MAHAVEER EDUCATION TRUST’S

SHAH AND ANCHOR KUTCHHI ENGINEERING COLLEGE

DEPARTMENT OF MANAGEMENT STUDIES

A

Business Development

Report

On

Hotel RADISSON PLAZA

In Partial Fulfillment of Mumbai University

Master of Management Studies

Subject-Marketing Audit

Submitted by

Chintan Dedhia

Roll No.-11

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INDEX (Hyperlinked)

Contents Pg No

1. Executive Summary 3

2. Industry overview 4

3. SWOT of Indian Hotel Industry 7

4. Current And Future Trends 9

5. Company Overview 11

6. Segmentation & Target Market 12

7. Marketing Mix of Hotel Radisson 13

8. Snap Shots of our upcoming Project – Radisson Plaza 17

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Executive Summary

This business plans entails all the details of our upcoming project of five star hotel at the corner of JVLR and LBS road. The purpose of the business plan is to provide a thorough and a clear idea to our financers about each and every aspect of our project. This business Plan entails the overall Industry scenario, SWOT Analysis, Company Overview and Marketing Mix of the Hotel Radisson

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Industry Overview

Global Scenario

The hospitality and tourism sector is the largest industry in the world. Contributes 10.4% of the global GDP & US$5.4 Trillion in 2007 Employed over 231.2 million people in 2007 Accounted for 8.3% of Total World Employment in 2007

Estimated to be comprised of more than 300,000 hotels and over 8 million restaurants, as well as countless tourist attractions, travel agencies, tour operations, cruise lines, tourism driven transportation systems, consulting firms, and real estate investment companies.

The Asia-Pacific Hospitality Industry

Asia-Pacific is the region with the greatest growth potential for the hospitality industry. 2006 - Average tourism growth of 7.7% across APAC Average tourism growth of 2.7% across Americas and 2.5% across Europe Total number of tourist arrivals in the Asia Pacific region - over 252 million in 2006.

The UK Hospitality Industry

The hospitality industry is probably the world’s fastest-growing, employment-generating profession, employing one in ten people worldwide. In the UK alone, the industry employs over 1.8 million people. It is estimated that the industry will require 30,000-35,000 trained people at managerial and supervisory levels every year till 2010 to fulfil its potential.

Top ranking countries in terms of absolute tourist arrivals

China (49 million overseas travelers)

Malaysia (but inflated due to heavy border traffic)

Thailand

Singapore

Japan

South Korea

Australia

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The Middle East Hospitality Industry UAE predicted to average 7% p.a. growth.

Visitors to Dubai projected to reach 10 million by 2010 & 25 million by 2029.

Dubai investing $45 billion in infrastructure and tourism.

Indian Scenario

Annual Growth Rate = 24 % The Travel and Hospitality industries have largely profited from the fast growing

economy of India, mainly due to the 3.5 million tourist arrivals in FY05 (22 % growth) over the previous period, thus posting a CAGR of around 7 % from FY00-FY05.

The Average Room Revenues (ARRs) in some metro hotels in India has increased by 15 % from the last year

According to the estimates of the World Tourism Organisation, international tourist inflow in India would be 10 million by 2020, which means the tourist influx has to grow at a CAGR of 6.5 % for the next 14 years.

According to Government estimates, India needs about 80,000 rooms in all categories over the next two or three years at an estimated cost of about US$ 8 - 9 billion.

A major reason for the growing demand for hotel rooms is the underlying boom in the economy, particularly the growth in the IT and ITES industries. The overall growth outlook appears buoyant and much of this growth will be driven by the BPO explosion, IT, Telecom and energy sectors.

The average employee to room ratio is 1.8 in hotels in India, across all the categories, except in the three-star category, where the ratio drops to 1.5 per room.

As new rooms are being added, the manpower requirement of the hotel industry is also increasing.

It is further reported that jobs in accommodation and food services as a whole are expected to increase by 17 percent between 2004 and 2014.

