Sustainable Competitive Advantage in the Hotel Industry and Impact of Innovations on Occupancy rate – A Managerial Perspective.
Thesis Submitted to the Padmashree Dr. D. Y .Patil University, Department of Business Management In partial fulfillment of the requirements for the award of the Degree of
DOCTOR OF PHILOSOPHY in BUSINESS MANAGEMENT
Submitted by Krishna K. Shetty Enrollment No. DYPPHD07- 066100026
Research Guide Dr. R. GOPAL DIRECTOR, DEAN & HEAD OF DEPARTMENT
PADMASHREE DR. D.Y. PATIL UNIVERSITY, DEPARTMENT OF BUSINESS MANAGEMENT, Sector 4, Plot No. 10, CBD Belapur, Navi Mumbai – 400 614
June 2010
1 Sustainable Competitive Advantage in the Hotel Industry and Impact of Innovations on Occupancy rate – A Managerial Perspective.
2 DECLARATION
I hereby declare that the thesis entitled “Sustainable Competitive
Advantage in the Hotel Industry and Impact of Innovations on Occupancy rate – A Managerial Perspective.” submitted for the Award of Doctor of
Philosophy in Business Management at the Padmashree Dr. D.Y. Patil
University Department of Business Management is my original work and the thesis has not formed the basis for the award of any degree, associate ship, fellowship or any other similar titles.
Place:
Date:
Signature of Guide Signature of Head of Dept. Signature of student
3 CERTIFICATE
This is to certify that the thesis entitled “Sustainable Competitive
Advantage in the Hotel Industry and Impact of Innovations on Occupancy rate – A Managerial Perspective.” submitted by Mr. Krishna K. Shetty is a bonafide research work for the award of the Doctor of Philosophy in
Business Management at the Padmashree Dr. D. Y. Patil University
Department of Business Management in partial fulfillment of the requirements for the award of the Degree of Doctor of Philosophy in
Business Management and that the thesis has not formed the basis for the award previously of any degree, diploma, associate ship, fellowship or any other similar title of any University or Institution.
Also certified that the thesis represents an independent work on the part of the candidate.
Place:
Date:
Signature of the Head of the department Signature of the Guide
4 ACKNOWLEDGEMENT
In the first place, I am indebted to the Padmashree Dr. D.Y. Patil University
Department of Business Management, which has accepted me for
Doctorate program and provided me with an excellent opportunity to carry out the present research project. I am highly grateful to Dr. R. Gopal, my guide, the Director, Dean and Head of the Department of Business
Management, who has been a source of constant support, inspiration and encouragement. Without his valuable guidance and mentoring this research would not have been possible. I am grateful to my family and friends for being supportive throughout this period of four years when I have been pursuing my Ph.D.
Place:
Date: Signature of the student
5 CONTENTS
CHAPTER -TITLE PAGE NO. NO. Preliminary Cover Page 1 Title 2 Declaration 3 Certificate 4 Acknowledgement 5 List of Tables 8 List of Figures 9 List of Abbreviations 10 Executive Summary 11 - 14 Chapter -1 Introduction 15 - 22 Chapter -2 Review of the Literature 23 – 39 2.1 Literature Review 23 2.2 Research Gap 38 Chapter -3 Objective of Research 40 – 45 3.1 Research Problem 40 3.2 Statement of Research Objectives 41 3.3 Hypotheses 42 3.4 Importance of Research 45 Chapter -4 Research Methodology 46 – 49 Chapter -5 Hospitality and Hotel Industry – An overview 50 – 78 5.1 Introduction 50 5.2 History of Hotels and Motels 53 5.3 Hotels in Modern Times 56 5.4 Motels and its features 59 5.5 Advent of Hotel Chains 63 5.6 Origin of Food Service Industry 64 5.7 Types of Hotels 64 5.8 Hotel Organization 69 Chapter -6 Hotel Industry – The Global Scenario 79 – 91 Chapter -7 Hotel Industry in India and Thailand 92 – 150 7.1 Hotel Industry in India 92 7.2 Hotel Industry in Thailand 134 Chapter -8 Sustainable Competitive Advantage and Innovations in 151 – 201 the Hotel Industry
6 Chapter -9 Data Analysis and Major Findings 202 - 235 9.1 Data Analysis 202 9.2 Major Findings 227 Chapter - Recommendations and Suggestions 236 – 241 10 Chapter - Conclusion 242 – 245 11 Appendices 246 – 314 Appendix I – Bibliography 246 Appendix II - Questionnaire used for survey 251 Appendix III- SPSS Outputs 261
7 LIST OF TABLES
Sr. Table No. Table Name Page
No. No.
1. Table 4.1 Overall Sampling 48
3. Table 6.1 Worldwide hotel ranking 2007 82
4. Table 6.2 Top 20 hotel brands worldwide 82
5. Table 7.1. The supply demand gap in premium hotels segment (Avg.10 major 102
cities)
6. Table 7.2. Thailand tourism growth rate. 139
7. Table 7.3. Thailand tourism receipts 140
8. Table 7.4 Thailand hotels grading points 147
8 LIST OF FIGURES
Sr. Figure No. Figure Name Page
No. No.
1. Figure 5.1. Large Independent Hotel Structure 71
2. Figure 5.14. Small Hotel Structure 77
3. Figure 6.1. Worldwide Real GDP Growth – 2003 to 2007 79
4. Figure 6.2 Rev PAR Change by Region May YTD 80
5. Figure 6.3 Most key global cites are also seeing substantial rate growth 80
6. Figure 6.4 European Supply & Demand Monthly Change 81
7. Figure 6.5 U.S. Supply & Demand Monthly Change 81
8. Figure 6.6 The growth rate of the hotel supply at corporate chains 83
worldwide from 2001 to 2006
9. Figure 6.7 Hotel Occupancy Rates – Major World Cities. 86
10. Figure 7.1 Sectoral Growth Rates at Factor Cost by Industry – India (03-09) 93
11. Figure 7.2 Domestic tourist visits to India 111
12. Figure 7.3 FTA in India over the past four years 112
13. Figure 7.4 Passengers carried by domestic airlines 112
14. Figure 7.5 Growth of Room Supply – India (1998/99-2013/14) 119
15. Figure 7.6 Thailand tourist arrivals 2007 -09 139
16. Figure 8.1 A Model of Competitive advantage 169
9 List of Abbreviations
GDP = Gross Domestic Product
WTTC = World Travel and Tourism Council
TSA = Tourism Satellite Accounting
UNWTO = UN World Tourism Organisation
SCA = Sustainable Competitive Advantage
F & B = Food and Beverages
RevPAR =Revenue Per Available Room
IRCTC = Indian Railway Catering and Tourism Corporation
ITDC = Indian Tourism Development Corporation
FDI = Foreign Direct Investment
RBI = Reserve Bank of India
FTA = Foreign Tourist Arrivals
FEE = Foreign Exchange Earnings
10 EXECUTIVE SUMMARY
India's tourism and hospitality industry has emerged as one of the key industries of the service sector driving the country's economy. The Hotel and Restaurant Industry forms a major chunk of the hospitality sector. The share of contribution of activities of trade, hotel and restaurant business rose from 8-9 per cent to 14-15 per cent over a period of five decades till 2010. By 2010, India will see an estimated 10 million foreign visitors and thereby a demand for approximately 100,000 rooms. And with the continuing surge in tourist inflow, this sector is likely to offer tremendous opportunity for investors. Sources estimate, demand is going to exceed supply by at least 100% over the next 2 years. With demand- supply disparity, 'Hotel India' room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. The hotel industry has to be prepared for this tremendous potential and have to take the necessary steps to meet and maintain this surge in demand.
In light of the importance of the Hotel Industry to the economy, it becomes extremely important to study the drivers for success in this sector. Thus a study of factors of sustainable competitive advantage in the hotel industry become most relevant.
Innovation is a word that has been talked about in most sectors of the economy especially in sectors like pharmaceutical and biotechnology.
However, is this factor as important in the services sector, more
11 specifically, the hotel industry, or is it being given more importance than is due in because of its relative importance in other sectors. Is innovation a part of the factors of sustainable competitive advantage in the hotel industry and if so what is its effect on the occupancy rates in the hotels? It is considered fit to study all these factors from the perspective of the management of the hotels as these are the people who are aware of the real pulse of this important industry.
The objectives of this study were to study the various factors for sustainable competitive advantage in the hotel industry with specific reference to innovations. To study the impact of implementing sustainable competitive advantage with specific reference to innovations on the
Occupancy Rate of the hotels. To study the perspective of the management in regard to the factors of sustainable competitive advantage across various categories of hotels, destinations, geographical areas and according to the designation of the managers themselves.
This study has sought to identify the factors for success and sustainable competitive advantage in the hotel industry which is a very important component of our economy. An endeavor has been made to study the impact of these factors on the occupancy rates of hotels especially with reference to innovations in various categories. The managers of the hotels are the ones who are in the best position of judging all these questions since they are the important link between the hotel ownership/management and the end customer. The management of hotels have to be aware of the
12 various factors for sustainable competitive advantage as they have a strong positive and direct impact on the occupancy of hotels. The research seeks to study and analyze these aspects from the perspective of the management of the hotels and come up with recommendations.
The study was conducted to cover all these criteria from the managerial perspective and attitude as regards the factors for sustainable competitive advantage in the hotel industry. A comparative study of these criteria in relation to the grade of the hotel, the level of the managers concerned, the reason for travel and geographical area of the hotel was conducted. Certain key cities were selected from India which were considered to be representative of the pulse of the whole country. For the purpose of comparison with another Asian country, Thailand was chosen and similarly two key cities from that country were chosen for the purpose of research.
Questionnaires were filled in from managerial personnel from the chosen sample cities from both countries.
The data was classified and tabulated as per various geographical locations and classes of hotels 5 Star, 4 Star and 3 Star. Classification was done question wise and using other criteria. Various statistical tools were used in the analysis of the collected data.
The findings were arrived at from the analysis of data and the comparative derivations from the available secondary data. The factors of sustainable competitive advantage in the hotel industry have irrefutably been determined to be the Facilities and Amenities provided in the hotel, the
13 technology used in various departments of the hotel, the product offerings of the hotel, the food an beverages served at the hotel, the service quality of the hotel, the ambience of the hotel, the other add-on facilities and services provided by the hotel and the innovations implemented by the hotel within all these factor. It has also been strongly determined that in the hotel industry innovations are not a stand alone factor but can only be a part of these other factors for sustainable competitive advantage. It was found that there is a significant difference in certain criteria when compared from the point of view of country of the hotel and destination.
One important finding was also that the occupancy rate of the hotels directly affects the perspective and attitude of the hotel as regards factors of sustainable competitive advantage.
The research is expected to help the hotel industry and the management of hotels in getting pointers for improvement in overall performance and for training managerial staff, hence resulting in a contribution to the welfare of the economy.
14 CHAPTER 1
INTRODUCTION
India at present has one of the 10 fastest growing economies in the world.
India’s GDP growth in the industrial and service sectors has been accelerating over the last five years, attaining double-digit growth in 2010, at 10.0 and 11.1 percent, respectively (Ministry of Finance, 2009). The optimism in service sector growth contributed more than two thirds of the overall growth in GDP between 2002-03 and 2006-07 (Ministry of Finance,
2007). India’s gross national product (at factor cost) rose from Rs. 20.7 trillion in 2001-02 to Rs. 32.5 trillion in 2005-06 at current prices, a rise of almost 60 percent in five years (Ministry of Finance, 2007). Post 1991
Globalization, Liberalization and Privatization, Service Sector share of contribution to India’s GDP has been steadily raising from a meager 38.67 per cent in 1985-86 to about 53% in 2006-07.
The services sector consists of a major component of the total GDP of our country. From out of this the Hotel and Restaurant Industry forms a major chunk. The share of contribution of activities of trade, hotel and restaurant business rose from 8-9 per cent to 14-15 per cent over a period of five decades till 2010. Trade along with hotel and restaurant business rose fourteen-fold over the period while transport along with storage and communication rose eighteen-fold.
15 India's tourism and hospitality industry has emerged as one of the key sectors driving the country's economy. India's tourism is thriving, owing to a huge surge in both business and leisure travel by foreign and domestic tourists. According to the latest Tourism Satellite Accounting (TSA) research released by the World Travel and Tourism Council (WTTC) and its strategic partner Accenture, India's travel and tourism industry is generated approximately US$ 100 billion in 2008, growing at 7.3 per cent and is expected to be rising to US$ 275.5 billion by 2018 over the next ten years.
The rapid growth of India's tourism industry has been instrumental in
South Asia being the preferred tourist destination as noted by the UN
World Tourism Organisation (UNWTO). Foreign tourist arrival rose to 3.46 million to an estimated 5 million in 2007. Domestic tourists too have grown from 366.23 million in 2004 to 462 million in 2006. Consequently, foreign exchange earnings from tourism in India rose from US$ 3 billion in 2002 to an estimated 11.96 billion in 2007. In fact, according to the World Travel and Trade Council, Indian tourism demand will continue to grow at a rapid pace. It estimates the demand to grow at an average of 8.8 per cent between 2004 and 2013, making India the world's third fastest growing tourist market.
Inbound Tourists: India's share of international tourist arrivals has steadily increased from 0.46 per cent in 2004 to 0.55 per cent in 2007. The flow of
16 foreign tourist arrivals has been recording phenomenal growth rates. The number of arrivals has increased from 3.9 million in 2005 to 4.4 million in
2006 and 4.95 million in 2007, recording a growth rate of 13.5 per cent in
2006 (over 2005) and 11.9 per cent in 2007 (over 2006). Alongside, there has been a concomitant rise in the foreign exchange earnings. Total earnings from foreign tourists has shown an annual growth rate of 19.2 per in 2006 and 33.8 per cent in 2007 to garner US$ 7.49 billion in 2005, US$ 8.93 in
2006 and US$ 11.96 billion in 2007. India's share in world arrivals currently stands at 0.5 per cent, its share in revenue generated from tourism worldwide is 1.11 per cent.
Medical Tourism : India is fast becoming a favourite with tourists world over, as it offers huge scope for various theme-based travel like Medical
Tourism, Adventure tourism, Heritage tourism, Wellness tourism,
Pilgrimage tourism, Golf tourism, Eco-tourism, Wildlife tourism among others. India's reputation as a major medical tourist destination is fast becoming popular amongst foreign tourists to the country. India is aggressively promoting the concept of medical tourism and capitalising on its low cost and highly trained doctors. Moreover, the country also has some of the best hospitals and treatment centres that are equipped with infrastructure and technology, which are at par with those in the US, UK and Europe at a fraction of the costs. In fact, Indian hospitals are fast becoming the first choice for foreign patients owing to easy access to visa facilities, coupled with the best emerging medical infrastructure, which will
17 help India earn to an extent of US$ 1.86 billion in foreign exchange by 2012.
Currently, India's earnings through medical tourism annually is an estimated US$ 821.40 million.
Hospitality : The boom in India's tourism industry and the surge in tourist inflow to the country has percolated to other associated sectors like aviation, medical tourism, and the hotel industry. The country's hospitality sector has witnessed an increase in the occupancy ratios and average room rates. While occupancy ratio is around 75-80 per cent, the average increase in room rates has been hovering around 22-25 per cent. By 2010,
India will see an estimated 10 million foreign visitors and thereby a demand for approximately 100,000 rooms. And with the continuing surge in tourist inflow, this sector is likely to offer tremendous opportunity for investors.
For example, while the estimated number of required hotel rooms is around
240,000, the current availability is just 90,000 rooms - leaving a shortfall of
150,000 rooms to be provided. India's hospitality sector is expected to see an estimated US$ 11.41 billion in the next two years, and around 40 international hotel brands by 2011, according to a report by Ma Foi
Management Consultants. Along with these large scale expansion plans, international hotel asset management companies are also likely to enter
India. Several global hotel chains see immense investment opportunities in the sector with global chains like Hilton, Accor, Marriott International,
Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI), InterContinental
18 Hotels group and Hampshire amongst others have announced major investment plans in India with others likely to follow suit.
International Recognition: India's booming tourism sector has not only witnessed international investments but also achieved international accolades with its increasing appeal as the leading global tourist destination. The government has been instrumental in making tourism a priority sector its efforts have borne fruits with a series of international recognition and awards.
India has been ranked No 1 in long-term travel growth by World
Travel and Trade Council in its global report for 2008.
India has been elected to head the UN World Tourism Organisation
(UNWTO), the highest policy making world tourism body represented
by 150 countries.
The world's leading travel and tourism journal, "Conde Nast
Traveller", ranked India as the ‘numero uno’ travel destination in the
world.
India was adjudged Asia's leading destination at the regional World
Travel Awards (WTA).
India bagged the World's leading Destination Marketing Award for
the Incredible India campaign.
Over the last decade and half the mad rush to India for business opportunities has intensified and elevated room rates and occupancy
19 levels in India. Even budget hotels are charging USD 250 per day. The successful growth story of 'Hotel Industry in India' seconds only to China in Asia Pacific. According to the tourism ministry, 4.4 million tourists visited India last year and at current trend, demand will soar to 10 million in
2010 – to accommodate 350 million domestic travelers. 'Hotels in India' has a shortage of 150,000 rooms fuelling hotel room rates across India. With tremendous pull of opportunity, India is a destination for hotel chains looking for growth. The World Travel and Tourism Council, India, data says,
India ranks 18th in business travel and will be among the top 5 in this decade. Sources estimate, demand is going to exceed supply by at least
100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, 'Hotel India' room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. 'Hotel Industry in India' is eroding its competitiveness as a cost effective destination. However, the rating on the 'Indian Hotels' is bullish. 'India Hotel Industry' is adding about
60,000 quality rooms, currently in different stages of planning and development and should be ready by 2012. MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn their share of pie in the race. Government has approved 300 hotel projects, nearly half of which are in the luxury range. Therefore, with opportunities galore the future
'Scenario of Indian Hotel Industry' looks rosy.
20 Combining unparalleled growth prospects and unlimited business potential, this industry is certainly on the foyer towards being a key player in the nation's changing face.
However, on the other hand it is also to be noted that hotels in most big cities around the world are emptier than they were last year, according to
STR Global, a research firm. The Indian hotel industry posted dull numbers during the quarter and year ended March'09. The first half of the financial year 2008-09 was affected with financial crises whereas the second half was affected due to the terrorist attack in Mumbai. The occupancies of various places during the year has posted sharp decline. According to industry sources, the aggregate supply of cities like Delhi, Bangalore,
Chennai, Hyderabad, Kolkata and Goa increased by 3 per cent to 18,447 rooms per day, but aggregate demand slid down by 12 per cent at 11,352 rooms per day.
During the year, the occupancy rate in Delhi decreased to 62 per cent from
73 per cent in FY'08, Bangalore decreased to 59 per cent from 70 per cent,
Chennai dipped to 65 per cent from 71 per cent and Hyderabad declined to
59 per cent from 69 per cent. The hard time for the Indian hotel industry is expected to continue in the current financial year also. With the cut in corporate travel, both domestic and international travel could result in the above the conditions.
21 In light of the importance of the Hotel Industry to the economy, it becomes extremely important to study the drivers for success in this sector. Thus a study of factors of sustainable competitive advantage in the hotel industry becomes most relevant. Innovation is a word that has been emphasized in most sectors of the economy especially in sectors like pharmaceutical and biotechnology. However, is this factor as important in the services sector, more specifically, the hotel industry, or is it a word that is being given more importance than is due because of its relative importance in other sectors.
Is innovation a part of the factors of sustainable competitive advantage in the hotel industry and if so what is its effect on the occupancy rates in the hotels? It was considered fit to study all these factors from the perspective of the management of the hotels as these are the people who are aware of the real pulse of this important industry.
22 CHAPTER 2
REVIEW OF LITERATURE
2.1 Literature Review - The first traces of a theory purporting to explain what is now called as sustainable competititve advantage was proposed by
Alderson (1965), he proposes three bases for differential advantage: technological, legal, and geographical; four strategies for achieving differential advantage: segmentation, selective appeals, and differentiation.
Hall (1980), said successful companies will achieve either the lowest cost or most differentiated position. Henderson (1983), continues the discussion of those unique advantage(s) of one firm over competitors; those who can adapt best or fastest gain an advantage over. Ghemawat (1986), discusses those advantages that tend to be sustainable: size in the targeted market, superior access to resources or customers, and restrictions on competitors’ options. Hamel and Prahalad (1989), A firm should not search for an SCA, it should learn how to create new advantages to achieve global leadership. Oliver (1997), proposes a model of firm heterogeneity which suggests that both resource capital and institutional capital are indispensable to SCA.
The idea of a Sustainable Competitive Advantage surfaced in 1984, when
Day suggested types of strategies that may help to "sustain the competitive advantage". The actual term "Sustainable Competitive
Advantage " emerged in 1985, when Porter discussed the basic types of
23 competitive strategies that a firm can possess (low-cost or differentiation) in order to achieve a long-run Sustainable Competitive Advantage.
Interestingly, no formal conceptual definition was presented by Porter in his discussion. Day and Wensley (1988) admit that there exists "no common meaning for ‘competitive advantage’ in practice or in the marketing strategy literature". Barney (1991) has probably come the closest to a formal definition by offering the following: "A firm is said to have a sustained competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy".
Although lacking a formal definition, Coyne (1986) contributed to the construct by proposing that in order to possess an Sustainable
Competitive Advantage, consumers must perceive some difference between a firm’s product offering and the competitors’ offering. This difference must be due to some resource capability that the firm possesses and competitors do not possess. Also, this difference must be some product/delivery attribute that is a positive key buying criterion for the market.
Recognizing the importance of an effective strategy to firms, Day and
Wensley (1988) focused on the elements involved in competitive advantage. Specifically, they identified two categorical sources of competitive advantage: superior skills, which are "the distinctive
24 capabilities of personnel that set them apart from the personnel of competing firms", and superior resources, which are "the more tangible requirements for advantage that enable a firm to exercise its capabilities".
Treacy and Wiersema (1995) point to successful companies such as Home
Depot and Nordstrom who have embraced the idea of customer intimacy in order to deliver a highly customized end product to customers.
Barney (1991) contributed to the discussion by exploring the link between a firm’s resources and Sustainable Competitive Advantage. He stated that not all firm resources hold the potential of Sustainable Competitive
Advantage; instead, they must possess four attributes: rareness, value, inability to be imitated, and inability to be substituted. Similarly, Peteraf’s
(1993) resource-based view of the firm designates four conditions that underlie Sustainable Competitive Advantage, including superior resources, ex-poste limits to competition imperfect mobility, and ex-ante limits to competition. Dierick and Cool (1989) discuss inimitable resources such as non-tradable assets which are immobile and thus bound to the firm.
Other researchers have contributed to the Sustainable Competitive
Advantage construct by more carefully delineating the specific resources and skills that aid in the development of an Sustainable Competitive
Advantage. For example, Hunt and Morgan (1995) propose that "potential resources can be most usefully categorized as financial, physical, legal, human, organizational, informational, and relational". They go on to state
25 that a comparative advantage in resources can translate into a position of competitive advantage in the marketplace, but only if the criteria proposed by Barney (1991) are satisfied and the offering has some perceived value in the marketplace. Prahalad and Hamel (1990) suggest that firms should combine their resources and skills into core competencies, loosely defined as that which a firm does distinctively well in relation to competitors. competitive advantage s are realized only when the firm combines assortments of resources in such a way that they achieve a unique competency or capability that is valued in the marketplace (Morgan and
Hunt 1996).
Bharadwaj, Varadarajan, and Fahy (1993) discuss the specific combinations of skills and resources that are unique to service industries.
They propose that the greater the complexity and co specialization of assets needed to market a service, the greater the importance of innovation as a source of competitive advantage will become. They also propose that brand equity becomes an important source of competitive advantage in service industries. Srivastava et. al. (1998) delineate market-based assets into two types: relational and intellectual. Relational market-based assets are those that reflect bonds between a firm and its customers and/or channel members. They are rare, unique, valuable, and difficult to imitate, market-based assets provide an excellent potential source of Sustainable
Competitive Advantage for a firm.
26 Day and Wensley’s (1988) greatest contribution to the Sustainable
Competitive Advantage construct is their framework for assessing a firm’s
competitive situation as the first step in achieving an Sustainable
Competitive Advantage. Unlike past attempts of performance outcome
measures (such as profitability and market share), they suggest using
perspectives of both the customer and the competitor to assess the firm’s
performance. Measures of customer input such as satisfaction and loyalty
balance the competitor focus and help to complete the assessment of
Sustainable Competitive Advantage of a firm. Similarly, Day and Nedungadi
(1994) propose that firms use different types of information to assess
whether a competitive advantage has been obtained according to the type
of orientation they have; a competitor-oriented firm emphasizes relative
resources or cost positions, whereas a customer-oriented firm emphasizes
segment differences and differentiation advantages. Bharadwaj,
Varadarajan, and Fahy (1993) also stress the importance of customers in determining the sources of competitive advantage; they state that a firm’s skills and resources can be considered sources only if they offer benefits desired by customers.
This outward focus on customers links the Sustainable Competitive
Advantage construct to concepts such as branding, market orientation, organizational learning, innovation, customer value, relationship marketing, and business networks. These linkages are discussed below in greater detail.
27 The marketing literature provides different conceptualizations of the term
"market orientation," yet they share similar components. Kohli and
Jaworski (1990) see market orientation as the implementation of the marketing concept by activities such as generating information (analyzing changing customer needs and wants), disseminating information and actually responding to customers’ needs. Other definitions of market orientation revolve around competitor-centered versus customer-centered firms. Day (1994), for example, views market orientation as a balance between being customer-centered and being competitor-centered, and that information technology can be used to help the firm to learn to act on available information faster than the competition.
Narver and Slater (1990) share a similar perspective of market orientation.
They view market orientation as an organizational culture that contains three behavioral components: 1) a customer orientation (understanding the target market), 2) competitor orientation (understanding the strengths, weaknesses, capabilities, and strategies of key competitors), and 3) interfunctional coordination, which means using resources of all departments in a firm in order to create value for target customers. An example of this latter component is provided by Ghoshal and Westney
(1991), who find that a corporate culture of willingness to share information with all departments (interfunctional coordination) facilitates the learning process. Fiol and Lyles (1985) agree that a corporate culture in which all departments are flexible and are willing to accept change increases the
28 probability that learning will occur. And the ability to learn is essential in a market-oriented firm. Market orientation, then, presumes an outward focus on customers and competitors. For example, through a customer orientation, firms can gain knowledge and customer insights in order to generate superior innovations (Varadarajan and Jayachandran 1999). Also, through interfunctional coordination, teams may be formed and empowered to respond to specific customer requests and solve complicated problems that span across functional areas (Tansik 1990).
Because a market orientation employs intangible resources such as organizational and informational resources, it can serve as a source of
Sustainable Competitive Advantage (Hunt and Morgan 1996). Wodruff
(1997) also sees the next major source of competitive advantage coming from a more outward orientation, specifically toward customers. He suggests a customer value hierarchy in which firms should strive to match their core competencies with customers’ desired value from the product or service. Slater (1997) aids Woodruff’s call by suggesting a new theory of the firm that is customer-value based. Under this theory, the reason that the firm exists is to satisfy the customer; the focus on providing customers with value forces firms to learn about their customers, rather than simply from their customers. With respect to performance differences, this theory suggests that those firms that provide superior customer value will be rewarded with superior performance as well as an Sustainable Competitive
Advantage.
29 According to Jarillo (1988) the establishment of trust and perceived goal congruence are two factors that assist in the development of organizational networks. Similar to Frazier, Spekman, and O’Neal’s (1988) view of opportunistic behavior, Jarillo sees the presence of trust as an indicator that the relationship is one of value; therefore, opportunistic behavior is less likely.
Porter (1985) also discusses the formation of "coalitions" that allow the sharing of activities in order to support a firm’s competitive advantage.
However, Porter’s "value chain" approach focuses on activities within a single firm. A new model is needed which adapts his approach in order to understand the value-added processes comprised of dyadic and network interfirm activities which foster each firm’s Sustainable Competitive
Advantage.
Ney, Edward (1995) says that hotels are realizing they must provide value- added services to attract and please customers. Many hotels are making innovations in food-and-beverage service. Hospitality finds success for its hotels in concept lounges. Achrol’s (1997) call for a paradigm shift to network relationships, the importance of understanding how networks operate as well as the advantages hotels can gain from network relationships cannot be ignored. Strategy researchers have been presented with a great opportunity to fill the gaps in our understanding of how networks contribute to a firm’s Sustainable Competitive Advantage. Robert
A Nozar.(2001) doubts about the severity of an economic slowdown and a
30 call for more innovations to attract hotel developers and guests. Operators can expect energy costs, payroll costs and the cost of technology upgrades to be the biggest drains on budgets.
Cathy Enz, Judy Siguaw- 2003, bring out the importance of innovative ideas and practice in the hotel industry. The paper tags ‘implemented and successful innovative ideas’ as ‘best practices’. To what extent will the current industry best practices stand the test of time? What appears to be necessary for a best practice to be sustained is becoming completely integrated into the organizations ongoing activities. The lack of time to think plan and develop best practices, and insufficient nurturing of innovations with needed resources and top management support were identified as barriers to development of best practices. The study reveals that the high attrition rate in the industry is deleterious to the consolidation of these best practices. Jeff Higley.(2003) says that new look of luxury properties isn't all about the appearance of them - it's more about the feel.
Guests' needs and wants have become more complex and owners and operators of luxury hotels and resorts are constantly are re-evaluating what services and amenities they need to offer to satisfy the increasingly hard- to-find repeat guest. Unlike 20 years ago, guests want to experience different activities. Guests expect spa treatments, water sports, outdoor adventures and cultural lessons to be among their experiences at a luxury hotel resort
31 Anshul Kaushesh (20040, discusses various issues directing onward aspects of innovations in hotel marketing that lead to the creation of wealth, a specific tool for entrepreneurs through which they try to create value, and its role in the marketplace. The focus of the innovation process needs to redefine from research and development to business strategies that affect the commercialization of new ideas. Clayton M. Christensen
(2005) points out that outstanding businesses can do everything right and still lose their market leadership, or worse, disappear completely. The study presents a set of rules for capitalizing on the phenomenon of disruptive innovation. He explains the impact of disruptive technologies and changes and how to manage their effect on the existing business is one of the notable and useful for the present study. Micheal Ottenbacher and Juergen Gnoth (2005) bring out nine factors that drive successful innovations in the hospitality service industry with the 184 German hospitality manager’s perceptions. The study was carried out to determine the key success factors for New Service Development in the hospitality industry. The authors concluded critical work that, the correct market selection and a suitable response to its needs are critical for success.
Rayka Presbury,(2005) identifies the key factors that impede service quality delivery in the context of luxury hotels (four- and five-star properties) The study revealed a number of impediments to developing and maintaining distinguishable, superior service. The limitations of the study was primarily related to the scope of the research in terms of the number of hotel
32 properties participating. The study incorporates the views of managers only. The focus of this study was on the hotel sector, and the findings cannot be accepted as being necessarily relevant and applicable to services across the tourism/hospitality industry as a whole. Douglas
Rushkoff (2005), presented that in an environment that seems to be transforming itself with every new technology, marketing tactic or investment strategy, businesses rush to embrace change by trading in their competencies altogether in the name of innovation. He points out that one needs to be continuously on the lookout for new ideas to keep up the sustainable competitive advantage.
Rayka Presbury, Anneke Fitzgerald, Ross Chapman (2005), state that the problem of sustaining competitive advantage can be addressed, in large part, if hotels adopt rigorous recruitment procedures that select people with the appropriate attitudes and skills. This should be supported by an organizational commitment to helping employees appreciate their roles in the hotel sector and, more broadly, in tourism. The study suggests that leaders in luxury hotels should take responsibility for overcoming the impediments to service quality budgetary constraints, inappropriate staff attitudes, lack of mentoring, and the high expectations of quests. If they do not do so, the sustainability of their hotels in the current competitive environment placed at risk. Clayton M. Christensen (2005), This research work advices that cost cutting, downsizing and economizing are not the way to success, but ongoing innovation is. The only sustainable
33 competitive advantage comes from out-innovating the competition. V. B.
Angadi, (2006), points out that one of the main roles of the entrepreneur is that of an innovator even thought this is one of the often neglected aspects of entrepreneurship. Ramamirtham Gopal (2007), in his paper helps one understand the types of innovation that take place in the industry and the impact of innovation on the value of business. He brings out the difference between product innovation and process innovation. He also talks about
Competitor centered and Customer centered innovation. The paper effectively brings out the importance of innovation for maintaining the
Sustainable Competitive Advantage and how it ultimately results in an increase in margin or an increase in volume.
Kamal Manaktola (2007), seeks to explore the factors which influence the consumer attitude and behaviour towards green practices in the lodging industry in India and also to explore the consumers' intentions to pay for these practices. The consumers using hotel services are conscious about environmentally friendly practices in India. Indian hotels have the competitive advantage over similar products if they follow green practices.
The study attempts to bring out facts regarding customer buying behaviour towards green practices in the Indian hotel industry.
Heather Gunter (2007), in his paper explores that the more innovation and technology in hotel design is helping to fuel the purchasing business.
Stephanie Ricca, (2007), worked on the Wyndham brand sharpens focus, found that the brand launched a three-pronged strategy that includes
34 development plans, revamped customer service, and a new marketing plan targeted to Generation X consumers. Glenn Withiam (2007), reflects the humble innovations in the hotel industry constantly look for ways to use technology to provide better service to guests. Though hotels have moved far beyond such humble innovations, one factor remains constant: guests' reaction to technology. He also points out the fact that not all guests are comfortable with technological changes.
Stacey Mieyal Higgins (2007), in his work has shown it is no secret that the world of hotel brands is increasingly competitive, and a comfortable bed just does not stand out anymore. It is the right thing to do to keep up with product innovations, but it is not defensible; it is very easy to knock that off. You win the day with distinguishing a way of making the guest feel recognized and special. A key finding in the program development was the level of employees' engagement or permission to perform varied services based on the hotel management's approach.
Sonia Bharwani (2007) reveals sustaining competitive advantage through innovative strategy. Firms pursuing differentiation strategy emphasize
‘innovation’ and strive to offer something new or unique to customers in terms of their products and services. Innovative organizations are problem solvers, actively focusing on existing customer or market problems on the one hand, and market problems on the other, existing practices and procedures on the one hand, and the generating ideas aimed at improving and solving these problems through the development or adoption of new
35 products, services and procedures on the other. Adegoke Oke (2007), the study was to identify the types of innovations predominant in the service sector. This study investigated the relationships between innovation types, the degree of innovativeness, innovation performance and innovation management practices. The relationship between product and service innovativeness and innovation management practices, however, reveals that formal practices tend to biased toward the development of radical innovations.
Mort Aronson (2008), explored in his paper that innovation is a necessary factor for success with hotel franchising as well as the overall franchising community. Those franchise systems that demonstrate complacency with their current success flirt with the danger of not just remaining constant with their income stream but significantly regressing with hotel occupancy and income because of the volatile nature of the hotel industry and the intensity of competition. Franchisors have been the mainstream of innovation within their hotel systems with new technology, the inventory control, new marketing techniques and more.
Jonathan Barsky, Lenny Nash (2008), focused on Satisfaction Trends:
Timeshares lead industry in customer satisfaction Timeshares offer the opportunity to "buy the hotel" and explore different locations through exchange agreements. This innovative concept has flourished in detail with continues to expand. The timeshare industry clearly is doing a lot of things right, including satisfying its customers. Wann-yih Wu,(2008), This study
36 draws on the Grey relational analysis to select the best-performing hotels in Taiwan. The data contains the performance of 56 international tourist hotels in 2002 and industry data from 1992 to 2005. This investigation reveals the various competitive advantages and strategies in these top hotels, such as their appropriate site, higher price, and higher occupancy rate.
Paul J Heney (2008), has tried to differentiate the modern day hotels from traditional hotel companies, with innovations in the spas, restaurants, and rooms.
Shyh-Hwang Lee (2009) worked a Dynamic-Capabilities Approach. In his work assessment on traditional corporate resource-based perspective of the past dictated that competitive advantage rested on a variety of mainstream elements related to basic core values like quality, cost, and timeliness. Nowadays, innovation has become an important additional factor in the challenge to create and sustain competitive advantage in a rapidly changing business environment. Ed Watkins (2009) says that the path back to prosperity for hotels and hotel companies is clear but treacherous and can be managed only by concentrating on the key factor for the road to recovery, i.e. innovations. He says that we have to cut costs as much as we can and focus on managing distribution and maintaining rate discipline
Jason Q Freed (2009) offers hoteliers and information technology experts learning experiences on how to install, operate and benefit from new
37 technologies. He worked on the subject Conferences, Trade shows,
Attendance, Information technology in Hotels, & motels.
2.2 Research Gap
Even though much has been talked about regarding sustainable competitive advantage and innovations in the past few years hardly any research has been found to have been done in this respect in the hotel industry. Do these criteria for competitive advantage differ in respect of the grade of the hotel concerned? Hardly any comparative studies have been done across geographical locations as regards the factors for sustainable competitive advantage. Similarly no study was found to have made a comparative analysis between the reasons for travel and whether they affect the factors for comparative advantage in the hotel industry.
The opinions of the managerial personnel who are the main cog in the machinery of the hotel industry and who probably have the best bird’s eye view of this important factor have been totally ignored and most studies have been conducted from point of view of the customers. It was found necessary that some research be done as to what it is that the managers at various levels feel are the important factors for competitive advantage in the hotel industry. And does the perspective of these managers differ in relation to the position they occupy in the ladder of hierarchy. Innovations as a parameter for success is irrefutably important in some industries like the pharmaceutical industry. But does this also holds good in case of the service sector or more specifically in case of the hotel industry, or is the
38 importance of innovations being overplayed in this sector. There is a dearth of studies on the impact of innovations in the hotel industry, which is generally touted to be very important criteria for success in the hotel industry. What is the effect of innovations on the occupancy rates in the hotel industry? Since there is no quantitative measure for gauging the impact of innovations on the occupancy rate, can the perspective of the managers be used as a gauge to judge the actually importance of innovations in this sector. Is there any difference in the attitude of various categories of hotels towards innovations as a criteria for competitive advantage in the hotel industry?
A need was felt to conduct a research which covers all these criteria and makes a study regarding the managerial perspective and attitude as criteria for sustainable competitive advantage in the hotel industry and what are the factors that affect their perspective. And also make a comparative study of these criteria in relation to the grade of the hotel, the level of the managers concerned, the reason for travel and geographical area of the hotel.
39 CHAPTER 3
OBJECTIVES OF RESEARCH
3.1 Research Problem
As business environment is becoming more and more complex, accompanied by increased competition, rapid advances in technology and most critically, rising churn, be it customer or employees, there is an unprecedented rise in business failures today in the service sector. The hotel industry is a category in the services sector which contributes substantially to the GDP of the country. It is now widely accepted that to keep afloat in this scenario hotels have to constantly resort to technological and other innovations to keep one step ahead of the competition and to guarantee a reasonable return on investment. What then, are the drivers for competitive advantage in the hotel industry? What is the contribution of these innovative practices to achieve sustainable competitive advantage in the hotel industry? What are the factors for
Sustainable Competitive Advantage? What is their relation with innovative practices and the impact on the markets share as seen by the occupancy rate. The managers of the hotels are the ones who are in the best position of judging all these questions since they are the important link between the hotel ownership/management and the end customer – most often having a birds eye view of the whole industry scenario. The research seeks to study
40 and analyze these aspects from the perspective of the management of the hotels and come up with recommendations.
3.2 Statement of Research Objectives
The research objectives are:
1. To study the various factors for sustainable competitive advantage
in the hotel industry with specific reference to innovations.
2. To identify tools which can be used to measure sustainable
competitive advantage in the hotel industry.
3. To study the impact of implementing sustainable competitive
advantage with specific reference to innovations on the market share
(Occupancy Rate)
4. To study the perspective of the management in regard to the factors
of sustainable competitive advantage across various categories of
hotels.
5. To study the perspective of the management in regard to factors of
sustainable competitive advantage in hotels across geographical
areas.
6. To study the perspective of the various levels of management in
regard to factors of sustainable competitive advantage in the hotel
industry.
41 3.3 Hypotheses
Hypothesis 1.
H1o - There is no significant difference in the opinion of the managers of
the hotels in general that innovations, product offerings, service quality,
technology, ambience, food and beverages, facilities and amenities and
other add on facilities are the factors for sustainable competitive advantage
in the hotel industry.
