Tourism and Travel Trends from India:

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Weekly News Related to Travel Industry in India

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Sector: Hotels and Restaurants

1. Versace group plans to set up mega resort in India

Fancy enjoying the most expensive luxuries at a Versace group hotel without leaving the salubrious Indian tropical clime? Well, you will get the chance shortly.

The Versace group is planning to set up a mega resort in India, which could be the third in its global chain of luxury hotels after Australia and Dubai. The Palazzo Versace (Versace palace) hotel is likely to adore the skyline in Goa, sources close to Italy’s Gianni Versace SpA told ET. The Versace hotel at Gold Coast in Southern Queensland is reportedly the most expensive hotel in Australia.

“The project could bring a massive investment into India, which could be in billions of dollars,” said the source who did not wish to commit a figure. The group will not have local partner for the India project. For all the luxury resort projects, the Milan-based Versace group has a tie up with Australia’s property developer Sunland Group Ltd. Construction projects such as resorts are allowed 100% foreign ownership in India without specific government approval.

The second Versace resort, which is under development in Dubai, is expected to be opened 2009. This is being developed by the Sunland Group and the Emirates International Holdings. "It will have 214 suites and 190 condominiums and several swimming pools," said the source.

It is understood that the group has plans for many capital cities in the world. These luxury resorts reflect designs from the opulent Renaissance palaces in Europe and its classical architecture. The Gold Cost resort houses a 750-kg chandelier owned by the legendary designer Gianni and its driveway has the second largest pebble mosaic design in the world made of rare Italian and Brazilian marble. Gianni’s brother Santo now heads the company that is diversifying into hospitality and aircraft interior design.

The group, which already has a boutique at a hotel in Mumbai, is also planning to open one in New Delhi. The group recently opened a boutique in China too. "India has a great passion for textiles and it has a fast growing upper middle class. India is a major focus for our home collection,” said the source.
October 4, 2007
Source: Economic Times

2. Amit Burman to enter restaurant
Amit Burman, CEO of Dabur Foods, is foraying into the restaurant chain business with Lite Bites, all in his personal capacity.

With about Rs 150 crore investment committed to the F&B retail space over the next three years, Lite Bites is positioned to be a holding company that would harbour a slew of brands.

Currently, Lite Bites is being promoted by three partners — Amit Burman, Rohit Agarwal and Tej Pavan Gandok — with Mr Burman as majority shareholder.

The company operates restaurant, Subway, as a franchisee, and has just brought in another international multi-format chain, the Dubai-based Hot Brands International, with whom a JV is being forged
October 4, 2007
Source: Economic Times

3. Big Mac's no longer betting big on kid stuff in India
Big Mac, America’s iconic child-centric brand, could learn a lesson or two from its Indian counterpart. Even as the world’s largest food chain continues to pile up junk food and obesity charges from concerned parents and public health advocates in the US, its Indian subsidiary seems to have circumvented all such contentious issues.

McDonald's India kids’ component — the amount of sales contributed by kids — is now perhaps the lowest in the world. Children now account for less than 18% of McDonald’s India sales, down from more than 33% when it started off here a decade ago.

Happy Meals, Big Mac’s most famous sub-brand specially tailored for children and a company trademark since 1979, has been witnessing a year-on-year decline in sales in India. “Kids’ visits to our stores have been declining year-on-year and have been overtaken by young adults, but we’ve also consciously building McDonald’s as a family brand,” McDonald’s (North) India MD Vikram Bakshi said.

Instead of trying to get children back in its fold, McDonald’s India has replaced Happy Meals with localised and baked products like curry pans and puffs as a core focus area. Big Mac’s trademark ‘I’m Lovin’ It’ campaign does not feature children anymore and instead uses only teenagers, adults and the elderly. Further, McDonald’s famous mascot Ronald McDonald is used only for the odd CSR initiative.

Teenagers and young adults now account for about 70-75% of the food retailer’s customer base, followed by kids with family (around 18%). Elderly people fill up the remaining pie. Mr Bakshi declined to reveal McDonald’s India’s revenues or profit/loss numbers. “That is something we never disclose,” he said.

Like in all world markets, McDonald’s India, too, started off by addressing children as its core target group. It aggressively pushed Happy Meals with toon-merchandise and toys, creating only kids-focused advertising and taking Ronald McDonald centrestage in all ground promotions through merchandise and footprints leading to order counters.

However, with global concerns over child obesity gaining ground, each of those strategies has been done away with.