India‟s hotel industry is increasingly being viewed as investment-worthy, both within the country and outside, and several international chains are keen to establish or enhance their presence here. It is anticipated that, over the next three-five years, India will emerge as one of the world’s fastest growing tourism markets

There will be a requirement of about 10 million people in the travel Industry in India. The industry needs manpower, which is highly qualified, has leadership qualities and a quest to lead the Indian Hotel industry.

Over the last decade and half the mad rush to India for business opportunities has intensified and elevated room rates and occupancy levels in India. Even budget hotels are charging USD 250 per day. The successful growth story of 'Hotel Industry in India' seconds only to China in Asia Pacific.

'Hotels in India' have supply of 110,000 rooms. According to the tourism ministry, 4.4 million tourists visited India last year and at current trend, demand will soar to 10 million in 2010 – to accommodate 350 million domestic travelers.

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'Hotels in India' has a shortage of 150,000 rooms fueling hotel room rates across India. With tremendous pull of opportunity, India is a destination for hotel chains looking for growth.

The World Travel and Tourism Council, India, data says, India ranks 18th in business travel and will be among the top 5 in this decade.

Sources estimate, demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage.

With demand-supply disparity, Hotel India room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years.

'Hotel Industry in India' is eroding its competitiveness as a cost effective destination. However, the rating on the 'Indian Hotels' is bullish.

'India Hotel Industry' is adding about 60,000 quality rooms, currently in different stages of planning and development and should be ready by 2012.

MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn their share of pie in the race. Government has approved 300 hotel projects, nearly half of which are in the luxury range.

The manpower requirements of the hotel industry will increase from 7 million in 2002 to 15 million by 2010.

With the USD 23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities. 'Hotel Industry in India' is set to grow at 24% a year. This figure will skyrocket in 2010, when Delhi hosts the Commonwealth Games.

Already, more than 50 international budget hotel chains are moving into India to stake their turf.

Therefore, with opportunities galore the Future Scenario of Indian Hotel Industry looks rosy.

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SWOT Analysis of Indian Hotel Industry

According to recent estimates of the World Travel & Tourism Council ,Indian tourism demand will grow at 8.8% over the next ten years, which would place the country as the second most rapidly growing tourism market in the world. With the Indian hotel industry capturing the attention of the world

Strengths

India’s rich culture heritage: With a historical backdrop of 5,000 years, India is one big package of culture and legend that never fails to captivate the imagination of the visitor. Along with endless natural splendors like the mighty Himalayas, the vast Indo Gangetic Plains, lush tropical jungles and a long coastline. A visit to the country is a changing spectacle of religions, customs, festivals, sights and sounds.

Demand–supply gap: Indian hotel industry is currently facing a mismatch between the demand and supply of rooms leading to higher room rates and occupancy levels. With 95,000 odd rooms in the country, the size of the hotel industry represents an abysmal figure for India's size and growth prospects. Though new capacities are expected to come in the next five years demand will outpace supply in the short to medium term.

Government support: Till a few years ago, the Indian government had a total apathy towards promotion of tourism. In fact, the industry did not find a place in the government’s fund allocation. Things have, however, witnessed a change. The government seems to have realized the importance of tourism and is willing to spend towards the development of the industry. The ‘Incredible India’ campaign is a product of this realization. The focus on infrastructure, modernisation of airports, open sky policy, development of new tourist destinations and circuits, more fund allocation towards tourism are some of the initiatives taken by the government to promote tourism. The Indian hotel industry stands to gain from this proactiveness shown by the government.

Weaknesses

Poor support infrastructure: India is currently spending a miniscule amount compared with its needs, on infrastructure. China is spending seven times as much as India on infrastructure (excluding real estate) in absolute terms. In 2003, total capital spending on electricity, roads, airports, seaports and telecom was US$150 bn in China (10.6% of GDP) compared with US$21 bn in India (3.5% of GDP). However, over the past 2-3 years, the government has realized the importance of infrastructure and has focused on improving it.

