Tarandeep Singh’s Blog

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HOSPINOMICS

Yes that’s the word I derived for understanding and addressing Hospitality Economics.
The world economy is seeing a downtrend and it’s just the beginning considering that we in India are yet to see the summers of 2009. But as I have maintained and I being the optimist, I am hopeful that the recession is going to be here but not more than 12 to 18 months.
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If you look into the past you will indeed realize that as hoteliers, we are the first one to enter recession and the last to come out of it. This means that our Hospinomics is kind of an indicator of the overall economy. The downturn starts and the first thing that companies look at are their travel and hotel budgets. So with the above trend and looking at 12-18 month scenario, 2010 is by far the time when we can start looking at recovery and I just hope it happens beginning Sept 2010 when we start preparing for the much awaited Commonwealth Games.
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But that’s about recovery, I am also certain that this is going to be the most severe of the recession and we are yet to gauge the coordinates of the losses – that could be in terms of unemployment levels, net worth loss or commercial losses. Let’s not discount the fact that Terror Attacks also had a role to play in this.
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I had a chance to chat up with Mr Vimal Singh, (he has spent a good part of his years in the US and India and was the one who brought Holiday Inn in India) Managing Director for Golden Tulip Hotels in India and he had an interesting observation. All economic cycles have a recession, followed by a recovery that is followed by a rebound. And when these cycles rebound they are in fact bound to cross the capital point that they marked in their last cycle. Second, such cycles are accompanied by a period of unreasonable consumer, investor and manager pessimism. This is followed by a period of relative confidence, that is followed by a period of reasonable (hopefully not, unreasonable) joyously unrestrained & enthusiastic (exuberant) confidence.
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We are in the first phase of those cycles. How long we will be in them depends on Obama’s and Manmohan’s (O&M Factor) success of their governments’ monetary and fiscal policies plus credit market restructuring (And yes the entire world economies will definitely have their roles to play as well). However, inevitably, the other phases of both cycles will occur.
In the background are several secular inevitable economic trends. First, BRIC (Brazil, Russia, China and India) economies must eventually grow. They are driven by population dynamics (generally more youthful and larger populations than the rest of the world) and rapidly expanding or burgeoning capitalist economies. Second, Western Europe and North America are just entering the 60+ club (the salt and pepper club referring to their grey hair) demographic whose net worth will eventually recover and whose free time will spur leisure travel and hospitality demand. These secular trends serve as a backdrop to the positive cyclical phases not yet entered. This gives some reason to be optimistic about the economic future when it comes. And, it will come!
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Having said that, there will be a few challenges that will remain – Global Warming, Depleting Non Renewable Energy Sources, Terrorism & Politics. All will continue to co-exist and we will have to plot them our charts of cyclical trends.
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To ensure a positive Hospinomics, hotels will have to seek ways to maintain margins, improving productivity and most importantly MOTIVATING STAFF and remember to keep the pressure on themselves rather than putting on consumers. And this is required as the customers are well informed and well read and notice everything. When you have new kids on the block in sales (and unfortunately that’s the scenario you can’t change or do not want to change), they will feel the pressure and eventually go all out in desperation to get the business. And all this means is erosion of your bottom lines and to some extent competition between may be your own two hotels in the same location.
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The luxury travel is also going through a change of phase. It will soon be replaced by up market eco tours and adventure vacations. Luxury need not be confined to a business traveler looking at 1000 USD a night suite in an up market branded hotel.
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The luxury consumer is going through three issues on his whiteboard:
1. Liquidity – People are losing money and loosing by the hour. But the fact is that it’s only on paper
2. Frozen Capital – Much of the investment was less liquid than stocks and bonds; instead it was in private equity (subject to capital calls) hedge funds (being locked down) and lenders (now tightening credit).
3. Asset Value Declines – in art, real estate and collectibles. And we all know what Real Estate has gone through and as I read in an article, even Hussain’s paintings have seen correction in their price points.
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For a positive Hospinomics, the key mantra will be T3 (Trust, Transparency & Trust) and this will be both internal and external.
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I remember the advt of MasterCard. You can buy Travel and the works by MasterCard (read money) and then there are precious moments that cannot be bought. I am looking at a different picture now. Travel is increasingly becoming about the things money cannot buy – experiences and emotions are treasured and these are the ones that are dictating the new rules.
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Discounting (I love this word!!) is NECESSARY. Let’s face it and not count on the numbers of adhoc rates that we have issued (If you would have been wise enough to offer decent price points earlier, you would not have been reading this blog anyways). But yes Discounting has to be specific and should target markets which give you good yields.
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A recent study indicated that Eco Tourism will continue to grow @ 30% and is expected to make around 25% of world travel by 2012. What are we doing about it?
A new trend in hotels is coming soon. Hyatt’s new Andaz brand as the new kind of business hotel that features a warmer welcome and local culture. It was referred as “Bleisure”.
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Embracing and facilitating consumers’ new behaviors is the key to survival. Counting on the power of new technology to enhance customer relationships, Sheraton introduced a social networking facility on its site, on which travelers are invited to share travel stories, recommendations and photos. It says that “Tying together the advantages of a known, global brand and the capabilities of the Internet, a personalized travel experience could be created to surprise and delight.” And I completely agree and pop goes the question – What are we doing about it?
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I recently came across ASSOCHAM study on Commonwealth Games. According to the Associated Chambers of Commerce and Industry of India (ASSOCHAM), Commonwealth Games 2010 are likely to push India’s Foreign Exchange Earnings (FEE) through tourism alone in 2010 to an estimated level of over USD 16915 million, as these are expected to grow at cumulative rate of 20 per cent in next two years.
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Through tourism last year, FEE’s were measured at USD 11747 million. The optimism as to why tourism will register a cumulative growth of 20 per cent in next two years is based on the fact that, by then global meltdown will have subsided to make India a leading tourist destination, especially due to the fact the focus its policy makers (I talked about the O&M factor) are attaching on hospitality sector. The ASSOCHAM estimates that if India’s tourist arrival in October 2008 was 4.53 lakh, during 2010 Commonwealth Games which will conclude in October, the foreign tourist arrival is likely to double.
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In October 2008, tourism alone fetched India USD 900million with tourist arrivals of over 4.50 lakh, especially from countries like UK, Japan, South Africa, Australia, Singapore, Mauritius, Middle East and Far East etc. The Recession and Terror Attacks were yet to happen by then.
In the last couple of years, FEE’s earnings on an average have been growing at robust average of over ten per cent and there is no reason that their average rate of growth will accelerate during Commonwealth Games for which India is creating lot of facilities by renovating its majority of tourist sites. Also, advertising strengths and intellectual superiority and skills of India’s Ayurvedic, Medical and Clinical Tourism including Religious Tourism are expected to draw a large crowd during the forthcoming Games for multi purposes.
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All in all, Savvy strategies are needed to combat recession and hopefully Hospinomics will be back on track soon!!

April 12, 2009 Posted by | Uncategorized | , , , , , | 2 Comments

An Experience on Singapore Airlines

I often fly to Singapore and SQ is one of my favorites.
Having said that, this one trip was not the best one. I have had issues in the past with broken baggage but the service recovery has been great. I have had in flight entertainment not working on my seat (twice) and again very well handled.

And at times when you are in love with something it’s also your duty to give the feedback to the other person. You do that with your best friend, your child your wife so why not with your favorite airline….

And I ended up writing to the India GM for Singapore Airlines – Mr David Lau on June 02, 2014. And while I did get a quick revert from Mr. Lau stating that they will get back to me. Within 2 days I had a detailed one as well.

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Dear Mr. Lau

At the outset let me begin by saying that I am a hardcore loyalist of your esteemed airline and along with that the Star Alliance members. And as a loyal consumer I feel it’s also my responsibility to give you feedback that can help in strengthening the airlines position in this competitive environment.

I was on board the flight SQ 406 from Singapore to Delhi on 31 May 2014 and also experienced the A380 with its 2nd flight on that route. I recently flew to Sydney as well and it’s a brilliant piece of machinery and creativity.

For this flight to Delhi, the check-in happened at around 3 pm and I had ample time to enjoy the hospitality at the lounge. Everything went great so far.

Experience 1:
On board the food was served and somehow I felt that every one was in a hurry. A SIN-DEL flight has enough time usually to cater to every one. Unless they were still staffed as per the regular flight as against A380.

I was served the International Non Veg selection on my seat 45C. The crew person had no rolls with her and promised to come back to me. Nothing happened.

I kept pressing the call button, no attention was provided. No worries- I can live without Carbs in one meal.

Experience 2:
Next to me were an elderly couple (45 A and B) and looked like parents returning back after visiting their children from Singapore or May be distant far and may be their first flight!!

