Industry Analysis

Current Industry Trend

Industry Background:

Indian hotel industry's revenues are likely to increase by 7-9% in 2014-15 mainly driven by incremental rooms and food and beverage income, ratings agency ICRA has said. The agency however said that the outlook for the industry is expected to remain subdued over the next 12-18 months due to weak demand in view of supply.

"The outlook for the Indian Hotel Industry over the next 12-18 months is expected to remain subdued given the gap between supply and demand. However, measures by the government to drive tourism through several strong policy initiatives could bring in stronger demand, supporting the industry over the next 12-18 months," ICRA said in a report.

Growth is expected to accelerate to 9-12% over the next two years, it added. Average Room Rates (ARRs) are expected to be largely flat while occupancies are estimated to improve by 2-4% during 2014-15, ICRA said.

Industry occupancy levels have witnessed improvement in the current fiscal. However, it has been geographically concentrated in pockets like Mumbai. But there continues to be lack of traction in ARRs even in markets like Mumbai, which has been maintaining a steady Rs 100-200 discount on year-on-year basis, it pointed out.

Domestic demand has showcased a growth of over 10%, driven by both business and leisure travellers during 2014-15.

However, falling global economic sentiments have affected inbound travel and with a booking window of 8-12 months for western leisure travel, the impact is expected to be felt in 2015-16 as well.

ICRA expects easing visa and policy norms will support inbound travel into India even as a weaker global economy curtails traveller budget, it said.

Foreign tourist arrivals growth increased from 5.9% in 2013 (calendar year) to 7.1% during 2014, the rating agency said.

As per ICRA Research, India has over 29,000 premium rooms under construction- to be launched over the next six years.

As a result of supply-demand mismatch, ICRA said, industry players have been resorting to significant belt tightening by keeping a check on key cost drivers like payroll expenses, which have gone up only by an estimated 4% over the last three fiscals.

Trends:

1. Millennials the New Power Segment - Exploration, interaction, and emotional experience is the hallmark of Millennials, the fastest growing customer segment in the hospitality industry, expected to represent 50% of all travellers by 2025. With the rise of millennial consumers businesses will need to be more transparent and tech savvy, with a strong focus on empathy and customer connection. Technology is essential for this demographic and they will expect technology to power check-in, payment, eating, and shopping. They will also actively engage in social media like Twitter, Yelp, Facebook, and TripAdvisor to complain. Millennials will expect a deeper link between tourism services and how they manage their everyday lives. “Foodies” are a distinct subset of this market looking for a gourmet experience at a reasonable prices. Culture buffs, LGBT and multi-generational travelers are looking for unique and novel experiences. Over half of Millennials stayed at independent hotels last year, 20% more than baby boomers. However, don’t count out the aging baby boomers that are living longer, are rethinking how to define retirement, and placing their energy in more creative pursuits.

2. Taking Control of Health and Personal Well Being – Taking charge of personal health will expand. Monitoring and adjusting your health will become more important as technology moves onto the body and consumers take greater control of their health. Tracking internal biochemistry and personal fitness data will result in more engaged and empowered personal health, and tele health (remote consultation) will allow for higher quality and more personalized care. Air purification, energizing lighting, a yoga space, in-room exercise equipment, and vitamin infused shower water are just the start.

3. Technology Driven Self-Sufficient Travelers - Innovative technologies on a mobile platform will be expected as more individuals rely on digital concierge services. Mobile check-in and seamless connectivity across platforms and devices is now expected. With geo-location software easily available, selling locally with a focus on content marketing is expected. Connectivity is key as more individuals are relying on information delivered through social software from virtual networks. Technology is better and smarter, and more integrated user experiences are likely. The smartphone is essential equipment for almost all employees, making it a potential tool for HR training and other workplace uses. Integrated outlets, USB ports, and wireless technology integration with hotel TV systems are basic. The iPod docking station is passé, but simple clocks are back in.

4. Sustainability and Resource Constraints – Eco-friendly practices are becoming the norm, and most hotels must have an attractive “green policy”, as travellers expect hotels to have some type of environmental program in place, while few are still willing to pay more for eco-features. Critical resources such as water and power are under increasing strain leading to price increases, volatility and even shortages. Global warming and energy use are affecting how we consume and live on a societal scale. Renewable energy resource and innovative projects will shape the future of resource use, while regional tensions over water will be heightened in 2015

5. Disruption and the Sharing Economy - Emerging new business models including peer-to-peer networks life Airbnb, Uber, and Lyft, multi-sided platforms such as Google and eBay, or free business models such as Skype and Flickr will change the business landscape. As peer-to-peer networks expand and grow they will become more professional and pose stronger direct competition to traditional travel services. Further, the growing popularity of meta search engines from big players like Google and Microsoft and the rapid growth of firms like Kayak may alter the user experience, define the mobile experience, lead to consolidation and impact partnerships with OTAs and hotels. As OTAs consolidate and expand their relationship with customers the costs of distribution will become increasing critical.

6. Fewer People and More Data - As more travellers prefer technology to human beings, bypassing the front-desk, using a digital concierge, and saying good bye to bellmen and other traditional positions could be in your future. Rethinking how to communication with guest will mean using more data and fewer staff. Recommendation engines will allow guests to obtain “good service” on an array of travel needs once handled by the hotel. Group planners will also expect easy online planning capabilities and fast rates. While a help yourself model will focus on technology to drive service, staff will need to be better able to create and execute on a “new” model of service.

7. Customer service: For those who are either tech-challenged or prefer more service, that service must be genuine and of a high quality – good recommendations whether they be for food, shopping or activities delivered by a truly caring team member. “WOW” Service is the only way to ensure repeat business. By creating an impressive, unique guest experience that exceeds all expectations, we are able to capture the customer whether it be with or without technology. On the meeting and event side, planners are expecting hotels to have tools to assist them. These tools may include online requests for proposals; dynamic package pricing that allows the planner to pick and choose certain amenities and more.

8. Booking more profitable business: It is critical as more revenues result from strong increases in occupancy levels, average rates and revenue per available room (RevPAR). This may suggest more profits, but the growth in distribution costs as well as other operating costs such as health care and the

minimum wage increases can stunt profit growth. While the revenues are coming first and foremost from RevPAR growth, there are additional ways to increase both revenue and net income.

9. Reputation management continues its importance because it is no longer all about TripAdvisor. Although this platform continues to dominate in the hotel industry, it is easy to skip over the increasing importance of Yelp, Yahoo, Facebook, and Expedia for guest reviews and comments. Managing a property’s reputation is increasingly important and using tools to help this process is crucial.

10.Mocial: Maybe soon we will see social as a dominant booking engine. According to PhoCusWright, the term “mocial” may be among the most overused buzzwords of the past few years, but there’s no disputing the importance of mobile to social strategy. Hotel companies are likely underestimating traveller interaction with them via mobile. For most social platforms, mobile is becoming the primary means for travellers to access and contribute content. Also mobile check-ins are the upcoming trend in the industry.

11.Real time marketing and providing content on an ongoing basis will dominate the industry. Although it would be unwise to discount the impact of traditional marketing, real time marketing must take place on a regular basis and incorporate guest-generated content, especially via social media. This must be a crucial component of the marketing mix. Video campaigns on social media, when done properly, are proving to be successful for hoteliers looking to generate guest engagement.

12.Health and wellness: They will continue to drive customer. There is a need to balance health and wellness with tasty options that are cost effective.

Role of Technology

Present Technology:

Internet

The Internet has a powerful impact on hospitality and tourism. For many businesses and locations, the experience starts long before a traveller arrives--it begins with the first visit to the website, when a person sees photos of the location and gets a sense of what to expect. In the hospitality and tourism business, effective use of Internet technologies can improve revenue. Websites, blogs, online advertising, social media, online ordering and information repositories all help convince customers to choose a location or business.

Reservations Systems

Booking engines to allow easy access by consumers and travel professionals; the systems enable individuals to make reservations and compare prices. Many, like Expedia and Orbitz, are available through online interfaces. Booking engines cut costs for travel businesses by reducing call volume and give the traveller more control over their purchasing process.

Computer Systems

Because many tourism businesses are large and dispersed, they use computer systems to stay connected. Computer systems allow communication between branches and locations which makes it easier to streamline reservations and cross-company policies. They are also used internally to keep all of the staff on the same page and make it easier to access information that can improve the guest experience: guest preferences, housekeeping information and reservation details can all be kept on a single system.

Mobile Communication

Many travellers take some form of mobile communication device with them on the road, whether it is a tablet computer or a mobile phone. To keep customers advised of changes many tourism and hospitality businesses use mobile communication; they send delay notices, offer deals and sponsor location-based advertising. Depending on the type of business the communication might happen through emails, text messaging or GPS tagging, for example.

