Report on

The Oberoi Group of Hotels

Sheldon Cleetus

Roll No. 849

Executive Summary

Oberoi group of hotels and resorts offer world class service to their customers. Located at

prime destinations across the country, this group of hotels offer services under ‘Oberoi’ and

‘Trident’. They demonstrate high level of commitment and excellence in the quality of

services delivered.

Oberoi Group has been the winner of several awards and applauds across the world for being

the most efficient hotel services. The company has shown consistent profits except previous

year as there was an economic slowdown which affected the tourism and hence the hotels,the

reason for same being that nearly 6.4% of the GDP comes from this sector.

They are incorporated with the East Indian hotels (EHI) Limited, a company listed on BSE.

In the last financial year total revenue of this company was Rs. 1177.00 crores with a net

sales rise. It also had a profit of Rs. 50.96 crores.

The Oberoi group of hotels are one of the earliest starts in the country under this sector. The

entire transformation of the hospitality industry is witnessed by them and they have also

accordingly adapted to the changes.They have always been focused on only customer

satisfaction and services in this field. Because of this positioning, they have yet not expanded

in any other sector. Its few add-ons are under the EIH Limited as well.

This report emphasizes on the marketing factors associated with the Oberoi Group of Hotels.

The company’s strengths, weaknesses and other factors influencing its operation are

mentioned. It is observed that they may not be the market leaders in terms of market share,

but are always a first choice among the high end high profile customers. The code of conduct

of high level of determination in the organization makes them set their class and standards

high.

Table of Contents

1. Introduction...............................................................................................2

2. History........................................................................................................3

3. Brand Positioning......................................................................................4

3.1 Swot Analysis:...................................................................................................................4

3.2 Pest Analysis......................................................................................................................6

3.3 Segmentation, Target and Positioning...............................................................................7

3.4 Marketing Mix analysis.....................................................................................................7

4. Comparison with Competitors.................................................................8

5. Advertisements, Pricing and Distribution:.............................................8

6. Conclusion..................................................................................................9

7. Bibliography............................................................................................11

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1. Introduction

The Oberoi Group of Hotels provide a wide range of quality services in the field of

hospitality. Not only, had a wide set of luxury and five-star hotels is provided by

them, but also a Motor Vessel (Kerala) and a Nile Cruiser. They are internationally

acclaimed and are famous for providing the best quality service to their customers.

The Oberoi group has its presence in six countries under the luxury ‘Oberoi’ and the

five stars ‘Trident’.

At Oberoi, they believe in quality service. For this they came up with the Dharma for

Oberoi services and employees. They expect the members to be highly committed

towards these points and display them not only in their behaviour and action but also

in every aspect of business which demands it.

Following are the points quoted in the Dharma for them:

“Conduct which is of the highest ethical standards - intellectual, financial and moral

and reflects the highest levels of courtesy and consideration for others.”

“Conduct which builds and maintains teamwork, with mutual trust as the basis of all

working relationships.”

“Conduct which puts the customer first, the Company second and the self last.”

“Conduct, which exemplifies care for the customer through anticipation of need,

attention to detail, excellence, aesthetics and style and respect for privacy, along with

warmth and concern.”

“Conduct which demonstrates a two-way communication, accepting constructive

debate and dissent whilst acting fearlessly with conviction.”

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“Conduct which demonstrates that people are our key asset, through respect for every

employee, and leading from the front regarding performance achievements as well as

individual development.”

“Conduct which at all times safeguards the safety, security, health and environment of

our customers, employees and the assets of the Company.”

“Conduct which eschews the short-term quick fix for the long-term establishment of a

healthy.”

The above mentioned points are not to be changed as per the service provider. They

need to be followed under all circumstances. These points set them apart and help in

delivering the world class services needed by the customers.

2. History

Oberoi Hotels were started in 1934, by its founder Mr RaiBahadur Mohan Singh

Oberoi. This was initiated by the acquisition of two hotels of Clarke located at Shimla

and Delhi in 1934.

Mr Oberoi started acquiring the shares of AIH over the period of time and by 1943,

the major interests was captured by him, making him the first Indian to operate the

finest and the largest hotel chain in India. By 1949, they initiated their activity as

operators in Srinagar for the Oberoi Palace Hotel.

In 1956, the company listed its equity shares on the BSE. They issued quite a number

of bonus shares for their shareholders. Also, in 1957, Oberoi started with their own

flight catering services, to provide better quality of meals to the airlines associated

with them.

