Factors affecting the Hotel Industry

As within any industry, the hospitality industry has a number of uncontrollable variables that affect
those involved in management or ownership of hotels, restaurants and other hospitality
establishments. Knowing what these factors are is important for those working in this capacity
because it provides them with an opportunity for contingency planning. Even though the variables
cannot be controlled, their effects can be mitigated somewhat with careful planning and
anticipation.
Economics
When someone speaks of the uncontrollable factors in the hospitality industry, they are referring
to the macro environment. External factors such as the economic situation facing the nation or the
world are among the factors that those working within the industry can have no control over. When
economies go sour, the hospitality industry may suffer because of a drop in discretionary spending.
Tourism may go by the wayside during times of extreme economic difficulty, leaving industries
within the hospitality industry, such as the hotel business, dependent upon the continued patronage
of the business community.
Legal Changes
Changes in the law can also affect companies within the hospitality industry and cannot be
controlled. The regulatory environment in the hospitality industry can change from time to time
and this can have an effect on the way that hotels, airlines and restaurants all go about conducting
business. For instance, a change in the tax laws that raise the price of gas will affect tourism and
costs for the hospitality industry as well.
Technology
Technology continues to develop unimpeded. The hospitality industry, like many others, is
affected by technological changes. As new technologies are made available, companies within the
industry are forced to adapt to the changes or get left by the wayside. For example, changes in
computer hardware and software options may make it necessary for a large national hotel chain to
replace its entire computer infrastructure on a periodic basis.
Competition
Competition is another factor that those managing or owning businesses in the hospitality field
have little to no control over. Many times, competition is heavily affected by economic and other
regulatory factors. For instance, changes in the airline industry since 9-11 have been due, in part,
to changes in the regulatory environment such as greater restrictions on airline travel and airport
check-ins that have discouraged flying. Airlines have no control over these changes and many have
suffered economically. They can only adapt to the changes as necessary and fight the other airlines
for the customers that continue to travel by plane.
Role of Government and Rating agencies In the Hotel
Hotels are an important component of the tourism product. They contribute to the overall tourism
experience through the standards of facilities and services offered by them. With the aim of
providing contemporary standards of facilities and services available in the hotels, the Ministry of
Tourism has formulated a voluntary scheme for classification of operational hotels which will be
applicable to the following categories: Star Category Hotels: 5 Star Deluxe, 5 Star, 4 Star, 3 Star,
2 Star & 1 Star Heritage Category Hotels: Heritage Grand, Heritage Classic & Heritage Basic

In a March 2018 report, ICRA gave an A1+ rating to the company’s commercial paper programme,
and AAA rating to its non-convertible debentures as well as its long-term loans with a stable
outlook, which remained as such till its first downgrade in August. The inability of rating agencies
to forecast the IL&FS liquidity crisis brings into question their credibility. It warrants an
exploration into their functioning, motivations and regulation.

Globally, three CRAs oligopolistically dominate 95% of this market: Standard & Poor’s (S&P),
Moody’s and Fitch Ratings. In India, Crisil dominates the market with 60%-plus share, and the
majority shareholder in Crisil is S&P.

Similarly, the largest shareholder in Icra is Moody’s. CRAs rate a gamut of long-term and short-
term debt securities, such as government, corporate and municipal bonds, and collateralised
securities. These instruments may be issued by any entity (not an individual) looking to raise
capital, ranging from private companies to local, state or national governments.

CRAs play a critical role in financial markets, and their integrity, therefore, must be airtight. In
their infancy in the early 20th century, these agencies forged credibility because they provided
disinterested analyses of creditworthiness and risk to those investing in debt, and were paid to do
so by these investors themselves.

Because their revenues flowed from investors, the agencies’ primary allegiance was to these
customers. Their reputations, along with the future of their business, was at stake if they provided
faulty predictions or ratings.

Since the 1970s, however, with a restructuring of the payment model, their credibility has been
called into question because of an inherent conflict of interest. Since then, revenues for rating
agencies flow from the issuers of debt, not from investors, which can be a breeding ground for
manipulation and collusion.
It would logically follow that CRAs would need much heavier regulation to accommodate this
payment reconfiguration. However, these agencies were not comprehensively regulated or held
accountable till the financial world was on its knees during the US subprime mortgage crisis
beginning in 2007.

