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Monday, 30 October, 2017, 16 : 30 PM [IST]

Time to adapt to the changes in business

Change is the only constant; it is inevitable. Progress is impossible without change. In the last decade, the hospitality business has witnessed many transitions, which is the vanguard of innovation and creativity. The hospitality business, in India and around the world, has metamorphosed at a rate and to a level that has far surpassed anyone’s expectations.

Previously, only five-star hotels were thought worthy of delivering any measure of service, safety and hygiene. The last decade saw the emergence of strong hotel chains and International hotel chains expanded their foot print in India. As brands became more prominent and acquired a corporate ownership, hotel managers focussed more on profitability and occupancy.

Numerous real estate companies decided to take a dip in these waters. There was a proliferation of good quality three and fourstar hotels which also emerged from strong brands. Strong brand differentiation evolved on the basis of the brand offer and promise due to which hotel companies realised the importance of budget, mid-level and luxury hotels in order to create and retain brand loyalty.

Brands and branding became important with more engagement on social media and websites becoming user friendly. Although loyalty programs made their debut well before the last decade, it was only in the last ten years that loyalty programs became an all important tool to retain customers. Indian customers travelled and stayed in hotels within India and internationally that would add to their tally of loyalty points earned.

A very significant development in the last ten years has been the genesis of new cities in India. At the turn of the century, as a company representing International hotel chains, we restricted ourselves to five or six key metros in India. As part of our tenth anniversary initiatives, 2011-12 saw us travelling to more than 29 cities. It took us into unchartered waters and opened up new cities for us to tap into.

The buying behaviour of agencies in smaller cities always tended to go through a DMC or wholesaler. With hotels now offering special rates and extra commissions for booking through their websites or online channels, some agencies have also decided to follow suit. This reinforces their recognition process by hotels, whether inclusion for awards, FAM trips or for merely having worked with the hotel chain. Hotels also started paying commissions in local currency, thus making it less cumbersome for agencies to book through hotel websites or toll free numbers.

OTAs / Aggregators / Hotel booking companies became very important distribution channels, even though initially their introduction created a tremendous amount of rate disparity. Customers benefitted from this largely as they were able to shop for the best possible rates. Then the hotels came out with dynamic pricing, which sort of ensured the OTAs printed online only the best available rates. However, rate disparity issues continue with some OTAs giving away their commissions as discounts to the customer.

The all-important toll free channel, which two decades ago was a key distribution channel, fell through the gaps in the last decade. With the emergence of OTAs – Indian and international hotel booking portals, wholesalers, hotel websites and ability to book through apps – the toll free especially to book international hotels was side-lined.

The Indian customer, who was by now a frequent traveller to international destinations, saw similar brands in India or vice versa and this created strong brand recall. This also raised the bar for hotels in India to live up to the expected standards in terms of providing differing services to differing customers. The future also looks very fast paced and exciting. There will be more hotel mergers and acquisitions. Boutique hotels and home stays will be also part pod luxury experiences and will be more in demand. We will also have more Indian hotel brands openings up hotels in international destinations.

To sum up, we in the travel trade have to anticipate the ever-changing direction of the dynamic winds and adjust our sails to dock on the shores of the fast changing customer behaviour, changing technology and new products.

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