels. The Ministry of Tourism has classified these hotels as heritage hotels.

Others

At any point in time, applications for classification are usually pending with the Ministry of Tourism because
of which such properties remain unclassified. The number of hotel rooms pending classification has declined
from historical 15-20per cent to 5per cent of the total rooms available in the recent past.

Key Consumer Segments

The market for the hotel industry can be divided into the following key consumer segments based on purpose
of visit:
The Business Traveler

The Business Traveler is a businessman or a corporate executive travelling for business purposes. This
segment includes corporate, both domestic and foreign, who open offices in the hotel premises during start-
ups, corporate executives who make extended stay either for long duration projects or while waiting for
permanent accommodation (primarily expatriates) and convention arrivals. While the senior executives
usually stay in 5 star hotels, the middle level executives, who are much larger in number, stay in the budget
hotels.

This segment offers better realizations, as they demand relatively smaller discounts on room rents (about
10per cent-15per cent), use more of facilities such as PCs, fax multi-media, conference halls. Also, the Food &
Beverage (F&B) revenues are better as they usually eat in the hotel itself due to their busy schedules.

The Leisure Traveler

The Leisure Traveler could either be a foreigner or a domestic traveler whose primary purpose of visit is
holiday or site seeing. Among non-business foreign tourists the primary motivation for visiting India is largely
cultural attraction followed by conferences and conventions, tourist attractions like beaches, wild life, hill
resorts etc. Usually, leisure travelers are part of a package run by a tour operator. The margins offered by
leisure travelers tend to be lower because of two reasons. Firstly, they seek higher discounts and also provide
less F&B revenues as they usually eat out. The business offered by this segment is highly seasonal and tends
to peak in the September to March period.

Airline Cabin Crew

Airline Cabin Crew forms another important segment because of the repetitive and guaranteed nature of the
business that they provide. Usually, these are a part of an annual contract whereby, in return for a fixed rate,
a certain number of rooms are provided on demand for cabin crews. With discount rates in the range of
40per cent and 50per cent, this represents a low-yield segment for hotels in general.

Demand & Supply:

Main reason for this increase has been following fundamental factors:
• India’s strong GDP growth.
• Opening of sectors of the economy to private sector/ foreign investment.
• Strengthening of ties with the developed world.
• Reforms in aviation sector which led to better connectivity with many countries (such as
ASEAN) and created additional capacity on existing routes (for e.g. USA, Middle East). Also,
introduction of low cost airlines also contributed to the demand. The increase in
international flights, seat capacity and frequency into the country and the decision to
allow private airlines like Jet Airways and Air Sahara to fly overseas has had a positive
impact on tourist and business arrivals into India, by way of providing additional seats to
key destinations.
• Development of infrastructure by the Government
• India’s emergence as an outsourcing hub.
• Success of “Incredible India” campaign and other tourism promotion measures.
• India’s growing recognition as an exciting place to visit (‘The Readers Travel Awards 2006’,
 conducted by Condé Nast Traveler has recently placed India at number four among the
world’s must-see countries, up from number nine in 2003) has helped boost its image as a
leisure destination.

Foreign Tourist Arrivals in India during 2007:

Foreign Tourist Arrival (Nos.) Percentage Change

Months 2005 2006* 2007* 2006/05 2007/06
January 385977 444260 514453 15.1 15.8
February 369844 407198 462578 10.1 13.6
March 352094 390824 443976 11.0 13.6
April 248416 309775 334558 24.7 8.0
May 225394 258527 271454 14.7 5.0
Total 1581725 1810584 2027019 14.5 12.0
Source: Ministry of Tourism

Foreign Exchange Earnings in India during 2007:

Foreign Exchange Earnings (in Rs. billion) Percentage Change

MONTHS 2005 2006* 2007* 2006/05 2007/06
January 23.26 27.22 33.00 17.0 21.2
February 23.43 26.36 30.04 12.5 14.0
March 22.11 24.34 27.99 10.1 15.0
April 16.50 21.27 23.41 28.9 10.0
May 14.53 16.74 18.59 15.2 11.0
Total 99.83 115.94 133.03 16.1 14.7
Source: Ministry of Tourism

