| Indian Hotel Industry Survey 2009-10.|
Monday, 10th January 2011
Source : By Manav Thadani and Inshita Wij
The Indian hospitality industry has emerged as one of the key industries driving the growth of the services sector and, thereby, the Indian economy.
The FHRAI Indian Hotel Survey 2010 aims to provide the most comprehensive guide to all India performance trends for this industry.
Results of the Survey will empower industry stakeholders such as owners, investors, operators, business analysts and researchers with information on the operational aspects of the industry. It will help operators benchmark their performance and identify investment opportunities.
The article divides this section in three parts: Country Trends, In the Focus, and City Trends. In the first subsection, we
provide an overview of the broad trends which have been observed in the country in the past year. The second subsection highlights the trends related to revenue and income generation, and presents the survey findings related to Key Operating Statistics. This is followed by the City Trends, which reflect HVS' perception for each city, as well as our expectations with regard to its performance in the current year (2010-11).
In the first half of the year 2009-10, the Indian hotel industry felt the effects of the global financial crisis, coupled with the Mumbai terror attack, which took place in the previous year.
With most organisations curbing expenses related to travel and entertainment, the hotel industry suffered from a decrease in commercial travel and decline in revenues from meetings and conferences as well as corporate events and get-togethers. However, towards the end of the year, strong domestic demand, coupled with increased global confidence in the business environment in India helped in improving occupancies and average rates.
Overall, the average occupancy cross India declined by approximately -3%, with some cities witnessing declines of up to -15%, reflecting decreased travel by corporations, re-negotiation of corporate contracts, and decreased leisure travel. However, the average rates witnessed an increase of approximately 8%.
The increase in departmental and fixed expenses as a percentage of revenue, coupled with a decrease in top-lines lead to a decline in net income percentages of approximately 11% in 2009-10 over 2008-09. The PAR increase in property operations and maintenance costs, along with the POR increase in food and beverage expenses is responsible for the reduction in bottom lines.
Increasing use of Technology: The hotel industry is making use of new technology in almost every function and department to increase efficiency and standardise operations. From using the hotel website as a forum for marketing and communicating with customers to designing customised revenue management solutions for hotel chains, technology is being used to provide better service and connectwith the customer.
Enhanced database management systems and customer relationship management systems, whether used in-house or outsourced, help to monitor guest preferences in an era when it is becoming imperative to differentiate a hotel product from the others. Customised systems and software are being designed for support departments, such as Human Resources. Hotel chains are using sophisticated software to monitor staff performance, manage turnover, and to facilitate career planning of hotel employees. Energy saving and monitoring systems are another example of introducing efficiency in operations and reducing costs with the help of technology.
Manpower Management: The hotel industry in India is at a turning point, where it is witnessing an influx of international and domestic branded hotels, along with a renewed interest by investors. One of the biggest challenges of this service industry, where the customer pays for much more than only the tangible product offerings, is managing manpower. The challenges faced in managing the manpower include increasing payrolls and compensation, high levels of attrition with the addition of new hospitality products in the market space and attrition to other service industries such as retail and travel
firms, and frequent need for employee training in order to maintain service standards.
Although manpower remains an issue due to the limited number of quality hotel-education institutions in the country, the problems related to training and attrition can be addressed by designing effective careerplanning programs for the employees within the property or in the same hotel chain and using programs such as cross training and mentoring, which empower the employees. Looking at nontraditional sources of hiring such as physically challenged employees, non-profit organizations, and local rural communities can also help in retention and reduction of payroll expenditure.
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The data for the FHRAI Indian Hotel Survey 2010 Report has been contributed by the member hotels of
FHRAI. The FHRAI sends out a questionnaire to each of its members (currently numbering 2,351 member
hotels) which is then analysed and presented in this report. The data presented in the current edition is culled
from 1,200 responses.
The data received from hotels participating in the survey is sorted and filtered into a comprehensible
structure. The data is then processed and analysed to extract important information pertaining to the
performance of the Indian hospitality sector across crucial parameters. These parameters, such as guest
segmentation, hotel finances, marketing, sources of reservations and seasonality, among others, are then
presented under the following categories:
- Star: Five-Star Deluxe, Five, Four, Three, Two and One-Star hotels along with Other hotels (which are
not classified under any star ratings).
- Inventory: Number of rooms in hotels are categorised as Less than 50 Rooms, 50-150 Rooms, and More
Than 150 Rooms.
- Affiliation: The two types of affiliations used to categorise hotels are Affiliated to Chain and
- Primary Markets: The seven major cities described in this report are Bengaluru, Chennai, Goa, Kolkata,
Mumbai, New Delhi-NCR, and Pune.
- Secondary Markets: Twelve secondary cities described in this report are Ahmedabad, Coimbatore,
Hyderabad, Indore, Jaipur, Kochi, Madurai, Mysore, Shimla, Thiruvananthapuram, Udaipur and