Indian Tourism Industry-Overview

domestic tourist visits(2010) 1.Andhra Pradesh(155.7mn) 2.Uttar Pradesh (144.75 mn) 3.Tamil Nadu(111.64 mn) 4.Maharashtra (48.46 mn) 5.Karnataka (38.20 mn)

foreign tourist Visits(2010) 1.Maharashtra (5.08 mn) 2. Tamil Nadu (2.80 mn) 3.Delhi (1.89 mn) 4.Uttar Pradesh (1.67 mn) 5.Rajasthan (1.28 mn)

Source: Ministry of Tourism, India

Indian Tourism Industry

The travel and tourism market in India reached US$ 91.7 billion in 2009, growing at a compounded annual growth rate (CAGR) of 16.4% over the past five years The market is expected to touch approximately US$ 266.1 billion by 2019 on back of continued economic growth and India attractiveness in the global context

India is an inflexion point in the Hotel Industry, with buoyant demand, increasing occupancies and increasing pipeline of quality supply With supportive government initiatives to optimize land costs, the sector will see even greater momentum of investments.

Source: Ministry of Tourism, India

Sector Highlights
Continued domestic economic growth and investments in infrastructure i.e airports(world class in New Delhi, Mumbai, Bangalore, Hyderabad and many more following), roads, rail and air connectivity has enhanced demand for organised hospitality and hotel rooms The current count of hotel rooms is 130,000, and the country is expected to require an additional 50,000 rooms(~USD 6-7 bn) over the next two to three years, according to World Travel and Tourism Committee (WTCC) estimates In recent times, the product mix is shifting as the country has witnessed huge growth in budget, midmarket hotels, premium hotels in larger cities and alternate forms all of which are increasingly targeted by organised hotel chains

Opportunities
The Ministry of Tourism estimates a shortage of 0.15 million hotel rooms, with two-thirds in the budget category

Shortage of hotel rooms

Global hotel chains including Hilton, Accor, Marriott International, Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI), Inter Continental Hotels and Hampshire have all announced major investment plans for the country

Potential of Business Travel

The share of convention or meetings tourism is miniscule in India in comparison to international standards, which accounts for over 20.0% of all international arrivals

Investment in smaller cities

Smaller destinations including Udaipur, Thiruvananthapuram, Bhubaneswar, Pune, Kochi and Chandigarh have shown potential for growth due to growing business and leisure travel Hospitality chains are expected to increase their presence in smaller towns

Opportunities
Hospitality chains are diversifying towards new product segments, including budget hotels and serviced apartments

Diversification

Indian Hotels has already launched budget hotels in India, while Accor has announced plans to introduce its budget hotel brand, Formule 1, in the country India is emerging as a preferred destination for medical treatment, with medical tourism expected to grow at 29.0% to reach US$ 2.4 billion by 2012 eco-tourism, wildlife tourism and adventure tourism are gaining popularity

Medical tourism and other niche segments Acquisitions, strategic alliances and partnerships

International hospitality chains are expected to acquire local players to increase their presence in the country Domestic and international players are expected to form strategic alliances and partnerships with regional players to expand in the country, reduce risk and optimize resources

Threats

Threats

Indian Tourism Industry

} Clientele:

Budget hotels
Foreign Tourists/ Leisure FIT, 7.7

Airline Crew, 1.1

Others, 27.9 Business TravellerForeign, 9.4

Business TravellerDomestic, 36.4

Domestic Tourists/ Leisure FIT, 17.5

Source: TFCI, IBEF

About Ginger
}

Ginger Hotels is a budget segment Hotel of the prestigious Tata Group Established under Indian Hotels Corporation limited, Ginger hotels introduced the concept of budget segment hotels in the Indian tourism sector for the first time Located primarily near IT parks, manufacturing hubs and religious locations catering to business travelers and Free Individual travelers (FITs) Ginger Hotels has a presence of 24 locations across India

Presence in India

Room Snapshot@ Ginger

Smart Basics
Simplicity & Convenience
Booking channels

Modernity & warmth

Product Design

Affordability
Transparent Pricing

Payment Gateways

Service Philosophy

Special offers

Smart Basics

Smart Basics

Current Situation
}

} }

} }

Increasing disposable income and an ever increasing middle class demands affordable pricing yet luxurious necessities People are willing to let go of luxulike Swimming Pool, Jacuzzi, spas and lounges But want necessities like air conditioners, ambient rooms, excellent food, Internet connectivity and a location which is not exotic but yet convenient. Credit card spending has not increased, but there is an increased usage of debit and ATM cards, Net banking and cash Cards for payments. People demand improved service in terms of booking, stay and staff interaction. Value for money concept has set in.