They asked for Indian veg meal and were told that the veg selection was over. It was only row 45 so was a bit amazed. The elderly man in his broken English and a soft voice insisted that they told the agent for veg meal. The crew was adamant though that the selection requests did not reach the airline. No worries again. Promises made “I will get back to you with some possible options”

No one turned up. Though some bread, Indian Roti, Curd, a fruit could have saved the day for them.

Experience 3:
The descend to Delhi was a horrible experience with scary air pockets that the plane had to navigate from. The captain did a great job of managing that except for a very very hard landing. Also on board the body language of the crew sitting right in front of me had a different tale to tell. Eyes tightly shut and remembering Jesus (loud enough for me to hear in row 45 which is the 2nd row in that block) was not going well with the front line passengers.

Experience 4:
The experience of an airline is not just on board. And I am sure you will agree it starts from booking to check in to flying and later to get the luggage before moving out.

On arrival at Delhi airport after a delayed flight ( thanks to air traffic congestion) and a scary bumpy one (owing to the natural conditions), there was a long wait first for the immigration (beyond your controls). This was followed later by a long wait for baggage till the belt stopped bringing in more bags.

On inquiring with the ground staff who was carrying a torn piece of paper with some names scribbled on it, we realized that the bags have not come from Singapore due to breakdown of some belt system.

And then the ordeal started. Why the wait for an hour if the ground staff had details of missing bags in the first place.

There were families, old people and every one wanted a solution. The solution was that airline needs to fill in 2 forms – custom clearance and another one for airline record with contact details.

(Also for record the AIRTEL signal at this desk is very weak and while everyone wants to talk to their family to pass a message of them getting delayed, even that seemed to be a concern)

Problem here was that there seemed to be one lady on counter and managing this without any display screen behind her to at least list names of passengers. We had to then request her to at least give us the custom clearance forms for us to fill on our own. With anger levels going up we demanded more staff to join her and finally they did. In this ordeal I must mention the ground crew manager – the only one in tie and jacket was not at all leading from the front. Ordering his team to do this and that, depending on which passenger is shouting is not the way this needs to be handled. Finally I had to tell him to stop doing that and take a pen in his hand and start filling forms himself.

I arrived back in India after a weeks trip to Singapore where I am relocating by Mid June. And I had a flight to Dubai on Sunday morning and my baggage was now missing.

Good news it was to come by the morning flight and it did at 545 am and I got my bag at 830 am on 01 June before I moved out from my house again at 0900 am to catch my Dubai flight.

So to summarize and being from the hospitality industry – mistakes and system breakdown does happen but what is important is service recovery and handling of those mistakes. On this not so fateful flight it seemed like every thing was breaking apart.

Today my faith has shaken a bit. Will I get my parents to visit me via SQ, Will I take SQ for my relocation with family … Only time will tell.

I am writing this on board Jet Airways flight to Dubai and indeed carrying my luggage. So that’s one tick I am going with so far.

Best Regards,
Tarandeep Singh

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Reply received:

Dear Mr Tarandeep Singh,

1. Thank you for your patience whilst we look into your concerns. Further to my interim email reply on 2 June/Monday, allow me to offer the following explanations to your concerns:

Experience 1 : We operate all our flights with the full crew complement. SQ406 was quite full in economy class on 31 May. That the meal service was hurried and our crew failing to provide rolls despite your reminders (calls for attention) is poor servicing on our part and I would like to extent my apologies. We pride ourselves in offering a warm and personalised inflight service and you are right to expect this consistently on all our flights. Your feedback has been forwarded to our crew operating SQ406/31 May.

Experience 2: Regarding the elderly couple, there was indeed no prior vegetarian meal request made by them. We normally uplift vegetarian meals according to booking requests plus some buffer in case of last-minute requests onboard the flights. On this occasion we had ran out of these meals. That said, I totally agree with you that a make-shift vegetarian alternative like rotis or fruits would have appeased the couple. This service failure has been notified to our Head Office Cabin Crew Division.

Experience 3 : Weather conditions were poor at the time of flight approach into Delhi. There were lightning and dust storm warnings with wind-speeds of 30-40 knots which our flight crew had to meander around for customers’ comfort. There was no threat to the flight per se and the aircraft landed normally. We will certainly look into the behaviour of our cabin crew that did not inspire confidence.

Experience 4 : Due to a breakdown of the Baggage Handling System in Singapore, a number of checked-in bags were not loaded onto the flight. Two of our staff were initially deployed at the baggage belt to identify and assist passengers with missing bags. A Duty Officer and more staff were eventually assigned at a later stage to supplement the two staff. I understand our duty staff did attend to you that evening and also offered apologies. We are glad we could deliver your bags in time for your next day’s flight.

We could have performed far better under the circumstances. Given the full flight, we could have prepared better to assist customers with their missing baggage. We could also have readied a proper signboard to address affected customers and prepare the necessary baggage/Customs forms in advance. A main reason for the delayed preparations was station did not receive timely information from Singapore regarding the missing baggage. This is an internal lapse which we are following-up with our handlers in Singapore.

2. Mr Singh, my gratitude again for taking the time to write to me. Your feedback is invaluable in helping us improve. The A380 is a new experience for all of us in India. In taking pride with operating the first A380s to India, we also owe it to our loyal customers such as yourself to ensure we meet your highest expectations. We know we have disappointed you and our other customers on this occasion and I offer my sincere apologies.

3. As a gesture of goodwill, I would like to offer you 10,000 Krisflyer Miles which will be credited directly into your KrisFlyer account. We look forward to welcoming you onboard our flights again in the near future, and certainly to be of better service to you.

Kind regards,
David Lau
General Manager India
Singapore Airlines Limited

June 4, 2014 Posted by | Uncategorized | , , , , , , , , , , | 2 Comments

The Indian Spring and Tourism

The just-concluded state elections have vindicated the market’s stance on the anti-incumbency factor. Even as experts draw multiple scenarios for the 2014 General Elections, what with state elections shaping the permutations and markets remaining euphoric in the short term, all this may or may not really matter much to you depending upon various factors. It can be investment in India for a common investor, the feeling of removing corruption for the common man and for me both and a positive feeling that transforms to boom in Travel.

 

 

So after the Arab Spring, we now have the Indian Spring. Well what more could you call it after the recent success of Aam Aadmi Party (AAP) in the Delhi elections. Look at the statistics – The number of votes that the first timer, Arvind Kejriwal (44269) got is more than the combined votes of Sheila Dikshit (18405) and Vijender Gupta (17952).

 

aamadmiparty_AFP

 

If that’s some signal of things to come, I would term this as a good signal. Having said that, the overall win of BJP in the 4 state elections also came up with a positive sign for the economy.

Whatever be the outcome of general elections in 2014, economic reforms and fiscal improvement are the only ways out for any ruling government given the current state of affairs; failing which, the outcome can be too harsh to face for the nation. Hence, while the governance style could change, the direction of reforms may not vary much, come NDA or UPA or a third front. The only positive factor that I see is that now you will have party like AAP that will sit in opposition and challenge the ways of governance.

Yes, sentiments do play a pivotal role in changing the investment climate, both internally and for foreign inflows. To this extent, the State Elections appear to be setting the stage for positive sentiments.

Historically, markets do not wait for events to happen. They anticipate events and discount them. And here, we are not talking of just the elections; we are talking of the host of domestic macro and market factors that are slowly but steadily turning favorable. So, we are talking of markets reading into these changes.

The equity markets rallied as part of the Indian Spring by 14% between September and December 2013 – an indication that it was not just anticipating election results (too early then) but reading into early signs of what could be an economic recovery.

And these are some of the conspicuous signs that are purely data based and therefore can not be ignored:

  • After nearly 10 quarters, GDP growth in the September quarter was marginally higher than expectations. And more importantly, the demand side of the GDP, especially gross fixed capital formation (representing investment demand) and consumption demand grew better than the previous quarter after a slump.
  • Inflow of dollars has considerably eased the liquidity tightness and ensured better money availability for short-term borrowing. Huge dollar addition to the forex reserves through the swap window for FCNR (B) and bank borrowing has also helped stabilize the rupee at around Rs 62 to a dollar.
  • The current account deficit has drastically fallen to 1.2% of GDP from 6.7% not long ago on the back of higher exports and lower imports.
  • FII flows have remain buoyant through 2013, notwithstanding the constant fear of a US tapering. fii
  • While US Fed tapering may be a factor that could continue to weigh on markets, it is widely believed that this has been discounted to a large extent by the debt market, which saw large FII withdrawals in the second half of 2013 thus far.
  • While corporate earnings have been lack lustre for several quarters now, the September quarter earnings of Sensex grew in double digits, compared with the 4% decline in the June quarter.

And how does this all transform into travel and tourism. With all the inflow of funds, comes the travel and therefore contribution to the Tourism Industry.

