3/23/2011

HOSPITALITY INDUSTRY
SUBMITTED TO:Dr. Nripendra Singh

Submitted by:Priyanka Gupta (10609042) Raushan Kumar (10609044) Shivam chaurasia(10609052) Vrishti Chatrath(10609064) Abhinav Dhingra(10609002)

Services Management project |

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Introduction
HOSPITALITY INDUSTRY AN OVERVIEW Hospit lity is all about offeri warmth to someone who looks for help at a strange or

unfriendly place. It refers to the process of recei ing and entertaining a guest with goodwill. Hospitality in the commercial context refers to the acti ity of hotels, restaurants, catering, inn, resorts or clubs who make a vocation of treating tourists.

Unique efforts are put in by government and all other stakeholders, including hotel owners, resort managers, tour and travel operators and employees who work in the sector, Indian hospitality industry has gained a level of acceptance world over. It has yet to go miles for recognition as a world leader of hospitality. Many take Indian hospitality service not for its quality of service but India being a cheap destination for leisure tourism. With unlimited tourism and untapped business prospects, in the coming years Indian hospitality is seeing green pastures of growth. Availability of qualified human resources and untapped geographical resources give great prospects to the hospitality industry. The number of tourists coming to India is growing year after year. Likewise, internal tourism is another area with great potentials. The hospitality industry is a 3.5 trillion dollar service sector within the global economy. It is an umbrella term for a broad variety of service industries including, but not limited to, hotels, food service, casinos, and tourism. The hospitality industry is very diverse and global. The industry is cyclical; dictated by the fluctuations that occur with an economy every year. Today hospitality sector is one of the fastest growing sectors in India. It is expected to grow at the rate of 8% between 2007 and 2016. Many international hotels including Sheraton, Hyatt, Radisson, Meridien, Four Seasons Regent, and Marriott International are already established in the Indian markets and are still expanding. Nowadays the travel and tourism industry is also included in hospitality sector. The boom in travel and tourism has led to the further development of hospitality industry. In 2003-04 the hospitality industry contributed only 2% of the GDP. However, it is projected to grow at a rate of 8.8% from 2007-16. This will place India as the second-fastest growing tourism market in the world. This year the number of tourists visiting India is estimated to

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have touched the figure of 4.4 million. With this huge figure, India is becoming the hottest tourist destination. The arrival of foreign tourists has shown a compounded annual growth of 6 per cent over the past 10 years. Besides, travel and tourism is the second highest foreign exchange earner for India. Moreover, it is also estimated that the tourism sector will account for nearly 5.3 per cent of GDP and 5.4 per cent of total employment. EVOLUTION Hotel Industry in India has witnessed tremendous boom in recent years. Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel industry. The thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. The 'Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' (ADB) campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry.

According to a report, Hotel Industry in India currently has supply of 110,000 rooms and there is a shortage of 150,000 rooms fuelling hotel room rates across India. According to estimates demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, re ceiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, hotel rates in India are likely to rise by 25% annually and occupancy by 80%, over the next two years. This will affect the competitiveness of India as a cost-effective tourist destination.

To overcome, this shortage Indian hotel industry is adding about 60,000 quality rooms, currently in different stages of planning and development, which should be ready by 2012. Hotel Industry in India is also set to get a fillip with Delhi hosting 2010 Commonwealth Games. The future scenario of Indian hotel industry looks extremely rosy. It is expected that the budget and mid-market hotel segment will witness huge growth and expansion while the luxury segment will continue to perform extremely well over the next few years.

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WTO/GATS and Indian government policy and restrictions for the Hospitality Industry
By Priyanka Gupta (Serial no. 50) In t ro d u ctio n Hospitality is one of t h e wor lds largest a nd fa stest-grow ing industries a n d its imp or ta nc e for ec ono m ic dev elop m ent is w idely ac know ledg ed. Wh a t ma kes h o s p i t a l i t y differ en t fro m m a ny ot her s er v ic e s is t hat t h e su pplier sta y s w h er e he is, a nd t he t ou r ist c o m es to hi m r at h er t h a n t h e su p plier ta k ing his s er v ic es t o t he c on su m er. Hospitality ca n thus play a key role in p overt y a llevia t ion , br inging jobs for u n s k illed or s e m i-s killed w orker s in ho t els, re sor t s a nd at c u lt u ra l s it e s, a s well a s encoura ging job cr ea t ion in supply in du st r ies . T hes e are a ll critica l contr ibutors to grow th in developing econ om ies . Bu t if hospitality is to offer a susta inable pat h to p overt y a llevia t ion , p olicies are n eed ed to ensure t hat t he b enefits are s h a r e d a nd sp rea d to p oor com m u n it ies, a n d t h a t m ea s u r es are ta ken to mini mise t he adv ers e im p a ct of touris m on t he en vir on m en t . T he im p or ta nc e of t h e t ou r ist s ect or is r ef lec t ed in t he r elat iv ely lib er a l e nv ir on m e nt cu r r en t ly in plac e in mo st cou ntr ies. N ea rly 130 Wor ld T rade O rga nization (WTO) m e m b er s ha ve m a de com m it m en t s t o op en u p t heir t ou r ist s ect or, m or e t ha n for a ny ot her ser v ic e s ec t or, r ef lec t in g a desir e to expa nd touris m a nd a t t ra ct for eig n dir ect in ves t m en t . Bu t ther e is st ill a great dea l of scop e for dev eloping c ou ntr ies t o ex pa n d touris m a nd t he opp or t u n it ies it offers for s ocio-econ om ic develop me nt. O ne factor r est r ic t in g s uc h gr ow t h is a la c k of a dequ a t e ser v ices a nd infra str uct ure, such a s t ra n s p or t, t eleco m m u n ica t ion s, fina ncial ser vic es, or electr ic pow er a nd s ewa ge t r ea t m e nt fa cilit ies . Any cou ntr y wa nt ing t o b oost its touris m industr y also n eeds t o be a ble to build hotels, provide a n a dequ at ely edu c at ed a nd t ra in e d workfor ce, a nd a dv ert is e for t ou r ist s.

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O p ening

up

ma rkets

to

t ra de

in

ser v ic es

and

inv est m ent,

cou ld

s u b st a n t ia lly c o nt r ib ut e t o t he de v elop m e nt of tourism. Bu t a ny m a r ket op enin g n ee ds t o be pr op erly desig ne d a nd im p lem ent ed, ta k ing a ccou n t of t h e s ocia l a nd en v iro n m ent a l im pa ct, if susta inable tou ris m a nd gr ow t h ar e to b e a ch ieved.

H o w d o es to u r is m affect the e co n o m y ?

