A

Proposal of Project Report

On
India a new emerging global
market for Hospitality and Tourism.
Submitted by:
Sujay Shah (57)
MBA IV-sem

Submitted to:
Dr. Bhargav Pandya
Assistant professor, Faculty of Management Studies,
M.S. University,
Vadodara
Year:
2014-16

1.

Introduction:

The hospitality industry is a service-oriented industry. Service products vary

from one experience to the next, from customer to customer, as well as for
the same customer from one occasion to the next.
The hospitality industry is extremely sensitive to economic cycles. Tourism is
travel for pleasure; also the theory and practice of touring, the business of
attracting, accommodating, and entertaining tourists, and the business of
operating tours.
Asia is anticipated to account for more than 41.0% of the worldwide growth
in outbound travel and tourism for the next decade.
Within the BRIC countries (Brazil, Russia, India and China), a middle class
that is eager and able to travel is developing. According to a recent
Bloomberg survey, China, Brazil and India are preferred places to invest
globally. The projections by Goldman Sachs that as many as 2bn people may
join the middle class by 2030, and that the BRIC and N11 economies may
represent as much as 60% of the worlds GDP by 2050, suggest that there
are significant opportunities for expansion.
India and China, fuelled by the economic strength , their respective middle
classes are expanding and increasing the amount of disposable income they
have available for international travel. The greatest future potential in these
markets will lie in developing mid-market and economy-branded products
aimed at the domestic travellers. India has over 563 million domestic
travellers, inbound arrivals of 5 millions.
Today, hospitality and tourism is a major source of income for many
countries, and affects the economy of both the source and host countries, in
some cases being of vital importance.

2. Literature Review

The history of the hotel industry is as old as the history of tourism and
travel industry. In fact, both are two sides of the same coin. Both are
complementary to each other. Hotel is an establishment which provides
food, shelter and other amenities for comfort and convenience of the
visitors with a view to make profit (Chakravarti, B.K). The concept of
travel and halting facilities is quite old in India. In ancient times, people
used to travel for pilgrimage or business purposes. For ages, India has
been known for its hospitality. Endowed with rich historic heritage, cultural
diversity, natural resources and geographical advantage, India remained a
big attraction for foreigners. In ancient times, the need of travellers for
food and accommodation was met mainly by hospitable householders
which are still in existence in interior areas of the country. Domestic
tourists were looked after by the pandas or priests. They used to
accommodate their clients in dharamshalas or in their own houses at
places of pilgrimage like Banaras, Haridwar, Puri and Mathura etc. In
general, the attitude of the ancient Indians towards visitors was
influenced by the 'Atithi Devo Bhavah'. It means guest is like God and
should be treated accordingly (R.N. Kaul, 1985).
After this, the British came to India and Sarais took the form of western style
hotels in the important cities of India like Mumbai and Kolkata. During this
period, on one hand, we find western style hotels for foreigners and on the
other, Indian style hotels for the people belonging to upper and middle class
income groups. The old type dharamshalas were still having their importance
to serve the needs and requirements of the poor classes (Negi
Jagmohan,2008).In the nineteenth century, western style residential hotels
were developed in India by British and Swiss families mainly for their own
use or for foreign visitors. Mr. Pallonjee Pestonjee is called as the pioneer of
the western style hotel in India who opened the first western style hotel
under the name of British Hotel in Mumbai in 1840. By the end of the
nineteenth century, many western style hotels were established in India.
These hotels were very much popular for their efficient management,
unsurpassed cuisine and the excellence of beers and wines. The twentieth
century may be called as the beginning of star hotels in India. In this century,
big and modern hotels came into existence on account of the advent of big
businessmen and new entrepreneurs (Negi Jagmohan).