Arguably, the CRAs’ role in engendering the global financial crisis was tremendous. The housing
bubble was inflated and financed by the creation of new, extremely complex and highly leveraged
financial instruments called ‘securitised mortgages’, in the form of mortgage-backed securities and
collateralised debt obligations.

It was impossible for these securities to flourish without the triple-A ratings designated to
thousands of them by the Big Three CRAs, which encouraged capital inflow to subprime securities
and allowed financial institutions to take unprecedented risk.

Accountability for Accounts

Billions of dollars worth of these CRAbacked securities were junked, resulting in losses of half a
trillion dollars. It was only then that stringent regulation of CRAs first became a part of
governmental agenda.

The US legislated the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, and
the EU created the European Securities and Markets Authority (Esma) in 2011 to protect investors
and increase CRA liability. S&P and Moody’s had to pay out $1.37 billion and $864 million,
respectively, as settlements with US federal and state authorities. But they still dominate most of
the market.

Rating agencies in India date back to 1987, and have one of the most extensive regulatory
frameworks under the Securities and Exchange Board of India (Sebi). However, this is no cause
for complacency. In 2015, Indian CRAs came under the Sebi scanner for abruptly downgrading,
and subsequently suspending, the ratings for Amtek Auto, and in 2017 for downgrading Reliance
Communications’ debt to default status, two full months after its default on non-convertible
debentures.

They must now be pulled up for failing to identify the IL&FS crisis. CRAs must assume utmost
responsibility and be held accountable for any manipulation, inflated ratings, or even slacking in
their analysis. Investors must have faith that the information being provided to them is accurate,
because thousands of retail investors like myself rely on these ratings to make investment
decisions.

It is unfortunate that IL&FS’ business decisions have rendered it unable to fulfil its debt
obligations. But, perhaps, we also need to look beyond another company on the verge of a bailout,
and scrutinize the institutions whose primary obligation is to alert investors and the market of the
risk associated with these companies.

Related Policies
I feel that the hospitality sector is consistently growing in India and has seen a dramatic change
over the last decade, for example the new government policies on FDI and tourism in 2017. As
India offers geographical diversity and has a diverse portfolio of niche tourism products, it attracts
tourists from different parts of the world. This leads to a potential change in evolving the sector in
terms of service standards, fast service, infrastructure and world class amenities.

The basic driving factor in the hospitality sector, as I foresee it for 2018, is the emerging lifestyle
and living standards of people, which is expected to grow three fold by the coming years.
Technology has become the key factor in boosting the service and market of hospitality industry
and is further going to do it by providing platforms to customers in filtering their requirements,
and to hoteliers in analyzing consumer behavior. Various policy measures undertaken by the
Ministry of Tourism and tax incentives will further aid the growth of hospitality industry. But most
importantly the marketing strategies like following trends, influencing opinion and delivery of
brand name will continue to be the deciding factors for major growth.

Pointing towards the government polices of tourism and GST implication in hospitality sector, it
has both pros and cons but the tariff release and reduced standardized rates conceptualize a steady
growth of the industry because there is still a lack of understanding about the tax slabs for various
categories of hotels and restaurants. This is something that can only be tackled with time and with
adequate training and guidance provided to the industry players.

We are much aware that India is culturally, the most diverse country in the world. It is a vivid
reflection of landscapes, magnificent historical sites and royal cities, colourful people, rich cultures
and festivities. It is also a major reason behind the growth of Indian Hospitality business. We have
gained reputation for excellence in quality of facilities and services over the past decades. From
greeting and welcoming the guests as part of the local culture to showcasing the root values, the
cultural differences manifest themselves in different levels of importance.
The factors for the success of a business model are dictated by characteristics of closely related
relationship with the customer in the hospitality services industry as well as by main elements,
such as value proposition, innovations, technologies, etc. Customer relationship management
becomes crucial in many business services as well as in the hospitality sector.

If we talk about India's rising middle class, then it is apparent that the living standard and increasing
disposable incomes have continued to support the growth of domestic and outbound tourism. Thus,
this would lead to a prosperous year, 2018 for Indian Hospitality sector and Indian Tourism too.

