Vineet Verma, CEO & executive director, Brigade Hospitality Services, notes the many tailwinds that would help hoteliers boost their business given the dynamic environment in which the sector thrives in India
Hospitality is one of the most flourishing sectors in India with many national and international brands making a beeline to establish a strong foothold in the country. India being a diverse market in terms of culture and tradition, lifestyle and food habits that change from region to region, makes it an incredible market for brands to introduce their various offerings under many categories to cater to a wider audience. The metros have long been a melting pot of opportunities for hoteliers, where one gets to see many iconic hotels known for luxury, experience, offerings, etc, that are unmatched. In recent times, the focus is gradually shifting towards Tier-II cities where the next battle royale is expected to take place.
Already a slew of hospitality properties have come up in places like Goa, Jaipur, Chennai, Hyderabad, Kolkata, Kochi, Indore to name a few as the hotel chains are building a strong portfolio in a country where the business is expected to grow stronger in the coming years. For many of these brands, it is an opportunity to understand and experience a market as diverse as India, which will go a long way in capturing a good pie of the hospitality market. At the same time, well established Indian hospitality brands are strengthening their brand presence and are reinventing guest experience like never before. Brands are introducing innovative guest programmes and taking initiatives to build a loyal customer base to ensure they are as much a part of the race as any other international brand to create higher industry standards.
While there is so much potential to be tapped, there is no denying the fact that certain challenges need to be tackled in order to make it a successful outing. To run a business, one has to consider internal and external factors that are of paramount importance, which affect the day to day operations. One needs to look at three of the following most critical challenges as opportunities to succeed.
Competition from local and international brands
The hospitality sector is one of the most dynamic sectors in the world. The arrival of technology has increased the demand and definitely has its impact on the economy. For a very long time there was less or no innovation in this field. Businesses like Airbnb necessitated the industry to come up with new ideas to drive maximum revenues from the rising demand. The restaurant industry started to thrive and it impacted how one does food and beverage business in hotels.
A lot of international brands have started expanding their footprint in India, as it is one of the fastest growing markets for travel and tourism. For one of the leading American hospitality giants, India is the second biggest market after China in the Asia Pacific region; there is a lot of competition but due to the high demand and the way they strategise to drive it, does not affect very much. Other leading European brands are not far behind, most of these hotel chains are strategically approaching the Indian market by customising their services and offerings according to the Indian market, which is making them a credible player in the Indian hospitality landscape.
On a separate note, when we talk about guest experience, the modern traveller is very brand savvy, whether it is from an international hotel chain or a local hotel chain. Both international brands and local brands are in direct competition to meet customer’s expectation on price, level of service and overall feel of the product. Loyalty plays a big role here since travel is now not country specific. International chains allow customers more opportunities to earn on their respective loyalty programmes worldwide, while giving travellers a more personalised stay keeping on record their preferences from previous stays. For an overall city to deliver great experience, it needs all brands to come together to cater different price points, locations, service levels, etc to ensure the particular location meets the needs of each and every potential traveller. At the end, competition is a healthy sign as it motivates everyone to innovate and be better.
Laws and taxes
Travel and tourism in India is one of the major revenue generators in the economy’s GDP and has a great potential considering the varying styles and influences. With the introduction of GST, the checking out process at hotels and restaurants has become much easier and eradicating any form of confusion and arguments.
Very recently, the GST council announced reduction in taxes from 28 per cent to 18 per cent on room bookings, thereby allowing traveller’s savings on overall cost, which is a positive move to ensure that tourism and business travel continues to grow and boost our economy. This decision is bound to make a positive impact on both business and growth.
Booking and revenue challenges
The pillar of a successful business is revenue management. Segmentation of customers is an essential part of pricing. It helps in identifying the suitable price for the customer. Selling the room to the right person at the right time for the right price is very important.
Planning and forecasting the demand play a key role in actively avoiding overbooking. Dynamic pricing strategies allow hotels to sell while making the maximum profit possible also keeping in mind the city-wide demand. By analysing past bookings and cancellations, future demand can be predicted and the pricing can be done accordingly.