Upcoming Technology:

CRMCustomer relationship management (CRM) software allows contacts and information to be organised and managed in one place. An effective CRM makes it easier to build ongoing relationships with customers, as well as making important details easily accessible to all staff via a cloud-based application.

Marketing automationMarketing automation allows personalised emails to be sent to customers and prospects based on their activities and personal information. A basic example is to automatically send a discount email to customers on their birthdays. However, advanced marketing automation software allows much more complex tasks to be performed, such as emailing customers who have been visiting or clicking on certain areas of the website or social media pages. While this may be out of reach for restaurants and smaller venues, many larger hospitality businesses could benefit greatly from monitoring and nurturing their prospects to encourage repeat business.

Social media

A social media presence is crucial in the hospitality industry, particularly given that Facebook is a popular platform for check-ins and reviews of restaurants and hotels. Attractive images are usually the most popular type of post, so restaurants and hotels should take the opportunity to share beautiful and interesting photos of their food and their facilities. Businesses should also choose their social media platforms carefully based on their target audience, rather than simply joining all of them.

SmartphonesThe proliferation of smartphones is yet another opportunity for hospitality businesses to improve customer service. Hilton Worldwide has taken advantage of this by

offering guests the ability to check in and out, select their room, check maps and make extra requests or purchases all from their smartphones. And an even more revolutionary service will soon be made available, using security technology that allows smartphones to function as room keys.

Smart appliances

Advances in smart appliances and home automation are beginning to reach the hotel industry, and will no doubt have a greater influence in the future. Lighting, temperature, blinds, alarms, TV, radio and room service will all be controlled from a single tablet device, or from a single app that guests can download and login to from their own device.

Despite the many changes that are being brought on by these technologies, the truth is that they are there to enhance, not to replace, the core offerings of a hospitality business. Top quality food and customer service are still the fundamental pillars of the industry, but the technologies discussed above can make it easier for you to consistently deliver a memorable experience to your guests.

Social

Social media has had a profound impact upon the hospitality industry. Trip Advisor has become one of the main sources of information for people researching holidays, hotels and leisure facilities. Meanwhile, newer social tools like Facebook or Twitter are quickly becoming just as influential. For any hotel to not at least monitor social media is tantamount to willingly flying blind.

The online reputation of a property is business critical. It does not however, stand alone as a marketing department concern, but relates directly to daily operations. As such, social media monitoring MUST be interfaced with the hotel management systems so that swift, appropriate action can be taken.

Looking again at City Nites, the organisation is improving its online reputation by monitoring relevant comments made via social media channels such as Twitter. These comments can then be answered and addressed by both marketing and operational personnel. Incorporating social media into City Nites' hotel management system in this way makes it easier to track all the possible sources of comments – especially when promotions are running.

Personalised systems

Customers expect their experience within a hotel to be totally personalised to them: from the welcome message on the television screen and food preferences to additional services such as personal training or flowers in the room.

This quickly creates a huge range of valuable customer preference data that needs to be fed into the hotel management system in order to deliver a personalised, high

quality service for each return visit. This is not just a case of linking the customer relationship management system into the hotel operations - it is embedding the process of capturing guest preferences and proactively using that data.

For example, if a guest comments on the facilities in the room to someone on the front desk as they leave for the day, the data can be passed to the relevant operational team for the issue to be rectified and the guest notified upon their return - delivering a truly personalised service at all levels of the stay.

Integration

Hotels span many functions - from accommodation and event catering to specialised facilities such as golf or health spas. Each of these areas has, traditionally, operated an individual software system. Whilst this approach has delivered specific functionality, it has also led to silos of information.

Integrating these systems can provide more comprehensive management information, faster reporting and a truly comprehensive view of profitability. The hotel can also pull together truly holistic reports for management information and customer communication.

Elsewhere, integration offers the possibility of being able to "revenue manage" the guest across all areas of their stay: this requires transaction level interfaces but need not be complex to use. Critically it aligns the marketing -based personalised offering with the financial outcome of the revenue secured.

Major Players:

International:

InterContinental Hotels Group:

Since 2004 InterContinental Hotels Group has been the largest hotel group in the world - today operating over 650,000 rooms.

The recently launched EVEN and Hualuxe brands join InterContinental Hotels & Resorts, Hotel Indigo, Crowne Plaza Hotels & Resorts, Holiday Inn Hotels & Resorts, Holiday Inn Express, Staybridge Suites, and Candlewood Suites in a portfolio of over 4,000 hotels.

IHG also manages Priority Club Rewards, the first and largest hotel loyalty programme in the world, with over 63 million members globally.

Hilton Worldwide

After 93 years, Hilton Worldwide remains a leading global hospitality company, spanning the lodging sector from luxurious full-service hotels and resorts to extended-stay suites and mid-priced hotels.

Its brands are comprised of more than 3,800 hotels and timeshare properties, with 630,000 rooms in 91 countries.

They include: Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Hilton Hotels & Resorts, DoubleTree by Hilton, Embassy Suites Hotels, Hilton Garden Inn, Hampton Hotels, Homewood Suites by Hilton, Home2 Suites by Hilton and Hilton Grand Vacations.

The company also manages the world-class guest reward program Hilton HHonors.

Marriot International:

Based in Bethesda, Maryland, Marriott International is a leading lodging company with operations in 74 countries.

The group operates 3,700 properties and reported revenues of over $12 billion in fiscal year 2011.

The company operates and franchises hotels and licenses vacation ownership resorts under 17 brands, including: Marriott Hotels & Resorts, The Ritz-Carlton, JW Marriott, Bulgari, EDITION, Renaissance, Autograph Collection, AC Hotels by Marriott, Courtyard, Fairfield Inn & Suites, SpringHill Suites, Residence Inn, TownePlace Suites, Marriott Executive Apartments, Marriott Vacation Club, Grand Residences by Marriott, and The Ritz-Carlton Destination Club.

There are approximately 300,000 employees at headquarters, managed and franchised properties.

Wyndham Hotel Group:

Wyndham Hotel Group, part of the Wyndham Worldwide family of companies, operates over 7,170 hotels and approximately 608,300 rooms in over 66 countries.

The group controls a number of brands including: Wyndham Hotels & Resorts, Ramada, Days Inn, Super 8, Wingate by Wyndham, Baymont Inn & Suites, Microtel Inn & Suites by Wyndham, Hawthorn Suites by Wyndham, TRYP by Wyndham, Howard Johnson, Travelodge and Knights Inn.

In addition, the company has license agreements to franchise the Planet Hollywood Hotels, Dream and Night brands and provide management services globally.

All hotels are independently owned and operated excluding certain Wyndham, Hawthorn Suites by Wyndham and TRYP by Wyndham hotels as well as certain international Ramada, Days Inn and Super 8 hotels.

Indian Brands

Taj Group:

The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectively known as Taj Hotels Resorts and Palaces and is recognised as one of Asia's largest and finest hotel company. The Taj, a symbol of Indian hospitality, completed its centenary year in 2003.

Taj Hotels Resorts and Palaces comprises 93 hotels in 55 locations across India with an additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the Middle East.

Spanning the length and breadth of the country, gracing important industrial towns and cities, beaches, hill stations, historical and pilgrim centres and wildlife destinations, each Taj hotel offers the luxury of service, the apogee of Indian hospitality, vantage locations, modern amenities and business facilities.

IHCL operate in the luxury, premium, mid-market and value segments of the market through The Taj, Taj Exotica, Taj Safaris, Vivanta by Taj Hotels & Resorts, The Gateway Hotels & Resorts, Ginger.

ITC Hotels

ITC Forayed into the Hotels business to support the national priority of developing new avenues of foreign exchange earnings and boosting tourism. Beginning with the Sheraton Chola, Chennai in 1975, ITC’s journey in this business has redefined the face of Indian hospitality.

Today, ITC Hotels is one of largest hotel chains in the Country with over 100 hotels across 70 destinations. Symbolised by its distinctive ‘Namaste’ logo, ITC Hotels integrated India’s fine tradition of hospitality with globally benchmarked services.

With a string of firsts to its credit, ITC Hotels pioneered the concepts of branded accommodation, branded cuisine, environment and guest safety. ITC Hotels is an exemplar in sustainable hospitality with all its premium hotels being LEED® Platinum certified.

As one of India’s premier corporations, ITC Hotels’ seeks to fulfill a larger role by enlarging its contribution to the society of which it is a part. The trusteeship role related to social and environmental resources, aligned to the pursuit of economic objectives, is the cornerstone of its Environment, Health & Safety philosophy for which it has won many awards and accolades.

The Oberoi Group of Hotels:

The Oberoi Group, founded in 1934, operates 30 hotels, a Nile Cruiser and a Motor Vessel in the backwaters of Kerala. The Group has presence in six countries under the luxury 'Oberoi' and five-star 'Trident' brand. The Group is also engaged in flight catering, airport restaurants, travel and tour services, car rentals, project management and corporate air charters.