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Opportunities

Rising Income: While there has been much talk about record number of foreign tourist arrivals, very little has actually been said or done about domestic tourism, which, according to our estimates, has registered a 40% annual growth in the last three years and is currently estimated at 300 m travelers. Significantly, the present-day consumption boom in India has been influenced more by higher disposable income rather than lower savings. This is good news, as income induced spending is likely to sustain itself for a longer period. Higher disposable incomes are also expected to enhance the concept of traveling for leisure.

Also, there has been an overall transformation in consumption pattern in the last five years. The increase in number of young people, their rising aspiration levels, and an increase in their spending power has led to a change in the consumption pattern. There is a marked shift from spending on traditional categories like food and grocery, clothing and jewelry, to lifestyle categories such as leisure, and aspirational products and services.

Open sky benefits: The opening up of the aviation industry in India brings exciting opportunities for the hotel industry (airlines transport around 80% of international tourists). Increased airline activity has stimulated demand and has helped to improve India's troubled infrastructure. Increased competition among airline companies will further lead to the development of new and improved services. Also the open skies policy has benefited both international and domestic travel.

New business opportunities: We believe that, over the next three to five years, the biggest surge in accommodation demand is expected to come from commercial zones that are being developed in metro suburbs and secondary markets. Mixed-use development projects that include retail and commercial space have also gained momentum in the last 24 months and will continue to be an attractive option. This provides a unique opportunity for hospitality projects.

Threats

Event risk: Dependency on foreign tourism can be a double-edged sword as travel decisions are based on global patterns and events that happen elsewhere can have serious impact the performance. Events like 9/11, SARS outbreak and Afghanistan and Iraq wars have severely impacted the tourism industry in the past and the threat remains.

Increasing competition: Global hospitality majors like the Four Seasons, Shangri-La and Aman Resorts are all making their entry into the Indian market. They are not the only ones who are turning their attention to India. The Hilton Group is deciding on a comeback and has tied up with the Oberoi Group. Two other groups - the Carlson Group and the Marriott chain are furiously hunting for new hotels in India's top cities. This will increase the competition for the existing Indian hotel majors

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Current & Future Trends

Joint Ventures

MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn their share of pie in the race. Government has approved 300 hotel projects, nearly half of which are in the luxury range.

E-Business

One of the top strategies for hotel e-business is evolving from selling to engaging the customer. Hoteliers need to think more like retailers. To succeed, hoteliers need to fulfill the experience expected by customers, not just think of them as heads in a bed. Another strategy is engaging the customer through social computing, which is the fifth generation of electronic distribution. Travel plays a big role in social computing, making social computing a blend of marketing and distribution, The sixth generation for electronic distribution is mobile technology. Mobile phones are becoming ubiquitous in many countries. Travelers are an ideal group for mobile-based services and activities. Frequent travelers are the ones who find the most utility from using mobile services. Some of the opportunities center around the five important trends affecting hotel e-business. These trends are: more demanding consumers; more complex distribution channels; changing business models where companies must give more but expect less in return; an emphasis on technology and richer content; and a change in the structure of hotel e-business.

Commonwealth Games

These will be organized by Delhi in 2010. Will provide a boost to the hotel industry.

Changing Factors In Decision Making

Shaping customers expectations is becoming crucial as customers look for an „experience‟ rather than just a room. The more compelling the experience for the customer, the more satisfied the customer will be. “Content will replace price as a deciding factor for customers,” But who then owns that content and the customers that are attracted by it? Is it the hotel or is it the online service? Consumer generated content, which is more and more in demand, is all about a traveler‟s experience. This is a great way to match content with traveler‟s age group and interests. It‟s also a way to bolster the customer‟s expectation about what that experience at the hotel will be like. There‟s an incredible reluctance by hotels to post consumer generated content, fearing that it will be negative. However, most people that take the time to write have positive comments about their travel experience.