Major players in the market:

The Hotel Industry mainly has following major players:

Hotel Chains

They comprise major players including Indian Hotels Company Limited (the Taj Group) and associate
companies, EIH Limited (the Oberoi Group), ITC Hotels Limited (the ITC Welcome Group), Indian
Tourism Development Corporation (ITDC) and Hotel Corporation of India (HCI) (the latter two being
under the Public Sector). Most of these chains had an established presence in one or more metro
cities prior to the tourism boom of the 1980s. Subsequent to the tourism boom, these chains
aggressively expanded their presence in other locations. The private players among the hotel chains
are industry leaders and have well-established brand identities across the different industry
segments.

Small Chains

They are companies that have come up after the tourism boom of the 1980s and 1990s. Due to lack of
prior experience in the hotel industry, these players have preferred to opt for operating/management
arrangements with international players of repute. Some of the companies in this category are Hotel
Leela Venture (with Kempinski), Asian Hotels (Hyatt International Corporation), Bharat Hotels
(formerly with Holiday Inn and Hilton and now with Intercontinental). As late entrants, most of these
hotel companies have fewer properties, compared with the big chains. However most of these players
have initiated expansion plans during the late 1990s.

Public Sector Chains

ITDC and HCI, boast of some of the best locations in major cities but are relative under-performers, as
compared with their private sector counterparts.

International Hotel Chains

They are also looking at India as a major growth destination. These chains are establishing themselves
in the Indian market by entering into joint ventures with Indian partners or by entering into
management contracts or franchisee arrangements. Some of the players who have already entered
or plan to enter the Indian market include Marriott, Starwood, Berggruen Hotels, Emaar MGF. Most
of these chains have ambitious expansion plans especially with a strong focus on the budget segment
and tier II cities.

Localized Hotel Companies

They are mainly comprise early entrants who have an established localized presence and who
preferred not to expand during the tourism boom but focus on building and catering to a loyal
customer base.

Profiles of players in Indian Hotel market:

The Indian Hotels Company

The Indian Hotels Company and its subsidiaries are collectively known as Taj Hotels Resorts and
Palaces, recognised as one of Asia's largest and finest hotel company. Incorporated by the founder of
the Tata Group, Jamsetji N Tata, the company opened its first property, The Taj Mahal Palace Hotel,
Bombay, in 1903. The Taj, a symbol of Indian hospitality, completed its centenary year in 2003. Taj
Hotels Resorts and Palaces comprises 59 hotels at 40 locations across India with an additional 17
international hotels in the Maldives, Mauritius, Malaysia, United Kingdom, United States of America,
Bhutan, Sri Lanka, Africa, the Middle East and Australia.
The company has had a long-standing commitment to the continued development of the Indian
tourism and hospitality industry. From the 1970s through the 1990s, the Taj played an important role
in launching several of India's key tourist destinations. Working in tandem with the Indian
government, the Taj developed resorts and retreats while the government developed roads and
railways to India's hidden treasures.

ITC Welcomgroup

ITC's Hotel division was launched on October 18, 1975, with the opening of its first hotel - Chola
Sheraton in Chennai. ITC - Welcomgroup Hotels, Palaces and Resorts, is today one of India's finest
hotel chains, with its distinctive logo of hands folded in the traditional Namaste is widely recognized
as the ultimate in Indian hospitality. Each of the chain's hotel pays architectural tribute to ancient
dynasties, which ruled India from time to time. The design concept and themes of these dynasties
play an important part in their respective style and decor.

With more and more hotels being added at strategic destinations, the group has joined hands with
the Sheraton Corporation to strengthen its international marketing base.