H11 – There is a significant difference in the opinion of the managers of the hotels in general that innovations, product offerings, service quality, technology, ambience, food and beverages, facilities and amenities and other add on facilities are the regards factors for sustainable competitive advantage in the hotel industries.
Hypothesis 2.
H2o – There is no significant difference in the opinion of the managers of the hotels in general whether the factors for sustainable competitive advantage in the hotel industry have an impact on the occupancy rate.
H21 - There is a significant difference in the opinion of the managers of the
hotels in general whether the factors for sustainable competitive advantage
in the hotel industry have an impact on the occupancy rate.
42 Hypothesis 3
H3o – There is no significant difference amongst the opinion of the
managers as to whether innovation is the most important factor for
sustainable competitive advantage in the hotel industry.
H31 - There is a significant difference amongst the opinion of the managers as to whether innovation is the most important factor for sustainable competitive advantage in the hotel industry.
Hypothesis 4
H4o – There is no significant difference amongst the opinion of the
managers as to whether innovations per se are an important factor for
sustainable competitive advantage or are merely a part of the other factors
of sustainable competitive advantage in the hotel industry.
H41 - There is a significant difference amongst the opinion of the managers as to whether innovations per se are an important factor for sustainable competitive advantage or are merely a part of the other factors of sustainable competitive advantage in the hotel industry.
Hypothesis 5.
H5o – There is no significant difference amongst the opinion of the
managers as to whether innovations as a factor for sustainable competitive
advantage are prominent in the hotel industry.
43 H51 - There is a significant difference amongst the opinion of the managers as to whether innovations as a factor for sustainable competitive advantage are prominent in the hotel industry.
Hypothesis 6.
H6o – There is no significant difference in the opinion of the managers as
to whether innovation performance per se as a factor for sustainable
competitive advantage has a significant and positive impact on the
occupancy in the hotel industry.
H61 – There is a significant difference in the opinion of the managers as to
whether innovation performance per se as a factor for sustainable
competitive advantage has a significant and positive impact on the
occupancy in the hotel industry.
Hypothesis 7.
H7o – There is no significant difference in the attitude of the managers of
India and Thailand hotels for developing innovations as a factor for
sustainable competitive advantage in their respective hotels.
H71 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing innovations as a factor for
sustainable competitive advantage in their respective hotels.
44 Hypothesis 8.
H8o – There is no significant association between the perspective of the managers regarding innovations as a factor for sustainable competitive advantage and the grade of hotels, age and designation of manager, country and occupancy rate.
H81 - There is a significant association between the perspective of the managers regarding innovations as a factor for sustainable competitive advantage and the grade of hotels, age and designation of manager, country and occupancy rate.
3.4 Importance of the Research
This research has sought to identify the factors for success and sustainable competitive advantage in the hotel industry which is a very important component of our economy. An endeavor has been made to study the impact of these factors on the occupancy rates of hotels especially with reference to innovations in various categories. The research is expected to help the hotel industry and the management of hotels in getting pointers for improvement in overall performance hence resulting in an indirect contribution to the welfare of the economy.
45 CHAPTER 4
RESEARCH METHODOLOGY
Secondary data was collected from various Journals, Books, Research
Papers, Theses, Internet, Annual Reports of Various Hotels and Data procured from the records of the Ministry of Tourism. A detailed literature review was conducted from all the available material.
After the identification of gaps and finalization of research objectives a questionnaire was prepared and a study was conducted on a pilot scale and managers of few hotels were interviewed to get an initial opinion as to factors to be taken into consideration for competitive advantage in the hotel industry. Later the information garnered from the pilot scale study and the findings from the literature review were used to prepare a final questionnaire to be used for the purpose of the research study. Data was collected through structured interview of managerial personnel of hotels using the questionnaire.
Sampling Design - Three major cities from India were chosen from India for the purpose of survey. Mumbai and Pune were the chosen commercial hubs (business being the main reason of travel to these destinations) and
Goa as a beach-tourist destination (leisure being the main reason for travel to this destination), as per purposive and convenience sampling. Mumbai was chosen because it is considered to be the commercial pulse of the countries business activities and is mostly considered representative of
46 the countries commercial tourism. Pune was chosen as a representative of the second tier commercial hubs of the countries which do have presence of star grade hotels and the business traveler tourists. And Goa was chosen as a representative of leisure tourist and beach destination of the country. For the purpose of comparative study from another Asian
Country, Thailand was chosen as Thailand is considered closest to India in terms of budget wise for international travelers and considerations such as culture, beaches and business. Bangkok and Pattaya were chosen as the cities to represent commercial hubs which in turn represent the destinations of choice in Thailand and were considered ideal for comparison with Mumbai-Pune and Goa respectively. The cities chosen were chose not only as per convenience sampling but also because these cities are considered to be representative of the pulse of the tourism industry in their respective countries. According to collected list of hotels from Mumbai, Pune, Goa the whole population was surveyed and from
Bangkok and Pattaya 33% of the hotels were chosen at random as per convenience.
Data Acquisition - Data was collected from the five cities chosen in the sample from the various categories of hotels in India and Thailand. The total number of hotels surveyed was 274. The managerial personnel designated by the hotel for the purpose of survey was interviewed. The primary data collection was done mainly using the structured interviews and questionnaire method. Opinions of the respondents were recorded
47 using mainly five point Likert scales and simple two alternatives method.
Eg: Opinion of the respondents was recorded regarding the various factors for sustainable competitive advantage with five point scale using Strongly
Disagree / Agree / Uncertain / Disagree / Strongly Disagree. A few open ended questions were also included in order to understand the types of innovations implemented in the various hotels. The final figure of hotels from which data was collected is represented in the table and chart below.
Table 4.1 – Overall Sampling Population Sample Sample Sample Sample
Hotels /City Total 5-star* 4-star 3-Star Total
Mumbai 113 38 20 55 113
Goa 73 23 8 42 73
Pune 35 8 15 12 35
Bangkok 90 8 9 13 30
Pattaya 69 1 5 17 23
78 57 139 274
*For the purpose of convenience 5 Star Deluxe and 5 Star Hotels were held to be in the same category.
Sample Size Justification - The standard error of the estimate is 0.226.
Therefore the error in our mean estimate of perspective is 34.70 +/- 0.45 i.e. between 34.25 to 35.15. Thus the error is 0.45 / 34.7 x 100 = 1.3% error which is acceptable error in the estimate. Thereby showing that the sample is more than sufficient to estimate the perspective of the managers.
According to above results i.e. Mean = 34.7 Standard Deviation = 3.765, The
48 sample required for 95% confidence and 10% error is 160, Whereas we have taken a sample of 274 for the purpose of research.
Data Analysis - The data was classified and tabulated as per various geographical locations, Mumbai, Goa, Pune, Bangkok and Pattaya and classes of hotels 5 Star, 4 Star and 3 Star. Classification was done question wise and using other criteria. Various statistical tools were used in the analysis. Regression analysis, Pearson’s Chi-square Test, ANOVA and T-
Test analysis were used for the purpose of analyzing the collected data.
Presentation of Findings Recommendations and Conclusion - The findings were arrived at from the analysis of data and the comparative derivations from the available secondary data. Suitable recommendations were suggested and conclusion drawn.
Limitations of the Research - The primary research is confined only to five-star(including five-star-deluxe), four-star and three-star hotels, due to time and money constraints and due to lack of systematic data available in budget hotels.
. The survey was done from the point of view of the opinions of the
various levels of management in the hotels only. There is scope for
further research from point of view of the hotel customers.
49 CHAPTER 5
HOSPITALITY AND HOTEL INDUSTRY - AN OVERVIEW.
5.1 Introduction - Human mind has an innate bent towards travel. Over the centuries, travel has developed for business, health, social, and cultural reasons. We take a trip to visit our relatives and friends.
Businesspeople travel to see what is going on in their home office or to find out what customers in other cities or countries think of their products.
Some travel to other countries to see the specialities or famous things about that region or to learn more about culture there.
Tourism is the act of travel away from home, mostly for the purpose of recreation or leisure. Tourism development provides the services to support this kind of travel. Tourists, according to the World Tourism
Organisation, are people who “travel to stay in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited’ This means that tourism invites visits to places other than one’s domicile for pleasure and recreation from where one does not receive a salary.
The United Nations in 1994 classified tourism in three categories:
1. Domestic tourism involving residents of the given country travelling within that country only.
50 2. Inbound tourism involving foreigners (non-residents), travelling into a given country.
3. Outbound tourism involving residents travelling to another country.
The tourism industry gets its inspiration from the motivation of humankind to travel. In earlier times humans travel to survive and later, to trade with each other. People later travelled mostly for trading, military campaigns, religious reasons and in some pockets, for sports. The purpose of travel has changed dramatically in modern times. Some of the popular reasons for travel and tourism are given below :
Sightseeing is a strong reason for travel. With disposable income people seek to connect with other nations to understand cultures. From this need, two popular types of tourism emerge – Cultural Tourism and Heritage
Tourism. Cultural tourism is concerned with a country’s or region’s culture, especially its arts. It generally focuses on traditional communities who have diverse customs, art and distinct social practices which distinguish them from other cultures. Heritage tourism is a branch of cultural tourism that showcases the cultural heritage of the past. Heritage tourism involves visiting historical sites like monuments, forts, battlegrounds, etc. with the overall purpose of appreciating the past.
Leisure is a strong motivation in a highly stressed work life. People just want to put up their feet and relax. There are numerous resorts for such purposes at sea sides, hills, ski resorts, spas, etc. At resorts people can get away from mundane chores and let the tourism infrastructure take care
51 of the rest. A major attraction in leisure travel is the weather. Some like cold weather found in the mountains while others find the warmth of sea beaches attractive. Sport has become a huge industry where travel is common for sportspersons and their fan following. Adventure tourism is a type of niche tourism involving exploration or travel to remote, inaccessible and possibly hostile areas where the traveller can experience the unexpected. Special interest groups are those who travel in pursuit of their hobby. This is an ever-increasing source of tourism. Climbers can fulfil their ambition of climbing the Mount Everest, ornithologists their interest in rare birds. Wild life has become a popular interest and people go to safari parks where animals are preserved from extinction. Shopping is a major attraction for anyone visiting new places. People gather mementos of their visits by buying cuckoo clocks in Switzerland or the Masai spear in
Kenya. Shopping has taken a new dimension with modern electronic domestic and commercial wares. With innovative Shopping Festivals people worldwide can get the best bargains from mobiles to cars. Business as a purpose for travel has from ancient times been a strong motivator. We know of trade between the earliest civilisations to distribute goods not available locally. With countries breaking down trade barriers, companies can go global in terms of possession of business in other countries or through franchise. Governmental travel has become important to foster better understanding and trade between nations. Political delegations pave the way for trade delegations. To maintain diplomatic relations countries
52 need to have constant travel to keep in touch and to help each other in the progress of mankind. Education as a reason for travel is a multi-million dollar industry where universities have made it possible for anyone around the world, with certain minimum qualification, to enter their educations system. Reunions are a major reason for travel. With people working in other countries due to global opportunities of employment, the return home for family reunions is a strong motivation. Similarly children, who have left home for international work, education and assignments, touch base with their loved ones at holidays and religious festivals. Another type of reunion is the alma maters of schools, colleges and higher universities.
Pilgrimage is a long journey or search of great moral significance in religion and spirituality. Sometimes it is a journey to a place or shrine of importance to a person’s beliefs and faith.
The hospitality industry is an important component of the tourism industry.
The hospitality industry is an inclusive term for Hotels and food establishments. It is a part of a broader service industry where people create the service experience with specific skills to generate revenue. The service industry places the customer as the central focus as against the machines in the Industrial age.
5.2 History of Hotels and Motels
INNS OF EARLY TIMES - The hotel industry grew with travel, as people needed places for shelter and food along the routes they travelled, whether
53 by land, water or air. The Hotel Industry is, therefore, one of the oldest trade endeavours in the world. The first Inns go back to 3000 BC which were established for the people on the move spurred by the urge to travel.
The earliest Inns were private homes of husband and wife teams who provided large halls, for travellers to roll out their own beds and sleep on the floor. These conditions prevailed for several hundred years and by 320
B.C. at the time of the Roman Empire, inns became commonplace, because of the need of the Romans for political, administrative and military travel
The Romans introduced inns to Britain, along roads and in main towns for officials on state business.
Religious travel grew, strongly after the crucifixion of Christ. As
Christianity spread in Europe so did religious travel. In the first century AD, one of the important providers of lodging places was the church for pilgrims. The Roman Catholic Church maintained hospices, monasteries and hostels for pilgrims during the middle ages that offered free doles of bread and ale. Occasionally an abbey had a hospice at a market place. In effect, the church operated the first ‘hotel chain’ for religious travel. Private inns also grew along pilgrimage routes. The quality of inns kept improving over the years as travel became more frequent due to conquests, religious travel and commerce as empires expanded.
Between the 16th and 17th centuries, inns developed into coaching inns in main towns because of the advent of coach travel.
54 From antiquity to the Middle Ages - The history of hotels is intimately connected to that of civilizations. Facilities offering guests hospitality have been in evidence since early biblical times. The Greeks developed thermal baths in villages designed for rest and recuperation. Later, the Romans built mansions to provide accommodation for travellers on government business. The Romans were the first to develop thermal baths in England,
Switzerland and the Middle East. Later still, caravanserais appeared, providing a resting place for caravans along Middle Eastern routes. In the
Middle Ages, monasteries and abbeys were the first establishments to offer refuge to travelers on a regular basis. Religious orders built inns, hospices and hospitals to cater for those on the move. Inns multiplied, but they did not yet offer meals. Staging posts were established for governmental transports and as rest stops. They provided shelter and allowed horses to be changed more easily. Numerous refuges then sprang up for pilgrims and crusaders on their way to the Holy Land. Travelling then became progressively more hazardous. At the same time, inns gradually appeared in most of Europe. Around 1200, staging posts for travellers and stations for couriers were set up in China and Mongolia. In Europe, or more precisely in Belgium, l' Auberge Cour Saint Georges opened in Gant, while the Angel Inn was built at Grantham in Lincolnshire, England.
The start of the hotel industry - In France, at the beginning of the fifteenth century, the law required that hotels keep a register. English law also introduced rules for inns at that time. During this epoch, more than 600
55 inns were registered in England. The first guide books for travelers were published in France during this period. An embryonic hotel industry began to develop in Europe. Distinctive signs were hung outside establishments renowned for their refined cuisine. In Paris in the time of Louis XIV, the
Place Vendome offered the first example of a multiple-use architectural complex, where the classical façades accommodated boutiques, offices, apartments and also hotels.
In the nineteenth century -The industrial revolution, which started in the
1760s, facilitated the construction of hotels everywhere, in mainland
Europe, in England and in America.
5.3 HOTELS IN MODERN TIMES - The advent of the industrial revolution in England brought ideas and progress in the business of inn keeping. The development of railways and steam ships made travelling more permanent. Travel also changed from social or government travel to business travel. There was a need for quick and clean service. The lead in
Hotel keeping was taken by the emerging nations of Europe, especially
Switzerland. It was in Europe that the birth of an organised hotel industry took place in the shape of chalets and small Hotels, which provided a variety of services and were mainly patronized by the aristocrats of the day. Hotels in Europe, as we know today, began in the Napoleonic wars, providing accommodation for officers on leave. They were generally run by
French refugees. Into the 19th century Hotels became distinctive with
56 ornate fronts, polished wood, brass and mirrors. Rail travel in Britain produced bigger Hotels like The Pancreas, Victoria, Charing Cross and the
Great Eastern in England reflecting Victorian architecture.
With the discovery of the new continent America, inns soon proliferated into America. Samuel. Cole is credited with the opening the first inn in 1634
A.D., -in Boston, called Cole’s Ordinary. Inns such as this provided beer and rum and plentiful cheap food. Taverns and Inns modelled themselves in the European style. While eateries were established, the Hotels came much later.
The real growth of the modern hotel industry took place in the USA, beginning with the opening of City Hotel. In New York in 1794 A.D., New
York then was a busy seaport with population of 30,000 people. This was the first building especially erected for a hotel. and had 73 guest rooms.
This eventually led to great competition between different cities and resulted in frenzied hotel building activities. The Exchange Coffee House in
Boston came first followed by the second City Hotel in Baltimore, then the
Mansion House in Philadelphia and the Adeiphi Hotel in New York. At best these were ordinary lodgings for the middle class. In 1829, The Tremont
House in Boston had the distinction of being the first luxury hotel. in
America. It was the first to offer private rooms with locks, a wash basin, pitcher and soap. It had a French restaurant and uniformed service personnel. This signalled the development of luxury Hotels in the USA during the 1800s. The Grand Pacific in Chicago, The Palmer House and
57 Sherman House in St. Louis and the Paxton in Omaha were such luxury
pre-runners in luxury hotel- development.
In 1874, William Chapman Ralston established a super luxury property
called the Palace Hotel in California during the Gold Rush. It was built on
the lines of a European palace with domed glass roof, marble floors, own
water supply, fire sprinkler system and air-conditioning. It had 800 plush
rooms spread over seven floors.
In 1908, Ellsworth M. Statler saw the need for providing accommodation for
a new segment — the business traveller. He created the Statler Hotel in
Buffalo, New York, built specifically for the commercial sector. It involved
big investments, big profits and trained professionals to manage the
business. The Statler Hotel provided private baths and full-length mirrors in
each room. His engineering, architecture and service ideas became the
standard for future commercial Hotels. The Statler went into chain
operations and can be credited to be the first hotel chain. In 1927, the
Stevens Hotel, a 3000 room hotel (later renamed the Conrad Hilton) became the largest hotel in the world.
The depression in 1930 had a disastrous effect art the hotel industry. 85% of the Hotels went bankrupt. It was felt that the industry would never recover. One hoteLier who kept afloat was Conrad Hilton who made the
Mobley, Cisco, Texas a profitable venture. The outbreak of World War H brought a tremendous upsurge. This prosperity continued through the war
58 years into the fifties when two new concepts emerged: a) Motels and b)
International chain operations.
5.4 MOTELS AND ITS FEATURES - The first motels called tourist cabins were established in Western United States during the early 1900, when people began to travel by automobile and could not travel the long distances between towns in one day. People were now mobile for long distances because of the car. Initially Motor Inns served fishermen, hunters besides vacationers in remote areas in the early 1900s. The great increase in automobile travel in the 1940s and 1950s led to the development of motels (short form of Motor and Hotel) situated at busy interchanges and on highways. Motels provide free parking facilities from which the guests can reach their rooms directly. Some motels have garaging facilities, restaurants and swimming pools. Over the years motels became chain operations and in 1970, we saw the budget motel with rates half that of regular motels. Budget motels have small rooms and provide fewer services. A modern motel will have the standard features; Rooms,
Services, Recreation, Food and Check-in.
The twentieth century: the age of prosperity - The early years of the twentieth century were rich in new hotels which rapidly became prestigious. The prosperous nineteen-twenties saw a veritable boom in the hotel industry. Numerous hotels were established in this decade. After the war, the fifties saw the second boom in the hotel industry. These years
59 were also notable for the construction of the first casino hotels. This was also the time when the airline companies began to develop their own hotels.
Hotels for business people - The 1970’s saw the beginning of the construction of hotels for business people. This movement was supported by several factors. First of all, there was the will of the airline companies to extend their efforts in the domain of hotels. Then there was the sudden prosperity, due to black gold, of Middle Eastern countries which attracted business people from the entire world. This engendered an important business travel trend - not limited to this region alone - which initiated the development of hotels primarily designed for business people. Hotel chains, attentive to their customers' wishes, started to offer an increasingly varied range of services. Their rooms became more spacious and the cuisine more refined. Gradually, too, various first class hotels (among them former palaces and city centre hotels) which had fallen into disrepair began systematic renovation programs. The end of the seventies, when China opened its doors to foreign tourists, also saw the first congresses of international hotel experts.
The third hotel industry boom - The third boom in the hotel industry began in 1980, marked by more inventive marketing and the development of hotels increasingly adapted to a particular type of clientele. This trend prompted the construction of hotels near airports, hotels for conferences,
60 health hotels, ski holiday hotels, holiday villages and marina hotels. The first administrative hotel management systems, offering hotels greater independence from human resources, then appeared on the market. The hotel industry was becoming more and more competitive. Business travelers and retired people became important target customers. In the eighties, too, the Far East began to prepare itself to welcome both business people and the tourists who were beginning to discover the countries of the rising sun, such as China, South Korea, Thailand and Japan. The international chains prepared expansion plans for Europe, the Middle and
Far East which were mainly aimed at congress participants and business people.
The nineties: technology starts to make an impact - The early nineties were characterized by a recession in the hotel business, without doubt caused by reductions in multinationals' travel budgets and the growing crisis in the
Gulf. It forced hoteliers to become more creative in finding ways of attracting guests (special programmes, offers for "frequent travelers", high performance reservation systems) and thus emerge from the crisis with the minimum damage.
For the first time, the environment and energy conservation played an important role in the marketing activities of numerous chains and even helped to win the loyalty of numerous clients while safeguarding assets at the same time. Reservation systems became more efficient and offered the
61 hotelier a new dimension in the creation of customer loyalty, the database.
The records of each guest's individual history have helped create individualized marketing programs and have enabled hotels to satisfy a guest's personal needs from the moment of his arrival. Since 1992, the most important international chains have been vying with each other in ever greater imaginative feats related to the vital process of renovating their establishments worldwide. Technology has started to take its rightful place in hotel administration (simplification of check-in and check-out procedures, global reservation systems, marketing management etc.). At
International Technology Forums, speakers unanimously, underlined the impact of technology on hotel rooms.
Hotel chains have been searching for alliances and some of them. For example: Holyday Inn, Intercontinental, and Crown Plaza have merged to form Six continents hotels Chain. The main expansion zones for the hotel industry in 1994 remained Asia (particularly China and India), the Middle
East (above all, the United Arab Emirates and Egypt) and Latin America.
Extravaganza - In 1995 construction began in Dubai of one of the most ambitious and prestigious tourist complexes in the region, the Jumeirah
Beach Hotels. These comprise several establishments capable of satisfying the needs of average tourists, business people and those who can afford real luxury. The talk now is of six- and seven-star hotels, a surprising designation which is nevertheless perfectly justified by the luxury of the
62 bedrooms and the facilities they offer, the impeccable service, the high degree of modern technology, as well as the beauty of the surroundings and the high-quality environment.
5.5 ADVENT OF HOTEL CHAINS - While the growth of motels was restricted to the North American continent, international chain operations spread into all continents. Individual entrepreneurs were crushed in the race of this multidimensional, multinational industry. International chains provided the expertise, technology, and marketing thrust that individual
Hotels could not. In 1925, Howard Johnson created the first restaurant chain of 400 restaurants through franchise — the leasing of a branded name. He soon entered into Hotels making the Howard Johnson hotel chain a worldwide name. Another famous hotelier, Willard Marriott, started as a restaurateur with A&W fast food restaurant chain and entered into the hotel industry in 1940s expanding it into the famous Marriot Hotels Chain.
Individual owners could not compete with large hotel chains and therefore merged with chains such as Sheraton, Hilton, Hyatt, Holiday Inn, Ramada
Inn etc. The international chains provided the following relationships to individual owners:
Partnership (sharing equity and profits), Franchise (providing name and association against a fee) and Management Contract (providing professional managers, technicians, operational manuals, systems, etc on the basis of management fees and a share of profits as incentive payment).
63 5.6 Origin of the Food Service Industry - Food and beverage is an intrinsic part of travel. Early inns provided wholesome food and local brews as part of their services to travellers. It was only later that food and beverage became specialized services when independent restaurants and pubs opened to serve the local and travelling public. Independent restaurants make up a huge part of food service business and employment.
An early type of restaurant was the Coffee House, which appeared in
England in the mid-1600s. The term restaurant, as we know today, began in
1765 in Paris, France. The credit of the first restaurant in the US goes to
Delmonicos, established in New York City in 1827. Then, as even now, the vast majority of American eating places offered simpler, less expensive food.
Types of Lodgings
Lodging is an inclusive term that defines the different types of accommodations available to a traveller. Lodgings may vary in each country but due to globalisation most lodgings today are standardized with international services. So a hotel in Budapest wilt be similar to one in
Birmingham. Inns were commonplace by the turn of the millennium and that later they were called Hotels.
5.7 TYPES OF HOTELS - British Law defines a “Hotel” or “Inn” as “a place where a bonafide traveller can receive food and shelter, provided he is in a position to pay for it and it is in a fit condition to be received”
64 Therefore, a Hotel must provide food (and beverages) and lodging to travellers, on payment and has, in turn, the right to refuse admission if the traveller is drunk, disorderly, unkempt or is not in a position to pay for the services.
By this definition, a hotel must provide rooms and meals. The provision of beverages is subject to local customs and practices. Earlier inns and
Hotels insisted on advance payment before guests were allocated the room. The credit card has made the issue of financial credibility easier.
With the evolution of Hotels and its proliferation around the world, it is impossible to categorise them under one term. Here is a list of Hotels usually used in the tourism circuit, each with a specific purpose and clientele:
Airport Hotels, as the name suggests, are located in the precincts of an airport, usually situated a distance away from the city. They cater mostly to transient airline passengers who may be catching another flight to complete their journey. Such guests generally need only a room to sleep before the next flight. Transient airline crews too find the airport hotel convenient between flights.
Bed and Breakfast establishments are usually small family businesses. A family may have an extra set of rooms in their home that they Let out to tourists. The family of the establishment takes the responsibility of providing comfortable rooms much in the home style with their dining rooms serving as the breakfast venue.
65 Boutique Hotels is a term originating in North America to describe intimate, luxurious and even quirky hotel environments. They differentiate themselves from other branded ones by providing personalized facilities and services. A boutique hotel is also known as “design hotel” or “lifestyle hotel”.
Business Hotels specialize in providing business related facilities and amenities for the business and corporate traveller. Such facilities will include business centres that provide meeting rooms, secretarial services and modern telecommunication facilities including the internet.
Casino Hotels serve only one purpose — to serve guests who want to gamble. Dramatic features of casino Hotels are gaming halls, with all possible gambling games including banks of slot machines, Blackjack tables, RouLettes tables, etc. Conference Hotels have conference centres attached to their main hotel to cash in on a Lucrative conference business.
These Hotels are geared for group check-ins and introduce efficient registration and meal venues to cope with volume conference participants.
Convention Hotels are specially designed for such purposes. They would have a Large plenary hall to seat 2000 people or more, breakout meeting rooms for smaller groups, administrative offices providing alt the secretarial, office automation facilities, ample registration lobbies and large dining halls.
Deluxe Hotels would normally have a minimum five-star rating. These
Hotels are rated as deluxe as they would have decor and appointments of
66 luxury. They would have every conceivable comfort built into the guest experience. Destination Hotel is a lodging whose inherent Location and amenities attract visitors regardless of the route needed to reach it. Hence
Hotels beside the Pyramids, Taj Mahal, etc. come under this category.
These Hotels give spectacular views of the object of interest. Hotels at remote places such as near volcanoes or in the heart of a jungle are self- contained to meet all the needs of the guests.
Downtown Hotels are located at the centre of the city in busy commercial and shopping districts. Everyone likes to stay downtown within easy reach of government and private offices, shopping malts and entertainment centres. However, since the price of land is expensive, the rates of the
Hotels are high to enable the investor to get his return on investment.
Family Hotels are found mostly at resorts geared specifically for families.
Rooms will be interconnected with perhaps a kitchenette and basic cooking facilities. There would be common entertainment Lounges equipped with television, indoor games and children play area. Many would have outdoor children parks, jogging paths and independent barbeque areas
Group Hotels are geared for volume traffic at any given time. They are usually for mass transit tour groups that come in charters on economy budgets. Their lobbies are large to welcome tour groups; have separate registration counters; Lobby staff that are equipped to handle volume
67 baggage. They may not have all the frills in the rooms of a business hotel because they are not needed.
Inns have their history from the Roman Empire when they built their famous system of highways two millennia ago. It is a place to get food, drink and lodging.
Motels are located on principle highways and road junctions. It is a lodging facility with 15- 100 rooms for the automobile traveller. Rooms are simple and clean with hot and cold shower or bath facilities. Guests have an overnight stay at the most.
Palace Hotels are original palaces converted into Hotels. The beds in which the guests sleep are the ones where actual royalty once slept. Of course, these palaces have been equipped with modern conveniences such as television, mini-fridges, air- conditioning and telephone connections though intruding into the original uniqueness of the property.
Residential Hotels are those that are equipped for longer stay. Guests may
Lease this accommodation for anything up to a year. These Hotels are convenient for Long tenure business executives who do not want the hassle of running a home. These are ideal in university campus locations who have families.
Resorts are located in natural and man-made sites. Resort Hotels will be found at hill stations, seaside resorts, ski resorts, canyons, waterfalls, etc.
Many of these resorts are highly seasonal depending upon climates and holidays to get their clientele. Resort properties have to make most of
68 those times and charge well. They would give heavy off-season discounts to the budget conscious. Suburban Hotels are located on the outskirts of a city where Land is cheaper than downtown Locations. Suburban Hotels will be sprawling constructions with ample parking spaces. They attract clientele that are cost-conscious, though not necessarily budget travellers.
OTHER LODGINGS
In addition to the traditional Hotels are other lodging options to a traveler, some of which are unique to a country, these are: Bed-sit, Boarding House,
Caravans, Camps, Chalets, Condominium, Floating Hotel, Furnished
Apartments, Government Houses, Hospices, Hostels, Ice Hotels, Log
Cabins, Matels, Rotel, Sanatoria, Sports Hostel, Time-Share Hotel, Tree
House and Youth Hostel.
5.8 Hotel Organisation - A hotel is structured organizationally to meet the following objectives: (1) To maximize revenue through efficient room occupancy; (2) To maximize food and beverage revenue with excellent meals; (3) To earn from other minor departments using the synergy of activities; and (4) to give safe quality service. A hotel is, therefore, structured to meet these objectives. The Hotel organisation structure is a framework which assigns responsibilities and establishes channels of communication to make decisions and set operational accountabilities. The structure serves many purposes: a) to establish the relationship of people from various departments with each other; (b) to establish effective
69 communication; and (c) to reflect the Levels of authority in the organisation hierarchy. Organisation structure is different from the physical structure of the building. The organisation structure is represented graphically in what is called, an organisation chart. An organisation chart is a schematic depiction of relationships between various job positions in an organisation.
The organisation structure of a hotel is based on its size and range of services it offers. The number of services depends on their economic viability and the market segment the hotel targets. To make it simple, we can categorise properties into large and small properties.
LARGE INDEPENDENT HOTEL STRUCTURE
Large hotel operations require more people to operate it compared to smaller ones. The amount of specializations also increases and therefore requires an elaborate organisation structure. The organisation chart is a representative one and is modified according to the policies of the enterprise.
The departments shown may be further classified into revenue and non- revenue (staff) divisions/departments. A division is a collection of departments with a common objective. A department is an independent activity with its own unique objectives though contributing to the hotels goals. These can be explained as under at each in detail (See Figure 5.1):
70 Figure 5.1. Large Independent Hotel Structure General Manager Chief Security Officer
Accommodations Food & Chef de Financial Sales & Human
Director Beverage Marketing Resources
Health Club
Manager Chief Engineer Chief Steward Marketing
Sales Manager Recruitment
Executive Front-Office Banquet Sous Chef Manager Income Training Housekeeper Manager
Restaurant Manager PurchaseManager Compensation Lobby Laundry Assistant Room Service & Benefits Receiving Manager housekeeper Manager Manager
Bars Manager Food &
Guest Beverage Banquet Relations Manager Source : Self Analysis after discussions with senior hotel managers 71 REVENUE DIVISIONS/DEPARTMENTS
A hotel has two major revenue producing divisions: (1) Accommodations which is responsible for the sale of rooms, driven by the Front-Office department supported by departments such as Housekeeping, Laundry,
Telecommunications, Health Club and Engineering, who make rooms saleable; and (2) Food and Beverage which is responsible for the sale of food and beverage through food outlets like restaurants, room service, bars and banquets, supported by the kitchen and stewarding departments.
In addition, there are “minor revenue departments” that earn by using the synergy of major revenue departments. Lets us examine each in brief:
ACCOMMODATIONS -
Front Office - The front office is the heart of the hotel that makes room reservations, registers guests into the hotel, provides them with information during their stay and maintains their master bills. It is the most frequented and visible department than any other in the hotel and, therefore, sets the lead in the guest experience. Their prime responsibility is to sell rooms, process room reservations, register guests, coordinate guest services, provide information and ensure the collection of room revenues and meet budgets. The front office is supported by Lobby services which include the concierge, belt desk, guest relations and transportation. To fulfil these basic responsibilities the front office is broken into different sections each with distinct roles. These sections are: Reservations: The principal role of reservations is to book rooms in
advance.
Reception: The reception registers guests and assigns rooms to them.
Telecommunications: This department is responsible for all communications within and external to the hotel. Guest Relations Desk:
The guest relations executive ensures that all the guests, especially the
VIPs, are kept comfortable during their stay. Front Office Cashier: Though a member of the accounts department, he is a crucial team member of the front office. The cashier maintains the guest’s accounts during his or her stay, monitors credit limits and settles bills as per instructions. Uniformed
Service: Uniformed services’ is the collective term for lobby services.
Lobby Manager: The lobby manager coordinates all guest services from a central point. Concierge: Provides personalized services and information in large hotels to the guests, during their stay and also offers mail and messaging services. Bell Desk: The desk coordinates the movement of the volume of baggage during a single day is very errands for the guest and the management within the hotel precincts. Doorman: He is person who welcomes guests at the hotel portal. Valet: He is responsible to provide car parking services.
Transportation is that section that manages a fleet of hotel transport to serve several objectives. It is headed by a transport supervisor.
Housekeeping - This department is responsible for the cleanliness, maintenance and the aesthetic standard of the hotel. Laundry: This is a critical department that launders the volume of bed
Linen, restaurant linen, staff uniforms and guest garments.
Engineering - This department is responsible for the supply of air- conditioning (or heating), lighting, mechanical, electrical, carpentry, electronic and civiL works of the hotel.
Health Club and Recreation This department is considered a minor revenue department but with a huge impact on a guest profile that is getting increasingly health and physical-fitness conscious.
Food and Beverage - Restaurants. A restaurant may be a Licensed part of a hotel operation, whereby the sales of the restaurant contributes to the sales performance of the hotel, or a franchised operation within the hotel premises, whereby the hotel leases space and has no share in the profits of the restaurant operations.
Room Service - Room Service is a food service operation. It provides food and beverage to guest-rooms.
Bars - The bar dispenses wines, liquor, spirits, juices, aerated waters, cigars and cigarettes.
Banquets - The banquets department is a major revenue area within food and beverages. They cater to various occasions in dedicated function rooms within the hotel premises as well as outdoor sites away from the hotel. The service is known as outdoor catering. Sales Coordinator: Is responsible to formalize alt sales generated by the sales executives through proper reports and documentation. S/he provides the link between the hotel and sales personnel who are always on the move in the market.
Kitchens - A kitchen is the place where food is prepared. While kitchens in large hotels have independent sections to deal with various aspects of food preparation due to the sheer volume of activity, smaller kitchens would club sections or have multi-skilled cooks to carry out several roles.
Kitchen Stewarding - The department is primarily concerned with the storage, maintenance, cleanliness and issue of cutlery, crockery, holloware, chinaware and glassware to the restaurants and kitchens. It is responsible for the cleanliness of kitchens and the washing of pots and pans.
NON REVENUE DEPARTMENTS (STAFF FUNCTIONS)
Staff departments are those that support the revenue departments in their efforts. These departments are:
Finance and Accounts - The Finance and Accounts department is responsible for two major activities: 1) The finance section is responsible for raising funds and multiplying profits through innovative investments and funding so as to ensure that the hotel meets its capital and operational funds. 2) The accounts section monitors the revenues and expenditures of the hotel. they ensure that cash flows are available for daily operations by controlling the bank accounts and making cash available through the
General Cashier.
Human Resources - The Human Resources department is key to any hotel operation as they are concerned with the very important resource—people.
Sales and Marketing The marketing department creates the groundwork to get customers to want to select the property for their stay and converts that decision into a sale by actually booking a room and staying in it. The marketing activity involves advertisement in various media such as television, newspapers, trade magazines, etc. The department also organises promotions to attract guests in different seasons and festivities.
Minor Revenue Departments - Minor revenue departments are those that produce revenue mostly based on the products of other departments of the hotel. These departments are the:
Delicatessen sells in-house butchery products
Patisserie sells bakery products such as cakes, pastries, tarts and hot items like patties, scones, bread sticks, etc. Beauty Salon provides hairdressing service and beauty care. Flower Shop is the retail outlet of the flowers and ferns from the gardens of the hotel. Health Food Counter is usually found at the Health Club. It capitalizes on a new trend among a health conscious public to stay fit.
Small Hotel Structure - Smaller hotels would have the same functions represented but done by fewer people with multiple skills. The organisation structure (Fig. 5.2) shows how a structure is pruned to fit limited payroll
budgets.
Figure 5.2. Small Hotel Structure.
General Manager
Dining Room Front Office Supervisor Accountant Engineer Supervisor Supervisor
Receptionists Chef-de-Partie Purchase F & B A/C Plumber
Clerk Cost Heating
Bell Boys Cooks Waiters
Source : Self Analysis after discussions with senior hotel managers
In small hotels, the General. Manager takes on the role of human resources
manager and sales manager in addition to the responsibilities of the
operations. The Front Office Supervisor overseas the front desk operations
as well as lobby activities. The Dining Room Supervisor oversees the
kitchen and dining room operations. The receptionist does the reservation,
reception, information, telephone and cashier functions. It is significant
that small operations have possibly only a dining room (or coffee shop) to
serve all the meats. The Accountant takes over the income and payable
responsibilities in addition to producing the statutory requirements such as Profit and Loss statements and Balance Sheets. He is assisted by the
Purchase Clerk who doubles the receiving and store functions. Though this is strictly not ideal in terms of food and beverage control, the operations is small enough for direct supervision and control of the Accountant. The
Food and beverage Cost Clerk will do all the costing functions. It is possible that the dining room has a dispensing bar to provide drinks eliminating the need for a formal bar. The engineering supervisor is multi- skilled to troubleshoot engineering problems. However, any operation requires specialists like air-conditioning and heating mechanics and plumbers. Most other services would be outsourced, such as laundry, horticulture, civil works, etc.
Conclusion - Lodging facilities are not anymore corresponding only to the truly definition: "A lodging accommodation for travellers". Nowadays, architects, designers, developers, engineers, managers, more and more are conscious that taste of guests could be different, according to their wishes or needs. Hotel specialists permanently analyse new trends, define better criteria, present modern standards in order to improve quality of life in hotels. In the third millennium, the permanent competitive hospitality market of suppliers is definitely more and more able, combining "savoir faire" and the good use of technology to offer their guests an "A la carte" environment. CHAPTER 6
HOTEL INDUSTRY – THE GLOBAL SCENERIO
Tourism and hospitality is one of the growth industries of the world with more and more jobs on offer. Over recent decades the world economy has undergone considerable transformation. Influenced by advances in technology and the spread of global capitalism, the shrinkage of geographical and cultural distances has allowed companies to widen substantially their geographical markets and sources of supply. This in turn has served as the catalytic focus for the creation of new business opportunities, yet at the same time creating an enormously more complex marketing environment for businesses to operate in. The Global Hotel
Industry Scenario may be studied in two phases – Before 2008 and the
Global Economic Crisis and Post 2008.
