INDUSTRY ANALYTICS REPORT ON

HOTEL INDUSTRYSubmitted To:

Prof. Samik Shome

Submitted by: Group 7, Finance - A

Mohit R Suchdev (09PG267)Badal H Jain (09PG426)Srinivasa M J (09PG174)Priya Richhariya (09PG398)Akanksha Yadav (09PG363)

AgendaGeneral overture of the Hotel Industry

Global Scenario

Indian Scenario

Detailed Industry Analysis– SWOT Analysis– PEST Analysis– Michael Porter’s Five Forces– Barriers in the Industry– Industry Practices– Industry performances

Company Analysis– Ratio Analysis & Interpretation

Future Prospects in India

Conclusions & Findings

A general overture of the Hotel Industry Hotels are amongst the most visible and important aspects of a

country's infrastructure.

Hotel industry is also inextricably linked to the tourism industry and its

growth has added impetus and zest to the hotel industry.

• Objectives of the study: - To study the hotel Industry globally.

- To study the Indian hotel Industry.

- To look at the future prospects of the Indian hotel industry.

- To analyze factors driving the Indian hospitality industry.

Global Scenario

The demand for the Hotels is decided by

international and domestic tourism.

With the number of tourists expected to rise to

the extent of 10 million by the turn of the

decade, the industry is extrapolated to see a

boom.

A counter argument is that, the influences like

economic recession seen in the consumption,

production, profit, investment etc. can be

counterproductive.

Indian Scenario The Indian Hotel Industry is exclusively

audacious enterprise.

the Investment environment is also very

crucial as the political instability and acts

of terrorism within the sovereign

boundaries of the nation affect the growth

trajectory.

The events like the IPL can also accelerate

the development, though in a regionally

imbalanced way (National Capital Region).

Challenges faced by Indian Hotel Industry

• Shortage of skilled employees• Retaining quality workforce• Shortage of rooms• Intense competition & image of India• Customer expectations• Manual back-end• Human resource development• Construction costs• Lack of proper career path

Detailed Industry Analysis Research Methodology(Qualitative)

SWOT AnalysisStrengths: Rich Culture and heritage.

Government Support.Weakness:

Poor Infrastructure.Opportunities:

Open Sky Benefits.New Business Opportunities.

Threats: Increasing Competition.

PEST Analysis:• Political Factors:

o Law and Regulationo Administrativeo Judicialo Lobbying

• Economic Factors:o Economic Factors that have an impact on the decision of the

customers.• Socio-Cultural Factors:

o Deals with consumers having different demographic, ethnic & cultural backgrounds

• Technological Factors:o Deals with sophisticated technological advances & regular up

gradation.

Michael Porter’s Five Forces Model

Barriers In the Industry

• Foreign Languages

• Service Expectation

• Menu and Diet

• Education and Support for

Diversity

• Government Regulation,

License & Approval Process.

Industry Practices• Pricing

An overload of customers calling for a mismatch in the demand and

supply levels of hotel rooms in the country causes the prices of the

even cheaply available rooms increase.o Economic Conditiono Occupationo Location

• Promotion

The main promotional activities provided for this industry is from

the government, aiming to increase the foreign exchange earnings

Industry Performance

• The UK Hotel Industry• The US Hotel Industry• The Indian Industry

Company Profile• Hotel Leela Venture Ltd

Market Capitalization Rs.1450. 75 Cr (2009)

Net Profit Rs. 145.23 Cr (March 2009)

• Asian Hotels Ltd (AHL)

Market Capitalization Rs. 857.052 Cr (Sept. 2009)

Net Profit Rs. 81.61 Cr (March 2009)

• East India Hotels Ltd (EIH)

Market Capitalization Rs. 4821.50 Cr (March 2009).

Net Profit Rs.172.34 Cr (March 2009).

Company Profile

• Bharat Hotels Ltd

Market Capitalization Rs. 568 Cr (March 2009).

Net Profit Rs. 139.74Cr (March 2009).

• Indian Hotels Company Limited (IHCL)

Market Capitalization Rs.5544.86 Cr(Sept 25, 2009).

Net Profit Rs.250.4 Cr (Mar 2009)

RATIO ANALYSISSales Growth Rate

Mar/09 Mar/08 Mar/07 Mar/060.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

1,600.00

1,800.00

indian hoteleihasianleelabharat

• Current Ratio

2009 2008 2007 2006 20050.00

0.50

1.00

1.50

2.00

2.50

Indian HotelEIHAsian HotelHotel Leela VentureBharat

• Debt Equity Ratio

2009 2008 2007 2006 20050.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Indian HotelEIHAsian HotelHotel Leela VentureBharat

• Profitability Ratio

Mar/09 Mar/08 Mar/07 Mar/06 Mar/050

0.05

0.1

0.15

0.2

0.25

0.3

0.35

indian hoteleihasianleelabharat

• Return on Assets

Mar/09 Mar/08 Mar/07 Mar/06 Mar/050

0.05

0.1

0.15

0.2

0.25

0.3

indian hoteleihasianleelabharat

• Interest Coverage Ratio

Mar-09 Mar-08 Mar-07 Mar-06 Mar-050

2

4

6

8

10

12

14

Indian Hotel EIH Asian Hotel Hotel Leela Venture Bharat

• Fixed Assets Turnover

2009 2008 2007 2006 20050

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Indian HotelsEast India Hotels Asian HotelsHotel Leela VenturesBharat Hotels

• Inventory Turnover

2009 2008 2007 2006 20050.00

10.00

20.00

30.00

40.00

50.00

60.00

Indian HotelEIHAsian HotelHotel Leela VentureBharat

Future in India• Room rates are most likely to rise 25% annually.

• Occupancy rate to increase by 80%.

• An addition of 60,000 rooms in different stages.

• Man power requirements in India to increase from 11 Mn to 15 Mn.

• Approx 300 projects are in the pipeline to hit India.

• 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.

Conclusions & Findings• Because of the seasonal trend in the hotel industry, hotels

are never used to their full capacity.

• Very difficult to maintain profits.

• Out of the reach of the Huge Indian middle class which are

yet upgrading themselves in terms of disposable incomes.

• With more projects in the pipeline the industry slash down

their prices.

• This helps the hotels to draw themselves out of seasonal

trend trap.

• Major factors driving 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.

References

• http://www.naukrihub.com/india/hospitality/• http://www.businessworld.in/• http://business.mapsofindia.com/india-industry/• http://www.itopc.org/travel-trade/• www.google.com• www.wikipedia.org

Databases & Sources• An Overview of Hospitality Industry – Article Investors Guide• Hotel Industry reiterates demand• Literature Review on ITDC• Saudi Hotel Sector Set For Growth • Indian Hospitality Industry has become an attractive investment destination• Hotel Industry Needs Real Green Change - MapChange 2010 • Capital line• Corporate websites• Annual Reports of various Pharmaceutical firms• Hotel Industry Journals & Magazines (Hospitality Outlook, Hoteliers Asso-cham, Panache maker

& ITC hotel ling)

Thank You