The Leela Group

Founded in 1957 by Capt. C.P. Krishnan Nair, the Rs.4.5 billion Leela Group is engaged in the business
of ready-made garments and luxury hotels and resorts. The Leela Kempinski, Mumbai and The Leela,
Goa are two of the best hotels in India, and have also won considerable international acclaim. For this
to have been achieved in 12 short years is nothing short of remarkable.

Recently in 2001 Capt. Nair fulfilled his longstanding dream of constructing a palace hotel in the
garden city of Bangalore. The Leela Palace Kempinski, Bangalore is built in art deco style recreating
the grandeur of The Mysore Maharajas Palace. It is set amidst 8 acres of landscaped garden and
waterfalls. It is a palace with the heart of a modern hotel. Its 254 rooms are opulently furnished and
are befitting royalty. The newest addition The Leela Kovalam is Kerala’s largest resort, built on a rock
face cradled between two wide sweeping beaches with a stunning view of the famous Kovalam
coastline.

The Bharat Hotels Group

The Bharat Hotels group is a major player in India’s tourism and hotel sector. It operates its hotels
under ‘THE GRAND’ banner and its present portfolio of hotels incorporates FOURTEEN luxury hotels
in the five-star deluxe segment. These include InterContinental ‘The Grand’ hotels in New Delhi,
Mumbai, Goa & Srinagar and The Grand Ashok Bangalore, The Grand Laxmi Vilas Palace Udaipur and
The Grand Temple View Khajuraho. Additionally, soon to open hotels in 2008-09 are – The Grand
Great Eastern Kolkata, The Grand Jaipur, The Grand Resort Bekal, The Grand Ahmedabad, The Grand
Chandigarh, The Grand Noida and The Grand Fort Dubai.

The EIH Ltd (The Oberoi Group)

Asian elegance is the key to running hotels, if you ask EIH (better known as The Oberoi Group). The
company owns and operates about 20 luxury hotels, about 10 mid-range hotels, and two inland
cruises; The Oberoi Group operates primarily in India, but also in Australia, Egypt, Indonesia,
Mauritius, and Saudi Arabia. Most of the company's luxury properties bear the Oberoi banner. The
company in 2004 joined forces with Hilton International to rebrand most of its mid-range hotels as
Trident Hiltons (the former Oberoi Towers is now known as the Hilton Towers Mumbai). The Oberoi
Group also operates luxury cruises of the Nile River and India's Kerala region.

India Tourism Development Corporation (ITDC) / The Ashok Group

India Tourism Development Corporation (ITDC) was established in 1966 as an autonomous public
sector corporation, entrusted with the task of helping develop tourism infrastructure and promoting
India as a tourist destination. The ITDC Ashok Group of hotel chains manages some of the best five
star and luxury tour hotels in the Indian hospitality industry. The hotels run by the ITDC Ashok Group
of hotel chains may be divided into different categories, these are elite hotels, comfort hotels and
classic hotels. The ITDC Ashok Group of hotel chains manages 33 hotels in 26 different tourist
destinations all over India. The management of Ashoka Group believes in offering the best in the
hospitality industry and the staff at each of the hotels run by the group is especially trained to be
courteous and efficient. The Ashok Group of hotel chains boasts of running some of the best hotels in
the Indian hotel industry. The hotels that are a part of the elite and classic category of the ITDC Ashok
Group are the Ashok Hotel in New Delhi, the Kovalam Ashok Beach Resort in Kovalam, Kerala, the
Agra Ashok in Agra, Hotel Jaipur Ashok in New Delhi and the Qutab Hotel in New Delhi. Most of the
hotels managed by the ITDC Ashok Group have had the privilege of playing host to several
international and national dignitaries.

The Hotel Corporation of India (HCI)

The Hotel Corporation of India Limited (HCI) is a public limited company wholly owned by Air India
Limited and was incorporated on July 8, 1971 under the Companies Act, 1956 when Air India decided
to enter the Hotel Industry in keeping with the then prevalent trend among world airlines. The
objective was to offer to the passengers a better product, both at the International Airports and at
other places of tourist interest, thereby also increasing tourism of India.