The touris m s ec tor ha s s u ffer ed fr om a la c k of p olit ica l a nd popular su p p or t in ma ny cou ntr ies becaus e its econo mic i mp orta nce ha s b ee n u nder est i m at ed. T he indu st r y a n d it s im pa ct ca n be difficult to define a n d m ea sure since it compris es s eller s of m a ny het er og en eo u s pr o du ct s. Th e W TOs G eneral A greeme nt on T rade in S er vic es (GATS) offers a r ela t ively lim it ed def init ion of touris m, which excludes a nu mb er of rela te d s er vices s u ch a s c o m p ut er re ser v at ion s yst em s, c r u is e sh ip s a nd ma n y ot h er t ra n s p or t s er v ic e s, or hot el con st r u c t ion . In t er n at ion a l effor t s t o im pr ove m ea s u r em en t of t he ec ono m ic i mp a ct of touris m led to t he develop ment of the Tourism Satellite Account (TSA), w hic h at t em p t s t o pr o v ide a cr e dible m ea sure of t he tr u e c ontr ib u t ion of tou rism to a nationa l econ om y. Br oa dly defined, touris m c ould be r ega r d ed a s one of t h e wor lds la r gest a nd fa st est gr ow ing indu stries. According to the World T ravel a nd Tou r is m Council (WTTC), a n or ga n isat ion m a de u p of ex ec ut iv es fro m t he t ra vel a nd touris m indu st r ies, t he contribution of travel a nd tour is m t o wor ld w id e gros s do mest ic product (GDP) will r ise fr om 10.3% (USD 4,9 billion) to 10.9% (USD 9 billion) b et we en 2006 a nd 2016. T h e s ect or is a m a jor d irec t em p lo y er a nd s u pp or t s a m uc h w id er in d ir ec t e mploy ment base in supplying indu str ies. Em ploy m en t is est im at e d b y WTTC at 234 million jobs in 2006, 8.7% of tota l worldw ide e mplo y ment or 1 in e ver y 12 jobs. D ir ect em ploy m ent gr ow t h in 2005 w a s e st i m a te d at 2.1 m illion ne w jobs, 6.5 million cou nt ing ind irect job creation. Touris m is a ke y

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ex p or t for m a ny dev eloping c ou nt r ies a nd a c ruc ia l (oft en t h e lea din g) source of foreig n exch a n ge. Tourism is also a co mplex industr y. It ca n gen era t e sig nif ica nt econ om ic activity t h r ou gh lin ka ges w it h ot her in du st r ies, su c h a s a gr icu lt u r e, m a n u fa c tu r in g and other ser vices. Tourism ca n boost dema nd for goo ds a n d s er v ic e s food, con st r u ct ion , t ra n s p or t fro m ot her sectors; t h e tourism indu str ies t hat s ell good s a nd s er vices to t ou r ist s ca n a ls o s ell pr odu c t s t o b u s in es s es in ot her s ect or s . OECD a na lysis finds t hat touris m is lin ked in t his wa y to mor e ot her industries t ha n t he avera ge s er vices s ect or, su ggest in g t hat touris m ma y be one of t h e m o s t in t er con n e ct ed ser v ic es s ect or s in ma ny econ o m ies . In In dia , for exa mple, tourism is p erha ps one of t h e m os t in t ercon n ec t e d s er v ic es s ect or s in t he econo my. It is one of t he la r ges t s ect or s in t er m s of de ma nd for good s a nd ser vic es fro m ot her s ect or s (ba ck wa r d lin ka ges), surpassed only by m a n u fa ct u r in g, t he elec t r icit y s ect or, hea lt h a nd so c ia l w or k, a nd n on -t ou r is m -r ela t e d a ir t ra n s p or t, hot e l a nd r est a u ra n t activ ity. In d ia n tourism is also above average in gen er at in g supply of good s a nd s er vices to ot her s ect or s (for wa rd lin ka ges).

Access to an a d equ a t e supply of good s a nd ser vices ca n be v ita l t o developing a succ es sful tour ism s ect or. If food, building m a t er ia ls, electricity su pp ly or a t ra in e d workforce is in short supply or exp ensive, it ca n ha mp er t h e gr ow t h of tourism. A ra nge of bott lenec ks have b een ident ified in dev elopin g c ou nt r ies t hat n e ed t o be addressed to s tre n g t he n ba ck wa r d lin ka ges a n d u n lea s h g r ow t h in t he s ec tor. Bu ildin g s er vice ca pa cit y figures pr om in en t ly o n t he list (see Box 1).

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Country Constraint Policy response and effects

India

Restrictive air transport policies and capacity constraints of A India. ir Insufficient airport capacity. National deficit of hotel rooms.

Steps to privatise A India and open domestic routes to new carriers. ir Open skies pursued and signed with A ustralia and the US. Resulted in more airlines operating domestically and internationally, greater private participation in airports and a boost in demand. Opened FDI in tourism and took steps to improve land availability. In 2005 the Ministry of Tourism proposed to the State G overnments to identify hotel sites and make them available on suitable terms. A a result, at s least 50 non-Indian hotel chains planned to enter the market as of April 2007. New reforms were introduced in 2005. Foreign banks are allowed to establish a wholly owned subsidiary (W or convert existing branches into W OS) OS. Promotional expenditure for tourism significantly increased since 1999/2000. The G overnment acknowledged the importance of increasing public- private partnerships in tourism marketing. Creation of the A dvisory T ourism Board charged with providing policy guidelines in tourism training. 21 G overnment-run Hotel Management and Catering Technology Institutes and 14 Food Craft Institutes were established. The Government also recognised that more needs to be done including by promoting partnerships with the private sector.

Inadequate access to investment capital.

Limited promotion and marketing compared to A sian neighbours. Inadequate national training and education in the hospitality and catering services and more generally in the tourism industry.

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INDIAN GOVERNMENT POLICIES AND RESTRICTIONS

Hospitality sector in India is governed by a regulatory framework described as under:

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REGULATIONS The raft of legislation governing the hospitality industry can be divided into three sectors. The first governs the construction and commissioning of hotels, restaurants, guest houses and other establishments, and includes the Foreign Exchange Management Act, the industrial licensing policy, the Transfer of Property Act, and various development control orders issued by central and state governments and local municipal councils. The second governs the operation, maintenance and management of establishments, and the health and safety of occupants. This legislation includes the Indian Contract Act, health and safety laws, insurance laws (notably public liability insurance), and fire safety and hygiene regulations. Establishments must obtain various licences, such as a liquor licence, dance licence, lodging house licence, eating house licence, police permissions, a licence under the Shop and Establishment Act, or a licence under the Food and Drug Administration Act, all of which are granted on an annual basis. If an establishment fails to meet the requisite criteria the licence is not renewed, effectively closing down the business. The third set of rules governs taxation, employment and other contractual relationships. This includes laws on income tax, service tax, expenditure tax, excise duty, luxury tax, entertainment/ amusement tax, as well as laws on pension, gratuity and provident funds, and other employment laws.