Objectives of growth
} }

Current focus for the company is 70% corporate and 30% FIT Scope of growth would focus on an increased FIT and lesser corporate to widen domestic reach in an economy with increased disposable income Initial strategy faltered on creating the right Brand Image in the consumer mind. New strategy has to aim at tapping alternate market segments: newer segments of travelers and an improved marketing strategy to create the right Brand Image in the consumer mind Objective is to achieve increased market share in a completely new market where there are very few competitors Ginger Hotels has a first mover advantage and should try to leverage on the same

Competitors- Budget Hotels

Hotel Group
Hotel Chain

Tata - IHL
Ginger

Sarovar
Hometel

Lemon Tree
Red Fox 800-3,000, at 20 per cent of whatever is the five-star pricing in that market 2008

ITC
Fortune Hotels 1000-6000 (varying acc. to locations Gurgaon is Rs.10000) 1995

Rate/ Single room Year of Launch Approx. No of rooms/ hotel Approx. cost of construction

999 2004

2000-4000 2006

100

100

150

var

12 crores

15-20 crore

50 crore

var

Competitors- Budget Hotels

Hotel Chain Ginger Hometel Red Fox Fortune Hotels
Chennai, Gurgaon, Indore, Ahm'bad, Trivandrum, Jamshedpur, Vapi, Calicut, Vijayawada, Ludhiana Kolkata, Cochin, Lavasa (near Pune), Siguri, Mumbai, Chennai, Bangalore

Location

Bangalore, Bhubaneswar, Durgapur, Haridwar, Mysore, Pune and Thiruvanantha puram Pondicherry, Nashik, Varanasi, Agartala, Baroda, Panaji and Tirupur

Bangalore Gurgaon, Hyderaba d, Jaipur, Mumbai, Pune and Baddi.

Hyderabad, Jaipur, Mumbai

Future Locations

33 cities

Competitors Major Budget Hotels

100 economy hotels being planned in next 3-5 years - Indian Hotels, Accor (Ibis), Marriott International (Courtyard) , Hilton, InterContinental Hotels (Holiday Inn Express), Starwood Hotels, Shangri-La Indian Railways wants to develop a chain of budget hotels - Public Private Partnership Red Fox properties in Pune , Jaipur atop shopping malls

SWOT Ginger
Strengths
Mother Brand name well established First Mover Advantage: Largest Locations than any existing player Excellent quality rooms at affordable rates Low employee-to-room ratio

Weakness
Brand Image not well understood Location not attractive to FIT Insufficient advertising spend and promotions

Opportunity
India preferred destination for travel Higher disposable income and changing Indian demographics Scope for tie-up with government agencies Development of Tier2 and Tier3 cities as manufacturing, IT hubs

Threats
Inflation pushing up land and employee cost Increased Competition from Domestic and International players

Problems
} Since

so many offers are available, people perceive Ginger to be a cheap hotel still thought of as a self service hotel which is untrue

} Ginger

} Locations

a put-off for Individual travelers since all locations not closer from railway station, airport or bus stands is still perceived as a business professionals hotel only

} It

Solutions

Ginger-STP
Segment

Lifestyle Behavior Age Group Income Level in Lakhs p.a.