 

 

The scenario for the coming months has been positive though the seasonal traffic will go down during the festive dates in December. These are times that will provide opportunities for investors to come in and explore opportunities. Having said that, will it impact the Average Rates for the hotels – that depends from city to city as there is plenty of supply that is ready to come in.

 

 

By March 2018, Bangalore will rival Mumbai’s as the city with the largest branded hotel room inventory in the country, as per a research note by one of the world’s leading hospitality consultants HVS. India’s southern metro city is expected to have a hotel room inventory of 16,581 by that year, higher than Delhi and second only to Mumbai. And the difference with Mumbai would be a mere 300 rooms. At present, Bangalore is the third largest hospitality market with 8,536 rooms, following Delhi with 11,338 rooms and Mumbai with 12,807 rooms.

 

 

Whatever be the impact of economic conditions, with that much supply coming in you are looking at a 100% growth in room supply. This not necessarily transforms to a growth in Room Nights. And hence puts pressure on Average Rates that in turn puts a lot of pressure on the ROI of these new hotel projects.

 

 

Look forward to a similar scenario with Aero City in Delhi. The industry fears aggressive competition, with the addition of 5,000-odd hotel rooms to the current inventory of 11,000 branded rooms in the Delhi-National Capital Region (NCR). This may result in pressure on ADRs. Hotels like Radisson Blu Plaza, which overlooks the Aero City and was the first Airport Hotel of the city has already invested in upgrading and renovating its property, expecting greater competition from the coming cluster of hotels in its neighborhood.

aerocitymap1

 

 

 

So while everyone agrees that there will be a short term pressure on ADR, there is also a feeling that in the long run this will convert to greater demand and therefore the ADRs will rationalize over time. There is a big emphasis on MICE business as well. With the capacity of the Delhi airport’s terminal-III expected to exceed 75 million after the completion of phase-I, hotel companies feel the airport would become a hub for long-haul routes passing through Delhi, for conferences and MICE (meetings, incentives, conferences and exhibitions) business.

 

 

According to HVS India, occupancy at upscale and luxury hotels in Delhi for 2012/2013 hovered at 60 per cent, with ARRs between Rs8,000-8,500 (US$130-138), a six to seven per cent year-on-year fall.

 

 

All in all a positive sign of times to come for the Indian Tourism. What you don’t want now are the external factors – Economy to be positive in US and Europe. A stable government as and when it comes in and a no nonsense business from our neighborhood (referred usually as external forces)!!

india-tourism

 

December 11, 2013 Posted by | Hospitality & Tourism, TOURISM | , , , , , , | Leave a comment

WELCOME 2011

Had been trying to take time out, concentrate and put down my thoughts for some time now. But seems it was as distant as my NY resolutions. So good to just start typing straight from the heart and doing a warm WELCOME to 2011, the year that hopefully will be filled with new challenges and excitement for the industry.

When I sit and look back now, I realize how fast the year has gone by. I spent a year in the development space and came back to Revenue Management at the beginning of 2010. It has been a roller coaster ride for me. Handling hotels across the region, challenging targets, last minute requirements, regular work pressures, travelling like hell, attrition and new recruitment and what not? Looks like I missed all this in 2009 and was enjoying it all the more in 2010.

But the biggest of all that I felt was and will remain a challenge seems to be acquiring the right talent and the reason seems to be very simplistic in nature. I have just managed to tweak the definition of revenue management–

“The art of selling the room at the right price at the right time to the right customer on the right channel by the right resource is Revenue Management*”

The word “resource” is crucial now a days in this definition. You need the right talent to run your hotel and handle business plans that generate revenues for your hotel. Each step that they take in short term and long term has a direct impact on the business. The vision this person has to look out in advance and adjust his strategies to optimize on market conditions can play a crucial role in the GOPs the hotels enjoy at the end of the month.

I had the pleasure of hiring two people in 2010 in my Revenue Management for Hire (RMH) division. While one was a bit easy as I was able to get some one back to work with me after a break, the second one actually gave me a chance to interview candidates and understands the current talent profile available in the country. When I moved to RM, I had 5 years of sales & marketing experience behind me. Today we have RMs that are fresh out of college and thrown in main stream. Not every one is lucky to get enough training before he is swimming on his own. Worst part not every one has even got a lifeguard.

End result – some bright minds leave a mark. Others are struggling and trying to understand if they are even in the right place first of all.

With the India development pipeline ready to explode. Pick up any established brand’s press release and they are talking about having a 100 hotels in the next 3-4 years. Where are we planning to get our talent from? WTM did a survey of key exhibitors and senior buyers this year and asked them about the biggest single issue facing their business over the next five years. While they covered points like Global Downturn, Exchange Rates, Taxation, Industrial Relations, Oil Prices, Consumer Protection, New & Emerging Markets – they failed to give any importance to Talent Requirements. Unless they want to keep it under others that accounted for 7% in the pie chart.

With all these new hotels opening up, the fear of attrition looms large on the head of every GM, HR Manager and Department Head. I was myself surprised and shocked by listening to some stories (breaking news items) of people moving from one hotel to another and being offered salaries never heard off. Well not that I am complaining since I am on the other side still. But I am wondering if the worth is really that much. Not to mention, I also came across stories of people leaving or rather asked to leave on account of under delivery results.

We usually debate today that with the number of hotels opening in Delhi NCR alone will make sure that the price points come down to 7-8K mark. Which leaves us with a question that where will the budget hotels go? So if the ADR is going to be in that range, does the salary structure justify the numbers?

Also, every year a decent 10% increment in salaries (if you get it) has a direct impact on the hotels bottom lines.

And remember our industry works in a cycle. The last one had a 4-5 year run with its own ups and downs a bit. And jokingly though, a good friend actually said “God knows what is coming in 2013” in a corporate presentation. While everyone did laugh at it, I think it was something to think about…

So keep looking for the best man on the job. You never know when you might need his services. Keep the social media working for you.

By the way we spent some good time asking hotels to start working on this. Might not be as big right now but certainly no harm in being there rather than being left out completely. Technology always helps, the only problem being that we get too dependent on it. During my recent visit to US I came across this mobile technology of checking in at airports. You get a picture code and you have to scan it on the machine at the kiosk. You are in!! Its not being used for travel in India but definitely not very far. The hotels and airlines are already there on the facebooks and twitters of the world. How effectively they do it again depends on the Right Resource though.

For the rest of the predictions and gyan – just Google !!

December 30, 2010 Posted by | Hospitality & Tourism, TOURISM, Uncategorized | , , , , , , | Leave a comment

ROLE OF SOCIAL MEDIA IN HOSPITALITY

The use of the term “social media” has risen steadily since July 2006 and today is part of our day to day life.
Wikipedia defines Social Media as “media designed to be disseminated through social interaction, created using highly accessible and scalable publishing techniques.”

Social media supports the human need for social interaction, using Internet- and web-based technologies to transform broadcast media monologues (one too many) into social media dialogues (many to many). It supports the democratization of knowledge and information, transforming people from content consumers into content producers. Businesses also refer to social media as user-generated content or consumer-generated media. Social media utilization is believed to be a driving factor in the idea that the current period in time will be defined as the Attention Age.

Research on the need for Social Media Interaction points to three broad factors: creativity, expertise and collective intelligence.

Users do believe that it’s a great platform to express their own thoughts and expressions without any fear. So whether it’s about giving views for an airline or a hotel service or expressing ideas on how to improve on a particular aspect – the views are there for all to read and comment upon further (read debate)

As far as expertise is concerned, an online social network is perceived by consumers as an expert tool, as it offers a basis for the detection of emerging social trends and recognition of changes in consumer behavior, including member profiles, behavioral patterns and associated lists of contacts and further more their individual experiences at a hotel or airline.

Additionally, Online Social Networks may be a means of aligning individual thinking with collaborative intelligence, leading to group consensus. This can be about announcing an event, new job openings or promoting a social cause.

Social Media @ The Hospitality Industry
In ’06 and even much later, the hospitality industry continued to ignore the concept of using Twitter or Facebook or any other social media platforms for their promotional activities. The marketing initiatives were either off line or on very limited and repetitive online options. However, things have changed now and the same marketing teams are relooking at their strategy to reach the end customer through these channels. But they have a new challenge today.

While almost all are keen to get into the space, most hospitality companies today are not sure where to allocate funding or resources for the management of this critical aspect of their business. The reason for this is because to effectively manage and reap the benefits of social media a combination of skills and resources are required including public relations, operations, revenue management and marketing.

The recent emergence of online social networks (OSN) has changed the technological and communications landscape of the hospitality industry. The bloggers becoming self proclaimed critiques sharing travel experiences, recommending preferred accommodations, offering views on restaurant ambiance, quality and service, as well as hospitality companies monitoring and contributing to self-sponsored sites or using these channels for their HR needs (LinkedIn particularly) have all changed the way the industry is looking at Social Media in current times.