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Distribution chain plays a major role in the hospitality industry. Thus, the Mercury

Travels, Oberoi Groups travel agency, were established. It is ranked as one of the

major travel agency in India.

In 1966, Oberoi Group of hotels formed the Oberoi School of Hotel Management, to

provide world class training and professional knowledge to the aspirants.

Also, they expanded in the luxury hotels segment over the years. In 1997, they started

with their first ever premier leisure hotel, which aimed to target the very high income

travellers across the globe. Some major names under this category being The Rajvilas,

Jaipur; Amarvilas, Agra; Wildflower Hall, Shimla in the Himalayas; The Oberoi

Cecil, Shimla.

Another new brand under The Oberoi Group is the Trident, a chain of five star hotels

which aim in providing the world class service and quality. Started in 2004, this

alliance was a strategic movement with Hilton to enter the international marketing on

a large scale.

3. Brand Positioning

3.1 Swot Analysis:

Strengths: The Oberoi Group of Hotels provide a wide range of skilled

staff compared to the competitors. They hold a strong

reputation in the market because of which they are able to

retain their brand loyalty. They are not diversified into any

other services as compared to their competitor and hence they

are able to provide better services.   

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Weakness: The weakness for Oberoi group of hotels are the the cost of

land being very high they are unable to start new hotel

operation. The tax structure in India is also very high which

reduces the profitability of the industry.

Opportunities: The Oberoi group of hotels have long term relation with their

suppliers and customers from the corporates. Their quality

service creates for them opportunities to bag in more customers

and get and edge over the competitor. Since there is difference

in the peak season of national and international tourist there is a

lot of demand and hotels can get a guest all-round the

year.Since the culture of India is one of the oldest in the world

the Oberoi hotels can offer the customer a unique experience in

their heritage hotels.

Threats: Several international brands have started their own chain of

hotels in India. They serve as severe threat to Oberoi’s

business. Political instability in the country reduces tourist and

the business of the hotel.The demands of the foreign tourist or

the rapid changing trends of the west which cannot be

implemented by the hotels in India can also be a threat.The

economic instability and condition which lead to frequent

fluctuation of foreign currency can also have a huge impact on

the earning of the hotel.

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3.2 Pest Analysis

Political: Tourism sector is a big revenue fetcher for the country and

several government norms are hence related to it. This affects

the hotels as well because they are the backbone for tourism.

The taxes and regulations fetch a hefty amount from the hotels.

Economical: The slowdown in Indian economy had a drastic impact on The

Oberoi Group. Due, to the current scenario, the number of

foreign travellers in India have reduced. Also, the domestic

travellers have been affected by the current market economy.

Social: Many factors such as the location convince to travel and

preferences lead to the selection of hotels. Different age group

try to explore different facilities provided by the hotels. Also,

for some it becomes a matter of social prestige to stay in such

luxury hotels.

Technological:The advances in the technology help them provide the best

quality of service whether it is in terms of accommodation

rooms or interms of the conference rooms. Better internet

facilities, provisions for larger conferences, Video conferencing

are some of the key features available due to the technology.

Also they offer a virtual walk on Google’s street View for

various properties owned by them. This panoramic view helps

the guests explore images of the hotels and resorts and

experience the ambiance.

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3.3 Segmentation, Target and Positioning

Segmentation: The segment for the Oberoi group of hotels is a combination of

high lifestyle travellers and income.

Target: Their target group is the set of business travellers and upper

class people who look for quality services. Also, the

professional corporate personals that travel across for their

office activities are also a part of it.

Positioning: They have positioned their self as the luxury hotel with the best

quality of services provided to their customers.

3.4 Marketing Mix analysis

Product: The services offered by Oberoi include two major hotels

Oberoi and Trident. Both cater to serve the high end premium

customers. For them the people availing their products and

services are their assets.

Price: The price ranges of the rooms for these two hotels are very

high. The high end customers need to pay a huge amount of

money and additional taxes to avail the facilities offered by the

Oberoi Group of Hotels

Place: Located at extreme prime locations across the country, Oberoi

grabs the attention of the tourists. The state of art infrastructure

creates a huge impact on the minds of the travellers.

Promotion: Being a high end premium brand, Oberoi hotels need no much

promotion. The business travellers and premium customers are

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well accustomed with the services and the offerings of the

hotels. This gives them a premium edge over others. Unlike

few of its competitors the need not spend more money here.

