The need to make a mark

While the Indian economy is seeing steady growth, there are requirements that need to be fulfilled before the hospitality industry makes a mark on the GDP of the country. Sudeep Jain, executive vice president at Jones Lang LaSalle Meghraj, speaks of the requirements for such a pinnacle. By Sayoni Bhaduri

Sudeep Jain Executive vice president Jones Lang LaSalle Meghraj

The Indian hospitality industry is going great guns presently, with high operating margins and increase in the number of travellers visiting India - both inbound and outbound. Thus, the only direction left for the sector points upwards. However, what needs to be focussed on is the fact that opportunities are not missed, which presently include the large gaps in rooms supply as compared to demand. India has approximately 100,000 rooms only in totality, which is lesser than that in Las Vegas, besides contributing to an insignificant portion of the GDP - just 5.4 per cent says Sudeep Jain, executive director of JLLM. In comparison to nations like China, Thailand and Malaysia where the hospitality share ranges between 12 and 15 per cent, India's growth potential is boundless. "By 2020, the hospitality and tourism sector would be a major contributor to the Indian economy," says Jain.

South Asia is and will remain a must-visit destination and India is looking more and more lucrative. Within the nation, major contribution as destinations will be from the growing tier I and II cities with a special emphasis on business hotels across categories as well as the prime leisure destinations like Goa, Rajasthan, etc, which will remain on the growth path, creating the aura for India as a leisure destination. Accordingly, the needs of the traveller, will be nothing less than perfection. Jain says, "They will be more discerning and more value conscious." With an increase in choices available, they will be less forgiving of service deficiencies. Guests will require higher levels of service in the full-service segments, which will warrant greater training requirements for hotel staff. The limited service hotels will require a complete shift in the perception of customer service. Nevertheless, this is directly related to the travellers' travel persona. "The same person will have different standards when he/she is on a business trip, versus an escape with his partner versus a leisure trip with the family," he explains.

Future-wise

Hotels as a product will witness evolution, says Jain. According to him, "As the market becomes more segmented, especially in the mid-market and select service categories, more product types will appear." The driving force behind these will be global brand standards and therefore they will have standard specifications creating a degree of uniformity and standardisation in certain limited and mid-market hotel segments. Differentiations in product type will evolve more at the higher end of the market with boutique hotels, resorts, convention centres, etc. The need to differentiate design will play an important role. Various brands and operators will play a larger role in driving design standards, getting involved at early project planning stages. "As hotel segments cater to specific demand segments, design typologies will be more customised to suit traveller's lifestyle," says Jain. Equal importance will also be given to green-building concepts in terms of development and operations, which will go beyond cost-saving, placating the demands from both investors and customers. "From the investment side, there will be enough environmentally-conscious investors, who will only invest in green buildings and will also pay a premium for such properties relative to other properties," predicts Jain. In addition, 'green-conscious' business and corporate groups will patronise hotels and brands that support green concepts," he further adds.

Besides all this, the reliance on technology will move beyond Wi-Fi and internet requirements to tools to support sales and marketing as well as yield management. Even basic interiors will be upgraded with the use of technology like self check-in and information kiosks. This will also revamp sales and marketing as international brands will leverage their central reservation systems and will initiate networks with third party reservation agencies. In addition, systems will become more sophisticated and targeted, customising sales and marketing efforts for each targeted traveller.

F&B, an area of immense importance within a hotel will also evolve, especially for the select-service hotel categories. Jain gives an example. "The standard two/three-meal restaurant could be replaced by limited service 24-hr cafés that occupy a smaller area and employ fewer staff and can provide limited room service." Similarly he speaks of grab-n-go concepts also that would make inroads in the select service segments. However when discussing service, which is the main play of this industry, it has to be understood that the growth phase is still on and the market is currently undersupplied in terms of trained hotel staff to cater to the large supply pipe-line. "A larger number of globally recognised training institutes are required in the country and this is a great opportunity for educational institutions," believes Jain.

The driving force

Being part of a real estate money management and services company, Jain discusses the various driving factors for growth opportunities, quoting research done by Jones Lang LaSalle Hotels. He believes that if the country is able to sustain its economic growth specially in the service sector, it will have a direct influence on the hotel industry. This is directly related to the incoming foreign investments, not just in the hotels but the economy as a whole. Also equally important is the fact that India has now discovered the power of marketing and with campaigns like Incredible India, there are also the various large scale regional and global events like the upcoming Commonwealth Games, Asian Games and the recent Indian Premiere League that builds interest about the nation. "These are just external factors. The policies and incentives that will be provided over the next decade could further act as a catalyst to this industry," says Jain. Apart from these external factors there are other factors where the industry can be given a great boost. For instance if land prices became more realistic, the process of getting approvals and licences to build and operate hotels are streamlined, together with strong infrastructure development and investment and more tax/levy incentives being provided to build hotels, it would prove very fruitful for the industry. "Also, moving to a more 'international' FSI guideline will stimulate development. Today, FSI's for hotels in India are only a fraction of those that exist in other mature markets," says Jain. He believes that there would be no stopping the growth in the industry if these measures were undertaken. But the fact remains that half of these changes will only occur if the government begins to take some proactive measures and provide the much needed stimuli to further accelerate development.