Prior to 2008 –
Figure 6.1 - Worldwide Real GDP Growth – 2003 to 2007
4.0% 5.3% 4.9% 5.4% 4.9%
2003 2004 2005 2006 2007F Source: International Monetary Fund World Economic Outlook Database, 2007 Figure 6.2 - Rev PAR Change by Region May YTD
15.1% 8.6% 5.2% 5.6% 6.5%
. s e C S a A A . c p E P U ri ro M A e u m E A OCC ADR
Source: HotelBenchmark; Smith Travel Research/The Bench
Figure 6.3 - Most key global cites are also seeing substantial rate growth
Rev PAR Change by Market May YTD
Abu Dhabi 32.7% Singapore 24.5% Sao Paulo 18.1% Dubai 16.3% Tokyo 15.7% Buenos Aires 15.6% Sydney 15.3% London 12.8% New York 12.4% San Francisco 9.1% Berlin 7.6% Hong Kong 7.1% Paris 5.8% Toronto 5.8% Washington, DC 5.5% Beijing 4.2% Tel Aviv 3.5% Rome -2.4% Rio de Janeiro-5.4% OCC ADR
Source: HotelBenchmark; Smith Travel Research
In Europe, demand grew at a slightly lower rate in the first quarter while supply growth remained flat Figure 6.4 - European Supply & Demand Monthly Change
10
5
0
-5
-10 2002 2003 2004 2005 2006 2007 Supply % change Demand % change
Source: Smith Travel Research/The Bench
U.S. demand growth has slowed while supply is on the increase
Figure 6.5. - U.S. Supply & Demand Monthly Change
10
5
0
-5
-10 2002 2003 2004 2005 2006 2007 Supply % change Demand % change
Source: Smith Travel Research
With 150,000 new rooms opened by hoteliers in the year 2006, the world supply of corporate chains posts heretofore unattained growth. On January
1, 2007 the worldwide supply of the top 200 groups reached 43,000 hotels and 5.5 million rooms. The turnover in the hotel industry worldwide posts double-digit growth (+12.4%) and it has never been so high (230 billion euros).
Table 6.1. Worldwide hotel ranking 2007 – final results Top 10 hotel groups worldwide in 01/01/2007(in rooms)
Source: MKG Consulting Database – Copyright 06/07
Table 6.2 Top 20 hotel brands worldwide on 01/01/2007(in rooms)
Source: MKG Consulting Database – Copyright 06/07 In its Worldwide Hotel Activity Report, on January 1, 2007 MKG Consulting counts 43,000 corporate operated hotels worldwide and 5.5 million rooms.
Growth in the year is established at 2.7% for nearly 150,000 rooms. This is the highest growth ever recorded.
Figure 6.6. The growth rate of the hotel supply at corporate chains worldwide from 2001 to 2006
Source: MKG Consulting Database – Copyright 06/07
Economic growth worldwide pursues its strong trend. The tourism sector fully benefits from this dynamic. With the return to growth in international travel, demand for hotel products is intensifying. The global depression that marked the beginning of this decade is abating.
The perspectives for growth are good on all the continents. North America remains the favored continent in the corporate hotel chain industry. Nearly
6 in 10 rooms (56.9%) in the world are located there, for nearly 3.2 million rooms. The United States have the most advanced development cycle of chains. They amount to nearly 70% of the country’s global supply. After a period of declining volumes of openings, the outlook for a drop in building costs should nonetheless result in wider operating margins to increase hotel projects. In contrast with chains in the United States, hotel brands in Europe (less than 25% for the entire continent) still have a considerable amount of room for development. And all the more so since it is the number-one tourist destination worldwide.
In 2006, Asia posts the most growth in the corporate hotel chain supply in terms of both growth rate (+10.5%) and volume (around 60,000 additional rooms). The penetration rate of chains in the zone is just 15%, and the race to Asia, already well on its way, shall continue. China and India are the priority targets. These countries present many vast agglomerations with large pools of customers. Finally, all lights are green, stimulating the investor’s appetites and rumors about acquisitions regarding groups in the
Top 10 worldwide are multiplying.
The Scenario after 2008 – In the last 18 months, the hotel industry has moved from an environment where there was a frenetic desire by both owners and operators to sign up new management agreements to one where new signings are comparatively rare. Attention is switching to how to make the agreement provisions work to maximize operating performance and hotel saleability.
According to data compiled by STR Global, occupancy levels in the Asia
Pacific region for the month of July 2009 dropped 6.3% year-on-year to
61.7%, ADR declined 15.9% to US$113.20, and RevPAR fell 21.2% to
US$69.83. Among the key markets, Beijing, China, reported the only occupancy increase, jumping 12.4% to 54.3%. Brisbane, Australia, was virtually flat in occupancy for the month, dropping 0.7% to 83.4%. Bangkok, Thailand, experienced the largest drop in occupancy, decreasing 25.6% to 52.7%. and
Hong Kong, China (-15.3% to 69.5%) also reported occupancy decreases of more than 15%.
Tokyo, Japan, posted the largest ADR increase in U.S. dollars, jumping
14.5% to US$216.08. Two other markets reported ADR increases for the month: Bali, Indonesia (+10.6% to US$138.21) and Osaka, Japan (+3.5% to
US$112.61). Three markets experienced ADR decreases of more than 30%:
Mumbai, India (-35.4% to US$166.68); New Delhi, India (-33.2% to
US$152.37); and Beijing (-30.5 to US$87.62). Tokyo reported the largest
RevPAR increase, up 8.5% to US$154.63, followed by Bali with a 4.9% increase to US$112.74.
Four markets posted RevPAR decreases of 30% or more: Mumbai (-39.6% to US$92.03); New Delhi (-38.7% to US$92.92); Bangkok (-35.9% to
US$46.07); and Sydney, Australia (-30% to US$98.80).
The current environment is very challenging. Hotels in most big cities around the world are emptier than they were last year, according to STR
Global, a research firm. London has weathered the global downturn better than most cities. Almost 79% of its hotel rooms were taken by paying customers in the seven months to July, the highest occupancy rate of the
87 cities in the survey, and little changed from the same period last year.
Figure 6.7. Hotel Occupancy Rates – Major World Cities.
Source: STR Global With the turmoil in the banking sector and the economic downturn around the world, the global lodging industry in 2009 suffered its most severe demand and rate contraction since the Great Depression. Almost no aspect of the industry has escaped unscathed. Data from market participants indicate that hotel transaction volume has decreased dramatically over the past two years. In addition, declines in values and prices per room in the
US and globally have been significant. Global hotel sales volume was just under US$12 billion for 2009, a 63% decline from the previous year. Beyond
2010, improvement is expected to commence, and a consensus around that improvement is becoming increasingly consistent, with most analysts indicating that RevPAR may reach 2007 levels by 2013. Aside from the global economic downturn, which affected tourism in 2009, the H1N1 pandemic in April also had a detrimental impact on the industry. Business travel remained equally constrained by drastic cost-cutting measures geared toward improving the bottom line, while incentive travel also diminished as a result of corporations and sales teams not meeting their quotas.
Despite the recent trepidation and the still-bumpy road ahead, the prospects for tourism appear favorable in the mid- to long-term.
Demographics in emerging markets point to a relatively large young population base that is still years away from reaching its peak earning capacity, while a growing middle class and increased access to credit — disrupted by the global crisis — suggest enhanced levels of disposable income.
While it is widely believed that the economy bottomed out in the third quarter of 2009 and that the economic crisis may begin to moderate in the latter half of 2010, the global hospitality industry is expected to experience the effects of the recession for many years as distressed assets change hands and the investment climate normalizes.
Following significant performance declines in 2008, the luxury hotel sector experienced a record drop in performance in 2009, driven by dramatic travel spending cuts among corporations (particularly in the finance sector) and individual consumers, affecting business, group and leisure segments. While all industry segments have been highly affected by the reduction in the number of trips, the luxury segment has been further affected by the so-called trade-down effect, whereby travelers seek more economical lodging alternatives, further exacerbating the trend away from luxury. Occupancy rates for luxury hotels worldwide fell to 57% in the year through July 2009 from 71% in the same period a year earlier, a bigger drop than for other types of accommodation, according to Smith Travel
Research. The average daily room rates at the most luxurious hotels around the world dropped 16% to US$245.13. Luxury demand dropped most significantly in Europe and the BRIC countries — Brazil, Russia, India and China — and was more pronounced during weekdays (dominated by corporate travel) than weekends. Data through September suggest that occupancy declines can be largely attributed to a considerable loss in high-end group demand (down 15%), which represents significant portion of demand in large destination resorts and urban hotels. Rate declines were more pronounced among transient business travelers (down 16%), which has resulted in a narrowing of the gap between transient and group rates that is likely to result in further group rate declines into 2010.
With the challenges that lie ahead, hoteliers will likely focus on rebuilding their occupancy first, which may require placing even greater downward pressure on average daily rates. As the economy rebounds, and demand picks up, however, hoteliers will have opportunities to focus on rebuilding their bottom lines. Although the lodging industry, like the economy, is anticipated to recover slowly, it is hoped that the middle of 2010 will mark the start of a new lodging cycle.
With the weakest economic fundamentals since the Great Depression, 2009 marked one of the poorest years for lodging fundamentals. According to
Smith Travel Research, occupancy, ADR and RevPar declined 8.7%, 8.8% and 16.7%, respectively, in 2009 and are anticipated to continue their downward trend through 2010. However, as the economy begins to show signs of recovery and supply growth decelerates, RevPar decline in 2010 is expected to be less substantial than in 2009. Smith Travel Research forecasts that occupancy, ADR and RevPar will decline 0.6%, 3.4% and
4.0%, respectively, in 2010, compared with the year before. Initial forecasts project positive growth for the US economy in 2010.
Occupancies in the hotel industry have actually already been correcting themselves for the past one to two years. However, rate correction has started only recently, but will become a growing trend owing not only to the economic situation, but also to the new branded supply entering the market. Current hotel operators need to realise that once the consumers have several options, they will settle for the best value proposition and be quick to switch loyalty from hotels that they believe are overcharging them.
Perhaps the silver lining lies in the limited supply growth expected in the lodging industry in 2010. Statistics have shown that the number of lodging projects under construction and in the planning phase continued to decline throughout 2009.
According to Lodging Econometrics, there were 3,890 projects (485,664 rooms) in the hotel construction pipeline as of third quarter 2009, representing a decrease of 34.0% compared with the same period the previous year. New project announcements, which are estimated at 275 projects (34,468 rooms), also appear to be at historic lows as a result of fundamental performance and financing conditions, while project cancellations and postponements (438 projects/54,299 rooms) appear to be at the upper end of the range of historical levels.
Tourism is anticipated to experience more robust growth in the next ten years than that observed in the past decade. The global tourism downturn, which began in the fall of 2008 and posted more than 12 consecutive months of declining demand, showed the first signs of bottoming out in late Q4 2009. Global demand was significantly affected in
2009, but the rate of decline slowed substantially in the second half, leading to an estimated compression of tourism of only 5%, to 876 million tourists globally for the year, according to the World Trade Organization.
Europe, representing more than half of all tourism traffic, experienced the steepest decline, while Africa appears to have been the only region to post positive results (+4%), given its smaller tourism base. The African continent is anticipated to see further expansion of its tourism sector with
South Africa hosting the FIFA World Cup in June and July of 2010. Sentiment on the tourism outlook among industry experts improved significantly in late 2009 and further supports the WTO’s estimate of a moderate tourism recovery of approximately 1% to 3% for 2010. CHAPTER 7
HOTEL INDUSTRY IN INDIA AND THAILAND
7.1 HOTEL INDUSTRY IN INDIA - India the country of over a billion people is also home to some of the most fascinating temples, forts, and monuments anywhere in the world. It is considered as an exotic place to travel from the point of view of tourists and is a described as a dream destination for the leisure traveler. Tourism in India has received a major boost in the past decade since the Indian Government realized the great potential of tourism of India. India has the right tourism potential and attractions to captivate all types of tourists whether it is adventurous tour, cultural exploration, pilgrimages, visit to the beautiful beaches or to the scenic mountain resorts, or business travellers India has it all.
It is boom time for India's Tourism and Hospitality sector. A 5,000 year history, culture, religion and alternative medicine fascinate both budget and luxury travelers alike. Driven by a surge in business traveler arrivals and a soaring interest in India as a tourist destination the recent years have been extremely busy for India as a tourist destination. Tourism in India is the third largest foreign exchange earner, accounting for 2.5 per cent of
GDP.
The tourism industry in India contributed 6.1% to the GDP in 2008/09 compared to 6.8% in 2007/08. According to estimates of the World Travel and Tourism Council (WTTC), GDP growth for Travel & Tourism economy is
expected to average 7.6% per annum over the next ten years. Despite the
global economic recession, foreign tourist arrivals (FTA) to India show a
continuing growth trend and increased to 5.37 million in 2008 from 4.98
million in 2007. However, the FTA growth rate declined from 14.7% in
2007/08 to only 5.7% in 2008/09, the lowest recorded since 2001/02 when
the 9/11 terror strikes occurred. The decline in growth rate reflects the
significant impact of the economic recession on the international travel
industry.
Figure 7.1: Sectoral Growth Rates at Factor Cost by Industry – India
(2003/04-2008/09)
Source : India Tourism Statistics 2008
However, according to the India Tourism Statistics 2008 published by the
Ministry of Tourism, the future outlook remains positive. The report showing year-to-date numbers for FTA shows that in the first quarter of
2009, the FTA declined significantly to 13.8% as compared to that in 2008, but in the second quarter the situation improved markedly (a decline of only 1.8%) with the FTA close to that of last year's. Considering that the second quarter was the traditionally weaker period in terms of season, we can attribute this improvement to the growing positive business sentiments in India. Over the last six years, FTA into India has recorded a growth of 125.6% from 2.38 million in 2002 to 5.37 million in 2008. Even at this visitation level, India accounts for less than 1% of the global tourism market. Although the total share of world tourist arrivals to India might be less, it has been steadily increasing. India attracted 0.58% of the world tourists in 2008 as compared to 0.34% in 2002.
In the same period, India moved from 54th rank in world tourist arrivals in
2002 to 41st in 2008, this being the highest ever attained by the country. In
2008, the domestic market in India recorded 562.9 million travellers as compared t o only 5.37 million international travellers. This highlights the potential of domestic tourism in the country, which is 104 times that of international arrivals in 2008.
India’s GDP growth in the industrial and service sectors has been accelerating over the last five years, attaining double-digit growth in 2010, at 10.0 and 11.1 percent, respectively (Ministry of Finance, 2009). Post 1991 Globalization, Liberalization and Privatization (GLP), Service
Sector share of contribution to India’s GDP has been steadily raising from a meager 38.67 per cent in 1985-86 to about 53% in 2006-07. The services sector consists of a major component of the total GDP of our country.
From out of this the Hotel and Restaurant Industry forms a major chunk.
The share of contribution of activities of trade, hotel and restaurant business rose from 8-9 per cent to 14-15 per cent over a period of five decades till 2010. Trade along with hotel and restaurant business rose fourteen-fold over the period.
India's tourism and hospitality industry has emerged as one of the key sectors driving the country's economy. According to the latest Tourism
Satellite Accounting (TSA) research released by the World Travel and
Tourism Council (WTTC) and its strategic partner Accenture, India's travel and tourism industry is expected to generate approximately US$ 100 billion in 2008, growing at 7.3 per cent and rising to US$ 275.5 billion by 2018 over the next ten years.
Inbound Tourists: India's share of international tourist arrivals has steadily increased from 0.46 per cent in 2004 to 0.55 per cent in 2007. Consequently, foreign exchange earnings grew at a much faster rate at 28.9 per cent in
2008, against 20 per cent during the corresponding period in 2007. The flow of foreign tourist arrivals has been recording phenomenal growth rates. India's share in world arrivals currently stands at 0.5 per cent, its share in revenue generated from tourism worldwide is 1.11 per cent.
Hospitality : The boom in India's tourism industry and the surge in tourist inflow to the country has percolated to other associated sectors like aviation, medical tourism, and the hotel industry. The country's hospitality sector has witnessed an increase in the occupancy ratios and average room rates. While occupancy ratio is around 75-80 per cent, the average increase in room rates has been hovering around 22-25 per cent. By 2010,
India will see an estimated 10 million foreign visitors and thereby a demand for approximately 100,000 rooms.
And with the continuing surge in tourist inflow, this sector is likely to offer tremendous opportunity for investors. For example, while the estimated number of required hotel rooms is around 240,000, the current availability is just 90,000 rooms - leaving a shortfall of 150,000 rooms to be provided.
India's hospitality sector is expected to see an estimated US$ 11.41 billion in the next two years, and around 40 international hotel brands by 2011, according to a report by Ma Foi Management Consultants. Several global hotel chains see immense investment opportunities in the sector with global chains like Hilton, Accor, Marriott International, Berggruen Hotels,
Cabana Hotels, Premier Travel Inn (PTI), InterContinental Hotels group and
Hampshire amongst others have announced major investment plans in
India with others likely to follow suit. International Recognition: India's booming tourism sector has not only witnessed international investments but also achieved international accolades with its increasing appeal as the leading global tourist destination. The government has been instrumental in making tourism a priority sector its efforts have borne fruits with a series of international recognition and awards.
India has been ranked No 1 in long-term travel growth by World
Travel and Trade Council in its global report for 2008.
The world's leading travel and tourism journal, "Conde Nast
Traveller", ranked India as the numero uno travel destination in the
world.
India was adjudged Asia's leading destination at the regional World
Travel Awards (WTA).
India bagged the World's leading Destination Marketing Award for
the Incredible India campaign.
Structure of the Industry:
Hotels in India are broadly classified into 7 categories (five star deluxe, five-star, four star, three star, two star, one-star and heritage hotels) by the
Ministry of Tourism, Government of India, based on the general features and facilities offered. The ratings are reviewed every five years. The
Government of India, Department of Tourism (H&R Cell) follows the following system for gradation of hotels, i.e. for the purpose of Hotel
Classification
Mark sheet for quality - Criteria Max Marks Score
Exterior & Grounds 8 - Exteriors, Approach 2/ Landscaping 2/Exterior lighting 2/ Parking 2
Guest Rooms 10 - Furniture 2/ Furnishings 2/ Décor 2/ Roomfacilities & amenities 2/ Linen 2
Bathrooms 8 - Facilities 2/ Fittings 2/ Linen 2/ Toiletries 2
Public Areas 8 - Furniture 2/ Furnishings 2/ Décor 2/Restrooms 2
Food & Beverage 8 - Choice of cuisine, menu 3/ décor 2/ foodquality 3
Kitchens 8 - Equipment 3/ State of repair 2/ food storage3
Cleanliness 8 - Overall impression
Hygiene 8 - Pot & Dish Washing 2/ drinking water 2/ stafffacilities 1/ pest control 2/ garbage disposal1
Safety & Security 8 - Fire fighting equipment 2/ signage 2/awareness of procedures 2/ public area and room security 2
Communications 6 - Phone service 2/ e-mail access 2/ internetaccess 1/ PC and other equipment 1
Guest Services 5 - Overall impression
Eco-friendly practices 5 - Waste management, recycling, no plastics1/Water conservation, Harvesting 1/pollution control-air, water, sound, light 2/
Alternative energy usage 1/
Facilities for Physically challenged persons 5 - At least a room for physically challenged persons 1/ public toilet in lobby1/telephone in public places 1/ ramps etc 1/facilities for aurally or visually handicapped 1
Staff quality 5 - Overall impression
TOTAL 100
Qualifying Score
5Star D-90 %, 5Star-80 %, 4Star-75 %, 3Star-65 %, 2Star-55 %, 1Star-50 %
Key Consumer Segments:
The market for the hotel industry can be divided into the following key consumer segments based on purpose of visit:
The Business Traveler: The Business Traveler is a businessman or a corporate executive travelling for business purposes. This segment includes corporates, both domestic and foreign, who open offices in the hotel premises during start-ups, corporate executives who make extended stay either for long duration projects or while waiting for permanent accommodation (primarily expatriates) and convention arrivals.
The Leisure Traveler: The Leisure Traveler could either be a foreigner or a domestic traveler whose primary purpose of visit is holiday and site seeing. Among non-business foreign tourists the primary motivation for visiting India is largely cultural attraction followed by conferences and conventions, tourist attractions like beaches, wild life, hill resorts etc.
Usually, leisure travelers are part of a package run by a tour operator. Airline Cabin Crew: Airline Cabin Crew forms another important segment because of the repetitive and guaranteed nature of the business that they provide. Usually, these are a part of an annual contract whereby, in return for a fixed rate, a certain number of rooms are provided on demand for cabin crews.
DEMAND & SUPPLY SCENARIO - Over the last decade and half the mad rush to India for business opportunities has intensified and elevated room rates and occupancy levels in India. Even budget hotels are charging USD
250 per day. The successful growth story of 'Hotel Industry in India' seconds only to China in Asia Pacific.
'Hotels in India' have supply of 110,000 rooms. According to the tourism ministry, 4.4 million tourists visited India last year and at current trend, demand will soar to 10 million in 2010 – to accommodate 350 million domestic travelers. 'Hotels in India' has a shortage of 150,000 rooms fueling hotel room rates across India. With tremendous pull of opportunity,
India is a destination for hotel chains looking for growth. The World Travel and Tourism Council, India, data says, India ranks 18th in business travel and will be among the top 5 in this decade. Sources estimate, demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, 'Hotel India' room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. 'Hotel Industry in India' is eroding its competitiveness as a cost effective destination. However, the rating on the 'Indian Hotels' is bullish.
'India Hotel Industry' is adding about 60,000 quality rooms, currently in different stages of planning and development and should be ready by 2012.
MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn their share of pie in the race. Government has approved 300 hotel projects, nearly half of which are in the luxury range. Sources said, the manpower requirements of the hotel industry will increase from 7 million in
2002 to 15 million by 2010.
With the USD 23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities. 'Hotel Industry in India' is set to grow at 15% a year. This figure will skyrocket in 2010, when Delhi hosts the Commonwealth Games.
Already, more than 50 international budget hotel chains are moving into
India to stake their turf. Therefore, with opportunities galore the future
'Scenario of Indian Hotel Industry' looks rosy.
There is a mismatch between demand and supply, leading to higher occupancies and average room rates. During 2004-5, revenue per available room in hotels across India increased by 29 per cent over the 2001-02 levels. This seems to be is just the beginning, judging by opinions from analysts and industry executives. Industry experts predict that demand will outpace supply in the short to medium term, and ARRs are expected to increase by 13 to 14 per cent annually over the next few years. Due to the spurt in tourist inflows, occupancy rates are expected to reach 83 per cent by 2008-09, up from 72 per cent.
The overall growth outlook appears to be very buoyant. Growth in demand in 2005 – 2010 was phenomenal year on year. Much of this growth will be driven by the BPO explosion, telecom, IT and energy. The hotel sector has also got a fillip from the entry of low cost airlines and the open skies policy
— which has led to a dramatic increase in commercial flights into and out of India. All these developments have contributed to a phenomenal growth in commercial travel. It is estimated that a majority of the tourists are business travelers. Unlike leisure travel which is seasonal, the business travelers ensure year-round occupancy. Indeed, the dollar-paying business travelers are the most sought after customers since they seek few discounts, entertain freely and make extensive use of the hotel's facilities like restaurants, business centres, travel desk, car rentals etc. since they are pressed for time. The increased thrust on meetings, conventions and exhibitions helps hotels improve their earnings. Historically, India has been a six or seven city market, including the four metros of Delhi, Chennai,
Kolkotta, Mumbai and tourist hotspots like Jaipur , Goa and Agra. However, the rise in economic activity across the country has led to an increase in demand in several other smaller cities including Ahmedabad, Pune,
Cochin, Bangalore and Hyderabad.
Table 7.1. Supply Demand gap in the premium hotels (Avg. 10 major cities)
Year 99-2000,200-01, 01-02, 02-03, 03-04, 04-05, 05-06, 06-07, 07-08 0 -099-2---
Room availability 16,378 17,656 18,976 22,247 23,010 24,246 24,620 25,773 27,703
Room demand 10,138 10,671 9,448 13,001 15,472 17,518 19,130 20,797 22,822
Surplus/ Shortage 6,240 6,985 9,528 9,246 7,538 6,728 5,490 4,976 4,881
Increase-room supply NA 1,278 1,320 3,271 763 1,236 374 1,153 1,930
Occupancy rate (%) 62 60 50 58 67 72 78 81 82
Av. Room Rate (Rs) NA 4,220 4,180 4,094 3,835 4,046 4,332 5,250 5,936
Note: The data pertains to the cities of Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad, Pune, Goa,
Jaipur and Agra
Source – Good times report. www.ibef.org/download/for_goodtimes.pdf
Although India has over 1,800 properties comprising more than 84,000
rooms, the hospitality industry is highly fragmented with a large
unorganised sector accounting for over 60 per cent of the market. The
majors in the organised segment are the Taj, Oberoi, ITC Hotels, Leela and
Asian Hotels, among others. Indian Hotels and its subsidiaries, collectively
known as Taj Hotels, Resorts and Palaces, comprises 71 hotels with over
8,000 rooms and is the largest hotel chain in south Asia. East India Hotels
has about 30 properties worldwide with about 5,000 rooms, and is focusing
its Oberoi brand in the luxury segment. Besides, the company also has a
marketing and management agreement with the Hilton group for eight of its
hotel properties. ITC has 66 hotels under four brands across 50
destinations in India with a total of about 5,000 rooms. The Leela group of
hotels operates in the luxury segment and owns three properties in
Mumbai, Bangalore and Goa with over 800 rooms. The Leela group has tied
up with Germany based Kempinski for the business segment and with Singapore based GHM group for the leisure segment. The demand and supply gap differs from city to city. The hotel industry is on an expansion spree. Several companies are scouting for properties in cities like
Bangalore and Chennai and in the states of Kerala and Goa, apart from expanding overseas.
Supply scenario - According to estimates by HVS International, around
10,856 hotel rooms in Delhi, 9,318 rooms in Mumbai, 7,794 rooms in
Bangalore and 7,408 rooms in Hyderabad are expected to be added by
2011.
As per the Travel and Tourism Competitiveness Report 2009 by the World
Economic Forum, India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places on the list of the world's attractive destinations. It is ranked the 14th best tourist destination for its natural resources and 24th for its cultural resources, with many World Heritage sites, both natural and cultural, rich fauna, and strong creative industries in the country. India also bagged 37th rank for its air transport network. The
India travel and tourism industry ranked 5th in the long-term (10-year) growth and is expected to be the second largest employer in the world by
2019.
Contribution to the economy
Combining unparalleled growth prospects and unlimited business potential, the industry is certainly on the foyer towards being a key player in the nation's changing face. Furthermore, banking on the government’s initiative of upgrading and expanding the country’s infrastructure like airports, national highways etc, the tourism and hospitality industry is bound to get a bounce in its growth.
The hotel and tourism industry’s contribution to the Indian economy by way of foreign direct investments (FDI) inflows were pegged at US$ 2.1 billion from April 2000 to March 2010, according to the Department of
Industrial Policy and Promotion (DIPP).
According to the Travel & Tourism Competitiveness Report 2009 brought out by the World Economic Forum, the contribution of travel and tourism to gross domestic product (GDP) is expected to be at US$ 187.3 billion by
2019. The report also states that real GDP growth for travel and tourism economy is expected to achieve an average of 7.7 per cent per annum over the next 10 years. Export earnings from international visitors and tourism goods are expected to generate US$ 51.4 billion (nominal terms) by 2019.
Furthermore, the sector which accounted for 6.4 per cent of total employment in 2009 is estimated to rise to 7.2 per cent of total employment by 2019.
According to industry data, India is expected to double the number of branded hotel rooms from 100,000 now in just three years. Leading the pack are global hotel chains, which will add over 300 hotel properties (an estimated 55,000 rooms) in the country by 2013, as per data compiled by companies.
Government Initiative - According to the Consolidated FDI Policy, released by DIPP, Ministry of Commerce and Industry, Government of India, the government has allowed 100 per cent foreign investment under the automatic route in the hotel and tourism related industry. The terms hotel includes restaurants, beach resorts and other tourism complexes providing accommodation and /or catering and food facilities to tourists. The term tourism related industry includes:
The Government of India has announced a scheme of granting Tourist Visa on Arrival (T-VoA) for the citizens of Finland, Japan, Luxembourg, New
Zealand and Singapore. The scheme is valid for citizens of the above mentioned countries planning to visit India on single entry strictly for the purpose of tourism and for a short period of upto a maximum of 30 days
Medical Tourism : India's reputation as a major medical tourist destination is fast becoming popular amongst foreign tourists to the country. India is aggressively promoting the concept of medical tourism and capitalising on its low cost and highly trained doctors. Moreover, the country also has some of the best hospitals and treatment centres that are equipped with infrastructure and technology, which are at par with those in the US, UK and Europe at a fraction of the costs. Currently, India's earnings through medical tourism annually is an estimated US$ 821.40 million. The market size of medical tourism in India is worth US$ 2.4 billion and is growing at 27
per cent annually. The country received 1.1 million medical tourists in 2009,
registering a growth of 17 per cent. According to a report by RNCOS,
medical tourism will grow at a CAGR of over 27 per cent in the period 2009–
12 to generate revenues worth US$ 2.4 billion by 2012. The number of
medical tourists is anticipated to grow at a CAGR of over 19 per cent to
reach 1.1 million by 2012. India’s share in the global medical tourism
industry will climb to around 2.4 per cent by the end of 2012.
Major players in the Indian Hotel Industry
Hotel Chains - They comprise major players including Indian Hotels
Company Limited (the Taj Group) and associate companies, EIH Limited
(the Oberoi Group), ITC Hotels Limited (the ITC Welcome Group), Indian
Tourism Development Corporation (ITDC) and Hotel Corporation of India
(HCI) (the latter two being under the Public Sector). Most of these chains had an established presence in one or more metro cities prior to the tourism boom of the 1980s. Subsequent to the tourism boom, these chains aggressively expanded their presence in other locations. The private players among the hotel chains are industry leaders and have well- established brand identities across the different industry segments.
Small Chains - They are companies that have come up after the tourism boom of the 1980s and 1990s. Due to lack of prior experience in the hotel industry, these players have preferred to opt for operating/management arrangements with international players of repute. Some of the companies in this category are Hotel Leela Venture (with Kempinski), Asian Hotels
(Hyatt International Corporation), Bharat Hotels (formerly with Holiday Inn and Hilton and now with Intercontinental). As late entrants, most of these hotel companies have fewer properties, compared with the big chains.
However most of these players have initiated expansion plans during the late 1990s.
Public Sector Chains - ITDC and HCI, boast of some of the best locations in major cities but are relative underperformers, as compared with their private sector counterparts.
International Hotel Chains - They are also looking at India as a major growth destination. These chains are establishing themselves in the Indian market by entering into joint ventures with Indian partners or by entering into management contracts or franchisee arrangements. Some of the players who have already entered or plan to enter the Indian market include
Marriott, Starwood, Berggruen Hotels, Emaar MGF. Most of these chains have ambitious expansion plans especially with a strong focus on the budget segment and tier II cities.
Localized Hotel Companies - They are mainly comprise early entrants who have an established localized presence and who preferred not to expand during the tourism boom but focus on building and catering to a loyal customer base. OPPORTUNITIES & CHALLENGES
Opportunities in the Sector - Considering India’s size and unparalleled diversity - natural, geographic, cultural and artistic, there is vast room for growth in tourism industry. As travelers surge into India, the demand for rooms, across segments, has skyrocketed. Hotels in the luxury and business traveler segment are recording nearly 100 per cent occupancy, spiraling tariffs, and a strain on capacity and manpower. Anticipating this demand, around 10,856 hotel rooms in Delhi, 9,318 rooms in Mumbai, 7,794 rooms in Bangalore and 7,408 rooms in Hyderabad are expected to be added by 2011, according to estimates by HVS International. The expected growth of the industry in future has provided its players with an opportunity to invest in new technologies such as CRM tools and latest security systems, and to venture into niche tourism segments like Medical,
Religious, Cruise, Casinos, MICE etc. India can also develop infrastructure to host international conferences and trade shows, thus increasing its share of tourist traffic from such activities
Health tourism - India is gradually gathering popularity as a health tourist destination. At its current pace of growth, healthcare tourism alone can rake over USD 1.7 billion additional revenues by 2012. Medical tourism is now a USD 299 million industry, as about 100,000 patients come each year.
The country needs to exploit the cost advantage it can offer to a health tourist, the study said. The biggest driver for healthcare tourism is the disparity in costs. A heart surgery in the US costs USD 30,000 as compared to USD 6,000 in India. A bone marrow transplant in the US costs USD
250,000 and USD 26,000 in India. With yoga, meditation, ayurveda, allopathy, and other systems of medicine, India offers a unique basket of services to an individual that is difficult to match by other countries.
Clinical outcomes in India are at par with the world's best centres since
India has internationally qualified and experienced specialists.
Challenges - India’s poor domestic tourism infrastructure is leading to a threat of losing foreign tourists to other competing countries. India is highly prone to prevailing socio-economic and political conditions. Like terrorist strikes, riots, epidemics, political uncertainty, slowdown in reforms etc. The growth in the Indian tourism sector is accompanied by the imminent destruction of local ecology and an increase in pollution, which, in the long run, is going to negatively impact the tourism industry of India.
While in general the global hotel industry has suffered owing to the meltdown, the Indian hotels industry has had to cope with significant contraction because of events like the 26/11 terrorist attacks and the spread of the H1N1 virus, which only added to the impact of the downturn.
Being a cash-rich business, hotels normally exhibit high profitability and are able to maintain a comfortable liquidity position during an industry up- cycle. However, in a down-cycle as volumes contract, the capital-intensive nature of the business with its high fixed operating costs weighs heavily on profitability. The global hotels industry has experienced RevPAR growth for periods of five to eight years followed by one to two years of decline in RevPAR.
Globally, demand has rarely kept declining for sustained periods. The long- term fundamentals of the hotels industry are interplay between hotel demand and supply, with the global economic scenario as the backdrop.
Contraction in volumes: Following more than a decade of increasing domestic tourist visitors and three years of continued increase in FTAs, foreign tourist volumes contracted sharply in calendar 2009. In H2, 2008-09, there was a sharp deterioration in the profitability, cash flows, and the capital structure of the Indian Hotels Industry.
Figure 7.2 : Domestic tourist visits to India
Source: Ministry of Tourism, Government of India
Note: Years in the chart refer to Calendar years
Foreign Tourist: Arrivals As per the press release by Press Information
Bureau dated 4th March, 2010, the monthly estimates for February 2010, compiled by the Ministry of Tourism on two important indicators of tourism sector, foreign tourist arrivals (FTAs) and foreign exchange earnings
(FEEs) were as follows: FTAs during the period January-February 2010 were 1,092,000 with a growth rate of 12.7 per cent, as compared to the FTAs of 968,000 during January-February 2009.
Figure 7.3: FTA in India over the past four years
Source: Ministry of Tourism, Government of India
Figure 7.4:- Passengers carried by domestic airlines
Source: Ministry of Civil Aviation, Government of India
Fall in ARRs and Occupancies erode profitability: In an industry that has heavy upfront capital costs, any decline in RevPAR is likely to have an exponentially negative impact on profitability. Under conditions of controlled costs, any increase in RevPAR should at minimum match inflation, for sustained profitability.
Short-term outlook remains weak: Overall, considering the present market conditions, ICRA expects 2009-10 to remain challenging for the Indian hotels industry. Although H2, 2009-10 is likely to post an improvement over the corresponding previous, partly because of the low base effect (H2,
2008-09 had been weak), increase in ARR in the current season (H2, 2009-
10 is the annual peak season for the industry) are likely to be muted as hotels attempt to revive occupancies. Further, as part of the proposed supply comes on-stream in various markets over the next year, the revival in the industry is likely to be subdued. The narrowing of the demand- supply gap would also prevent industry wide ARRs from shooting up as had happened in 2007-08. However, over the longer run this is likely to bring in a greater alignment between tariffs and the value provided.
Long-term outlook remains positive; significant room additions anticipated across regions: Despite the current trends in the industry, ICRA continues to have a positive view on the long-term fundamentals of the Indian hotels industry.
The long-term performance of the Indian hotels industry is linked to macroeconomic factors related to the general health of the economy and to micro market-specific, supply-demand gaps. ICRA expects demand in the long term to be driven by increasing travel volumes (low-cost airlines play an important role in boosting domestic travel); globalisation of trade and increase in tourist travel (India and Malaysia are set to emerge as key tourist destinations); and rising affluence and improving lifestyles of the travelling population (which drive demand for branded rooms and quality
F&B).
Notwithstanding the long-term favourable outlook, the Indian hotels industry would remain exposed to exogenous shocks like terrorist attacks or health concerns, as evident from the aftermath of the 26/11 attack in
India. Another point of concern is the lack of services and supporting infrastructure in India that would warrant the high prices Indian deluxe hotels currently command. These high prices, which are often comparable with those of premium international hotels, have led to the diversion of a significant number of MICE and leisure travellers to neighbouring value-for- money destinations like Thailand and Malaysia.
While the current global crisis is significantly impacting the economy and the demand for hotel rooms, the vast gap between the demand for and the supply of rooms in India persists. While the hotel industry in developed markets appear to have reached a point of saturation as far as demand and supply is concerned, the Indian hotels industry continues to evolve. The country currently has an estimated inventory of 125,000 branded rooms, which is well short of the requirement of almost twice the number in the next five years. In the short-to-medium term, the Indian hotels industry is likely to face several challenges ranging from the aftermath of this current down-cycle to more inherent problems like availability of low priced credit, government clearances, a plethora of taxes and economically viable land to build inventory. In the longer term, the growth potential is significant as evident from the continued global interest in the Indian hospitality industry.
The industry has announced a pipeline inventory of over 90,000 new rooms
(across categories) to be launched in the next five years, a significant number of which is coming from international hotel majors.
The Indian hospitality industry covers various price segments (unbranded to 5 Star Deluxe) but continues to be dominated by a few premium segment players. The room inventory is skewed towards the 5 Star and 5 Star
Deluxe segments. Indian Hotels Company Limited (IHCL) with more than
12,000 rooms is the largest and most diversified hospitality company in
India with a presence spanning a wide price spectrum, ranging from super luxury to economy. IHCL is followed by the hotel divisions of ITC and EIH
Limited who have around 1,500-3,000 rooms. Apart from these hotels, the industry has numerous participants with portfolio sizes ranging from one to 10 hotels.
FUTURE OUTLOOK - The Indian Hospitality sector is expected to show a healthy growth in the medium term. Strong economic growth, increased
FDI, greater emphasis on tourism development, favorable Government policies, impending 2010 Commonwealth games, 2011 Cricket World Cup and other international events, will be the major drivers for the growth.
There exists a lot of scope for growth in tourism sector. According to the Ministry of Tourism, the contribution of tourism to India’s GDP is only 5.9 per cent as compared to the worldwide average of 11 per cent.
By 2020, the Government of India expects travel and tourism to contribute
Rs 8,500 billion to GDP, almost four times the value in 2005. With successive Governments committed to reform, a strong manufacturing sector and a private sector that already has a critical mass that is needed to drive growth, it is unlikely that the strong growth in GDP is likely to be reversed. The rising middle class is also becoming increasingly affluent, mobile, Internet savvy and more sophisticated in terms of what is demanded in terms of tourism products and services, and more importantly the price they are willing to pay for it.
Entry of international brands through joint ventures and tie-ups is likely to enhance the service levels and will narrow demand-supply gap of rooms.
But ICRA expects the shortage in rooms to remain for next five years leading to higher occupancy levels and increase in Average Room Rates
(ARR). Currently, according to industry estimates, there are only 1,05,000 hotel rooms in India while in China the figure is much higher at 7,65,000 rooms.
The annual growth rate of hotel rooms in India is only 6 per cent, compared to 22 per cent in China, 18 per cent in Thailand and 15 per cent in Malaysia.
Economic growth in tier II and tier III cities have put these on the hospitality industry map. ARR are likely to harden in these cities in next 2-3 years due to shortage of room. Niche areas like health tourism and spiritual tourism are emerging as lucrative business opportunity for the industry. The overall buoyancy in the market is attracting increased interest from investors and higher inflow of capital in the industry is expected. The growth for hotels is also likely to come from proliferation of Special Economic Zones.
Major impediments to the growth are sensitivity to business cycles and adverse political and social events (including terrorist attacks), high rate of tax, high land price, bureaucracy, and poor infrastructure. For instance, the effective rate of taxation on tourism in India is 21 per cent as compared to 7 per cent in Thailand, 4 per cent in Malaysia and 1 per cent in Hong Kong.
Furthermore, owing to high land prices, there are more five star hotels than budget hotels, making India a high cost deluxe destination. Additionally,
India still does not have facility of modernised e-visa. The existing visa process is cumbersome and comparatively more expensive than other destinations. Yields are expected to be low in coming years on account of continuing price-cutting and discounts.
The Government is planning to grant infrastructure status to all budget hotels and convention centres set up in Delhi and National Capital Region till 2010 Commonwealth Games. This will enable them to enjoy a 10 year tax holiday as in case of other infrastructure projects such as roads, ports and power.
Until recently, global hotel chains preferred the franchisee or management agreement route in India rather than invest their monies. That is changing now. The Grand Hyatt was among the first hotels in which the foreign partner invested in the equity of the company. The current good-times in the hotel business may be part of a larger business cycle, which occurs periodically in corporate history. But one spinoff is certain; it has heralded the coming-of-age of Indian hotel chains.
