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COVER STORY

Hospitality Twenty20 A Pitch Report

Tuesday, January 7, 2020, 12:22 Hrs  [IST]



In the game of Cricket 20:20 is the most exciting format these days. A 20:20 can be anybody's game irrespective of the strengths and weaknesses of the teams involved. Strategies do not matter much in it. As time is short, quick decisions and seamless execution matter most. The New Year 2020 is also seeming to be heading towards a similar situation analysing the reports that are emerging on the ground.

The pitch report is not very robust for the global economies as well as our own Indian economy. Global agencies like the International Monetary Fund (IMF) has already expressed their dismay over the sliding growth in India, which is posing a grave threat to global growth. Declining consumption and investment and falling tax revenue in one of the fastest-growing economies of the world which aspires to be a 5 trillion-dollar economy is a jolt to the whole world.

The overall growth meltdown in the economy had its impact on the tourism economy of the country as well if the government's own statistics are to be believed. For an industry, which was expecting an acceleration in inbound traffic after the first quarter, mainly because of the general elections, had to satisfy with nearly flat growth. The inbound growth for India was just about 3% in the first 10 months of the year, which was lowest considering the track record of the past many years.

The issues in the aviation sector also had its share in Indian tourism's agony. The grounding of all Boeing 737 Max engines for safety reasons at the beginning of the year and the closure of Jet Airways, one of the critical private carriers in the country, immediately thereafter, all made air travel a costly affair forcing people to revisit their vacation plans. As the year is coming to close, the reports from various agencies about the financial health of the Indian airline companies is not satisfactory. According to CAPA, Indian carriers are expected to post a consolidated net loss of 600 million dollars by the end of FY 2019-20.

Domestic travel has always been the mainstay of Indian tourism and hospitality industry. The domestic consumption of travel products is largely recession-proof because of the Indian middle class' appetite to travel and lifestyle. However, recent reports from many leisure destinations have shown the softening of the domestic demand even during the peak months. The overall market sentiment prevailing in the economy seems to be catching up with travel as well if the indications are to be believed.

The government which talks about the perception issues is also not helping the cause or doing anything to improve it. On the other hand, political discourse in the country is going from bad to worse and getting settled on the streets in different parts of the country, creating an atmosphere of anarchy.

All these do not seem to be bothering the players in the Hospitality 20:20. They are confident and hope that the 2020 pitch will deliver results for them. They repose faith in the millennial fans and hope they will continue to throng the Hospitality stadia to boost the morale of teams in 2020. They certainly have apprehensions in the swing and the rough nature of the wicket they are going to face. But they are neither nervous nor overtly cautious as of now. Hospitality Biz tries to gauge the sentiment of the Hospitality players preparing for the 20:20:

There is a certain upswing on the cards

Vishal Vithal Kamat
Chief Executive Officer
Kamat Group of Hotels

We expect that there would be an upswing in the times to come as things will get better. A lot of pitch fans have been dejected globally due to the closure of Thomas Cook, Cox and Kings and many other such Travel Agents leading to a poor atmosphere as many lost money and hence didn't holiday. Next year when they will spend and this time there will be more robust Tour Operators servicing them.

The government needs to enhance consumer sentiments and drive this in the economy in general. Also, we need to market ourselves and the destinations better in global forums. The focus needs to be on roads and other tourism-related infrastructure.

We need better infrastructure as all countries are targeting the same set of tourists. We must ensure we offer memories that will last a lifetime through great hotels, packages and places of interest which are well kept and hassle-free all at attractive prices.

Challenging turf: Need to learn to do more with less

Ajay Bakaya
Managing Director
Sarovar Hotels & Resorts

Economic and Political instability are some of the key elements that impacted consumption in the immediate short run. This can affect the hospitality industry as it heavily depends on discretionary spending.

A careful watch on room rates is really important for protecting margins, as additional room supply comes into the market, the ability to increase room rates can become a challenge.