The Leela Group:

The Leela Palaces, Hotels and Resorts is owned and managed by Hotel Leelaventure Limited which was established in 1983 in Mumbai. The company is a part of The Leela Group whose portfolio includes hotel and resort properties; IT and business parks; as well as, real estate development.The Leela - as it is commonly referred to, is a group of eight luxury palaces and hotels, located in Mumbai, Goa, Bangalore, Trivandrum, Gurgaon, Udaipur, New Delhi and Chennai. The group has opened a new hotel in Chennai (2013) and has plans to open new hotels in Coimbatore and Agra, Lake Ashtamudi (Kollam, Kerala) and Jaipur.[2] The company has marketing alliances with US-based Preferred Hotels and Resorts and is a member of Global Hotel Alliance based in Geneva, Switzerland.[3][4] In October 2013 The Leela ended its marketing alliance with Germany-based Kempinski.

Substitutes to Hotels

Considering the Premium Business Hotels in mind the substitute for them are increasing which are eating up into the market of this category.

Category in consideration:

Business Hotels: - These hotels are the largest group of hotel types and they primarily cater to business travellers and usually located in downtown or business districts. Although Business hotels primarily serves business travellers, many tour groups, individual tourists and small conference groups find these hotels attractive. Guest amenities at business hotels may include complimentary newspapers, morning coffee, free local telephone calls, Breakfast etc.

Substitutes

Airport Hotels: - These type of hotels typically target business clientele, airline passengers with overnight travel layovers or cancelled flights and airline crews or staff. Some hotels might give free transport between hotel and

airport. Some Airport hotels also charges the guest by hour instead of normal daily night charges.

Suite Hotels: - These kind of hotels are the latest trend and the fastest growing segments in the hotel industry. Such hotels have a living room and a separate bedroom. Professionals such as accountants, lawyers, business men and executives find suite hotels particularly attractive as they can work and also entertain in an area besides the bedroom.

Extended Stay Hotels: - Extended stay hotels is somewhat similar to the suite hotels, but usually offers kitchen amenities in the room. These kind of hotels are for long stayers who wants to stay more than a week and does not want to spend on hotel facilities.

Serviced Apartments: - Serviced Apartment / Residential hotels provide long-term or permanent accommodation for Guest. Usually guest makes a lease agreement with the hotel for minimum of one month up to a year. Rooms generally include living room, bedroom, kitchen, private balcony, washing machines, kitchen utensils etc. Unlike normal hotels Serviced apartment only provide weekly one housekeeping service.

Resort Hotels: - Resort hotels are usually located in the mountains, on an island, or in some other exotic locations away from cities. These hotels have recreational facilities, scenery, and golf, tennis, and sailing, skiing and swimming. Resort hotels provide enjoyable and memorable guest experiences that encourage guest to repeat to the resort.

Bed and Breakfast / Homestays: - These are houses with rooms converted into overnight facilities, this can size up to 1 to 10 guest rooms. They are also known as 'Home Stay's'. The owner of the B&B usually stay on the premises and is responsible for serving breakfast to guest.

Timeshare / Vacation Rentals: - Another new type or segment of the hospitality industry is the timeshare hotels. These are sometimes referred to as “Vacation-interval" hotels. Timeshare hotels are where the guests who purchase the ownership of accommodations for a specific period. These owners may also have the unit rented out by the management company that operates the hotel.

Casino Hotels: - Hotels with gambling facilities are called Casino Hotels .Although the food and beverage operations in casino is luxurious their functions is secondary to and supportive of casino operations.

Conference and Convention Centres: - These type of hotels focus on meeting and conferences and overnight accommodation for meeting attendees. They also provide video conferencing facility, audio-visual equipment’s, business services, flexible seating arrangements, flipchart etc. These hotels mostly located outside the metropolitan areas and have facilities like golf, swimming pools, tennis courts, fitness centres, spas etc.

Tangibility of the Industry:

In the premium business hotel industry the offerings are a mix of tangible and intangible. The room facilities, the food, the attendant service, the courtesy of the staff and all these features make it a good mix of tangible and intangible. Considering business hotels we see that the intangibility is dominant.

Typical Service Offering

Customer expectations of service:

1. Customers will expect modern looking equipment and excellent physical facilities in the hotel.

2. Customers will expect amenities such as high end TV, fridge with chocolates, liquors etc, and excellent furniture in the room.

3. There should be a scope of entertainment/ relaxation amenities such as bar, restaurant, swimming pool, spa /salons etc.

4. Customers expect the employees to be neat in their appearance and the materials associated with the service (forms, bills, and seating arrangements) visually appealing.

5. Customers expect that the hotels will perform the service right the first time and provide the service at the time they promise to do so.

6. Whenever the customers face any problem, they expect the hotel staffs to show a sincere interest in solving it as soon as possible.

7. The customers presume that the hotel staffs will give individual attention to them. Also the operating hour of the hotel should be convenient for all the customers.

Bundles of benefits received by customers:

Customers receive the exclusive facilities and services including personalised butlers, private dining, champagne room and cigar lounge etc. along with rooms. They also receive rooms which includes free wifi, breakfast, lunch, dinner, complementary arrival drinks, private pool view, private airport transportation.

Some hotels offers  PC and Mac enabled internet kiosks featuring IMAC and dual windows, a plush lounge, teleconferencing facilities, meeting tables electronically equipped to minimize excessive cabling, electronic white boards directed to TV in meeting rooms for making presentations extremely easy, expandable rooms with large screens, scanning, faxing, printing, copying, comb binding, CD/DVD writing, secretarial support plus long term office rental spaces accompanied by business centre services.

Typical service performance:

1. It can be providing a customer/ businessman a personal associate or a translator if required.

2. It also provides facilities like conference rooms, meeting rooms, video conference facility etc.

3. Providing luxury cars for inter city or intra city travel.

4. Provide customised set up for meeting rooms.

5. Flexible check in and checkout timings.

6. Special Luxury rooms for single lady travellers and 24/7 service by lady staff only and special amenities for Ladies.

The Five key dimensions of Service Quality are applicable to the Upscale Luxury Hotel Industry.

Dimension VariablesTangibility Attractiveness(external), Internal

decorations, Staff appearance & tidiness, Hotel facilities

Reliability Timely accommodation, Rooms delivered to customers, Facilities of rooms, Orders done by staff

Responsiveness Welcoming of customers, Response for requests, Giving information offering for service, Speed of service

Assurance Staff experience and professionalism, Staff politeness, Price of service, Effort done by staff for security, Hotel atmosphere(calm and quit)

Empathy Accessibility, Staff availability, Attention paid by staff, Staff flexibility, Hotel prevision for customer necessities

Reliability is the most important factor in the luxury hotel industry. The reliability dimension reflects the consistency and dependability of the hotel’s performance. Does the hotel providing the same level of service time after time, or does the quality

dramatically vary with each encounter? These are the things customer research before going to a hotel. They check the reviews from previous customers and then they decide whether to go or not to that hotel. The customers also check does the hotel keep the promises, bill the customers accurately, keep accurate records etc. Nothing can be more frustrating for customers than unreliable service providers. So the reliability is the utmost priority for any customer.

A hotel’s tangibles includes variety of objects such as carpeting, furnishings, lightning, wall colours, interior design of room, quality of mattress etc. The scope of differentiation in tangibles between two luxury hotels is quite less than reliable services. So tangibles are least important factor in luxurious hotel industry.

Customer involvement in the service industry is very high because customer is involved in the process of delivering the service.

Service Blueprint of a Luxury Hotel

Service Encounters/Moments of Truth:

1) Cart of Bags : It is the first time when the guest contact a hotel staff (Bellboy).2) Check In : The second moment of truth when the guest goes to registration

counter for a room.3) Receive Bags : It is the third moment of truth when the Bellboy returns the

bag back to the guest.4) Call Room Service : It is the fourth moment of truth when the guest gives the

order for breakfast/lunch/dinner by calling to room service department.5) Receive Food : It is the fifth moment of truth when the room service staff

delivers the food to the guest at his/her room.6) Check Out : It is the sixth and final moment of truth when the guest checks

out of the hotel and pay the bills at the bill counter.

Value of blueprinting a service:

There are varied benefits of blueprinting a service. Service blueprinting, being a customer-focused approach for service innovation and service improvement, permits companies to envision the service processes, points of client contact, and also the physical proof related to their services from their customers’ perspective.