The American quick-service chain, which has invested nearly Rs 800 crore in India, plans to pump in Rs 300 crore more over the next three years. “The additional investment will be infused for back-end operations to improve productivity of food processing plants and suppliers, expanding and testing new format stores and entering new markets,” Mr Bakshi said.

With 121 stores up and running in the country, Big Mac’s first outlet at the New Delhi domestic airport equipped with a kitchen is scheduled to open shortly, and the site for a store at the Old Delhi railway station has been finalised. Expansion plans are underway at two-tier and three-tier cities such as Meerut, Varanasi, Karnal, Kanpur and Gwalior. It is also toying with the idea of setting up an outlet at the busy Noida toll road in the NCR region.

Carrying forward its localisation strategy, the food retailer is set to make French fries locally through a greenfield plant in Gujarat, set up by one of its key supplier partners — McCain Foods. The plant, set up on an investment of Rs 100 crore, will manufacture fries exclusively for McDonald’s in the first phase. The fast food chain has been importing fries from New Zealand and Holland all along.
October 3, 2007
Source: Economic Times

Niche Tourism

1. Enjoy India in Luxury with Oberoi Group
Here’s a new dish on the menu of top-end hotels. It’s expensive, comes with lots of frills, pampers the super rich no end and the package comes complete with an experience manager. On a more mundane note, it’s called itinerary-based holiday packages.

In a bid to woo independent luxury travellers, the Oberoi Group plans to offer such holiday packages. Christened as India in Luxury, the product is targeted at the international luxury travellers from the UK, the US and Europe. The itineraries, which give ample time to travellers to experience India, can cost an individual anywhere from Rs 300,000 for a nine-day itinerary to Rs 680,000 for a 22-day trip.

To begin with there are four itineraries that the group is offering. The offer includes accommodation at an Oberoi property, business class or economy class domestic airfare, meals, road transfers, spa treatments, guide charges and also entrance charges to places of interest and monuments. “With the launch of India in Luxury, the endeavour is to extend the Oberoi experience to the guest’s entire visit,” says a senior executive of the Oberoi Group.

To co-ordinate a visitor’s travel, the group has an alliance with Jet Airways. It will also be entering into strategic partnership for marketing and promoting the product. “The launch of this programme and the extensive promotional exercise being undertaken will result in enhanced awareness of India as a luxury destination and, we expect, it will increase the number of luxury travellers to the country,” added the official from the Oberoi Group.

To take care of visitors opting for these itineraries, each hotel will have a luxury experience manager who will be incharge of the guests itinerary, road transfers, connecting flights, spa appointments and dietary preferences. The programme can be booked by a travel agent also through the Oberoi central reservation system or the Oberoi Hotels & Resorts website. Properties that are part of the itinerary are Oberoi hotels in Udaipur, Jaipur, Agra, Ranthambore, Mumbai, Delhi and Wildflower Hall in Shimla.

This might just be the start of an’ itinerary-based holiday’ trend. While in India, Oberoi Group claims to be the first hotel chain to offer such holidays, globally there are few such products being offered. Orient Express offers itinerary-based holidays branded as Journeys of Distinction in Europe, Asia and South America while Aman resorts offers such travel options in Bhutan.
October 5, 2007
Source: Economic Times

2. A touch of luxury

In the last three years, we've explored cities in foreign countries, shopped till we dropped, and filled albums with photos of ourselves grinning in front of tourist attractions around the world.

Frankly, our vacations have become a bit... dull. So now that we've been there and done that, what's the plan for the next holiday? Well, we could go for something a little more sophisticated. Something like these, perhaps.

Cruises
It doesn't exactly have the shimmering splendour of the Titanic, but when the Costa Mediterranea luxury liner heads out into the rippling blue waters off Venice for a seven-day European joyride, there is a whiff of old world romance in the air. It touches Bari (Italy), Olympia, Santorini and Rhodes (Greece) and Dubrovnik (Croatia) before sailing back home. It was, says a cruiser who was left poorer by Rs 63,999 at the end of the week, like living in a dream. An aqua-fantasy. And so worth the price.

"Cruises are fun; my wife loves them. And they are definitely the in thing now," says Bangalore-based hotelier B K Menon, who sailed down the Canada and US coasts in an Atlantic cruise last year. Cruises, says Brian Major of the Florida-based Regent Seven Seas Cruises, a global luxury cruise line, are becoming popular as more and more vacationers recognise that they offer enjoyable, flexible and value-oriented experiences that are not available on overland holidays.

