The Evolving Hospitality Trends

By Swarnendu Biswas

The financial year of 2017-18 has recently ended and a new financial year has begun. The last financial year was a mixed one for the Indian hospitality industry. Overall, the performance of the industry has been moderate, but was not satisfactory enough.

Fiscal Overview

The year started just after demonetisation, which gave a temporary jolt to the industry. Then came GST with its series of confusions and coping up with this new tax regime was initially a challenge for the industry. The ban on serving and sales of liquor by establishments within 500 metres of national and state highways throughout the country also initially harmed the revenue prospects of many hospitality properties in India, as sales of alcohol also do induce food sales.

Slowly but surely, India’s hospitality industry managed to recover from these jolts to a great extent. The occupancy rates in India’s hotel industry received a fillip during the financial year 2017-18.  According to hospitality consulting firm Hotelivate, hotel room occupancy through India recorded a nine-year high during 2017-18, reaching over 67 percent. Several hoteliers in the industry think that this healthy occupancy level is expected to increase average room rates in the Indian hotel industry significantly during 2018.

“The financial year 2017-18 has just closed and it ends on an optimistic note for India’s hospitality industry. If we were to sum it up, we can say that 2017-18 has been better than was expected. The last financial year just started after demonetisation, but slowly the hospitality industry picked pace. But then around July-August came a bump in the form of GST. Since lots of facets of GST were new to us, initially it became challenging to understand and follow the new tax rule. But towards the end of the year,   benefits of GST have started trickling in,” elaborated w, Director,  Shri Radha Brij Vasundhara Resort and Spa.

She believes that on the whole, 2017-18 ended on a promising note for India’s hospitality industry. “In addition, the identification of religious corridors which (Govardhan) Mathura is part of, is huge plus for us as we are located in the region,” Tanya expressed.

However, Ashish Bhatia, Vice President - Operations, VITS Luxury Business Hotels, didn’t sound so optimistic. “I would say the industry’s performance during 2017-18 was a topsy-turvy one. After demonetisation it took a long time for the industry to recover. On the whole, I would say that the industry’s performance was a better then 2016-17 but a nevertheless a turbulent one,” he conveyed.

According to him, “India’s hospitality industry is in a revival mode, and is going through the period of consolidation.”

Overall, India’s hotel industry has been showing speedy revival since 2016. According to the HVS Report titled 2017 Hotels in India: Trends & Opportunities, five-star deluxe and three-star hotels clocked 66.5 percent occupancy each in 2016-17, while fo u r - s t a r ho t e l s achieved 65.6 percent occupancy during the same fiscal. Five-star hotels were just shy of the 65 percent mark and closed at a nationwide occupancy of 64.6 percent, whereas two-star hotels managed 62.7 percent occupancy during 2016-17.

“Market wide occupancy of 65.6 percent during 2016-17 was 3.5 percent higher than the 2015-16 performance of 63.3 percent,” noted the report. Having more than 65 percent occupancy in hotels, on an average, over a period of a fiscal is nothing but an achievement in India, where discretionary spending is only just gathering pace.

Here it also deserves a mention that according to the figures of the Ministry of Tourism, the number of foreign tourist arrivals in India during 2016 was 8.80 million, which showed 9.7 percent annual growth rate over its previous year’s figures. The number of international tourist arrivals to India during 2016 was 14.57 million, which again showed a 9.7 percent growth rate over its previous year. The number of domestic tourist visits to all states/UTs within India was 1613.6 million during 2016, which showed an annual growth rate of 12.7 percent.   According to the provisional figures of the Ministry of Tourism, during January-June 2017, there were 4885340 or 4.9 million foreign tourist arrivals in India. 

The impressive domestic tourism and foreign tourist arrivals statistics, together with impressive hotel occupancy levels during 2016-17 and 2017-18, along with various other socio-economic dynamics taken together, indicate 2018-2020 to be promising for India’s hospitality industry, both in terms of room revenues and profit margins. 

Lacunae and Challenges

However, the road ahead is far from hunky dory. Tourism is inextricably linked to the business of hospitality and the next two years ahead present several challenges for India’s tourism and hospitality industry to contend with.  Many of these lacunae are chronic but very much relevant. “There are multiple factors which stifle the potential of our hospitality industry. The first and foremost is high taxation, which makes travel within the country expensive. Moreover, the room tariffs are high because of high taxation, which can and does compromise on the demand for rooms. Occupancy rates at hospitality properties in India, at the best of times don’t cross 60-70 percent,” lamented Tanya. 