Service blueprints conjointly connect the underlying support processes throughout the organization that drive and support customer-focused service execution. One in all the foremost distinctive characteristics of services is their method nature. Service blueprinting, being a versatile approach, helps managers with the challenges of service method style and analysis that is dynamic in nature. It’s a strong technique that may be accustomed depict a service at multiple levels of research. For instance, it will facilitate the careful refinement of one step within the client method additionally because the creation of a comprehensive, visual summary of a complete service method. Effectively coming up with and managing the client expertise needs presenting a series of clues that perform holistically to fulfil or exceed client expectations. Additionally, service blueprints permit all members of the organization to envision a complete service and its underlying support processes, providing footing from that vital points of client contact, physical proof, and different key purposeful and emotional expertise clues can be orchestrate.

Service blueprinting could be a service innovation approach that's film-able across differing kinds of organizations and during a kind of sensible applications. A number of the advantages firms notice from the method of service blueprinting are mentioned below:

A Platform for Innovation: Foremost, service blueprinting provides a typical platform for everybody – customers, employees, and managers – to participate within the service innovation method. Blueprinting provides a typical purpose of dialogue for brand spanking new service development or service improvement. The service blueprint provides staff and summary of the complete service method so that they will gain insight on how their roles match into the integrated whole. This reinforces the notion that the full service is larger than the total of its elements.

Recognizing Roles and Inter-dependencies: The method of blueprinting and also the document itself generate insights into numerous role and relative inter-dependencies throughout the complete organization. The customer’s actions and interactions are highlighted, revealing points at that he or she experiences quality. The blueprint reveals all of the bit points that are vital in meeting client wants and helps in characteristic probably points of service failure.

Utilizing the visual language of service blueprints puts everybody concerned within the service style method on identical page, making additional communication potency and informational preciseness throughout the usually “fuzzy front end” of the service development method.

Facilitating each Strategic and plan of action Innovations: Service blueprints are often changed to suit any level of research desired. The methodology has been accustomed improve macro- and micro-level processes, facilitate strategic and plan of action decision-making, additionally as style complicated and straightforward services with high and low levels of divergence. Managers in the least levels respond favourably to service blueprinting once they are introduced thereto in workshops and seminars. Most will rapidly see the potential and begin thinking of the way to use the technique.

Transferring and Storing Innovation data Service: Blueprints are often written out or be hold on electronically and created accessible to everybody concerned. Blueprints being developed are often announce on a cooperative web site, providing all collaborating parties with access to Associate in Nursing editable sort of the document.

Designing the Moments of Truth: Blueprinting promotes conscious decision on what guests see and that staff ought to be up-to-date at every moment of truth. In several services it's comparatively straightforward to come to a decision that components of the service ought to be provided visible of the guest and that

components ought to be performed behind the scenes, or backstage. For example, at a hotel, housework might give flip down service within the presence of a client, however the laundry is clearly a housework activity best performed backstage. Once developing a brand new and innovative service, however, the choices don't seem to be continually really easy. Recent trends within the restaurant business, for instance, currently build it absolutely acceptable, even fascinating for diners to gnaw a “chef’s table” placed within the room, that is historically out-of-bounds to customers. Service blueprinting makes it easier to ascertain the key operational, human resources, and selling problems related to providing such a particular eating expertise.

Clarifying Competitive Positioning : Service blueprinting permits companies to clarify competitive positioning by facilitating the comparison of the required service and actual service, or company and rival processes. Mapping twin processes for the identification of key service quality gaps could be an extremely helpful application of blueprinting. This can be not shocking, given firms’ continuous efforts to position their service offerings properly within the extremely competitive international marketplace.

Understanding the perfect Service Experience: We have a tendency to conjointly understand service blueprinting as being applicable at intervals the realm of research in understanding and coming up with ideal service experiences. for example, completes undergoing location usually ask for data concerning client perceptions of what Associate in Nursing “ideal” brand at intervals a given product or service class would appear as if. Customers are asked to spot wherever such a complete would be positioned on key attributes or dimensions. For services, it's usually helpful to own customers determine the perfect service method for a given service class. Service blueprinting will facilitate market researchers overcome the constraints inherent in asking customers to explain such a service by victimization words alone. The service blueprint will give a method for service complete managers and service designers to look at and compare the customer’s ideal service, the firm’s actual existing service, and any range of competitors’ service offerings. Use of photography or videography will greatly enhance the effectiveness and potency of this method.

Physical Evidence

Role of servicescape in Hotel industry.

The servicescape is very important in creating a good impact when providing a service. In an upscale hotel also, it plays very significant role in delighting the customers. The servicescape can play many roles simultaneously. Therefore, it is important to provide appropriate physical evidence of the services in a hotel.

Packaging Role

The service-scape is the outward appearance of the organization and thus can be critical in forming initial impressions or setting up customer expectations – it is a visual metaphor for the intangible service. The physical surroundings offer an organization the opportunity to convey an image.

Facilitator

The servicescape can also serve as a facilitator in aiding the performances of persons in this industry. How the setting is designed can enhance or inhibit the efficient flow of activities in the service setting of a hotel, making it easier for customers and employees to accomplish their goals. A well-designed, functional facility can make the service a pleasure to experience from the customer’s point of view and a pleasure to perform from the employee’s. On the other hand, poor and inefficient design may frustrate both customers and employees.

Socializer

The design of the servicescape aids in the socialization of both employees and customers in the sense that it helps to convey expected roles, behaviours, and relationships. It also suggests to customers what their role is relative to employees, what parts of the hotel servicescape they are welcome in and which are for employees only, how they should behave while in the environment, and what types of interactions are encouraged.

Differentiator

The design of the hotel can differentiate it from its competitors and signal the market segment the service is intended for. In the hotel industry one large hotel may have several levels of dining possibilities, each signed by differences in design.

Aspects of servicescape that significantly influence the service delivery process

There is ample evidence for the strong impact of the physical environment and hotel ambience on customer satisfaction. All tangible elements that facilitate the process of discharging the services influence the service delivery process in a hotel.

Use of servicescape as a source of competitive advantage

The extent to which a hotel can offer “hospitable service” is actually the competitive advantage or unique selling proposition that differentiates one hotel from another. Because the ultimate aim of hospitality is to create a memorable experience, the attractiveness of the servicescape also plays a vital role apart from the personalized customer relationship. The concept of customer satisfaction is very much related to feelings of pleasure and enjoyment generated from the consumption of a product or service. The interactional effect of attractive servicescape and hotel hospitality tends to increase the level of guest satisfaction substantially. Guests experience enjoyable service encounters and moments of truth if the servicescape is impressive, distinctive, and emotionally appealing. To listen to relaxing and soft music in the hotel lobby while interacting with hotel staff will definitely enhance the enjoyment of the service and subsequently create a memorable staying experience for the guests ultimately leading to the competitive advantage for the hotel in the industry.

WEBSITE ANALYSIS

The TAJ HOTELS

User-friendliness:

The website is highly user-friendly as the scope of ambiguity is very less. The user can run through the website hassle free.

Easy to access and use:

The site is easy to access and use as the headings help the user to navigate properly and do what he intends to do.

Fast:

The website is fast enough as the traffic is pretty low on the website

Needed information:

The needed information about the bookings and the hotel is provided by the website.

Instructions:

The website doesn’t have a dedicated instructions tab but the website layout is in such a way that it doesn’t need instructions to complete the procedure. (Keeping in mind the target consumer)

Applicability of contents and features to each of the five technology-dominated areas:

Information: The information needed is available in abundance to solve any query the customer might have.

Consultation: No personal consultation is provided as such during the transaction but the technological consultation is helpful as it helps you in reviewing your reservation detail also is helpful in filling up the information.

Order-Taking: Order taking is a simplified process with details about each feature being mentioned. The website also considers the comments according to which the customers need the room.

Billing: It is easy and the payment procedure takes into mind all the details of the customer. The Taj Inner Circle membership makes the procedure even simpler as all your card and personal details are already mentioned.

Payment: The website lacked the option of pay later which is alright considering the segment of the consumer it is targeting; the payment is online via card only. The option of internet banking is not available.

Overall effectiveness and suggestions for improvement on specific dimensions missing or unnecessary content:

The website effectiveness is pretty good and doesn’t have unnecessary content. The website did lack the option of internet banking which is a letdown. The other aspect missing in the website is the interactivity; it is a plain vanilla website which could have been better. Keeping in mind that the website of such a brand shouldn’t have a lot of funky and interactive features but the booking website and the Taj official home page have a lot of difference.

Layout and sequencing:

The layout and sequencing of the website is managed in a pretty good way and provides a good user-experience.

Eye-appeal—appropriate use of graphics and color:

The booking website is not an eye candy and uses mostly a duo-tone theme which makes it simple. The website though also gives out a feeling of a basic web design which hasn’t put much of a thought in designing, The homepage on the other hand being simple is also elegant and the additional graphics make it a pleasure to watch.

Animation:

The animation is present only on the main website but is absent in the booking platform. The graphics and animation in the homepage are at par with the industry standards.

Audio options:

The website lacked audio options of any kind and could have had a video tour of the hotels with audio to enhance the experience of the consumer and delight them.