Social media monitoring gives hotel marketing managers an opportunity to keep their fingers on the pulse of how consumers are responding—to what extent current marketing campaigns are successful, how they need to refine campaigns or packages over time and, ultimately, the business outcomes.

How to enhance the .Com experience?

A recent research acknowledges that toolbox technologies can be used to monitor and analyze brand equity, market influencers and consumer intelligence. Social media monitoring and analysis are also capable of identifying sensitivities about a customer experience without necessitating market intrusion. Additionally, the technology can profile or delineate influential consumers for targeting. Customers that engage in blogging or photo or video sharing are more likely to assert influence in the marketplace. By identifying individuals who disproportionately influence markets or consumer behavior in the market, a business can determine a strategy of appeal.

Various technology options like ChatterGuard.com, an online social media monitoring and reputation management system, HotelSocialBlogs.com, a turn-key Travel 2.0 Distribution & Marketing service, CommentCards.com, a full-service business-2-consumer comment card service,

eProposalSystem.com, an online RFP response system hotel Sales Managers, RFPLink.com, a group RFP lead generation, HotelDirectBook.com, a consumer hotel portal, and reporting system, DiningClick.com, Internet Marketing Services for the restaurant industry, and Spa Interactive, Internet Marketing Services for the health spa industry are available today to effectively utilize the power of Social Media in the Hospitality space.

What’s happening out there?
For the E-Marketing Managers – Microsoft’s Bing and Google have already announced that tweets from Twitter will be included in the search duo’s organic results. Facebook status updates are likely to follow. For travel and its relationship with search, indexing of live Twitter and Facebook updates will trigger an evolution – once again – in how travel companies think about Search Engine Optimization and social media.

In the Google-Twitter arrangement as an example, it is unclear as yet how Google will index and rank the stream from Twitter – but if it uses the same relevancy and linking protocols it applies at the moment to natural search, then this is a powerful change in engine’s capability. This is just one in a series of steps by Google to address real-time information. Recently they quietly added a parameter which allows granular time search: for new results within the last 5 minutes, 30 seconds, 10 hours, etc

As in the past, results for a search for “XYZ Hotel New Delhi” on Google would probably have returned the property’s website may be along with a Google map image, a Trip Advisor review, Yahoo Travel reviews, a handful of aggregator sites (where aggregation is entirely automatic, using algorithms which carry out contextual analysis and group similar stories together e.g.: RSS Feeds, Google News), an Online Travel Agent or OTA like the Make My Trip or Expedia or Travelocity, and maybe a blog post or forum entry in the first few pages. And yes you can always count on the sponsored links on the top or on the right that depends on the money you spent for electronic marketing.

But now the good news is that the results may include relevant tweets from Twitter. The relevancy may be determined by how many other Twitterists have re-tweeted the post, number of inbound links from respected and page ranked authorities, number of followers for the tweeter, etc.

In one quick stroke the search engines will be including the essence of travel: the here and now of the travel conversation or what the web community is saying about destinations, airlines, hotels, tour operators, agencies and, most importantly, the reaction to it. If this is the case, Twitter becomes a powerful channel for travel companies and can no longer be ignored. And the fear is that travel companies may well possibly flood Twitter or Facebook with hundreds or even thousands of messages in the hope that it ends up on an organic search result relevant to their brand. This is relevant from the plenty of fan pages on Facebook in the hospitality space.

The Social Media platforms might at the same time may simply become a huge distribution network of offers and late deals by the travel companies. So it’s not far away when the leading hotel companies can have a special offer right there just for its fan club on the social media network or launching an opening offer for a new hotel only by sending tweets to its regular customers.

One of the interesting tightropes of social media is that what makes something Happening in one moment where it was Outdated just six months prior. Users on Facebook are more discerning about making suggestions simply because if the person has a bad experience at a hotel as a result of that recommendation, it might just come back to bite them post the “Moment of Truth”. Twitter users, on the other hand, are more impulsive and less likely to screen their recommendations.

Or, to put it in a travel context: Facebook suggestions are like suggestions from a hotel concierge and Twitter suggestions are like reviews you read in a magazine. If the XYZ hotel concierge sends you to an exhibition venue that is closed, the hotel will compensate you with may be a meal or even a cash credit. However, you’re not going to get that response from the magazine — or with a Twittered comment. That is why Facebook status comments have greater utility than Twitter.

Who are using it already?
AIR FRANCE KLM, European based airline holding company and one of the largest airline companies worldwide, launched BLUENITY (http://bluenity.com/) what they claim to be the first social network launched by the airline industry. All usual social elements such as sharing, recommendations and reviews flights, hotels, restaurants and destinations are included. Next to that, customers are able to display flights booked through Air France KLM on their profiles, find other members on the same flight and find members at similar destinations.

Bluenity is the first community site for travelers in the airline. The consumer can communicate with and meet people who travel with Air France and KLM, at the airport, in the plane or at your destination. The trip becomes an opportunity to meeting people: for example, one can exchange favorite addresses (hotels, restaurants, shops, events, excursions…), share a taxi on arrival, use your travel time to make new contacts. One can also submit good travel tips, views and comment on tips given by other members of the community.

This social media platform is hoping to get a reasonable market share with a potential target group of over 75 million consumers who fly with either one of the two airlines.

Another leading airline – BRITISH AIRWAYS has also launched their social network and service METROTWIN (http://www.metrotwin.com/) on similar service offerings.

However one of the most successful examples of utilizing the social media space in hospitality industry is one of the major cruise companies worldwide. The Miami-based CARNIVAL CRUISE LINES has over 80.000 employees and about 13 billion U.S. Dollar revenue recorded in 2007 and is operating 22 ships which are expected to carry over 2.6 million passengers this year.
Blogging

With close to three million visitors already since 2007, Carnival is having quite a popular blog, written by Carnival’s Senior Cruise Director John Heald (http://johnhealdsblog.com/). The blog, which was started to give insight to the behind-the-scenes activity in the life of a cruise director, originally was a one month project but due to its success continued and is still growing strong.

Besides the enormous amount of visitor traffic and brand exposure, the blog is also stimulating consumers to be part of discussions, resulting in over 25.000 comments. Due to the tremendous success of the blog, earlier this year John Heald hosted his first blogging cruise, to which over 800 enthusiastic blog visitors took part.

Social Networking
Carnival has set up its own social network and community for their customers http://www.carnivalconnections.com/ featuring several social functionalities such as photo and story sharing, scrap blogging, cruise and trip planning, event organizing and a message board forum.

Of course carnivalconnections enables customer to connect to friends, invite friends and share experiences of previous cruises and expectations of future cruises with each other. Also, the social network provides customer to write reviews about cruises which they can share with the public.

Not having exact numbers of members available, we would have to conclude from the amounts of topics and posts on the forum, over 5000 topics featuring 30.000 replies, that the network is quite successful and a great example of how a travel company can interact with its customers. Only image the amount of knowledge Carnival is getting from communicating with customers through this channel.

Virtual Tour
Carnival has created a complete virtual tour of it’s Fun Ship Island at FunShipIsland.com, featuring social elements such as sharing and personalization, which enables customers to view all parts of the ship online. Other features include a downloadable content such as wallpapers, ringtones and mp3 music.

While interacting with this website, quick, optional questions and individual preferences are collected for each visitor, which results in tailored recommendations for of course carnival cruises.

Using twitter already in May 2007, Carnival can be seen as an early adapter of twitter. Since then, carnivalcruise features over 300 updates and managed to get close to 500 followers. Carnival is using their twitter account to monitor their brand, listen to questions from customers, communicate promotions, share news about carnival and wish customers a safe journey. Also, people are asked and stimulated to use other their social networks to share their cruise experiences.

Photo Sharing
Since 2004 Flickr has become the most popular website for everything related to images and after having been acquired by Yahoo in 2005, the service continued growing. Carnival Cruises has its own photo stream on Flickr, a location where all images uploaded by Carnival can be found. Having uploaded close to 250 images on different topics such as their ships, locations, interiors, crew and construction sites, carnival is providing an interesting insight into the brand Carnival.

Online Video
You Tube is a video sharing website where users can upload, view and share video clips, owned by search engine Google. Carnival has its own ‘channel‘ on youtube, where it publishes its videos, coverage and presentations.

Measuring success
Although it is hard to measure the success of social media without data on costs and revenues, it appears Carnival successfully implemented social media. Brand awareness, customer services and customer intelligence through social media is difficult to measure.

By February 2008 both carnivalconnections.com and FunShipIsland.com managed to record over one million visitors. In terms of transactions, the only number available we could find is 20.000 transactions through carnivalconnections.com, which is significant and expected to have increased since 2006.