A cruise vacation normally includes transportation, meals, entertainment and accommodation, all together. "Today's ships offer international itineraries covering all regions of the world and allow guests to sample several destinations in one vacation," says Major.

Water world
As we become more sophisticated as travellers, we begin to see the advantages that cruises offer. Cruises are niche holidays that are flexible enough to include wacky schedules and innovations, says Peter De Jong, CEO, Pacific-Asia Travel Association. "And, of course, a touch of class."

While some of us save up for long cruises out of Europe and America, most of us, especially first-time travellers, prefer to stick to cruises that touch ports like Singapore, Hong Kong, Macau, Cambodia and China. These don't come cheap, so usually cruisers tend to be people with pretty fat bank accounts and a taste for something offbeat. The most popular operators are Star Cruises, Royal Caribbean, P and amp;O, Princess and Cunard, which hawk the most luxurious packages.

The liners are packed to the brim. In 2006, more than 65,000 tourists from India holidayed on the high seas. Short duration cruises, usually for three days and four nights, are the most popular. "Europeans love long cruises, but Indians don't have the time. So, weekend getaways like Supertsar Libra's one-night package to Goa are in demand," says Arup Sen, executive director, Cox and Kings.

"The great Indian rivers and their surrounding locales are being promoted as alternative destinations," says Sushila Nair, executive director, Vivada Cruises. Vivada, the country's largest inland carrier, offers two cruises; one to the Sundarbans and the other on the Hooghly in Kolkata.

Ocean of Innovation
Because we don't like holidays that consist solely of lounging in deckchairs, many operators have customised their itineraries to include activities. Star Cruises for instance, offers restaurants, pools, gyms, recreation rooms and lounges. Regent Seven Seas, which offers voyages of exploration and discovery to over 300 ports across six continents, including Antarctica, boasts of six-star comforts and Cordon Bleu menus. Its new Discovery Collection blends education with leisure, so depending on the cruise you choose, you can holiday and learn from professional photographers, ocean explorers, wine experts, and chocolate and coffee connoisseurs.

Spa tourism
Why do we need holidays? Well, you may reply, because we want to get away from the stress of our day-to-day existences. Because we want to relax, refresh our minds, bodies and souls, and recharge ourselves so that we can return to our regular lives happily.

Good answer. That's exactly why, when we plan our holidays these days, we don't only consider places where there are things to do and sights to photograph. We also consider spas.

India rising
As a concept, spa holidays are new. But the spirit behind them is ancient. Till very recently in India, we had no spas, just ashrams where yoga and herbal cures cleansed the body and mind. Today, they're called spas - wellness resorts - and while they continue to be peaceful places offering yoga and herbal cures, they do so in an atmosphere of quiet luxury suitable for the people who usually go to them - well off people aged between 35 and 45, according to Arup Sen.
Because spa treatments trace their roots to traditional Indian cures, our first choice tends to be wellness resorts in India, particularly in the hills of Uttarakhand and the lush greenness of Kerala.

"A survey by the International Spa Organisation says domestic spa tourism has increased by 250 per cent in 2006-2007, whereas the outbound flow has fallen by 50 per cent since 2005. More Indians are opting for spa resorts in the country than abroad," says Siraj Halyara, regional manager, Serena Spas, an India-based chain with resorts in the Maldives, Egypt, Seychelles and in Cochin, Kerala.

Heal thyself
That's all very well, but why did we decide that our holidays should be 'wellness' oriented? The answer is simple. First, our working styles since globalisation began to affect us have changed completely, which means that our life-styles have changed too. We sit at our desks for long hours, eat badly, and exercise less. Naturally we're stressed almost all the time, and that puts our health at risk. So spas that offer us luxuries while they put our lives back on track are top on our vacation lists when we get to a certain age.

Second, we are more open these days to 'alternative' therapies. While our belief in allopathy hasn't wholly disappeared, we are willing to try traditional approaches to health that aim for holistic wellness rather than cures for symptoms, says Arup Sen. And that's what spas offer us.

Women's world
A lot of us like to combine wellness with travel, which is why we also go abroad for our spa holidays. Switzerland, the pioneer in spa holidays, draws hordes from India to La Prarie Spa in the Lake Geneva region, the Victoria Jungfrau Spa in Interlaken, the Beau Rivage Palace in Lausanne and Leukerbad Alpentherme. "The natural hot springs are an advantage and now more and more resorts are taking advantage of the purity and natural beauty of Switzerland to make it a wellness destination," says Ritu Sharma of the Swiss Tourism Board.