Presence or absence of all necessary service features:

The service features in context of the website were good enough but the absence of interactive options and the audio features makes it fall short of the global players.

Use of hypertext links

The use of appropriate hypertext links was done and was made sure that only the necessary hyperlinks were provided.

SOCIAL MEDIA ANALYSIS

Since the inception of its first hotel in 1905 in Mumbai, the Taj chain of hotels has surely come a long way. With a strategy widely spread over different Social Media outlets and an additional area specific approach, is Taj’s social media strategy a suitable path for luxury destinations? We find out in this review:

Audience Analysis

Being a luxury brand, it is not surprising that majority of the followers lie in the age bracket above 30. It is mostly followed by men, with a relatively low share for females.

Source: Simplify360 – A Social Media Analytics Tool

Source: Simplify360 – A Social Media Analytics Tool

Overall strategy

As happens with most luxury brands, the emphasis in the social media strategy of Taj Hotels is more on the experience of being in Taj and the services rather than anything else. This is enhanced with a pan social media presence, courtesy of spaces in several social media platforms.

A major hit in terms of social media is their website and the way with which they have organised outreach. So if you wish to like the Facebook page of a particular hotel, the website takes you there. This is step one of social media outreach fulfilled – leading your audience to your social media space.

Facebook

On Facebook, almost each and every hotel of the chain has a separate page. The frequency of posts is optimum, generally talking about offers and services. Many a

time, there are also posts to sell that product effectively. They have taken hashtags seriously and usually add appropriate hashtags to their posts. Majority of the posts happen to be photos, with small descriptions coupled with hashtags and shortened links.

Source: Simplify360 – A Social Media Analytics Tool

The responsiveness is on the page is decent with customer complaints and as well queries being addressed. Both comments as well as user posts are given importance on the page.

Moreover, if in case you thought Hindi wasn’t leisurely enough, the page surely proves it wrong.

So while the main page emphasises on services, hotel specific pages have posts relevant to the locality and the theme/events happening at the hotel. For instance, a Taj Safaris page talks about Wildlife, and a Taj Palace and Tower, Mumbai Page creates an elaborate quiz. The Taj Mahal Hotel, New Delhi shares photographs of the place to create an essence of luxury.

Twitter

The brand’s activity of Twitter is fairly good with the platform being used for some great engagement with customers. However, the follower count does not reflect all

that. The prime variable in this is the fact that most of the tweets are replies or conversations with customers.

There are extremely few occasions when the brand itself is initiating the discussion. Adding to this, there is not much of retweeting amidst the various Twitter accounts of the Taj brand of hotels.

However, the response time and the level at which they engage with the client is surely praise worthy.

The number of retweets or favourites that @TajHotels receives isn’t that high. The reason for this as mentioned earlier is the extremely low number of tweets that are not replies/retweets. Even these are generally tweeted with a photograph. This concludes the fact that not many text only tweets that are not replies are generated from the account.

Otherwise, if activity happening on other Twitter accounts of Taj is taken a look at, each one of them has a different strategy.

For instance, Taj Palace Hotel, New Delhi (@TajPalace_Hotel) is extremely negligent about interaction and tweets only about themselves (that too not very frequently).

On the other hand, Taj Mahal Palace, Mumbai (@TajMahalMumbai) stresses on interactivity with campaigns such as a #TajAndSwaraj quiz contest that was held during Independence Day. Perhaps, the usage of such tools might also be a reason why it’s Twitter account has more followers than the main @TajHotels Twitter space.

Also, while a few hotels have their Twitter accounts, (e.g. @TajLandsEnd in Mumbai) they are not listed on the Hotel Website.

YouTube

The brand’s usage of YouTube though limited, but is surely interesting. Since, there are around 20 videos in total, surely there is less amount of content available and this reflects on the number of views and subscribers as well. In terms of cross platform usage also, while these videos are often shared on Facebook from time to time, not many are tweeted from the Taj Hotel’s accounts.

The production quality of the videos is extremely good and the fact that they are well made and well documented stories makes it a great type of content to use on your YouTube Channel. While there are videos that tell about specific hotels, there are

also several about Wildlife and the movement for Tiger conversation. The one below, follows a documentary style and indirectly promotes the brand as well.

Pinterest

For a brand like a luxury resort or a hotel, Pinterest surely happens to be a great platform to use the visuality within the idea of luxury. Hence, it has great potential. Firstly, the Taj Hotels website redirects you to a broken Pinterest link.

Secondly, once you land up on Pinterest and find the correct profile with a quick search, it happens to be a not so active one. There are roughly five boards for five different hotel destinations. And a total of around 40 pins. Though using Pinterest for a visual tour of your hotel and the destination is a great idea, it is not being used in the best way by the brand.

Other platforms

While international branches of the brand have explored social media spaces such as Instagram, Flickr and Google+ as well, none of the Indian outlets have reached out to audiences through them. However, all of them have a presence on TripAdvisor and according to the purpose, that is an important place to be at.

Comparison with competitor

The Oberoi Group of Hotels is one of the leading competitors of the Taj Group and when taken a look at their social media strategy it is apparent that Taj has a lot to learn. Both have multiple Facebook pages and Twitter accounts, but Oberoi uses these for cross sharing.

As in, a post made on Oberoi, Gurgaon or Oberoi, Kolkata’s Facebook page, is shared on the main one. This magnifies the presence of all the spaces.

Source: Simplify360 – A Social Media Analytics Tool

However, one lacking aspect from Oberoi’s side is responsiveness from the brand on Facebook. The brand does not respond to customer queries in comments, but answers/engages when posted as a user post.

Another interesting aspect is the usage of a Facebook app for reservations, something that Taj isn’t using. On Twitter again, both share a similar style, but Oberoi is way ahead in terms of follower numbers. The idea of doing Tweetups with concierges across the globe is an innovative idea again.

When the sentiment analysis for the two is done, Oberoi scores more by generating greater positive sentiment.

Source: Simplify360 – A Social Media Analytics Tool

Oberoi’s active presence on Pinterest is another thing that Taj should be concerned about. Moving to Google+ and YouTube, while Oberoi is there, the activity is negligible. Hence, the major competition here becomes the idea of presence that Oberoi has created through it’s social media strategy.

Also, through posts that talk about their staff and Tweetups where people can directly interact with the hotel’s concierges, Oberoi is taking the concept of interaction a step ahead.

Final Remarks

The fact that Taj Hotels has established a well branched social media system is good for the kind of service that they provide. Yet, at the end of it, there needs to be a collaborative identity that emerges out of the process. So, if there is a space about the overall brand name, it should engage with various branches of that brand.

Moreover, while they are using Facebook to promote offers, other platforms are not being used for simply selling. If they can take a tip from their competitor and incorporate applications that help users and also work on one on one interaction with their staff, there might be greater sense of dialogue initiation from them. Sharing user experiences and not just reviews or celebrity experiences might be another interesting approach.

Since, creativity is not a constraint, it is well defined strategies and campaigns what the brand is lacking now. Though they have the basics right, those ‘special’ elements such as the quiz organised by Taj Mahal Palace, Mumbai are less in number.

Gap Analysis

Customer Gap:

Difference between customer expectations and perceptions

Provider gap 1 (the knowledge gap):o Not knowing what customers expect

Provider gap 2 (the service design & standards gap):o Not having the right service designs and standards

Provider gap 3 (the service performance gap):o Not delivering to service standards

Provider gap 4 (the communication gap):o Not matching performance to promises

Knowledge Gap

This gap exists in a service when the company doesn’t clearly identify the needs of the customer. The hotel management perceptions of guest expectations with regard to the desired quality of a hotel service may not be in sync with real customer expectations. The knowledge gap in any service firm is a function of marketing research orientation, upward communication, and levels of managers. It is motivated both by lack of initiatives to listen to the customer and by the lack of correct understanding when these initiatives are taken . The

gap could be further enlarged to include a lack of understanding of other external information. The service quality strategy identifies the organization’s competitive scope and its concepts of quality, through a selection of, and positioning on, the fundamental quality dimensions it wants to compete with. The service quality strategy is a set of guidelines that provides orientation for everyone in the.

Especially in the hotel industry where the customization of service needs to happen, if the hotel doesn’t have proper information about the needs of the customers it can never deliver the expected service let alone delighting the customers.

Service Design & Specification Gap

An accurate perception of customers expectation does not guarantee customer satisfaction, you need to have the proper service designs and specifications through which the service has to be delivered

Gap 2, the so-called management perception-service quality specification gap, occurs when hotel management correctly perceives guest expectations, but is unable to translate this information into clear specifications or design. Garvin (1988) and Zeithaml, Parasuraman, and Berry (1988; 1990) suggest that four factors may account for this discrepancy, including

management commitment to service quality existence of goal setting task standardization and Perception of feasibility.