4. Comparison with Competitors

There has been extreme competition in the Indian market in terms of hotels. Various

international competitors as well as competition from India have been a concern for

the Oberoi group of hotel.

However, they hold a strong position compared to the rest in India. Many awards have

been awarded to Oberoi. They have been voted as the ‘World’s leading Luxury Hotel

Brand 2013’ at WTA (World Travel Awards). They have been among the top 10

hotels in the world based on tourist review magazines. Not only this, they have also

been ranked as the number one in terms of Market Metrix Hospitality Index which is

a leading customer feedback survey. They beat world class hotels like Waldorf and

Four Seasons in terms of this satisfaction score of the customers. They also won the

award by the Travel + Leisure magazine, which is one of the most prestigious awards

in the hospitality industry.

The international competitors also face several challenges on the other hand. They

know very well that in order to survive this market in long run, they need to show

strong competition to Oberoi Group.

5. Advertisements, Pricing and Distribution:

In terms of advertisements, Oberoi Hotels need none. They provide high class service

to their customers which itself is the promotion of the hotel. Their customer

satisfaction and delight serves as the biggest outcome for their advertisements. In

other words, word of mouth creates a huge impact on the advertisements. Another

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mean of promoting their brand name is by providing small souvenirs with their name

imprinted to their high end customers. They need a highly reliable chain of

distribution in order to provide the required services to all their customers on time and

every time. Irrespective of the hotel location, the service has to be delivered in the

standard form and on time. Thus, the role of the distribution channels is very

important.

Another attempt to advertise or one may say to provide the feel of the hotel ambience,

done by Oberoi group is the Google Street View. One can check the locations of the

hotels and their services all on the map. This feel good experience helps attract more

customers to them.

The pricing of Oberoi is as per the norms set by the federation of hotels in India. The

high class service provided by them deserves a high price pay as well. These prices

differ depending on the room and the location of the hotel. The rack rates for them are

mentioned on their websites and they also offer discounts on online bookings.

6. Conclusion

The tourism market is currently very down due to the economic effects. We can see

the differences of the same in the net worth and the capital expenditure (Annexure I).

The Indian government imposes huge taxes to the hotels. Oberoi Group of hotels

annual report mentions the difference in their profits after tax and the gross revenues

(Annexure II). Compared to previous year (1549.98 Rupees in Millions) there has

been a drop in the profit after tax in this financial year. Also with a hope that the

tourism will be back on track, they are aiming to increase their infrastructure and

security factors. This hope is supported by the forecast increase of 2% to 4% by the

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World Travel and Tourism Council. The market composition in India is changing

drastically because of the increase in the affluence.

Following are few insights that can be drawn on Oberoi Group of hotels:

The hospitality sector will witness high growth in time to come. The next two

years may be the building phase before they witness higher growth trajectory.

Domestic travel will be the primary driver for the growth.Business travel and

MICE will have possible growth segments.

The multi-location and multi format is evolving as the most preferred strategy.

Most of the investment to come from tier 1 and then the tier 2 towns.

Budget and middle segment will also be highly preferred. Cost is one of the

main problems in this sector and companies are trying to become more

effective in the costing space.Companies will be looking at reducing

consumption of energy and may also want to invest money in technology to

reduce operating cost.

There will be a lot of need for a better infrastructure status.Procurement of

licenses has been very difficult and if it can be procured under a single

effective window can become a key requirement.

Reduction in the number of the tax levies and implementation will also benefit

the industry.

Talent would be the major challenge in the industry.The inadequate supply of

good talent and the competition for the best talent will make attrition a major

issue.

The trends for the future include the following:

Segments driving growth would be across all the segments however revenue

from the business traveller will grow significantly, MICE will also be a good

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contributor as there might be better infrastructure. Leisure traveller may start

to perceive hotel as a luxury. Key drivers in domestic travel- high income,

type of hotels, type of hotel, new location, loyalty program.

The growth strategy adopted by them would be that the next two to three years will be

a muted growth for the sector. However, after that there might be a good phase of

growth and hence companies need to start investing now to get better return.Tier 1

cities may be preferred for expansion - Mumbai and Delhi will still be a preferred

location however tier 2 locations can also be used to capitalize on the growth.Segment

that may attract investment-Most of the investment would be from the budget and

middle segment however players who are operating in the luxury end will still exist.

