Hospitality - Industry Analysis

HOSPITALITY INDUSTRY OF
INDIA
Report by-
Group 4 -
Dhruv Shah
Harsh Sanghvi
Hemani Dhanuka
Ishita Bisht
Meet Chotai
Google defines ‘Hospitality’ as “the friendly and generous reception and

entertainment of guests, visitors, or strangers”. The diverse culture of the Indian
sub-continent has always pulled in explorers and tourisms from all around the
Globe. Not only a few selective parts of the country but the entire country has
always been open to visitors as each region has a different story to tell.
Characteristics
1. Intangibility & Tangibility: Services cannot be measured. Hotels can be
seen, felt & touched.
2. Variability: Same place may derive different levels of satisfaction for

different customers at different times. The same guest may find difference
in service for different times. The output of the service differs from
customer to customer.
3. Heterogeneity: Products & services will vary from one establishment to

another even if under the same brand. The services will be customised and
changed according different places.
4. Labour: High manpower is required to offer great services. The attrition
rate is really high for the industry. A lot of labour is required to provide
services upto a set standard.
5. Culture: The industry requires heavy inputs of culture and customisation

W.R.T to culture on different locations. The theme and overall look of the
hotel also changes from place depending on the staff, culture of the place
and guests.
6. Customers Loyalty: The industry depends highly on repeated customers.

Getting long term relationships & building brand loyalty is crucial. Loyal
customers drive in most of the business for the industry.
Unique Point of Industry

The same product can be sold at very different prices for different customers. The
prices for a room vary depend availability, location, season, event, duration &
services associated with it.
GROWTH
After the liberalization of its economy, India witnessed significant growth in its
middle class and disposable economy. This had a direct impact on the country’s
hospitality industry which contributes over 7 per cent to the GDP of India. At
present, the hospitality industry in India is considered a 'sunrise industry' which
means it has a huge scope in the near future. It is considered as one of the most
profitable industries which also accounts for over 8.78 per cent of the total
workforce, creating almost 15 million jobs in the past five years. Tourism is also a
potentially large employment generator besides being a significant source of
foreign exchange for the country. Such high growth of the industry is facilitated by
the highly advanced technology which is one of the best ones in the world for
planning, booking, and experiencing a journey. India was globally the third largest
in terms of investment in travel and tourism with an inflow of US$ 45.7 billion in
2018, accounting for 5.9 per cent of the total investment in the country. Hotel
and Tourism sector received cumulative FDI inflow of US$ 15.28 billion between
April 2000 and March 2020.
Sub-Sectors
The Hospitality Industry is divided as follows:
1) ACCOMMODATIONS
A) Hotels
B) Motels
C) Hostels
D) Resorts
E) Serviced Apartments
F) Time-sharing Plans
2) FOOD AND DRINKS

A) Restaurants
B) Catering
C) Bars and Cafes
D) Nightclubs
E) Tea & Coffee Shops
3) HOSPITALITY RELATED CONCERNS

A) Travel Agents
B) Tour Operators
C) Online Travel Agencies
D) Cruises
E) Car Rentals
F) Casinos
CURRENT TREND
New trends in hospitality industry provide countless possibilities. Even when
they’re not satisfied with the customer service, have a complaint or the details of
their reservations have changed, there’s no more waiting for your turn at the
reception, while the elderly couple in front of you is searching for their
documents but they forgot their glasses. The reception processes are more
instant now than ever before with just a push of a few buttons on your remote
control. They are about to change dramatically, even if your guest doesn’t feel like
going out for a meal and just wants to stay in, they can use the same screen to
order room service, check prices or request a special massage treatment in the
hotels facilities. If they’re not exactly sure which service to choose from, they can
always read the recommendations offered by the hotel.
So to conclude, the future of current trends in the hospitality industry will most
likely include both human interaction and more advanced efficient technologies
that best serve both consumers and businesses alike. It’s easy to assume guests
prefer the “human” touch, but we should be careful of making such assumptions.
In addition to the statistics that show an undoubtedly positive response to
technology, there are other benefits to be gained from the shift of current trends
in the hospitality industry. The old-school cynics still claim that technology in this
new digital age is no match for the warmth and personality of the receptionist’s
welcome at your favourite hotel concierge whose 20 years of personal
connections can land you those sought-after dinner reservations and concert
tickets. Or is it? I guess the future will show us soon enough, how this industry
evolves with time.
FUTURE TREND
The future trends in the hospitality industry can
be summarized as follows:
• More green and eco-lodgings.