Specifications, along the service quality dimensions, are useful to define what quality is. Frequently, organizations do not possess any kind of formal specification, which results in aggravated service variability and lower quality (Zemke and Schaaf 1989). Specifications are required to guide personnel in their activities. Specifications are also required as a means of comparison for effective quality evaluation. The size of the specification gap in any hotel is proposed to be a function of: designing specifications, task standardisation, perception of feasibility, levels of management, hrm and integration/coordination.

The Service Performance gap

It is the gap between the development of customer driven service standards and the actual service being provided by the employees of the hotel. Even though the guidelines and service design for the service exists, delivering consistently a service of the appropriate standard gets difficult. When a service is not delivered according to the set standards there is a service failure and the expected service by the customer is not met.

Especially in the hotel industry if the room service delivery time is supposed to be half an hour, if the waiter or the chef delays the process the time of half an hour cannot be met. Even though the service could have been delivered in time the delay from the employee point of view led to a service failure.

This not caused only due to the failure from the sides of the employee but also from the customer end wherein the customer doesn’t give complete information about how the service is to be delivered or he doesn’t fulfil his role.

For example if a customer wishes to book his room online and doesn’t go through the facilities bundled into one package or gives incomplete or falsified information this would create a problem for him during his check in. In this case even though the service technology design was at par, but the failure on the side of the customer led to service failure.

Few examples of Hotels who empower their employees to bridge this gap:

TAJ PROMISES

At the Taj Group, our commitment to service excellence is rooted in our two guiding principles called the Four Steps of Service and the Taj People Philosophy. One of our key priorities is to empower our people to deliver on our legacy of impeccable service.

Four Steps of Service:

1. A warm and sincere welcome. Use the guest name, whenever possible.

2. Fulfill guest needs and provide anticipatory service.

3. Defect free products and services.

4. Fond farewell using the guest name, whenever possible.

The following philosophy is a summary of our beliefs and values towards our employees.

Taj People Philosophy:

The Taj People Philosophy displays our commitment to and belief in our people. We see Talent Management as the most important sustainable competitive advantage in the future.

You are an important member of the Taj family.

We endeavor to select, retain and compensate the best talent in the industry.

We reward and recognize quality customer care based upon individual and team performance.

We commit to providing you with opportunities for continuous learning and development.

We abide by fair and just policies that ensure your well-being and that of your family, the community and the environment.

We commit to regular and formal channels of communication, which nurture openness and transparency.

We strongly believe that you are the Taj.

The Taj is an equal opportunity employer and is committed to providing opportunities to marginalised communities.

Ritz Carlton has an initiative for their employee empowerment:

Keeping Standards Alive Without Crushing Autonomy: Consider My Acronym, PEPI

When designing your training and enforcement program for standards, consider my acronym PEPI (pronounced, ‘‘peppy’’):

Purpose: Employees have a clear sense of purpose—and how the standard fits into it.

Enforce intelligently: Keep things visual, train, and reinforce.

Peer pressure: Positive peer pressure is a must.

Input: Employees are able to have a say in the refinements, changes, and even possible future abolition of the standard.

In other words, even when it comes to standards, you need standards. Use my PEPI standards when it comes to enforcing and reinforcing your service and brand standards, and you’ll be ahead of the game.

Ritz Carlton hiring process:

Selection process has four general steps that allow you to get to know us better, and for us to determine if you are the best fit for the position and the company:

1. Explore possibilities,

2. Apply and complete assessment,

3. Interview with locations, and

4. Receive offer.

While it may take some time to go through each of the four steps, it helps both the applicant and The Ritz-Carlton make the best decision. Not all candidates will go through each step, but each location you apply to will let you know if you have been advanced to the next step.

Ritz Carlton Employee Training:

The Ritz-Carlton Leadership Center® offers advisory services, courses and presentations to organizations that wish to benchmark the award-winning business practices of The Ritz-Carlton. The Programs include Service Excellence Culture, Customer Service Reenergized, Memorable Cutomer Service amongst others.

Indian Hotels Company Ltd (IHCL), better known as the Taj group, has set a global benchmark by registering an 80 per cent loyalty with its staff, at a time when turnover in hospitality staff is at a high due to international hotel chains setting up shop in India, says a Gallup survey.

The Communication Gap:

This gap exists because of the difference between the service delivered by the hotel to the customer and the communication done by the hotel regarding the service. The promises made by the hotel in forms of advertisement, sales promotion or even the word of mouth should be met by the hotel so as to meet the expectations of the customer. To increase the brand loyalty and to get customers with more lifetime value at times the hotels overpromise to lure them into staying in the hotels. But this might have an additional cost which can’t be met and hence the service delivered is not of the level at which it was promised. This leads to an unsatisfied customer.

Managing customer expectations hence becomes a very important part of the system. Proper integrated marketing communication and avoiding overpromising can help reduce this gap.

Few examples of advertising in hotel industry are

Tangibility in Hotel Industry:

It is very important to have tangible cues in the service provided to the customer it helps him in rating the service in a better way. The tangible cues act as a reinforcement to the service. Especially in the hotel industry which is highly competitive in service aspect it wold help the customer evaluate your services better.

Tangibility can be increased with help of physical evidence like facilities, design, style ambience, colors, employee dress etc.

Standardization:

In the service industry it is very important that if you are expanding geographically your service practices remain same all over the world. The world is highly globalised and in this globalised world it is of utmost importance to make sure that the service delivered at one place is the same as provided in other. This process of keeping the service standardized is called standardization of service. As every geography comes with its own culture it is important to adapt to that culture but the service philosophy should never be compromised.

The hotel industry where the customization of service is an important aspect it is important to understand that the product even if is customised the process should be standardized.

Hilton Hotels are a good example of homogeneity in Hotel industry

With more than 540 properties in 78 countries across six continents, Hilton Hotels & Resorts stands as the stylish, innovative leader in the full service segment. As the most recognized name in the industry, Hilton remains synonymous with the word “hotel.” From inaugural balls and Hollywood award galas to business events and days to remember, Hilton is where the world makes history, closes the deal, toasts special occasions and gets away from it all. The flagship brand of Hilton Worldwide continues to build upon its legacy of innovation by developing products and services to meet the needs of tomorrow’s savvy global travelers while more than 144,000 Team Members shape experiences in which every guest feels cared for, valued and respected.

Perishability:

Perishable which means is won't be last longer and won't experience the same experience. The services in the hotel industry are consumed as they are produced. Hotel rooms cannot be warehoused for futures sales. When a hotel room is not booked tonight, you cannot take ‘tonight’ and sell it tomorrow. In many things, we will have the first try and if the thing is not good we won't try anymore. Same is in the hotel: if the hotels we stay are not satisfaction we just will try once and next time we will know which type hotel we should choose and will do a proper research about hotel that we stay to make sure it won't be same as last time. Other than this, if we late to check in and without paying deposit or have any inform to the hotel they have right to cancel reserved the room for guest and the guest need to re-book the room if the hotel have room still available. Hotels have traditionally recognized this feature of the industry by targeting different markets at weekends to those targeted during the week.

Inseparability:

Inseparable which means service and customer and service provider can't be separated. We cannot take the hotel room home – only the small bottles of shampoo and toothpaste. Guest is the main major no matter in which area. It sure will have its own supplier to provide the thing. Supplier is important to hospitality because they need a big amount of quantity of food and drink. They sure will have different type of supplier to supply the food and drink to make sure they have enough supply for guest because hotel is the places that always have many guest and employees walk in and out. Other than need to supply food for hotel, they also need other supplier to supply their basic needed such as toothpaste, shampoo and other. Furthermore, service provider is indispensable for service delivery as he must promptly generate and render the service to the requesting service consumer because customer pay and get a service from them. In addition, the service consumer is inseparable from service delivery because he is involved in it from requesting it up to consuming the rendered benefits. Due to inseparability it is impossible for hotels to standardize output and gain economies of scale in the same way that firms producing goods can. Hotels, by their very nature, need to be customized and focused on the needs and wants of consumers.

Customer Retention strategies for a Luxury Hotel

1) Loyalty Programme: Loyalty programme provides added value to consumers at two points, during credit acquisitions and at redemption. Although the credits have no material value until they are redeemed, they may deliver some pre-redemption psychological benefits to customers, such as a sense of belonging and of being valued, and an enjoyable anticipation of desirable future events. At the redemption stage, customers receive both psychological and material benefits. The reward acts to positively reinforce purchase behavior. It also demonstrates that the company appreciates its customers. This sense of being recognized as valued and important can enhance customers ' overall sense of well-being and emotional attachment to the firm.

2) Profiling: Hotels should maintain an accurate profile of the spending patterns of guests, allowing them to create guest- centric benefits & promotions for increased loyalty & spending.

3) Packages: Earlier the packages were seasonally only – summer, winter, and holiday. For example “reunion package”, packages for senior citizens only.