Notable trends in Hotel Industry

Year 2016 was a good year for the hotel industry with many new trends that developed. This
industry is developing so fast that it is now regarded as one of the most attractive businesses with
lucrative returns seeing the franchise route. Year 2017 also has a lot of trends that are quickly
being accepted by the patrons too. Let’s know more on the trends for this year.
Weather it is a great experience, design, comfort, technology or value add, trends in hotel industry
keep changing and evolving fast. With the entry of many home furnishing brands in hotel sector
and famous designers now designing for hotels, designing is also one of the fast trends in the
sector. Design truly defines a hotels persons and a complete way to care for your guest. Dilpreet
Singh Bindra, General Manager, JW Marriott Chandigarh shares: ‘Today, we live in the times of
‘technology’. To stay on par with the world, the hospitality industry is making considerable efforts
to embrace technology across domains. This is important to remain profitable and be able to service
the evolving demands of patrons. Talking of profitability, effective management of space has
become a focus area. Another area which is trending in the hospitality sector is ‘partnerships’
between luxury brands and hospitality destinations.
Technology at peak
Technology has become a critical part of our business, says Raj Rana, CEO, South Asia, Carlson
Rezidor Hotel Group. He mentions: ‘On a broader level, competition is not just with the hotel next
door but also with OTAs and disruptive models in the market. At Carlson Rezidor, all our
distribution channels are real-time, be it our branded website, global distribution system (GDS) or
global OTAs. Our mobile apps are GPS enabled that allow users to review hotels in their proximity
or choose any other destination. Further our mobile apps like iConcierge are geared to track
performance through personalized analytics and can deliver improved communication and
response to guest requests.’

On leveraging technology and newer trends, Bindra says: ‘From keyless check-in and robot
concierges to mobile apps and messenger-based booking, top hotel chains are continuously
experimenting with technology to enhance over all experience of a guest, right from the time of
booking till the time a guest checks-out. These days, hotels’ mobile apps have an impressive list
of features. Services like Mobile check-in, Keyless entry, Chat-applications and interactive
televisions are becoming more common. As far as effective space management is concerned, with
real estate/rental costs soaring, it becomes essential for hotels, especially 5-stars like JW Marriott
Chandigarh which occupy larger spaces, to create revenue generation opportunities from each area
of the property. Each area of the hotel is now structurally and functionally planned to meeting
diverse requirements of different set of users. For example conference halls, executive lounge,
kid’s area, etc all cater to diverse requirements in Corporate and Banquet space.’
Collaborations in trend
Customer behaviour and expectations continue to change continuously with shift in socio-
economic values in the society. However, what remains constant in the hospitality industry is the
value and impact created by a smile or handshake while meeting a guest. Nothing can replace the
value of human warmth and courtesy which lies at the core of the business of hospitality.
Partnership with reputed brands for a variety of exclusive services and merchandise is also a trend
now. Hotels are looking to offer the best products available in the market to their patrons. Luxury
hospitality brands in particular are putting their best foot forward to collaborate with reputed
service providers for in-house services and branded merchandise.
Social media
The role of social media in generating business in today’s landscape cannot be undermined.
Carlson Group is focused on social media to create brand awareness, drive business, foster loyalty
and manage customer relationships. It has deployed platforms like Revinate and Engagor to track
customer complaints and gauge sentiment on an ongoing basis. Rana adds: ‘We realize that the
guests’ stay experience is drastically elevated with high speed Wi-Fi service. This is therefore still
a focus area for us even though the technology has evolved from being a luxury to necessity.
Keeping in mind the ever-changing needs of digital age and millennial guests, we are also
introducing Radisson RED in India soon, which will resonate with customers through its lifestyle
oriented aspects like art, music and fashion.’
Major hotel names are now bringing in better and newer trends for their guests. Now, hotels are
more than just a place for temporary stay. In fact it has become a place like home for many. With
bigger hospitality chains opting for management and franchise routes and accepting newer trends,
the industry is bound to bloom this year. 2017 has much more in store for investors and hotel
owners too.
Challenges and Future Opportunities
According to a market Pulse Report published by Ministry of Tourism, currently, there are more
than 1,20,000 hotel rooms in India, both in the organized and unorganized sectors. By 2020, there
will be additional 1,00,000 rooms. There are around 90,000 people working in various functional
areas of the hotel industry and will require an additional one million professionals by the year
2023.
The study of current training infrastructure in the hospitality sector reveals that around 25,000
students are being trained at hospitality education institutes (of which only 60 percent join the
industry and 40 percent change the career choice, which leads to further widening of the gap
between the supply of the trained manpower and the demand of the industry).
Hospitality and tourism sectors are therefore facing an acute shortage of skilled manpower
currently, as there are many obstacles as far as development of human resources in hospitality and
tourism industry is concerned.
The challenges
First and foremost is the issue of lower salaries as compared to the remuneration paid in other
industries like IT, retail, banking, telecoms etc. Secondly, HR practices are not standardized and
there is a lack of professional approach and vision. Thirdly, there is a lack of growth opportunities
as well as learning and development opportunities. Last but not the least, due to long working
hours there is high employee dissatisfaction and attrition rate among hospitality professionals.
Furthermore, a poor perceived image of hospitality and tourism sector and inadequate and
inefficient training and education programs are also discouraging and add to the challenge of
attracting competent students.
Those who are competent, committed and talented are hesitant to opt for this industry as a career
option which is resulting in a poor supply of manpower. Therefore, the major challenge before the
hospitality and tourism sector in India is to bridge this gap of demand-supply of the skilled
workforce. This can primarily be done by attracting and retaining the talented and skilled people
who can serve the industry efficiently.