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LI

STR

WORL SCE

RIO B Raushan Kumar (serial no. 49)

Growth rate: The travel and tourism sector continues the momentum of the last few ears. By 2011 it will contribute more than $US 9.3 trillion to world economic activity more than 10% of total spending. More than one in 12 jobs today is in tourism. In spite of the ups and downs of the economy tourism is extremely resilient in the face of external factors. There was a record overall growth rate of 6% for 2007, and a very healthy growth rate of 4% 5% is projected over the next ten years (United Nations World Tourism Organi ation). Top players:

Players 1 IHG (InterContinental Hotels Group) 2 Wyndham Group 3

Head uarters Denham, Kingdom United

Logo

Hotel Parsippany, New Jersey

Marriott International Bethesda, United Hilton Hotels Corp. Accor Choice International Best International

Maryland, States

4 5

Courcouronnes, France

Hotels Silver Maryland, U.S. Western Phoenix, United States

Spring,

Ari ona,

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8 Starwood Hotels & White Resorts Carlson Worldwide 10 Global Hyatt Corp. Worldwide York Plains, New

STRY

Hotels Minnetonka, Minnesota, USA Chicago, United States

Illinois,

11 Westmont Hospitality Group

Toronto, Canada

12 TUI AG/TUI Hotels Hanover, Germany & Resorts Jiang Shanghai, China

13 Jin

International Hotels

14 Golden

Tulip Amersfoort,Netherlands

Hospitality Group 15 The Re idor Hotel Brussels, Belgium Group 17 Sol Melia Palma Spain de Mallorca,

TRE

S IN HOSPIT LIT SECTOR

Trends that will shape the future of hospitality sector are: 1. Low Cost Carriers 2. Budget Hotels 3. Service Apartments 4. Technology 5. Loyalty Travel

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1. Low cost carriers: Travelers in general are more price sensitive to airfare than they are to hotel room rates. Often a low airfare will stimulate demand for travel even if hotel prices are increasing. LCCs are a good option for business travelers, as they have advantages like low costs, more options and connectivity. 2. Budget hotels: More than 50 per cent of occupancy of a majority of hotels comes from the business travel segment. The average room rate (ARR) realized from business travelers is normally higher than from leisure travelers. Heightened demand and the healthy occupancy rates have resulted in an increase in the number of budget hotels. Some of the new players entering into this category of hotels include Hometel, Kamfotel, Courtyard by Marriott, Country Inns & Suites, Ibis and Fairfield Inn. 3. Service apartments: The concept of service apartments, though a recent phenomenon in India, is an established global concept. Villas in Spain, flats in the UK and apartment complexes in the US have all created a viable market for those who want more than just a room in a hotel. Service apartments are the latest trend in accommodation, offering the comfort and convenience of a home without the hassles of having to maintain or look after it. Ideally suited for medium to long staying guests, service apartments are a natural choice for corporate employees or expatriates relocating to a particular city, non-resident Indians visiting the country for long spells and foreigners visiting the city for long durations. 4. Technology: Travel and technology have become inseparable. Technology is making its own advances with high-tech video conferencing facilities, web cameras and virtual reality mode of conferencing. On-line bookings, e-ticketing, Wi-Fi Internet connectivity, easy access to information, etc. are just a few areas where technology has completely changed the way we travel. 5. Loyalty travel: Today, airline-credit card company tie-ups have brought a whole range of benefits to the travelers. These include insurance cover, upgrades, free tickets, access to executive lounges, and a host of other Goodies.

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INDIAN SCENARIO
By Shivam chaurasia ( Serial no. 48)

Tourism and hospitality As per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum, India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places 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. Market size of Indian hospitality industry: The Indian hospitality industry, which includes hotels and restaurant chains, is valued at $23 billion (Rs 113,976 crore).Hotels comprise 75 per cent of the total market size.The hotel market is expected to double in size by 2018. About $12 billion (Rs 59,442 crore) is likely to be invested in the next two years. By 2011, there will be around 40 new international hotel brands operating India.The high growth rate can be attributed to increase in foreign tourist arrivals,the popularity of heritage sites, and international events such as the Commonwealth Games being held in the country. GROWTH RATE Combining unparalleled growth prospects and unlimited business potential, the industry is certainly on the foyer towards being a key player in the nation's changing face. Furthermore, banking on the governments initiative of upgrading and expanding the countrys infrastructure like airports, national highways etc, the tourism and hospitality industry is bound to get a bounce in its growth. The hotel and tourism industrys contribution to the Indian economy by way of foreign direct investments (FDI) inflows were pegged at US$ 2.24 billion from April 2000 to

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November 2010, according to the Department of Industrial Policy and Promotion (DIPP). . He added that the Indian hospitality industry is projected to grow at a rate of 8.8 per cent during 2007-16, placing India as the second-fastest growing tourism market in the world. Initiatives like massive investment in hotel infrastructure and open-sky policies made by the government are all aimed at propelling growth in the hospitality sector. MAJOR PLAYERS

Major players in the Indian Hotel Industry The Hotel Industry mainly has following major players:

Hotel Chains They comprise major players including Indian Hotels Company Limited (the Taj Group) and associate companies, EIH Limited (the Oberoi Group), ITC Hotels Limited (the ITC Welcome Group), Indian Tourism Development Corporation (ITDC) and Hotel Corporation of India (HCI) (the latter two being under the Public Sector). Most of these chains had an established presence in one or more metro cities prior to the tourism boom of the 1980s. Subsequent to the tourism boom, these chains aggressively expanded their presence in other locations. The private players among the hotel chains are industry leaders and have wellestablished brand identities across the different industry segments.

Small Chains They are companies that have come up after the tourism boom of the 1980s and 1990s. Due to lack of prior experience in the hotel industry, these players have preferred to opt for operating/management arrangements with international players of repute. Some of the companies in this category are Hotel Leela Venture (with Kempinski), Asian Hotels (Hyatt International Corporation), Bharat Hotels (formerly with Holiday Inn and Hilton and now with Intercontinental). As late entrants, most of these hotel companies have fewer properties, compared with the big chains. However most of these players have initiated expansion plans during the late 1990s.

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Public Sector Chains ITDC and HCI, boast of some of the best locations in major cities but are relative underperformers, as compared with their private sector counterparts.