HVS Global Hospitality Services a leading consulting firm has released the
2009 edition of “Hotels in India – Trends and Opportunities”. The report presents market performance across 11 major cities in India and highlights important trends in the Indian hospitality industry. According to the report, in 2008/09 the industry saw an overall decline in occupancy and revenue per available room (RevPAR) in most cities in India. This was expected in view of the global economic contraction. However, the report states that despite a contracting global economy, India recorded 562.9 million domestic travellers in 2008, as compared to only 5.37 million international travellers: domestic travellers being 104 times that of international ones.
The report gives an account of the new supply entering the market in 11 major cities across the country. It states that in a period of 11 years, from
1998/99 to 2008/09, the supply of rooms increased by 109%. The supply is further expected to increase by 94% by 2013/14 from that in 2008/09;
therefore, reflecting a faster growth in the coming years.
Figure 7.5 : Growth of Room Supply – India (1998/99-2013/14)
According to HVS, the addition of new supply across the country in each of
the hotel categories, particularly in the three and four-star ones, will ensure
that hotels charging high rates have a product that can support their rate.
Current hotel operators will need to realise that once the consumers have
several options, they will settle for the best value proposition and be quick
to switch loyalty from hotels that they believe are overcharging them.
The "Indian Tourism Industry Forecast (2007-2011)" report provides an
objective analysis of the present scenario and future prospects of the
Indian tourism industry. This report focuses on different parameters of
tourism industry including: inbound tourism, outbound tourism,
expenditure by inbound tourists, and medical tourism in India. It also helps clients to analyze the opportunities and factors critical to the success of tourism industry in India.
In India, inbound tourist expenditure per head is third highest in the
world and even more than global average tourist spending.
India has been promoting its healthcare tourism by providing the
visitors with private healthcare facilities. It is expected that the
number of tourists visiting India for the purpose of medical treatment
will reach one Million by 2012, representing a CAGR of 28.09% from
2007.
Disposable income in past (during 2001-2006) grew at a CAGR of
10.11%, thereby driving domestic as well as outbound tourism.
Room rent accounts for more than 50% of revenue earned by Indian
hotel industry.
Indian outbound tourist flow is expected to increase at a CAGR of
12.79% over the five-year period spanning 2007-2011.
Tourist influx to India is expected to increase at a CAGR of 22.65%
between 2007 and 2011.
India's share in global tourism is expected to reach 1.5% by 2010.
India has been promoting its healthcare tourism by providing the
visitors with private healthcare facilities. It is expected that the total
market for medical tourism will reach US$ 2 Billion by 2012,
representing a CAGR of 60.69%. Personal disposable income during 2002-2007 grew at a CAGR of
14.16%, thereby driving domestic as well as outbound tourism.
Indian outbound tourist flow is expected to increase at a CAGR of
13.30% over the five-year period spanning from 2008 to 2012.
Indias share in the global tourism is expected to reach 1.5% by 2010.
The growth in Indias tourism market is expected to serve as a boon,
driving the growth of several associated industries, including hotel
industry, medical tourism
The report & Indian Tourism Industry Analysis & by RNCOS provides an insight into the Indian tourism market. It evaluates the past, present and future scenario of the Indian tourism market and discusses the key factors which are making India a potential tourism destination. With focuses on different parameters of tourism industry, including inbound tourism, outbound tourism, expenditure by inbound tourists, medical tourism, and hotel industry, the report gives a thorough analysis on the tourism industry in India.
According to the report, India represents one of the most potential tourism markets in the world. It has expanded rapidly over the past few years and underpinned by the government support, rising income level and various international sports events, the Indian tourism industry will continue to grow at the fastest pace in the coming years. However, the industry may have to cope up with several challenges which will limit its growth. The travel and hospitality industry continues to be the sector, which has largely profited from the fast growing economy of India. Though FY09 had been tough year with tourist inflow declining by 4% YoY on account of economic slowdown and terror attacks, it has grown at a CAGR of 13% in the past 5 years. Higher
GDP growth, rising income, demand supply mismatch and strong government focus would continue to aid the industry.
India occupies forty-sixth position among the sixty tourist destinations in the world. A flourishing economy helped boost demand for the industry. To encourage the tourism sector, the government is planning to propose a conditional 10-year tax holiday for all tourism projects in the country.
Companies will enjoy full tax exemption up to 50% of profits, but will qualify for tax benefits for the remaining amount only if they re-invest it in tourism projects. The Centre and States are also working out a PPP (Public-Private-
Partnership) model to increase hotel capacity. Efforts to diversify tourist attractions by offering new products such as wellness tourism, medical tourism and golf tourism are expected to have a positive effect on both foreign tourist arrivals and domestic tourism.
The five star hotel segment has grown the fastest during the last five years clocking a CAGR of 12%. Further this segment can be divided into 3 sub- segments namely Luxury, Business and Leisure. The growth in this segment indicates the type of travelers coming into the country. The Planning Commission's High Level Group on services sector has pegged the room shortage in the country at 150,000 rooms by 2010, out of which more than 100,000 will be in the budget category. Not only the Indian hotel majors, but even international players have lined up huge capex plans. Investments of
US$ 11 bn over the next 2 years are expected to be earmarked for the hotel industry in India. Further, new segments like budget hotels, service apartments and management contracts are witnessing increasing interest.
Key Points
Supply Supply is catching pace. Metros will witness an
oversupply situation after four to five years.
Demand Largely depends on business travelers but
tourist traffic is also on the rise. Demand
normally spurts in the peak season between
November and March.
Barriers to entry High capital costs, poor infrastructure facilities
and scarcity of land especially in the metros.
Bargaining power of suppliers Limited due to higher competition, especially in
the metros.
Bargaining power of customers Higher in metro cities due to increasing room supply.
Competition Intense in metro cities, slowly picking up in
secondary cities. Competition has picked up
due to the entry of foreign hotel chains.
Financial Year '09
The hospitality industry witnessed a mixed year in 2008. The sector began
the year 2008 on a strong note. Rising tourist inflow, higher occupancy and
room rates continued to benefit the hotel players. In the first four months of
the year, the tourist arrivals were higher by 11.7% YoY. Prospects were
looking good, until the sector faced a double blow. The worst financial
crisis in many decades, high oil prices and a slew of militant attacks hit the
hotel industry.
During 1HFY09, though lower corporate spending, fluctuating dollar and
opening of credit crisis had impacted occupancy rates in some cities like
Bangalore, Pune, Hyderabad and Chennai, the room rates however,
remained high. However, with the terror strike (26/11) during the onset of
the peak season, things got murkier. As per Crisil, the available room
(RevPAR) for premium segment hotels fell by 31.4% YoY in March 2009. The
Average room rates (ARR) also declined by 19% YoY to Rs 10,398 in March
2009 whereas occupancy levels for the said period declined YoY from 78% to 66%. This led to cash flow pressures and delay/ cancellation of projects
by new developers.
The hotel industry is expected to have a tough FY10. As per WTTC, the
travel GDP is expected to decline by 3.5%. The hotel players may witness a
RevPAR fall of 10% to 15% during the year.
CRISIL Research expects the profitability of premium hotels to be impacted
due to a sharp decline in occupancy rates and room rates. It expects
demand to decline by 15.5% YoY in 2009-10. This is going to affect the
profitability of the sector. The hotel companies are already facing cash flow
pressure, thereby affecting their expansion plans. The balance sheets of the
hotel companies are under stress on account of acquisitions of land banks
and rising debt levels.
While the government is promoting year 2009 as Visit India, concrete
measures on problems faced by the sector need to be solved urgently to
get the industry back on track
Prospects
According to the 2002 estimates of the World Tourism Organisation (WTO),
international tourist inflow in India by 2020 would be 10 m, which means the
tourist influx has to grow at a CAGR of 6.5% for the next 14 years. This makes
the country one of the fastest growing tourist destinations in the world second only to China. As of FY08, the increase in the tourist arrivals is well
inline with the WTO estimates.
India accounts for 0.5% of world tourism. Strong GDP growth, improving
infrastructure, confidence in the country's economic prospects, open sky
policy and the 'Incredible India' campaign has improved the outlook for India.
This positive outlook would increase the tourist arrival in the country and the
hotel industry is expected to be the major beneficiary. Even domestic tourism
is gaining momentum. Rising disposable incomes, cheaper airfares and
better connectivity would continue to increase the demand for rooms.
Many international hotel chains either have or are on the look out for setting
up shop in the country. Companies like the Hilton and Hyatt group have
already tied up with local giants East India Hotels and Asian Hotels. Others
like Four Seasons, are on the lookout for a partner or would be setting up
their own hotels, government permitting. This clearly shows that India is on
the international tourism radar.
Although prospects are promising, as mentioned earlier, any change in the
global geo-political situations can and have adversely affected the
performance of this sector. Also, the heightened demand for land, especially
from real estate players has led to a steep escalation in the prices. Also,
shortage of manpower is going to be a huge challenge going forward. Hotel
players with a diversified portfolio across different segments are likely to be the key beneficiaries. This should be one of the determining factors while
investing in this sector.
As per the World Travel & Tourism Council, the tourism industry in India
is likely to generate US$ 121.4 billion of economic activity by 2015 and
Hospitality sector has the potential to earn US$ 24 billion in foreign
exchange by 2015.
Additionally, India is also likely to become a major hub for medical
tourism, with revenues from the industry estimated to grow from
US$ 333 million in 2007 to US$ 2.2 billion by 2012, says a study by the
Confederation of Indian Industry (CII) and McKinsey.
The booming tourism industry has had a cascading effect on the
hospitality sector with an increase in the occupancy ratios and average room
rates. While occupancy ratio is around 80-85 per cent – up nearly 10 percent
from three years back, the average increase in room rates over the last one
year has hovered around 22-25%.
Indian Cities Surveyed - It would be pertinent at the end to briefly study the three cities from India which were chosen for the purpose of this study,
Mumbai, Pune and Goa.
Ancient yet modern, fabulously rich yet achingly poor, Mumbai is India in microcosm. Once a sultry tropical archipelago of seven islands, and the
Raj's brightest jewel, Mumbai was the dowry of Portuguese Princess Infanta Catherine de Braganza who married Charles II of England in 1661.
Today it's a teeming metropolis, commercial hub of an old civilization seeking to find its place in the New World Order.
Mumbai, formerly called Bombay, is the capital of the Indian state of
Maharashtra. Mumbai lies on the west coast of India and has a deep natural harbour. Mumbai is the commercial and entertainment centre of India, generating 5% of India's GDP, and accounting for 25% of industrial output,
40% of maritime trade, and 70% of capital transactions to India's economy.
Mumbai is home to important financial institutions such as the Reserve
Bank of India, the Bombay Stock Exchange, the National Stock Exchange of India and the corporate headquarters of numerous Indian companies and multinational corporations. The city also houses India's Hindi film and television industry, known as Bollywood.
With a golden history of hundreds of years, Mumbai never fails to mesmerize its visitors amidst the heritage monuments. The Island City is dotted with several beaches and natural harbor. On the tourism map of
India, Mumbai has always entertained the maximum traffic from overseas.
Being the city of Bollywood, Mumbai allures thousands of aspirant actors and artists from all over the country.
Tourists can experience its dazzling nightlife in bars, lounges, pubs, discotheques and beaches. Tourists can uncover the spiritual side of the magnificent city in its places of worship. Parks, gardens, museums, shopping malls, amusement parks, beaches and lakes define the charisma of this economic hub. Another popular thing to do in Mumbai is do a slum tour after the popularity of the movie Slumdog Millionaire. In an effort to understand the world, such tours are being organized by reputable tour companies. The Elephanta Caves with carvings dedicated to Shiva are a definite stop as well.
Mumbai, the heart of India’s commerce and finance, continues to impress with confident increases in average room rates, dislodging Bangalore from the number one position. The financial year 2008/09 was an unforgettable one for the Indian tourism industry with the Mumbai terror attacks and the global economic downturn affecting the industry's performance. The hotel industry, too, observed an overall decline in occupancy and revenue per available room (RevPAR) in most cities in India. Mumbai reported the largest RevPAR decline of 20.1% for 2008/09 amongst the major cities in
India. This was due to the Mumbai terror attacks, which catapulted across the international firmament as the electronic media beamed live images of the Taj going up in flames; even earning the dubious distinction of being
'India's 9/11'. The event raised concerns in the minds of international travellers regarding India's worthiness as a safe and secure travel destination. The Mumbai market has been able to retain the average rates but saw a sharp decline in occupancy. However experts expect a strong recovery in the city demand after the decline witnessed in November and
December 2008. The city has a supply growth pipeline of 168% (13,386 rooms). Of this, 73%(the highest in metro locations) to actually get built.
Mumbai continues to offer fantastic opportunities for new hotel
development as demand certainly continues to be strong. With all the
various redevelopment/rehabilitation schemes of mill lands and the master
development of Mumbai's international airport, there to be good
opportunities for hotels to come up during the next decade or so. The
Chhatrapati Shivaji International Airport at Mumbai is also undergoing
redevelopment simultaneously.
Pune , also known as Poona, is the eighth largest city and eighth largest
metropolis in India, and the second largest in the state of Maharashtra,
after Mumbai. Pune is known to have existed as a town since 937 AD.
Chhatrapati Shivaji Maharaj, the founder of the Maratha Empire, lived in
Pune as a young boy, and later oversaw significant growth and
development of the town during his reign. Today, Pune is known for its
educational facilities, having more than a hundred educational institutions
and nine universities. Pune has well-established manufacturing, glass,
sugar and forging industries since the 1950-60s. Pune has a growing
industrial hinterland, with many information technology and automotive
companies setting up factories in Pune district. Pune is known for various
cultural activities like classical music, spirituality, drama, sports, and
literature. These activities and job opportunities attract migrants and
students from all over India and abroad, which makes for a city of many
communities and cultures. Pune is well known as the 'Queen of Deccan' due to its scenic beauty and rich natural resources. Besides, it is famous for its religious and historical places. Pune city is known on the world map beacuase of its educational, research and development institutions. Pune is the most industrialized district in western Maharashtra and a famous IT hub in the country. Pune is also famous for tourist visitors for its Historical and Religious places and
Scenic spots and Parks.
Pune has been included in our study owing to the growing interest of investors in this market, its proximity to Mumbai, development of quality industrial and IT areas and also the mammoth construction of hotels. Pune has traditionally been an industrial city with only a handful of branded hotels operating an inventory of approximately 400 rooms. The hotel room count in Pune doubled with the addition of 400 more rooms opening in
2007/08 alone and approximately 5,500 more rooms opening in the next few years. Pune saw a growth in room supply of 12.8% in 2008/09, but a decline in the city performance owing to a drop in demand primarily from the
IT/ITeS sectors. At this stage, there are close to 30 projects in this market, a few of which are expected to get delayed. Despite these developments, there would be opportunities in certain micro markets provided the product positioning is appropriate for the site. The Pune market is expected to have the maximum development (531% supply growth over existing supply) over five years. Pune may reflect that 8,054 rooms are under development, however it is estimated that only 52% of this proposed supply will actually get developed by 2013/14.
Goa with Panjim as its capital, Konkani, Marathi and English as its most spoken languages, in this secular state, the population follows Hinduism,
Christianity and Islam. Goa boasts of some of the finest churches and temples in the world. One of the most traveled tourism destinations in India
- Goa has a range of spots to offer, exquisite churches, ancient temples, adventurous forts, wildlife preserves, scenic beaches and even get away lakes. At any time of the year Goa, is fun and laid back. It experiences lovely and relaxing climate. This coastal state has a magic of its own during the rains. The warm tropical showers turn the countryside into the picturesque greenery; the sea waves seem to welcome one and all and the tourists cannot ask for better package than Goa in the rains. The beaches are intertwined with several waterways and the two rivers, namely Mandovi and Zuari. The Goan coastline is heaven on Earth for swimmers, anglers, water sports buffs and sunbathers. Cruises in Goa are unforgettable experience for lifetime of tourists coming to India. Along with beautiful beaches, Goa has remarkable lakes too. Boating is one activity every tourist visiting this artificial lake in Goa must indulge in.
Most of the northern beaches offer adventure gelled with a very active nightlife. The southern beaches are paradise for the tourists seeking tranquility amidst the silvery sand and the palm groves. Shopping which is a must for a holiday is true fun at Goa with several shops making loads of stuff easily available for the tourists. The items may vary from Carpets to
Papier Mache, Textiles and Silk to Wood Carvings. Some of the restored
Goan houses have the best of lifestyle and fashion shops.
Goa has its fair share of festivals. On one hand the Goans celebrate the
Carnival and Shigmo as festivals of joy, on the other, Shivaratri is one of austerity and penance. The celebration of the Carnival and the Shigmo comprises of various types of theatrical performances. Goa being the coastal state has remarkable seafood to offer. Goan cuisine has always been admired, with its gamut of Portuguese-Goan dishes. Goa has traditionally been a strong leisure and meetings, incentives, conferences and exhibitions destination. Showing a growth of nearly 34.4% in valuations in 2007/08, hotels in Goa have the fourth most expensive valuations in the country. Goa continues to be India's preferred beach destination. The state is likely to see an increase of 78% (2,178 rooms) with a low probability factor of 31% for the next few years. Goa remains an excellent investment opportunity for hotel development due to its growing potential as a leisure destination. Unfortunately, due to the political instability in the state, Goa has now become one of the worst administrations to get approvals and licenses for opening new hotels; and that is hurting the state as its economy is highly reliant on tourism.
The Road Ahead - The Indian hospitality sector is certainly the most apt replication of the belief 'Atithi devo bhava'- touch of tenderness, a helping hand and a welcoming visage. According to the World Travel and Tourism
Council (WTTC), the growth in the hospitality industry is pegged at 15 per cent every year, with 200,000 rooms needed, the hotel segment of India is on the brink of an astounding growth.According to the Tourism Satellite
Accounting (TSA) research, released by WTTC and its strategic partner
Oxford Economics in March 2009: The demand for travel and tourism in
India is expected to grow by 8.2 per cent between 2010 and 2019 and will place India at the third position in the world.India's travel and tourism sector is expected to be the second largest employer in the world, employing 40,037,000 persons by 2019.
7.2 HOTEL INDUSTRY IN THAILAND
Thailand is an independent country that lies in the heart of Southeast Asia.
The country is a kingdom, a constitutional monarchy with King Bhumibol
Adulyadej, the ninth king of the House of Chakri, who has reigned since
1946, making him the world's longest-serving current head of state and the longest-reigning monarch in Thai history. The king is officially titled Head of State, the Head of the Armed Forces, an Upholder of the Buddhist religion, and the Defender of all Faiths.
Thailand is the world's 50th largest country in terms of total area, and the
21st most-populous country, with approximately 64 million people. The country's official language is Thai. Its primary religion is Buddhism, which is practiced by around 95% of all Thais. Thailand experienced rapid economic growth between 1985 and 1995 and is a newly industrialized country with tourism, due to well-known tourist destinations such as Pattaya, Bangkok, Phuket, Chiang Mai and Ko Sam, and exports contributing significantly to the economy. Thailand is the most popular tourist destination in Southeast Asia, and for a reason. One can find almost anything here: thick jungle as green as can be, crystal blue beaches that feel more like a warm bath than a swim in the ocean and food that can curl your nose hairs while tap dancing across your taste buds.
Exotic, yet safe; cheap, yet equipped with every modern amenity you need, there is something for every interest and every price bracket, from beach front backpacker bungalows to some of the best luxury hotels in the world.
Thai temples known as wats, resplendent with gold and easily identifiable thanks to their ornate, multicolored, pointy roofs.
Some traditional arts popular in Thailand include traditional Thai dancing and music, based on religious rituals and court entertainment. Famously brutal Thai boxing (muay Thai), derived from the military training of Thai warriors, is undoubtedly the country's best known indigenous sport.
Thailand's a big enough country that you can find a place to practice almost any outdoor sport. Some of these are: Rock climbing - the cliffs of
Rai Leh in Krabi are arguably among the best in the world, Snorkeling -
Phuket and its surrounding islands, Phi Phi, Koh Tao, and Some areas in the Similans have some wonderful snorkeling over coral reefs, Scuba diving - easily accessible Ko Tao and Ang Thong National Marine Park (near Ko Samui) draws the crowds, but also possible in Koh Chang,
Pattaya and Krabi, and the Similan Islands are worth the journey. One of the newest hot spots for diving is Ko Lipe - Small island in the middle of
Tarutao National Park amazingly unspoilt, great reefs and beaches absolutely stunning, a must see. See also Diving in Thailand, Trekking - very popular up north around Chiang Mai and Chiang Rai, Surfing - possible in Khao Lak, Phuket and Koh Samui, Liveboard Diving.
Other activities which are very popular with tourists are:
Dinner Cruise - dinner cruises have become one of Thailand's must visit spot for any visitors to Thailand..
Spas - Although spas weren't introduced here until the early 1990s,
Thailand has quickly become the second-highest ranking spa destination in the world. There are a phenomenal variety of spa types, and spas can be found at almost every destination in the country.
Medical tourism - Many travellers go to Thailand to undergo medical treatments at a fraction of the cost charged in their home countries. Private hospitals in Thailand are accredited by the government according to standards that meet or exceed those in North America, and many of the doctors in Thailand hold international accreditation and relevant licenses.
Popular treatments, ranging from cosmetic, organ transplants and orthopedic treatments to dental and cardiac surgeries, are available at a price much lower than the US or Europe.
Shopping and Business – Thailand is a shopper's paradise and many visitors to Bangkok in particular end up spending much of their time in the countless markets and malls. A Thai speciality are the night markets found in almost every town. Here a variety of vendors from designers to handicraft sellers have stalls selling goods which cannot normally be found in malls and day markets. Not to be left out is what is often touted as the world's biggest weekend bazaar with products ranging from clothes to antiques.
Thailand suffered from the SARS threat in 2003 and had the first decline in growth seen in the recent past. The recovery in 2004 was very strong and has seen additional real growth beyond recovery. The only major risk is an extension of the political problems in the Southern regions. Phuket has also been slow to recover from the tsunami but much of this trade has shifted to other parts of Thailand.
It is a testament to the strength of Thailand's tourism industry, the huge attraction and strong brand image that the country enjoys, that it has been rebuilt so quickly, with vibrancy that seemed all but impossible nearly two years ago amid the wreckage of the tsunami. There is no question that 2005 was a miserable year. Miserable in terms of the human tragedy in the fallout of one of the worst natural disasters there has ever been and miserable for the industry in the setback that followed.
Thailand’s hotel operators collectively held their breath since the demonstrations and violence, waiting to see whether any change of government that was going to cut into their businesses on the eve of the busiest time of the year. Immediately after the coup, some hoteliers reported losses of millions of baht as tourists cancelled bookings and guests already in the country cut short their stay. As the weeks went by and it became clear that Thailand was well on the way to a smooth transition, relief became palpable. Most hotels reported anecdotally that, traditionally the busiest months of the year, were almost back to business as usual.
Thai hotels have time and again proved their resilience, regardless of the doomsayers who say there are too many rooms for the industry to sustain.
The sector had already shown strong recovery from the dark days after the tsunami and coups and that continued through this year. Many in the affected areas had started the year with occupancy rates as low as 15%.
However, after the beginning of 2010 the overall occupancy rate for the industry rose to around 65% and continues to hover around that level. The aftermath of the political unrest is still being felt Bad publicity highlighting regional threats, such as health scares and terrorism, may also deter some visitors, although it must be stressed that
Thailand is not alone in facing these difficulties.
On the other hand, Thailand tourism, as it demonstrated so clearly last year, is highly resilient and will enjoy many opportunities if it is prepared to grasp them. With sustained levels of support for the industry from the government, we can do more to service the rapidly growing intra-regional market. Phuket has also been slow to recover from the tsunami but much of this trade has shifted to other parts of Thailand.
Table 7.2. Thailand tourism growth rate.
Source: Tourism Authority of Thailand
Receipts declined in 2003 but are forecast to increase rapidly alongside increased arrival numbers through the forecast period. Table 7.3. Thailand tourism receipts
Source: Tourism Authority of Thailand
International arrivals to Thailand from 1998 to 2009 show a significant rise from
1998 onwards. There are significant dips with the SARS epidemic, and after the
Tsunami of end 2004. From end 2008 political events in Thailand have influenced tourist arrivals. While total number of arrivals in 2009 was only mildly down on the year before, the tourist industry surely had expected more revenue. Probably a potential additional number of 1 million visitors elected not to come to Thailand.
Thailand has suffered from political instability, a closure of Suvarnabhumi Airport
(26 november 2008, by the Yellow Shirts protesters). A Red Shirt mob invaded the
East Asia Summit in Pattaya on 11 April 2009, leading to a cancellation of the summit, with world leaders scurried away to safety. This was followed by violent riots the next day (during Songkhran) and the declaration of a state of emergency by prime minister Abhisit Vejjajiva. The protesters withdrew and the state of emergency was lifted on 24 April.
Flu cases emerged in March and April of 2009 in Mexico, with the official first announcement of the new H1N1 flu on 23 April. On 12 May, it was made public by
Health Minister Witthaya Kaewparadai that two Thais who returned from Mexico had been infected with swine and subsequently recovered. Fortunately while infections became epidemic, the resulting health risk of H1N1 infection proved to be less serious than expected by some.
Despite the serious disturbances in April 2009, tourism arrivals for the whole year were only mildly affected, with a significant upturn (+28%) in the last quarter of
2009, when compared to the last quarter of 2010. The first quarter of 2010 was likely also good, but serious demonstrations by the Red Shirts happened from
April 2010 onwards, with serious repercussions for arrivals in the second quarter of 2010.
In the recent past, both SARS in early 2003, and the Tsunami of december
2004, had significant effects on the number of international arrivals. Bird flu
also emerged at the beginning of 2004 in Thailand and probably with the
Tsunami, caused a decreased number of visitors in the 2004-2005 period.
The chart otherwise shows the number of arrivals steadily increasing to
more than 14 million in 2008. This may seem a lot, but quite a few countries
in Europe (and also China) receive many more visitors.
Thailand's tourism industry makes up about 6.5 percent of the country's
GDP. When seeing the number of tourists, and the number of tourist
destinations and hotels, one would actually expect a more substantial
portion of GDP. But Thailand's tourism industry, while very visible, brings in much less money than other service industries, and certainly less than its manufacturing industry. Nevertheless, international visitors spent more than 547 billion baht (something like 16 billion U.S. Dollars) in 2008. The average length of stay per tourist in 2007 was 9 days.
In 2008, 52.37 % of international tourists were East Asian, with Malaysia and Japan providing the most visitors. Close to two million Malaysians visited Thailand. Europeans provided close to 4 million visitors in 2008, about 27.22 % of the total. The number of visitors from the Americas, South
Asia and Africa, is much smaller. However, close to 700,000 Australians visited Thailand, which is actually an enormous number, when taking the total population of Australia into account.
Arrivals from 2007 to 2009 per quarter : The number of tourist arrivals in the first quarter and second quarter of 2009 were 3,64 million and 2,96 million respectively. These figures were lower than during the first 2 quarters of 2007 or 2008. In the third quarter of 2009 we see that the number of visitors is similar to the number of visitors in both 2007 and
2008, suggesting that the worst was over. In the 4th quarter of 2009, saw higher arrivals than in 2007 and 2008. See the yellow line crossing over in the graph below. In view of the political disturbances from April 2010, a serious downturn is expected for the second quarter of 2010. What happens afterwards will greatly depend on a resolution of the political situation in Thailand. Figure 7.10 – Thailand tourist arrivals 2007 -09
Source: Tourism Authority of Thailand
Tourist arrivals in Thailand continued to decline in 2009, leaving the industry on track for an extremely poor performance on a full-year basis.
Figures released by the Office of Tourism Development (OTD) show that tourist arrivals fell by 11.8% year-on-year (y-o-y) in the first three quarters of the year to 9.89mn, down from 11.2mn in the same period in 2008.
Encouragingly however, the rate of decline had fallen since H109, when arrivals slumped by 16.2% y-o-y. In Q309 arrivals fell by only 1.2% y-o-y, to
3.29mn.
Thailand’s Spa Sector Potential Amid the general industry decline,
Thailand’s spa sector received some good news in December 2009 when it was voted the region’s spa capital of the year at the AsiaSpa Awards, indicative of the swift development of the country’s spa industry. The first spa in the country was opened in 1992 and the number of spas has risen to
585, employing 11,240 people. The industry generated US$263mn in 2007. The spa industry benefits from Thailand’s worldwide reputation as a centre for massages and beauty treatments, with many spas now attached to resorts that specifically offer spa-based holiday packages, which provide another incentive for tourists to visit Thailand rather than other countries in the region. Although the spa industry is likely to stagnate during the downturn, we expect the industry to be one of the sectors leading the recovery.
The Thai government launched a campaign to woo back tourists after recent rioting there; its world-renowned hospitality industry is facing another threat; stiffer competition from neighboring countries working to increase their visitors. The Thai travel business has a history of bouncing back from crises. It did after the 2003 outbreak of Severe Acute Respiratory
Syndrome, or SARS, the 2004 tsunami that hit Phuket and nearby beach areas and a 2008 protest that shut Thailand's main international airport for days. The government is planning to make more than five billion baht ($150 million) available to tourism-industry businesses in low-interest loans with two-year grace periods. It also intends to waive visa fees for some countries and lower the landing fees for airlines. This time, however, the rebound could be weaker and take longer.
LEVELS OF THE THAILAND HOTEL STANDARD AND SYMBOL - The hotel standard is divided into 5 levels and arranged in ascending order with one star ( ) denoting the lowest standard and five stars ( ) denoting the highest standard. STAR RATING LEVEL - The "Hotel stardard" defines the qualities and
SYMBOL characteristics of a hotel and sets it apart .
One star ( ) Standard of one star level
Two star ( ) Standard of two star level
Three star ( ) Standard of three star level
Four star ( ) Standard of four star level
Five star ( ) Standard of five star level
Source: Tourism Authority of Thailand
Hotels have contributed significantly the growth and development of the
Thai tourism industry and will continue to play a vital role. The Thai tourism
industry had long recognised the importance of setting a consistent
standard for hotels and resorts in Thailand. Hence in order to increase
Thailand's competitive potential on the international stage, the Thai hotel
industry deemed it an important step to raise overall standards by adopting
internationally-recognised practices, such as the introduction of a 'precise,
accurate and reliable' hotel standard and certification process that would
enable Thai hotels to compete with world-class hotel properties on an
equal footing.
In March 2004, the Thai hotel industry introduced the country's first
ever hotel standard certification programme a comprehensive and
credible "hotel standard" that defines the qualities and characteristics of a particular hotel or resort property and sets it apart from properties in other levels, and is also universally-recognised and internationally- accepted. Participation in the Thai Hotel Standard certification programme is voluntary. As of September 2005, there are a total of 116 participating hotel and resort properties.
MAJOR FACTORS IN CONSIDERING THE HOTEL STANDARD - The Thai hotel standard covers three aspects: The standard of construction and facilities, The standard of maintenance and the standard of services
The major factors taken into consideration in the assessment and certification of an individual hotel and resort property are:
Physical aspects such as location and surroundings, Construction aspect ie. the physical structure of the hotel, systems in place, security system, etc., Facilities for hotel guests taking into consideration guests who are resident at the hotel (in-house guests) as well as guests who frequent the hotel and use the services provided For example, the quantity of the facilities, décor, equipment, etc., Quality of Service and the ability to maintain quality includes such criteria as personality, the quality of services, cleanliness, hygiene, etc. and The maintenance of the hotel of the abovementioned facilities. Scores for each of the abovementioned standards are allocated as follows. Table 7.2.3 Thailand hotels grading points
Level Criteria Five star Four star Three star Two star One star
(1) The standard of construction 359 284 163 72 53 and facilities
(2)The standard of maintenance 305 270 225 205 180
(3) The standard of services 374 320 301 169 150
Total 1,052 896 699 451 383
Source: Tourism Authority of Thailand
Applicants are required to pass all three standards by scoring higher than
the lowest score for each standard for the level for which they have
applied.
The Foundation of Standard and Human Resources Development in
Service and Tourism Industry", a non-profit organization and juristic
person representing the private and public sector, was established to
oversee the administration of and certification process for the Thai Hotel
Standards.
Successful implementation of the certification programme increases
international confidence in Thailand as a world-class travel and holiday
destination, enhances the overall image of the Thai tourism industry and
reinforces Thailand's positioning as 'Tourism Capital of Asia'. As a growing number of hotel and resort operators recognise the importance of having set standards for the industry, it is expected that the programme will attract increased participation from Thai hotels and resorts.
Since the two cities from Thailand chosen for the purpose of this study are
Bangkok and Pattaya, this chapter concludes with a note on these two cities :
Bangkok is also known as "Krungthep" meaning 'the City of Angels'.
Bangkok is famous for its temples, the Grand Palace as well as some of
Asia's largest shopping centers and Asia's largest outdoor week-end market . Bangkok is highly appreciated for its wide choice of restaurants, from authentic street-side eateries to a number of fine dining establishments, In addition to probably the best nightlife in Asia. The wide choice of accommodation, from high end international hotels to guesthouses meets the demands of all travelers. In terms of relaxation –
Bangkok has seen a huge development of Spas and wellness centers as well as medical facilities of Western standards.
There are many attractions in Bangkok, which are worth a visit. The following are some of the interesting ones are the Sanam Luang,
Democracy Monument, Princess Mother Memorial Park, King Rama IX
Royal Park, Dusit Zoo, Samphran Elephant Ground & Zoo, Safari World, Crocodile Farm, Snake Farm, Rose Garden and the Damnoen Saduak
Floating Market.
Pattaya is 147 kms southeast of Bangkok, and faces the Thai Gulf. It is
Asia's premier beach resort, and caters with equal appeal to families, couples and single visitors. Pattaya's relaxing tropical ambience is synonymous with every ingredient for memorable holidays. Pattaya hotels ranges from luxuriously appointed backside hotels with superb convention facilities to simple guesthouses and beach resorts.
Pattaya is a paradise for everyone, as it has a variety of attractions suitable for all types of visitors. This is the place where you can fill your day, from dusk to dawn, with endless activities, or you may choose to do nothing at all and relax. This exotic beach resort welcomes approximately 5 million visitors a year.
Pattaya currently integrates the delights of a beach resort, city-like dining, shopping and night entertainment facilities with more than 300 assorted hotels, thousands of shops, restaurants and bars. In addition, there are an array of sports and recreational activities including beaches, golf courses, tennis courts, go-kart, gyms for working out, weight lifting and Thai-boxing gear.
Pattaya offers a broad range of things to do. During the day, one may enjoy riding elephants or driving humble automatic mini-bikes, monstrous motorcycles, or even monster multicolored convertible Jeeps. Others go for shooting firearms, scuba diving and surfing, deep-sea fishing, speed boats, scooters, water-skiing, parasailing, or aerial sports such as gliding ultra-lights and flying motor-propelled gliders. On the other hand, at night, there are restaurants, bars, theaters, cabaret shows, night clubs, bowling halls, billiard & snooker clubs, discos, sauna & massage parlors, not to cite its absolutely incredible shopping which is available non-stop both day- and-night. CHAPTER 8
SUSTAINABLE COMPETITIVE ADVANTAGE AND
INNOVATIONS IN THE HOTEL INDUSTRY.
Competitive advantage is a position a firm occupies against its competitors. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. A competitive advantage is the thing that differentiates a business from its competitors. It is what separates the business from everyone else. And, it's usually the reason one is in business. It answers the question "Why should I buy from you?" or "How are you better than my current supplier?"
A firm possesses a Sustainable Competitive Advantage when it has value-creating products, processes and services for their customers that cannot be duplicated or imitated by its competitors. Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors.
The term competitive advantage is the ability gained through attributes and resources to perform at a higher level than others in the same industry or market. The study of such advantage has attracted profound research interest due to contemporary issues regarding superior performance levels of firms in the present competitive market conditions. An organization is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player. Successfully implemented strategies will lift a firm to superior performance by facilitating the firm with competitive advantage to outperform current or potential players. To gain competitive advantage a business strategy of a firm manipulates the various resources over which it has direct control and these resources have the ability to generate competitive advantage. Superior performance outcomes and superiority in production resources reflects competitive advantage. Competitive advantage as the ability to stay ahead of present or potential competition, thus superior performance reached through competitive advantage will ensure market leadership. Also it provides the understanding that resources held by a firm and the business strategy will have a profound impact on generating competitive advantage. Business strategy is the tool that manipulates the resources and creates competitive advantage. Hence, viable business strategy may not be adequate unless it possess control over unique resources that has the ability to create such a unique advantage. Competitive advantage is a key determinant of superior performance and it will ensure survival and prominent placing in the market. Superior performance being the ultimate desired goal of a firm, competitive advantage becomes the foundation highlighting the significant importance to develop same. In the event competitive advantage is gained by a firm wouldn’t it be necessary to sustain such value creating advantage for desired periods of time in order to gain maximized superior outcomes? Sustainable competitive advantage is a journey not a destination.
The idea of a Sustainable Competitive Advantage surfaced in 1984, when
Day suggested types of strategies that may help to "sustain the competitive advantage". The actual term "Sustainable Competitive
Advantage " emerged in 1985, when Porter discussed the basic types of competitive strategies that a firm can possess in order to achieve a long- run Sustainable Competitive Advantage. Interestingly, no formal conceptual definition was presented by Porter in his discussion. There exists "no common meaning for ‘competitive advantage’ in practice or in the marketing strategy literature". Barney has probably come the closest to a formal definition by offering the following: "A firm is said to have a sustained competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy".
In order to possess an Sustainable Competitive Advantage, consumers must perceive some difference between a firm’s product offering and the competitors’ offering. This difference must be due to some resource capability that the firm possesses and competitors do not possess. Also, this difference must be some product/delivery attribute that is a positive key buying criterion for the market. The key is being able to predict the actions of others in the industry over time; by matching the firm’s resources to the gaps and voids that exist in the industry, a competitive advantage can be created. This advantage is sustained if competitors either can not or will not take action to close the gap.
In order to offer a formal conceptual definition of the term, it may be helpful to consider the meaning and implications of all three terms. Webster’s
Dictionary defines the term "advantage" as the superiority of position or condition, or a benefit resulting from some course of action. "Competitive" is defined in Webster’s as relating to, characterized by, or based on competition (rivalry). Finally, Webster’s shows the term "sustain" to mean to keep up or prolong.
The next step in crafting a formal conceptual definition of Sustainable
Competitive Advantage is to consider these dictionary definitions in a business-specific context. Based on the definition of "competitive" presented above, Sustainable Competitive Advantage should be viewed by a firm from an external perspective. Competition is based on rivalry between two or more parties; thus, the focus of Sustainable Competitive
Advantage should be how long a firm can keep competitors at bay. A firm who approaches the achievement of Sustainable Competitive Advantage from an internal perspective is missing the point. A particular strategy based on firm resources irrespective of what competitors are doing certainly could be sustained. However, it is the external focus – the focus on competitors – that allows a firm to recognize and/or create unique resources. This uniqueness is what gives a firm the advantage. The advantage (or superiority) is sustained (or prolonged) as long as the unique strategy provides added value to customers, and as long as competitors cannot find a way to duplicate it.
Therefore, the following formal conceptual definition is offered:
Sustainable Competitive Advantage is the prolonged benefit of implementing some unique value-creating strategy not simultaneously being implemented by any current or potential competitors along with the inability to duplicate the benefits of this strategy.
There are many obstacles to further theory development for the
Sustainable Competitive Advantage construct. First, researchers lack a solid operational definition for Sustainable Competitive Advantage. Without this, we cannot measure it, nor can we begin to empirically understand its antecedents and consequences. Current theory also has no agreed upon method of assessing whether an Sustainable Competitive Advantage has been achieved by a firm. For example, should performance indicators such as market share or profitability be used to determine if an Sustainable
Competitive Advantage has been achieved? If such performance indictors are used, how can they be empirically linked as the result of an Sustainable
Competitive Advantage rather than other factors? These are just a few measurement issues that need to be addressed if we want to successfully develop further theory related to Sustainable Competitive Advantage. The first step would be to create an operational definition of Sustainable
Competitive Advantage, possibly one based on the conceptual definition offered here. Perhaps a formative scale could be developed to assess whether a particular firm resource is a source of Sustainable Competitive
Advantage. Scaled questions such as "Does it add value?," "Do current competitors possess it?," "How difficult is it to duplicate?," and "Can it be sustained over time?" could be summated to arrive at some numerical value. The higher the numerical value, the more likely the resource is an
Sustainable Competitive Advantage.