“Land rates are too high. Even in the so called downturn if one were to buy land and construct a hotel on it, it will be unviable for many players. Moreover, loans for hotel construction are difficult to get by and if one gets it, the rate of interest are expected to be high,” she pointed out while adding “Another perpetual problem is the paucity of proper infrastructure. You need good quality roads, railways, airports to facilitate travel and hospitality business. Sadly, in these areas we are nowhere where we should be.” Tanya aired. She conceded that tourism and hospitality infrastructure in India had improved over the years, but still there are miles to go in this direction.

“Infrastructure contributes in a big way to tourism. Delays in highway projects, poor upkeep of the state highways, along with lack of proper commuting options or tourist information systems in smaller towns have been collectively a matter of concern for India’s tourism and hospitality industry for long,” iterated Aditi Balbir, CEO, V Resorts.

“One of the biggest challenges confronting the industry, especially with the surge in the unorganised sector, is the paucity of standardised services or regulations,” stated Aditi forthrightly.  She rightly believes that standardisation of services in the unorganised hospitality sector of India is a challenge. This impedes travel and growth of offbeat destinations. “A traveller within India often cannot move from one place to another without concerns about the kind of services he/she would be offered, which then impedes the exploration of novel destinations,” maintained Aditi.

It deserves mention that rampant lack of sanitation and hygiene in India, which can also be construed as part of our tourism and hospitality infrastructure, has probably impeded our more than awesome tourism potential to a great extent. For example, Varanasi and Puri are two wonderfully magnificent religious tourism destinations, which despite being apparently crowded, do offer pockets of deep serenity; giving solace to the soul. But last time this writer visited those places there was widespread lack of hygiene and sanitation. I strongly suspect the things have not changed much, if we go by the tourists’ feedback and a media report of the recent past.

Recent State Initiatives

However, Tanya credits the government where it is due. “Government has initiated steps to get tourism an industry status which will allow it to avail loans at concessional rates. New airports are coming up. Air travel has become considerably cheaper. Visa on arrival has been extended to residents of several other countries. Right now one can say we are on the right track but there is a need to increase the speed of the reforms directed towards India’s hospitality industry,” she asserted.

“The biggest positive for the hospitality industry during 2017-18 was seeing the government’s involvement in moving the industry forward. Make in India, Paryatan Parv and several other forums have been great platforms to discuss and address the challenges faced by the industry, and how the public-private partnership can address them,” proffered Aditi.  

Tanya believes that despite the impediments, the prospects for India’s tourism and hospitality industry for the next two years is “bright.”  She cites growth in foreign tourist arrivals and growth in domestic travel among middle class, the extending of the facility of visa on arrival to residents of some countries, considerable increase in income levels in India during the recent years, change in mindsets of Indian people are the contributing factors towards this bright future.

Women-friendly Hospitality

Single women travellers or women travelling in groups of other women are emerging as an important market segment for India’s hospitality industry. There are now a number of clubs and companies which are catering exclusively to those women travellers, who are opting to travel without family and friends. 

However, with rampant and heinous crimes against women in India, the safety of women travelers in our country poses a major concern. In this regard, we can say that ensuring perfect safety, ease  and comfort for female tourists is very much needed towards making India a world class tourist destination, which can in turn attract greater tourism and hospitality revenues for the country.

Not only hotels and resorts (here I do not mean only five-star hotels and resorts) should reserve a floor for single lady travellers or groups of lady travellers in increasing numbers, they should also embrace the policy of having lady butlers, lady chauffeurs, and lady martial artist experts for facilitating the security of their lady guests, in increasing numbers.

The lady chauffeurs, lady butlers, lady martial artist experts and lady adventure tour experts (to guide women adventure tourists) can become the norm in the Indian hospitality industry, at least across the five-star and four-star properties, if our state tourism bodies extend financial support to those hotels and resorts who would choose to have at least 70 percent of their personnel as women.

Of course, exhaustive security measures are not the only way to attract more numbers of inbound and domestic women travellers to and within India, though they are absolutely necessary.

The women travellers travelling within India for business and/or leisure should also be made to feel comfortable and feel excited to explore this unique experience called India. For this, specially tailored tourism packages for single lady travellers who generally travel for business, or for groups of lady travellers who generally travel for leisure, and thoughtful entertainment options exclusively geared to interest them should be provided/ hosted by the hotels and resorts in the country, on a continual basis.