International Hotel Chains They are also looking at India as a major growth destination. These chains are establishing themselves in the Indian market by entering into joint ventures with Indian partners or by entering into management contracts or franchisee arrangements. Some of the players who have already entered or plan to enter the Indian market include Marriott, Starwood, Berggruen Hotels, Emaar MGF. Most of these chains have ambitious expansion plans especially with a strong focus on the budget segment and tier II cities.

Localized Hotel Companies They are mainly comprise early entrants who have an established localized presence and who preferred not to expand during the tourism boom but focus on building and catering to a loyal customer base. Corporate Catalyst India A report on Indian Tourism and Hotel Industry

Profiles of some of the major players in the Hotel Industry

The Indian Hotels Company The Indian Hotels Company and its subsidiaries are collectively known as Taj Hotels Resort and Palaces, recognised as one of Asia's largest and finest hotel company. Incorporated by the founder of the Tata Group, Jamsetji N Tata, the company opened its first property, The Taj Mahal Palace Hotel, Bombay, in 1903. The Taj, a symbol of Indian hospitality, completed its centenary year in 2003. Taj Hotels Resorts and Palaces comprises 59 hotels at 40 locations across India with an additional 17 international hotels in the Maldives, Mauritius, Malaysia, United Kingdom, United States of America, Bhutan, Sri Lanka, Africa, the Middle East and Australia.

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The company has had a long-standing commitment to the continued development of the Indian tourism and hospitality industry. From the 1970s through the 1990s, the Taj played an important role in launching several of India's key tourist destinations. Working in tandem with the Indian government, the Taj developed resorts and retreats while the government developed roads and railways to India's hidden treasures.

ITC/ Sheraton Corporation ITC's Hotel division was launched on October 18, 1975, with the opening of its first hotel Chola Sheraton in Chennai. ITC - Welcomgroup Hotels, Palaces and Resorts, is today one of India's finest hotel chains, with its distinctive logo of hands folded in the traditional Namaste is widely recognised as the ultimate in Indian hospitality. Each of the chain's hotel pays architectural tribute to ancient dynasties, which ruled India from time to time. The design concept and themes of these dynasties play an important part in their respective style and decor. With more and more hotels being added at strategic destinations, the group has joined hand with the Sheraton Corporation to strengthen its international marketing base. A successful marketing franchise for almost 25 years now, there are currently 10 ITC Welcomgroup Sheraton hotels, and more in the pipeline.

The Leela Group Founded in 1957 by Capt. C.P. Krishnan Nair, the Rs.4.5 billion Leela Group is engaged in the business of ready-made garments and luxury hotels and resorts. The Leela Kempinski, Mumbai and The Leela, Goa are two of the best hotels in India, and have also won considerable international acclaim. For this to have been achieved in 12 short years is nothing short of remarkable. Recently in 2001 Capt. Nair fulfilled his longstanding dream of constructing a palace hotel in the garden city of Bangalore. The Leela Palace Kempinski, Bangalore is built in art deco style recreating the grandeur of The Mysore Maharajas Palace. It is set amidst 8 acres of landscaped garden and waterfalls. It is a palace with the heart of a modern hotel. Its 254 Corporate Catalyst India A report on Indian Tourism and Hotel Industry rooms are opulently furnished and are befitting royalty. The newest addition The Leela Kovalam is Keralas

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largest resort, built on a rock face cradled between two wide sweeping beaches with a stunning view of the famous Kovalam coastline.

The Bharat Hotels Group The Bharat Hotels group is a major player in Indias tourism and hotel sector. It operates its hotels under THE GRAND banner and its present portfolio of hotels incorporates FOURTEEN luxury hotels in the five-star deluxe segment. These include InterContinental The Grand hotels in New Delhi, Mumbai, Goa & Srinagar and The Grand Ashok Bangalore, The Grand Laxmi Vilas Palace Udaipur and The Grand Temple View Khajuraho. Additionally, soon to open hotels in 2008-09 are The Grand Great Eastern Kolkata, The Grand Jaipur, The Grand Resort Bekal, The Grand Ahmedabad, The Grand Chandigarh, The Grand Noida and The Grand Fort Dubai. By 2009, the company plans to open hotels in Hyderabad, Amritsar and other key locations.

The EIH Ltd (The Oberoi Group) Asian elegance is the key to running hotels, if you ask EIH (better known as The Oberoi Group). The company owns and operates about 20 luxury hotels, about 10 mid-range hotels, and two inland cruises; The Oberoi Group operates primarily in India, but also in Australia, Egypt, Indonesia, Mauritius, and Saudi Arabia. Most of the company's luxury properties bear the Oberoi banner. The company in 2004 joined forces with Hilton International to rebrand most of its mid-range hotels as Trident Hiltons (the former Oberoi Towers is now known as the Hilton Towers Mumbai). The Oberoi Group also operates luxury cruises of the Nile River and India's Kerala region.

India Tourism Development Corporation (ITDC) / The Ashok Group India Tourism Development Corporation (ITDC) was established in 1966 as an autonomous public sector corporation, entrusted with the task of helping develop tourism infrastructure and promoting India as a tourist destination. The ITDC Ashok Group of hotel chains manages some of the best five star and luxury tour hotels in the Indian hospitality industry. The hotels run by the ITDC Ashok Group of hotel chains may be divided into different

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categories, these are elite hotels, comfort hotels and classic hotels. The ITDC Ashok Group of hotel chains manages 33 hotels in 26 different tourist destinations all over India. The management of Ashoka Group believes in offering the best in the hospitality industry and the staff at each of the hotels run by the group is especially trained to be courteous and efficient. The Ashok Group of hotel chains boasts of running some of the best hotels in the Indian hotel industry. The hotels that are a part of the elite and classic category of the ITDC Ashok Group are the Ashok Hotel in New Delhi, the Kovalam Ashok Beach Resort in Kovalam, Kerala, the Agra Ashok in Agra, Hotel Jaipur Ashok in New Delhi and the Qutab Hotel in Corporate Catalyst India A report on Indian Tourism and Hotel Industry New Delhi. Most of the hotels managed by the ITDC Ashok Group have had the privilege of playing host to several international and national dignitaries.

The Hotel Corporation of India (HCI) The Hotel Corporation of India Limited (HCI) is a public limited company wholly owned by Air India Limited and was incorporated on July 8, 1971 under the Companies Act, 1956 when Air India decided to enter the Hotel Industry in keeping with the then prevalent trend among world airlines. The objective was to offer to the passengers a better product, both at the International Airports and at other places of tourist interest, thereby also increasing tourism of India.

