BUDGET HOTELS: LAUNCH OF INDIONE

Abhishek Maloo

HOSPITALITY INDUSTRY

• It is one of the fastest growing industry in the world as well as in India.

• With the advancement of the budget hotels its pace is accelerated.

• According to World Travel and Tourism Council India has the potential of becoming the number one tourist destination with the demand growing at 10.1%/ annum.

HOSPITALITY INDUSTRY

• The World Travel Organisation predicts that India will receive 25 million tourist by 2015.

• India currently has over 200,000 hotel rooms and is still facing a shortfall of over 100,000 rooms(source-FHRAI).

• India will be adding 114,000 hotel rooms over the next five years and investment of INR 40, 463.10 crore (source-HVS).

• Application of aggressive strategies through its campaign “Incredible India” to promote tourism.

The Current Scenario

• Existing hotel rooms in India:- 202,963(source-FHRAI)

• Revenue of the Indian hotel industry FY 2009- 10: US $ 137.36 million (INR 47,889.03 crore)

• 30% of the revenue i.e. US $ 41.2 million (INR 14, 366.7 crore) went back into the market in FY 2008 – 09 as operating expenses.

COMPANY PROFILE

• The Indian Hotels Company (IHCL) and its subsidies are collectively known as Taj Hotels Resorts and Palaces.

• It is one of Asia’s finest and largest group of hotels.

• Incorporated by the founder of Tata group Jamsedji Tata.

COMPANY PROFILE

• Taj Hotels Resorts and Palaces comprises 93 hotels in 53 locations.

• It includes 25 Ginger hotels across India and 16 international hotels.

• IHCL operates in the luxury, upper upscale and value segment of the market.

• IHCL’s head office is in Mumbai, India.

BUDGET HOTELS :

• It is India’s first of its kind chain of Smart Basics hotels.

• It is a innovative concept which redefines the way the business travel is done in India.

• It is a GenNext category of hotels in India.• It signify simplicity, convenience, informality, style,

warmth, modernity and affordability.• The concept was developed in association with Dr.

C.K. Prahalad.

BUDGET HOTELS :

• It was first launched in Bangalore and was called IndiOne, a brand name given by Chlorophyll (communication consultancy).

• Chlorophyll also designed the signage, curtains, furnishing and the website.

• It was also provided with the job of direct marketing activities of the brand.

INITIAL PROBLEMS

• The venture was not under the Brand name of Taj.

• After stripping features in the services and cutting cost, they cannot go below Rs. 2500.

• It was not a competitive price for the Budget Segment.

STRATEGIC MOVE

• They took the assistance of Dr. Prahalad.• He suggested the bottom – up approach to

arrive at a price and the service offering.• They surveyed managers, salespersons and

business travellers of mid-sized companies.• This gave them a fair idea of price range i.e.

Rs. 1000/room.

STRATEGIC MOVE

• Each hotel was built in the area of 1 acre with 100 rooms.

• They budget of each hotel was marked at Rs. 100 millions which means Rs. 1 million/ room.

• This was comparatively far lower than the investment of Rs. 5 millions – 15 millions / room in developing five star hotels.

STRATEGIC MOVE

• Size of the room was kept small- around 180 sq. ft. as compared to 250- 400 sq. ft. of premium segment hotel.

• The company cut down room service and applied the concept of “Help Yourself”.

• This concept helped in operating the hotel with 25 people as compared to 250 people in premium category hotel.

PRICING

• Single Room Charges- Rs. • Double Room Charges- Rs. 950.• The customers were entitled to a discount of

Rs. 50 if booking is made through internet.• This practice helped to cut their marketing

costs which contributes to 10% -15 % of room costs.

SPECIAL OFFERS

• Early Booking Offer:- “SAVE NOW” Book Early and Pay Less.

• Last Minutes Rates:- Sensational last minutes rates in their top destinations.

• Day Use Rates:- Introducing special day use rates for travelers to freshen up or relax before heading to work.

• Coolest Offer Packages:- Visit most popular destination starting at just Rs. 2799/- onwards.

FACILITIES• Ginger’s facilities and services are intelligently designed

for customers comfort and convenience.• It provides:-

• meeting room, • conference room, • restaurant and WiFi and net zone • self checking • safe zone• CCD, • water dispenser• 20 inch flat-TV in each room with satellite channel• Mini fridge• 24 hr hot /cold water

BOOKING SYSTEM

• It provides a toll- free number-1860-266-3333 to book over phone.

• Payment Options:- American Express Card. Master Card / Debit Card. Visa credit/ Debit Card. Net Banking. • Facility of group booking is also available.

CORPORATE ADVANTAGES

• Optimizes costs:- Enjoy special customized rates.• Enjoy exciting facilities.• Convenience and peace of mind:- suitable

location, rooms are hygienic, peaceful & comfortable.

• Consistency:- Uniform standard in services.• Hassle free resevations.• Transparency in booking process• National Contract.

GLOBAL TRENDS

• Enjoy unmatched blend of comfort and economy & convenience in India.

• According to global study, international travelers are increasingly concerned about their safety while choosing hotels, so Ginger ensures stringent checks.

• The Ease of the internet for booking solutions and customer can also get SMS and e-mail updates of every transaction.

STRATEGIES ADOPTED BY GINGER HOTELS

Meeting room for CorporateBanquet hallsGymnasium facilities with Certified TrainersHotels in MallsPPP models-Yatri Niwas

HEALTH TOURISM & “HOTEL IN MALLS”

• India’s gaining popularity in Health tourism– Disparity cost in healthcare services.– Yoga, meditation, ayurveda etc

• Hotel in Malls for seasoned business travellers or tourists– Tristar Hotels Private Limited, first in Delhi

SUCCESS FACTOR FOR BUDGET HOTELS

• Site & location

• Positioning

• Financial flexibility

• Brand equity

EXISTING PLAYERS

• ITC Fortune Hotels- strong presence in – Ahmedabad, Chennai, Darjeeling, Indore,Jodhpur, Jamshedpur

• Courtyard - Mariott International– commissioned hotels in Goa, Chennai, Pune, Hyderabad

• Lemon Tree Hotels- Delhi based Company– presence in cities like Goa, Gurgaon, Ahmedabad, Aurangabad, Indore,

Chennai

• Formula 1-joint venture between France hospitality giant Accor and Emaar MGF

UPCOMING PLAYERS

• Keys -backed by NewYork based Berggruen Holdings.

• Premier Inn-UK’s largest hotel chain

• Hilton Garden Inn- a joint venture launched by DLF and Hilton Hotels

• Indian Railways, in the public sector, has announced its plans to set up 100 budget hotels all over country on railway land

CHALLANGES

• Poor domestic tourism infrastructure• Highly prone to socio-economic & political

conditions• Tourism on the verge of ecological imbalance• India’s growing economy and new entrants

PORTER’S FIVE FORCES COMPETITORS• Existing players • Unorganized

hotel sector

SUBSTITUTES• Mid- Size hotels

BARGAINIG POWER OF SUPPLIERS

Limited due to higher

competition (metros)

BARGAINING POWER OF BUYER• Higher in metro

cities due to increasing room supply.

NEW ENTRANTS • India's growing

economy thereby attracting new competitors

• 100% FDI permissible

• Low investment

ANALYSIS OF GINGER HOTEL, BHUBANESWAR

• Implementation of all “Smart Basics” concept• Coffee Café day• Presence of Swosti Premium, May Fair, Hilton• No proper advertisement & promotion

Our strategies

• Target to middle class foreign tourists• Corporate tie-ups• Loyalty cards• Referral system• Travel agents• Hop-on-Hop-off