As hotels are required to do more with less, improving efficiencies will be necessary in order to operate profitably. Identify where technology advancements can be incorporated in our systems & processes to their full potential to improve productivity.

A larger number of bookings will take place online. Technology will be a key element in booking hotel rooms with increasing usage of smartphones during travel.

Domestic travellers will continue to be the bedrock of demand. MICE business collaborated with short-stay business travel to drive demand for rooms.

Managing costs and reviewing them on a regular basis will help improve the hotel's long-term financial health.

Faith in strong fundamentals

Shwetank Singh
VP - Development and Asset Management InterGlobe Hotels


 We enter 2020 with enthusiasm and hope. We expect the operating performance to generally improve as the fundamentals of the industry remain strong with a slowing supply graph and an improving demand curve which has historically been in the 8-10% range.

The previous year had a slowdown in the first quarter as one of the major airlines shutting down, the longish tail of general elections and slowdown of the economy. Some green shoots are beginning to appear, and we have a healthy forecast in the second half of this fiscal.

The key trends to watch out for are SME uplift, Auto sales, Aviation passenger growth, International travellers, Strength of the Indian rupee vis-a-vis other currencies and growth of the IT and ITES industries.

An Improving economy is a key to all our strategy. Other factors which drive our business is going to be our global distribution sales network, maximising our output from the wholesaler groups, engaging with our top corporate accounts and exploring new opportunities for locally negotiated accounts for every city hotel, especially in the SME segment.

The winning combination would remain simple - grow the hotel rates, maintain the occupancy targets, aim to grow new business segments and explore F&B opportunities to grow revenuess.

Conditions ripe for scoring

Rohit Vig
Managing Director
StayWell Hospitality


 Infrastructure development will bring in value to the industry, to keep driving the domestic travellers to travel more and expect a certain standard and comfort in accommodation solutions.

For our running hotels in India, a sizeable portion of the domestic and Corporate business will further increase average room rates as demand is expected to grow in this segment.

The Low-cost carriers (LCCs) expanding international routes will open a new segment of travellers in the no-frills space to visit leisure destinations which will have a direct effect on our leisure hotels under the Park Regis flag in locations like Goa, Jaipur and Kerala.

The development pipeline has now slowed down, especially in the luxury segment. The investments have decreased considerably due to high capital expenditure and unfavourable lending regime. The mid-segment still continues to go strong in terms of development in the year 2020.

We keep looking to anticipate guests' needs and deliver on them accordingly, by creating distinctive experiences that will resonate with our target audience.

Think out of the box

Kush Kapoor
CEO
Roseate Hotels & Resorts


 I have a positive sentiment for 2020. I believe that the coming year will be exciting and we plan to have more offers for our customers.

We don't look out for competition; we constantly better ourselves innovate and offer personalised services. Idea is to reinvent that further in 2020.

MICE will continue to grow, similarly the domestic travel. Corporates will be little lesser this year. In the inbound, Chinese travellers will drive the market.

We are always vying to compete with market trends with innovation and personalised services. Going ahead we plan to reinvent not only for the niche segment but for every traveller.

Conditions need to clear up

Sarbendra Sarkar
Founder & MD
Cygnett Hotels & Resorts


 With tensions in the field, I am expecting that the hospitality industry pitch should start behaving in favour of the batting team so we can gain traction that was not evident in 2019. The decline in the audience (tourist arrivals) from countries like Russia and Israel has been a prominent challenge to make the content engaging.

If the situation continues, even avid followers of the game (discerning travellers), will stop coming into the stadium (destinations), especially when there are a whole lot of choices are with them. It is, therefore, important that the right conditions are created for people to visit.

In fact, delayed matches (read project timelines) has also contributed to the challenges.

To be a winning team, we need to have innovative designs with impeccable service standards to turn the game's fortune in our favour. Harnessing right technology with the right product design is the secret for success in the emerging market condition..