We are also faced with the task of further understanding how a network environment can enhance the core competencies of a firm which lead to an
Sustainable Competitive Advantage.
SOURCES OF SUSTAINABLE COMPETITIVE ADVANTAGE - Two categorical sources of competitive advantage are: superior skills, which are "the distinctive capabilities of personnel that set them apart from the personnel of competing firms", and superior resources, which are "the more tangible requirements for advantage that enable a firm to exercise its capabilities". In the present environment, one might question whether personnel could truly be considered a sustainable competitive feature of a firm. But if these personnel truly understand customers’ needs and are able to foster business-intimate relationships with them, then they most certainly qualify as an Sustainable Competitive Advantage. Not all firm resources hold the potential of Sustainable Competitive
Advantage; instead, they must possess four attributes: rareness, value, inability to be imitated, and inability to be substituted. The resource-based view of the firm designates four conditions that underlie Sustainable
Competitive Advantage, including superior resources, ex-poste limits to competition (including imperfect imitability and imperfect substitutability), imperfect mobility, and ex-ante limits to competition. Inimitable resources such as non-tradable assets which are immobile and thus bound to the firm.
"Potential resources can be most usefully categorized as financial, physical, legal, human, organizational, informational, and relational". A comparative advantage in resources can translate into a position of competitive advantage in the marketplace, but only if the offering has some perceived value in the marketplace. Firms should combine their resources and skills into core competencies, loosely defined as that which a firm does distinctively well in relation to competitors. Competitive advantages are realized only when the firm combines assortments of resources in such a way that they achieve a unique competency or capability that is valued in the marketplace.
There are the specific combinations of skills and resources that are unique to service industries. For example, the greater the complexity and co- specialization of assets needed to market a service, the greater the importance of innovation as a source of competitive advantage will become. Brand equity becomes an important source of competitive advantage in service industries as the level of service offered becomes more intangible and when consumers have a great need to overcome perceptions of risk.
Intangible resources may indeed be better suited than tangible ones to achieve Sustainable Competitive Advantage. Given that the achievement of
Sustainable Competitive Advantage is based on an external focus, it is interesting to note that those intangible assets that are external to the firm may contribute the most to value generation and subsequently Sustainable
Competitive Advantage. Market-based assets can be delineated into two types: relational and intellectual. Relational market-based assets are those that reflect bonds between a firm and its customers and/or channel members. Examples of such assets would be brand equity or a business- intimate relationship that allows a firm to work with a customer to produce a highly customized product. An example of an intellectual market-based asset would be the detailed knowledge that firm employees possess concerning their customers’ needs, tastes, and preferences. Both types are intangible and employ an outward focus on firm customers and/or channel members. To the extent that they are rare, unique, valuable, and difficult to imitate, market-based assets provide an excellent potential source of
Sustainable Competitive Advantage for a firm. Therefore, no matter what type of business, firms may succeed in establishing a Sustainable
Competitive Advantage by combining skills and resources in unique and enduring ways. By combining resources in this manner, firms can focus on collectively learning how to coordinate all employees’ efforts in order to facilitate growth of specific core competencies.
Firms use different types of information to assess whether a competitive advantage has been obtained according to the type of orientation they have; a competitor-oriented firm emphasizes relative resources or cost positions, whereas a customer-oriented firm emphasizes segment differences and differentiation advantages. The importance of customers in determining the sources of competitive advantage has also to be taken into consideration; a firm’s skills and resources can be considered sources only if they offer benefits desired by customers.
Competitive Advantage is a company's unique skills and resources working to implement strategies that competitors cannot implement as effectively. Understanding the competitive advantage is critical. It is the reason one in business. It is what one does best that draws customers to buy their product/service instead of the competitor's. Extremely successful companies deliberately make choices to be unique and different in activities that they are really, really good at and they focus all of their energy in these areas. Of course once the company has identified its competitive advantage(s), it is not enough just to have an advantage over the competitors. For the business to be great, it needs to weather competitive and environmental storms. It has to be able to combat today's fierce market forces and uncertainty. In other words, the competitive advantage needs to be sustainable and able to endure the test of time for the company to be great.
Why? Because most advantages can be duplicated within a period of time.
But, how does the company know when they have developed a sustainable competitive advantage? There are three criteria that can help evaluate if the company is on the right track and keep it there:
. Customers must see a consistent difference between your
product/service and those of your competitor's. This difference
needs to be obvious to your customers and it must influence their
purchasing decision.
. Your competitive advantage must be difficult to imitate. Avoid falling
into the incompetence trap.
. The above two items combined must be activities that can be
constantly improved, nurtured, and work at to maintain that edge
over your competition. However this process of maintaining a competitive advantage is not a one time thing but a continuous process. Over the entire history of business analysis, the conventional wisdom has been that if you have an idea for a business and the idea is good and you implement the idea correctly, the business will succeed. If the idea is bad or you fail to implement it correctly, the business will fail.
In reality, no matter how good a business idea is, no matter how well the idea is implemented, as soon as one opens the doors for business, the business has to change – not just minor adjustments and small shifts in marketing or product design but radical change. Customers never thought of, will want the product or service, and customers counted on will want the product in an entirely different form or, perhaps, not want the product at all.
In short, those people who succeed in business are not so much visionaries who devise products and services no one else has ever thought of and that millions of people suddenly desire. Rather, they are flexible, information-alert individuals who understand what their customers tell them and who can quickly respond by shaping their business to profitably provide that exact product and service.
This process means that business and business thinking flow in cycles.
Every cycle begins with an idea or assumption based on an initial level of understanding. The idea or assumption is put into practice. Then, the business environment, primarily in the form of the customer, responds. After that, based on the response, a new idea or assumption is created.
This cycle repeats and repeats as any business grows and develops.
The chief skill is not being right in the initial idea or assumption. No one is ever completely right with their first assumptions. The skill is in the ability to gather information from the response and then incorporate that information into the next idea or assumption which will necessarily be closer to what the customer needs and wants.
It is the knowledge of the process through which that stream of innovative business models flows and the ability to translate that knowledge into effective action that is the only sustainable competitive advantage.
Monopolies, patents and other market protections and advantages all eventually end. The slower the introduction of technology, the longer competitive advantages last. But in a time of rapid technological innovation such as our own, it quickly becomes clear that the only truly Sustainable
Competitive Advantage is the ability to implement the iterative process of building a business.
The basics of Competitive Advantage dictate that for a Firm to create and subsequently enjoy Competitive Advantage it needs to have an “Ability to outperform its rivals”, an ability which comes from Core Competencies built around resources and capabilities which in turn are Valuable, Rare,
Costly to Imitate and Non Substitutable. For a firm to enjoy Sustainable
Competitive Advantage it needs to have an “Ability to continuously outperform its rivals” i.e. it needs to continuously create/ acquire/ upgrade its kitty of resources and capabilities. Firms have to continuously change and adapt to their environments and, Firms need to continuously create and acquire new sources of CA to remain competitive.
Competition in today’s business environment is becoming increasingly intense. While a company may be a market leader today, the status quo might change overnight. Having competitive advantage alone is not sufficient. The key determinant for prolonged growth is sustainability – the ability to maintain a competitive advantage. Time is also of the essence.
While others are merely finding their orientation to stay abreast with the latest innovations, the winning company is already moving up to the next level. Threats of competition arise from a multitude of sources, defying geography, sectors, and converging technologies among others.
Organizations can seek consolation in the fact that most competitors are also struggling to survive in this turbulent business environment.
The potential of an organization's sustainable competitive advantage depends on the rareness and imitability of its resources and capabilities.
The less imitable a competitive advantage is, the more cost disadvantage is faced by the competitor in imitating these competencies. Thus, core competence is an important source of sustained competitive advantage for corporate success and greater is its economic return. The potential of an organization's sustainable competitive advantage depends on the rareness and imitability of its resources and capabilities. The less imitable a competitive advantage is, the more cost disadvantage is faced by the competitor in imitating these competencies. Thus, core competence is an important source of sustained competitive advantage for corporate success and greater is its economic return. Core competence is a bundle of skills and technologies that enable a company to provide a particular benefit to customers. Core competencies are not product specific; they contribute to the competitiveness of a range of products or services. They are the roots of competitiveness and individual products and services are the fruit. A core competence is a tapestry woven from the threads of distinct skills and technologies. A skill must meet three tests to be considered as a core competence, i.e., customer value, competitor differentiation, and extendibility.
Competitive advantage is at the heart of firm's performance. It is concerned with the interplay between the types of competitive advantage, i.e., cost, and differentiation, and the scope of the firm's activities. The value chain plays an important role in order to diagnose and enhance the competitive advantage. A sustainable competitive advantage creates some barriers that make imitation difficult. Without a sustainable competitive advantage, above average performance is usually a sign of harvesting.
The secret of a sustainable competitive advantage lies in performing every step in the value chain in an appropriate way. A competitive advantage essentially has to be one that not only merely represents better performance than that of its competitors, but also delivers genuine value to the customer, thus ensuring a dominant position in the market. The internal resources and capabilities of an organization play a very important role in building competitive advantage. The organizations that want to build competitive advantages, which cannot be eroded (no matter how much change is there in the environment) must make linkages between the advantage and the capabilities underlying it as impenetrable and as confusing as possible. Also the most important part of the competitive advantage stems from a capability that is impossible to replicate.
Sustainable competitive advantage is the focal point of corporate strategy.
It allows the maintenance and improvement of a enterprise's competitive position in the market. It is an advantage that enables business to survive against its competition over a long period of time.
Distinctive capabilities are the basis of competitive advantage. According to the new resource-based view of the company, sustainable competitive advantage is achieved by continuously developing existing and creating new resources and capabilities in response to rapidly changing market conditions. The opportunity for a company to sustain competitive advantage is determined by capabilities of two kinds – distinctive capabilities and reproducible capabilities - and their unique combination a company to create to achieve synergy. Distinctive capabilities are the characteristics of a company which cannot be replicated by competitors, or can only be replicated with great difficulty, therse are the basis of sustainable competitive advantage. Distinctive capabilities can be of many kinds: patents, exclusive licenses, strong brands, effective leadership, teamwork, or tacit knowledge. Reproducible capabilities are those that can be bought or created by competitors and thus by themselves cannot be a source of competitive advantage.
The strength of organizational culture is one of the most fundamental competitive advantages. If a company can build and preserve an innovation-adept culture, a culture of commitment, one where employees passionately pursue the organization's cause and mission, the company will be better positioned for success.
Sustainable competitive advantage is the prolonged benefit of implementing some unique value-creating strategy based on unique combination of internal organizational resources and capabilities that cannot be replicated by competitors. Sustainable competitive advantage allows the maintenance and improvement of the enterprise's competitive position in the market. It is an advantage that enables business to survive against its competition over a long period of time. Managers should be committed to creating economic value to their stakeholders, and the best means to create that value is to focus on sustainable competitive advantage as the key.
The Four Criteria of Sustainable Competitive Advantage : 1. Unique, 2.
Difficult to replicate, 3. Sustainable, 4. Superior to the competition Core competencies are the most significant value creating skills within a corporation and key areas of expertise which are distinctive to a company and critical to the company's long term growth.
A company's core competencies are the things that it can do better than its competitors in the critical, central areas of a company where the most value is added to its products or services. These areas of expertise may be in any area from product development to employee dedication.
A competence which is central to a business's operations but which is not exceptional in some way should not be considered as a core competence, as it will not generate a differentiated advantage over rival businesses. It follows from the concept of Core Competencies that resources that are standardized or easily available will not enable a business to achieve a competitive advantage over rivals.
Competition is at the core of the success or failure of firms. Competition determines the appropriateness of a firm’s activities that can contribute to its performance, such as innovations, a cohesive culture, or good implementation. Competitive strategy is the search for a favorable competitive position in an industry, the fundamental arena in which competition occurs. Competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition.
Analysis of competitive advantage is the subject of numerous theories of strategy, including the five forces model pioneered by Michael Porter of the Harvard Business School. Porter identified two basic types of competitive
advantage: cost advantage & differentiation advantage
A competitive advantage exists when the firm is able to deliver the same
benefits as competitors but at a lower cost (cost advantage), or deliver
benefits that exceed those of competing products (differentiation
advantage). Thus, a competitive advantage enables the firm to create
superior value for its customers and superior profits for itself.
Cost and differentiation advantages are known as positional advantages
since they describe the firm's position in the industry as a leader in either
cost or differentiation.
A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. The following diagram combines the resource- based and positioning views to illustrate the concept of competitive advantage: Figure 8.1. A Model of Competitive advantage
Resources
Cost Advantage Distinctive or Value Competencies Differentiation Creation
Advantage
Capabilities
Source :, Michael E Porter, Competitive Advantage: Creating and Sustaining Superior Performance, 1985, The Free Press Two central questions underlie the choice of competitive strategy. The first is the attractiveness of the industries for long-term profitability and the factors that determine it. Not all industries offer equal opportunities for sustained profitability, and the inherent profitability of its industry is one essential ingredient in the determining the profitability of a firm. The second central question in competitive strategy is the determinants of the relative competitive position within an industry. In most industries, some firms are much more profitable than others, regardless of what the average profitability of the industry may be.
Neither question is sufficient by itself to guide the choice of competitive strategy. A firm in a very attractive industry may still not earn attractive profits if it has chosen a poor competitive position. Conversely, a firm in an excellent competitive position may be in such a poor industry that it is not very profitable, and further efforts to enhance its position will be of little benefit. Both questions are dynamic: industry attractiveness and competitive position change. Industries become more or less attractive over time, and competitive position reflects an unending battle among competitors. Even long periods of stability can be abruptly ended by competitive moves.
Competitive advantage grows fundamentally out of value a firm is able to create for its buyers that exceeds the firm’s cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation.
Competitive advantage in one industry can be strongly enhanced by interrelationships with business units competing in related industries, if these interrelationships can actually be achieved. Interrelationships among business units are the principal means by which a diversified firm creates value, and thus provide the underpinnings for corporate strategy. The first fundamental determinant of a firm’s profitability is industry attractiveness. Competitive strategy must grow out of a sophisticated understanding of the rules of competition that determine industry attractiveness. The ultimate aim of competitive strategy is to cope with and, ideally, to change those rules in the firm’s favor. In any industry, whether it is domestic or international or produces a product or a service, the rules of competition are embodied in five competitive forces: the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among the existing competitors.
The collective strength of these five competitive forces determines the ability of firms in an industry to earn, on average, rates of return on investment in excess of the cost of capital. The strength of the five forces varies from industry to industry, and can change as an industry evolves.
The result is that all industries are not alike from the standpoint of inherent profitability. In industries where the five forces are favorable, such as pharmaceuticals, soft drinks, and data base publishing, many competitors earn attractive returns. But in industries where pressure from one or more of the forces is intense, such as rubber, steel, and video games, few firms command attractive return s despite the best efforts of management.
Industry profitability is not a function of what the product looks like or whether it embodies high or low technology, but of industry structure.
Some very mundane industries such as postage meters and grain trading are extremely profitable, while some more glamorous, high-technology are not profitable for many participants.
The five forces determine industry profitability because they influence the prices, costs, and required investment of firms in an industry the elements of return on investment. Buyer power influences the prices that firms can charge, for example, as does the threat of substitution. The power of buyers can also influence cost and investment, because powerful buyers demand costly service. The bargaining power of suppliers determines the costs of raw materials and other inputs. The intensity of rivalry influences prices as well as the costs of competing in areas such as plant, product development, advertising, and sales force. The threat of entry places a limit on prices, and shapes the investment required to deter entrants.
The strength of each of the five competitive forces is a function of industry structure, or the underlying economics and technical characteristics of an industry.
If the five competitive forces and their structural determinants were solely a function of intrinsic industry characteristics, then competitive strategy would rest heavily on picking the right industry and understanding the five forces better than competitors. But while these are surely important tasks for ant firm, and are the essence of competitive strategy in some industries, a firm is usually not a prisoner of its industry’s structure. Firms, through their strategies, can influence the five forces. If a firm can shape structure, it can fundamentally change and industry’s attractiveness for better or for worse. Many successful strategies have shifted the rules of competition in this way.
In any particular industry, not all of the five forces will be equally important and the particular structural factors that are important will differ. Every industry is unique and has it s own unique structure. The five-forces framework allows a firm to see through the complexity and pinpoint those factors that are critical to competition in its industry, as well as to identify those strategic innovations that would most improve the industry’s and its own – profitability. The five-forces framework does not eliminate the need for creativity in finding new ways of competing in an industry. Instead, it directs manager’s creative energies toward those aspects of industry structure that are most important to long-run profitability. The framework aims, in the process, to raise the odds of discovering a desirable strategic innovation.
Positioning determines whether a firm’s profitability is above or below the industry average. A firm that can position itself well may earn high rates of return even through industry structure is unfavorable and the average profitability of the industry is therefore modest.
The fundamental basis of above-average performance in the long run is sustainable competitive advantage. Though a firm can have a myriad of strengths and weaknesses vis-à-vis its competitors, there are two basic types of competitive advantage a firm can possess: low cost or differentiation. The significance of any strength or weakness a firm possesses is ultimately a function of its impact on relative cost or differentiation. Cost advantage and differentiation in turn stem from industry structure. They result from a firm’s ability to cope with the five forces better than its rivals.
The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them lead to three generic strategies for achieving above-average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus.
Each of the generic strategies involves a fundamentally different route to competitive advantage, combining a choice about the type of competitive advantage sought with the scope of the strategic target in which competitive advantage is to be achieved. The cost leadership and differentiation strategies seek competitive advantage in a broad range of industry segments, while focus strategies aim at cost advantage (cost focus) or differentiation (differentiation focus) in a narrow segment. The specific actions required to implement each generic strategy vary widely from industry to industry, as do the feasible generic strategies in a particular industry. While selecting and implementing a generic strategy is far from simple, however, they are the logical routes to competitive advantage that must be probed in any industry.
In a differentiation strategy, a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.
The means for differentiation are peculiar to each industry. Differentiation can be based on the product itself, the delivery system by which it is sold, the marketing approach, and a broad range of other factors.
A firm that can achieve and sustain differentiation with be an above- average performer in its industry if its price premium exceeds the extra costs incurred in being unique. A differentiation, therefore, must always seek ways of differentiating that lead to a price premium greater than the cost of differentiating.
The logic of the differentiation strategy requires that a firm choose attributes in which to differentiate itself that are different from its rivals. A firm must truly be unique at something or be perceived as unique if it is to expect a premium price.
A generic strategy does not lead to above-average performance unless it is sustainable vis-à-vis competitors, though actions that improve industry structure may improve industry wide profitability even if they are imitated.
The sustainability of the three generic strategies demands that a firm’s competitive advantage resists erosion by competitor behavior or industry evolution.
The sustainability of a generic strategy requires that a firm possess some barriers that make imitation of the strategy difficult. Since barriers to imitation are never insurmountable, however, it is usually necessary for a firm to offer a moving target to its competitors by investing in for a firm to offer a moving target to its competitors by investing in order to continually improve its position.
Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering, and supporting its product.
Each of these activities can contribute to a firm’s relative cost position and create a basis for differentiation. A cost advantage, for example, may stem from such disparate sources as a low-cost physical distribution system, a highly efficient assembly process, or superior sales force utilization.
Differentiation can stem from similarly diverse factors, including the procurement of high quality raw materials, a responsive order entry system, or a superior product design.
A systematic way of examining all the activities a firm performs and how they interact is necessary for analyzing the sources of competitive advantage. The value chain is a basic tool for doing so. The value chain disaggregates a firm into its strategically relevant activities in order to understand the behavior of costs and the existing and potential sources of differentiation. A firm gains competitive advantage by performing these strategically important activities more cheaply or better than its competitors. A firm’s value chain is embedded in a larger stream of activities. Every firm is a collection of activities that are performed to design, produce, market, deliver, and support its product. All these activities can be represented using a value chain. A firm’s value chain and the way it performs individual activities are a reflection of its history, its strategy, it approach to implementing its strategy, and underlying economics of the activities themselves.
The relevant level for constructing a value chain is a firm’s activities in a particular industry (the business unit). An industry or sector- wide value chain is too broad, because it may obscure important sources of competitive advantage. Though firms in the same industry may have similar chains the value chains of competitors often differ.
Difference among competitor value chains are a key source of competitive advantage. A firm’s value chain in an industry may vary somewhat for different items in its product line, or different buyers, geographic areas, or distribution channels. The value chains for such subsets of a firm are closely related, however, and can only be understood in the context of the business unit chain.
Value activities are therefore the discrete building blocks of competitive advantage. How each activity is performed combined with its economics will determine whether a firm is high or low cost relative to competitors.
How each value activity is performed will also determine its contribution to buyer needs and hence differentiation. Comparing the value chains of competitors exposes differences that determine competitive advantage. Identifying value activities requires the isolation of activities that are technologically and strategically distinct.
There are three activity types that play a different role in competitive advantage:
Direct. Activities directly involved in creating value for the buyer,
such as assembly, parts machining, sales force operation,
advertising, product design, recruiting, etc.
Indirect. Activities that make it possible to perform direct activities
on a continuing basis, such as maintenance, research
administration, vendor record keeping, etc.
Quality Assurance. Activities that ensure the quality of other
activities, such as monitoring, inspecting, testing, reviewing,
checking, adjusting, and reworking. Quality assurance is not
synonymous with quality management, because many value
activities contribute to quality.
Every firm has direct, indirect, and quality assurance value activities.
To diagnose competitive advantage, it is necessary to define a firm’s value chain for competing in a particular industry. Starting with the generic chain, individual value activities are identified in the particular firm.
Everything a firm does should be captured in a primary or support activity.
Value activity labels are arbitrary and should be chosen to provide the best insight into the business. Labeling activities in service industries often causes confusion because operations, marketing, and after-sale support are often closely tied. Ordering of activities should broadly follow the process flow, but ordering is judgmental as well. Often firms perform parallel activities, whose order should be chosen to enhance the intuitive clarity of the value chain to managers.
Although value activities are the building blocks of competitive advantage, the value chain is not a collection of independent activities but a system of interdependent activities. Value activities are related by linkages within the value chain. Linkages are relationships between the way one value activity is performed and the cost or performance of another.
Particulars of competitiveness in the hospitality industry - Tourism is a sector in which the structure of supply is extremely volatile and the solid and consistent part is the demand. Tourism exists only because, for various reasons – pleasure, business etc. – people want to travel and are willing to spend money; consequently, they create demand for tourism products and services. Thus, the decision to travel precedes the acts of consumption.
Travelers are willing to consume a large variety of goods and services produced and supplied by various industries, among which the most important are transports, hotel and restaurant services or segments of activity related to entertainment, culture and sports.
The fact that competition is firstly between destinations becomes obvious, since this is what visitors choose in the first place. Only after this choice another form of competition occurs, that between the suppliers of products and services at the respective destination. We can therefore speak about a duality of competition forms, with the following implications:
- The competitiveness of destinations is an essential topic, and it can depend, for instance, on the existence of specific attractions visitors are willing to pay for;
- The tourism firms that contribute to the formation of the package of goods and services consumed by visitors on arrival benefit from the uniqueness of the destination;
- At a certain destination, firms (e.g., hotels) can be competitive on the basis of specific advantages that differentiate them from the rivals and give them an advantage.
Another duality of tourism markets – which includes the hospitality industry – is structural.
Numerous destinations are dominated by small firms that offer hotel and restaurant services and leisure activities etc., forming the SME segment.
On the other hand, tourism is a very dynamic sector in the world economy and one of the most internationalized, which lead to the formation of large companies operating on a global level. This development was possible especially because of important innovations, such as charter flights, the forming of hotel chains – some originating in family businesses, rent-a-car services, debit and credit cards that easily allow for international money transfers etc. At the same time, the innovations of the kind mentioned allowed for a high degree of standardization of services, so that the segment of the large international companies can offer clients quality services at affordable prices.
Standardization does not mean, however, the elimination of the services supplied by small firms, since a lot of tourists prefer the life experiences they offer.
Referring strictly to the hotel services sector, in most cases a strong brand competition is manifest. However, along with the basic monopolistic competition, other types of market structures can exist on various segments, for instance oligopolies. Therefore, a specific analysis of the relevant markets is necessary, as they should be defined both form the point of view of the product as well as geographically, because on certain sub-markets the situation can be different form free competition, and anti- competitive behavior could be noticed.
The relation competitiveness – strategy in the hospitality industry
Changes in the political and economic environment in the last century had strong effects on the way companies operate. Turning from a production economy to a market economy and globalization have confronted companies with new realities based on competition in which they needed new tools to succeed.
The key to attracting and making clients loyal is offering an unforgettable experience and not just accommodation; hotel chains innovate to create a unique environment, from hotel rooms to lobbies and the restaurant. Thus, changes in the design of Marriott restaurants and in the menus – so as to reflect the particularities of different regions – have lead to up to 50% increases in sales recorded in rapport to the number of rooms occupied.
Along with innovation, technology is an important strategic asset that allows hotel chains to improve their performance and competitiveness. On a global scale, the role of technology in strengthening the competitive advantage of a hotel is recognized, hence its contribution to the hotel’s success .
Since the hospitality industry, as any other branch of services, is capital intensive, human resources can represent a source of competitive advantage for a company. Failite Ireland, in the research conducted among
3, 4 and 5 star hotels in Dublin to analyze successful practices in hotels underline the fact that the industry depends on the know-how of personnel, of the knowledge and understanding of the clients’ requirements that would make the client feel at home.
Another source of competitive advantage can be found in the management of the acquisition-delivery chain. As Harold Sirkin notes for the Boston
Consulting Group: the acquisition-delivery chain can enhance the performance of a company by developing advantages in specific sequences: quality, trust, flexibility, agility and cost efficiency. The achievement of improvements by observing this order will ensure long term benefits that will offer a sound foundation for future improvement initiatives and a better positioning of the chain to successfully deal with future challenges.
Another strategy recently adopted by some hotels is integrated in the current trends that aim at making tourism a sustainable activity. Thus hotels are encouraged to adopt new methods for protecting the environment in their daily operations and to help the local community.
Factors that influence competitive advantage from the point of view of differentiation in the hospitality industry
The hospitality industry is increasingly confronted with the intensification of competitiveness at a global level, the rapid advance of technology and higher expectations form clients. Among the most important factors of influence highlighted by research are the ones described in the following:
1. Service Quality - The various service concepts that hospitality businesses adopt are not simply amorphous marketing ideas. A hotel or restaurant, including its services, is carefully designed to appeal to a limited segment of the market, and the way service is delivered is tailored to match, the expectations of the segment that it targets. Research has shown that most people believe buying an intangible service like a vacation or even a meal in a restaurant is more risky than buying a manufactured product. With a manufactured product, buyers have a better idea of what they’re getting for their money, while with intangible products there may he some surprises. It is that clement of uncertainty that poses the biggest challenge to service businesses. That is why ii is so important for managers and employees to provide consistent services that meet an operation’s standards. Successful hospitality companies focus a good deal of management attention on establishing quality standards for services, communicating these standards to employees through training programs, and measuring performance. Providing consistent services is extremely complex where customer contact is involved, especially when some of the lowest-paid employees make the most contacts. Everyone understands that customers want superior service and that better service leads to competitive advantage. But understanding it is one thing, doing it is another. Hence a conscious effort has to be made in this direction.
2. Product Offerings - Gone are the days when one had to stand in long queues to get tickets booked and make unlimited calls for searching and booking a hotel for their travel. Today with the expanse of the internet in every household, the travel and hospitality industry has also spread its reach and is providing faster and better services to the customers. Just a few clicks and you have your ticket, hotel, sight-seeing tours booked within minutes. These sites are playing an increasingly important role when customers are considering where to stay. Special packages and schemes are being offered to customers globally for almost all the destinations across the world. With new trends and expectations of the customers, competition within the industry has also increased. Hence it has become very important for the hotels to look at the products offered by them, the rooms, the suites, the offers and the type of packages and schemes offered in respect to them. Product segmentation has become more popular.
Luxury and first class hotels have created more amenities and products for their customers. Also specialized extended stay and suite hotels have become more popular. Hotels with indoor water parks are one of the newest trends. Timeshares is another segment that many hotel companies are involved with recently. The development, sale, and management of timeshares have become particularly popular with the large chains.This could be the main competitive edge the hotel could have since, after the brand name or reputation of the hotel, it is what would bring the customer to the hotel in the first place. Thereby, making all other factors secondary.
3. Ambience - Ambience has become a pivotal concern for tourism and hospitality managers worldwide. In an effort to improve the ambience, different groups of professionals are involved, in particular hospitality managers and outside experts, e.g. designers and architects. Ambience of an hotel decide how a guest ‘feels’ during his stay at the hotel. Guest love to stay at hotels where the ambience has a ‘different touch’. Ambience of the hotel is a important factor for gaining a competitive edge in the hotel industry.
4. Facilities and Amenities – Hotels are patronized and graded by the way of the facilities and amenities that they provide. Few of the common and uncommon facilities and amenities are as follows: Swimming pool – and a shallow area for children, Free Continental Breakfast, Free Local Calls,
Electronic Door Lock, Early morning wakeup, Remote Control Satellite colour televisions,, Smoke Detectors, Smoking / Non Smoking Rooms,
Luxury cotton linen and towels, Full size and exquisite bathrooms with power showers, Guest Services, Safe-deposit boxes or lockers, Mini-bar,
All Major Credit Cards accepted, Currency facilities, Internet ‘café’ with complete and wireless internet access, Tour and Travel Desk Advisory,
Daily Laundry, dry-cleaning and valet services, Massage therapies, Jacuzzi,
Tennis courts – with flood lights for night time play, Fitness Room – state of the art exercise equipment, Putting green -for playing golf, Jogging trail
– to work up a sweat while the guest takes in the breathtaking scenery,
Beauty salon – to ensure the guest goes home looking at his best, Spa- offering the best treatments, Doctor on call, Excursions via concierge,
Rooms with private balconies, terraces or patios, Individually controlled air-conditioning, International direct dial telephone, Vanity Desk and complimentary luxury bathroom amenities including bathrobes, slippers and hairdryers, Down pillows and duvet, Bedrooms featuring king or queen size beds, Airport and border transfer services, 24 hour Duty Manager,
Express Check-out, Subtropical garden, Snack bar, Free parking, 24hour
Laundry, Express lifts, Fitness and Wellness Center, Aquarium Pool,
Lounge Bar, Hotel Boutique, WiFi – High Speed Internet Access, Porter
Service and Private Dining and Spa Menus. These facilities and amenities and their qualities are an important factor of sustainable competitive advantage in the hotel industry. 5. Technology - Technology is another important factor for competitive advantage in the hotel industry. Some examples of early technology use in the hotel industry are, satellite channel, international direct dial, online booking, in-house entertainment, and WiFi. Advanced technology provides a competitive edge in the hospitality market for attracting conventions and sophisticated business travelers to a property. Hospitality patrons demand state-of-the-art technology. They expect fast, uninterrupted Internet connectivity. They expect seamless traditional and wireless functionality.
They expect convenience. Resorts and conference centers have transitioned from static structures to interactive hubs of technology.
Technology adds value and generates revenue in the hospitality industry.
The state of technology in the hotel can be a very important factor for competitive advantage in the hotel. This holds especially true for graded hotels.
6. Food and Beverages - It is said that the way to a mans heart is through his stomach. This is also true in case of hotel guests. The quality, variety, cost and innovativeness of the food and beverage service of hotels holds a very important place in deciding the competitiveness of the hotel. There is a tremendous amount of options to choose from. Hotel guests rate a hotel according to the hygiene, taste and quality of the food served there. The choice in beverages also is important as also the pricing. The presentation of the food and variety on offer also adds to the satisfaction of the guests. In recent years, the industry has witnessed a few notable trends, including:
Increasing emphasis on in-house development of retail-style restaurant concepts, A new focus on f & b in the select service segment (Hyatt Place,
Aloft, Indigo, Courtyard), An explosion of partnerships with celebrity chefs; and The addition of f & b service in hotel public spaces.
To support the focus on food and beverage development, many hotels are expanding expertise in this area by increasing the number of corporate staff members or adding senior level positions where none existed before.
This buttressing of corporate F & B talent has occurred not only at some of the world's biggest hotel companies such as Starwood and Marriott, but also at many smaller hotels. Hotel food & beverage has been recognized as an important contributor to a hotel's positioning within its market. As such, a guest's experience with food & beverage plays a critical role in his or her overall hotel experience, and has been credited as an important driver for rooms revenue as well as overall asset value. This explains why, in recent years, corporate food and beverage departments are either hiring or remaining intact while other departments have faced downsizing.
7. Innovations - Some examples of early innovations in the hotel industry are, in-room music, in-room coffee maker, auto check-in, check-out, food festivals, shopping arcades, information desks, lighting control, specialty restaurants, online booking, health spas, conferencing facilities, laptop and phone recharge outlets, swipe card entry instead of key, etc. Some of the newer innovations are TVs in bathroom mirrors, In room workout kits, underwater hotels, swipe card entry creating ‘for guests only area’, i-pad order menu in restaurant for reducing wait time for guests, Floatels and
Ecotels, etc.
For eg. The website of Choice Hotels International has mentioned the following facts and claim to have a remarkable history of innovations in the hotel industry. They state to have consistently used their expertise to develop ways to innovate methods, systems, service and brands.
1940 -First to inspect member properties for standards.
1941 -First to provide travel directories.
1952 - First to mandate wall-to-wall carpet.
1954 - First to offer 24-hour desk service, telephones in rooms and swimming pools.
1963 - First to guarantee reservations.
The Quality referral system offered the industry's first prepaid telephone reservations.
1970 - First to offer toll-free reservations. We introduced the innovative 24- hour, 800-number reservation system.
1981 - Opened a new property every other day.
First to segment in the lodging industry with the introduction of two new lodging products - Quality Royale and Comfort Inn. First company to successfully franchise in the economy and mid-priced categories.
1983 - First to develop a global marketing/reservations system. Developed a marketing and reservation system that linked reservations centers in US,
Canada, Mexico, UK, Belgium, Holland, Italy, Germany and Japan with airline reservations systems and travel agents to create one global marketing network.
1984 - First to offer non-smoking rooms in every hotel.
1988 - Developed Sleep Inn, a major industry breakthrough. It was the first hotel engineered from the ground up to reduce labor costs.
1990 - The company name became Choice Hotels International to better reflect our growing number of brands and locations.
1993 - First to offer formal, written impact-protection policy.
First to offer "senior-friendly" rooms. Rodeway Inn began offering "senior" rooms with brighter lighting, grab bars in showers, lever handles on doors and large buttons on phones and alarm clocks.
1995 - First to provide "real-time" access to reservation system via web.
Launched the company's Internet site. More than 72,000 pages were accessed during that month and 40,000 hits were recorded in first two weeks alone.
1996 - Became a publicly traded company.
Launched MainStay Suites, the first mid-market, extended-stay lodging product developed and franchised by a major chain.
Introduced the Automated Travel Management (ATM®) system, the first commission system that expedites travel agent payments, provides tracking and instant answers for inquiries.
Developed the industry's first geographically based system to identify points of interest near its hotels. Known as geo-coding, this allows reservations agents to easily choose the closest Choice hotel to a specific destination.
1997 - Introduced the industry's first Internet site devoted to travel agents.
Launched the first training and certification program in hotel franchising for hotel employees.
1999 - First in the hospitality industry to launch a company owned, online procurement system - ChoiceBuys.com. It enables franchisees to order goods directly from endorsed vendors.
2000 - On October 19, Choice Hotels became the first to offer wireless reservations via handheld computers.
2001 - In wake of the September 11 terrorist attacks on the U.S., Choice
Hotels launches, "Thanks for Traveling," an industry-wide campaign to help America get back on the road.
The Quality Inn Larson celebrates its 60th anniversary in the Choice Hotels family and becomes the first Quality Inn to display the brand's new image.
Choice Hotels implements "last room availability" synchronizing the hotels' room inventory with Choice Hotels central reservations system.
2002 - New prototypes for Econo Lodge brand hotels, a first-ever "Inn &
Suites" option for the brand as well as a non-traditional use of color, space and materials that sets a new standard in economy lodging.
Launched www.choicesportstravel.com, a website designed exclusively to accommodate the lodging needs of sports travelers.
2003 - Launched Best Choice E-Rate Guarantee that guarantees consumers the best on-line rates via choicehotels.com.
2004 - A Multi-Cultural Franchising Seminar was held at the company's
Silver Spring headquarters to educate potential franchisees on the steps required to become a successful hotel owner.
The World's Greatest Sales Blitz, an initiative designed to thank the travel agent community for its continuous support of the lodging industry took place around the world in November.
Choice Hotels de Mexico, a newly formed subsidiary of the company was launched in Mexico and began a direct franchising effort to introduce the
Choice Hotels brands to hotel owners and developers in the country.
The Women's Business Alliance was officially launched at Choice Hotels
50th Annual Convention. 2005 - Cambria Suites, an upscale, select-service all-suites hotel brand designed to maximize return on investment for developers was launched.
"Click to Chat," a communications tool designed to give visitors to choicehotels.com the ability to engage in online conversations directly with Choice Hotels customer service representatives was introduced.
Innovations are a very important part of the competitive strategy of any hotel. Innovations have to be made in all other factors of competitive advantage. Innovations, at least for a short term can be a very prominent differentiator. Thereby providing a competitive edge to the hotels who innovate.
8. Other Add on facilities or services provided by the Hotel. – Are the extra touch of facility or service that a hotel may provide for its guest. Eg: Crown
Plaza Hotel hired a sleep doctor for advice on relaxation, and tossed in a sleep kit for guests. Some examples of add on services offered by some hotels are: Free form swimming pool – with temperature control, Handicap
Rooms, Newspaper of choice delivered upon request, Secretarial Services,
Multilingual staff, Personal butlers upon request, Hammocks – strung between the palm trees, for a nap in the cooling breeze, Cycle shop – with scooters, motor bikes and mountain bikes for hire, Boutique with authentic artefacts and treasures, Maids to assist with unpacking and ironing upon arrival, Diving and snorkeling, Kayaks to explore the shoreline in beach resorts, private beach –reserved exclusively for our guests, Baby-sitting, Saltwater Infinity Pool. A recent trend is hotels re-imaging their lobbies to destination places. For example part of the lobby may be used for a breakfast area in the morning and a bar at night. This may include sliding walls, decorative lighting, and music. These other additional or add-on facilities may provide the much needed competitive edge in an industry where most players are striving to outdo each other and almost all provide the same facilities and services.
Importance Of Bright Ideas : The intellectuals, thinkers, academics,
CEOs, and business pundits all agree on the importance of good ideas to future business survival – and that of the individual and society. But generating new ideas does not automatically result in innovations and success. It is only the beginning of the journey. The real challenge for an organization is to convert these ideas into acceptable products or services for customers. This can happen only when organizations design and implement a structured approach to managing innovations.
However there is no doubt that to compete effectively, you must innovate – and that too, on an ongoing basis. Not just once, but consistently, in all your products, services and business functions. Very simply, innovation is what is going to enable businesses to pave their way in the world. Without it many of our firms will go out of business, and those that remain will become second-rate and subservient to international leaders in decision- making and profit-taking. Without innovation there won’t be the new businesses and jobs that are necessary in a dynamic economy. But, profitable innovation doesn’t just ‘happen.’ It must be managed, measured and executed on- and a few companies do that well.
Innovations are equally important in the services sector, more so in the restaurant business. In order to survive the cut throat competition in the catering industry on has to foster ongoing innovation. The restaurant business requires entrepreneurs to continuously come up with new dishes, new ways to present or serve existing dishes, new services schemes to satisfy customers, new ways of enhancing their ambience and new processes to economize operations. Without innovation, restaurants face the threat of becoming ‘obsolete’- leading to sickness – and ultimately driving them out of business or forcing them to hand the business over to more efficient and innovative entrepreneurs.