Price Conscious

Quality Conscious

Image Conscious

Brand Conscious

15-25

25-35

35-45

>45

<5

5-10

>10

We intend to position Ginger hotels as Affordable Luxury for all

Nos. needed Tie-up with Low Cost Airlines

} }

} }

Professionals generally prefer low cost airlines like GoAir, Indigo, Spicejet, etc. Tie-up with some of these airlines and bundle the whole package Airlines would be offering 2 packages, one is just the ticket, and the other would be the ticket + ginger bundle Win-Win for all the three parties Advertisements in in-flight magazines

Advertising with Indian Railways

} Local
} }

Trains

Hoardings at major local and outstation stations Print ads on the train

Advertise on Indian Rail and IRCTC website } 4.5 Million Monthly Users collectively } Most professionals book tickets online } Also integrated travel plans including tickets and stay at Ginger

Tying up with travel agents

Tie-up with travel agents Provide them with higher margins Ensure they do bookings for Ginger Hotels

Online promotion on various social sites and other popular hits

Tie-ups with online travel agencies in order to display ads as other prominent hotels do Discounts on bookings made through credit/debit cards Banks could periodically send alerts regarding any schemes offered by the hotel

Food and culture festivals

PROPOSED STRATEGY To promote hotels, culture and food festivals can be organised State specific food, dance and handicraft festivals can be organised Festivals like Diwali and Christmas can also be celebrated in the hotels through events and gatherings This will encourage leisure travellers to stay at Ginger hotels

Differentiation of rooms
EXISTING STRATEGY The rooms are of same types No differentiation Most rooms are simplistic un-cluttered business class rooms Not appealing to the recreational traveler

PROPOSED STRATEGY Three types of rooms Standard business class rooms: with work area(70) Colorful and spacious rooms for the leisure traveler (20) Special rooms-with bunk beds for kids, rooms for the family of 4(10)

Pricing Strategy
Current pricing Proposed Pricing

Till 2009 Ginger had uniform and nominal pricing pan-India Since then there rooms have been priced based on their presence in a tier I/II city.

} Based

on the new rooms the pricing should be done , keeping in view the location of the hotel.

Existing Pricing

Increasing the levels of service

INSIGHT People in India feel the need to be pampered when they travel as guests They liked to be served by and respected by the staff EXISTING STRATEGY Serve yourself Smart basics PROPOSED STRATEGY Minimum staff should be kept for laundry, tour planning reception Also room service should be refined as lots of complains have been seen on hotel review websites

Taking over existing 1/2 Star hotels

} As

observed the only Ginger hotel having full occupancy 365 days a year is the Delhi hotel which is an IRCTC hotel near the Delhi Station
Proposed Strategy

Redevelop/takeover 1 or 2 star hotel near the Station at tourist or pilgrimage centers- Give them the Ginger brand Propose a revenue sharing model with owners(70-30 break up) In some locations leasing floors above popular malls can also be thought of(this reduces the Hotels burden for food-it can be sufficed by the malls-leading to savings )

Convert business travelers to leisure travelers

Current Accounts:
Ginger Accounts

Platinum (>1200 room nights)

Gold (300-1200 room nights)

National Priority (100-300 room nights)

Local Priority (business at single location)

Tata Account (other Tata companies)

Proposed Strategy

A frequent Business traveler can be given special discounts and spot offers to encourage his/her visiting the hotel as a leisure traveler A special loyalty card can be started which can have a points system which counts your business stays and you can redeem them with extensive discounts for family visits

New Segments
Tie-up with Wedding Portals

Tie up with wedding portals such as BharatMatrimony.com, shaadi.com and other regional wedding portals. Idea is to tap the lower middle income group segment that cannot afford a luxurious hotel, but would want basic hygiene and refreshing rooms. Have a special honeymoon suite in each of the hotel rooms, which is currently unavailable, to tap into this segment.

New Segments
Tie-up with colleges and schools

: This segment has high potential

If rates can be lowered to suit colleges and schools which have annual picnics during the monsoons which is a slack season anyways for tourism, then it could lead to great increase in the top line and bottom line.

Branding options at Ginger hotels

Hotel Space

Website/mailers

Sampling/Educating

Invoices

Brand Connect: Network with us and get connected to your customers Through such branding an income can be maintained throughout the year and drop in income during slack periods can be avoided

Branding at hotel spaces

Options :Tent Cards Brochures/Leaflets Floor Graphics Standees Kiosks Product Placement Product Distribution Your creative ideas Benefits :More time spent with the creative Captive Audience Uninterrupted communication Customer in relaxed frame of mind High engagement

Mailers/Website
Options : Through Mailers -2 lakh registered customer base -Discounts/offers Website - branding options - Promotions and discounts Benefits :More than 5000 visits/day Focused and filtered Target Group Cost Effective Transactions based website