Industry Analysis of Hotel Industry, India

Topics: Hotel, Tourism, Hotel chains Pages: 10 (2650 words) Published: November 22, 2012
Business structure and processes


Shruti Garg 2012H149223P Department of Management 16th November’ 2012 Submitted to Dr. Jyoti

1. Introduction 1.1 Background of Hotel Industry 1.2 Structure of Hotel Industry 1.3 Mid Market Segment 1.4 Budget Segment 1.5 Heritage Hotels 1.6 Others 2. 5 Major Players in Market 3. Profiles of some Major Players 3.1. Indian Hotels Company 3.2.ITC/Sheraton Group 3.3 The Leela Group 3.4 The EIH Ltd. (The Oberoi Group) 3.5 The Ashok Group 4. Porter’s Five Forces Model 4.1 Introduction 4.2 Bargaining power of Suppliers 4.3 Bargaining power of Customers 4.4 Threats of New Entrants 4.5 Threats of Substitutes 4.6 Competition Rivalry between Existing Players 5. SWOT Analysis 5.1 Strengths 5.2 Weaknesses 5.3 Opportunities 5.4 Threats 6. References 3 3 3 4 5 5 5 5 6 6 6 6 7 7 8 8 9 9 9 10 10 11 11 11 11 12 12

Shruti Garg



The Hotel Industry comprises a major part of the Tourism industry. Historically viewed as an industry providing a luxury service valuable to the economy only as a foreign exchange earner, the industry today contributes directly to employment (directly employing around 0.15 million people), and indirectly facilitates tourism and commerce. Prior to the 1980s, the Indian hotel industry was a slow-growing industry, consisting primarily of relatively static, single-hotel companies. However, the Asiad, held in New Delhi in 1982, and the subsequent partial liberalization of the Indian economy generated tourism interest in India, with significant benefits accruing to the hotel and tourism sector, in terms of improved demand patterns. Growth in demand for hotels was particularly high during the early 1990s following the initiatives taken to liberalize the Indian economy in FY1991, as per the recommendations of the International Monetary Fund (IMF).The euphoria of the early 1990s prompted major chains, new entrants and international chains to chalk out ambitious capacity additions, especially in the metropolitan cities. However, most of these efforts were directed towards the business travelers and foreign clientele. In recent years, the hotels sector has grown at a faster rate than GDP. As a result, the share of hotels & restaurants in GDP at current prices has increased from 1.2per cent in FY2000 to 1.5per cent in FY2005.In constant (1999-2000) prices, the GDP from hotels and restaurants has increased from Rs. 222.65 billion in FY2000 to Rs. 335.49 billion in FY2005. As a result, the share of hotels and restaurants in total GDP at constant prices has increased from 1.24per cent in FY2000 to 1.40per cent in FY2005.5

Hotels are an important component of the tourism product. They contribute in the overall tourism experience through the standards of facilities and services offered by them. With the aim of providing contemporary standards of facilities and services available in the hotels, the Ministry of Tourism has formulated a voluntary scheme for classification of operational hotels which will be applicable to the following categories:  Star Category Hotels: - 5 Star Deluxe, 5 Star, 4 Star, 3 Star, 2 Star & 1 Star  Heritage Category Hotels: - Heritage Grand, Heritage Classic & Heritage Basic

Shruti Garg



MID-MARKET SEGMENT This segment comprises 3 and 4 star hotels, which cater to the average foreign and domestic leisure travelers. This segment also caters to the middle level business travelers since it offers most of the essential services of the luxury hotels without the high cost 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 tithe highly price-conscious...
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