Systemic Innovation - Innovation used to be a linear trajectory from new knowledge to new product. Now innovation is neither singular nor linear, but systemic. It arises from complex interactions between many individuals, organizations and environmental factors. Firms which are successful in realizing the full returns from their technologies and innovations are able to match their technological developments with complementary expertise in other areas of their business, such as manufacturing, distribution, human resources, marketing, and customer relationships
Radical Innovation - Long-term corporate success is now linked to the ability to innovate. Although corporate investment in improvements to existing products and processes does bring growth, it is new game
changing breakthroughs that will launch company into new markets,
enable rapid growth, and create high return on investment. Radical
innovation, concerned with exploration of new technology, is fundamentally different from incremental innovation that is concerned with exploitation of existing technology. Radical innovation is a product, process, or service with either unprecedented performance features or familiar features that offer potential for significant improvements in performance and cost. It creates such a dramatic change in processes, products, or services that they transform existing markets or industries, or create new ones.
Some examples of innovations in the hotel industry are as follows:
REX Room Expeditor - REX is the first application to revolutionize the
housekeeping room assignment process and effectively change how room
attendants work. They no longer receive a board with rooms to clean,
instead, they are presented an iPod Touch which lists (in their native
language) -- the most important room to clean based on hotel defined
criteria like room rush, VIP status, room type, etc.
DS Assistant - Positioned at strategic locations such as the hotel lobby or
the spa entrance, these electronic posters constitute the ideal medium for
spas to present their offer effectively and boost their sales in a simple way.
An interface fully integrates Digital Signage into Reservation Assistant Spa
& Activity Software. Through this interface Reservation Assistant selects available spa treatments and offers them on all screens in the hotel and spa area via Digital Signage. iMEDIA - iMEDIA is an extension of the ETVi solution, enabling the ability to view internet content in true digital, HD, live streaming, full screen format on a hotel guest room TV screen. It is an innovation that for the first time ever allows hotels to create new revenue streams, address cost management, differentiate from other hotels and enhance a customized guest experience.
High Definition Event Conferencing - PSAV's High Definition Event
Conferencing (HD EVC) program gives guests the ability to integrate crisp, real-time, two-way sound and video communication into their meetings and event experience. With businesses looking to save money on meeting travel, multiple properties with video conferencing capabilities can capture otherwise lost revenue. PSAV's HD EVC ensures continued communication regardless of geography.
Libra OnDemand - Libra OnDemand is the FIRST hospitality specific CRM system on the Force.com platform, offering a comprehensive suite of applications: Customer Relationship Management, Loyalty Management,
Event Management, Analytics, Email Marketing and Customer Portal. What makes us so special? Libra OnDemand is a Software-as-a-Service (SaaS) application that is easy to use, requires zero upfront investment.
OPERA Resort Dashboard - MICROS OPERA Resort Dashboard is an intuitive, fully-integrated activities scheduler allowing appointments to be booked quickly and efficiently, improving customer service. The system automatically finds available times, organizes multiple services, and identifies availability of qualified staff members. The interfaced solution for facilities and activities on property allows guests to book hotel reservations, spa, leisure ventures, and golf tee times in real-time creating one single itinerary.
Link Balancer Appliance - Elfiq Networks is a technology leader in the field of bandwidth management and business continuity; producing ISP link balancing appliances enabling hospitality properties deliver a superior guest experience. Through the use of multiple concurrent ISP links such as
DSL, T1, fiber, cable modem, wireless and more, the overall available bandwidth for both guests and employees can be multiplied easily and securely. When an ISP carrier is not operating normally, other links are available to offer a failover strategy to maintain connectivity.
ICE - Intelity, is a hospitality software solution company focused on the self-service marketplace. ICE is a customizable, branded interface that allows hotel guests to arrange all services instantly via an in-room touch screen, laptop or mobile device. The virtual concierge and back-end monitoring system organizes, tracks and measures all hotel activity at the touch of a screen along with language preferences for effective use to all international consumers.
PowerWave - On June Intercontinental Hotels launched guestLINK at select
Holiday Inn, Holiday Inn Express and Hotel Indigo locations. The guestLINK PowerWave console allows hotel guests to plug in their laptop,
DVD, mp3 player, iPod, iPhone, personal gaming station, camcorder or digital camera, and have instant connectivity to the flat-panel HDTV via a single HDMI cable.
MediaHub HD - TeleAdapt's MediaHub HD lets hotel guests enjoy their personal media in the room like never before. In addition to standard audio/video TV connectivity like Composite A/V, S-Video, VGA, and HDMI ports, MediaHub HD is the only panel with a Stereo Bluetooth pairing point, converting the in-room into a wireless speaker. Compatible with most models of iPod, Phone, Blackberry, and other MP3-playing smartphones, guests can fill the room with the sound of their own music with the freedom to control their tunes from anywhere in the room.
Vitrum The Glass Collection – Vitrum, the Glass Collection by VDA is a new generation of glass Devices for Room Management System, complying
Access Controls, Temperature Panels and Light Control Panels for an exclusive approach of the Building Automation in the Hotels. Turn on, Turn off, Control lighting and temperature. Today's design, is simple, is light, is ergonomic and with Tactile technology.
FloodGate - - FloodGate is the first low cost hospitality product to deliver encrypted free-to-guest HDTV programming to the guest room over coax or
IP without the use of a set-top box in each room.
Energy Harvesting Wireless Sensors - Room renovations during normal operation "between guests" enabling 40% energy savings and ROIs of less than 2 years made possible by new energy harvesting based wireless sensors that require no cables and no batteries.
AirWatch – AirWatch is a web-based mobile device and WLAN management software designed to track, monitor and manage all mobile devices deployed across today's hotel property. AirWatch provides an integrated, real-time view of your property's wireless network and all connected devices.
Pure Allergy Friendly - The PURE process reduces or eliminate irritants in a room, The industry's interest in indoor air quality is timely. For the past several years, the number of Americans with allergies and asthma has been growing at an accelerated rate. In America as many as one in four hotel guests are looking for non-allergenic rooms.
There is practical value in understanding the patterns in and the differences between evolutionary incremental innovation projects and revolutionary radical innovation projects. This understanding can help one apply right management practices to different types of innovation projects and make the course of radical innovation shorter, less sporadic, less expensive, and less uncertain.
High level of uncertainty is a hallmark a radical innovation projects, especially at early stages. The criteria used to evaluate a radical idea and concept should differ from those applied to evaluating incremental innovations. Creating a Culture for Innovation
The first step is to understand where the greatest deficiencies lie, and which levers will deliver the most impact. For many organizations, the most critical levers to assess initially include structure and metrics, though establishing innovation processes and providing employees with new skill sets are also critical drivers of culture. The act of visibly sponsoring specific initiatives focused on creating new organizational capabilities that promote innovation serves to send a message and establish new symbols and stories that reinforce a culture of innovation. CHAPTER 9
DATA ANALYSIS & MAJOR FINDINGS
9.1 DATA ANALYSIS
1. Tools for sustainable competitive advantage in the hotel industry:
The data clearly show that all levels of management of all the categories of hotels agree that the important tools for sustainable competitive advantage are Innovations, Product Offerings, Service Quality, Technology,
Ambience, Food and Beverages, Facilities and Amenities, and
Miscellaneous Add-on Services Offered. However, the relative importance given to Innovations (59.9%) was comparatively lesser than that given to the other factors for competitive advantage which were as follows, Product
Offerings (77%), Service Quality (77.4%), Technology (80.7%), Ambience
(91.2%), Food & Beverages (93.8%), Facilities & Amenities (90.5%), and as far as factors other than these were concerned most respondents were not sure (68.2%) (See tables 9.1.1 to 9.1.8).
Hypothesis 1.
H1o - There is no significant difference in the opinion of the managers of the hotels in general that innovations, product offerings, service quality, technology, ambience, food and beverages, facilities and amenities and other add on facilities are the factors for sustainable competitive advantage in the hotel industry. H11 – There is a significant difference in the opinion of the managers of the hotels in general that innovations, product offerings, service quality, technology, ambience, food and beverages, facilities and amenities and other add on facilities are the regards factors for sustainable competitive advantage in the hotel industries.
Here, there is no significant difference in the opinion of the managers. Ho is accepted. The totals suggest that the managers agreed that these are the factors for sustainable competitive advantage in the hotel industry.
2. Factors for sustainability – Comparison according to Grade of Hotel:
There is no significant difference in the managers opinion as compared by the different grades of hotels as to the factors for sustainable competitive advantage except in the case of innovations, where the Five Star Hotel managers believe significantly more than the Four Star and Three Star
Hotel managers that innovation are an important factor for sustainable competitive advantage in the hotel industry. (See tables 9.2.1a to 9.2.8b).
Sub Hypotheses 1.1.
H1.1o – There is no significant difference amongst the opinion of the managers of various grades of hotels as to innovation being an important factor for sustainable competitive advantage in the hotel industry.
H1.11 - There is a significant difference amongst the opinion of the
managers of various grades of hotels as to innovation being an important
factor for sustainable competitive advantage in the hotel industry. Here there is a significant difference in the opinion of the managers of the various grades of hotels as is seen by p value = .000 (< .05). The Five Star
Hotel managers believe more than the Four Star and Three Star Hotel managers that innovation is are an important factor for sustainable competitive advantage in the hotel industry. Therefore, Ho is rejected. (See tables 9.2.1a and 9.2.1b).
3. Factors for sustainability – Comparison according to Designation of
Manager.
There is no significant difference in the opinion of the managers as compared by their designation as to the factors of sustainable competitive advantage as everywhere p value is more than .05. The totals suggest that the managers of all levels of all the hotels feel that these are the factors for sustainable competitive advantage in the hotel industry. (See tables 9.3.1 to 9.3.8b).
4. Factors for sustainability – Comparison according to Country.
There was no significant difference as to the impact of the factors of sustainable competitive advantage between India and Thailand. The totals suggest that most of the managers agreed that these are the factors for competitive advantage in the hotel industry according to the managers of the hotels in both countries. (See tables 9.4.1a to 9.4.8b).
5. Factors for sustainability – Comparison according to Reason for travel
to Destination. There is a significant association between purpose of travel and the
importance food and beverages as a factor for competitive advantage.
Hotels where the customers are more for business purposes give more
importance to food and beverages for competitive advantage. Other than
that there is no significant difference in all the other factors for sustainable
competitive advantage. (See tables 9.5.1a and 9.5.8b).
Sub Hypothesis 1.2.
H1.2o – There is no significant difference amongst the opinion of the managers of business and tourist Destination hotels as food and beverages being an important factor for sustainable competitive advantage in the hotel industry.
H1.21 - There is a significant difference amongst the opinion of the
managers of business and tourist Destination hotels as to food and
beverages being an important factor for sustainable competitive advantage
in the hotel industry.
Here there is a significant difference in the opinion of the managers of the
two destinations as is seen by p value = .017 ( < .05). Therefore, Ho is
rejected. (See tables 9.5.6a and 9.5.6b).
There is a significant association between purpose of travel and the
importance food and beverages as a factor for competitive advantage.
Hotels where the customers are more for business purposes give more
importance to food and beverages for competitive advantage. 6. Effect of Factors of Sustainable Competitive Advantage on Occupancy
Rate.
In order of importance they were rated as below from most important to least important as: Technology, Ambience, Facilities and Amenties, Food and Beverages, Other Add on Services Offered, Service Quality, Product
Offerings and Innovations. Most of the managers rated these factors between Agree and Strongly Agree, except in the case of Innovations where the managers were between Agree and Uncertain (see Table- 9.6).
Hypothesis 2.
H2o – There is no significant difference in the opinion of the managers of the hotels in general whether the factors for sustainable competitive advantage in the hotel industry have an impact on the occupancy rate.
H21 - There is a significant difference in the opinion of the managers of the hotels in general whether the factors for sustainable competitive advantage in the hotel industry have an impact on the occupancy rate.
Here there is no significant difference in the opinion of the managers of various hotels in general. The mean values suggest that most of the managers rated these factors between Agree and Strongly Agree, except in the case of Innovations where the managers were between Agree and
Uncertain (see Table- 9.6).
7. Effect of Factors of Sustainable Competitive Advantage on Occupancy
Rate – Comparison by Designation of Mangers.
However by designations there is significant difference as to the effect of Ambience, F&B, Facilities and Amenities and Other Factors on the occupancy rate of the hotels. The relative importance of the impact of the tools for sustainable competitive advantage in the opinion of the Lower
Level Management differs from the opinion of the Middle and Top Level
Management. The Lower Level Management essentially feel that the tools which have the maximum impact on the occupancy rate are Ambience
(F=3.068, P=.048), Food and Beverages (F= 4.329, P=.014), Facilities and
Amenities and Miscellaneous Add-on Services Offered. Whereas, the
Middle and Top Level Management opine that Technology is most important. There is no significant difference as far as Innovations, Product
Offerings, Service Quality and Technology are concerned as to their effect on the occupancy rate. (See ANOVA table No.9.7.1 and 9.7.2)
8. Effect of Factors of Sustainable Competitive Advantage on Occupancy
Rate – Comparison by Grade of Hotel.
The different grades of hotels do not differ in their opinion regarding tools for sustainable competitive advantage in the hotel industry and their impact on the occupancy rate (chi square=7.543, P=0.479). (See tables
9.8.1a to 9.8.8b).
9. Effect of Factors of Sustainable Competitive Advantage on Occupancy
Rate – Comparison by Country. (See tables 9.9.1 to 9.9.2).
Most of the managers are agreeing that the factors of sustainable competitive advantage have a direct effect on the occupancy rate since most of the mean values are around 4 and above, except in the case of
Innovations where the mean is 3.92 indicating that the managers are not sure as to the direct effect of innovations as a factor having a direct effect on the occupancy rate. However, there is no significant difference in the opinion of the managers of Thailand and India (all the P-values are > 0.05).
(See tables 9.9.1 and 9.9.2).
10.Effect of Factors of Sustainable Competitive Advantage on Occupancy
Rate – Comparison by Reason of travel to Destination.
The managers of the hotels as compared by business and tourist destinations both feel that the factors of sustainable competitive advantage have a direct effect on the occupancy rate. They agree to a great extent except in the case of innovations where they are not sure. However there is no difference between the two categories. (See tables 9.10.1 and 9.10.2).
11.Is Innovation an important factor for Sustainable Competitive
Advantage? – Comparison by Grade of Hotel.
The managers of all grades of hotels were of the unanimous opinion that innovations per se are not important as a tool of sustainable competitive advantage but innovations are important to be implemented in all categories of tools of sustainable competitive advantage. (See tables
9.11.1a to 9.11.1b). Hypothesis 3.
H3o – There is no significant difference amongst the opinion of the
managers of various grades of hotels as to whether innovation is the most
important factor for sustainable competitive advantage in the hotel
industry.
H31 - There is a significant difference amongst the opinion of the managers of various grades of hotels as to whether innovation is the most important factor for sustainable competitive advantage in the hotel industry.
Here there is no significant difference in the opinion of managers different grades of hotels as is seen by p value = .411 (not < .05). Therefore, Ho is accepted. (See tables 9.11.1a to 9.11.1b).
12.Is Innovation an important factor for Sustainable Competitive
Advantage? – Comparison by Country.
There is no significant difference in the opinion of the managers as compared by country whether innovation is a most important factor for sustainable competitive advantage as is seen by p value = .176 (not < .05).
(See tables 9.12.1a to 9.12.1b).
13.Is Innovation an important factor for Sustainable Competitive
Advantage? – Comparison by Reason of Travel to Destination.
There is no significant difference in the opinion of the managers as compared by destination whether innovation is a most important factor for sustainable competitive advantage. (See tables 9.13.1a to 9.13.1b). 14.Whether Innovations are implemented in isolation or is a part of all other
tools of Sustainable Competitive Advantage. – Comparison by Grade of
Hotel.
The managers of all hotels agree that innovations per se are not important
as a factor for sustainable competitive advantage but are to be
implemented as a part of all the other factors for sustainable competitive
advantage. However, there is no significant difference as per grade of the
hotels concerned amongst the opinion of the managers. (See tables 9.14.1a
to 9.14.1b).
Hypothesis 4.
H4o – There is no significant difference amongst the opinion of the
managers of various grades of hotels as to whether innovations per se are
an important factor for sustainable competitive advantage or are merely a
part of the other factors of sustainable competitive advantage in the hotel
industry.
H41 - There is a significant difference amongst the opinion of the managers of various grades of hotels as to whether innovations per se are an important factor for sustainable competitive advantage or are merely a part of the other factors of sustainable competitive advantage in the hotel industry.
Here there is no significant difference in the opinion of managers of various grades of hotels as is seen by p value = .069 (not < .05). Therefore,
Ho is accepted. (See tables 9.14.1a to 9.14.1b). 15.Whether Innovations are implemented in isolation or a part of all other
tools of Sustainable Competitive Advantage. – Comparison by Country.
The managers of the hotels of both countries agree that innovations per se are not important as a factor for sustainable competitive advantage but are to be implemented as a part of all the other factors for sustainable competitive advantage. However, there is no significant difference amongst the opinion of the managers of India and Thailand as is seen by p value =
.156 (not < .05).. (See tables 9.15.1a to 9.15.1b).
16.Whether Innovations are implemented in isolation or a part of all other
tools of Sustainable Competitive Advantage. – Reason of travel to
Destination.
The managers of all hotels agree that innovations per se are not important as a factor for sustainable competitive advantage but are to be implemented as a part of all the other factors for sustainable competitive advantage. However, there is no significant difference amongst the opinion of the managers as per business and tourist destination hotels. (See tables
9.16.1a to 9.16.1b).
17.Managers opinion whether innovations are prominent in the hotel
Sector in the other factors for Sustainable Competitive Advantage. –
Comparison by Grade of Hotel. There is no significant difference between the opinion of the managers of
different grades of hotels as to whether innovations are predominant in the
other factors of sustainable competitive advantage in the hotel industry.
(See tables 9.17.1a to 9.17.7b).
Hypothesis 5.
H5o – There is no significant difference amongst the opinion of the
managers of various grades of hotels as to whether innovations as a factor
for sustainable competitive advantage are prominent in the hotel industry.
H51 - There is a significant difference amongst the opinion of the managers of various grades of hotels as to whether innovations as a factor for sustainable competitive advantage are prominent in the hotel industry.
Here there is no significant difference in the opinion of managers of various grades of hotels as is seen by p values of all the factors of competitive advantage compared individually none being less than .05.
Therefore, Ho is accepted. (See tables 9.17.1a to 9.17.1b).
18.Managers opinion whether innovations are prominent in the hotel
Sector in the other factors for Sustainable Competitive Advantage –
Comparison by Country.
There is no significant difference between the opinions of the managers of
India and Thailand hotels as to whether innovations are predominant in the other factors of sustainable competitive advantage in the hotel industry.
(See tables 9.18.1a to 9.18.7b). 19.Managers opinion whether innovations are prominent in the hotel
Sector in the other factors for Sustainable Competitive Advantage. –
Comparison by Reason of travel to Destination.
There is no significant difference between the opinion of the managers of
hotels of Business and Tourist destinations as to whether innovations are
predominant in the other factors of sustainable competitive advantage in
the hotel industry. (See tables 9.19.1a to 9.19.7b).
20. Do you think innovation performance in the other factors for
competitive advantage significantly and positively increases occupancy
rates? - Comparison by Country
There is no significant difference between the opinions of the managers of
India and Thailand hotels as to whether innovations performance
significantly increases the occupancy rate in the hotel industry. (See tables
9.20.1a to 9.20.1b).
Hypothesis 6.
H6o – There is no significant difference in the opinion of the managers of
India and Thailand hotels as to whether innovation performance per se as a
factor for sustainable competitive advantage has a significant and positive
impact on the occupancy in the hotel industry.
H61 – There is a significant difference in the opinion of the managers of
India and Thailand hotels as to whether innovation performance per se as a factor for sustainable competitive advantage has a significant and positive impact on the occupancy in the hotel industry. Here there is no significant difference in the opinion of the managers of the two countries as is seen by p value = .445 (not < .05). Therefore, Ho is accepted. (See tables 9.20.1a and 9.20.1b).
21. Do you think innovation performance in the other factors for competitive advantage significantly and positively increases occupancy rates? - Comparison by Reason of Travel to Destination.
There is no significant difference between the opinions of the managers of hotels of business and tourist destinations as to whether innovations performance significantly increases the occupancy rate in the hotel industry. (See tables 9.21.1a to 9.21.1b).
22. Attitude of Hotels towards developing Innovations – Comparison by
Country.
All of them have good attitude as scores of all are above 4. However,
Thailand is better in case of Ambience and Facilities and Amenities. India is better in case of Service and Others Factors. No significant difference was seen in Product Offerings, Technology and Food and Beverage. (See tables
9.21.1a to 9.21.1b).
Hypothesis 7.
H7o – There is no significant difference in the attitude of the managers of
India and Thailand hotels for developing innovations as a factor for sustainable competitive advantage in their respective hotels. H71 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing innovations as a factor for
sustainable competitive advantage in their respective hotels.
The analysis of each of the criteria was as follows;
H7.1ao – There is no significant difference in the attitude of the managers
of India and Thailand hotels for developing product innovations as a factor
for sustainable competitive advantage in their respective hotels.
H7.1a1 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing product innovations as a factor for
sustainable competitive advantage in their respective hotels.
Here there is no significant difference in the opinion of the managers of the
two countries as is seen by p value = .087 (not < .05). Therefore, Ho is
accepted. (See tables 9.21.1a and 9.21.1b).
Sub Hypothesis 7.1b.
H7.1b o – There is no significant difference in the attitude of the managers
of India and Thailand hotels for developing service innovations as a factor
for sustainable competitive advantage in their respective hotels.
H7.1b 1 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing service innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is no significant difference in the opinion of the managers of the two countries as is seen by p value = .039 (not < .05). Therefore, Ho is accepted. (See tables 9.21.1a and 9.21.1b). Sub Hypothesis 7.1c.
H7.1c o – There is no significant difference in the attitude of the managers
of India and Thailand hotels for developing ambience innovations as a
factor for sustainable competitive advantage in their respective hotels.
H7.1c 1 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing ambience innovations as a factor
for sustainable competitive advantage in their respective hotels.
Here there is a significant difference in the opinion of the managers of the
two countries as is seen by p value = .000 (< .05). Therefore, Ho is rejected.
(See tables 9.21.1a and 9.21.1b).
Sub Hypothesis 7.1d.
H7.1d o – There is no significant difference in the attitude of the managers
of India and Thailand hotels for developing technology innovations as a
factor for sustainable competitive advantage in their respective hotels.
H7.1d 1 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing technology innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is no significant difference in the opinion of the managers of the two countries as is seen by p value = .098 (not < .05). Therefore, Ho is accepted. (See tables 9.21.1a and 9.21.1b).
Sub Hypothesis 7.1e.
H7.1e o – There is no significant difference in the attitude of the managers
of India and Thailand hotels for developing facilities and amenities innovations as a factor for sustainable competitive advantage in their respective hotels.
H7.1e 1 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing facilities and amenities innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is a significant difference in the opinion of the managers of the two countries as is seen by p value = .043 (< .05). Therefore, Ho is rejected.
(See tables 9.21.1a and 9.21.1b).
Sub Hypothesis 7.1f.
H7.1f o – There is no significant difference in the attitude of the managers of India and Thailand hotels for developing food and beverages innovations as a factor for sustainable competitive advantage in their respective hotels.
H7.1f 1 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing food and beverages innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is no significant difference in the opinion of the managers of the two countries as is seen by p value = .246 (not < .05). Therefore, Ho is accepted. (See tables 9.21.1a and 9.21.1b). Sub Hypothesis 7.1g.
H7.1g o – There is no significant difference in the attitude of the managers of India and Thailand hotels for developing any other factor innovations as a factor for sustainable competitive advantage in their respective hotels.
H7.1g 1 - There is a significant difference in the attitude of the managers of
India and Thailand hotels for developing any other factor innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is a significant difference in the opinion of the managers of the two countries as is seen by p value = .040 (< .05). Therefore, Ho is rejected.
(See tables 9.21.1a and 9.21.1b).
23. Attitude of Hotels towards developing Innovations – Comparison by
Designation of Manager.
No significant difference was seen as per the designation of the managers was concerned in the attitude towards developing innovations in the factors of sustainable competitive advantage. (See tables 9.23.1a to
9.23.1b).
24. Attitude of Hotels towards developing Innovations – Comparison by
Reason of Travel to Destination.
No significant difference was seen in the attitude of the managers of hotels of business and tourist destinations towards developing innovations in the factors of sustainable competitive advantage. The findings also show as seen by the mean values that the attitude of the hotels towards developing innovations in their hotel is poor. (See tables 9.24.1a to 9.24.1b). 25. Attitude towards developing Innovations - Comparison as per grade of
Hotels
There was no significant difference in the opinion as per grades of hotels in
Product Offerings, Ambience, Facilities & Amenities and Other Factors. The attitude of five star hotels was found to be substantially higher towards developing Technological Innovations and slightly higher in developing
Service Innovations. Whereas, the attitude of three and four star hotels was better in developing Food & Beverage Innovations. (See tables 9.25.1a and
9.25.1b).
Sub Hypothesis 7.3a.
H7.3a o – There is no significant difference in the attitude of the managers of various grades of hotels for developing product innovations as a factor for sustainable competitive advantage in their respective hotels.
H7.3a 1 - There is a significant difference in the attitude of the managers of various grades of hotels for developing product innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is no significant difference in the opinion of the managers of various grades of hotels as is seen by p value = .093 (not < .05). Therefore,
Ho is accepted. (See tables 9.25.1a and 9.25.1b). Sub Hypothesis 7.3b.
H7.3b o – There is no significant difference in the attitude of the managers
of various grades of hotels for developing service innovations as a factor
for sustainable competitive advantage in their respective hotels.
H7.3b 1 - There is a significant difference in the attitude of the managers of various grades of hotels for developing service innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is a significant difference in the opinion of the managers of various grades of hotels as is seen by p value = .023 (< .05). Therefore, Ho is rejected. (See tables 9.25.2a and 9.25.2b).
Sub Hypothesis 7.3c.
H7.3c o – There is no significant difference in the attitude of the managers
of various grades of hotels for developing ambience innovations as a
factor for sustainable competitive advantage in their respective hotels.
H7.3c 1 - There is a significant difference in the attitude of the managers of
various grades of hotels for developing ambience innovations as a factor
for sustainable competitive advantage in their respective hotels.
Here there is no significant difference in the opinion of the managers of
various grades of hotels as is seen by p value = .257 (not < .05). Therefore,
Ho is accepted. (See tables 9.25.3a and 9.25.3b). Sub Hypothesis 7.3d.
H7.3d o – There is no significant difference in the attitude of the managers of various grades of hotels for developing technology innovations as a factor for sustainable competitive advantage in their respective hotels.
H7.3d 1 - There is a significant difference in the attitude of the managers of various grades of hotels for developing technology innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is a significant difference in the opinion of the managers of various grades of hotels as is seen by p value = .029 (< .05). Therefore, Ho is rejected. (See tables 9.25.4a and 9.25.4b).
Sub Hypothesis 7.3e.
H7.3e o – There is no significant difference in the attitude of the managers of various grades of hotels for developing facilities and amenities innovations as a factor for sustainable competitive advantage in their respective hotels.
H7.3e 1 - There is a significant difference in the attitude of the managers of various grades of hotels for developing facilities and amenities innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is no significant difference in the opinion of the managers of various grades of hotels as is seen by p value = .132 (not < .05). Therefore,
Ho is accepted. (See tables 9.25.5a and 9.25.5b). Sub Hypothesis 7.3f.
H7.3f o – There is no significant difference in the attitude of the managers of various grades of hotels for developing food and beverages innovations as a factor for sustainable competitive advantage in their respective hotels.
H7.3f 1 - There is a significant difference in the attitude of the managers of business and tourist Destination hotels for developing food and beverages innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is a significant difference in the opinion of the managers of various grades of hotels as is seen by p value = .004 (< .05). Therefore, Ho is rejected. (See tables 9.25.6a and 9.25.6b).
Sub Hypothesis 7.3g.
H7.3g o – There is no significant difference in the attitude of the managers of various grades of hotels for developing any other factor innovations as a factor for sustainable competitive advantage in their respective hotels.
H7.3g 1 - There is a significant difference in the attitude of the managers of various grades of hotels for developing any other factor innovations as a factor for sustainable competitive advantage in their respective hotels.
Here there is no significant difference in the opinion of the managers of various grades of hotels as is seen by p value = .316 (not < .05). Therefore,
Ho is accepted. (See tables 9.25.7a and 9.25.7b). 26. Regression Analysis of perspective of managers.
The relationship between the perspective of the management of the hotels as related to parameters of factors like age of manager, level of manager, grade of hotels, country, destination and occupancy rate was studied.
There is only one factor which significantly affects the level of perspective of the managers i.e. occupancy rate in the hotel. None of the other parameters affect the perspective.
The hotels where occupancy rate is higher have better perspective about innovations and the hotels where occupancy rate is lower have poor perspective about innovations.
All other factors did not have any significant contribution to the level of perspective of the managers towards innovations as a tool for sustainable competitive advantage in the hotel industry. (See tables 9.26.1a and
9.26.1g).
Hypothesis 8.
H8o – There is no significant association between the perspective of the managers regarding innovations as a factor for sustainable competitive advantage and the grade of hotels, age and designation of manager, country and occupancy rate.
H81 - There is a significant association between the perspective of the managers regarding innovations as a factor for sustainable competitive advantage and the grade of hotels, age and designation of manager, country and occupancy rate. y = a + bx Perspective = 32.934 + 0.024 x (Occupancy Rate 2008-09) The association was analyzed and the findings were as follows for each parameter used for comparison.
Hypothesis 8.1
H8.1o – There is no association between the perspective of the managers regarding innovations as a factor for sustainable competitive advantage and the grade of hotels.
H8.11 - There is an association between the perspective of the managers regarding innovations as a factor for sustainable competitive advantage and the grade of hotels.
Here there is no association in the opinion of the managers of various grades of hotels as is seen by p value = .172 (not <.05). Therefore, Ho is accepted. (See tables 9.26.1a and 9.26.1g).
Sub Hypothesis 8.2.
H8.2o – There is association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the age of the manager.
H8.21 - There is a association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the age of the manager. Here there is no association in the opinion of the managers and age of the managers as is seen by p value = .215 (not <.05). Therefore, Ho is accepted.
(See tables 9.26.1a and 9.26.1g).
Sub Hypothesis 8.3.
H8.3o – There is no association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the designation of the manager.
H8.31 - There is a association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the designation of the manager.
Here there is no association in the opinion of the managers designation of the manager as is seen by p value = .471 (not <.05). Therefore, Ho is accepted. (See tables 9.26.1a and 9.26.1g).
Sub Hypothesis 8.4.
H8.4o – There is no association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the country.
H8.41 - There is a association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the country.
Here there is no association in the opinion of the managers country as is seen by p value = .565 (not <.05). Therefore, Ho is accepted. (See tables
9.26.1a and 9.26.1g). Sub Hypothesis 8.5.
H8.5o – There is no association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the destination.
H8.51 - There is a association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the destination.
Here there is no association in the opinion of the managers and destination as is seen by p value = .806 (not <.05). Therefore, Ho is accepted. (See tables 9.26.1a and 9.26.1g).
Sub Hypothesis 8.6.
H8.6o – There is no association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the occupancy rate.
H8.61 - There is a association in the perspective of the managers regarding innovations as a factor for sustainable competitive advantage depending upon the occupancy rate.
Here there is an association in the opinion of the manager and occupancy rate as is seen by p value = .046 (<.05). Therefore, Ho is rejected. (See tables 9.26.1a and 9.26.1g).
27. Sample Size Justification.
The standard error of the estimate is 0.226. Therefore the error in our mean estimate of perspective is 34.70 +/- 0.45 i.e. between 34.25 to 35.15. Thus the error is 0.45 / 34.7 x 100 = 1.3% error which is acceptable error in the estimate. Thereby showing that the sample is more than sufficient to estimate the perspective of the managers. According to above results i.e.
Mean = 34.7 Standard Deviation = 3.765, The sample required for 95% confidence and 10% error is 160, Whereas we have taken a sample of 274 for the purpose of research.
9.2 MAJOR FINDINGS
1. Tools for sustainable competitive advantage in the hotel industry:
The research has clearly shown that in the opinion of all levels of management of all the categories of hotels, the important tools for sustainable competitive advantage are Innovations, Product Offerings,
Service Quality, Technology, Ambience, Food and Beverages, Facilities and Amenities, and Other Add-on Facilities Offered by the hotels. However, the relative importance given to Innovations was comparatively much lesser than that given to the other factors for competitive advantage. In terms of the maximum managers agreeing as to the tools for sustainable competitive advantage the order of importance from most important to least important was as follows: 1. Food & Beverage, 2. Ambience, 3.
Facilities & Amenities, 4. Technology, 5. Service Quality, 6. Product
Offerings, 7. Other Add-on Facilities Offered and 8. Innovations. 2. Factors for competitive advantage in the hotel industry – Comparison
according to Grade of Hotel, Designation of Manger, Country and
Destination:
The research showed that there was no significant difference in the managers opinion as compared by the different grades of hotels as to the factors for sustainable competitive advantage except in the case of innovations, where the Five Star Hotel managers believed significantly more than the Four Star and Three Star Hotel managers that innovations are an important factor for sustainable competitive advantage in the hotel industry.
There was found to be no significant difference in the opinion of the managers as compared by their designation as to the factors of sustainable competitive advantage. The managers of all levels of all the hotels agreed that the factors for sustainable competitive advantage in the hotel industry are Innovations, Product Offerings, Service Quality, Technology,
Ambience, Food and Beverages, Facilities and Amenities, and Other Add- on Facilities Offered by the hotels.
There was found to be no significant difference as to the impact of the factors of sustainable competitive advantage between India and Thailand.
The managers of both countries agreed that Innovations, Product
Offerings, Service Quality, Technology, Ambience, Food and Beverages,
Facilities and Amenities, and Other Add-on Facilities Offered by the hotels are the factors for competitive advantage in the hotel industry. The research showed that there was a significant association between purpose of travel and some of the factors of sustainable competitive advantage. The importance of food and beverages as a factor for competitive advantage was found to be much more in hotels which were destinations for business rather than hotels which were more tourist destinations. Other than that there is no significant difference in all the other factors for sustainable competitive advantage.
3. Effect of Factors of Sustainable Competitive Advantage on Occupancy
Rate.
The research has revealed that, in terms of having maximum impact on the occupancy rate the factors for sustainable competitive advantage could be rated as follows from most important to least important as: Technology,
Ambience, Facilities and Amenities, Food and Beverages, Other Add on
Services Offered, Service Quality, Product Offerings and Innovations. Most of the managers varied between strongly agreeing and agreeing that these factors have a significant effect the occupancy rate of a hotel, except in the case of Innovations where the managers were found to be uncertain as to whether it would have an effect on the occupancy rate.
4. Effect of Factors of Sustainable Competitive Advantage on Occupancy
Rate – Comparison by Designation of Mangers, Grade of Hotel, Country
and The research showed that however, the opinions of the managers as compared by their designations differed significantly. There is significant difference as to the effect of Ambience, F&B, Facilities and Amenities and
Other Factors on the occupancy rate of the hotels. The relative importance of the impact of the tools for sustainable competitive advantage in the opinion of the Lower Level Management differs from the opinion of the
Middle and Top Level Management. The Lower Level Management essentially felt that the tools which have the maximum impact on the occupancy rate are Ambience, Food and Beverages, Facilities and
Amenities and Miscellaneous Add-on Services Offered. Whereas, the
Middle and Top Level Management opined that Technology is most important. There is was found to be significant difference as far as
Innovations, Product Offerings, Service Quality and Technology are concerned as to their effect on the occupancy rate.
The managers of different grades of hotels did not differ in their opinion regarding the impact of the different tools for sustainable competitive advantage on the occupancy rate in the hotel industry.
The managers of the hotels as compared by business and tourist destinations both felt that the factors of sustainable competitive advantage have a direct effect on the occupancy rate. They agreed to a great extent except in the case of innovations where they were not sure. However there was found to be no significant difference between the two categories. 5. Is Innovation an important factor for Sustainable Competitive
Advantage? – Comparison by Grade of Hotel, Country and Destination.
The managers of all grades of hotels were of the unanimous opinion that innovations per se are not important as a tool of sustainable competitive advantage but innovations are important to be implemented in all categories of tools of sustainable competitive advantage.
There is was found to be significant difference in the opinion of the managers as compared by country as well as destination whether innovation is a most important factor for sustainable competitive advantage
6. Whether Innovations as a tool for sustainable competitive advantage in
the hotel industry are implemented in isolation or are merely a part of all
other tools of Sustainable Competitive Advantage. – Comparison by
Grade of Hotel, Country and Destination.
The research proved that the managers of all grades of hotels agreed that innovations per se are not important as a factor for sustainable competitive advantage, but are to be implemented as a part of all the other factors for sustainable competitive advantage. However, there is no significant difference as per grade of the hotels concerned amongst the opinion of the managers.
The managers of the hotels of both India and Thailand agreed that innovations per se are not important as a factor for sustainable competitive advantage but are to be implemented as a part of all the other factors for sustainable competitive advantage. However, there was found to be no significant difference amongst the opinion of the managers of the two countries.
The managers of hotels which are predominantly business and tourism destinations both agreed that innovations per se are not important as a factor for sustainable competitive advantage but are to be implemented as a part of all the other factors for sustainable competitive advantage.
However, there was found to be significant difference amongst the opinion of the managers as per business and tourist destinations.
7. Managers opinion whether innovations are predominant in the hotel
Sector in the other factors for Sustainable Competitive Advantage. –
Comparison by Grade of Hotel, Country, and Destination.
The managers were not sure whether innovations are predominant. The opinions were scattered from agreeing to not being sure and also disagreeing. There was found to be no significant difference between the opinions of the managers of different grades of hotels as to whether innovations are predominant in the other factors of sustainable competitive advantage in the hotel industry.
There was found to be no significant difference between the opinions of the managers of India and Thailand hotels as to whether innovations are predominant in the other factors of sustainable competitive advantage in the hotel industry.
There was found to be no significant difference between the opinion of the managers of hotels of Business and Tourist destinations as to whether innovations are predominant in the other factors of sustainable competitive advantage in the hotel industry.
8. Do you think innovation performance in the other factors of competitive
advantage significantly and positively increases occupancy rates? -
Comparison by Country and Destination.
The managers unanimously agreed that innovation performance in the factors for sustainable competitive advantage has a significant effect on occupancy rates. There was found to be no significant difference between the opinions of the managers of India and Thailand hotels as to whether innovations performance in the other factors for competitive advantage significantly increases the occupancy rate in the hotel industry.
There was found to be no significant difference between the opinions of the managers of hotels of business and tourist destinations as to whether innovations performance in other factors of competitive advantage significantly increases the occupancy rate in the hotel industry.
9. Attitude of Hotels towards developing Innovations – Comparison by
Country, Designation of Manager, Destination and Grade of Hotels The research showed that there was a significant difference in the attitude of the management towards developing innovations as compared by country. The management of Thailand hotels had a better attitude in case of Ambience and Facilities and Amenities. Management of hotels in India had better attitude in case of Service and Others Factors. No significant difference was seen in Product Offerings, Technology and Food and
Beverage.
No significant difference was seen as per the designation of the managers was concerned in the attitude towards developing innovations in the factors of sustainable competitive advantage.
Similarly, no significant difference was seen in the attitude of the managers of hotels of business and tourist destinations towards developing innovations in the factors of sustainable competitive advantage. The findings also show that the attitude of the hotels towards developing innovations in their hotel is poor.
Significant difference was found as per the attitude in developing innovations in some of the factors of sustainable competitive advantage.
The attitude of five star hotels was found to be substantially higher towards developing Technological Innovations and slightly higher in developing Service Innovations. Whereas, the attitude of three and four star hotels was better in developing Food & Beverage Innovations. There was no significant difference in the opinion as per grades of hotels in
Product Offerings, Ambience, Facilities & Amenities and Other Factors. 10. Analysis of perspective of managers and the association of their
perspective with their age, designation, grade of the hotel, country,
destination and the occupancy rates of the hotel.
The research studied the relationship between the perspective of the management of the hotels as related to parameters of factors like age of manager, level of manager, grade of hotels, country, destination and occupancy rate of the hotel concerned. There was only one factor which was found to significantly affect the level of perspective of the managers i.e. occupancy rate in the hotel.
In the hotels where occupancy rate was higher, the management had better perspective about innovations and in the hotels where occupancy rate was lower, the management have poor perspective about innovations.