Ernst & Young survey revealed likely targets for hospitality investment in
2008. Emerging markets in Asia are unseating Europe as the epicenter of
new hospitality investment and development while investors in the United
States are switching their focus from the acquisition of existing hotels to
developing new properties. According to the Ernst & Young Hospitality
Investment Survey, which surveyed more than 300 investors and industry
executives worldwide, capitalization rates for hotel properties are expected
to stabilize and possibly even increase over the short-to-mid-term in the US.
Even with the dramatic shift in the debt markets over the last few months,
hotel industry sector fundamentals continue to be strong. (Brian Tress of
Ernst & Young's Hospitality Advisory Services Group)
With regard to tourism Indian government has made clear that its objective
is to harness the tourism industry as an engine of economic growth and reap
its direct and multiplier benefits of creating employment and decreasing
poverty in a sustainable manner. In an effort the boost tourism the
government has sought to liberalise the aviation sector, rationalise tax rates
in the hospitality sector, ensure tourist-friendly immigration and visa services
and facilitate in making land available for the construction of hotels. The
reason why the government is taking the hospitality industry seriously is as it
expects the industry to earn US$24billion in annual foreign exchange by
2015 (Asiamoney, 2007).
According to Ministry of Tourism, an investment of Rupees one million in the
hotel and restaurant sector may create 89 jobs as against 44 jobs in
agriculture sector and 12.5 jobs in the manufacturing sector. Investment
required to create one job in manufacturing sector is around Rs.79,000
whereas in hospitality industry it is only Rs.11,200. At present about 20
million persons are directly or indirectly employed in tourism related industry
and this figure is likely to increase to 40 million by 2020. It amply proves the
job potential of hospitality industry in India.
It is very evident from the literature review that hospitality industry in India is
growing very fast. Present study is an attempt to take an overview of Hospitality
Industry in India as a key emerging market for World Hospitality. This study is also
an attempt to present some suggestions to hospitality players to maximise their
performance in India.

3.

Needs of Hospitality and Tourism:

Tourism is also one of the very important factors as a source of income for
countries. Due to its
moving nature tourism industry is one of the best dynamic industry to be invested
so it can be
considered as the growth industry because it is providing the growth opportunities
in terms of

employment and business. Therefore, Tourism is a global force for any economic or
regional
developments.
Development in this field brings with it a mix kind of benefits along with the costs
with the
growing field of tourism. Here, economics is also making a very important
contribution to the
tourism policy along with plannings for a various business and practices.
Another industry called as hospitality industry of India is also a one of the fastest
growing
industries. The duration of between 20092010 had increased the Indian tourism
and hospitality
industry and experienced a growth of 24.6% . So the industry became the
thirdlargest
foreign exchange earner, accounting for 6.2% of Indias GDP and 8.8% of total
employment as the
report by the Planning Commission. between the year of 20082009.
Indian economy had faced the recession period for a short duration, but growth is
now going up in the graphs according to recently available data(Rivera,2008).
According to the national report we find that hotel and hospitality industry combine
contributes in 6.4% towards the GDP of India. According to the estimate it is
expected that hospitality industry
grown from 16.7 Billion US Dollar to 30.7 Billion Us Dollar in between the durations
of 2008 to
2013 which is going to be 26% of CAGR, B. (2009).
The hotel industry of India have various categories according to which hotels can be
categorised as Star Category Hotels, Heritage Hotels and Large number of
Uncategorised
Hotels.
Star hotels can also be further categorised on the basis of stars that is from one to
five.
according to the survey reports and countings 165 five star hotels are present all
over the
country out of total 2195 star category hotels. Another wide category is called as
Heritage hotel,
some 70 heritage hotels are present in India till yet and more than 7000 hotels
come under
uncategorised hotel in India. In which 30% of the Hotels are actually included in the
organised
sector and some around 200000 people are working in such hotels. Therefore there
are so
many opportunities are present in this industry as well.

4. Objectives of the Study:

o To take an overview of Indian Hospitality and Tourism Industry.

o Impact if Tourism sector on GDP and Employment.

o To enlist the strategies taken by International Brands to show presence
in Indian Hospitality Market and increase their market share.
o To suggest measures to succeed in Indian Hospitality and Tourism
Industry.

5. Research Methodology :
Secondary data:
Various journals, research articles, internet, e-books, reports published by
various Research Agencies, etc. will be used for this study.
Primary Data:
Online Surveys from hotel managers and tourist agencies will be done.
Personal interviews from tourist guides will also consider.
6. Target poplation
Hotel Managers and Tourist Guides and Agencies.

7. Sample Size
100
8. Type of Research
Exploratory
9. Type of sampling
Snowball Sampling