4) Guests Feed Back Forms: Comments/feedbacks should be taken from guests on the quality of their experience & the services offered & any suggestions for improvement.

5) Guests Relation Executives : There is constant interaction between the guests & customer contact employees like the front desk (reception) & front office (lobby). Hotels should employ Guests relation executives to interact with the guests & define profiles & preferences as also to obtain information on the guests stay & any problems that she may be facing or any comments that she may have.

6) Customer Clubs: A customer club is a company-run membership organization that offers a wide range of value-adding benefits exclusively to members. Research suggests that customer clubs aresuccessful at promoting customer retention. Hotels should have a special club for all its members & the fees vary according to the age& the duration of the membership. They choose from two levels of membership, full and associate, and a variable membership length, from one year to lifetime. A nominal fee is charged only for administrative purposes in relation to the services provided.To become a member and obtain benefits, customers have to register. With these personal details, the company is able to begin and services for them. The club manager tries to personalize the services to the segment or individual level. Among the more common benefits of club membership are roadside assistance, a membership man a membership manual, a touring handbook, and alerts about upcoming new and improved products, discounts, magazines and special offers.

7) Customer Delight: Hotels should make sure that all its customers are satisfied and tries to delight them by providing certain services that the customer did not expect. Such as if the customer has a reservation before he arrives at the hotel, the hotel should provide a car pick up from the airport/station. Thus delighting the customers and making the stay at the hotel comfortable.

8) Relationship Management: Hotels should maintain records of their guests like birthdays and wedding anniversaries, etc. and never forgets to send them a greeting, or sometimes a gift coupon or a free dinner or stay in the hotel. This has proved to be a great step in retaining a guest.

9) Service Recovery: Hotels should make sure that no guest leaves the hotel half heartened. There should be the required level of empowerment given to the contact personnel to take the decision at the moment of failure, thus helping in better and faster recovery of the service.

10) Planning the advanced use of technology: Hotels are taking help of technology to woo more and more customers. Hotels World over are adopting latest technologies like Wi-Fi connectivity, teleconferencing, online hotel selection smart cards, so on and so forth.

Customer lifetime value analysis at ROSEWOOD Hotels:

The calculation below confirms that when following the corporate branding/strategy

could be beneficial for Rosewood hotels.

ROSEWOOD HOTELS & RESORTS:

CUSTOMER LIFETIME VALUE (CLTV) ANALYSIS

Without

Rosewood

Branding

With

Rosewood

Corporate

Branding

Total number of unique Guests 115,000.00 115,000.00

Average daily Spend $750 $750

Number of days average guest per stay 2 2

Average gross margin per room 32% 32%

Average number of visits per year per guest 1.2 1.3

Average Marketing expense per guest (system-

wide) $130 $138.70

Average new guest acquisition (system wide) $150 $150

Total number of repeat guests (s) 19,169 24,920

of which: Total number of multi-property stay

guests 5750 11500

Discount Rate 8% 8%

Average Guest Retention Rate (f) 16.67% 21.70%

Average gross Profit Guest $576 $624

CLV Calculation Without Corporate Brand

strategy 2003 2004

# of Nights per stay 2

# of Stays per guest 1.2

Revenue per Night $795

Revenue per Customer $1,908

Gross Profit per customer $610.60

Cost to acquire customer $150 0

Marketing cost per customer 133.9

Cash flow retained customer ($150) 476.66

Percentage probability of retention 1 1

Expected Cash flow from customer ($150) 476.66

Discount factor 1 0.926

NPV of cash flow ($150) 441.35

NPV of CLTV $378.49

CLV Calculation With Corporate Brand

strategy 2003 2004

# of Nights per stay 2

# of Stays per guest 1.3

Revenue per Night $795

revenue per Customer $2,067

Gross Profit per customer $661.40

Cost to acquire customer $150

Marketing cost per customer $133.90

Additional Marketing Cost per customer $8.96

Cash flow retained customer $518.58

Percentage probability of retention 1 1

Expected Cash flow from customer ($150) 518.58

Discount factor 1 0.926

NPV of cash flow ($150) 480.17

NPV of CLTV $461.09

Based on the Customer Lifetime Value (CLV) calculations, there is incremental value

when branding with the corporate strategy even after including marketing expenses.

Source: https://yazc570.wordpress.com/2013/02/18/rosewood-hotels-resorts-customer-lifetime-value-cltv-analysis/

Six Marketing Domains of Relationship Marketing for Hotel Industry

1) Customer Markets: Existing and new guests. 2) Internal Markets: Employees and staff.3) Channel Markets: Toiletries suppliers, Room Amenities/kits suppliers, Food and

Beverage suppliers etc.4) Referral Markets: Existing customers, intermediaries, consultants, reward referrals.5) Recruitment Markets: Placement agencies, colleges, training institutes, sponsor student

events, conduct workshops etc.6) Influence Markets: Shareholders, financiers, consumer protection groups,

environmentalists, government, media, trade unions, general public etc.

Delivering Service through Intermediaries and Electronic Channels

With the migration of hotel-room distribution to the internet, a host of players old and new are vying to gain (or retain) control of distribution channels. In addition to the hotels and chains themselves, the operations that distribute hotel rooms include global distribution systems (GDSs), distribution service providers (DSPs), third-party websites

(e.g., Expedia, priceline.com), and traditional travel agencies. Many of these channels use price as a principal parameter. Hence, a strategic problem for hotels is to avoid having price be customers' main (or only) consideration for a room booking. One chief way to offset the trend toward commoditization is to provide customers with considerable information to distinguish properties based on their provision of services.

While hoteliers seek to drive bookings to their own proprietary websites, the third-party sites (notably, Expedia) have created strategic approaches to encourage hoteliers to distribute rooms on their sites. As a practical matter, hoteliers almost always use some kind of discounted distribution to clear their inventory of unsold rooms. To gain hotel-room listings, some intermediaries, such as travel agents and GDSs, have developed a value-added strategy of providing additional services to their customers and packaging hotel rooms as part of travel packages. One reason that travel agencies have become so interested in distributing hotel rooms is the demise of airline commissions. All intermediaries are attempting to provide services or incentives to encourage customers to book through their channel. One competitive advantage that third-party intermediaries can provide is to shift market share toward a particular hotel or chain.

1) Through Intermediaries: (a) Franchising

Benefits: Leveraged business format for greater expansion and revenues Consistency in outlets

Knowledge of local markets Shared financial risk and more working capital

Challenges: Difficult in maintaining and motivating franchiseesHighly publicized disputes and conflictInconsistent qualityControl of customer relationship by intermediaries

(b) Agents and Brokers: Benefits: Reduced selling and distribution costs

Wide representation Customer Choice

Challenges: Loss of control over pricing Representative of multiple service principals

2) Through Electronic channels: Telephone, television, internet, fax, text messages.Benefits: Consistent delivery for standardized services

Low cost Customer convenience Wide distribution Customer choice and ability to customize Quick customer feedback

Challenges: Customers are active, not passive

Lack of control of electronic environment Price competition Inability to customize with highly standardized services Lack of consistency with customer involvement Required changes in consumer behavior Competition from widening geographies

Role of Servicescape in hotel industry

The servicescape is very important in creating a good impact when providing a service. In an upscale hotel also, it plays very significant role in delighting the customers. The servicescape can play many roles simultaneously. Therefore, it is important to provide appropriate physical evidence of the services in a hotel.

Packaging Role

The service-scape is the outward appearance of the organization and thus can be critical in forming initial impressions or setting up customer expectations – it is a visual metaphor for the intangible service. The physical surroundings offer an organization the opportunity to convey an image.

Facilitator

The servicescape can also serve as a facilitator in aiding the performances of persons in this industry. How the setting is designed can enhance or inhibit the efficient flow of

activities in the service setting of a hotel, making it easier for customers and employees to accomplish their goals. A well-designed, functional facility can make the service a pleasure to experience from the customer’s point of view and a pleasure to perform from the employee’s. On the other hand, poor and inefficient design may frustrate both customers and employees.

Socializer

The design of the servicescape aids in the socialization of both employees and customers in the sense that it helps to convey expected roles, behaviors, and relationships. It also suggests to customers what their role is relative to employees, what parts of the hotel servicescape they are welcome in and which are for employees only, how they should behave while in the environment, and what types of interactions are encouraged.

Differentiater

The design of the hotel can differentiate it from its competitors and signal the market segment the service is intended for. In the hotel industry one large hotel may have several levels of dining possibilities, each signed by differences in design. Just like in the image below, Taj stands tall in front of the gateway of India in Mumbai.

Aspects of servicescape that significantly influence the service delivery process:

There is ample evidence for the strong impact of the physical environment and hotel ambience on customer satisfaction. All tangible elements that facilitate the process of discharging the services influence the service delivery process in a hotel.