Industry and institutional perspectives

With this background, there are two primary perspectives relating to the training and availability
of trained professionals for Indian hospitality and tourism sectors: Industry perspective –
(employees) and institutional perspective (employees training institution).
Industry perspective (demand side) narrates that the landscape is not filled with the required inputs
in terms of volume and quality by the training institutions. As a result, the hospitality industry
receives trainees that are of poor quality. These trainees have poor research skills and do not have
the adequate entrepreneurial skills. They are also not trained on latest technologies, which happens
because of the outdated pedagogies which are being used. Even the faculty lacks the required
industrial experience and there is an absence of innovative curriculum.
On the other hand, institutional perspective (supply-side) presents a different picture by stating
that the industry does not attract or retain the talent due to a poor rewarding ecosystem. Quite
often, there is no work-life balance, therefore, even the trained manpower has shifted to other
operational fields and sources. The industry does not want to mentor the interns on new
technologies. It sees interns as only a temporary arrangement and not as employees
The solution
How can we solve this current situation and create a conducive learning and training environment
for talented aspirants? This can be achieved by taking a number of steps such as matching the
curriculum to meet the industry expectations, increase the number of enrollments and meet the
required volume. Quality internships can be provided to the students.
There can be joint research initiatives by the industry and the academia. Training of the faculty on
modern operational process and tools is also essential to overcome these problems. To conclude,
both the stakeholders and key players from the demand side of the industry (hotels, et. al.,) and the
supply side of the industry (educational and training institutions), have to identify their roles and
responsibilities to make this career choice more attractive and rewarding. The industry and the
institutions should work in sync with each other and supplement and complement efforts of each
other to achieve sustainable growth.
Future Opportunities
Hospitality Industry in India accounts for almost 7.5 percent of the country’s GDP. In recent years,
this industry is having a positive growth. A wide range of activities falls under the hospitality
industry and it provides various jobs directly and indirectly. This industry is one of the most
important foreign exchange earners in the country and attracts a huge amount of FDI (Foreign
Direct Investment). It is also a significant contributor to indirect tax revenue at the state and central
level which includes revenues from VAT, Service Tax, and Luxury Tax etc. In India, the
Hospitality Sector is expected to grow at 16.1 per cent CAGR to reach Rs 2,796.9 thousand crores
in 2022 according to a report.
There is a huge tourism potential in the country and as a result hospitality industry will continue
to grow at a substantially higher rate. The hospitality industry was one of the most heavily taxed
industries and multiple layers of tax were added such as VAT, service tax, luxury tax, which ranges
from 20 – 30%. Operational costs increased and so there was a decrease in profit due to multiple
taxations. Though the introduction of Goods and Services Tax (GST) has brought many benefits,
there is an urgent need of lowering the levied tax, to incentivize and attract more investments to
the sector.
Another important requirement is infrastructure development which is essential for the growth of
the hospitality industry. India is projected to be the fastest-growing nation in the wellness tourism
sector in the next five years and infrastructure development is an inevitable factor in order to
support this growth. Various Hotel Management Institutesare coming up these days with
various training and placement opportunities.
The government should promote the luxury items industry which will promote the luxury brands
which in turn will bring niche people from across the globe. The government should also provide
service tax exemption for new developments and a longer tax holiday for new hotels and resorts
that will help in attracting investments into the industry. Also, the tax rate for the sector needs to
be lowered from the proposed 18% tax slab under consideration for the new GST regime.
The hospitality industry relies on a host of enabling the ecosystem to function and has a reciprocal
relationship with several other sectors like transportation, entertainment, aviation etc. Simple
clearance for real estate and hospitality projects is a primary requirement. The hospitality sector
can become a major driver in the GDP of the country. It, however, will be possible only with the
right amount of support and incentives from the government in all categories of hotels and not
only limited to the luxury and ultra-luxury segment. I believe that the government must provide
its full support in incentivizing the sector and the overall taxation on the hospitality sector should
be reduced to stimulate its growth and bring India at par with other leading nations in regards to
the hospitality sector.

