The hospitality industry is a broad category of fields within the service industry that includes lodging, restaurants, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry.
The hospitality industry is a several billion dollar industry that mostly depends on the availability of leisure time and disposable income. A hospitality unit such as a restaurant, hotel, or even an amusement park consists of multiple groups such as facility maintenance, direct operations (servers, housekeepers, porters, kitchen workers, bartenders, etc.), management, marketing, and human resources.
The hospitality industry covers a wide range of organizations offering food service and accommodation. The industry is divided into sectors according to the skill-sets required for the work involved. Sectors include accommodation, food and beverage, meeting and events, gaming, entertainment and recreation, tourism services, and visitor information.
The hospitality industry is complex. It covers a wide range of jobs, locations, activities, and economic brackets.
There are 4 sectors of the hospitality industry:
Food and beverage,
Lodging
Recreation
Travel and tourism.
The food and beverage industry, also known as the foodservice industry, consists of businesses that prepare food for customers. It is the largest segment of the hospitality industry in the US. It is estimated that thefoodservice industry provides 50% of all meals eaten in the US today; with so many people eating out, manyopportunities for food entrepreneurs exist. A business in this industry can range from casual to fancy, large to
small, expensive to inexpensive. The number of people employed in foodservice industry is expected to doubleby 2015 to approximately 22 million people (Reynolds 23)
Lodging, also known as accommodation, is a place to sleep for one or more nights. A business in the lodging
industry is a business that provides a place for people to sleep overnight. It can be one of many sleeping places
such as a fancy hotel, a youth hostel, an elder hostel, a campground, or highway side motel.
Recreation is any activity that people do for rest, relaxation, and enjoyment. The goal of recreation is to refresh a person’s body and mind. Any business that provides an activity for rest, relaxation, and enjoyment in order to refresh a person’s body and mind is in the recreation business. Recreation businesses are incredibly diverse because people have varying ideas on what activities they participate in for rest, relaxation and enjoyment. There are four general types of recreation businesses: entertainment, attractions, spectator sports, and participatory sports.
Travel and tourism
The travel industry is in the business of moving people from place to place while the tourism industry provides those people with services that promote travel and vacations. Busses, planes, cabs, boats, and passenger trains are all part of the travel industry while travel agencies, tour operators, cruise companies, convention planners, and
visitors bureaus are all part of the tourism industry.
The H & T industry helps other industries around it grow, thus creating a basis for an economy. In “tourist towns”,for example, the entire economy is built up around the H & T industry. In places like this, a lawyer is not directly part of the hospitality industry, but a lawyer that works for a hotel chain is supported by the hospitality industry and
a school teacher that teaches in this type of community is also supported by the hospitality industry. Shop owners, business providers, government agencies, and other service providers all rely on the tourism to bring people intotheir businesses.
Montana cities that exemplify the importance of the H & T industry and the affect that industry has on the economy as a whole, include, but are not limited to: West Yellowstone, Gardiner, Red Lodge, Bozeman, Whitefish, Big Sky, Helena, and Billings.
Other, non-tourist based economies also rely on the H & T industry for growth. For example, an agriculture community that raises lots of barley may supply much of their crop to alcohol manufacturing, which in turn is served
in the foodservice sector of the H & T industry. Another example would be a M.D. that specializes in orthopedic surgery and lives in a town where many injuries are due to recreational activities.
Ultimately, any town with a hotel, restaurant, or recreational activity is affected by and employs people in the hospitality industry.
The ability to serve people food, give them a place to sleep, and provide them with entertainment is the back boneof many economies the globe over.
Trends influencing growth of hospitality in India
The Indian economy
Not only is the elephant dancing today, but it’s actually one of the only few circuses around. It has been a fantastic growth story for a country that in 1990 attracted only US$ 150 million of Foreign Direct Investments (FDIs), and then received US$ 4 billion in 2000 to over US$ 90 billion in just the past three years
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ndia’s GDP has grown at an impressive 8.5% during the six years spanning 2003/04-2008/09. The recent global financial crisis has only reduced the rate by 2-3 percentage points and even then the economy continues to grow at the annual rate of 6% following the three quarters after the meltdown. Several domestic and global agencies have recently applauded the Indian economy’s resilience and have projected a growth rate of 7% in 2010 and 7.5% for 2011. India reduced its central fiscal deficit from 8% of the GDP in the early 1990s to 2.5% in early 2008. This gave the government ample breathing space to increase its expenditure (the deficit subsequently rose to 7% of the GDP), and boost demand in the country which enabled the economy to sustain itself during the critical months of the crisis
The Maturing of Indian hotel markets
The Ministry of Tourism’s ‘Incredible India’ campaign has started to strike a chord and will likely play its role in increasing visitations to India. That being said, the general sentiment is that although India has a varied bouquet of destinations to offer, relatively mediocre efforts have been made to market Brand India.