Jaypee Hotels Ltd. Jaypee Hotels Limited primarily engages in the ownership and operation of hotels in India. The company owns three Five Star Deluxe Hotels, namely Jaypee Palace Hotel at Agra, and Jaypee Vasant Continental and Jaypee Siddharth Hotel at New Delhi. It also manages the operation of the hotels Jaypee Residency Manor at Mussoorie and Jaypee Green Resorts. In addition, Jaypee Hotels involves in construction operations. The company is headquartered in New Delhi, India. Jaypee Hotels Limited is a subsidiary of Jaiprakash Associates Limited

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Features: Foreign Tourist Arrivals Ministry of Tourism compiles monthly estimates of Foreign Tourist Arrivals (FTAs) in India and Foreign Exchange Earnings (FEE) from tourism on the basis of data received from major airports. Following are the important highlights, as regards these two important indicators of tourism sector for 2010 and December 2010.
y

FTAs in India during 2010 were 5.58 million with a growth rate of 9.3 per cent as compared to the FTAs of 5.11 million during 2009. FTAs during the December 2010 was 6,55,000 as compared to FTAs of 6,46,000 in December 2009 and 5,34,000 in December 2008. FEE from tourism during 2010 were US$ 14,193 million as compared to US$ 11.39 billion during 2009 and US$ 11.74 billion during 2008. The growth rate in FEE in US$ terms during 2010 was 24.6 per cent. FEE from tourism during the month of December during 2010 were US$ 1.55 billion.

Government Initiatives/policy According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of India, the government has allowed 100 per cent foreign investment under the automatic route in the hotel and tourism related industry. The terms hotel includes restaurants, beach resorts and other tourism complexes providing accommodation and /or catering and food facilities to tourists. The term tourism related industry includes:
y y y y

Travel agencies, tour operating agencies and tourist transport operating agencies Units providing facilities for cultural, adventure and wildlife experience to tourists Surface, air and water transport facilities for tourists Convention/seminar units and organisations

The tourism master plan, the first for Karnataka, envisages initiatives to attract private investment ranging from US$ 2.2 billion to US$ 4.4 billion in the next three to five years.

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The plan is prepared based on the Vision 2020 document prepared and adopted by the Karnataka State Planning Board. The state government aims to generate 200,000 jobs in the tourism sector in the next five years. The master plan is aimed at making Karnataka the number one destination for tourism in the country by 2020, according to Mr G Janardhan Reddy, Minister for Tourism and Infrastructure Development 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. The Ministry of Tourism has sanctioned 781 projects in 34 States/ Union Territories (UTs) in the country amounting to US$ 511.82 million during the last three years up to June 2010, as per a press release dated October 18, 2010.

Tourism and hospitality The Ministry of Tourism has won a PATA Grand Award and two PATA Gold Awards during the Pacific Asia Travel Association (PATA) Travel Mart 2010 in Macau. The PATA Grand Award was given under the Heritage category for the Rural Tourism Project at Hodka village in Kutch District of Gujarat. Medical Tourism As per a market research report Booming Medical Tourism in India by RNCOS, Indias 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 20112013. 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. Factors such as, low cost, scale and range of treatments provided by India differentiate it from other medical tourism destinations. The growth in Indias medical tourism market will be a boon for several associated industries, including hospital industry, medical equipments

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industry and pharmaceutical industry. 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. Recently, the Union Ministry of Tourism has included Medical Tourism under the Marketing Development Assistance (MDA) Scheme. The Ministry of Tourism has sanctioned US$ 27,400 as MDA to 10 Medical Tourism Service Providers during 2010. Hospitality The current count of hotel rooms is 130,000, and the country is expected to require an additional 50,000 rooms over the next two to three years, according to World Travel and Tourism Committee (WTCC) estimates
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US-based hotel chain, Marriott International, plans to expand its network in India to 100 hotels over the next five-years, stated Arnie Sorenson, Chief Operating Officer, Marriott International. At present, the group operates 11 properties across the country. Roots Corporation, a subsidiary of Indian Hotels Company (IHC), plans to open 60 to 70 budget hotels, known as Ginger Hotel, in 23 locations across the country. ITC, the Kolkata-based cigarette major, also projected its plan to open 25 new hotels under the Fortune brand over the course of next 12-18 months (or by 2011).

The Road Ahead The Indian hospitality sector is certainly the most apt replication of the belief 'Atithi devo bhava'- touch of tenderness, a helping hand and a welcoming visage. According to the Tourism Satellite Accounting (TSA) research, released by World Travel

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and Tourism Council (WTTC) and its strategic partner Oxford Economics in March 2010:
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The contribution of travel and tourism to Gross Domestic Product (GDP) is expected to increase from 8.6 per cent (US$ 117.9 billion) in 2010 to 9.0 per cent (US$ 330.1 billion) by 2020. Export earnings from international visitors and tourism goods are expected to increase from US$ 11.1 billion in 2010 to US$ 33.6 billion in 2020. Travel and tourism investment is estimated at US$ 34.7 billion or 7.2 per cent of total investment in 2010. By 2020, this should reach US$ 109.3 billion or 7.7 per cent of total investment.

Ministry of Tourism aims to create a comprehensive and coordinated framework for promoting golf tourism in India, capitalising on the existing work that is being carried out, and building upon the strength of Indias position as the fastest growing free market economy.

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ONE GLOBAL FIRM By Vrishti Chatrath (SerialNo. 46)
COMPANY PROFILE:TAJ GROUP OF HOTELS

A. TAJ History The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectively known as Taj Hotels Resorts and Palaces and is recognised as one of Asia's largest and finest hotel company. Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the company opened its first property, The Taj Mahal Palace Hotel, Bombay in 1903. The Taj, a symbol of Indian hospitality, completed its centenary year in 2003. Taj Hotels Resorts and Palaces comprises 66 hotels in 42 locations across India with an additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the Middle East. Spanning the length and breadth of the country, gracing important industrial towns and cities, beaches, hill stations, historical and pilgrim centres and wildlife destinations, each Taj hotel offers the luxury of service, the apogee of Indian hospitality, vantage locations, modern amenities and business facilities. The Taj Mahal Palace and Tower, built in 1903, stands on the shores of the Arabian Sea, a resplendent tribute to the vision of Jamsetji N Tata, founder of the Tata group, who wished to build the finest hotel that India had ever seen.