Promoting MICE and Wellness

Nowadays most hotels and other hospitality properties in India have already realised or are fast realising that they can garner impressive profits not only from their rooms. These days, besides rooms, F&B, MICE, and even spa offers lucrative revenue earning opportunities for many a hospitality properties in India. 

 “Being a resort, for us the maximum revenue earner is rooms. Room nights are most important for us. Along with this, MICE revenue also is very important. Lots of company does off sites with us. Besides, being situated in Govardhan, a large number of destination weddings take place here. All in all, MICE contributes a fair chunk to our revenue,” disclosed Tanya.

“Rooms, MICE and F&B are all very crucial as far revenue earning avenues for hospitality business in India goes,” viewed Ashish.  According to him, revenues from rooms and MICE are completely dependent on business and leisure travels, whereas revenues from F&B can also be garnered through walk-in guests living in the same destination where the property is situated.

“F & B has recently seen a boom across metros of the country; especially specialty restaurants are on the rise in these cities. I think the trend is now spreading to tier-II & III cities also,” he  articulated.

In this context, there is an urgent need for the hospitality industry of India to develop more MICE and banqueting facilities, infuse more innovativeness in its F&B options, and develop its wellness quotient. MICE and spa are both promising sectors for the Indian hospitality industry, as there is huge demand for these two segments among the large numbers of business and leisure travellers in India.

 However, the MICE infrastructure in India is not very impressive, and there are lots of scope of improvement in this regard. Rapid improvements in the conference and exhibition scenario in the country are needed to induce India’s tourism and hospitality industry yield its potential revenues through MICE.

Similarly, the spa business in India is also booming and our hospitality industry can cash on to this trend. According to a KPMG Wellness Sector report, released in April 2014, it was projected that the size of India’s beauty and wellness market would nearly double from Rs.41, 224 crore in 2012-13 to Rs. 80,370 crore by 2017-18. The Spa Association of India has estimated that the spa industry in India is presently valued at around Rs. 11,000 crore and the industry will continue to grow at a fast pace.

But unless we have many more numbers of trained spa personnel than we have now, the growing demand for wellness in the country would not be able to enhance the wellness tourism revenues in the country anywhere close to its potential demand. 

Succinctly, one can say in both MICE and wellness, India is facing with supply side bottlenecks. We have the potential demand in these areas, but have paucity of infrastructure and the right numbers of qualified human resource to harness that potential effectively.

Exploring IT

In this age, IT in general and social media in particular is being creatively channelised to enhance guest satisfaction across hospitality properties in the country. This trend is only expected to gather momentum in the industry, in the near future.

“These days IT systems and more specifically, IT-enabled facilities management systems that take care of bookings, inventory management, property management, billing and customer redressal can facilitate the hospitality property owners to focus their efforts on delivering the best possible localised experiences to their guests,” Aditi explained.

However, IT has not only given more scope for hospitality personnel to devote more time towards guest satisfaction, but has induced the hospitality industry to become more   fast and more accountable. Social media is not only a great window of opportunity for the hospitality industry, but also poses an uphill challenge for properties which falter in terms of guest satisfaction.

“Our hospitality industry is moving towards cloud-based system. We are finding that telly check-ins and check outs are the future. Moreover, social media is playing a huge role in creating a brand name for hotels and resorts. It is also inducing the hospitality properties in the country to be more responsive to consumers’ demands, and has also enabled them to communicate directly with their guests and potential guests,” analysed Ashish, while discussing the effect of digital age in India’s hospitality industry.

The digital age can give new avenues for hospitality properties to market themselves creatively. “In this digital age, if your hotel’s website figure up high on the search engine, then chances of people hitting your website  or  booking with you grows up manifolds,” affirmed Tanya with a smile. “In this regard, search engine optimisation plays a key role, as is the content and user-friendliness of the website,” she asserted. Tanya too believes that social media can be facilitated to enhance the credibility of a hospitality property.

“With more & more hospitality property chains integrating better IT-enabled platforms to engage the customers, coupled with increased penetration of 3G and 4G services in remote locations, we should see holistic changes in the way property systems are managed,” concluded Aditi.

Succinctly, the creative use of IT in general and social media in particular is one of the crucial factors towards the success and impressive growth of the Indian hospitality industry, in the near future. How far the industry explores and/or exploits IT for its revenues and profits remains to be seen, though the signs at present are encouraging.

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