Multidimensional SWOT Analysis of the Hotel Industry Considering the Globalization with Special Emphasis on Karnataka Hotel


By
Dr. Padma Srinivasan
Head-HR & Company Secretary
Sindhu Cargo Services Ltd.
Bangalore
E-mail :
hrd@sindhucargo.com
 


MULTIDIMENSIONAL SWOT ANALYSIS OF THE HOTEL INDUSTRY CONSIDERING THE GLOBALIZATION WITH SPECIAL EMPHASIS ON KARNATAKA HOTELS.

"Success depends not only on market conditions, but also on the ability to create markets where none exist."

Every business with the global prospects in the multi dimensional, volatile atmosphere has to introspect its strategies taking into consideration the strengths, weaknesses, opportunities and threats. The hotel industry also tags along the line and has to undertake smart and innovative moves to woo its clientele who expect best possible service at competitive rates. It is estimated that approximately a lull of 2%-10% of the previous year business in all categories of hotels. Some hotels have to face modernization at huge costs often especially in cyber city like Bangalore where technology up-gradation is swift and the inflows of customers require multi dimensional facilities ranging from full-fledged business center to high grade video conferencing.

The hotel should concentrate and keep up the good work even if the business is already strong. Each relevant factor needs to be rated according to its importance- high, medium, or low for the business as a whole 1. The Indian Hotel Industry utilizes the latest marketing principles and information technology updates to get a respectable position in the world market. In the face the worldwide economic recession, the guests have become more sensitive to price which calls for effective formulation of the pricing strategy.

Though the sales & market conditions are changing rapidly, the marketing principles are not changing. Hotel owners and managements tend to be more inclined towards marketing and sales rather than cost control, constantly seeking to maximize room sales - double- bed occupancies. All this may fail and such a scenario may result in profit problem on cyclic basis, which may sometimes lead the hotel into liquidation or forced sale.

Hotels seeking a balance between achieving high occupancies and high average room rates may have higher long term profit. The peculiar nature of the hotel business may compel the management to think short term about day-to-day problems or the next-meal periods, as the ROOM DAY is a PERISHABLE ITEM. The room occupancy perishes on the expiry of the day.

The increased competition has lead to Up market self-catering, time sharing, home entertainment, competition from producers of other services and commodities and other trends like rising operating costs, high interest and too many hotel in many areas. Following diagram indicates the Strengths and Weakness Analysis of a generic Hotel.
 

    Strengths
    ¥ India's rich cultural  heritage
    ¥ Second largest foreign exchange earner
    ¥ Demand far exceeds Supply
    ¥ Global economical turn-up
    ¥ Inclusion in EPCG* scheme
    ¥ New business opportunities

    Weaknesses

    ¥  Capital intensive
    ¥  Lack of adequate Man power 
    ¥  Non-availability of land
    ¥  Regional imbalance of hotels
    ¥  Long gestation period
    ¥  Poor infrastructure and cleanliness
    ¥  Huge labor turnover
    ¥  Less  corporate ownership

Opportunities
¥  Boom in tourism
¥  Privatization of airlines
¥  Tie ups with international hotel chains
¥  Increase in disposable incomes
¥  Boost in tax concessions

Threats
¥ Sensitive to disturbances in the country
¥ Competition from other Asian countries whose official currencies have fallen drastically
¥  High service & luxury taxes may render India as an unviable destination.
¥  Lack of trained entrepreneurs

*EPCG - Export Promotion Capital Goods.
Fig 1. Strengths and Weakness Analysis of a Hotel.


The Japanese style of management has added the following dimensions to the business flow viz., zero customer feed back time, zero service improvement time, zero purchasing time and zero defects. Therefore, on a continuous basis THREE MAJOR ASPECTS are monitored to maximize sales and net profit namely: Marketing, Plan of Action and Sales Technique.

This will combine performance and importance levels in SWOT analysis of the individual hotel though it may not correct all of its weaknesses or rejoice about all of its strengths. But the hotel should consider all possible better opportunities and evaluate if it now possesses the required strengths to take new challenges.
 

 

Customers who brand switch easily 'more values-less price'

 

New entrants focussing regionally, nationally and internationally

SIX METRIC
ANALYSIS OF
INDIAN HOTEL
INDUSTRY

Suppliers who demand higher prices for out sourced inputs

Competitors, who manipulate the demand supply position to suit their competencies

Global tourism
Opportunities & governmental financial assistance

 

Fig.2 Six metric analysis of Indian hotel industry


INSTITUTE OF HOTEL MANAGEMENT & CATERING TECHNOLOGY,
MANIPAL  – A CASE STUDY OF MAXI-MAXI HOTEL.

The Valley View Hotel of Manipal is a famous star hotel catering to Manipal Pai Hospital and other local educational organizations. The Medical college employees, patients and the medical students are totally catered to by this hotel.

Opportunities That Maximize The Revenue of the Hotel:

    * The medical students are housed as a compulsory hostel in the hotel, which has special package for the longer duration.
    * This hotel has regular stream of the parents visiting their wards who prefer to stay with them.
    * The students who do opt not to change their rooms after their vacations and like to have a special pricing only for them assure the steady business
    .

Strengths That Maximize and Drive The Revenues:

    * The menu card is specially prepared for these foreign students of third world.
    * The Valley View Hotel of Manipal has 24-hour cash counter offering the required forex and encashing the traveler's cheques.
    * The ambience is well maintained to enable to maintain the relaxed atmosphere and noise level reduced to the minimum.
    * The food plans are based on the nativity of the guest like that of American, Continental etc. Frequent foods fests keep the other country students.
    * The hotel has the best business center facilities with telelinks, 24 hours Internet and the latest and best communication and banking facilities.
    * The trained students are passed on from the Institute of Hotel Management & Catering Technology; Manipal itself for the hotel has tied up WELCOME group of ITC for best hotel management students
    .

Hotels must lay emphasis on customer care and satisfaction being top priority in the current scenario. From time to time the hotels must experiment with new things to enhance the same. The budget hotels have experienced a growth by using 'value for money', their trump card. For growth in the industry, hotels in the higher segment will have to offer value-added services to their guests.

To conclude….

Building a winning strategy is undeniably the foundation of successful management 2. The winning strategies on based on answering the following questions/action points successfully:

1. Grow your revenues
2. Manage your costs
3. Captivate your customers.

Bibliography:

1. Anupa Sophia Mathias, The Hotel Market in Bangalore, Chennai & Coimbatore, a study for CB Richard Ellis, Bangalore, Page. No. 2.

Robert Heller, First rule of successful business strategy: Get a business strategy, www.thinkingmanagers.com.
 


Dr.Padma Srinivasan
Head-HR & Company Secretary
Sindhu Cargo Services Ltd.
Bangalore
E-mail :
hrd@sindhucargo.com
 

Source : E-mail September 21, 2004

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