Executives and corporate jet-setters apart, women form the bulk of the spa tourists. The Champney's Health Resort in England, which has four properties spread across Britain, has a core female audience within the 30-55 age-group. "They visit our spas from across the globe to escape the pressures of modern living and lead a more healthy life," says Sharon Scott, group PR and marketing manager of Champney's.

For most spa tourists, a wellness holiday is spiritually elevating. "I look for a place where I can look to the clouds and talk to gods," says Chennai-based Gouri Choksi, who is headed for Ananda Spa in the Himalayas this year.
September 30, 2007
Source: Hindustan Times

Medical Tourism

1. A glance at the other side
The latest report by Frost & Sullivan titled Indian healthcare industry gives the low down on the economic, political and social infrastructure of one of the most dynamic and evolving industries in the country today.

On the fast track!:

Increasing investment in recent years in health infrastructure and facilities combined with quality health professionals has improved the healthcare services in India. India is fast emerging as a regional hub for healthcare services attracting patients from many countries in Asia, Europe, and the United States. Key healthcare initiatives undertaken by the government include establishment of new regulatory bodies, launch of several healthcare programmes and changes in patent laws. The healthcare industry is currently one of the largest service sectors in India with healthcare being delivered through both the public and private sectors. In 2005, India's expenditure on healthcare was around 5.3 percent of the gross domestic product (GDP), of which almost 75 percent to 80 percent was contributed by the private sector and the rest by the public sector. Public healthcare expenditure as a percent of GDP is very low when compared to the private healthcare expenditure. It provides healthcare services free of cost or at subsidised rates to low-income families in urban and rural areas. The public sector is mainly financed by general taxes and non-tax revenues from both internal and external agencies, with the basic role of planning, regulating, and shaping the Indian healthcare system. The provision of healthcare services by the public sector is a responsibility shared by the local, state, and central governments. The funds allocated by the government are well short of the figure that is required to meet the country's growing demand. In India, the private healthcare sector provides the bulk of the curative services. This trend puts India in the league of being one of the highest proportions of private healthcare spending countries in the world. This sector has grown immensely in the past 10-15 years.

Glaring urban-rural disparities:

There is a glaring contrast in the healthcare status of people in India as is clearly pointed out by the differences in various healthcare indicators. Appropriate and affordable healthcare facilities are still inaccessible to millions of people residing in the urban and rural areas, particularly women and children. The quality of healthcare services is poor and the number of healthcare facilities is not adequate for the present population. In India, the vast majority of the population (nearly 70 percent) resides in the rural areas, while the remaining 30 percent in the urban areas. The per capita expenditure on public health is very low in the rural areas when compared to the government's healthcare spending in the urban areas. The healthcare system in India is ill-equipped to cope up with the rising number of changing disease patterns, with an average of just less than one percent of hospital beds and physicians per 1,000 people.

Government support:

The key issues that the government is addressing are the modernisation of the healthcare system and greater collaboration with the healthcare industry so as to provide innovative drugs, expansion of healthcare insurance, modern medical equipment in the hospitals and better healthcare services to the people. The Indian government has been following a policy of encouraging several healthcare programmes to leverage healthcare services to people residing in the rural areas with various developmental programmes, such as the Common Minimum Prog-ramme and the National Rural Health Mission. Increased awareness of IPR increase in drug and pharmaceutical R&D expenditure and creation of suitable modern infrastructure is likely to bring new projects for drug development into the country. The National Health Policy, National Rural Health Mission, Common Minimum Programme and increase in healthcare expenditure and increased outlay in the 2007- 08 Union Budget are some initiatives in this direction.

Public-private partnerships:

Since government resources have not been able to maintain the existing healthcare system and increase access to healthcare services, the government is no longer viewed as the only engine of development. Public-private partnership (PPP) is an essential strategy to expand the scope of the existing healthcare system nation-wide and secure co-operation from the non-governmental organisations (NGOs) and social activists for this purpose. The government is in the process of developing necessary guidelines for PPPs in which the public sector is expected to play the main role in defining the framework and sustaining the partnerships.