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With a tradition of commitment to excellence, personal attention and guest delight, the Taj brand succeeds in making guests feel completely at home. There is a strong focus on exceeding customer expectations, reinventing service concepts and upgrading physical products. By benchmarking itself constantly against the best in its class, this brand, the oldest in the Tata group, has built a solid reputation in the hospitality industry. With a total of 57 properties in 40 locations across India and 18 international hotels, the Taj family of hotels encompasses iconic city hotels, grand palaces, modern business hotels, beach resorts and rustic safari lodges. Taj Hotels is justifiably proud to belong to the Tata group, an association that automatically elicits trust and esteem from its customers and stakeholders. The brand is a crowning achievement in the Tata groups array of brands. B. Product profile Market Analysis Taj Hotels, Resorts and Palaces covers a wider market in the hotel industry than the other luxury hotels in the race. They have a better product profile than the rest: i.e. They have great management, hospitality and facilities provided by them to their customers. Some of them are:
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Launch of Knowledge Management Site Systems and Technology Electronic Signage Guest Wireless Internet access In Room Guest Entertainment Systems The Taj Contact Centre Project Orion, the Integrated Back Office System Self service Kiosks Taj Website Outlook Global Reach and 24 x 7 x 365 Access for our customers across the world

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C. Client Profile Taj Hotels have a client profile consultation service provided wherein they diagnose the clientele needs and thus, with that information they try and provide the required facilities to their customers. Generally, Taj concentrates on the Upper class of the society who can spend lavishly on the luxury provided. D. Vision The Taj Group of Hotels commits itself to the overall improvement of the ecological environment, which we are all a part of. We recognize that we are not owners but caretakers of the Planet and owe it to our children and future generations of humankind. It is our endeavor not only to conserve and protect but also to renew and regenerate the environment in which we live and operate. Our commitment encompasses all actions related to our products, services, associates, partners, vendors and communities.We will partner and engage with our environment through EARTH: Environmental Awareness and Renewal at Taj Hotels. For us EARTH is not a program, nor a process; it is a way of life.

EARTH Taj Hotels Resorts and Palaces presents EARTH ~ Environment Awareness & Renewal at Taj Hotels gets Green Globe Certification ~ In an endeavour to reinstate its vision and efforts to boost sustainable tourism and integrate environment management in all business areas, Taj Hotels Resorts and Palaces presents EARTH (Environment Awareness & Renewal at Taj Hotels), a project which reiterates the conscious effort of one of Asias largest and finest group of hotels to commit to energy conservation and environmental management. EARTH has received certification from Green Globe, the only worldwide environmental certification program for travel and tourism.

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E. Taj Values

PEOPLE DIVERSITY, INTEGRITY & RESPECT PASSION EXCEED INNOVATION SENSE OF URGENCY & FOR EXCELLENCE EXPECTATIONS

ACCOUNTABILITY SOCIAL JOY AT WORK People are our greatest asset and the key to our success. RESPONSIBILITY

We respect diversity of people, ideas, cultures and honor the value of individuals in a team.

Taj Promises At the Taj Group, our commitment to service excellence is rooted in our two guiding principles called the Four Steps of Service and the Taj People Philosophy. One of our key priorities is to empower our people to deliver on our legacy of impeccable service. Four Steps of Service: 1. A warm and sincere welcome. Use the guest name, whenever possible. 2. Fulfill guest needs and provide anticipatory service. 3. Defect free products and services.

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Fond farewell using the guest name, whenever possible F. Taj People Philosophy

STRY

The Taj People Philosophy displays our commitment to and belief in our people. We see Talent Management as the most important sustainable competitive advantage in the future. Ratan Tata (Chai man)

Raymond Bickson (C & MD)

Anil Goel (Executive dir.Finance)

Abhijeet mukherji

(Executive dir.hotel operations)

Ajoy mis a(Sal s & mark ting)

Prakah Shukla(Tech nology & chief info officer)

Sumit guha(Develo pment & projects)

Sankar parmeswara m(legal & company secretary)

HN Srinivas(H uman resource)

J. Present market share

Market Share(Approx)
0.6 1.1

0.5 2.5

Taj Hotels
Oberoi Hotels ITC Welcomgroup

1.7

Hotel eela Others

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Update on Key Initiatives

Growth

In the coming years, IHCL will see growth through the addition of 80 Luxury Residences at the Taj Wellington Mews, Mumbai, as well as rooms added at Taj Lands End, Mumbai and Taj West End, Bangalore. The Taj Lands End is a hotel built with a capacity of 500 rooms with an additional 50,000 sq. ft. approximately that is yet to be built. We will aim to reach this capacity over the next two years, which will include adding rooms and developing highend offices or retail space created in the new 50, 000 sq. ft. block. Taj West End will have approximately 175 rooms added to it over the next two years. IHCL continues to pursue management contracts in India as well as in South and South East Asia. Associate companies viz. Taj GVK Hotels & Resorts Limited and Oriental Hotels Limited are also in the process of setting up properties in Chandigarh and Bangalore respectively, which would add to the properties under the Taj group. IHCL has secured two management contracts for a high end luxury resort and an upmarket resort in Kovalam, Kerala. Both the hotels are under construction and will open in the current financial year.

Spas IHCL successfully launched the Taj Spa in the Taj Mahal Palace, Mumbai and is in the process of launching Spas in a number of hotels. They will be the first and one of a kind Indian Spa. Spas are being planned in Taj Wellington Mews, Mumbai and Taj Lands End, Mumbai.

Ginger Hotels IHCL is in the process of rolling out its Smart Basics hotels, under the brand name Ginger. These hotels will cater to the economy or value for money segment and being predominantly domestic clientele based, are far less prone to fluctuations than the luxury and upscale segments.

Brand Architecture IHCL is in the process of clearly defining the product and service standards in order to have

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consistency across properties under each brand. This will help in further enhancing the brand value of Taj. Product Upgradation IHCL continues to invest in renovation and relaunch of key / brand defining properties. The rooms at Taj President, Mumbai, Taj Residency, Bangalore, Jai Mahal Palace, Jaipur and Taj Holiday Village, Goa are being renovated and relaunched.

Service Excellence In the last few years IHCL has undertaken a number of steps to significantly enhance service levels to be in line with the best in class. IHCL has constantly benchmarked itself with the key international luxury chains and strived to raise the bar. IHCLs service excellence philosophy, has at its core, delivery through our people, processes and culture.

