Made by:

Mudit Grover

Final Year

Challenges faced by Indian Hotel

Industry

IndexS.No. Contents Slide

No.

1. Introduction 3

2. Manpower Management 5

3. Competition 6

4. Lowering Costs-Increasing Revenue 8

5. Over-Taxed Industry 9

6. Vying for Visas 10

7. Technological Issues 11

8. Safety & Security 13

9. Food Safety 15

10. The Tangible cost of Time 16

11. Suggestions 17

12. Conclusion 18

13. Bibliography 19

14. Appendices 20

Introduction• India is known worldwide as the Land of Hospitality and has made a significant

mark for itself on the international tourism and hospitality scene.

• Its been a very challenging time for the Indian hotel industry with many diverse challenges being thrown its way.

• Whether it be natural calamities such as earthquakes, tsunamis or Mumbai Terror attacks, or any technological issues- all lead to a significant slowdown in the industry.

• The Indian hospitality industry managed to emerge out of the drastic decline in 2008-09, but the present and the future ahead are abounding in critical issues that need to be addressed.

• So, lets discuss some of the major issues being faced

by Indian Hotel Industry….

Challenges in Indian Hotel Industry

#Manpower management

• Putting employee first is better than putting customer first.

• Industry reputation is on lower side because of long hour shifts, night and weekend shifts.

• Lagging wage rates: Starting salaries, wages or packages are low as compared to other industries which in result is finding difficult to

retain and attract qualified candidates.

• Companies must compete for employees as hard as they are competing for customers.

• Health care cost & other benefits cost have significantly increased adding up in Labor cost.

Year Starting Year End0

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#Competition

• With each passing day competition among the hotels for their own survival is becoming fierce.

• Directly or indirectly causing the revenue loss.

• Rooms are not only sold only on lower price but are also being bundled with special packages.

• Packages could be like: Breakfast included, 3+1 night complimentary, 1 day sight-seeing, airport pickup/drop.

• A booming industry has also attracted many international players as well. These include Radisson, Marriott, Sheraton, Hyatt, Holiday Inn, Crown Plaza.

• New brands such as Banyan Tree, Mandarin Oriental are planning to enter the Indian Hospitality industry.

• Competition calls for innovation in hospitality industry.

Number of approved hotels and availability of rooms

2009 2010 Growth %

Number of hotels 1,839 2,483 36%

Number of Rooms 92,784 117,815 27%

NUMBER OF HOTELS NUMBER OF HOTEL ROOMS

2009 2010 Growth 2009 2010 Growth %

Premium 207 302 46% Premium 34,935 51,331 47%

Mid Market 636 1,026 61% Mid Market 31,816 48,644 53%

Budget 275 374 36% Budget 9,294 10,983 18%

Heritage 88 146 66% Heritage 2,545 3,879 52%

Others* 623 635 2% Others 14,194 2,978 -79%

Total 1,829 2,483 36% Total 92,784 117,815 27%

* As per the ministry of tourism

#Lowering Costs-Increasing Revenue

• With increase in competition day-by-day, hotels are being forced to lower the cost according to their competitive brands irrespective of facilities available.

• Staffing need to be “Just Right”. Further, they are in the “the right place at the right time”.

• Investing wisely in infrastructure, technological solutions.

• Need not to focus just on room revenue.

• Making rooms “smarter” about energy use. Automatic power off for room when no one is in there.

• Offering facilities to guest wisely.

• Selecting the target market accordingly.

#Over-Taxed Industry?

• “Indian Hospitality Industry is an Over-Taxed Industry” quoted Samir Kuckreja , Ex-President(NRAI).

• High service tax and other taxes is actually hampering the growth of the industry.

• The industry which was rising at a rate of 20-25 per cent has slowed down, due to the burden of taxes.

• Service Charge, Service Tax, Luxury Tax & Value Added Tax are currently being charged by customers.

• Different tax structures in different states are difficult for tourists to comprehend.

• In India, hotels are taxed anywhere in between 20% to 25% depending on the state when other Asian countries are levying 8%-10%.

• Once GST comes, taxes will be reduced.

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Count of Foreign Tourist in 2013

#Vying for Visas• India failed to attract foreign tourist and gained the lowest spot among its

competitors.

• Onerous Visa application process which is often fraught with the long delays.

• Excessive documentation, Old bureaucratic procedures deterring potential tourists.

• As per the new policy, India is poised to offer Tourist Visa-on-Arrival and Electronic Travel Authorization to the citizens of 180 countries.

• The Government has indicated that it will take five six months for the respective departments to put in place the requisite infrastructure in terms of technology and trained personnel.

#Technological Issues• The challenge of keeping up with the fast pace of technology is difficult and

expensive.

• Many are moving to take full advantage of this opportunity to streamline their operations, but adoption is frequently hampered by older systems & outdated infrastructure.