None of the other parameters were found to affect the perspective of the managers towards innovations. The other factors did not have any significant contribution to the level of perspective of the managers towards innovations as a tool for sustainable competitive advantage in the hotel industry. CHAPTER 10
RECOMMENDATIONS AND SUGGESTIONS
India's tourism and hospitality industry has emerged as one of the key sectors driving the country's economy. India's tourism is thriving, owing to a huge surge in both business and leisure travel by foreign and domestic tourists. India’s travel and tourism industry generated approximately US$
100 billion in 2008, growing at 7.3 per cent and is expected to be rising to
US$ 275.5 billion by 2018 over the next ten years according to the Tourism
Satellite Accounting Research released by World Travel and Tourism
Council, 2008. The tourism industry in India contributed 6.1% to the GDP in
2008/09.
The boom in India's tourism industry and the surge in tourist inflow to the country has percolated to other associated sectors like aviation, medical tourism, and the hotel industry. The country's hospitality sector has witnessed an increase in the occupancy ratios and average room rates.
While occupancy ratio is around 75-80 per cent, the average increase in room rates has been hovering around 22-25 per cent. By 2010, India will see an estimated 10 million foreign visitors and thereby a demand for approximately 100,000 rooms. And with the continuing surge in tourist inflow, this sector is likely to offer tremendous opportunity for investors.
For example, while the estimated number of required hotel rooms is around
240,000, the current availability is just 90,000 rooms - leaving a shortfall of 150,000 rooms to be provided. India's hospitality sector is expected to see an estimated US$ 11.41 billion in the next two years, and around 40 international hotel brands by 2011, according to a report by Ma Foi
Management Consultants. Along with these large scale expansion plans, international hotel asset management companies are also likely to enter
India. Several global hotel chains see immense investment opportunities in the sector with global chains like Hilton, Accor, Marriott International,
Berggruen Hotels, Cabana Hotels, Premier Travel Inn (PTI), InterContinental
Hotels group and Hampshire amongst others have announced major investment plans in India with others likely to follow suit.
The hotel industry being a vital part of the tourism industry, and therefore the economy, has to be prepared for this tremendous potential and have to take the necessary steps to meet and maintain this surge in demand. The competition is not only from within the country but it is also very important to ‘deliver’ upon these factors of competitive advantage so as to make
India a preferred Asian tourist destination.
It is usually easy to single out the managers in a hotel or restaurant.
Managers have titles. But what exactly do managers do? This question cannot he answered precisely or easily. Managers in different businesses do different things, and the entire field of management is changing rapidly as the world moves from a manufacturing-based to a service-based economy. Peter Drucker, says a manager has two broad goals. The first is
“creation of a true whole that is larger than the sum of its parts, a productive entity that turns out more than the sum of the resources put into it.” The Four Seasons hotel company in its statement of operating philosophy, compares a manager to a conductor of an orchestra who is able to pull together the music played by each musician into a beautiful symphony. Managers are told that their role is to “keep all of the various pieces playing in proper tempo and harmony so the performance is pleasing to the customer.” Unlike conductors, who have a composer’s score in front of them and only have to interpret It. Hotel managers must do more. They must write their own score, and in that sense hotel managers are composers as well as conductors.
The second broad goal of a hotel manager is to “harmonize in every decision and action the requirements of immediate and long-range future.”
In other words, a hotel manager must consider not only the needs of today but also the needs of next year and beyond. He not only has to prepare for crossing distant bridges—he has to build them long before he gets there.
However along with this a manager also has to do supervisory work in order to ensure that all decisions taken are implemented properly
The management of hotels have to be aware of the various factors for sustainable competitive advantage as they have a strong positive and direct impact on the occupancy of hotels. Innovations in these areas are essential to garner a competitive advantage. However it has been observed during the research that the understanding of the importance of innovations, especially, and also the other factors of sustainable competitive advantage is limited. Very few hotel managers are consciously aware as to the important role innovation could play in maintaining a sustainable competitive advantage in the industry. In many parts of the world, hospitality has become a mature industry. That is to say, it has passed the stage of rapid growth and innovation. There are not many new inventions that affect the way we eat and sleep away from home. The hotel industry components do not have separate cells or departments for conscious innovations as would be the case in other sectors, say for e.g.: the pharmaceutical industry. In the absence of this it is important that the management of hotels at all levels be made aware as to the importance of these factors of sustainable competitive advantage, so that they can take conscious steps of making improvements in this direction.
The research has made it clear as to how these factors can affect the occupancy rates as per grades of hotels and the occupancy rates and how the perspective of the mangers differ according to these factors as well as their designation. The important findings of the research may be used by the management of the hotels whence giving training to their managerial staff as also while taking policy decisions by the top level management.
The study has revealed as to how important each of these individual factors are and how they are correlated to the perspective and attitude of the management and these factors can be kept in mind while taking important policy decisions as far as the management of the hotels is concerned. However, sustainability of these factors is an issue as most of the steps taken by the hotels are easily copieable. And some effort can be done in finding out a way to help in sustainability of the factors for competitive advantage. The hotels need to make a conscious effort in making innovations in the areas of product offerings, technology, ambience, service quality, food and beverages, facilities and amenities. The first step is to understand where the greatest deficiencies lie, and which levers will deliver the most impact. For many organizations, the most critical levers to assess initially include structure and metrics, though establishing innovation processes and providing employees with new skill sets which are critical drivers of culture. The act of visibly sponsoring specific initiatives focused on creating new organizational capabilities that promote innovation serves to send a message and establish new symbols and stories that reinforce a culture of innovation.
The various grades of hotels need to consider each of these factors to uphold or enhance their gradability. However, at the individual level there is realization amongst the lesser grade hotels that the factors in which efforts can be made at the individual level as far as the hotels are concerned is in the area of the Additional services and facilities which the individual hotel can offer and their improving their Service Quality. These hotels also have a scope to make improvements ambience and product offerings to some extent, to give them the competitive edge. However, five star hotels need to more on the area of Innovations in Technology and Food and Beverages. The research has also shown that occupancy rate of the hotel affects the perspective and attitude of the managers, and factors like grade of the hotel, the level of the manager himself, the type of tourist or destination the hotel caters to decide the relative importance of the individual tool for competitive advantage in the concerned hotel. The managers would do well to use all these criteria into account and do some introspection before taking important decisions.
Scope for further research - There is tremendous scope for further research to come up with a system for measuring the impact of these factors of competitive advantage on the occupancy of hotels, as in the opinion of the management, the impact they have is substantial. There is also scope to conduct research from the financial point of view as to the amount of funds and resources allocated to developing each of these factors of competitive advantage and their Return on Investment. Further research can be done to look into the matter of sustainable competitive advantage from the point of view of the customers of the hotel as the present study has been restricted only to the management perspective. CHAPTER 11
CONCLUSION
The hotel industry as has been seen is one of the vital components of the countries economy and an important factor which determines as to how the country is looked upon in the global scenario.
The managers of the hotels are the most important cog in the machinery of the hotel industry and many a times the success or failure of the hotel could depend upon the perspective and attitude of the managers.
The competition, as far as the hotel industry is concerned, is not only within the country but also international because the inbound tourists have a choice as to the Asian country they wish to visit or have as a preferred destination. Thailand, Singapore, Hong Kong and Malaysia are also the hot favorite destinations for tourists worldwide. In this scenario the hotels would do well to know and improve upon the factors for having a competitive edge in the tourism industry.
The factors of sustainable competitive advantage having being determined, the managers of hotels play a very important role in affecting the attitude of the hotels in developing these factors and seeing to it that they are implemented effectively. More often than not these managers are the very important link between the end customers and the hotel owners or the hotel management. It is the attitude and perspective of these managers which can play a vital role in the success and failure of the hotel. The factors of sustainable competitive advantage in the hotel industry have irrefutably been determined to be the Facilities and Amenities provided in the hotel, the technology used in various departments of the hotel, the product offerings of the hotel, the food an beverages served at the hotel, the service quality of the hotel, the ambience of the hotel, the other add-on facilities and services provided by the hotel and the innovations implemented by the hotel within all these factor. It has also been strongly determined that in the hotel industry innovations are not a stand alone factor but can only be a part of these other factors for sustainable competitive advantage. However, it is important to consciously make an effort to inculcate a culture of innovation amongst the other factors for sustainable competitive advantage since it was also strongly felt that innovations are important and have a direct impact on the occupancy rate of the hotel.
There are factors which affect the attitude and perspective of the managers, such as the occupancy rate of the hotel, and there are factors which affect the importance of the individual tool for competitive advantage such as the grade of the hotel and the type of tourists the hotel caters too and all these insights are useful in determining the general policy the hotel adopts in implementing the tools of sustainable competitive advantage.
Tourism in India has received a major boost in the past decade since the
Indian Government realized the great potential of tourism of India during vacations. Tourism of India has grown by leaps and bounds with a great influx of tourists from throughout the world.
India has the right tourism potential and attractions to captivate all types of tourists whether it is adventurous tour, cultural exploration, pilgrimages, visit to the beautiful beaches or to the scenic mountain resorts as also business travelers.
However, foreign tourists are appalled at the state of Indian catering services, roads, guides services, hotels, motels, and transportation services and above all, the degrading environment of the Indian subcontinent. We would have to provide international standard star amenities to the tourists. If we do not follow this norm, we would lose tourists to the Mauritius, Singapore, Thailand, Hongkong, and Japan. These countries offer entertainment, good quality rooms, and transportation, liquor, as well as food, at the most competitive prices. They follow international tourism norms in terms of catering, hospitality, and hygiene. If we do not follow any norms and this leads to aversion on the part of the tourists from India.
It is fortunate to note that hotel management and tourism have become serious subjects as well as vocations. The government as well as the private institutions has launched many courses in tourism as well as hotel management. The professionals in tourism and travel are required by tour operators as well as airlines. Hotel professionals are also in great demand.
This would boost the hotel industry as well as the economy. The services of hotels would have to be operated on professional grounds according to international standards. The managers of the hotels play an important part in this regard and this study has been aimed at providing some insights which might prove useful for the hotel industry in general.
The Government of India is also doing its best. The participation of the private firms has also increased. However, a lot needs to be done in this crucial area. We can earn a lot through tourism as well as hotel industries.
Our outlook and approach would have to be professionalized if we want to achieve concrete results in this fastest growing industry. APPENDIX I
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QUESTIONNAIRE USED FOR SURVEY
Sustainable Competitive Advantage in the Hotel Industry thru Innovations
and its impact on the Occupancy Rate
Questionnaire
(The following information is for the purpose of research only. Confidentiality of the information shall be
maintained at all levels.)
Q.1 1) Sample No ……………………. City : a) Mumbai b) Pune C) Goa d) Bangkok e) Pattaya
2) Hotel Name: ……………………… (………………………………..)
……………….………………………… a) 5 Star Deluxe, b) 5 Star, c) 4 Star, d) 3 Star,
3) Hotel Rating: ………………… e) Budget Hotel (………………………………..)
Q.2 1) Name of the Respondent ………………………………………………………………………………………………
2) Designation a) TLM b) MLM c) LML (……………………………….).
3) Residential Address: …………………………………………………………………………………………..
4) Age Completed Years: (……………………………….).
a) Less than 20 b) 20 – 25 c) 26 – 30 d) 31 – 35 e) 36 – 40
f) 41 – 45 g) 46 – 50 g) Above 50
5) Sex a) Male b) Female (……………………………….).
6) Educational Qualification ……………………………………………………………………………………………..
Q.3 What are your Season periods? a) Lean Season, ………………………………………………………..
1)………………………………………… b) Shoulder Season …………………………………………………….
2)…………………………………………. c) Peak Season ……………………………………………………………
3)…………………………………………. (1 to 12 represent January to December) Q.4 a) What is the total area acquired by
hotel campus? A) In sq. mtr ………………………… (……………………………..)
b) How many Rooms available in your B) Number of rooms ………………… (……………………………..)
hotel?
Q.5 Please give details about the rooms Category Number of Rooms categories available in your hotel. 1 2 3 4 5 6 7 Total
Name of Investigator ...... Visit Date ...... Q.6 Explain the Demographics of the
Guests during the last years (in (Fill up by using recorded document of hotel)
percentage) National Foreign Total …………………...... 1) By Sex ...... …………………...... a) Male ...... …………………...... b)Female ...... …………………...... 2) By Age ...... …………………...... a) Less Than 6 years ...... …………………...... b) 6 to 14 ...... …………………...... c) 15 to 24 ...... …………………...... d) 25 to 35...... …………………...... e) 36 to 50 ...... …………………...... f) 50 to 60 …………………...... g) Above 60 years …………………...... 3) By Occupation …………………...... a) Service …………………...... b) Business …………………......
Q.7 Tell me the average occupancy rates of your hotel Financial Year Average Occupancy Rates Peak Season Shoulder Season Lean Season Total 2006-07 2007- 08 2008-09 Projection for 2009-2010 Note: Category of Occupancy Rate in Percentage. A - 80 to 100 B - 60 to 80 C – 40 to 60 D – 20 to 40 E – Less than 20 Q.8 Do you think the following are tools for Sustainable Competitive Advantage in the Hotel Industry?
Tools 1. Yes 2. No 3. Can’t Say A Innovations B Product Offerings C Service Quality D Technology E Ambience F Food & Beverages G Facilities & Amenities H Any Other (Specify) ......
Q.9 Please state your opinion whether the following tools for S C A have a direct effect on the occupancy rate?
Tools 1. Strongly 2. Agree 3. Uncertain 4. Disagree 5. Strongly Agree Disagree A Innovations B Product Offerings C Service Quality D Technology E Ambience F Food & Beverages G Facilities & Amenities H Any Other (Specify) ......
Q.10 Please state your opinion about Innovation is an important factor for Sustainable Competitive Advantage in the Hotel Industry. 1. Strongly 2. Agree 3. Uncertain 4. Disagree 5. Strongly Agree Disagree Q.11 Please state your opinion about Innovation is not implemented in isolation but is part of implementing all other tools for Sustainable Competitive Advantage
1. Strongly 2. Agree 3. Uncertain 4. Disagree 5. Strongly Agree Disagree
Q.12 Are the innovations in the following categories predominant in the hotel sector?
Tools 1. Yes 2. No 3. Can’t Say A Product Innovations B Service Innovations C Ambience D Technology E Facilities & Amenities F Food & Beverages G Any Other (Specify) ......
Q.13 Which of the following categories of innovations are implemented in your organization?
Tools 1. Yes 2. No 3. Can’t Say A Product Innovations B Service Innovations C Ambience D Technology E Facilities & Amenities F Food & Beverages G Any Other (Specify) ......
Q.14 Do you think innovation performance in the other factors of competitive advantage significantly and
positively increases occupancy rates?
1. Strongly 2. Agree 3. Uncertain 4. Disagree 5. Strongly Agree Disagree
Q.15 What is the attitude of your hotel towards developing innovations in various categories?
Tools Rating A Product Innovations B Service Innovations C Ambience D Technology E Facilities & Amenities F Food & Beverages G Any Other (Specify) ...... 1. Aggressively work towards more and more innovative practices
2. Only work on improving existing offerings (Incremental innovations)
3. Me-too attitude - (Follow practices adopted by others with respect to innovations).
4. Rarely consciously have policy for adopting innovative practices.
Please list out whether innovative practices have been adopted by your hotel in the last Q.16 three years w.r.t the following CODE YES- 1 NO - 2 Can’t Say A Product Offerings 1 Schemes / Packages 2 Timeshare 3 Discounts B Service Quality 1 Staff Quality 2 Cleanliness & Hygiene 3 Guest Services 4 Safety & Security 5 Pickup & drop / Transportation 6 Local Tours & Guide 7 Room Service / Bell Boy 8 Currency Exchange 9 Reception 10 Restaurant 11 Valet Parking 12 Housekeeping 13 In-house Doctor. 14 Telephone. Q.16 CONT. YES NO Can’t Say CODE 15 Maintenance C o Technology 1 Internet Booking 2 Internet & Wifi facilities in Hotel 3 Swipe card entry 4 Bill pay Options. Entertainment Facilities ( TV, Music System, Games, 5 Etc.) 6 Dischotheque Facilities. D o Ambience 1 Exterior & Grounds 2 Reception Area 3 Lobby 4 Rooms 5 Bathrooms 6 Lounge Area / Gardens. 7 Restaurants 8 24 hr Coffee Shops 9 Spas 10 Shopping Area 11 Swimming Pool 12 Lift 13 Kitchen. 14 Gardens 15 Discotheque 16 Pub 17 Casino 18 Children Play Areas. 19 Parking. 20 Lighting 21 Air Conditioning. E o Food & Beverages 1 Cusine / Choice of Food 2 Choice of Beverages 3 Water 4 Food Pricing 5 Food Presentation 6 Theme Food 7 Food Festivals. 8 Packaged Foods. F o Facilities & Amenities 1 ATM Q.16 CONT. YES NO Can’t Say CODE 2 Banking Facilities 3 Swimming Pool 4 Spa 5 Beauty Parlour 6 Gymnasium 7 Massage Parlour 8 Discotheque 9 Pub 10 Casino 11 Creche 12 Children Play Area 13 Water Park 14 Amusement Games 15 Sauna / Steam / Jaccuzi 16 TV / Cable / Home theatre 17 Music System in Rooms 18 Lockers 19 Medical Store G o Any Other
Q.17 Please tell details of proposed innovations if any YES NO Can’t Say CODE o Product Offerings A o Service Quality B o Technology C o Ambience D o Food & Beverages E o Facilities & Amenities. F Any Other G Who do you consider to be your immediate
competitors?
1 ......
2...... Q.18
3......
4 ......
Do you consider yourself as better than your
competitor in the following tools for sustainable Can’t Say
Q.19 competitive advantage? Yes No CODE o Innovations A o Product Offerings B o Service Quality C o Technology D o Ambience E o Food & Beverages F o Facilities & Amenities. G Any Other ______Thank you for your kind cooperation in this research study
Name of the Investigators: …………………………………………………… Signature
......
Date: ......
Investigator’s / Researchers Comments / Observations APPENDIX III
SPSS OUTPUTS
Table-9.1.1: No. of managers stating that Innovations are key factor for Sustainable Competitive Advantage. No. of Innovations managers Percent Yes 164 59.9 No 70 25.5 Can't Say 40 14.6 Total 274 100.0
Table-9.1.2: No. of managers stating that Product Offerings are key factor for Sustainable Competitive Advantage.
Frequency Percent Valid Yes 211 77.0 No 50 18.2 Can't 13 4.7 Say Total 274 100.0
Table-9.1.3: No. of managers stating that Service Quality Is a key factor for Sustainable Competitive Advantage.
Frequency Percent Valid Yes 212 77.4 No 50 18.2 Can't 12 4.4 Say Total 274 100.0
Table-9.1.4: No. of managers stating that Technology Is a key factor for Sustainable Competitive Advantage.
Frequency Percent Valid Yes 221 80.7 No 42 15.3 Can't 11 4.0 Say Total 274 100.0
Table-9.1.5. No. of managers stating that Ambience Is a key factor for Sustainable Competitive Advantage.
Frequency Percent Valid Yes 250 91.2 No 15 5.5 Can't 9 3.3 Say Total 274 100.0
Table-9.1.6. No. of managers stating that Food & beverages Is a key factor for Sustainable Competitive Advantage.
Frequency Percent Valid Yes 257 93.8 No 7 2.6 Can't 10 3.6 Say Total 274 100.0
Table-9.1.7. No. of managers stating that Facilities & Amenities Is a key factor for Sustainable Competitive Advantage.
Frequency Percent Valid Yes 248 90.5 No 26 9.5 Total 274 100.0
Table-9.1.8. No. of managers stating that Other Add Factors Is a key factor for Sustainable Competitive Advantage.
Frequency Percent Valid Yes 86 31.4 No 1 .4 Can't 187 68.2 Say Total 274 100.0 Table 9.2.1a Innovations as a factor for competitive advantage – Comparison as per Grade of Hotel Grade 3 Star 4 Star 5 Star Total Suitable Tools Yes Count 71 32 61 164 for % within 51.1% 56.1% 78.2% 59.9% Sustainability - Grade Innovations No Count 54 15 1 70 % within 38.8% 26.3% 1.3% 25.5% Grade Can't Say Count 14 10 16 40 % within 10.1% 17.5% 20.5% 14.6% Grade Total Count 139 57 78 274 Table 9.2.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 38.084(a) 4 .000 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 8.32. Table 9.2.2a Product Offerings as a factor for competitive advantage – Comparison as per Grade of Hotel Grade 3 Star 4 Star 5 Star Total Product Yes Count 110 40 61 211 Offerings % within 79.1% 70.2% 78.2% 77.0% Grade No Count 22 13 15 50 % within 15.8% 22.8% 19.2% 18.2% Grade Can't Say Count 7 4 2 13 % within 5.0% 7.0% 2.6% 4.7% Grade Total Count 139 57 78 274
Table 9.2.2b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 3.006(a) 4 .557 a 2 cells (22.2%) have expected count less than 5. The minimum expected count is 2.70.
Table 9.2.3a Service Quality as a factor for competitive advantage – Comparison as per Grade of Hotel Grade 3 Star 4 Star 5 Star Total Service Yes Count 105 46 61 212 Quality % within 75.5% 80.7% 78.2% 77.4% Grade No Count 27 10 13 50 % within 19.4% 17.5% 16.7% 18.2% Grade Can't Say Count 7 1 4 12 % within 5.0% 1.8% 5.1% 4.4% Grade Total Count 139 57 78 274
Table 9.2.3b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.510(a) 4 .825 a 2 cells (22.2%) have expected count less than 5. The minimum expected count is 2.50. Table 9.2.4a Technology as a factor for competitive advantage – Comparison as per Grade of Hotel Grade 3 Star 4 Star 5 Star Total Technology Yes Count 108 47 66 221 % within 77.7% 82.5% 84.6% 80.7% Grade No Count 25 7 10 42 % within 18.0% 12.3% 12.8% 15.3% Grade Can't Say Count 6 3 2 11 % within 4.3% 5.3% 2.6% 4.0% Grade Total Count 139 57 78 274
Table 9.2.4b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.293(a) 4 .682 a 2 cells (22.2%) have expected count less than 5. The minimum expected count is 2.29. Table 9.2.5a Ambience as a factor for competitive advantage – Comparison as per Grade of Hotel Grade 3 Star 4 Star 5 Star Total Ambience Yes Count 127 54 69 250 % within 91.4% 94.7% 88.5% 91.2% Grade No Count 8 3 4 15 % within 5.8% 5.3% 5.1% 5.5% Grade Can't Say Count 4 0 5 9 % within 2.9% .0% 6.4% 3.3% Grade Total Count 139 57 78 274
Table 9.2.5b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 4.447(a) 4 .349 a 5 cells (55.6%) have expected count less than 5. The minimum expected count is 1.87.
Table 9.2.6a Food & Beverages as a factor for competitive advantage – Comparison as per Grade of Hotel Grade 3 Star 4 Star 5 Star Total Food & Yes Count 130 53 74 257 Beverages % within 93.5% 93.0% 94.9% 93.8% Grade No Count 5 1 1 7 % within 3.6% 1.8% 1.3% 2.6% Grade Can't Say Count 4 3 3 10 % within 2.9% 5.3% 3.8% 3.6% Grade Total Count 139 57 78 274
Table 9.2.6b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.885(a) 4 .757 a 5 cells (55.6%) have expected count less than 5. The minimum expected count is 1.46.
Table 9.2.7a Facilities & Amenities as a factor for competitive advantage – Comparison as per Grade of Hotel
Grade 3 Star 4 Star 5 Star Total Facilities & Yes Count 127 51 70 248 Amenities % within 91.4% 89.5% 89.7% 90.5% Grade No Count 12 6 8 26 % within 8.6% 10.5% 10.3% 9.5% Grade Total Count 139 57 78 274
Table 9.2.7b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .243(a) 2 .885 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 5.41.
Table 9.2.8a Other Factors as a factor for competitive advantage – Comparison as per Grade of Hotel Grade 3 Star 4 Star 5 Star Total Any Other Yes Count 46 22 18 86 (Specify) % within 33.1% 38.6% 23.1% 31.4% Grade No Count 1 0 0 1 % within .7% .0% .0% .4% Grade Can't Say Count 92 35 60 187 % within 66.2% 61.4% 76.9% 68.2% Grade Total Count 139 57 78 274 Table 9.2.8b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 5.098(a) 4 .277 a 3 cells (33.3%) have expected count less than 5. The minimum expected count is .21.
Table 9.3.1a Innovations as a factor for competitive advantage – Comparison as per Designation of Manager Designation TLM MLM LML Total Suitable Tools Yes Count 65 58 41 164 for % within 59.1% 59.2% 62.1% 59.9% Sustainability - Designation Innovations No Count 30 21 19 70 % within 27.3% 21.4% 28.8% 25.5% Designation Can't Say Count 15 19 6 40 % within 13.6% 19.4% 9.1% 14.6% Designation Total Count 110 98 66 274
Table 9.3.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 4.106(a) 4 .392 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.64.
Table 9.3.2a Product Offeings as a factor for competitive advantage – Comparison as per Designation of Manager Designation TLM MLM LML Total Product Yes Count 80 80 51 211 Offerings % within 72.7% 81.6% 77.3% 77.0% Designation No Count 23 14 13 50 % within 20.9% 14.3% 19.7% 18.2% Designation Can't Say Count 7 4 2 13 % within 6.4% 4.1% 3.0% 4.7% Designation Total Count 110 98 66 274 Table 9.3.2b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.988(a) 4 .560 a 2 cells (22.2%) have expected count less than 5. The minimum expected count is 3.13. Table 9.3.3a Service Quality as a factor for competitive advantage – Comparison as per Designation of Manager Designation TLM MLM LML Total Service Yes Count 88 75 49 212 Quality % within 80.0% 76.5% 74.2% 77.4% Designation No Count 17 18 15 50 % within 15.5% 18.4% 22.7% 18.2% Designation Can't Say Count 5 5 2 12 % within 4.5% 5.1% 3.0% 4.4% Designation Total Count 110 98 66 274
Table 9.3.3b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.786(a) 4 .775 a 3 cells (33.3%) have expected count less than 5. The minimum expected count is 2.89.
Table 9.3.4a Technology as a factor for competitive advantage – Comparison as per Designation of Manager Designation TLM MLM LML Total Technology Yes Count 91 79 51 221 % within 82.7% 80.6% 77.3% 80.7% Designation No Count 17 12 13 42 % within 15.5% 12.2% 19.7% 15.3% Designation Can't Say Count 2 7 2 11 % within 1.8% 7.1% 3.0% 4.0% Designation Total Count 110 98 66 274
Table 9.3.4b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 5.453(a) 4 .244 a 3 cells (33.3%) have expected count less than 5. The minimum expected count is 2.65. Table 9.3.5a Ambience as a factor for competitive advantage – Comparison as per Designation of Manager Designation TLM MLM LML Total Ambience Yes Count 102 87 61 250 % within 92.7% 88.8% 92.4% 91.2% Designation No Count 4 8 3 15 % within 3.6% 8.2% 4.5% 5.5% Designation Can't Say Count 4 3 2 9 % within 3.6% 3.1% 3.0% 3.3% Designation Total Count 110 98 66 274
Table 9.3.5b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.248(a) 4 .690 a 4 cells (44.4%) have expected count less than 5. The minimum expected count is 2.17. Table 9.3.6a Food & Beverages as a factor for competitive advantage – Comparison as per Designation of Manager Designation TLM MLM LML Total Food & Yes Count 105 90 62 257 Beverages % within 95.5% 91.8% 93.9% 93.8% Designation No Count 2 3 2 7 % within 1.8% 3.1% 3.0% 2.6% Designation Can't Say Count 3 5 2 10 % within 2.7% 5.1% 3.0% 3.6% Designation Total Count 110 98 66 274
Table 9.3.6b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.355(a) 4 .852 a 6 cells (66.7%) have expected count less than 5. The minimum expected count is 1.69.
Table 9.3.7a Facilities & Amenities as a factor for competitive advantage – Comparison as per Designation of Manager Designation TLM MLM LML Total Facilities & Yes Count 99 90 59 248 Amenities % within 90.0% 91.8% 89.4% 90.5% Designation No Count 11 8 7 26 % within 10.0% 8.2% 10.6% 9.5% Designation Total Count 110 98 66 274
Table 9.3.7b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .330(a) 2 .848 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 6.26.
Table 9.3.8a Other Factors as a factor for competitive advantage – Comparison as per Designation of Manager Designation TLM MLM LML Total Any Other Yes Count 38 32 16 86 (Specify) % within 34.5% 32.7% 24.2% 31.4% Designation No Count 0 1 0 1 % within .0% 1.0% .0% .4% Designation Can't Say Count 72 65 50 187 % within 65.5% 66.3% 75.8% 68.2% Designation Total Count 110 98 66 274
Table 9.3.8b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 3.993(a) 4 .407 a 3 cells (33.3%) have expected count less than 5. The minimum expected count is .24. Table 9.4.1a Innovations as a factor for competitive advantage – Comparison as per Country Country India Thailand Total Suitable Tools Yes Count 134 30 164 for % within 60.6% 56.6% 59.9% Sustainability - Country Innovations No Count 54 16 70 % within 24.4% 30.2% 25.5% Country Can't Say Count 33 7 40 % within 14.9% 13.2% 14.6% Country Total Count 221 53 274
Table 9.4.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .757(a) 2 .685 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.74.
Table 9.4.2a Product Offerings as a factor for competitive advantage – Comparison as per Country Country India Thailand Total Product Yes Count 169 42 211 Offerings % within 76.5% 79.2% 77.0% Country No Count 41 9 50 % within 18.6% 17.0% 18.2% Country Can't Say Count 11 2 13 % within 5.0% 3.8% 4.7% Country Total Count 221 53 274
Table 9.4.2b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .231(a) 2 .891
a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 2.51.
Table 9.4.3a Service Quality as a factor for competitive advantage – Comparison as per Country Country India Thailand Total Service Yes Count 170 42 212 Quality % within 76.9% 79.2% 77.4% Country No Count 39 11 50 % within 17.6% 20.8% 18.2% Country Can't Say Count 12 0 12 % within 5.4% .0% 4.4% Country Total Count 221 53 274
Table 9.4.3b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 3.134(a) 2 .209 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 2.32. Table 9.4.4a Technology as a factor for competitive advantage – Comparison as per Country Country India Thailand Total Technology Yes Count 179 42 221 % within 81.0% 79.2% 80.7% Country No Count 33 9 42 % within 14.9% 17.0% 15.3% Country Can't Say Count 9 2 11 % within 4.1% 3.8% 4.0% Country Total Count 221 53 274
Table 9.4.4b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .143(a) 2 .931 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 2.13. Table 9.4.5a Ambience as a factor for competitive advantage – Comparison as per Country Country India Thailand Total Ambience Yes Count 202 48 250 % within 91.4% 90.6% 91.2% Country No Count 11 4 15 % within 5.0% 7.5% 5.5% Country Can't Say Count 8 1 9 % within 3.6% 1.9% 3.3% Country Total Count 221 53 274
Table 9.4.5b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .910(a) 2 .634 a 2 cells (33.3%) have expected count less than 5. The minimum expected count is 1.74. Table 9.4.6a Food & Beverages as a factor for competitive advantage – Comparison as per Country Country India Thailand Total Food & Yes Count 207 50 257 Beverages % within 93.7% 94.3% 93.8% Country No Count 7 0 7 % within 3.2% .0% 2.6% Country Can't Say Count 7 3 10 % within 3.2% 5.7% 3.6% Country Total Count 221 53 274
Table 9.4.6b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.409(a) 2 .300 a 2 cells (33.3%) have expected count less than 5. The minimum expected count is 1.35. Table 9.4.7a Facilities & Amenities as a factor for competitive advantage – Comparison as per Country Country India Thailand Total Facilities & Yes Count 203 45 248 Amenities % within 91.9% 84.9% 90.5% Country No Count 18 8 26 % within 8.1% 15.1% 9.5% Country Total Count 221 53 274
Table 9.4.7b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.404(b) 1 .121 a Computed only for a 2x2 table b 0 cells (.0%) have expected count less than 5. The minimum expected count is 5.03. Table 9.4.8a Other Factors as a factor for competitive advantage – Comparison as per Country Country Total India Thailand Any Other Yes Count 68 18 86 (Specify) % within 30.8% 34.0% 31.4% Country No Count 1 0 1 % within .5% .0% .4% Country Can't Say Count 152 35 187 % within 68.8% 66.0% 68.2% Country Total Count 221 53 274 Table 9.4.8b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .426(a) 2 .808 a 2 cells (33.3%) have expected count less than 5. The minimum expected count is .19.
Table 9.5.1a Innovations as a factor for competitive advantage – Comparison as per Destination Destination Total Business Tourist Suitable Tools Yes Count for 109 55 164 Sustainability - Innovations % within Destination 61.2% 57.3% 59.9% No Count 44 26 70 % within Destination 24.7% 27.1% 25.5% Can't Say Count 25 15 40 % within Destination 14.0% 15.6% 14.6% Total Count 178 96 274
Table 9.5.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .405(a) 2 .817 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 14.01. Table 9.5.2a Product Offerings as a factor for competitive advantage – Comparison as per Destination
Destination Business Tourist Total Product Yes Count 138 73 211 Offerings % within 77.5% 76.0% 77.0% Destination No Count 31 19 50 % within 17.4% 19.8% 18.2% Destination Can't Say Count 9 4 13 % within 5.1% 4.2% 4.7% Destination Total Count 178 96 274
Table 9.5.2b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .315(a) 2 .854 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.55.
Table 9.5.3a Service Quality as a factor for competitive advantage – Comparison as per Destination Destination Business Tourist Total Service Yes Count 137 75 212 Quality % within 77.0% 78.1% 77.4% Destination No Count 31 19 50 % within 17.4% 19.8% 18.2% Destination Can't Say Count 10 2 12 % within 5.6% 2.1% 4.4% Destination Total Count 178 96 274
Table 9.5.3b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.983(a) 2 .371 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.20.
Table 9.5.4a Technology as a factor for competitive advantage – Comparison as per Destination
Destination Business Tourist Total Technology Yes Count 145 76 221 % within 81.5% 79.2% 80.7% Destination No Count 27 15 42 % within 15.2% 15.6% 15.3% Destination Can't Say Count 6 5 11 % within 3.4% 5.2% 4.0% Destination Total Count 178 96 274
Table 9.5.4b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .574(a) 2 .751 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 3.85. Table 9.5.5a Ambience as a factor for competitive advantage – Comparison as per Destination Destination Business Tourist Total Ambience Yes Count 162 88 250 % within 91.0% 91.7% 91.2% Destination No Count 9 6 15 % within 5.1% 6.3% 5.5% Destination Can't Say Count 7 2 9 % within 3.9% 2.1% 3.3% Destination Total Count 178 96 274
Table 9.5.5b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .815(a) 2 .665 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 3.15.
Table 9.5.6a Food & Beverages as a factor for competitive advantage – Comparison as per Destination Destination Business Tourist Total Food & Yes Count 169 88 257 Beverages % within 94.9% 91.7% 93.8% Destination No Count 6 1 7 % within 3.4% 1.0% 2.6% Destination Can't Say Count 3 7 10 % within 1.7% 7.3% 3.6% Destination Total Count 178 96 274
Table 9.5.6b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 6.766(a) 2 .034 a 3 cells (50.0%) have expected count less than 5. The minimum expected count is 2.45.
Table 9.5.7a Facilities & Amenities as a factor for competitive advantage – Comparison as per Destination Destination Business Tourist Total Facilities & Yes Count 158 90 248 Amenities % within 88.8% 93.8% 90.5% Destination No Count 20 6 26 % within 11.2% 6.3% 9.5% Destination Total Count 178 96 274
Table 9.5.7b Chi Square Tests Asymp. Sig. Exact Sig. Exact Sig. Value df (2-sided) (2-sided) (1-sided) Pearson Chi-Square 1.805(b) 1 .179 .202 .128 a Computed only for a 2x2 table b 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.11.
Table 9.5.8a Other Factors as a factor for competitive advantage – Comparison as per Destination Destination Business Tourist Total Any Other Yes Count 54 32 86 (Specify) % within 30.3% 33.3% 31.4% Destination No Count 1 0 1 % within .6% .0% .4% Destination Can't Say Count 123 64 187 % within 69.1% 66.7% 68.2% Destination Total Count 178 96 274
Table 9.5.8b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .772(a) 2 .680 a 2 cells (33.3%) have expected count less than 5. The minimum expected count is .35. Table- 9.6 : Mean importance for effect of different factors of sustainable advantage on Occupancy Rate N Mean Std. Deviation Whether these have direct effect on 274 3.93 1.003 occupancy rate – Innovations Product Offerings 274 4.07 1.010 Service Quality 274 4.07 1.021 Technology 274 4.21 .644 Ambience 274 4.19 .713 Food & Beverages 274 4.17 .693 Facilities & Amenities 274 4.18 .705 Any Other (Specify) 274 4.15 .706
Table- 9.7.1. One Way ANOVA for effect of factors of sustainable competitive advantage on occupancy rate – Mean and SD of comparison by designation of Managers. Designatio n N Mean Std. Deviation Std. Error Whether these have direct effect TLM 110 3.95 1.140 .109 on occupancy rate - Innovations MLM 98 3.94 .929 .094 LML 66 3.91 .872 .107 Total 274 3.93 1.003 .061 Product Offerings TLM 110 4.07 1.002 .096 MLM 98 4.15 .967 .098 LML 66 3.95 1.087 .134 Total 274 4.07 1.010 .061 Service Quality TLM 110 4.11 .989 .094 MLM 98 4.01 1.079 .109 LML 66 4.11 .994 .122 Total 274 4.07 1.021 .062 Technology TLM 110 4.18 .638 .061 MLM 98 4.21 .646 .065 LML 66 4.24 .658 .081 Total 274 4.21 .644 .039 Ambience TLM 110 4.21 .692 .066 MLM 98 4.07 .750 .076 LML 66 4.35 .668 .082 Total 274 4.19 .713 .043 Food & Beverages TLM 110 4.19 .684 .065 MLM 98 4.03 .695 .070 LML 66 4.35 .668 .082 Total 274 4.17 .693 .042 Facilities & Amenities TLM 110 4.20 .688 .066 MLM 98 4.04 .731 .074 LML 66 4.33 .664 .082 Total 274 4.18 .705 .043 Any Other (Specify) TLM 110 4.16 .698 .067 MLM 98 4.02 .718 .072 LML 66 4.30 .679 .084 Total 274 4.15 .706 .043
Table- 9.7.2. One way ANOVA for effect of factors of sustainable competitive advantage on occupancy rate – F-values and significance comparison by Designation of Managers Sum of Squares df Mean Square F Sig. Whether these have Between Groups .058 2 .029 .028 .972 direct effect on Within Groups 274.760 271 1.014 occupancy rate - Innovations Total 274.818 273 Product Offerings Between Groups 1.554 2 .777 .760 .469 Within Groups 276.986 271 1.022 Total 278.540 273 Service Quality Between Groups .602 2 .301 .287 .751 Within Groups 283.938 271 1.048 Total 284.540 273 Technology Between Groups .157 2 .079 .189 .828 Within Groups 112.985 271 .417 Total 113.142 273 Ambience Between Groups 3.072 2 1.536 3.068 .048* Within Groups 135.676 271 .501 Total 138.748 273 Food & Beverages Between Groups 4.054 2 2.027 4.329 .014* Within Groups 126.884 271 .468 Total 130.938 273 Facilities & Amenities Between Groups 3.488 2 1.744 3.578 .029* Within Groups 132.103 271 .487 Total 135.591 273 Any Other Between Groups 3.207 2 1.604 3.269 .040* Within Groups 132.953 271 .491 Total 136.161 273 Note: * Significant at .05 level
Table- 9.8.1a. Agreement about effect of Innovations on occupancy rate – Comparison by Grade of Hotels.
Grade of hotel 3 Star 4 Star 5 Star Total Whether these Strongly Agree Count 43 10 22 75 have direct effect % within Grade 30.9% 17.5% 28.2% 27.4% on occupancy rate - Agree Count 70 36 39 145 Innovations % within Grade 50.4% 63.2% 50.0% 52.9% Uncertain Count 12 7 11 30 % within Grade 8.6% 12.3% 14.1% 10.9% Disagree Count 6 2 1 9 % within Grade 4.3% 3.5% 1.3% 3.3% Strongly Count 8 2 5 15 Disagree % within Grade 5.8% 3.5% 6.4% 5.5% Total Count 139 57 78 274
Table 9.8.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 7.543(a) 8 .479
a 5 cells (33.3%) have expected count less than 5. The minimum expected count is 1.87. Table- 9.8.2a. Agreement about effect of Product Offerings on occupancy rate – Comparison by Grade of Hotels.