Jaypee Hotels Ltd.

Jaypee Hotels Limited primarily engages in the ownership and operation of hotels in India. The
company owns three Five Star Deluxe Hotels, namely Jaypee Palace Hotel at Agra, and Jaypee Vasant
Continental and Jaypee Siddharth Hotel at New Delhi. It also manages the operation of the hotels
Jaypee Residency Manor at Mussoorie and Jaypee Green Resorts. In addition, Jaypee Hotels involves
in construction operations. The company is headquartered in New Delhi, India. Jaypee Hotels Limited
is a subsidiary of Jaiprakash Associates Limited.

Porters five forces on hotel industry:

1. Bargaining Power of Suppliers

The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or
services.

 The high class hotels are operating by few hotel chains like-TAJ,EIH,ITC&THE LEELA PALACE so they
have a control over the industry.
  There are no substitutes for spas and five star hotels.

 The hotels customers are fragmented, so they have to reduce their bargaining power to attract the
customers.

 The Taj, ITC& Oberoi are having various rates and tariffs. Because they are having their own brand
image.

 The hotel chains are operating different services like Spas, Boatels, Resorts, City Centers, Heritage
HOTELS, etc.

2. Bargaining Power of Customers

Similarly, the bargaining power of customers determines how much customers can impose pressure
on margins and volumes.

 The hotel industry is one of the most invested in its fixed assets. So they are trying to recover their
amount quickly.

 The suppliers are providing better information about them to attract the customers’ .Here the
buyers are highly informed.

 If the hotel price changes are moderate, the Customers have low margins and are price-sensitive.

 Some unseasoned timings the hotels are offering discounts and incentives to reduce the bargaining
power of buyers.

3. Threat of New Entrants

The competition in an industry will be the higher; the easier it is for other companies to enter this
industry. In such a situation, new entrants could change major determinants of the market environment (e.g.
market shares, prices, customer loyalty) at any time. There is always a latent pressure for reaction and
adjustment for existing players in this industry.

 The foreign hotel chains are tied up with Indian hotels to reduce the initial cost and using the latter’s
brand name.

 Brand loyalty of customers like TAJ, ITC, and LEELA PALACE affects the new entrants.

 Access to raw materials and Distribution channels are controlled by Existing players like TAJ, ITC, and
LEELA PALACE.

 The cost of land in India is high at 50% of total project cost as against 15% abroad. This acts as a
major deterrent to the Indian hotel industry.

 In India the expenditure tax, luxury tax and sales tax inflate the hotel bill by over 30%. Effective tax in
the South East Asian countries works out to only 4-5%.
4. Threat of substitutes

A threat from substitutes exists if there are alternative products with lower prices of better
performance parameters for the same purpose. They could potentially attract a significant proportion of
market volume and hence reduce the potential sales volume for existing players. This category also relates to
complementary products.

 Brand loyalty of customers (TAJ, ITC, LEELA PALACE, etc,) is dominating the substitutes.

 The hotel relationship with customer and costs also the reasons to switching to substitutes.

 The price variation of same class hotel services from various brands is one of the reasons to choose a
substitute.

 The present demand and supply of hotel rooms is one of the reasons to choose a substitute.

 More fixed cost and switching costs affects the business.

5. COMPETITIVE Rivalry between Existing Players

This force describes the intensity of competition between existing players (companies) in an industry.
High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single
company in the industry.

 The top competitors in hotel industry are having the same services like five star, spas, boatels and
motels, heritage hotels and palaces.

 The healthy competition among the all players is helping to increase the industry growth.

 Intense in metro cities, slowly picking up in secondary cities.

SWOT Analysis of the industry:

Strengths

 A very wide variety of hotels is present in the country.

 There are international players in the market such as Taj and Oberoi & International Chains

 A manpower cost in the Indian hotel industry is one of the lowest in the world.