Tata Business Excellence Model (TBEM) In order to intensify the drive for Business Excellence, IHCL conducted Internal Assessments based on the Tata Business Excellence Model for Luxury, Leisure, Business SBUs as well as for Taj SATS Air Catering Limited. The Luxury Division has also applied for External Assessment, which is to be facilitated by Tata Quality Management Services. Some of the key initiatives deployed across key hotels of the Taj group in the year 2003-04 are:

Raising the bar in terms of product & service quality Introduction of international best practices Rollout of the Customer Feedback System (CFS Reinforcement of the use of the Balanced Scorecard Corporate Restructuring TO IT initiatives

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ONE INDIAN FIRM

By Abhinav Dhingra (Serial No. 47)

Overview: Founded in 1957 by Capt. C.P. Krishnan Nair, the Rs.450 crore Leela Group is engaged in the business of ready-made garments and luxury hotels and resorts. Background: Behind every institution lies the vision of an individual. In Capt. Nairs case, this vision has flowered, given his unshakeable belief in Indias ability to compete with the best in the world as an equal. This belief, forged to a large extent during Capt. Nairs early years as a freedom fighter in Indias fight for Independence, finds expression in each of the groups endeavors. Leela Lace Ltd. It was in 1957 when Capt. Nair, after completing his stint in the army, set up a small industrial unit in suburban Mumbai. Inspired by the handloom weaving industry in Cannanore, Kerala, this was the Leela Scottish Lace Ltd., Indias first and only lace manufacturing plant. With a commitment to excellence and innovation, Leela Lace Ltd. grew from a small beginning to become the first company to introduce the Bleeding Madras fabric and other handlooms such as Cheese Cloth and gauze fabric to the fasion capitals of the west, specifically the USA. Their runaway success was reflected in the magic words Guaranteed to bleed, which became the key to the popularity of Indias textile export.

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In the early 70s, the company launched its ready-made garments unit and is today, Indias premier export house. Since the 80s, the client list of Leela Lace reads like the veritable whos who of the American fashion industry : The Gap, Liz Claiborne, Polo Jeans, Tommy Hilfiger, JC Penney, Macys, Van Heusen, Walmart….. It is Leela Lace Ltd., the parent company, which is the promoter of Hotel Leelaventure Ltd.

About The Leela Palaces, Hotels & Resorts

Hotel Leelaventure Ltd. operates The Leela Palaces, Hotels & Resorts in New Delhi, Mumbai, Bangalore, Gurgaon - Delhi N.C.R., Udaipur, Goa and Kovalam. Located in key business and leisure destinations, and charting a pan India presence in the near future, The Leela Palaces, Hotels & Resorts are a blend of aesthetic sensibility, modern amenities and truly reflect the essence of India. New hotels will soon open in Chennai in 2011, and subsequently in Agra, Hyderabad and Lake Ashtamudi in Kerala. The group has marketing alliances with Germany based Kempinski (Hoteliers since 1897); US based Preferred Hotel Group and are members of Global Hotel Alliance based in Geneva, Switzerland The Leela Palaces and Resorts, four of India's finest deluxe hotels, hallmark the essence of India in Mumbai, Goa, Bangalore and Kovalam. The Group has established a global leadership position in the 5-star luxury hotel and resort industry for the world's most discerning business and leisure travelers. The proximity to International airports and central business districts, strategic location, individuality, architectural aesthetics, lush greens and the intrinsic Indian culture and heritage distinguishes the group from the rest. The Leela is committed to striving for excellence and exceeding expectations based on the ancient Indian philosophy that the 'Guest is God' Kempinski hotels and The Leela Palaces & Resorts have extended their partnership in India. In addition to The Leela Kempinski hotels in Mumbai, Bangalore, Kovalam and Goa, five new hotels in Gurgaon Delhi, Udaipur, Chennai, Hyderabad and Pune will be included in the agreement in the next four years. The year 2008 will see the launch of at least two more business hotels, one in Chennai on the Marina beachfront and the second in Hyderabad which will set new benchmarks for luxury in this city of Charminars and biryanis. The Indian

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hospitality industry is experiencing a boom and most international brands are constantly looking for entry opportunities in this market especially with inbound and outbound travel soaring from India. The five new hotels and the expansion of The Leela Palace Kempinski in Bangalore will see addition of 1600 rooms to the group inventory of 1006 rooms now. MISSION STATEMENT: Hoteliering has gone beyond the status of an industry. It is today an art form. It starts with innovation, continues the search for excellence, and finally celebrates perfection. These are precisely the three pillars on which The Leela Group has built its reputation.
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Innovation Excellence Perfection

They also represent the three faces of modern India. The India which dares to take on the world with its world-class technology, its great tradition ' enriched over the centuries and its obsessive desire to be hospitable to travelers from all over the world. But beyond all this is the simple fact: We love and enjoy people. It is this that has made us what we are. It is this that must inspire us in the years to come.

THE LEELA KEMPINSKI MUMBAI The Essence of India Set amidst 11 acres of lush landscaped gardens, cascading waterfalls, lotus pools and fountains, The Leela Kempinski, Mumbai is a 5minute drive from the international airport and 15 minutes from the domestic airport. Located in close proximity to North Mumbais commercial center and export, it is an oasis of tranquility amidst a concrete jungle. Its never too easy to stay in the hospitality industry especially with younger competitors showing plenty of enterprise in the market. But The Leela Kempinski Mumbai continues to reinvent itself with fresh ideas, even better standards and a world-class product.

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STRY

The Leela Kempinski Mumbai closed as one of the top two hotels in North Mumbai in Revpar, says Indrajeet Banerjee, Head-Sales and Marketing, The Leela Kempinski Mumbai. Typical of The Leela, the new Royal Club rooms will Under promise and overdeliver, increasing the expectation level of the guests. The strong customer response and buoyancy in the travel economy has prompted the hotel to look at healthy growth in revenues.

HOTEL FACILITIES AND SERVICES

423 elegantly furnished deluxe rooms & suites Large business desk in all rooms Electronic safe in all rooms 2 Line telephones in all rooms 3"' phone in all the bathrooms 100 channel cable TV Fully stocked mini-bar Broadband high-speed internet access Business Centre

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Concierge Services 24 hr In-Room dining Laundry & Dry cleaning Daily City Coach Board rooms & Meeting rooms Beauty Parlor Health Club & Fitness Massage Service Outdoor Swimming pool & S uash Court

STRY

DINING & ENTERTAINMENT Citrus - All-day Dining Restaurant The Great Wall- Chinese Cuisine Fiorella - Italian Cuisine (Under Renovation from 1st March Dec 2005 ) The Lobby Lounge Six Degrees - The Cosmopolitan Bar Zaha - Lounge bar / Night club OTHER FACILITIES Shopping Arcade Parking for 150 cars Limousine and Car Hire Services Foreign Exchange Services

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Travel Agency Pastry Shop Art Gallery Concierge Post and Parcel Services Same day Laundry Services Baby Sitting Florist

STRY

Restaurant

Deluxe suite

Ball room

SERV CES 24 hour Services :

Business Centre Concierge Services Doctor on call Duty Manager In-Room Dining Laundry and Pressing

PROCEDURE

The hotel LEELA has its own procedure for running the management of the hotels they are somehow same to common procedures of all other hotels. The first thing is to appoint work force according to their respective ualified degrees re uired which is divide into d