Servicescape and physical evidences are the first and one of the most important things that are noticed in the hospitality industry. It very much depends on the physical evidences if a customer is going to be a repeat customer or not. Because apart from services and food one of the main criteria of selecting a hotel is its servicescape and the feel of the environment.

Servicescape used as a source of competitive advantage:

The extent to which a hotel can offer “hospitable service” is actually the competitive advantage or unique selling proposition that differentiates one hotel from another. Because the ultimate aim of hospitality is to create a memorable experience, the attractiveness of the servicescape also plays a vital role apart from the personalized customer relationship. The concept of customer satisfaction is very much related to feelings of pleasure and enjoyment generated from the consumption of a product or service. The interactional effect of attractive servicescape and hotel hospitality tends to

increase the level of guest satisfaction substantially. Guests experience enjoyable service encounters and moments of truth if the servicescape is impressive, distinctive, and emotionally appealing. To listen to relaxing and soft music in the hotel lobby while interacting with hotel staff will definitely enhance the enjoyment of the service and subsequently create a memorable staying experience for the guests ultimately leading to the competitive advantage for the hotel in the industry.

Service Recovery

Service Recovery is the action a service provider takes in response to service failure. Service recovery is a procedure for dealing with customers’ problems and complaints. An effective & timely recovery procedure will turn a complaining customer into a satisfied, loyal customer most of the time.

Even though most of the top of the line hotels try to make sure that there is not a single service failure on their side, but every once in a while, even the best service providers will make a blunder. Because service failure is inevitable in any service context since it conforms to the characteristics of service-

Intangible Heterogeneity Simultaneous production and consumption Perishability

Implications to service marketing

The implication of service recovery affects the organization in many ways. Effect on customer satisfaction will be as follows:

Importance

Service recovery builds customer loyalty that brings a customer back from the brink of defection. It is not how big or what type of service failure occurred that’s going to stick with the customer; but the memories of how smartly the hotel turns the situation around will surely make a lasting impression on the mind of that customer.

Service Recovery Examples

All of us are well aware of Taj hotels being one of the best in the industry, and it is not without any reason. Here is a review of St. James' Court, A Taj Hotel in London by a customer on a travel website tripadvisor.com on the service recovery by the hotel:

Following was the reply of the manager of the hotel on the same website:

There are innumerable instances where the best hotels differentiate themselves by going beyond the usual service practices to control service failures and further entice customer satisfaction. One example is of a Ritz Carlton Hotel where one guest’s gown was shrunken after the laundry service. After the complaint, the hotel manager showed pro-activeness and took the matter very seriously. The guest was assisted with a personal shopper to help her pick the best new gown for her complete with all the accessories and tailored; making up for the ruined dress. The hotel paid for the whole day of lavish treatment given to the customer. It made sure that through some extra cost incurred on a guest, they made a loyal customer for life.

Service Recovery Leading To Service Recovery Paradox

Service recovery paradox means customers who have had an issue resolved really generate more loyalty than those that have never had an issue. i.e., the service recovery paradox is a situation where a customer thinks more highly of a service organization after it has corrected a problem with their service, compared to how he or she would regard the company if no service failure had happened. Although it is not proven that it happens with every customer, but most of the organizations feel that successful service recoveries are very helpful; more

than if the problem hadn’t had taken place at all. And many customers also feel the same. But many researchers have come across with a mixed view about this phenomenon and researches are going on to prove if, at all this paradox is real? However, with live examples and academics we can say that indeed it is real but it may not give similar results always in every situation.

Service Standards

Service standards in Luxury Hotels means delivering the utmost value to its customers, as well as unparalleled hospitality offerings to its discerning clientele. Serving as the benchmark for the luxury hospitality industry, the leading Hotels of the World establishes its product and service standards through Leading Quality Assurance and quality standards.

Some examples of service standards are given below.

Gold Standards in The Ritz Carlton Hotel:

Gold Standards are the foundation of The Ritz-Carlton Hotel Company. The values and philosophy by which they operate include:

I. The Credo II. The Motto

III. The Three Steps of Service IV. Service Values V. The 6th Diamond

VI. The Employee Promise

The Credo: The Ritz-Carlton Hotel is a place where the genuine care and comfort of the guests is the highest mission. The hotel employees pledge to provide the finest personal service and facilities for their guests who will always enjoy a warm, relaxed, yet refined ambience. The Ritz-Carlton experience enlivens the senses, instils well-being, and fulfils even the unexpressed wishes and needs of the guests.

Motto: At The Ritz-Carlton Hotel Company, "We are Ladies and Gentlemen serving Ladies and Gentlemen." This motto exemplifies the anticipatory service provided by all staff members.

Three Steps of Service

1. A warm and sincere greeting. Use the guest's name.2. Anticipation and fulfilment of each guest's needs.3. Fond farewell. Give a warm good-bye and use the guest's name.

Service Values: I Am Proud To Be Ritz-Carlton

1. I build strong relationships and create Ritz-Carlton guests for life.2. I am always responsive to the expressed and unexpressed wishes and needs of our

guests.3. I am empowered to create unique, memorable and personal experiences for our

guests.4. I understand my role in achieving the Key Success Factors, embracing Community

Footprints and creating The Ritz-Carlton Mystique.5. I continuously seek opportunities to innovate and improve The Ritz-Carlton

experience.6. I own and immediately resolve guest problems.7. I create a work environment of teamwork and lateral service so that the needs of our

guests and each other are met.8. I have the opportunity to continuously learn and grow.9. I am involved in the planning of the work that affects me.10. I am proud of my professional appearance, language and behavior.11. I protect the privacy and security of our guests, my fellow employees and the

company's confidential information and assets.12. I am responsible for uncompromising levels of cleanliness and creating a safe and

accident-free environment.

The 6th Diamond1. Mystique2. Emotional Engagement3. Functional

The Employee Promise: At The Ritz-Carlton, Ladies and Gentlemen are the most important resource in service commitment to their guests. By applying the principles of trust, honesty, respect, integrity and commitment, they nurture and maximize talent to the benefit of each individual and the company. The Ritz-Carlton fosters a work environment where diversity is valued, quality of life is enhanced, individual aspirations are fulfilled, and The Ritz-Carlton Mystique is strengthened.

Hampton Inn:

“Feel the Hamptonality”

At Hampton by Hilton, every moment is crafted to bring a smile to their guest's face. From the brand's signature Clean and fresh Hampton bed to friendly and authentic service, guests can really feel the Hamptonality.

Service Quality

The service qualities are judged by three parameters

I. Search QualitiesII. Experience Qualities

III. Credence Qualities

Search in case of luxury hotel segment would refer to the easy accessibility or availability of information pertaining to the hotel. This information can range from location, price, room availability, photos, amenities and customer reviews. The business travellers will look for Close proximity to- Railway Stations/Airport/Bus Stops/Business/IT Parks etc. Word of mouth can also play a big role in this case. In this digital era easy online accessibility is a key element. Things like online booking, online payment options, and reviews in travel forum, social media, travel magazines are key ingredients of the search quality.

Fig: Tripadvisor reviews on Taj Palace Hotel

Fig: Tripadvisor reviews on Hampton Inn

In case of luxury high end hotel, experience is the most important quality. It can be described as the physical evidence of the service provider. It is where such hotels diffentiate themselves. Things like well maintained rooms, high end infrastructure, good music in the lobby, spas, courteous and skilful service staff and the pleasurable experience define this quality.

Credence Quality is the aspects of services that cannot be evaluated by a consumer even after 'consumption' but have perceived value. Just after consuming the service he/she may be satisfied with the service however after sometime the consumer may be unsatisfied due to some reason.

References

http://www.dnaindia.com/money/report-indian-hotel-industry-s-revenues-to-rise-7-9-in-fy15-icra-2056070

http://blogs.sas.com/content/hospitality/2015/01/27/top-10-global-trends-that-will-impact-hospitality-in-2015/

http://www.4hoteliers.com/features/article/8736

http://smallbusiness.chron.com/technology-used-hospitality-tourism-31033.html

http://www.hospitalitymagazine.com.au/Management/7-technologies-that-are-transforming-the-hospitali

http://www.hospitalitynet.org/news/4060662.html http://www.breakingtravelnews.com/focus/article/major-players-largest-hotel-groups-in-the-world/

http://www.tajhotels.com/about-taj/company-information/default.html

http://www.itchotels.in/others/othersabt.aspx

http://www.oberoihotels.com/about-us/profile.aspx

http://setupmyhotel.com/about-hotel-industry/classification-of-hotels-by-there-type.html

http://www.socialsamosa.com/2013/11/social-media-strategy-review-taj-hotels/

http://www.ritzcarlton.com/en/Corporate/GoldStandards/Default.htm

http://www.hiltonworldwide.com/portfolio/hampton/