Tasks and Activities undertaken in the Hotel

Hotel management trainee has to work in close association with different departments in a hotel
and assist them in their daily routine operations. A trainee is required to understand the overall
operations of the hotel while specializing in one or two areas. Hotel management trainees may
have to work closely with front desk managers, culinary department, general managers, convention
and event planner, housekeeping department, and learn from them.
The Job Role and Responsibilities
A hotel management trainee is supposed to acquire a good working knowledge of the hospitality
sector with special attention to dealing with customers. The various roles and responsibilities of
individual department are:
Front Office
Registration of guests and assigning rooms
Maintain an inventory of reservation, vacancies and room assignments
Answer enquiries regarding hotel services, provide assistance and respond to guests' complaints

Food & Beverage

Greeting customers, escorting them to seats, taking food and drink orders, and serving food and
beverages
Answer questions regarding the hotel services, explaining menu items and specials, and offering
personal attentive treatment.
Co-coordinating with team workers to plan events, parties etc.
Housekeeping
Responsible for maintaining the hygiene and appearance of the hotel
Servicing and maintaining the guest rooms and replenishing stock as and when needed.
Providing service items to guest rooms upon requests from the guests
Food Production
Preparation of simple food items like vegetable preparation, salads, cold starters etc.
Work according to established health and safety guidelines. Kept the kitchen area clean and
hygienic.
Keep a check on stock and order for replenishments as and when necessary.

Sales
Selling room rights to individuals, corporate.
Competencies and Skills Required
Front Office
Should be able to sell hotel services to the customer
Strong Problem solving and interpersonal skills
Excellent Communication skills
Should be able to deal with all types of customers and work under pressure
Food & Beverage
Should be able to sell F&B outlet services to the customer
Have a high service orientation
Excellent communication skills
Be a good team worker
Strong interpersonal skills
Housekeeping
Able to do repetitive jobs with consistency and excellence
Gives high attention to details
Should be a good team worker
Should be responsible, disciplined and organized
Should be honest
Food Production
Should be a good team worker
Should be creativity in approach
Can work under pressure
Is organized and adaptable
Sales
Should have strong interpersonal and communication skills
Quick decision making and negotiating skills
Should be persuasive and result oriented
References
Aspiringminds.com. (2019). Hotel Management Trainee – Fresher / Entry Level | Aspiring Minds. [online] Available
at: https://www.aspiringminds.com/featured-profiles/hotel-management-trainee-%E2%80%93-fresher-entry-level-0
[Accessed 25 Feb. 2019].

Emeraldinsight.com. (2019). EmeraldInsight. [online] Available at:

https://www.emeraldinsight.com/doi/abs/10.1108/17554211211217299 [Accessed 25 Feb. 2019].