Growth prospects:

Prospects for the Indian healthcare industry remain bright in the forecast period due to new demand originating from different sections of the society. Economic conditions are favourable for sustainable growth; increase in disposable income is expected to increase the per capita expenditure on healthcare during the forecast period (2007-2010).  The demand for healthcare services is expected to grow substantially over the next to 5-10 years, and to meet this growing demand for healthcare services, high investment is likely to be required. Particular growth opportunities exist in the Indian healthcare industry in areas like medical tourism, healthcare outsourcing, pharmaceuticals, biotechnology, healthcare insurance, clinical trials, and medical devices and equipment. Significant growth opportunities also exist in stem cell biology and bioinformatics in India. The research is expected to result in the development of advanced treatment for a number of debilitating diseases. The medical tourism segment is by far the most promising and dynamic segment of the Indian healthcare industry.

Medical tourism:

Currently, medical tourism is the buzzword in the Indian healthcare industry. The most important reasons why medical tourism has gained so much fame in India is the low-cost advantage and the emergence of high quality healthcare service providers in the country. The factors, which are likely to favour and make India a prominent medical tourism destination, are the high quality expertise of medical professionals, the fast improving medical equipment and nursing facilities, improvement in medical infrastructure and technology, and cost-effectiveness of the overall package. The healthcare industry is creating the necessary standards with the help of insurance companies, credit rating agencies involved in the self-regulation of the industry, which is likely to give a boost to the medical tourism industry in India.

Healthcare outsourcing:

The major reason behind India emerging as an attractive destination for healthcare outsourcing is the quality of the human resource pool available in the country. Healthcare outsourcing activities in India range from claims processing and medical transcription, to medical analytic and clinical processing. In addition, Indian companies have an edge in offering a large number of value-added services such as diagnostic analysis by highly qualified medical professionals at a much cheaper cost compared to developed countries. The qualified labour force is rising as a result of the increased importance given to medical and technical education by the government.

Pharmaceuticals and drugs:

Indian pharmaceutical companies' export performance has substantially boosted their sales revenues. Indian pharmaceutical exports were worth $2.33 billion in 2005. Formulations contributed over 50 percent of exports, which in turn has seen a 7.5 percent growth rate in 2005. Since 2001, the government has decided that foreign direct investment (FDI) of up to 100 percent will be allowed through the automatic route for the manufacture of drugs and pharmaceuticals. The Patent (Amendment) Act introduced in 2005 brought the pharmaceutical products under the patent regime. This law is expected to gradually slowdown the product launches in the country and at the same time drive Indian companies to increase their R&D activities.
October 1-15, 2007
Source:Expresspharmaonline.com

2. US insurers eye Indian tie ups

Keen to take advantage of low-cost healthcare in India, the US is pushing its insurance firms to draw up attractive medical tourism packages with Indian hospitals to facilitate travel and treatment for its citizens there.

A few firms have already started offering 30-40 per cent discount on their annual health insurance premium for those going to India for treatment. Some are also adding tourism and shopping to their packages and arranging for friends and relatives to stay at nearby affordable hotels.

Indian officials, who were here last week to participate in a series of trade, investment and cultural events, said an increasing number of American insurance companies were keen to tie up with Indian hospitals.

"Many of them are setting up liaison offices in India so that it is easier for them to send their clients for major surgeries in India," said an Indian official.

The issue figured prominently during the first meeting of the Private Sector Advisory Group (PSAG) of the US-India Trade Policy Forum held in New York last month.

According to Indian Commerce Minister Kamal Nath, the US side was keen to ask its insurance companies to work with hospitals in India. "It will open up a huge opportunity for our country," the minister said.

In fact, some US medical insurance companies like Blue Cross and Blue Shield have already announced schemes for treatment in India.

Cost comparison

Giving a cost comparison, officials said while a coronary bypass urgery in the US costs $60,000, it costs a mere $6,600 in India. A single knee replacement costs at least $22,000 in the US, while it is $6,500 in India. A bone marrow transplant is $250,000 in the US, while Indian hospitals do it for $26,000. Rhinoplasty (nose job) costs $10,000 in the US, and just $2,000 in India.

Even the common dental root canal treatment is a prohibitive $1,000 in the US and just $100 in India. The list goes on.

US insurance companies are offering to arrange for appointments with medical specialists, hospital admissions, pickup and drop-off at airport, additional travel and accommodations in India for the patients.

Many here feel that the move would be a "great relief" for Americans, who find health insurance in their country exorbitant.

"The health premiums are becoming unaffordable. Anything related to medical treatment has become hugely expensive here," said Catherine Simon, who works in a hospital here.

Around 60 million people in the US do not have medical insurance. Even those who have it cannot afford the expensive surgical procedures.
October 6, 2007
Source: NDTV Profit

Others
1. At your service

Volunteer tourism, or voluntourism as it's now come to be called, is perhaps the newest trend in tourism right now. Everybody has visited new places with the help of tour guides and travel brochures.

But volunteering to work with a local organisation or NGO in a place you want to visit can be a great way of discovering everything about it. And voluntourism is fast becoming the preferred option for many foreign tourists who want to travel around India. "I interned for 10 weeks with Akanksha, an NGO for underprivileged children. My experience of India would have been starkly different had I come just as a tourist," says US resident Karina Weinstein. But for NGOs and organisations that accept foreign volunteers, supporting these activities could be a source of financial strain. For more info visit www.ivoindia.org.
October 5, 2007
Source: Hindustan Times

Policy

Travel and Tourism Support Industries …and much more

Events

1. International Hospitality Fair 2007 to kick-start on October 8, 2007 at New Delhi

The International Hospitality Fair (IHF) 2007 organised by the Confederation of Indian Industry (CII) will take place from October 8-11, 2007 at the Pragati Maidan, New Delhi. A B2B event, it will provide industry players with an opportunity to get acquainted with the latest trends in food and beverage, house keeping, hospitality equipment, hotel interiors and technology, with over 80 participants showcasing their offerings at the fair. Other events that will take place alongside the fair include 'Culinary challenge', 'Pastry challenge', 'Think tank for general managers' and a full day seminar on revenue management. Also, there will be interactive sessions on financing, equity and operating options; trained manpower shortage and legal issues in hospitality.
October 4, 2007
Source: Travel Biz Monitor

2. India much safer than Brazil, South Africa

Aglance at the travel advisories that the US government issues to its tourists shows how much safer traveling in India is compared to other global tourism hotspots. HT compares its advice on the crime risks in India with those of South Africa and Brazil:

INDIA
The advisory spends a mere 200 words on the potential dangers travellers may face in India. The worst ones are bag-snatching in Delhi and sexual harassment or "eve-teasing". Tourists are advised not to accept food offered on trains as it may be drugged and told that the non-violent theft of U.S. passports from luggage is quite common on overnight trains, and at airports.

SOUTH AFRICA
The dangers in this country require four times as much text to cover. Common crimes against tourist highlighted include armed robbery, carjacking and "smash and grab" attacks on vehicles. It also points out that South Africa has the highest incidence of reported rape in the world. Travellers are warned not to wear jewellery in public or make high-value purchases as this attracts robbers. Using ATMs after bank business hours is inadvisable for similar reasons.

BRAZIL
Like South Africa, it is a country where robbery at gunpoint and carjackings are routine. Hold-ups at traffic lights are a common occurrence. Added to this is the very present danger of kidnappings that can also result in rape or beatings for the victims.

The incidence of crime is supposed to be greater for visitors in tourists areas. Travellers are advised not to accept help with directions or communication from bystanders as such behaviour is often an excuse to victimise a tourist. In fact, the variety and intensity of the crime risks mentioned require 1200 words to cover, six times as much as India.
September 30, 2007
Source: Hindustan Times

Research and Market reports

1. High rates erode hotel occupancy

Driven by inflation in hotel room rates, the occupancy rate in Delhi, Mumbai, Chennai and Kolkata has declined for the first time in four years, according to a report.

The HVS survey on 'Hotels in India-trends and opportunities' has revealed that the hotel industry overall saw a 12-month average growth of 30 per cent in 2006-07 as opposed to a growth of 23.7 per cent in the previous year.

Whereas, occupancy growth, which had been 2.6 per cent in the previous year, showed a marginal growth of 0.7 per cent in 2006-07.

The continued demand-supply imbalance has led to exponential rate increases resulting in inflated room rates across key markets in the country, some of which currently rank among the most expensive hotel markets in the world.

"Research indicates that the effects of spiralling rates have already been noticed in most markets. For the first time in four years, markets have started showing a decline in occupancy," the survey said.

It said the trend resembles the period starting 1996-97 where occupancies had started to decline but average rates continued to rise for a few years thereafter.

The survey which covered 268 hotels with a total of 34,784 rooms also revealed that the high rates have also resulted in emergence of an unregulated and unorganised hotel/guesthouse sector which is witnessing a boom in cities like Bangalore, Delhi and Pune.