The future of the Indian markets and their ability to mature into destinations relies on concerted efforts, both by the relevant government bodies and the private sector players. Creativity will be of essence and perhaps it is time to start marketing Brand India under several subsets such as cultural tourism, eco-friendly vacationing, medical tourism, religious circuits, adventure sports tourism, wildlife safaris, beach destinations and wellness vacations.
Additional influences that attract or deter foreign tourists and thus need to be addressed are the quality of infrastructure-related developments, ease of attaining a tourist visa for India, perhaps offering a visa on arrival option to nationals of certain countries, the country’s image as a safe, secure and friendly destination, amongst others.
Hospitality marketing trends
Ten years ago, the marketing mantra that worked best for hotels was the creation of a brand; make it exclusive, market the experience as surreal and the customer’s decision to purchase was expected to automatically follow suit. This worked at that time because there was a narrow playing field with few domestic and international hotel chains in the country.
Not surprising then that in 2010, India has seen an increased supply of international and domestic hotel chains that now volley with independent hotels for market share. Moreover, consumer generated media and mobile technology had yet to hit India in 2000 where the foremost influencer for the customer in making a purchase decision was the brand. The brand was conceptualized by its custodians – the internal stakeholders – to reflect the persona of the product, which made branding a one-way stream of communication mostly. Hence, Brand 2000 was a product of the internal stakeholders accented with high flying Brand Promises which translated into the Consumer Purchase Decision of 2000.
Food & Beverage (F&B) Concepts
Ten years ago, when one talked about ‘eating out’ at a standalone restaurant, for the most part it meant going to Kwality, Gaylord’s or Nirulas. Today, F&B offerings in India have evolved and are fast making a mark for themselves in the global F&B arena, too. Until recently, five-star hotel restaurants were considered the epitome of fine dining experiences in the country; however, the rapid growth in standalone restaurants is seriously challenging the former for top honours. With a well travelled upwardly mobile consumer, new and trendy food concepts are a rage in the Indian F&B business. Of late standalone restaurants like Indigo, Tote, Olives, Tetsuma, Trishna, Zest, Smoke House Grill, to name a few have raised the bar for the F&B offerings across major metros; each outlet has a unique selling proposition (USP) that has become its claim to fame. However, the concept of standalone restaurants is still in a nascent stage and will benefit immensely if provided the right impetus with regards to ease of acquiring licenses, clearances etc.
Technology and hospitality
The growth of the internet since then has played a key role in truly globalizing the sales efforts as well as the marketing opportunities for the hotel industry. The advent of third party travel websites such as Hotels.com, Expedia.com and Travelocity.com as well as a few home grown websites like Makemytrip.com and Yatra.com has also been witnessed in recent years. These channels of distributions quickly gained strength and their contribution to the overall pie of reservations has been growing with every passing year. Additionally, independent hospitality review and opinion websites like Tripadvisor are also very popular with the travelling population of today. While these websites offer the tech-savvy traveller the opportunity to see pictures and read actual guest comments about almost every hotel in every major and minor city of India, they also offer the hotels an opportunity to showcase their products and services to a mass audience
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Facts and figures of Indian hospitality Industry
As per the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum, India is ranked 12th in the Asia Pacific region and 68th overall, on the list of the world’s attractive destinations. It is ranked the 14th best tourist destination for its natural resources and 24th for its cultural resources, with many World Heritage sites, both natural and cultural, rich fauna, and strong creative industries in the country. India also bagged 37th rank for its air transport network. The India travel and tourism industry ranked 5th in the long-term (10-year) growth and is expected to be the second largest employer in the world by 2019.
The Indian Hospitality industry contributes around 2.2 per cent of India’s GDP. The industry is expected to reach INR 230 billion (US$ 5.2 billion*) by 2015, growing at a robust CAGR of 12.2 per cent. India will be investing around INR 448 billion (US$ 10.1 billion*) in the hospitality industry in the next five years, according to a report ‘The Indian Hotel Industry Report – 2011 Edition’ by CYGNUS Business Consulting & Research Firm. In the next two years, a total investment of US$ 12.2 billion (INR 545.2 billion*) is expected that will add over 20 new international brands in the hospitality sector.
The tourism ministry has proposed a cash subsidy of Rs.2 lakh per room for one-star category and Rs.3 lakh per room for two and three star category hotels to facilitate their growth. According to Federation of Hotel and Restaurant Association of India (FHRAI), the country is short of 65,000 budget category rooms.