 India offers a readymade tourist destination with the resources

 Natural and cultural diversity

 Demand-supply gap

 Government support

 Increase in the market share

Weaknesses

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

 The hotel industry in India is heavily staffed.

 High tax structure in the industry makes the industry worse off than its international.

 Only 97,000 hotel rooms are available in India today.

 Only limited value added services

 Poor support infrastructure

 Slow implementation

 Susceptible to political events.

Opportunities

 Demand between the national and the inbound tourists can be easily managed due to difference in
the period of holidays.

 In the long-term the hotel industry in India has latent potential for growth.

 Unique experience in heritage hotels.

 Rising income.

 Open sky benefits.

Threats

 Guest houses replace the hotels.

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

 Changing trends in the west demand similar changes in India

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

 Lack of training man power in the hotel industry.

 Fluctuations in international tourist arrivals.

 Increasing competition
Loyalty programs:
Here are the loyalty programs for top two hotel players: TAJ and ITC

Loyalty programs at TAJ:

1) Taj Inner circle: The Taj Inner Circle is the frequent guest programme of Taj Hotels Resorts and
Palaces. Besides a bouquet of benefits, as a member you will earn points when you stay with us or
stop by for a meal at one of our restaurants at participating Taj Hotels in India and abroad. You will
earn points on your eligible spends on room, food and beverage, laundry, telephone and business
centre. You can also earn points on your spends at the Taj Khazana boutiques located in select Taj
Hotels in India. Redeem your points for room nights, memorable meals, gift certificates redeemable
at Taj Khazana, Taj Salon, Jiva Spa, and gifts from a hand-picked selection.
2) Taj Advantage Plus: Taj Advantage Plus is the perfect programme for our valued corporate bookers
in India and comes power-packed with great earning and redemption opportunities, special benefits
and exciting offers. Enrolment to the programme is by invitation only. Log-in for details and the latest
updates.
3) Taj Alliance: The Taj Alliance Preferred Partner Membership (TAPP Me) Programme has been
designed exclusively for our partners in the travel trade in India. Enrolment to the programme is by
invitation only. Enter your TAPP Me membership number and password to access the TAPP Me
website.

Loyalty programs at ITC:

1) WelcomAward: WelcomAward has earned the distinction of being India's premier and most powerful
frequent guest programme. The WelcomAward programme recognizes your needs as a business
traveler and through its strategic alliances with travel partners, endeavors to build a rewarding
relationship with you. As a WelcomAward member you earn 'Stars' on every aspect of your business
trip.
2) Culinary Plus: One of the rewards of this membership is the pleasure of dining at ITC-Welcomgroup
hotels, a journey that encompasses a wide choice of cuisine from across the globe. As a member you
enjoy attractive savings when you dine & entertain with the Culinary plus Card. These include:

20% off when you dine alone or in a group of five and more
20% discount on alcoholic beverages
20% discount at The Gourmet Shop

3) WelcomLink: WelcomLink, India’s most popular lifestyle rewards programme, designed exclusively to
recognize and reward our business partners who channelize bookings into ITC-Welcomgroup Hotels.
As a WelcomLink Member, you can earn points for every materialized room night you book at
 participating hotels. These points can be redeemed for an array of exciting rewards… from luxury
getaways & fine dining to travel privileges, home furnishings, lifestyle apparel and much more , your
choice is limitless.

Service Quality Measurement at Hotels:

CASE : Jaypee Palace

 Hotel Jaypee Palace uses exhaustive 324 question list
 Question are primarily close ended, along with few open ended questions
 Questionnaires' are pitched up to the customer at different points of their stay in hotel
 Also further down the service blueprint is used
 These close ended question are pitched to the customers at various point of their stay in the hotel.
 Than these responses are mapped on the cause and effect diagram and actions are taken
subsequently. Example- food ,laundry services etc.
 Hotel primarily follows star standards strictly.
Service evaluation meet is done after every four weeks.

Fish bone diagram analyzing the causes for food not being tasty in a hotel:
Blueprint for hotel industry:

Growth drivers for the industry: