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Rising Opportunities in India’s Hospitality Industry
The Indian hospitality industry has experienced prominent growth in recent years due to various factors, including the rising purchasing power of domestic travelers, an increase in commercial development and foreign tourist arrivals, a growing airline industry and government-led initiatives aiming to stimulate the sector.
"Ecole Hôtelière De Lausanne", a leading hospitality school in the world.
INDIA'S POPULATION of 1.3 billion presents a massive potential for the hospitality industry. In 2015, India was the fastest growing economy among the BRICS countries. That year, India’s travel and tourism sector contributed INR8,309.4 billion, amounting to 6.3% of the country’s GDP. This is forecast to rise to INR8,913.6 billion in 2016, and reach INR18,362.2 billion (7.2% of total GDP) in a decade’s time.
The Indian hospitality industry has experienced prominent growth in recent years due to various factors, including the rising purchasing power of domestic travelers, an increase in commercial development and foreign tourist arrivals, a growing airline industry and government-led initiatives aiming to stimulate the sector. There is a great deal of scope to expand tourism across India, and as the country improves air travel connections and relaxes visa restrictions, tourist arrivals should increase.
Consolidation of a highly fragmented sector
The Indian hotel industry is highly fragmented, with a large number of small and unorganised players dominating the market. In recent years, there has been a shift towards the mid-market and budget segments in the industry, and the development of hotel aggregators in the budget space, who have consolidated the massive and unorganised hotel market. Online platforms for budget accommodation such as Oravel Stays (OYO Rooms), WudStay, Zostel Hospitality (Zostel and Zo Rooms), Fab Hotels and Treebo have partnered with standalone hotels and guesthouses in order to provide them with marketing, distribution and quality assessments. These companies are raising venture funding and implementing ambitious plans for expansion. In just three years since its launch, OYO Rooms has nearly 70,000 rooms across 200 cities, making it one of India’s largest hotel chains.
Fragmentation and consolidation will be key drivers of change in the industry, creating both risks and opportunities. We detail the mechanisms around these dynamics in our soon to be published “Lausanne Report”, a comprehensive overview of the future of hospitality with an outlook through to 2030, which assesses trends and drivers of change in the hospitality industry. In Asia, the hospitality industry could continue to consolidate and create regional hotel chains with regional ownership. Elsewhere, Europe is likely to remain fragmented although a consolidation dynamic is gaining speed, whereas the hospitality market in the United States is already consolidated and durably so.
Talent management imperative
The hospitality sector is a significant source of employment in India. In 2015, the travel and tourism industry directly supported over 23 million jobs (5.5% of total employment), which is expected to rise by 3.2% in 2016. The international inbound leisure tourism sector in India is seasonal, and the majority of tourism activity in India is driven by the domestic market. Seasonality in India is region and city specific and can vary significantly. This brings its fair share of challenges in terms of human resource management, and also in terms of operational strains that need to be well prepared for. Average staff turnover in the industry remains high, at above 30%. The connection between staff retention and client satisfaction, combined with high staffing costs, highlights the ever present need for talent recruitment and retention.
I believe that adequate and adapted training can reduce turnover rates among Indian hoteliers. Hospitality management education can help cross-train staff and streamline the guest experience, reducing the cost of running a hotel and providing hotel staff with a higher amount of sought-after job skills. Staff who feel bored due to a limited role may be less tempted to leave for a new job if they are made to feel valued and useful. Furthermore, hoteliers should consider investing in education that will position them as strong niche players.
To accommodate this need and the growth in tourism, India has many hospitality schools, including the NIPS School of Hotel Management, several branches of the Indian Institute of Hotel Management, and Ecole Hoteliere at Lavasa, which is certified by Ecole hôtelière de Lausanne (EHL). Overall, India is powered by a thriving middleclass and resurgent economy and its hospitality industry is evolving in a promising direction.
1. BECOME FAMILIAR: If you are new to a video call, familiarize yourself with how a video platform (Zoom, Go To Meeting, etc.) works.
2. STAY FOCUSED: This is a BIG one. Distractions at home are especially tempting. Do what it takes to stay involved in and fully present with those that are on the call. Put your phone away, close your door and stay off the internet.
3. BACKGROUND: Plan ahead and be mindful of your background. Is it professional? Is it tasteful? Will it distract others from the business at hand?
4. MUTE: Keep yourself muted until it is time for you to speak.
5. RECORDING: If you are the host and plan to record, make sure the attendees are aware.
6. DRESS: You personal brand still matters. Keep yourself professionally groomed and dressed.
7. BEHAVE: Act as if you are attending the meeting “live”. Do not act or speak in a way that is not in keeping with your normal professional behavior.
8. TIME: Be on time.
9. SPEAK: Speak up and speak clearly.
- Understand the Need. You can't share a message or piece of information effectively until it is clearly defined.
- Learn to Listen. Somehow, when we think of communication, it's almost instinctive to focus on the way we share our thoughts with others.
- Manage Passive Communication.
- Consider Non-Verbal Image.
- Know you audience.
In Season 5, when Walter White meets Lydia to get the names of his competitor’s distributors, she offers Walter a chance to go global especially in the Czech Republic market. Her research suggests that the largest global demand for Walter’s product is in Czech, and she says something, which all leading brands and startups should adhere to, “There is significant advantage of diversification of distribution!” The key Breaking Bad lessons here are, while you are innovating the product to create demand, you must think about ways to innovate the distribution channels to grow sales!
The key lesson from Breaking Bad is, if you want to grow your business you must take ownership of your supply chain, particularly its distribution channels! The only thing common in Walter White’s onscreen business and any leading brand is that both of them want to control distribution of their product to the customer! Not easy but this is where the success lies, to control the full value chain.
No matter how awesome your product is and how much your customers like it, if you do not expand fast and quick, chances are that you will be ruined and duplicated by another party soon. So it becomes imperative for you to join hands with a big fish to ensure your hooks are deep in the market. Being a startup, it is not easy to expand your area of operations and clientele. With the deficit of resources and manpower, your competitors will, without doubt, try all sorts of tactics to stop you taking any of their market shares. When one of the Jesse’s guys vanished and Skinny Pete ducked out so Jesse didn’t have a choice but to think outside the box and find a Bigger and Better distribution channel. This is where you need to be connected with very well “network” of partners like S James Morgan “Jimmy” McGill, also known as Saul Goodman to find and connect with countrywide distributors. Walter White would not have connected with Gustavo “Gus” Fring if not for Saul Goodman’s connections!
With the initial feedback and a trusted partner your next obvious phase will be to determine the right distribution channels (right distributor and/or wholesaler in your local market like Tuco Salamanca). But to find a right Distributors and wholesalers as
channel partners is a tough ask and they have a tendency to put in high demand early on, like consign inventory programme which you as a startup or small business might not be able to entertain. So be upfront and define your SLA in the first go itself.
Now that you have this amazing, high on quality product, which is both unique and innovative, your next step is to get yourself some feedback from your early adopters. Identifying and doing a control experiment within a small group, customers whom you can trust to test the product and also get feedback for your product is quintessential.
This is the utmost important thing; your alliances should be as strong and as dependable as Jesse Pinkman is to Walter White. Not only does Jesse, give Walter the right channel of customers but also helps him to focus on manufacturing rather than on distribution. It is important for a successful supply chain to be efficient in every step to deliver both quality and quantity at the right time and at the right place to the customers.
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