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Globalization Vs Localization

Are globalization and localization competing strategies? No. “Any business needs to think about both,” Globalization is here to stay as evidenced by changes in demographics and affluence. For instance, Russia is becoming the biggest European market while India, China and other Asian countries are emerging as important markets, too. In all of these regions, there‟s a huge rise in an affluent middle class who will be interested in travel. A globalization strategy needs careful planning, “You can‟t rush into it. You need to give it some thought,” Don‟t forget about the local aspects of your strategy. You need to incorporate local and global to be successful.

Growth Of Other Industries

With the USD 23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities. 'Hotel Industry in India' is set to grow at 24% a year. This figure will skyrocket in 2010, when Delhi hosts the Commonwealth Games. A major reason for the growing demand for hotel rooms is the underlying boom in the economy, particularly the growth in the IT and ITES industries. The overall growth outlook appears buoyant and much of this growth will be driven by the BPO explosion, IT, Telecom and energy sectors. The opening up of the aviation industry in India has resulted in exciting opportunities for the hotel industry. The various emerging concepts in India such as service apartments, spas, medical tourism, wildlife resorts, cruise tourism, adventure tourism etc will boost the hotel industry in India.

Budget Hotels

Already, more than 50 international budget hotel chains are moving into India to stake their turf.

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Company Overview

Mission Statement

Hotel Radisson’s mission is to provide its customers with the world class service in hospitality. We always put customers first in everything we, do our decisions for providing quality service are made keeping the customer in mind.

Vision

We will establish Radisson as the "exclusive & trusted brand" of customers by touching their hearts - the first time and every time with world class services delivered by people having "passion for customers".

Company Ownership

Radisson Hotels is owned by Chintan Mahesh Dedhia Group (CMDG) which is a diversified conglomerate and has interests in service industry with handsome profit margins. CMDG invests in service businesses and believes in inorganic growth by take overs which saves time and efforts for the group and hence increasing efficiency all over. The ideology behind investing in business with huge profit margins is that the group believes in sharing profits with its employees the most valuable asset for the group who in turn work whole heartedly towards the achievements of the group’s goals, CMDG also believes in sharing a good amount of its profits for the betterment of the downtrodden sectors of the society by helping them to become self employed and get education.

Chintan Mahesh Dedhia is the chairman of the group is a management graduate with 18 months work experience in Investment banking Operations and is now pursuing MBA from University of Mumbai with specialization in Marketing. He has always dreamt of becoming an entrepreneur and has a strong philanthropic belief of supporting the lives of the people at the bottom of the pyramid.

Management and Key advisors to the company

All the major strategic decisions of CMDG are taken by a team of 6 key directors, who are confidants of Mr. Chintan Mahesh Dedhia and the final decision is arrived after doing the thorough discussion on the issue. The directors are well experienced and have a vast and deep knowledge in their respective field. The team is so strategically built each and every director is from different field viz Supply Chain, Investment Banking, Legal, and Marketing streams.

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Segmentation

The hotel Industry can be segmented into four different segments

Domestic Tourists Domestic Business Visitors International Tourists International Business Visitors

Target Market

Our Main Target Market would be International Business Visitors, but we would also cater to the needs of International Tourists and Domestic Business visitors by tailoring the services as per their needs.

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Marketing Mix of Hotel Radisson

Product

Name of the Hotel will be Radisson Plaza

Products we would offer are as follows

Radisson Suites ( Recommended of International Business Visitors)Indulgent one-bedroom, king-bedded Radisson Suites with spacious sea view balconies, feature a relaxing seating area and the idyllic setting for an intimate candlelit dinner for two. Keep in touch with high-speed Internet or unwind with a good read in the comfy yet chic living area furniture. Some suites offer a whirlpool on the balcony.

Junior Suites (Recommended for Domestic Business Visitors)Located on the upper floors of the resort to take advantage of the spectacular views of the sea, our Junior Suites are strikingly decorated encompassing rich browns hues with hints of silver and gold. These one-bedroom, king-size bedded resort suites feature a lounge area, bathroom with a separate rain shower and bathtub, coconut cream coloured marble finishes and sliding glass doors that open onto a large terrace.    