Tapping the market potential:

Most of the hotels are now opting for the multi-location and multi format. Within

these managing brands to ensure clear positioning and their goals is very crucial.

Few of the industry challenges and expectations are mentioned in Annexure IV.

7. Bibliography1. Oberoi Hotels & Resorts voted as leading luxury brand at WTA

http://economictimes.indiatimes.com/news/news-by-industry/services/hotels-/-

restaurants/oberoi-hotels-resorts-voted-as-leading-luxury-brand-at-world-travel-

awards/articleshow/27793907.cms

2. Prithviraj Raj Singh Oberoi: Inside the mind of India's leading hotelier

http://articles.economictimes.indiatimes.com/2012-03-23/news/

31230448_1_oberoi-hotels-and-resorts-oberoi-group-rai-bahadur-ms-oberoi

3. Oberoi CSR activities.

http://www.oberoihotels.com/HR/Communique/issue5/csr.html

4. Dull seasons for hotels as weak rupee fails to boost tourist check-ins

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http://economictimes.indiatimes.com/news/news-by-industry/services/hotels-/-

restaurants/dull-season-for-hotels-as-weak-rupee-fails-to-boost-tourist-check-ins/

articleshow/28165329.cms

5. Trident Oberoi and others as executives to tame rising power bills.

http://articles.economictimes.indiatimes.com/2011-12-19/news/

30534288_1_starwood-hotels-energy-bills-itc-hotels

6. Oberoi Hotels and Resorts properties on Google street view

http://economictimes.indiatimes.com/news/news-by-industry/services/hotels-/-

restaurants/oberoi-hotels-and-resorts-properties-on-google-street-view/

articleshow/23365240.cms

7. The Oberoi Group

http://www.oberoihotels.com/about_us/group_profile.asp

8. The annual report

http://www.eihltd.com/EIHLimited_AR2012-2013.pdf

Annexures:

I. Net worth and Capital employed

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Source: http://www.eihltd.com/EIHLimited_AR2012-2013.pdf

II. Gross Revenue and Profit after Tax

Source: http://www.eihltd.com/EIHLimited_AR2012-2013.pdf

III. Share Capital and Reserves & Surplus

Source: http://www.eihltd.com/EIHLimited_AR2012-2013.pdf

IV. Industry Challenges and Expectations:

Industry challenges Industry expectations

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1. Less supply of quality staff a. Setting up more better institute

2. high attrition rate b. provide better training and work environment

3. low work productivity c. Increase in measuring productivity

4. cost of property d. rationalise floor space index norms

5. approval from government bodies

e. start a single effective window

6. many indirect taxation policy f. uniform tax system should be introduced

7. connectivity g. better infrastructure in case of roads, railways and airport.

V. Market Statistics:

Revenue(Rs

crore)

Net Profit 

(Rs crore)

EV/EBIDTA(X)

FY’ 10 FY’ 11E

FY’ 12E

FY’ 10 FY’ 11E

FY’ 12E

FY’ 10 FY’

11E

FY’

12E

Indian Hotels

2457 2985 3633

-137 86 274 23 18 12

EIH 845 1144 1363

66 69 161 27 20 15

Taj GVK Hotels

228 266 315 26 45 59 13 8 6

Hotel Leelaventure

430 540 769 41 56 81 35 22 14

Source: Bloomberg

VI. Key Players:

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Company

Type of properties Brands

Indian Hotels Luxury, mid-segment and budget

Taj, Gateway, Vivanta and Ginger

ITC Welcomgroup Luxury, budget and heritage hotels

ITC Hotel—Luxury Collection, WelcomHotel—Sheraton, Fortune and WelcomHeritage

EIH Business hotels, leisure hotels and cruises

Oberoi and Trident

Carlson Luxury, business hotels, economy and cruises

Radisson Hotels and Resorts, Park Plaza, Country Inns & Suites, Park Inn

InterContinental Luxury, mid-segment and business hotels

InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Hotel

Source: IBEF

VII. International Brands:

Brand No. ofhotels

Targetdate

Carlson 50 2012

Four Seasons 6 2012-13

Starwood 15 2012

Hyatt 10 2012-13

Marriott 24 2012

Wyndham 50 2011

Hilton 75 2015

Intercontinental 41 2012

Fairmont Raffles 15 2012-13

Accor 44 2012

Source: Business Standard

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