Grade 3 Star 4 Star 5 Star Total Product Strongly Count 42 23 30 95 Offerings Agree % within 30.2% 40.4% 38.5% 34.7% Grade Agree Count 78 24 39 141 % within 56.1% 42.1% 50.0% 51.5% Grade Uncertain Count 6 7 6 19 % within 4.3% 12.3% 7.7% 6.9% Grade Disagree Count 1 0 0 1 % within .7% .0% .0% .4% Grade Strongly Count 12 3 3 18 Disagree % within 8.6% 5.3% 3.8% 6.6% Grade Total Count 139 57 78 274
Table 9.8.2b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 9.925(a) 8 .270
a 5 cells (33.3%) have expected count less than 5. The minimum expected count is .21.
Table- 9.8.3a. Agreement about effect of Service Quality on occupancy rate – Comparison by Grade of Hotels.
Grade 3 Star 4 Star 5 Star Total Service Strongly Count 53 14 29 96 Quality Agree % within 38.1% 24.6% 37.2% 35.0% Grade Agree Count 72 30 38 140 % within 51.8% 52.6% 48.7% 51.1% Grade Uncertain Count 8 6 5 19 % within 5.8% 10.5% 6.4% 6.9% Grade Strongly Count 6 7 6 19 Disagree % within 4.3% 12.3% 7.7% 6.9% Grade Total Count 139 57 78 274 Table 9.8.3b Chi Square Tests
Asymp. Sig. Value df (2-sided) Pearson Chi-Square 7.551(a) 6 .273
a 2 cells (16.7%) have expected count less than 5. The minimum expected count is 3.95.
Table- 9.8.4a. Agreement about effect of Technology on occupancy rate – Comparison by Grade of Hotels.
Grade 3 Star 4 Star 5 Star Total Technology Strongly Count 51 18 22 91 Agree % within 36.7% 31.6% 28.2% 33.2% Grade Agree Count 71 30 48 149 % within 51.1% 52.6% 61.5% 54.4% Grade Uncertain Count 17 9 8 34 % within 12.2% 15.8% 10.3% 12.4% Grade Total Count 139 57 78 274
Table 9.8.4b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 3.006(a) 4 .557
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.07. Table- 9.8.5a. Agreement about effect of Ambience on occupancy rate – Comparison by Grade of Hotels. Grade 3 Star 4 Star 5 Star Total Ambience Strongly Count 46 15 34 95 Agree % within 33.1% 26.3% 43.6% 34.7% Grade Agree Count 78 31 34 143 % within 56.1% 54.4% 43.6% 52.2% Grade Uncertain Count 12 10 8 30 % within 8.6% 17.5% 10.3% 10.9% Grade Disagree Count 3 1 2 6 % within 2.2% 1.8% 2.6% 2.2% Grade Total Count 139 57 78 274
Table 9.8.5b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 7.685(a) 6 .262
a 3 cells (25.0%) have expected count less than 5. The minimum expected count is 1.25.
Table- 9.8.6a. Agreement about effect of Food & Beverages on occupancy rate – Comparison by Grade of Hotels.
Grade 3 Star 4 Star 5 Star Total Food & Strongly Count 42 14 32 88 Beverages Agree % within 30.2% 24.6% 41.0% 32.1% Grade Agree Count 82 32 36 150 % within 59.0% 56.1% 46.2% 54.7% Grade Uncertain Count 12 10 9 31 % within 8.6% 17.5% 11.5% 11.3% Grade Disagree Count 3 1 1 5 % within 2.2% 1.8% 1.3% 1.8% Grade Total Count 139 57 78 274
Table 9.8.6b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 7.681(a) 6 .262 a 3 cells (25.0%) have expected count less than 5. The minimum expected count is 1.04. Table- 9.8.7a. Agreement about effect of Facilities & Amenities on occupancy rate – Comparison by Grade of Hotels. Grade 3 Star 4 Star 5 Star Total Facilities & Strongly Count 44 14 32 90 Amenities Agree % within 31.7% 24.6% 41.0% 32.8% Grade Agree Count 80 32 36 148 % within 57.6% 56.1% 46.2% 54.0% Grade Uncertain Count 12 10 8 30 % within 8.6% 17.5% 10.3% 10.9% Grade Disagree Count 3 1 2 6 % within 2.2% 1.8% 2.6% 2.2% Grade Total Count 139 57 78 274
Table 9.8.7b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 7.181(a) 6 .304
a 3 cells (25.0%) have expected count less than 5. The minimum expected count is 1.25.
Table- 9.8.8a. Agreement about effect of Other Factors on occupancy rate – Comparison by Grade of Hotels.
Grade 3 Star 4 Star 5 Star Total Any Other Strongly Count 40 13 33 86 (Specify) Agree % within 28.8% 22.8% 42.3% 31.4% Grade Agree Count 80 32 35 147 % within 57.6% 56.1% 44.9% 53.6% Grade Uncertain Count 16 11 9 36 % within 11.5% 19.3% 11.5% 13.1% Grade Disagree Count 3 1 1 5 % within 2.2% 1.8% 1.3% 1.8% Grade Total Count 139 57 78 274
Table 9.8.8b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 8.474(a) 6 .205
a 3 cells (25.0%) have expected count less than 5. The minimum expected count is 1.04.
Table- 9.9.1. T-Test - Group Statistics of Agreement about effect of factors of sustainable competitive advantage on occupancy rate – Comparison by Country. Std. Error Country N Mean Std. Deviation Mean Whether these have direct India effect on occupancy rate – 221 3.92 1.046 .070 Innovations Thailand 53 4.00 .809 .111 Product Offerings India 221 4.05 1.003 .067 Thailand 53 4.15 1.045 .144 Service Quality India 221 4.08 .997 .067 Thailand 53 4.04 1.126 .155 Technology India 221 4.24 .639 .043 Thailand 53 4.09 .658 .090 Ambience India 221 4.19 .701 .047 Thailand 53 4.21 .769 .106 Food & Beverages India 221 4.16 .675 .045 Thailand 53 4.21 .769 .106 Facilities & Amenities India 221 4.17 .690 .046 Thailand 53 4.21 .769 .106 Any Other (Specify) India 221 4.14 .692 .047 Thailand 53 4.15 .770 .106
Table- 9.9.2. T-Test - Independent Samples Test of Agreement about effect of factors of sustainable competitive advantage on occupancy rate – Comparison by Country.
t-test for Equality of Means
t df Sig. (2-tailed) Sig. (1-tailed) Whether these have direct effect on .620 98.330 .537 .268 occupancy rate – Innovations Product Offerings -.625 272 .533 .266 Service Quality .279 272 .780 .390 Technology 1.434 272 .153 .076 Ambience -.160 272 .873 .436 Food & Beverages -.421 272 .674 .337 Facilities & Amenities -.372 272 .710 .355 Any Other (Specify) -.057 272 .955 .477
Table- 9.10.1. T-Test - Group Statistics of Agreement about effect of factors of sustainable competitive advantage on occupancy rate – Comparison by Destination. Std. Error Destination N Mean Std. Deviation Mean Whether these have direct effect Business 178 3.89 1.000 .075 on occupancy rate - Innovations Tourist 96 4.01 1.010 .103 Product Offerings Business 178 4.07 .992 .074 Tourist 96 4.07 1.049 .107 Service Quality Business 178 4.03 1.038 .078 Tourist 96 4.16 .988 .101 Technology Business 178 4.18 .656 .049 Tourist 96 4.26 .620 .063 Ambience Business 178 4.23 .711 .053 Tourist 96 4.13 .715 .073 Food & Beverages Business 178 4.21 .686 .051 Tourist 96 4.10 .703 .072 Facilities & Amenities Business 178 4.21 .702 .053 Tourist 96 4.11 .709 .072 Any Other (Specify) Business 178 4.17 .701 .053 Tourist 96 4.10 .718 .073
Table- 9.10.2. T-Test - Independent Samples Test of Agreement about effect of factors of sustainable competitive advantage on occupancy rate – Comparison by Destination. t-test for Equality of Means t df Sig. (2-tailed) Sig. (1-tailed) Whether these have direct effect on occupancy rate - Innovations -.922 272 .357 .178 Product Offerings .001 272 .999 .499 Service Quality -.991 272 .322 .161 Technology -.989 272 .323 .161 Ambience 1.168 272 .244 .122 Food & Beverages 1.183 272 .238 .119 Facilities & Amenities 1.045 272 .297 .148 Any Other (Specify) .719 272 .473 .236
Table- 9.11.1a. - Whether Innovation is the most important factor for Sustainable Competitive Advantage – Comparison by Grade of Hotel.
Grade Total 3 Star 4 Star 5 Star Please state your Strongly Agree Count 51 21 29 101 opinion about % within Grade 36.7% 36.8% 37.2% 36.9% Innovation is an important for Agree Count 76 28 42 146 Sustainable % within Grade 54.7% 49.1% 53.8% 53.3% Competitive Uncertain Count Advantage in the 12 8 7 27 Hotel Industry. % within Grade 8.6% 14.0% 9.0% 9.9% Total Count 139 57 78 274
Table 9.11.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.526(a) 4 .822
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 5.62.
Table- 9.12.1a. - Whether Innovation is the most important factor for Sustainable Competitive Advantage – Comparison by Country. Country India Thailand Total Please state your Strongly Agree Count 84 17 101 opinion about % within Country 38.0% 32.1% 36.9% Innovation is an important factor Agree Count 117 29 146 for Sustainable % within Country 52.9% 54.7% 53.3% Competitive Uncertain Count Advantage in the 20 7 27 Hotel Industry. % within Country 9.0% 13.2% 9.9% Total Count 221 53 274
Table 9.12.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.184(a) 2 .553 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 5.22.
Table- 9.13.1a. - Whether Innovation is the most important factor for Sustainable Competitive Advantage – Comparison by Destination. Destination Business Tourist Total Please state your Strongly Agree Count 66 35 101 opinion about % within Destination 37.1% 36.5% 36.9% Innovation is an important for Agree Count 93 53 146 Sustainable % within Destination 52.2% 55.2% 53.3% Competitive Uncertain Count 19 8 27 Advantage in the Hotel Industry. % within Destination 10.7% 8.3% 9.9% Total Count 178 96 274
Table 9.13.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .456(a) 2 .796 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.46. Table- 9.13.2a. - Whether Innovation is a most important factor for Sustainable Competitive Advantage – Comparison by Designation. Designation Total
TLM MLM LML
Please state your opinion Strongly Count
about Innovation is an Agree
important factor for 45 35 21 101 Sustainable Competitive
Advantage in the Hotel
Industry.
% within 40.9% 35.7% 31.8% 36.9% Designation
Agree Count 55 55 36 146
% within 50.0% 56.1% 54.5% 53.3% Designation
Uncertai Count 10 8 9 27 n
% within 9.1% 8.2% 13.6% 9.9% Designation
Total Count 110 98 66 274
Table 9.13.2b Chi Square Tests Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 2.677(a) 4 .613
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 6.50.
Table- 9.14.1a Whether Innovations are implemented in isolation or is a part of all other tools of Sustainable Competitive Advantage. – Comparison by Grade of Hotel. Grade 3 Star 4 Star 5 Star Total Please state your Strongly Agree Count 39 16 13 68 opinion about % within Grade Innovation is not 28.1% 28.1% 16.7% 24.8% implemented in Agree Count 81 35 59 175 isolation but is % within Grade 58.3% 61.4% 75.6% 63.9% part of implementing all Uncertain Count 19 6 6 31 other tools for % within Grade Sustainable Competitive 13.7% 10.5% 7.7% 11.3% Advantage Total Count 139 57 78 274
Table 9.14.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 6.964(a) 4 .138
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 6.45.
Table- 9.15.1a Whether Innovations are implemented in isolation or is a part of all other tools of Sustainable Competitive Advantage. – Comparison by Country. Country India Thailand Total Please state your Strongly Agree Count 57 11 68 opinion about % within Country Innovation is not 25.8% 20.8% 24.8% implemented in Agree Count 142 33 175 isolation but is part % within Country 64.3% 62.3% 63.9% of implementing all other tools for Uncertain Count 22 9 31 Sustainable % within Country Competitive 10.0% 17.0% 11.3% Advantage Total Count 221 53 274 Table 9.15.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.329(a) 2 .312 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 6.00.
Table- 9.16.1a Whether Innovations are implemented in isolation or is a part of all other tools of Sustainable Competitive Advantage. – Comparison by Destination. Destination Business Tourist Total Please state your Strongly Agree Count 43 25 68 opinion about % within Destination Innovation is not 24.2% 26.0% 24.8% implemented in Agree Count 115 60 175 isolation but is part % within Destination 64.6% 62.5% 63.9% of implementing all other tools for Uncertain Count 20 11 31 Sustainable % within Destination Competitive 11.2% 11.5% 11.3% Advantage Total Count 178 96 274
Table 9.16.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .135(a) 2 .935 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 10.86.
Table- 9.16.2a Whether Innovations are implemented in isolation or is a part of all other tools of Sustainable Competitive Advantage. – Comparison by Designation of Manager. Designation Total
TLM MLM LML
Please state your Strongly Count
opinion about Agree 31 17 20 68 Innovation is not
implemented in isolation but is
part of
implementing all
other tools for
Sustainable
Competitive
Advantage
% within 28.2% 17.3% 30.3% 24.8% Designation
Agree Count 69 67 39 175
% within 62.7% 68.4% 59.1% 63.9% Designation
Uncertain Count 10 14 7 31
% within 9.1% 14.3% 10.6% 11.3% Designation
Total Count 110 98 66 274
Crosstab
Table 9.16.2b Chi Square Tests
Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 5.349(a) 4 .253
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.47.
Table- 9.17.1a Managers opinion whether Product Innovations are prominent in the hotel Sector – Comparison by Grade of Hotel. Grade 3 Star 4 Star 5 Star Total Are these Yes Count 81 33 46 160 Innovations % within Grade 58.3% 57.9% 59.0% 58.4% prominent in Hotel Sector - No Count 23 8 15 46 Product % within Grade 16.5% 14.0% 19.2% 16.8% Innovations Can't Say Count 35 16 17 68 % within Grade 25.2% 28.1% 21.8% 24.8% Total Count 139 57 78 274
Table 9.17.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.084(a) 4 .897
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.57.
Table- 9.17.2a Managers opinion whether Service Innovations are prominent in the hotel Sector – Comparison by Grade of Hotel. Grade 3 Star 4 Star 5 Star Total Service Yes Count 82 31 47 160 Innovations % within 59.0% 54.4% 60.3% 58.4% Grade No Count 33 14 22 69 % within 23.7% 24.6% 28.2% 25.2% Grade Can't Say Count 24 12 9 45 % within 17.3% 21.1% 11.5% 16.4% Grade Total Count 139 57 78 274
Table 9.17.2b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.555(a) 4 .635
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.36.
Table- 9.17.3a Managers opinion whether Ambience Innovations are prominent in the hotel Sector – Comparison by Grade of Hotel. Grade 3 Star 4 Star 5 Star Total Ambience Yes Count 84 35 41 160 % within 60.4% 61.4% 52.6% 58.4% Grade No Count 32 15 21 68 % within 23.0% 26.3% 26.9% 24.8% Grade Can't Say Count 23 7 16 46 % within 16.5% 12.3% 20.5% 16.8% Grade Total Count 139 57 78 274
Table 9.17.3b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.352(a) 4 .671
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.57.
Table- 9.17.4a Managers opinion whether Technology Innovations are prominent in the hotel Sector – Comparison by Grade of Hotel. Grade 3 Star 4 Star 5 Star Total Technology Yes Count 105 45 56 206 % within 75.5% 78.9% 71.8% 75.2% Grade No Count 23 5 18 46 % within 16.5% 8.8% 23.1% 16.8% Grade Can't Say Count 11 7 4 22 % within 7.9% 12.3% 5.1% 8.0% Grade Total Count 139 57 78 274
Table 9.17.4b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 6.356(a) 4 .174
a 1 cells (11.1%) have expected count less than 5. The minimum expected count is 4.58.
Table- 9.17.5a Managers opinion whether Facilities & Amenities Innovations are prominent in the hotel Sector – Comparison by Grade of Hotel. Grade 3 Star 4 Star 5 Star Total Facilities & Yes Count 82 31 47 160 Amenities % within 59.0% 54.4% 60.3% 58.4% Grade No Count 33 14 22 69 % within 23.7% 24.6% 28.2% 25.2% Grade Can't Say Count 24 12 9 45 % within 17.3% 21.1% 11.5% 16.4% Grade Total Count 139 57 78 274 Table 9.17.5b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 2.555(a) 4 .635
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.36.
Table- 9.17.6a Managers opinion whether Food & Beverages Innovations are prominent in the hotel Sector – Comparison by Grade of Hotel. Grade 3 Star 4 Star 5 Star Total Food & Yes Count 75 29 33 137 Beverages % within 54.0% 50.9% 42.3% 50.0% Grade No Count 53 25 36 114 % within 38.1% 43.9% 46.2% 41.6% Grade Can't Say Count 11 3 9 23 % within 7.9% 5.3% 11.5% 8.4% Grade Total Count 139 57 78 274 % within 100.0% 100.0% 100.0% 100.0% Grade
Table 9.17.6b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 3.851(a) 4 .427
a 1 cells (11.1%) have expected count less than 5. The minimum expected count is 4.78. Table- 9.17.7a Managers opinion whether Innovations in Other Factors are prominent in the hotel Sector – Comparison by Grade of Hotel. Grade 3 Star 4 Star 5 Star Total Any Other Yes Count 75 29 33 137 (Specify) % within 54.0% 50.9% 42.3% 50.0% Grade No Count 54 21 40 115 % within 38.8% 36.8% 51.3% 42.0% Grade Can't Say Count 10 7 5 22 % within 7.2% 12.3% 6.4% 8.0% Grade Total Count 139 57 78 274
Table 9.17.7b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 5.317(a) 4 .256 a 1 cells (11.1%) have expected count less than 5. The minimum expected count is 4.58.
Table- 9.18.1a Managers opinion whether Product Innovations are prominent in the hotel Sector – Comparison by Country. Country India Thailand Total Are these Yes Count 133 27 160 Innovations % within 60.2% 50.9% 58.4% prominent in Country Hotel Sector - No Count Product 36 10 46 % within Innovations 16.3% 18.9% 16.8% Country Can't Say Count 52 16 68 % within 23.5% 30.2% 24.8% Country Total Count 221 53 274
Table 9.18.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.558(a) 2 .459 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 8.90. Table- 9.18.2a Managers opinion whether Service Innovations are prominent in the hotel Sector – Comparison by Country. Country India Thailand Total Service Yes Count 132 28 160 Innovations % within 59.7% 52.8% 58.4% Country No Count 56 13 69 % within 25.3% 24.5% 25.2% Country Can't Say Count 33 12 45 % within 14.9% 22.6% 16.4% Country Total Count 221 53 274
Table 9.18.2b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.907(a) 2 .385 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 8.70. Table- 9.18.3a Managers opinion whether Ambience Innovations are prominent in the hotel Sector – Comparison by Country. Country India Thailand Total Ambience Yes Count 126 34 160 % within 57.0% 64.2% 58.4% Country No Count 56 12 68 % within 25.3% 22.6% 24.8% Country Can't Say Count 39 7 46 % within 17.6% 13.2% 16.8% Country Total Count 221 53 274
Table 9.18.3b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.000(a) 2 .606 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 8.90.
Table- 9.18.4a Managers opinion whether Technology Innovations are prominent in the hotel Sector – Comparison by Country. Country India Thailand Total Technology Yes Count 166 40 206 % within 75.1% 75.5% 75.2% Country No Count 36 10 46 % within 16.3% 18.9% 16.8% Country Can't Say Count 19 3 22 % within 8.6% 5.7% 8.0% Country Total Count 221 53 274
Table 9.18.4b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .629(a) 2 .730 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.26.
Table- 9.18.5a Managers opinion whether Facilities & Amenities Innovations are prominent in the hotel Sector – Comparison by Country. Country India Thailand Total Facilities & Yes Count 132 28 160 Amenities % within 59.7% 52.8% 58.4% Country No Count 56 13 69 % within 25.3% 24.5% 25.2% Country Can't Say Count 33 12 45 % within 14.9% 22.6% 16.4% Country Total Count 221 53 274
Table 9.18.5b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.907(a) 2 .385 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 8.70. Table- 9.18.6a Managers opinion whether Food & Beverages Innovations are prominent in the hotel Sector – Comparison by Country. Country India Thailand Total Food & Yes Count 108 29 137 Beverages % within 48.9% 54.7% 50.0% Country No Count 94 20 114 % within 42.5% 37.7% 41.6% Country Can't Say Count 19 4 23 % within 8.6% 7.5% 8.4% Country Total Count 221 53 274
Table 9.18.6b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .585(a) 2 .746 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.45.
Table- 9.18.7a Managers opinion whether Innovations in Other Factors are prominent in the hotel Sector – Comparison by Country. Country India Thailand Total Any Other Yes Count 108 29 137 (Specify) % within 48.9% 54.7% 50.0% Country No Count 94 21 115 % within 42.5% 39.6% 42.0% Country Can't Say Count 19 3 22 % within 8.6% 5.7% 8.0% Country Total Count 221 53 274
Table 9.18.7b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .838(a) 2 .658 a 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.26.
Table- 9.19.1a Managers opinion whether Product Innovations are prominent in the hotel Sector – Comparison by Destination. Destination Business Tourist Total Are these Yes Count 99 61 160 Innovations % within 55.6% 63.5% 58.4% prominent in Destination Hotel Sector - No Count Product 32 14 46 % within Innovations 18.0% 14.6% 16.8% Destination Can't Say Count 47 21 68 % within 26.4% 21.9% 24.8% Destination Total Count 178 96 274
Table 9.19.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.614(a) 2 .446 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 16.12. Table- 9.19.2a Managers opinion whether Service Innovations are prominent in the hotel Sector – Comparison by Destination. Destination Business Tourist Total Service Yes Count 101 59 160 Innovations % within 56.7% 61.5% 58.4% Destination No Count 48 21 69 % within 27.0% 21.9% 25.2% Destination Can't Say Count 29 16 45 % within 16.3% 16.7% 16.4% Destination Total Count 178 96 274
Table 9.19.2b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .885(a) 2 .642 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 15.77.
Table- 9.19.3a Managers opinion whether Ambience Innovations are prominent in the hotel Sector – Comparison by Destination. Destination Business Tourist Total Ambience Yes Count 101 59 160 % within 56.7% 61.5% 58.4% Destination No Count 48 20 68 % within 27.0% 20.8% 24.8% Destination Can't Say Count 29 17 46 % within 16.3% 17.7% 16.8% Destination Total Count 178 96 274
Table 9.19.3b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.257(a) 2 .533 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 16.12.
Table- 9.19.4a Managers opinion whether Technology Innovations are prominent in the hotel Sector – Comparison by Destination. Destination Business Tourist Total Technology Yes Count 127 79 206 % within 71.3% 82.3% 75.2% Destination No Count 34 12 46 % within 19.1% 12.5% 16.8% Destination Can't Say Count 17 5 22 % within 9.6% 5.2% 8.0% Destination Total Count 178 96 274
Table 9.19.4b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 4.077(a) 2 .130 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.71. Table- 9.19.5a Managers opinion whether Facilities & Amenities Innovations are prominent in the hotel Sector – Comparison by Destination. Destination Business Tourist Total Facilities & Yes Count 101 59 160 Amenities % within 56.7% 61.5% 58.4% Destination No Count 48 21 69 % within 27.0% 21.9% 25.2% Destination Can't Say Count 29 16 45 % within 16.3% 16.7% 16.4% Destination Total Count 178 96 274
Table 9.19.5b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .885(a) 2 .642 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 15.77.
Table- 9.19.6a Managers opinion whether Food & Beverages Innovations are prominent in the hotel Sector – Comparison by Destination. Destination Business Tourist Total Food & Yes Count 85 52 137 Beverages % within 47.8% 54.2% 50.0% Destination No Count 77 37 114 % within 43.3% 38.5% 41.6% Destination Can't Say Count 16 7 23 % within 9.0% 7.3% 8.4% Destination Total Count 178 96 274
Table 9.19.6b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.061(a) 2 .588 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 8.06.
Table- 9.19.7a Managers opinion whether Innovations in Other Factors are prominent in the hotel Sector – Comparison by Destination. Destination Business Tourist Total Any Other Yes Count 85 52 137 (Specify) % within 47.8% 54.2% 50.0% Destination No Count 79 36 115 % within 44.4% 37.5% 42.0% Destination Can't Say Count 14 8 22 % within 7.9% 8.3% 8.0% Destination Total Count 178 96 274
Table 9.19.7b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 1.234(a) 2 .540 a 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.71.
Table- 9.20.1a - Whether innovation performance significantly and positively increases occupancy rates - Comparison by Country Country India Thailand Total Do you think Strongly Agree Count 183 43 226 innovation % within Country 82.8% 81.1% 82.5% performance in the other factors of Uncertain Count 38 10 48 competitive % within Country advantage significantly and 17.2% 18.9% 17.5% positively increases occupancy rates? Total Count 221 53 274
Table 9.20.1b Chi Square Tests Asymp. Sig. Exact Sig. Value df (2-sided) (1-sided) Pearson Chi-Square .083(b) 1 .773 .455 a Computed only for a 2x2 table b 0 cells (.0%) have expected count less than 5. The minimum expected count is 9.28.
Table- 9.21.1a - Whether innovation performance significantly and positively increases occupancy rates - Comparison by Destination Destination Business Tourist Total Do you think Strongly Agree Count 146 80 226 innovation % within Destination 82.0% 83.3% 82.5% performance in the other factors for Uncertain Count 32 16 48 competitive % within Destination advantage significantly and 18.0% 16.7% 17.5% positively increases occupancy rates? Total Count 178 96 274 Table 9.21.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square .074(b) 1 .785 a Computed only for a 2x2 table b 0 cells (.0%) have expected count less than 5. The minimum expected count is 16.82.
Table- 9.22.1a - T-Test - Group Statistics - Attitude of Hotels towards developing Innovations – Comparison by Country. Std. Error Country N Mean Std. Deviation Mean Attitude of your Hotel towards developing India Innovations in - Product Innovations 221 4.14 .992 .067 Thailand 53 4.34 .783 .108
Service Innovations India 221 4.79 .582 .039 Thailand 53 4.58 .795 .109 Ambience India 221 4.24 .866 .058 Thailand 53 4.64 .623 .086 Technology India 221 4.67 .678 .046 Thailand 53 4.53 .749 .103 Facilities & Amenities India 221 4.05 .813 .055 Thailand 53 4.26 .738 .101 Food & Beverages India 221 4.55 .670 .045 Thailand 53 4.62 .686 .094 Any Other (Specify) India 221 4.85 .505 .034 Thailand 53 4.68 .701 .096 Table- 9.22.1b - T-Test - Independent Samples Test- Attitude of Hotels towards developing Innovations – Comparison by Country.
t-test for Equality of Means Sig. (2- Sig. (1- t df tailed) tailed) Attitude of your Hotel towards developing Innovations in - Product Innovations -1.364 272 .174 .087 Service Innovations 1.784 65.949 .079 .039 Ambience -3.837 105.899 .000 .000
Technology 1.292 272 .197 .098 Facilities & Amenities -1.717 272 .087 .043 Food & Beverages -.686 272 .493 .246 Any Other (Specify) 1.679 65.504 .098 .049 Table- 9.23.1a - Attitude of Hotels towards developing Innovations – Comparison by Designation of Manager. Country Total India Thailand Designation TLM Count 91 19 110 % within Country 41.2% 35.8% 40.1% MLM Count 73 25 98 % within Country 33.0% 47.2% 35.8% LML Count 57 9 66 % within Country 25.8% 17.0% 24.1% Total Count 221 53 274
Table 9.23.1b Chi Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi-Square 4.069(a) 2 .131
a 0 cells (.0%) have expected count less than 5. The minimum expected count is 12.77.
Table- 9.24.1a - T-Test - Group Statistics - Attitude of Hotels towards developing Innovations – Comparison by Destination. Std. Error Destination N Mean Std. Deviation Mean Attitude of your Hotel towards Business developing Innovations in - 178 1.77 .937 .070 Product Innovations Tourist 96 1.92 .991 .101 Service Innovations Business 178 1.25 .636 .048 Tourist 96 1.24 .628 .064 Ambience Business 178 1.63 .801 .060 Tourist 96 1.77 .900 .092 Technology Business 178 1.38 .696 .052 Tourist 96 1.33 .691 .071 Facilities & Amenities Business 178 1.88 .786 .059 Tourist 96 1.96 .832 .085 Food & Beverages Business 178 1.45 .672 .050 Tourist 96 1.41 .674 .069 Any Other (Specify) Business 178 1.17 .526 .039 Tourist 96 1.21 .597 .061
Table- 9.24.1b - T-Test - Independent Samples Test- Attitude of Hotels towards developing Innovations – Comparison by Destination. t-test for Equality of Means t df Sig. (2-tailed) Sig. (1-tailed) Attitude of your Hotel towards developing Innovations in - Product Innovations -1.214 272 .226 .113 Service Innovations .165 272 .869 .434 Ambience -1.336 272 .183 .091 Technology .490 272 .625 .312 Facilities & Amenities -.806 272 .421 .210 Food & Beverages .507 272 .613 .306 Any Other (Specify) -.570 272 .569 .284
Table- 9.25.1a - Attitude of Hotels towards developing Product Innovations – Comparison by Grade of Hotel. Grade Total
3 Star 4 Star 5 Star
Attitude of your Strongly Count
Hotel towards Agree
developing 67 31 26 124 Innovations in -
Product
Innovations
% within 48.2% 54.4% 33.3% 45.3% Grade
Agree Count 51 17 37 105
% within 36.7% 29.8% 47.4% 38.3% Grade
Uncertain Count 5 4 6 15
% within 3.6% 7.0% 7.7% 5.5% Grade
Disagree Count 16 5 9 30
% within 11.5% 8.8% 11.5% 10.9% Grade
Total Count 139 57 78 274
Table 9.25.1b Chi Square Tests
Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 8.783(a) 6 .186
a 2 cells (16.7%) have expected count less than 5. The minimum expected count is 3.12.
Table- 9.25.2a - Attitude of Hotels towards developing Service Innovations
– Comparison by Grade of Hotel.
Grade Total
3 Star 4 Star 5 Star
Service Strongly Count 116 46 72 234 Innovations Agree
% within 83.5% 80.7% 92.3% 85.4% Grade
Agree Count 5 6 2 13
% within 3.6% 10.5% 2.6% 4.7% Grade
Uncertain Count 18 5 3 26
% within 12.9% 8.8% 3.8% 9.5% Grade
Disagree Count 0 0 1 1 % within .0% .0% 1.3% .4% Grade
Total Count 139 57 78 274
Table 9.25.2b Chi Square Tests
Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 12.744(a) 6 .047 a 5 cells (41.7%) have expected count less than 5. The minimum expected count is .21.
Table- 9.25.3a - Attitude of Hotels towards developing Ambience Innovations – Comparison by Grade of Hotel. Grade Total
3 Star 4 Star 5 Star
Ambience Strongly Count 75 28 34 137 Agree
% within 54.0% 49.1% 43.6% 50.0% Grade
Agree Count 47 23 35 105
% within 33.8% 40.4% 44.9% 38.3% Grade
Uncertain Count 6 3 6 15
% within 4.3% 5.3% 7.7% 5.5% Grade
Disagree Count 11 3 3 17
% within 7.9% 5.3% 3.8% 6.2% Grade Total Count 139 57 78 274
Table 9.25.3b Chi Square Tests
Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 5.238(a) 6 .514 a 4 cells (33.3%) have expected count less than 5. The minimum expected count is 3.12.
Table- 9.25.4a - Attitude of Hotels towards developing Technology Innovations – Comparison by Grade of Hotel. Grade Total
3 Star 4 Star 5 Star
Technology Strongly Count 96 39 67 202 Agree
% within 69.1% 68.4% 85.9% 73.7% Grade
Agree Count 29 15 8 52
% within 20.9% 26.3% 10.3% 19.0% Grade
Uncertain Count 9 3 1 13
% within 6.5% 5.3% 1.3% 4.7% Grade
Disagree Count 5 0 2 7
% within 3.6% .0% 2.6% 2.6% Grade
Total Count 139 57 78 274 Table 9.25.4b Chi Square Tests
Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 12.126(a) 6 .059
a 5 cells (41.7%) have expected count less than 5. The minimum expected count is 1.46.
Table- 9.25.5a - Attitude of Hotels towards developing Facilities and Amenities Innovations – Comparison by Grade of Hotel. Grade Total
3 Star 4 Star 5 Star
Facilities & Strongly Count 47 13 26 86 Amenities Agree
% within 33.8% 22.8% 33.3% 31.4% Grade
Agree Count 65 38 41 144
% within 46.8% 66.7% 52.6% 52.6% Grade
Uncertain Count 17 3 8 28
% within 12.2% 5.3% 10.3% 10.2% Grade
Disagree Count 10 3 3 16
% within 7.2% 5.3% 3.8% 5.8% Grade
Total Count 139 57 78 274
Table 9.25.5b Chi Square Tests Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 7.659(a) 6 .264
a 2 cells (16.7%) have expected count less than 5. The minimum expected count is 3.33.
Table- 9.25.6a - Attitude of Hotels towards developing Food & Beverages Innovations – Comparison by Grade of Hotel. Grade Total
3 Star 4 Star 5 Star
Food & Strongly Count 98 41 40 179 Beverages Agree
% within 70.5% 71.9% 51.3% 65.3% Grade
Agree Count 32 14 29 75
% within 23.0% 24.6% 37.2% 27.4% Grade
Uncertain Count 5 2 9 16
% within 3.6% 3.5% 11.5% 5.8% Grade
Disagree Count 4 0 0 4
% within 2.9% .0% .0% 1.5% Grade
Total Count 139 57 78 274
Table 9.25.6b Chi Square Tests Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 17.123(a) 6 .009 a 5 cells (41.7%) have expected count less than 5. The minimum expected count is .83.
Table- 9.25.7a - Attitude of Hotels towards developing Any Other Innovations – Comparison by Grade of Hotel. Grade Total
3 Star 4 Star 5 Star
Any Other Strongly Count 122 52 69 243 (Specify) Agree
% within 87.8% 91.2% 88.5% 88.7% Grade
Agree Count 8 3 3 14
% within 5.8% 5.3% 3.8% 5.1% Grade
Uncertain Count 9 1 5 15
% within 6.5% 1.8% 6.4% 5.5% Grade
Disagree Count 0 1 1 2
% within .0% 1.8% 1.3% .7% Grade
Total Count 139 57 78 274
Table 9.25.7b Chi Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 4.395(a) 6 .623
a 7 cells (58.3%) have expected count less than 5. The minimum expected count is .42.
Table- 9.26.1a - Regression Analysis of perspective of managers- Mean and SD of independent and dependent variables
Std Error Mean Std. Deviation N of Mean Q9+Q10 Perspective of Managers about 0.226 34.70 3.765 274 Innovations Age (mid point) 34.863 6.6440 274 Occupancy 2008-09 (mid point) 74.2336 19.05160 274 TLM Dummy .40 .491 274 MLM Dummy .36 .480 274 Thailand Dummy .19 .396 274 Business Dummy .65 .478 274 FiveStar Dummy .28 .452 274 FourStar Dummy .21 .407 274
Table- 9.26.1b- Regression Analysis of perspective of managers- Correlations of Independent and dependent variables Q9+Q10 Perspectiv e of Mgrs Five abt Age Occupancy TLM MLM Thailan Star Four Innovation (mid 08-09 (mid Dumm Dumm d Business Dumm Star s pt) pt) y y Dummy Dummy y Dummy Pearson Q9+Q10 Correlatio Perspective of 1.000 -.057 .121 .011 -.099 .021 .007 .080 -.120 n Mgrs abt Innovations Age (mid point) -.057 1.000 .099 .008 -.053 -.098 -.030 -.063 .038 Occupancy 08-09 .121 .099 1.000 .013 -.062 -.109 -.062 .115 -.105 (mid pt) TLM Dummy .011 .008 .013 1.000 -.611 -.043 .102 .028 -.016 MLM Dummy -.099 -.053 -.062 -.611 1.000 .117 -.011 -.015 .068 Thailand Dummy .021 -.098 -.109 -.043 .117 1.000 -.086 -.125 .068 Business Dummy .007 -.030 -.062 .102 -.011 -.086 1.000 .056 .131 FiveStar Dummy .080 -.063 .115 .028 -.015 -.125 .056 1.000 -.323 FourStar Dummy -.120 .038 -.105 -.016 .068 .068 .131 -.323 1.000 Sig. (1- Q9+Q10 tailed) Perspective of . .174 .023 .429 .050 .363 .452 .094 .024 Mgrs abt Innovations Age (mid point) .174 . .052 .444 .189 .053 .313 .149 .267 Occupancy 08-09 .023 .052 . .412 .153 .036 .154 .029 .042 (mid pt) TLM Dummy .429 .444 .412 . .000 .240 .046 .323 .395 MLM Dummy .050 .189 .153 .000 . .027 .431 .401 .132 Thailand Dummy .363 .053 .036 .240 .027 . .078 .020 .132 Business Dummy .452 .313 .154 .046 .431 .078 . .176 .015 FiveStar Dummy .094 .149 .029 .323 .401 .020 .176 . .000 FourStar Dummy .024 .267 .042 .395 .132 .132 .015 .000 . N Q9+Q10 Perspective of 274 274 274 274 274 274 274 274 274 Mgrs abt Innovations Age (mid point) 274 274 274 274 274 274 274 274 274 Occupancy 08-09 274 274 274 274 274 274 274 274 274 (mid pt) TLM Dummy 274 274 274 274 274 274 274 274 274 MLM Dummy 274 274 274 274 274 274 274 274 274 Thailand Dummy 274 274 274 274 274 274 274 274 274 Business Dummy 274 274 274 274 274 274 274 274 274 FiveStar Dummy 274 274 274 274 274 274 274 274 274 FourStar Dummy 274 274 274 274 274 274 274 274 274
Table- 9.26.1c - Regression Analysis of perspective of managers- Variables Entered/Removed (a) Variables Variables Model Entered Removed Method 1 Occupancy Stepwise (Criteria: Probability-of-F- 2008-09 (mid . to-enter <= .050, Probability-of-F-to- point) remove >= .100). a Dependent Variable: Q9+Q10 Perspective of Managers about Innovations
Table- 9.26.1d - Regression Analysis of perspective of managers- Model Summary Adjusted R Std. Error of Model R R Square Square the Estimate 1 .121(a) .015 .011 3.744 a Predictors: (Constant), Occupancy 2008-09 (mid point) Table- 9.26.1e - Regression Analysis of perspective of managers- ANOVA (b) Sum of Model Squares df Mean Square F Sig. 1 Regression 56.347 1 56.347 4.020 .046(a) Residual 3812.708 272 14.017 Total 3869.055 273 a Predictors: (Constant), Occupancy 2008-09 (mid point) b Dependent Variable: Q9+Q10 Perspective of Managers about Innovations
Table- 9.26.1f - Regression Analysis of perspective of managers- Regression Coefficients (a) Unstandardized Standardized Model Coefficients Coefficients t Sig. B Std. Error Beta 1 (Constant) 32.934 .911 36.135 .000 Occupancy 2008-09 (mid .024 .012 .121 2.005 .046 point) a Dependent Variable: Q9+Q10 Perspective of Managers about Innovations y = a + bx Perspective = 32.934 + 0.024 x (Occupancy Rate 2008-09)
Table- 9.26.1g - Regression Analysis of perspective of managers - Excluded Variables (b) Partial Collinearity Model Beta In t Sig. Correlation Statistics Tolerance 1 Age (mid point) -.069(a) -1.150 .251 -.070 .990 TLM Dummy .009(a) .154 .877 .009 1.000 MLM Dummy -.092(a) -1.533 .126 -.093 .996 Thailand Dummy .035(a) .575 .565 .035 .988 Business Dummy .015(a) .246 .806 .015 .996 FiveStar Dummy .067(a) 1.103 .271 .067 .987 FourStar Dummy -.109(a) -1.801 .073 -.109 .989 a Predictors in the Model: (Constant), Occupancy 2008-09 (mid point) b Dependent Variable: Q9+Q10 Perspective of Managers about Innovations.