The Hotel Industry

Hotels form one of the most important support service that affect the arrival of tourist to a country. The major players in the industry are Indian Hotels Company Ltd (IHCL) operating under the Taj brand, the Oberoi, Welcome Group of Hotels, Hotel Leela Venture and the Ashoka chain of hotels, owned and operated by the Indian Tourism Development Corporation (ITDC).
There are around 1000 classified hotels and the total room availability is pegged at 97,000 rooms. Hotels are classified into six categories according to the star rating assigned by the Department of Tourism. These range from one star to Five star deluxe depending upon size and amenities. About 30% of the rooms fall under the 5-star deluxe categories.
To find out the present status of this industry a strength, weakness opportunity and threat (SWOT) analysis is mental. This will help us in understanding this industry and also identify the weak spots

S.W.O.T ANALYSIS OF HOTEL INDUSTRY

Strengths

  • A very wide variety of hotels is present in the country that can fulfill the demand of the tourists.
  • There are international players in the market such as Taj and Oberoi & International Chains. Thus, the needs of the international tourists travellers are met while they are on a visit to India.
  • Manpower costs in the Indian hotel industry is one of the lowest in the world. This provides better margins for Indian hotel industry.
  • India offers a readymade tourist destination with the resources it has. Thus the magnet to pull customers already exists and has potential grow.

Weaknesses

  • The cost of land in India is high at 50% of total project cost as against 15% abroad. This acts as a major deterrent to the Indian hotel industry.
  • The hotel industry in India is heavily staffed. This can be gauged from the facts that while Indian hotel companies have a staff to room ratio of 3:1, this ratio is 1:1 for international hotel companies.
  • High tax structure in the industry makes the industry worse off than its international equivalent. In India the expenditure tax, luxury tax and sales tax inflate the hotel bill by over 30%. Effective tax in the South East Asian countries works out to only 4-5%.
  • Only 97,000 hotel rooms are available in India today, which is less than the Bangkok hotel capacity.
  • The services currently offered by the hotels in India are only limited value added services. It is not comparable to the existing world standards.

Opportunities

  • Demand between the national and the inbound tourists can be easily managed due to difference in the period of holidays. For international tourists the peak season for arrival is between September to March when the climatic conditions are suitable where as the national tourist waits for school holidays, generally the summer months.
  • In the long-term the hotel industry in India has latent potential for growth. This is because India is an ideal destination for tourists as it is the only country with the most diverse topography. For India, the inbound tourists are a mere 0.49% of the global figures. This number is expected to increase at a phenomenal rate thus pushing up the demand for the hotel industry.
  • Unique experience in heritage hotels.

Threats

  • Guest houses replace the hotels. This is a growing trend in the west and is now catching up in India also, thus diverting the hotel traffic.
  • Political turbulence in the area reduces tourist traffic and thus the business of the hotels. In India examples of the same are Insurgency in Jammu Kashmir and the Kargil war.
  • Changing trends in the west demand similar changes in India, which here are difficult to implement due to high project costs.
  • The economic conditions of a country have a direct impact on the earnings in hotel industry. Lack of training man power in the hotel industry.

Transport Facilities

A well knit and coordinated system of transport plays an important role in the sustained economic growth of the country. The present transport system of the country comprises of several modes of transport including rail, road, air transport etc. Tourism industry is also affected by the performance of these services heavy road taxes are the great threat to the tourism industry.