• Special and well trained staff requirement raises.

• Hospitality systems & their interfaces are rapidly moving to Internet-based technology.

• Guest can now book the rooms of particular hotel through hotel’s website via internet.

• In India, around 25%-35% reservations are made through internet in a year.

• New technologies like:– Almost all paper work is now done by computer systems by the use of PMS.– Check in through mobile applications– Room amendments can be made through mobile applications.– In restaurants, paper menu has been replaced by tablet menu or a digital menu.– Metallic keys have been replaced by key card.– Locking and unlocking doors through mobile applications……….

• System and server failures are frequent, which has to be dealt carefully and wisely.

#Safety & Security Issues• Many Indian cities are not considered safe for foreign tourists, especially for female

tourists.

• There have been such instances where foreign tourists are abducted, assaulted or robbed.

• Before 26/11, hotel staff did not focus a lot on the security department. There has been a paradigm shift in hotels in India after 26/11 attack.

• Newer hotels under development relooked at their design aspects with greater attention given towards integrated surveillance systems, advanced lock and access control systems, and sophisticated asset protection tools.

• Offering free or paid internet is at the discretion of the hotel, but offering secured and managed internet is the need of the hour.

• According to the Trustwave 2012 Global Security Report, hospitality industry has four times consecutively ranked on top of the list for data breaches.

• It shows that most of the hospitality companies in the world are unaware about managing the access network.

#Food Safety• Food safety is receiving more attention worldwide with a rising incidence of food

borne diseases.

• Knowledge and best practices in this field are rapidly evolving.

• FSSAI has been established under the Food Safety & Standards Act, 2006 which is consolidating statute related to food safety & regulation in India.

• The agency is also responsible for inspection of food in hotels, restaurants, cafés under the Food Safety Act.

• Hotels are embracing the open kitchen methods to win the trust of their customers as they cook food for them under their watch.

#The Tangible Cost of Time• Potential loss of revenues for the food service outlet when low paying guest take

too much time in restaurant & have a modest billing that is not at all commensurate with their time spend in the outlet.

• People arranging official meetings or interviews in QSR outlets or Fine dining restaurants.

• Though these type of situations happen more in case of casual coffee cafes and bakery cafes, but its possibility of happening in formal fine dining restaurants can also not be ruled out.

• Situation need to be addressed tactfully by the restaurant staff.

• Restaurants should keep educating the potential customers about a reservation system on a regular basis so that they don not have to wait for the seat.

Suggestions• The cost of the labor is the biggest expense in all categories of hotels. Hence, an

appropriate number of employees should be hired and then must be retained by the company as long as they can.

• Competition is increasing day by day. Hence, hotel staff should try up-selling techniques to gain more profits and try to make guest comfortable.

• Technology will become advance in coming time and at a faster pace. One need to keep hotel’s requirement in mind before advancing on to the latest technologies.

• Safe food is everyone’s basic requirement and hotel staff must follow the best hygienic practices & standards to cook, handle and serve the food to guests.

• Hotel staff should take care off small points around them and try to do cost

cutting so as to maximize the profit with which they will be affected

indirectly.

Conclusion

• There will be long-term, sustainable and fruitful growth of the hotel industry in India and the future seems bright, provided the issues at hand are tackled.

• Most of the issues need to be tackled by way of evolving policies at the centre and state level and taking stands and united decisions by recognised hospitality forums.

Bibliography

Food and Hospitality World, Magazine

www.hotelonline.com

www.ahrmhospitality.com www.expertresearchers.blogspot.in

www.wikipedia.com www.indiahospitalityreview.com

www.hotelnewsnow.com www.4hoteliers.com

www.tourism.gov.in www.thetelegraph.com

www.thetribune.com www.timesofindia.com

Appendices• FSSAI : 15th Slide, 3rd point

– The Food Safety and Standards Authority of India (FSSAI) is an agency of the Ministry of Health & Family Welfare, Government of India. The FSSAI is responsible for protecting and promoting public health through the regulation and supervision of food safety. The FSSAI has been established under the Food Safety and Standards Act, 2006 which is a consolidating statute related to food safety and regulation in India.

• Food Safety & Standards Act,2006 : 15th Slide, 3rd point– An Act to consolidate the laws relating to food and to establish the Food Safety

and Standards Authority of India for laying down science based standards for articles of food and to regulate their manufacture, storage, distribution, sale and import, to ensure availability of safe and wholesome food for human consumption.

• NRAI : Slide 9, 1st Point

– National Restaurant Association of India– It represents Independent and Chain Restaurant Owners and Operators

in India.

• QSR : Slide 16, 2nd Point

– A fast food restaurant, also known as a quick service restaurant (QSR) within the industry, is a specific type of restaurant characterized both by its fast food cuisine and by minimal table service.