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C AS E

4
Ginger: Smart BasicsTM
Dr Mukta Kamplikar1

Roots Corporation Limited develops and operates a fast-expanding chain of economy hotels across India under the “Ginger” brand. There is currently a lack of competition in the branded economy hotels segment and Ginger is the only branded economy hotel chain in India. The Ginger hotels are built around a concept that provides facilities to meet the key needs of today’s traveler, at affordable rates. Ginger faces challenges in different aspects of its business as it aims to deliver consistently, quality service to the customer and manage customer expectations.

COMPANY BACKGROUND

Exhibit 1: The proportion of hotel segments across Indian cities. Jaipur Cochin Goa Pune Hyderabad Bangalore Chennai Kolkata Mumbai Delhi/National Capital Region Budget Mid-market First class Lurxury

R

oots Corporation Limited (RCL) is a wholly-owned subsidiary of The Indian Hotels Company Limited (IHCL). IHCL is a part of the Tata Group of companies (see www.tata.com), India’s premier business house. Taj Hotels Resorts and Palaces comprises 77 hotels, 7 palaces, 6 private islands and 12 resorts in 40 locations across India with an additional 18 international hotels in the Maldives, Mauritius, Malaysia, Australia, UK, US, Bhutan, Sri Lanka, Africa, and the Middle East. Incorporated on 24 December 2003, Roots Corporation Limited operates the first-of-its-kind category of Smart Basics™ hotels across India. Launched in June 2004, the Smart Basics™ concept created a revolution in the world of Indian hospitality. Roots Corporation Limited develops and operates a fast-expanding chain of economy hotels across India under the “Ginger” brand. The company either owns/ leases land on which it develops and operates hotels and has now started entering into joint developments where the owner brings in the land and bare shell and leases the same to the company. The company’s recent growth has been organic, through developing and operating hotels in new cities or by going for additional hotels in existing markets; thus expanding the geographic reach of the hotel chain. The company intends to develop and operate additional hotels under both business models to maintain or achieve a dominant position in every market covered by their Ginger hotel chain.

The Economy Segment
Historically, hotel development projects in India generally focused on upscale hotels that were primarily targeted at international tourists and corporate travelers. New hotels will be concentrated in 18 main cities over the next 10 years, as shown in the following chart. Exhibit 2: Projected hotel expansion rate over 10 years.

60 50 Number of hotels 40 30 20 10 0
De lhi N Mu CR Ba mba n Hy galo i de re rab ad P Ch une en n Ja ai ipu r G Ko oa lka Vis t akh Ko a ap chi Ah atn em am da b Ud ad aip u A r Lud gra h Luc iana kn M ow Co yso imb re ato re

Source: HVS International.

446

Case Study

Between 2007 and 2010, supply will increase in all categories of hotels, as shown in the chart below. Exhibit 3: Projected supply increase in all categories of hotel. Increase over Five Year Development of Supply Mid-market First Class Proposed Supply Existing Supply Budget Luxury

affiliations as opposed to Ginger hotels, which are part of a network of hotels). Going forward we see competition continuing from the unorganized section of the market as well as from newer international and local hotel companies who have announced their intent to set-up hotels across the country in the value segment. The market is witnessing a fair amount of activity in this segment of the hotel market. Some of the companies who have announced plans to establish a presence in the country are shown in Exhibit 4. Exhibit 4: Lodging brands venturing into India. Brand Formule 1 Promoters Plans

Agra Ahmedabad Bangalore Chennai Delhi (NCR) Goa Hyperabad Jaipur Kolkata Mumbai Other Cities

1,336 519 1,906 2,075 7,030 2,252 1,442 1,298 1,354 7,402...
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