Using social media
Carnival has introduced a general audience with all comforts of long and short term cruising and is successfully using social media to spread their message and increase their brand positioning. Although the numbers of followers on twitter and members on youtube are not even significant, the efforts of Carnival do illustrate how innovative the company is and how active the company is participating in the conversation with their customers.

Strategizing Social Media for Hospitality Industry
An effective strategy in the hospitality space to cover social media should consider these points:

The monitoring service should cover more than one or two social media websites or blogs. Depending on the market and clientele demographics, the consumer reviews may appear on non-travel websites and blogs or on social media sites that are popular within that region or even from it’s key inbound territory.

When monitoring social messages one needs to segment them by attributes. For example for your hotel, the attributes may include rooms, perceived value, dining and housekeeping. A different set of attributes will apply for a restaurant, conference facility, spa services or golf. Segmenting by attribute also makes the process of applying this information internally to improve a service, inform your staff or to write a response so much easier.

A scoring method is needed to measure the trend of reviews by attribute so one can measure or compare trends up or down over time. If all reviews about the business are good, then the organization needs to know that and can take advantage of this input by posting or linking the messages to it’s brand website.

It is important for the organization to post responses to both good and bad reviews on the social media websites that allow response postings and where it is a blog one can generally add the comments. The response should be brief and address only the specific issue raised in a review. The comment should not read like an advertisement. In the social environment, consumers are on these sites to see the reviews, one-on-one information and not a commercial message. The value of the response is in the participation rather than interruption. The participation shows the companies’ willingness to listen and to be responsive; where as a commercial message may appear deceptive.

Conclusion
Simply monitoring one or two social media websites or blogs requires time and resources. It may give piece of mind, but there is no value or return on the time and resources without a strategic plan as to how this important information will be utilized. To reap the benefits of social media requires a measurable plan and clear expectation. The strategy should enable to benefit not only from negative reviews, but also the good reviews as well.

As part of overall strategy, the following key points can be considered while planning:

Social Media:
• Best Practices for Monitoring Customer Reviews
• Facebook Fan Pages for the hotel: Set-up or Optimization, Ongoing

Campaign Management, Content Postings, Fan List Growth
• Twitter Profiles for the hotel: Set-up or Optimization, Ongoing Campaign Management, Content Postings, Follower List Growth
• Flickr Profile for the hotel: Set-up and Optimization, Ongoing Management,

Content Postings
• YouTube: Flash Video Production, YouTube.com Hotel Profile Set-Up and Optimization, Ongoing Video Uploads
• Social Media Advertising (Web 2.0 Search, Banner Advertising, Sponsorships)
• Reservation Tracking and Conversion Reporting from the social media initiatives:
o Via the online booking engine
o Via the special 1-800 numbers used in the social media campaigns

Web 2.0 Features/Functionality on the Hotel Website:
• Interactive Calendar of Events (content managed by the hotel)
• Interactive Sweepstakes (e.g. 100th guest Free Room Giveaway)
• Blog on the Hotel Website (content managed by the hotel)
• Interactive Contests (Photo Sharing, Scavenger Hunts, etc.)
• Interactive Games (Good for resorts & casinos)

Building the Hotel Web 2.0/Social Media Strategy
• Hotel Defensive Strategy
• Hotel-Sponsored Social Media Initiatives
• Social Media and Hotel Employees
• Web 2.0/Social Media Marketing Initiatives
• Best Practices and Recommendations
• Brand/Corporate Level
• Property Level
• Destination Level

Because each site and each component of social media strategy has different objectives, they each have their own success metrics. One definitely needs to track engagement, satisfaction, and leads/sales. But to have a truly successful social media strategy, sales shouldn’t be the number one measure of success. From launching a new site to simply opening a Facebook fan page, each and every one of these initiatives involves a strategy and a foresight.

For some brands it doesn’t make sense to participate in every social networking site available, so one definitely tends to ease into new applications. The good news is that there are plenty to choose from and get into action…

January 13, 2010 Posted by | Hospitality & Tourism, TOURISM | , , , , , , , | 1 Comment

The Right Customer

I was reading an interview of Puneet Mahindroo who heads the Revenue Management & Distribution at Taj Hotels and he points out the Right Customer being the most critical to address.

Well, I agree to this (and more so considering that I have worked with the man and have been influenced a lot on the RM front) and more so it makes me recall the RM definition of how the Selling of the Right Product at the Right Time to the Right Customer got modified a bit and there came in the selling through the Right Distribution Channel as well.

The competitive pricing in our industry has over the years made us look back to not only our revenue streams but also on the expense side as well. And for three years with the Taj where I was managing RM at various positions, I preached on the original theory but at the same time realized the importance of the distribution platforms as well. The clear and definitive balance that acknowledges long-term and sustainable customer relationships, as he points out, is important to our business and equally important is the fact that the short term tactical rate optimization should not harm this balance. However, this is where I feel that we have a great task on our hands.

India is still going through its learning curve as far as the OTAs and E-Distribution Channels channels are concerned in the lodging domain. And the trends have been exciting and alarming at the same time. I remember, once Expedia representatives were giving us a presentation on their company and the stated that for every 3 people that come to their website, at least 1 calls up the hotel directly or books on hotel website for the booking. So it also acts as a search engine for various customers.

3 years hence, when I am part of a corporate profile and manage my own hotel bookings (unlike the other verticals in my company) within India and abroad, I have realized the importance of Expedia, Travelocity, Make My Trip and most importantly the one that I am hooked upon – Kayak!! And this is all when the company does enjoy special corporate rates with various hotel companies. But a little effort and I end up saving a considerable amount – either for my company or the client who is paying most of the times for my hotel stay.

So, going back to the Right Customer, I am not sure if this balance is as easy to maintain as it’s said. There is supposedly one strategy at the hotel level that drives revenues. This strategy is totally inclined towards the past year performance (usually numbers thrown by a PMS) OR the effort of the sales person to convince the unit to give a better rate on account of overall importance of the account.

Then while on the grind, the task for the RM gets into a different mould of striving to achieve budgets and maintaining the first position in the RevPar Premium City Set. And this is where the magic lies. The magic of getting into a tangent mode and there you have a new RM strategy which drives its’ own numbers and who cares about the Right Customer??

I wish the likes of Optims (Amadeus RMS) and Ideas will be able to account for the customer (company) profile, it’s loyalty to the unit hotel and/or hotel group and then throw up the numbers that it does while the Group Tool is used. And I am assuming this is being used and not that they are being used for taking out lovely graphs for the RM & Projection meetings on weekly basis. And if not, I think there is a lot required to be done at the shop floor level on training people and most importantly retaining them. You do not want to be training ground for the Alofts, Four Points, Hiltons, Dusit Thanis, Moevenpicks of the world to come over into your country and take over your most important asset – Employee apart from the Customer that they will take for sure as all are to eat from the same pie.

RM is both a Strategic and Tactical function. And Puneet did talk about this as well. There needs to be a 1-3-6-9-12 month strategy in place and within the current month, there can be a week to week and day to day detailing (Did someone say – God is in the Details!!). Some time back I was presenting a proposal to the owner, GM, DOS and RM of a leading Delhi hotel on a RM assignment considering that they are really lying low on the city set chart. The DOSM who had recently joined came into defensive and it was hard to convince him. My only question was what is the strategy to tap the Def Expo business for next year when you have an open rate of 8000 Rs available on the open channels and realizing that there is always a short supply of rooms in the city and the Def Expo participants usually book much in advance. The answer to that was simple that I could figure out– There is no Strategic Policy in place. And the result will be again for him and the team to see.

While we all will continue to talk and debate about so many things to be done on the RM front, I have rarely seen a concrete road map for this. With new kids on the block every 1 year, I am sure it does get difficult for the RM bosses as well to put their thoughts into action. How many of these new kids have even realized the importance of the hot seat they are in. One pricing decision can impact revenues to a great extent – Right or Wrong is anybody’s guess. One has to live in the future to be a leader but at the expense of not realizing the present, it can bounce back hard.

I wish the roots are strong enough for any organization to take care of the fruits that will hang over a period of time. And to strengthen the roots, you require good nourishment in the form of motivation and regular training. And I hope it’s’ done soon.

October 14, 2009 Posted by | Uncategorized | , , | Leave a comment

The Saga of CWG & Incredible India

I am on board Indian Railways as I continue my journey from Agra to Jaipur (of course on business!!) and this story is on the brand standards that we have created for ourselves across the world

I started the day at 0400 hrs, took the Bhopal Shatabdi at New Delhi Railway Station at 0615 hrs after picking up a colleague from The Lalit hotel at Barakhamba Road New Delhi. Onboard I was going through a daily newspaper and was not so amazed to find quite a few articles on the Commonwealth Games preparation whether it’s infrastructure or our own readiness or the proposed change in behavior that is now being sought after (maybe to shift focus from the slow pace of infrastructure)

We are talking about getting ourselves ready for the CWG and I was taking a train early in the morning from Paharganj side. The traffic jam that prevailed at the traffic light right in front of the entrance of the station was amazing. Of course I had a good dose of honking in the morning to begin with. The good bit was that the train started on time (considering it originates from Delhi), the service was good (if not great) and the meal quality was also fine (I am not going to compare it with in-flight meal service here).