Cruise shipping is growing globally at the rate of 12-15% annually. In India the cruise market is in excess of 1,25,000 guests annually and will grow at over 10% annually
International Recognitions
India’s booming tourism sector has not only witnessed international investments but also achieved international accolades with its increasing appeal as the leading global tourist destination. The government has been instrumental in making tourism a priority sector. Its efforts have borne fruits with a series of international recognition and awards.
India has been elected to head the UN World Tourism Organization (UNWTO), the highest policy making world tourism body represented by 150 countries.
The world’s leading travel and tourism journal, Conde Nast Traveller, has ranked India as the ‘numero uno’ travel destination in the world.
India was adjudged Asia’s leading destination at the regional World Travel Awards (WTA).
India’s Taj Mahal continues to figure in the Seven Wonders of the World.
Bangalore-based Leela Palace Kempinski was voted the favourite business hotel in the world in a Readers’ Choice Awards by Conde Nast Traveller in 2007.
India bagged the World’s leading Destination Marketing Award for the Incredible India campaign.
Government Initiatives
Launch of Incredible India campaign to promote tourism both in domestic and international markets.
Guidelines issued for classification of Apartment Hotels / Timeshare Resorts / Guest Houses and Bed & Breakfast establishments. Railways have planned to set up 100 budget hotels at various stations along with private hospitality players. Recognition of spare rooms available with various house owners by classifying these facilities as “Incredible India Bed and Breakfast Establishments”‘, under ‘Gold’ or ‘Silver’ category.
Other Initiatives by the Ministry of Tourism:- Paradigm shift towards Rural Tourism / Agri Tourism, Eco-Tourism; Medical Tourism launched as a new product.
The Government has launched a Scheme of ‘Visa on Arrival’ (VoA) from January 2010 for citizens of five countries, viz. Finland, Japan, Luxembourg, New Zealand and Singapore, visiting India for tourism purposes. The Government has now extended this Scheme for the citizens of six more countries, namely Cambodia, Indonesia, Vietnam, Philippines, Laos and Myanmar from January 2011. During the period January-June 2011, a cumulative figure of 5774 VoAs were issued, with a total of 865 & 770 VoAs issued in the months of May & June respectively.
As per the press release by Press Information Bureau (PIB) dated November 15, 2010, the Union Ministry of Tourism has included Medical Tourism under the Marketing Development Assistance (MDA) Scheme. The Ministry of Tourism has sanctioned US$ 27,742 as MDA to 10 Medical Tourism Service Providers during current year
As per a market research report ‘Booming Medical Tourism in India’ by RNCOS, India’s share in the global medical tourism industry will reach around 3 per cent by the end of 2013. Moreover, medical tourism is expected to generate revenue worth US$ 3 billion by 2013, growing at a CAGR of around 26 per cent during 2011-2013. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to reach 1.3 million by 2013.
Domestic medical tourism in the country has also seen growth in the recent years. As per the report ‘Domestic Tourism in India, 2008-09’ released by the National Sample Survey Office (NSSO), trips for ‘health and medical’ purposes formed 7 per cent of overnight trips in the rural population and about 3.5 per cent in the urban population. ‘Health and medical’ purposes accounted for 17 per cent of same-day trips in rural India and 8 per cent in urban India. Expenditure on medical trips accounted for 30 per cent of all overnight trip expenditure for rural India and 15 per cent for urban
924 Infrastructure projects worth Rs.1440.86 crore sanctioned during the 10th Plan. The government has already okayed plans to substantially upgrade 28 regional airports in smaller towns. The upgradation of national highways connecting various parts of India has opened up the way for the development of budget hotels in India.
Conclusion
India is a buzzing Asian economy which attracts a large number of global players across various sectors. The Indian hospitality sector has also taken a paradigm shift from a nascent stage to an expansionary stage. It contributes 8.6% to the country’s GDP.
It is estimated that India will be the 4th fastest growing nation in the Travel and Tourism sector over the next ten years.
The number of medical tourists is expected to reach 1.3 million by 2013, at a CAGR of 19%.
‘Foreign Tourist Arrivals (FTAs) in India during 2010 touched 5.58 million with a growth rate of 9.3% as compared to a growth rate of -3.3% during 2009’
‘There is a shortage of 110000 rooms across the country. This incentive has led to many hospitality giants venturing into the dynamic Indian market.
Besides this, increasing foreign and domestic tourist arrivals, medical tourism, favourable government policies and rising business travel are the key contributors to a positive outlook for the sector.’
With the advent of new international players in the industry and expansion plans of existing players, there are ever increasing job opportunities in the hospitality sector. The Indian travel and tourism industry is expected to be the second largest employer in the world by 2019.
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