However, despite drop in occupancy for the four major cities in India, there was an across-the-board growth in terms of occupancy for the various market segments.

There are strong demand indicators emerging from Tier - II markets with the three-star segment witnessing highest growth in occupancy at 3.3 per cent, This was followed by the five-star category at 0.9 per cent and the five star - deluxe and four star at 0.3 per cent each.
October 3, 2007
Source: PTI via Economic Times

Travel Characteristics of Indians

1. Bitten by the luxe travel bug
The emergence of nuclear family set-up coupled with a steep rise in the income have changed the way they enjoy their holiday. "If we ever happen to go through the holiday brief or note of the children which they often submit to their class teachers after their summer and winter breaks nowadays,  we would be at no wonder to find the vivid detail of the scenic and exotic places which they enjoyed with their parents. The note of their description will be more than enough to point out the latest fad in their lavish living," says Radhika Shastry, Managing Director, RCI Group India, a global leader in non-hotel leisure accommodations. "The Indian vacationer requirements have shifted rapidly during the past few years to something aspirational and luxurious," she says.

India is expected to be the third fastest growing country in the world in travel and tourism demand over the next ten years, according to the Pacific AsIa Association . The growth potential along with the the 19.8 per cent increase in the number of the members living in India with financial assets of more than USD 1 million versus 6.5 per cent growth worldwide is showing its impact in this sector, according to the Total Tourism Study by the Pacific Asia Travel Association.

"The market for leisure real estate continues to grow globally and should gain momentum over the next few years", says Kenneth May, Chairman and Chief Executive Officer of the Group RCI Global Vacation Network.

He adds "In particular, India and Asia are showing some of the greatest potential for growth. The success that our clients had in developing shares ownership in India point to the fact that the country is not only an attractive destination for tourists  but also an opportunity to explore new formats in the real estate developer or the hotel which owns it". Relaxation for the stressed-out career-person, rejuvenation for the elderly who want  to avoid the colder climes as well as fun, frolic and adventure for the younger lot is what western style beach holidaying offers.

Plus, adventure activities such as enjoying the thrills of windsurfing, aqua biking or water-surfing are bonanza which nature lovers are provided with. The sun-soaked horizons of the Konkan Coast or the isolated, unexplored stretches along the Arabian Sea, golden sands of Goa and seashores alongside Kerala's backwaters, all beckon hordes of holidaymakers to savour beach vacations. "Further, opening up leisure destinations help in the development of the land and the nearby area. Real estate developers buy huge plots of land next to luxury destinations, airports etc. and the civic amenities come up next', adds Radhika Shastry. Cashing in on the growing aspirations, real estate developers are also moving up the value chain leisurely offerings like chalets, villas and condominiums. The market for leisure real estate products such as CondoTels, fractional properties , mixed use hotels, traditional timeshare or destination clubs is emerging as one of the most profitable business globally. "A couple of years ago with the timeshare model, destinations in South India like the Coorg, Munnar and others opened up and now we are exploring areas like the Malabar Coast and the pristine beauty of North Kerala", says Shastry.

"Indians are not looking for a getaway alone but want the whole experience now including the food and lifestyle," says Aniruddha Haldar, Head Marketing, Club Mahindra Holidays.
October 6, 2007
Source: PTI via Deccan Herald

Human Resources

1. Expats to help hospitality cos put best foot forward

Shortage of local talent to run the business has led hotel companies to turn to expatriates, especially from the Gulf. Leading hospitality companies are employing expatriates to man key functions like F&B, front officers and general managers. Recent estimates by HVS International, a hospitality consultancy, says top 12 cities in the country will need around 1.46 lakh fresh employees in the next five years, more than twice the existing requirement. The country has approximately 69,000 employees working for hotels in the branded segment.

Delhi faces a huge shortage of manpower, it requires 28,600 new employees followed by Bangalore at 20,300, Mumbai 18,500 and Hyderabad at 15,900 employees. This additional requirement is across all categories like luxury, first class, mid market and budget hotels. The biggest challenge in the future is to be faced by Pune, Hyderabad and Bangalore where the talent hunt for rivalling sectors is high, say HVS officials.

The shortage of manpower has been created because of the number of hotels that have come up in the last one year, say industry sources. The next few years will see more than 1.01 lakh hotel rooms, of which the star category will account for maximum. The existing supply across top cities in India is around 39,285 rooms. While the hotel projects are in various stages of development, they are expected to enter the market by 2011.