• Development of mega hotels (multi-purpose facilities with casino,
shops, theatre, theme park, etc.).
• More boutique hotels.
• Intelligent hotels with advanced technology using the guests virtual
fingerprint in order to perform all the operations (check-in,
• charges, check-out, etc.).
• Increasing employee salaries in order to
• retain the existing staff.
• More emphasis on the internet and
• technology.
• Guest’s virtual and physical social
• networks will be the best distribution channels
COMPETITION
The competition in the hospitality industry is a result of two aspects:
Technological adaptation
Changing customer profile
Technological Adaptation
Technology has levelled the playing field, and contributed to various facets of the
industry, including branding, communication, and outreach. In particular, three
particular trends are going to reshape the hospitality industry in the coming years.
Let’s look at each on them individually.
A Mobile-First Approach
In emerging markets around the world, 1 billion people are expected to come
online globally. Most of these will be customers who will experience their entire
guest lifecycle on their smartphones. Hospitality and travel companies have no
choice but to invest in mobile friendly and mobile-first guest engagement and
retention strategies.
Changing customer profiles and brand experience

The tourism industry is witnessing a change in the psychographic and
demographic profiles of travellers. Along with Gen X travellers, there’s a fresh
influx of millennials, whose expectations and lifestyle are setting completely
different standards for industry performance.
Customer experience is currently the most dominant brand differentiator. It will
also drive customer loyalty and referrals and hotels will be needed to synthesize
more targeted, personalized, and intricate loyalty schemes than ever before.
This personalization and differentiation also extends to the kinds of experiences
that you create. The ‘home away from home’ concept does away with the
homogenization of luxury, which was the tried and tested paradigm earlier.
Now, to provide unmatched service, rooting the hotel in its local climate while
also giving experiences beyond the conventional hotel space, has become an
important factor. The millennial demand for organic food and sustainable options
also creates more vulnerabilities when it comes to risks and food safety, which
needs to be monitored by hotel owners.
Porters five force analysis

Competitive rivalry - HIGH
- Highly fragmented w a large number of small unorganised players, this

increases competition.
- Price sensitivity- increasing competition among players.
Bargaining power of customers - HIGH
- Low switching costs, gives the customer a High bargaining power.

- Customers are price sensitive and have high information about the services
available.
Threat of new entrants - MODERATE
- Entry is easy as it’s not capital intensive, but a player needs to achieve
common economies of scale and access to distribution channel to compete.
Threat of substitute product - LOW
- Minimal as no substitutes are available in the market.
Bargaining power of suppliers- MODERATE
- Threat of forward integration for instance, the airline starts selling directly
to customers.
- The cost for switching between suppliers is low.
SWOT ANALYSIS
Strengths:
1.India is a large market for travel and tourism & offers a diverse portfolio of
niche products - cruises, adventure, medical, wellness, sports, MICE, eco-tourism,
film, rural & spiritual tourists
2. India ranked 3rd among countries in terms of tourism’s contribution to GDP
3. Tourism contributes 9% of GDP & is 3rd largest foreign exchange earner
4. Department of Tourism promotes “Incredible India”
5. New budget and star hotels are being established.
6. Domestic travel is expected to be the primary driver of the sector’s growth.
7. Sector will witness high growth over time.
Weakness
1. Service standards are lower compared to elsewhere.

2. Business is highly seasonal dependant
3. Property cost is high in major parts of the country.
4. GST is varying whereas it is fixed in most of the world
< INR 1,000 – No Tax
INR 1,001 -7,500 – 12%
= or > INR 7,501 – 18%
Opportunity:
1. Government has released a fresh category of visa – the medical visa or M visa,
to encourage medical tourism in the country.
2. Budget and mid-market segments have emerged as the most preferred
3. Number of foreign tourists in India is very high
4. Indian has a growing technology sector which directly affects and helps the
tourism sector in development of new ways and technologies.
Threats:
1. Cheaper technology & ways are emerging in the market.

2. Homestays & AirBnb is a threat
3. Less skilled people
4. Political chaos & terrorism may affect the demand
5. Climate change will directly affect travel and hence hospitality sector.
Thank You

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HOSPITALITY INDUSTRY OF

Google defines ‘Hospitality’ as “the friendly and generous reception and

2. Variability: Same place may derive different levels of satisfaction for

3. Heterogeneity: Products & services will vary from one establishment to

5. Culture: The industry requires heavy inputs of culture and customisation

6. Customers Loyalty: The industry depends highly on repeated customers.

Unique Point of Industry

2) FOOD AND DRINKS

3) HOSPITALITY RELATED CONCERNS

• More green and eco-lodgings.

Changing customer profiles and brand experience

Porters five force analysis

- Highly fragmented w a large number of small unorganised players, this

Bargaining power of customers - HIGH

- Low switching costs, gives the customer a High bargaining power.

Threat of new entrants - MODERATE

Threat of substitute product - LOW

- Minimal as no substitutes are available in the market.

Bargaining power of suppliers- MODERATE

1. Service standards are lower compared to elsewhere.

1. Cheaper technology & ways are emerging in the market.

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