Deluxe Rooms (Recommended for International Tourists)Deluxe Rooms are chic and well-appointed accommodations, which are spread amidst two low-rise buildings where every luxury is within arm's reach. Rooms feature a king bed or twin beds, shuttered blinds in the bathrooms that permit natural light to disperse effortlessly throughout, marble vanities, a work station, dressing table with ottoman, arm chair and a mini-bar with flavorsome local delicacies.

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The services we will offer are

We offer the following services:• 24-hour manager on duty• 24-hour reception• Accessible facilities• Airport transfers • Babysitting services• Bar• Business Center• Catamarans, kayaks and windsurfing equipment • Children's swimming pool • Conference and events room • Express check-in and check-out • Fitness Center • Foreign currency exchange • Four food and beverage outlets • High-speed Internet • International direct dialing • Kid's club • Luggage storage • Massage treatments• Multi-lingual resort staff• Room service (24 hours)• Satellite channels • Secretarial services • Spa • Wireless access available in public areas

Place

The upcoming project is being developed at Kanjurmarg, details of the city and its strategic importance are summarized as below

Kanjur Marg is a suburb in east central Mumbai. Kanjur Marg rail station is the main access point for IIT Bombay, KV POWAI, NITIE, Hiranandani Gardens, and other locations in Powai. The station was built in 1968 and named after the local Kanjur village.

Kanjur Marg is fast developing into a business district through some thoughtfully planned corporate campuses like OneWorld and Lodha iThink. But much prior to that the suburb was home to large industrial establishments like Crompton Greaves and The Indian Smelting And Refining Company Limited. Apart from developing into a high end corporate and residential suburb, Kanjur marg has rounded itself off as a top notch hospitality suburb as well.

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Much of the development may be attributed to the suburb's strategic location and its proximity to Powai,the IIT and easy access to the IT hubs of Seepz,Vikhroli IT parks and the IT campuses of Airoli and Mahape.Kanjur Marg is also the starting point for Jogeshwari Vikhroli Link Roadpopularly known as JVLR which demarcates Kanjur Marg on south side and connects the Eastern and Western Express Highways. Covering a distance of 10.8 km, point to point, it skirts the Powai Lake snaking its way through Andheri East and Seepz to reach Western Express highway. On the Eastern end it joins the EE highway via a flyover. Its one of the major arterial routes that has truly opened up connectivity between Western and Eastern Mumbai exposing areas like Powai which are not served by trains.

The upcoming Corporate parks in Kanjurmarg are summarized as below

Akruti Oneworld Corporate Park

1. ebay India.

2. Intertek

3. Ingram MIcro

Lodha iThink Campus

1. HDFC

2. Aker Solutions

3. Häfele India Pvt. Ltd.

Lodha Supremus

Malls present in Kanjurmarg are as below

Huma Mall

1. Home to Hotel Sheetal Samudra known for its fine seafood.

2. Home to a very nice open air restaurant Sheesha with nawabi cuisine and hukkas.

3. Is a one stop shop for finest Factory outlets.

4. Has 6 Screen BIG Cinema Multiplex.

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Neptune Magnet mall

1. Spread over 1,200,000 sq ft (111,000 m2).

2. 10 screen multiplex

3. Indias largest indoor/outdoor entertainment arena

This all development of kanjurmarg makes it a perfect place for Hotel Radisson to cater to its target market.

Price – Prices will be as per the competitive market pricing for the relevant suites.

Promotions –

The promotions of the hotel will be done as follows.

1. Tie ups with the leading travels agencies.2. Tie ups with leading airlines in India viz Jet and Kingfisher for promotional packages and

product bundling.3. Advertisements on the airports of Mumbai both international and domestic also

advertisements will be placed at airport in the New Mumbai area.4. Tie ups with leading corporate in India for bulk bookings and discounts

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Some Snapshots of our upcoming project – Radisson Plaza

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