And there I was reading all those articles. Reached Agra and was welcomed to the city of monument of love by nothing less than a mess. It was raining when we reached and the site of the railway station, the only other option apart from road, would have put our railway and tourism minister to shame. The exit of the station on both sides has for some reason iron bars in zig zag manner so the crowd has to wait and go one by one to move out. The problem is that the taxi operators are pouncing on one another to get the foreign tourist into their taxi. Even though the pre paid taxi service booth is just in front with two policemen doing the clerical job, there is absolutely no control on the way the cars are moving out, the way drivers are dressed, check on the car numbers leaving the parking bay. And if you hear these taxi men fighting with each other, it further puts you to shame. They use all kinds of abusive language thinking that only foreigners are around them and talk in a nice sweet language the moment they approach the tourist.

The rain had ensured that both sides of the exit were full of standing water. While leaving the parking, a policeman is just to be shown even from a distance that the pre paid slip has been collected. The main exit of the station is again worth visiting. The road is surrounded by the “Shudh Vaishno Dhabas” on both sides with of course a Sarkari Theka!! There is absolutely no drainage system that I could see and hence the roads were flooded with rain water. The moment you leave the station, you find endless planter guards in green triangular shape that are supposed to protect saplings from getting destroyed by the easily available herd of cattle on roads. Unfortunately there are hardly any saplings that are being protected by these metallic guards and all they are doing is to provide a good marketing opportunity for advertising and you see the LIC and the BSNL advts all along. Someone has been smart enough in the government to first come up with a great idea and then sell it within the public sector to get further advertising revenues. The best is yet to come though. Amongst this endless sight of guards I found a few that had some broken flowerpots placed in the centre with of course a dead sapling hanging from it. Why on earth you will place regular earthen flowerpots on road sides and cover them with metallic guards. Half of them would have got picked up on the night they were placed and the rest were left to die a natural death.

I reached my hotel to again find a pool of water at the entrance and the reason was simple, there was absolutely no famed Nalla anywhere. Where will the water go and I am on Taj Road the one that actually leads to the Taj Mahal.

So this is the plight of affairs at a destination which is bound and destined to get the maximum pull of visitors when the CWG begins or ends as part of various itineraries and I am sure using the morning Shatabdi or Train for that matter will be a sought after option for most of the tourists.

Just in case Delhi is able to change, let’s imagine for a moment, I am sure the tourists are going to get a shock treatment at Agra. My humble request to the ministers in Delhi Government to please ask Behen Mayawati to get the Agra taxi drivers and guides to attend the training sessions in Delhi. All in the name of brand standards and the brand being Incredible India!!

My journey continues now from Agra to Jaipur and the 2965 Gwalior Udaipur Superfast Train is already running late by 30 minutes. Another eye opener for the tourist of 2010. When you travel AC Chair Car on Shatabdi you will be given a newspaper, a Flask of Tea, Breakfast, Mineral Water bottle. Now when you continue your journey from Agra to Jaipur (and the AC chair car in this train is full of these tourists) you just get nothing. Boarding the train at 1745 and a scheduled arrival time in Jaipur at 2215 hrs. An attendant with water has passed now at 2131 hours. I requested for a cup of tea and the attendant is yet to come by. The attendant serving snacks – veg cutlet and omelet + bread had nothing even close to warm snacks and of course you are to pay for everything unlike the complimentary stuff that you got in the morning. Now look at the math:
Delhi to Agra – 195 kms – 740 Rs – AC Chair Car Approx 4 Rs per Km
Agra to Jaipur – 245 kms – 610 Rs – AC Chair Car Approx 2 Rs per km

So by saving 2 Rs per km, the railways decided to not offer anything on board the 5 hour journey. Ok, but at least give some decent options and above all the service. Or may be learn from the LCAs. You book on Indigo online and have an option to add a meal of your choice. Why not copy that? Alternatively, please mention on the tickets that you will be served any meals or not. We could have got some decent stuff packed from the hotel and had on board.

My journey will now continue to Jaipur, Lucknow, Varanasi, Khajuraho and will end in Delhi thereafter. I am sure I will some more eye openers for the people responsible. But is there someone listening?

October 6, 2009 Posted by | Uncategorized | , , , , , , , | Leave a comment

Tourism Education in India

 By the very nature of tourism as a service industry, its efficient management and successful operation depend largely on the quality of manpower. In India, the shortage of skilled manpower poses a major threat to the overall development of tourism.

In particular, the rapid expansion of hotels of an international standard in India is creating a high level of demand for skilled and experienced staff. The nature of the decisions facing hotel management is continually expanding. For their business to remain competitive, managers must be skilful in many diverse areas. Tourism statistics reveal that both domestic and foreign tourism are on a robust growth path. This growth will need to be serviced by a substantial increase in infrastructure, including air-road, rail connectivity as well as hotels and restaurants

 

The availability of skilled and trained manpower is a crucial element in the successful long-term development and sustainability of a tourist destination. Skilled and trained human resources will ensure the delivery of efficient, high-quality service to visitors, which is a direct and visible element of a successful tourism product. High standards of service are particularly important in sustaining long-term growth, since success as a tourist destination is determined not only by price competitiveness or the range of attractions available, but also by the quality of the services provided, there by the qualified human capital. 

 

The hotel sector is labor-intensive with an average employee-to-room ratio of 1.8: 1 in India, compared to 1.5: 1 globally. However there exist a huge gap in manpower availability, especially so with the budget hotel segment.

 

Currently there are 26 Institutes of Hotel Management with 180 other Institutes providing Degree/ Diploma courses in F&B service, F&B production, Housekeeping. These training facilities produce around 10,500 graduates in various courses every year. However this doesn’t solve the crisis faced by the budget hotel segment, given the preference of graduates for the 5 star segments.

 

One option now is to look at opening more quality Hotel Management institutes and ensure that the country is geared up for the kind of targets that are being made and aimed in terms of tourism in the country which includes not only inbound foreign tourist but also the domestic tourism that is slowly picking up the pace.

 

The above seems to be a genuine option that needs to see the light of the day.

 

However, I am shocked and surprised by what is happening in the country – thanks to some eagerness of the Ministry of Tourism. Kind of reminds me the latest DMRC metro rail accidents in Delhi where in the quality has been sacrificed in our eagerness to complete the projects within the CWG 2010 deadlines.

 

I passed out of IHM Bhopal in 1998. At that time the institute was decent enough to accommodate the kind of numbers are batch possessed though we still felt that things were overcrowded at times. We were a batch of around 100 students and the numbers had actually gone up from 50-60 that our previous batches used to be. I was at IHM Goa recently and had a chance to meet the faculty there. Somewhat similar story in terms of the numbers in 1998. However, the new batch that was joining now had 275 students and add on to that another 25 failures from the last years batch. That gives you 300 students to manage in the Ist Year course of B.Sc. in Hotel Management by National Council and degree being awarded by IGNOU.

 

And Mind It!! There has been no change in the infrastructure. The professors are expected to pull up their socks (with the age) and ensure that they have full control on 300 students. So from a time when there used to be one person on a range making to learn a Mayonnaise Sauce or making Chicken Chettinad, there are now 6-7 students trying to learn from the act. It might remind you of Munnabhai MBBS wherein our man claims to provide him a separate dead body at the medical college so that he could learn something considering there were so many students pounding on to get a look at how the professor was trying to cut open the stomach.

 

And things are not over here, in fact the problems start much earlier. The entrance test to IHM colleges in India comes now with an option to write the exam in English & Hindi. While I have complete respect for the national language and with no offence meant to the BJP & RSS political leaders, I am wondering how a student who writes in Hindi, gets selected and joins, is expected to understand the course content which is totally in English. Let’s face it, we are preparing the manpower to take care of the foreigners coming in to the country, if I go by the numbers targeted. Domestic Tourism is yet to get into shape and even if it does Hindi still can’t be taken as the common language for communication.

 

6 students per table, English Language, Poor Infrastructure, Disgusting Campus Placement success rate – Where do you expect this 3rd year pass out student to stand in the industry?

 

And add to that the fact that over 43.5% seats (15% SC + 7.5% ST + 18% OBC + 3% Physically Handicapped + 1 Kashmiri Migrant Seat) are reserved for SC/ST/OBC. I feel reservations in such kind of professional courses should be a strict no. A student who gets over 15000 rank, still gets admitted if he is part of the quota seat. I wonder, what will he/she go through during the 3 years at college and a bleak campus recruitment scenario.

