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Hospitality Industry – Taj Group Hospitality Industry – Taj Group Organizational Behavior Assignment Executive Summary At 7.8 per cent contribution to national GDP, the hospitality industry is a major growth driver for Indian economy. The Indian Hotels Company limited, the parent group of Taj Hotels Palaces and Resorts is the largest player in the hotel segment. With a presence across the country and in 16 international locations, Taj Group is one of India’s most iconic brands. The company has had a rich history of more than 100 years and witnessed major leadership changes. Equally intriguing is the growth story of the company. This report presents an overview of the company, its history and some iconic leaders who have created the brand that Taj is today. Being a major force to reckon in the hotel industry, Taj is also shaped by a lot of external factors comprising its business environment. The social, legal, economic, political and technological factors moulding the group and industry’s growth have been discussed at length in this report. In conclusion, the report also identifies the most important of the business environments responsible for its growth and success. 2 Contents Executive Summary .................................................................................................................... 2 1. Introduction ........................................................................................................................... 4 2. Company Profile (Content)..................................................................................................... 4 History .................................................................................................................................... 4 Hotels ..................................................................................................................................... 4 The Taj Philosophy ................................................................................................................. 4 Leadership at Taj .................................................................................................................... 5 Ajit Kerkar ........................................................................................................................... 5 RK Krishna Kumar ............................................................................................................... 6 3. Industry Analysis (Context) .................................................................................................... 6 SLEPT Analysis ........................................................................................................................ 6 Social Factors ...................................................................................................................... 6 Legal factors ....................................................................................................................... 6 Economic factors ................................................................................................................ 7 Political factors ................................................................................................................... 8 Technological Factors ......................................................................................................... 9 4. Conclusion .............................................................................................................................. 9 3 1. Introduction Hospitality and Tourism Industry contributes to 7.8 per cent of India’s GDP vis-a- vis global average of 4.2 per cent. India is ranked 12th among 184 countries in terms of travel & tourism’s contribution to GDP in 2012. Indian hotel industry grossed revenues of over $5.3 billion in 2011 and has recorded a strong CAGR of 13.3 per cent in the last six years. At $337.9 million revenue in FY12, Taj Hotels Resorts and Palaces is the market leader in the Hotel segment. 2. Company Profile (Content) The Indian Hotels Company Limited (IHCL), branded as Taj Hotels Resorts and Palaces, is an Indian chain of hotels and resorts headquartered in the Oxford House in Mumbai. The company is a part of the Tata Group, India's largest business conglomerate. Taj Hotels Resort and Palaces owns and operates 93 hotels in 55 locations across India with an additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the Middle East and employ over 13000 people. History Established in December 1903 by Jamshetji Nusserwanji Tata, Taj Mahal Palace & Tower, the first Taj hotel is one of India’s most iconic structures. The group has expanded by converting former royal palaces in India into world class luxury hotels such as the Taj Lake Palace in Udaipur, the Rambagh Palace in Jaipur and Umaid Bhawan Palace in Jodhpur. Hotels The Taj Hotels operates three categories of hotels - luxury, leisure and business hotels. The Taj Luxury Hotels offer a wide range of luxurious suites with modern fitness centers, rejuvenating spas, and well-equipped banquet and meeting facilities. The Taj Leisure Hotels offer a complete holiday package that can be enjoyed with the whole family. It provides exciting activities ranging from sports, culture, environment, adventure, music, and entertainment. The Taj Business Hotels provide the finest standards of hospitality, which helps the business trips to be productive. They offer well-appointed rooms, telecommunication facilities, efficient service, specialty restaurants and lively bars, well-equipped business centres, and other conference facilities. The group also operates five-star deluxe beach resorts and business hotels. The Taj Philosophy The Taj Group is known for its two guiding principles called the Four Steps of Service and the Taj People Philosophy. The group prides itself with excellent customer service which is laid 4 down by the Four Steps of Service. The group emphasizes employee development and is reflected in the Taj People Philosophy – “Nurturing employees from the womb to the tomb”. The extreme dedication to customer service by the Taj employees was brought to light during the terrorist attacks of 26/11 at Taj Mahal Hotel when the employees risked their lives to save their customers. Leadership at Taj Ajit Kerkar Kerkar joined IHCL in January 1962 as assistant catering manager. He began his career with J. Lyon & Company in London where he qualified in hoteliering. Climbing the ladder quickly, Kerkar became the general manager of the badly managed and poorly run Taj Mahal Hotel, Mumbai, in 1968. In 1970, he became its managing director. Kerkar was one of the 'super managers' appointed by JRD Tata, who were given full freedom to run the different wings of the family empire in their individual ways. Over the next 27 years, Kerkar built up IHCL as India's largest and most profitable hospitality company. In the 1970s, IHCL expanded in a major way in Delhi, Madras, Goa and Rajasthan. This was seen as a major achievement for Kerkar as he succeeded despite very little financial help from the Tatas. By the 1980s, the once sick hotel had turned into a chain embracing the US and Europe. Kerkar funded the expansion of the IHCL flagship Taj Hotel by floating different companies, with different partners. Kerkar pioneered the concept of palace hotels and resort hotels. He enhanced India's status as a tourist attraction by developing Rajasthan and Goa as tourist destinations. Kerkar had a well-polished public image and established himself as a capable executive. He was regarded as the man who almost single-handedly converted a one-hotel company into a thriving hotel chain with an international presence. Ultimately however, the Kerkar era came to an end on August 30, 1997, not with canape and champagne, but with anger and acrimony. Kerkar's troubles started when Ratan Tata took over as the head of the Tata Empire. Unlike his father JRD Tata, Ratan Tata proved to be less trusting of his managers. As the Tatas had never helped Kerkar in any way - financial or otherwise, Kerkar commented that he didn't need Ratan Tata to start telling him how to run his business. Kerkar was asked to leave after two allegations of FERA violations surfaced: the non- repatriation of dollar deposits by two foreign airlines, which had offices on the Taj premises in Mumbai; and issue of Global Depositary Receipts (GDR) by IHCL's subsidiary, Oriental Hotels, amounting to about US$30 million. The Tatas leveled serious charges of misdemeanor and irregularity against Kerkar, who had by then become a legend in the hotel industry for turning a single loss making property (the Taj Mahal Hotel in Mumbai) into a reputed international chain. 5 RK Krishna Kumar RK Krishna Kumar started his career with the Tata Group in 1963 when he joined the Tata Administrative Service. Over the period of 46 years that he has been with the House of Tata, he has served in several Tata Companies in various capacities. He is referred to as Ratan Tata’s right-hand man. He held several senior positions in the company, before being appointed joint managing director of Tata Tea Limited in 1988 and managing director in 1991. Under his leadership, Tata Tea moved from commodity to branded business and then into acquisitions, which transformed the company into a global beverage company. He was transferred to Mumbai and appointed MD of the Indian Hotels Company in 1997 after Ajit Kerkar’s exit. Under his leadership, IHCL experienced a stable growth. In January 2002 he was also appointed Director of
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