Lack of manpower is forcing many hotels like Royal Orchid, Leela, Sarovar and Kamats to set up in-house management institutes to meet the shortage. The staff turnover in 5-star deluxe hotels in India is 29%, while it is much higher at 32%, 43% and 47% in the case of 4-star, 3-star and 2-star hotels, respectively. Faced with a shortage of trained manpower, Royal Orchid Hotels CMD Chender Baljee said: “We are setting up in-house institutes offering shorter duration courses.” Freshers prefer joining BPOs and the retail industry for higher salaries, said The Leela group HR vice-president Mohan Rao.
October 4, 2007
Source: Economic Times

2. Hotels tap local stars for foreign ventures too

Indian hotel companies have begun sending local employees to man key positions in overseas properties despite the extra cost involved in doing so, hotel executives say. Indian Hotels, part of the Tata group, began this exercise some time ago after it acquired properties in London, New York and Boston. Key functions such as food and beverage (F&B), accounting, revenue management, IT and finance are ones where the group feels Indian expertise or talent is needed.

"It is need based and we sent employees to man key functions according to the requirements," said a source. He added that the group, as a policy, likes to retain employees in all the properties it has acquired so far. It does not like to disturb the existing structure. For instance, it would make little sense to send employees from India to man the front desk of Pierre in New York or act as waiters in Boston’s Ritz Carlton. Key functions such as IT or finance is another matter altogether. They do not require much interface with consumers and Indian employees can actually add some value.

The cost involved in such exercise is much more. Indian hotel salaries have skyrocketed in recent years thanks to the boom in the industry and the shortage of talent in the sector. For instance, a chef, working in a premium 150-room hotel in India earns (cost to-the-company) around Rs 60-65 lakh, while in the international markets it would range between Rs 60-80 lakh.

Industry executives say that salaries of hotel staff (particularly in premium hotels) in India have risen 20-25% in the past one year. According to industry sources, salaries of development heads, managerial staff particularly general managers, project heads have jumped in the range of 60-80% followed by food and beverage (F&B) managers which include chefs by 40-50%.

While development heads earn anywhere between a crore to Rs 2 crore, F&B manager (including chefs) salaries range between Rs 60-65 lakh. The shortage of trained manpower and the large scale expansion by hotel majors are reasons for the rising pay packages.

Executive sous chef earned the maximum at Rs 43 lakh (54,000 pounds) followed by fine dining restaurant managers at Rs 41 lakh (50,000 pounds) and front office managers at Rs 37 lakh (44,000 pounds).

In India, as compared to the global markets the payroll costs are low. The payroll cost is 11-14% of the revenue as compared to over 30% in US and Europe and around 20-25% in other South East Asian countries. The additional cost to be incurred by Indian companies when they send executives abroad would lie in areas such as health\life insurance, pension, or the well-being kind such as childcare or home-working options.

These costs add about 15-20% to the cost-to-company package. But hotel companies, especially Indian Hotels do it, as it is an additional incentive for employees.
October 4, 2007
Source: Economic Times

3. AH&LEI ties up with IGNOU for course in international hospitality management

American Hotel & Lodging Association - Education Institute (EI-AH&LA) has tied-up with Indira Gandhi National Open University (IGNOU) to launch an under-graduate course in International Hospitality Management.

Speaking of the tie-up, Professor VN Rajsekharan Pillai, VC of IGNOU, said, "This is a step in the right direction. It is truly a global alliance in hospitality education. Industry focused courses and state-of-the-art learning resources developed by AH&LEI, integrated with IGNOU's reputed tourism courses provide India's students the best opportunity to earn a prestigious international degree on Indian soil at a great cost advantage."

Added Pillai, "Professionalism is of great importance for sustained success. Quality education and training hold the key."

Speaking of the alliance, Roy Kennington, CHA, president and COO of AH&LEI, expressed, "We are proud to be associated with India and with IGNOU in particular. India is a powerhouse of human capital and talent. With fast-paced growth and development in every sphere of activity, the travel and tourism sector has taken a quantum leap. Indian hospitality professionals who have been certified and benchmarked with global competencies and skill-sets are sought after universally."

KV Simon, the regional head of AH&LEI, said, "With this timely tie-up, India's growing human resource challenges can be met. This will also benefit Indian hospitality professionals." Beginning with the next batch of IGNOU admission, the program would be available at IGNOU-AH&LEI approved program centers.
October 1-15, 2007
Source: Express hospitality