 

The fact that there are 26 institutes is good to read. However, while the established institutes like Bhopal, Delhi, Gwalior, Chennai, Bangalore, Hyderabad etc go overbooked, the institutes in Sikkim, Patna and other remote locations go half full.

 

The Government could constitute a steering committee to review the demand and supply of the human resources in the hospitality industry and prepare plans for developing qualitative human resources which are require for the present day global industry. They should concentrate on the following issues mainly:

 

• Create a policy on Industry institute interaction

 

• Establish an apex body to coordinate all the hospitality management institutes in the country

 

• For conducting Common entrance test for all Govt. University/AICTE/Private institutes in the country

 

• Curriculum development from time to time as per industry requirement which is very important.

 

• Fees structure for different courses in different institutes

 

• Appoint a committee to identify the requirements of qualified manpower for International Hotels and also identify the ways to develop.

 And going back to college if required to impart some training or share your own experiences is something we all can start at our end and I am sure our faculty at colleges will be more than happy to have us there.

July 24, 2009 Posted by | Uncategorized | , , , , , | 1 Comment

Indian Tourism – Dreams Unlimited…

Indian Tourism – Dreams Unlimited

Year after Year the industry associations and leaders have been pushing to get a handful of their demands approved by the Ministry of Tourism. Unfortunately and yet again July 06, 2009 did not bring any cheer to our face.

And who am I? – Just another professional from the industry who has been reading all the articles for so many years and yes the decisions does impact me and you till the time we are part of this great industry.

While the budget was all about AAM ADMI and did took call on some specific industries, it kind of kept a blind eye for the Tourism sector. The Finance Minister Mr. Pranab Mukherjee who was giving his second budget and a record of sorts considering that he gave the interim budget, got back to power and again had the task of giving the full annual budget.

The only exciting part or a silver lining so as to say is the fact that Fringe Benefit Tax has been abolished, Budget allocation for CWG 2010 has been increased, focus has been kept on infrastructure development.

The Fringe Benefit Tax or the FBT is a tax levied on privilege/service/facility that the company offers to its employee. This means that being a part of an organization and getting a benefit to travel or tour, or stay in hotels, or attend a conference, or a membership etc. gets taxed by FBT. The abolition of FBT means corporate will not shy away now from giving these benefits to their employees and save a little amount of tax as well. The MICE industry which is significant and an important contributor to the overall revenues of the hotel and indirectly contributing to revenues for a tour operator, airline as well also gets the benefit as more and more conferences get conducted at hotels.

But what next? Does a saving of marginal 6.8% FBT good enough to drive our business? I am still wondering on why we will abolish service tax for an exporter and not for someone who is doing the same job of getting FOREX into the country by means of tourism as his livelihood.

Anyways, let’s consider the infrastructure development. The FM has ensured greater flexibility for India Infrastructure Finance Company Ltd. (IIFCL), a special purpose vehicle set by the Central government in 2006 to provide long-term financial assistance to infrastructure development of airports, ports, railways and ports. This means that the flexibility will help to increase funds available for infrastructural projects at lower cost.

However this is going to take time may be 2 or 3 or may be a complete 5 year plan. The task is to be able to develop basic civic and infrastructure amenities in the country including modes of transportation. If it does deliver in a time line, it can help to promote domestic tourism and will benefit tourist movement in the long term. The word of caution here is that the development work that needs to be planned and implemented should not be taken up on the mercy of our ministers. Or else we will see a repeat of the Railway Budget announcements. Coach factories getting shifted from Bihar to Bengal, New Trains out of Bengal, Medical Colleges in Bengal and everything about Maa, Mati & Manush. I was wondering yet again – Who am I?

For the infrastructure development, the government needs to analyze the demand pockets in the country for infrastructural development. This can be achieved by getting professional bodies on board (Technopak is one resource) and getting the act together. Decisions today need to be made on the basis of a rational, a logic and some scientific findings.

The development of national highways with 23 per cent increase budget allocation for the year 2009-10 over the previous year is again a great step. The development of national highways is expected to benefit the Road Tourism segment in India with enhanced connectivity to destinations that are not accessible right now. The Road Tourism industry, which holds immense potential is yet untapped to its fullest capacity due to the challenges faced by the segment particularly with road infrastructural and the tax issues faced by the industry. But this has to be combined with infrastructure development on hotels, airports, railway stations, transport options and most importantly the overall destination. Though an important question unanswered here is that what is the contribution of Road Tourism overall in the tourism sector. A visitor going on a Golden Triangle tour was, is and will continue to go by road or rail. And the connectivity is good enough. As a honeymoon destination to Kerala, a visitor from Delhi will take the option to either fly and may be travel by rail. So a highway construction might not be a great solution, unless the agenda here is again to what we saw before the previous term elections where just closer to the date various NH projects were introduced and all roads saw portraits of our BJP leaders and talking about the development work they are doing. Come on guys, this is not a billboard activity. We are talking about some serious money being spent.

The government has also increased allocation for Common Wealth Games 2010 from Rs 2,112 crore to Rs 3,472 crore. Well a lot has been spent on the same with some great criticism coming initially on the way things were going at a snail’s pace. I am not sure how much has been spent and what is the current status of projects, while I do read that the Delhi CM is herself conducting routine meetings to drive the efforts. I hope it works well for the city and our country as a whole. The breakup of funds allotted for the Common Wealth Games has not been specified and it will again be crucial to not what is being spent on stadiums, games village, accommodation, transportation civic amenities, landscaping, etc.

And for next year a recap of our demands yet again (collated info)

(a) Do not equate the hotel sector with real estate
The RBI has equated the hotel sector with real estate in the circular dated June 29, 2005. Due to a higher risk perception, the interest rates are typically increased by 3 per cent to 4 per cent per annum. The hotel industry should be granted infrastructure status under Income Tax Act as well as in RBI definition.

(b) Rationalize tax structure
In order to remain competitive with other destinations in Asia like Malaysia, Indonesia, etc, which has a low level of taxation, hotels in India need to be subjected to a rational tax structure

(i) Direct taxes
Section 80IA: Infrastructure status for the hotel industry
In the list of infrastructure projects, hotels may be included just like airports, seaports, and railways, etc.

In fact under Section 10 (23) g of the Income Tax Act, hotels were added to the infrastructure list so that the interest received by financial institutions and banks for loans extended to hotels were tax exempted. However, the section itself was discontinued with effective from April 1, 2007. All new hotel projects will be able to avail the benefit of deductions of 100 per cent with respect to profits and gains for a period of 10 years. This will lead to many new hotel projects being set up, with companies re-investing their profits in the hotel sector.

Further, it will help in channeling huge investment about Rs 50,000 crore (Rs 500 billion) in the tourism sector in next 3-4 years and quickly bridge the shortfall of hotel accommodation.

Deduction in respect of earnings in convertible foreign exchange under Section 80HHD
Section 80 HHD gives tax exemption from the export profits to exporters. If this is granted to the hotel industry, it would help companies to reinvest profits for building additional capacity.

Section 80-IC
As per Section 80-IC of the Income Tax Act, any undertaking commencing any operation specified in the Schedule XIV and having undertaken substantial expansion during the period from January 7, 2003, to April 1, 2012, to promote eco tourism in the special category states (like Sikkim, Assam, Tripura, Meghalaya, Mizoram, Nagaland, Manipur, Arunachal Pradesh, Uttranchal and Himachal Pradesh) are exempt from income tax for five years, for promoting eco tourism in the country.

But the income tax authorities have denied deductions to hoteliers on the ground that the activity of a hotel does not constitute an operation as specified in Schedule XIV of the Income Tax Act and they have also directed the hoteliers to explain the eco tourism activity in their project.

The hotel sector seeks a liberal view to include hotels as an eligible activity of eco tourism in Schedule XIV, to enable them to claim the above benefit.

Deduction to be made in computing total income under Sec 80
While calculating the total income of an individual deduction of LTC paid to an employee be admissible, as in the case of other deductions via PF, Mutual Funds, LIC, etc. This will promote domestic tourism all over India and increase revenues for the government.

Section 80-ID
In the Income Tax Act 2007-08, Section 80 ID was introduced to give encouragement to 1, 2, 3 and 4 star hotels and convention centres of a minimum seating capacity of 3,000 persons being set up in the National Capital Region of Delhi, Gurgaon, Faridabad, etc, for the Commonwealth Games in 2010.

A tax holiday for five years was granted to these hotels that would open before March 31, 2010.
The areas covered under this section were further expanded in the Budget proposal 2008 to several other locations. Presently, the benefit is extended to new hotels set up in the specified region and the benefits are not allowed to substantial expansions of hotels and resorts in these regions.