The pitch will remain flat

Jayant Singh
Founder & Managing Partner
Treehouse Hotels & Resorts

The pitch will remain flat for the first quarter of the year. We will see little movement from both domestic and international leisure markets. The mid overs (summer months) will see aggression from the top order (Hill destinations) whereas Goa and Rajasthan will have negative growth. The unsung heroes of the middle order (domestic demand) will pick up and possibly surpass their previous best during the slog overs (winter of 2020).

The key challengers remain the openers (international tourists) and power play (pressure rates). For a good score, the openers will have to click (international tourists act as filler business). However, if the openers fail (filler business is low), it will put pressure on middle order (rates for domestic business).

The key players will be OTAs and the digital platform. The games will be interesting with middle-order kicking in and contributing, but the pitch itself will be slow and so high scores cannot be expected (leisure demand will move favourable towards value segment but at lower rates).

The winning combination would be giving openers a freehand with no expectation (early contracting of inbound rates) and then ordering the middle order to make the most of the situation (micro-focus to the online revenue maximization game).

Faith in the Millennial audience

Roop Pratap Choudhary
Managing Director
Noor Mahal


 Hospitality brands in India are gearing up to begin 20:20 with a lot of excitement. Millennials are unique and the fastest emerging consumer segment in the hospitality industry. With a heavy influence on the emergence of new concepts, trends, and market patterns, they are proudly entering into their prime spending years. They love to travel, enjoy cuisine experiments, are impulsive and embrace personalization over standardization. With this swing from the entirely new yet the most promising segment of the hospitality sector, the year 2020 is going to be the year of Independent hotel brands. Driven by Millennial choices, the independent hotel brands of the 21st century are going to put a strong winning proposition in 2020 by shaping the future of Luxury Hospitality.

The year 2020 will be the testing ground for new influences in hotel design, cuisine experimentation, in-room experiences, social spaces, Insta-friendly moments, services and modern amenities.

Expect the track to be slow with uneven bounce

SN Srivastava
President & Co-founder
Clarks Inn Group of Hotels


 Given the market slows down and developments in the country, the year 2020 looks like a year when we are playing overseas and on new turf. At the moment it looks challenging with uncertainties like uneven bounce and turns. As an industry, we would really hate a situation where the pitch is not behaving usual and balls are either keeping low or there is unpredictable bounce.

The pitch report that we have today, be it a market slowdown, declining growth or other developments, do not really much support domestic leisure travel movements, inbound tourism and are even affecting domestic corporate and business travel. So, we don't really see much excitement on swing (demand) part and looks like it may be one of those 20:20 match that wasn't too exciting. At the moment it looks like a slow track and uneven bounce so the scoring will be slow. It is already showing in various parts of the country.

A stable harmonious environment in the country is key for the hospitality business to thrive. So normalcy is one of the top challengers at the moment. The spate of travel advisories that we see today are like deadly bouncers that can undo any set batsmen. The economic slowdown is another challenger

Local players will score better

Vibhas Prasad
MD
Leisure Hotels Group


The Year 2019 started well for the entire industry but then took a backspin. It's still not a 'dead rubber' and a high required 'Run Rate' notwithstanding I believe we should have a better 2020. We see domestic players (demand) performing better than expected. We also do not see that many Hotel launches in 2020 and that should help in increasing ARR's.

Growth in tier 2 Towns will ensure that we keep accruing 'Runs' at a required pace. The domestic Spiritual travel market still has a vast untapped potential and will be an 'Arm ball'.

Local players and Indian brands will keep the Hospitality industry scoring better in terms of numbers.

Localisation and playing to our key strengths will make a good combination. A left-hand and Right-hand combination (Tie-ups – individual players with domestic) will help in keeping the offering nice for the customer.Hiring can be a key challenge. Finding the right talent and then be in a Square leg position' to stop any runs getting through. While the sector still is among the top 10 for FDI industry still is seeking a single-window clearance for projects.


 
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