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operational n administrative workforce. The administrative workforce is the one wherein they handle back office work to finance dept looks after the records n accounts n other expenses right from the beginning of their business n operational workforce includes waiters , security guards, supervisors, managers, laundry men, etc. which takes care of customer priority. When a customer checks in irrespective of nationality they have to fill the check in form then the details of the customers is to be recorded in the register form which includes all imp details names, permanent address, their visa validity n passports if foreigner. After checking n verifying all the necessary details the rooms are allotted according to their willingness. In Leelas, the amount which the customer pays for their stay 80% of the amount amenities are provided to them. special treatment is provided to VIP's n sole care, attention n security is given. Special concessions are given to customer who visit often. Proper services are provided to customers according to their needs. STANDARD The Leela Kempinski is today known as one of the best five stars hotels in Mumbai. Foreigners usually prefer to stay in this deluxe hotel. Therefore, it needs to maintain its own standard and reputation in order to be a part of customers best choice and also to achieve their own level of expectation. In order to maintain this they have taken many standardized policies and step. For a start to make back up plans in case something goes wrong. There are workers training program which trains them to be one the best service provider. They also look upon the various customers problem and take a keen interest to solve as their one policy is GUEST ARE GODS! Also to achieve their level of expectation they try to maintain their all departments connected to each as their prime motto is customers satisfaction. All the heads of the various departments are ordered to maintain a grade in their respective field. Observation, analysis, and adjustments are also frequency used by the hotel managers in order to provide a better standard. Proper time management is today where The Leela have really gone through. Their main priority is TIME IS WORK. For example: 1) Time management between workers is very important.

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2) Service to the customers is provided on proper time. Standard is also maintained by the reinforcement of the work force. This helps them to be flexible in their field and also in the respective departments. Changeability in their various policies from time to time helps them to improve at every step. This also leads them to be a better in respect of customer satisfaction. BUDGET A budget is a plan for income or outgo, or both, of money, personnel, purchased items, sales items, or any other entity about which the manager determining the future course of action will assist in managerial efforts. The Leela, being a huge organization budget is to be carefully set up and analyzed properly by the finance department. There are different departments in the Leela as every other company such as Human Resource, Hygiene, Food and Beverages, Health, Engineering, Security, etc. Every department is supposed to prepare and submit their respective budgets. Later, a meeting is summoned and accordingly, it sets up the budget annually taking into consideration the budget submitted by various departments. Budget also includes salaries and other expenses for the services provided by the operational and administrative workers. If additional manpower is required, then all the related expenses are to be adjusted within the parameters of the budget. Eg 1) The Leela sets up an annual budget of Rs100crores and if only 80crores is used then they are accountable to the finance department. Similarly, if excess amount is used they are liable to answer. 2) If 80crores are earned in 365 days it is divided by the number of rooms and the average by it is the average room realization (ARR) of the hotel. When foreigners check in, it is obvious that they wont have Indian currency. So the finance department needs to have clearance from the Reserve Bank of India (RBI). As stated above, budget also includes the incomes or the revenues collected by the company for the services rendered. In order to accomplish the task they generally collect the revenues in two forms:

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a) 80% of the revenue is collected by the way of charging the customers for the rooms allotted to them. b) 20% by the way of other facilities provided to the customers. This year too, The Leela Kempinski, Mumbai, is doing well. And their profits tell it all. Revenues are up 42% and average room realization (ARR) has grown by 26%. Thus, The Leela Kempinski, Mumbai continues to benchmark itself against the best in the international market. As a part of this strategy, it has rolled out an Rs.104crore product enhancement plan which is nearing completion. Product Enhancement For the first time your company has entered in to a management contract to operate a hotel. The Leela, Gurgaon, owned by Ambiance Hotels & Resorts Limited and managed by our company under 'The Leela' brand, formally commenced business operations from April 2009. The business at this property with 319 guest rooms and 90 service apartments, in first year of operation, has been very successful and has secured 'Brand Leela' presence in North India. Our company earned fees of Rs. 11.84 crores in the year for managing the hotel. The Leela Palace Udaipur with its breathtaking architecture and opulence started operation in stages in this fiscal year. It has 80 rooms and spa managed by ESPA. Although business has taken time to pick up in the first year of operation but the hotel has received excellent feedback and accolades from both trade analysts and discerning international travelers.

Marketing Alliances The Company has marketing alliances with Germany based Kempinski Group of Hotels (Hoteliers since 1897) and US based Preferred Hotel Group and is a member of Global Hotel Alliance based in Geneva, Switzerland. Under the alliance with Kempinski, the Company has been receiving, among others, international marketing services for the existing hotels, technical and pre-opening services for the proposed hotels in New Delhi and Chennai as well as other hotels that the Company would operate in the future, purchasing services, services related to IT and management information systems used in our hotels, as well as personnel and operational support. This alliances with Preferred Hotel Group and Global Hotel Alliance, amongst others, derives benefits for the Company of Preferred Hotels and Resorts branding, greater recognition of brand in the USA as premium and luxury hotels, opportunity to leverage additional 29 Global

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Sales Offices in the USA, Singapore, Hong Kong, Japan and Australia; preferred relationship with four of the largest consortia American Express, CWT, BCD and Hogg Robinson, and also lower commission on receipts through American Express Credit Card, which results in substantial savings; opportunities to participate in many more road shows in our main source markets. The alliances assist the Company to acquire more international business and enhances our competitive positioning in the market. Towards maintaining world-class standards, the Company has engaged ESPA of London, one of the leading Spa management companies in the world, to manage the Company's Spas at Mumbai, Goa, Udaipur, and Delhi.

Expansion / Up-gradation Plans India is one of the fastest growing tourist markets in the world owing to its splendid historical architecture, rich heritage and ancient culture along with beautiful beaches and rural tourism, and the inherently rooted concept of hospitality in form of tithi Devo bhava. In India, the tourism industry is bound to grow stronger post the present recessionary trend. At present, your Company operates six hotels at the locations viz. Mumbai, Bangalore, Goa, Kovalam, Udaipur and Gurgaon comprising 1523 guest rooms and 90 serviced apartments.

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Review of Operations The overall performance of the Company has declined during the year under review in line with the overall global economic slowdown. The total income stood at Rs. 463.02 crores (including income from discount on redemption of Bonds of Rs. 0.65Crores) compared to Rs. 582.16 crores in the previous year. The revenues of the Company from its various units are summarized as under:

The Average Room Rates in the city of Bangalore decreased by 32% and in Mumbai by 25% during the year. Overall ARR of the company for 2009-10, decreased by 20% as compared to 2008-09. However, as in the past, this year also, the Company maintained its market dominance in terms of revenue, ARR and Occupancy in Bangalore, Goa and Kovalam.

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