Substantial expansions of room capacity in excess of 30 per cent of the existing capacity should also be treated eligible for the tax holiday benefits. The coverage of the benefits granted under this section should be extended to all categories of hotels throughout the country, and those which open in the next 10 years.

Section 32
Hotel buildings are considered as plants for the hotel industry as they are utilized for 24 hours. The industry is required to make heavy investments in renovation, upgradation and upkeep of the hotel buildings at all times to keep it in pristine condition.
Section 32 of the IT Act should be amended to restore the depreciation rate to 20 per cent.

(ii) Indirect taxes
Service tax
Hotels and other tourism related service providers who earn foreign exchange have been included as the 13th sector in the Service Export Promotion Council set up by the ministry of commerce, government of India.
As such, they may be granted exemption to the extent of foreign exchange earned for the following services provided by the hotels, i.e. banquet rentals, rent-a-cab, dry cleaning services, health club or fitness centre services, beauty parlor services, internet cafe services, club/association service, business support services, business auxiliary services, management consultant services, renting of immovable property, etc.

Custom duty
The customs duty structure should be rationalized for hotels and restaurants in tune with the international practices, to enable the Indian service sector to compete with their international counterparts.
This is specially so for import duty payable by small sized hotels and restaurants who do not earn substantial foreign exchange and therefore, are not eligible for any of the Export Promotion Capital Goods schemes.

Excise duty
Seeks excise duty exemption on supply of food preparations (as part of their food and beverage services) by hotels or restaurants to their by guest (staying in the relevant hotel).
Also, hotels and restaurants with turnover less than Rs 1.50 crore (Rs 15 million) should be exemption from paying central excise duty on the products produced and consumed within the premises.

(c) Interest subvention to employment intensive sectors
The 2 per cent interest subvention extended to employment-intensive sectors like textiles, leather, marine and handicrafts as announced in the relief package announced by the government of India on December 8, 2008, should be definitely extended to the hotel sector as their employment generation capacity is much more than these sectors.

(d) Declaration of tourism as an industry under the Industries Act 1951
Many states in India have already granted industry status to tourism and the industry seeks the remaining state governments as well as the central government to recognize tourism as an industry.
It is also requested to declare tourism as an industry under the Schedule 1 of the Industries Development Act, 1951.

(e) Luxury tax
Luxury tax varies widely across services and states. Also, in the most of sales it is charged on the published tariff by not considering the commissions paid to agents and discount offered to walk-in clients.
So the industry seeks exemption of luxury tax on the room tariff less than Rs 2,500 and to charge a uniform rate of 4 per cent on the actual tariff where room rent is Rs 2,500 or more per day.

(f) VAT/Sales tax and other taxes
Vat/Sales tax on food & beverage are different for each state and it should be uniform over the country. It will help in many hotel projects coming up all over the country which leads to lowering hotel tariffs and generating employment.

So till the next time when we again go for elections, let’s keep the note ready to hand it over to hopefully the same or a new Tourism Minister to push our case. I think it’s time for people like Amitabh Kant to be on hot seat and not only draft policies but push our case with the Government as well.

Till such time the Tourism Sector Dreams and Dreams …..and Dreams really hard for them to become reality soon enough!!

 

Amin!

July 13, 2009 Posted by | Uncategorized | , , , , , , , , , , , | Leave a comment

The Great Economic Downturn & The Great Indian Tourism Industry

Let’s go back to the year 2001, the year wherein we witnessed the crash of tourism for once owing to 9/11 attacks. The personal tourism activity recorded for that year stood at USD 645.06 Billion. The business travel & tourism was aggregated at USD 110.71 Billion. These figures for the following year went up to USD 662.76 billion and USD 134.49 billion. And did we say at that time that tourism has come to an end? The entire world was suffering from the fear of terrorism and hence was reconsidering their travel plans. Our country that depends heavily on the western world for its incoming business traffic was wondering on how to tackle the depleting numbers. The message was loud and clear. It was then that the country took some steps that marked the beginning of a new source market, a new trend. The domestic tourism was by now far forgotten. A few good campaigns, launch of Incredible India over a period of time and an active interest by the local state tourism bodies ensured that we are marketing our products to our internal customers who are cautious but at the same time have that risk taking ability. These are the people who stand by roadside and eat those pani purris, these are the ones who will stand in a local Mumbai train early in the morning with half of their body almost hanging outside. So with a healthy appetite and a spirit of adventure, our great Indian tourist was ready for a new beginning. Something that he never anticipated but always strived for. The results were astonishing. The year 2002 saw the corresponding Personal and Business T&T grew to USD 662 billion and USD 134 Billion. Something similar was seen in countries like Singapore that got affected by SARS in 2003 and remember this was also the year of the Gulf War. Tourism at time generated over USD 10 billion in revenue annually or about 5% of the country’s GDP. The numbers were down but not the spirit and the belief. While 2002 saw a total of 7.6 million visitors, the first half of year 2003 saw these numbers down to 2.5 million. But in order to boost the city state’s travel industry, the Singapore Tourism Board set for promotional tourism campaign on two sections, healthcare and education services. It also set up more overseas offices to tap fast-growing markets like China, India and ASEAN countries. The Singapore ROARS and Step Put Singapore campaigns not only minimized the impact of SARS on businesses but also staged a rapid recovery for the tourism industry. When the STB and International Advisory Council for Tourism met for to discuss and explore key issues and trends facing the city tourism industry, the key agenda was not short term. The agenda was to position Singapore as a destination for the next 10 years to ensure tourism remains sustainable engine of economic growth. And we all are witness to the growth and comeback that this nation has recorded. I see no harm when our Finance Minister talk about cutting down on hotel and airline fares. Our industry works on volumes and that helps in a big way to bring down our overall costs. This is true for any industry and for long we have been asking to give tourism an industry status. The month of November 2008 saw a steep 10% decline in occupancies in NCR. While the ARR hike was able to boost a higher REVPAR over last year, it’s definitely not a very positive trend. Companies are looking at budget hotels, guest houses and day trips to cut costs. If its recession, its’ for everyone and the first thing that gets the cut is travel & boarding. And you do not need any Revenue Managers today to guide you on how to cut costs. Travel planners are keenly looking out on the best fares available across various airlines and hotels to ensure that they are able to save each and every penny. And why not, my personal belief is that this should be done throughout the year. You don’t need an economic downturn to teach you the basics of business. The economic downturn is in fact proving to be a mixed blessing for online travel companies, with budget travel and cruise lines benefiting from the current environment. According to Hitwise, UK online traffic to budget travel companies increased by 5.3 percent in September compared with the previous year. The websites of cruise companies experienced an 8.2 percent increase in traffic over the same period. Each of the top three budget travel websites in the UK – easyJet, Ryanair and Travelodge – has experienced at least a 20 percent increase in UK Internet traffic over the last 12 months. Almost 60 percent of visitors to cruise websites are aged 55+, with a further 16 percent coming from the 45-54 age-group. If these figures are any indicators of the global trend, I think we have a great opportunity at hand. Demographics will play a role in the growth of the various sectors online, but the economic downturn will also have an impact. Customers are now looking for all inclusive deals as a way of saving money, and online channels offers travelers with one way of achieving this. India is seen as a growing market for international airline traffic and the current market size is nearly $5 billion (Rs21,000 crore) a year. India, with its huge middle-class population of over 250 million, is like Airways, untapped gold mine. With its present international travel market not even covering 2% of the population, the country offers large opportunities for airlines. Deutsche Lufthansa AG, Singapore Airlines Ltd, Cathay Pacific Airways Ltd, British Airways Plc. (BA) and Emirates are in the process of increasing the frequency of their flights and connecting new destinations here. Everything that goes down has to come up and vice versa. So, when a rebound happens there (in global markets) these carriers will have an advantage as they would have already built capacities in India. Hong Kong Dragon Airlines Ltd (an affiliate of Cathay Pacific), Saudi Arabia’s Sama LelTayaran Co. Ltd (popularly known as Sama), and AirAsia Berhad are also launching operations in the country As for hotels, investment in the right city and right segment is always important and more so in the current times. Good location will be the criteria for the future development. Having a good mix of investments in premium, mid and budget segments will give the group a better robustness to weather the challenge ahead. The fact of the matter is that there is still a mismatch between supply and demand of rooms in India. Bad times, like the good ones, don’t last forever. Yet again a time will come when companies and people will resume their usual spending when the rooms are in short supply. While the next twelve to eighteen months will be challenging, things will be back to normal if we stand up to this challenge. The demand-supply mismatch will again come into the picture with continued shortage of rooms, which will again drive companies to develop hotels Tough times don’t last, only tough people do!!

April 12, 2009 Posted by | Hospitality & Tourism | , , , , , , , | Leave a comment