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Hospitality Sector- Ready for disruption?

Author: ResearchFox

Disruptions in businesses are not a rarity in today’s world. But there are sectors which accepts change yet cling on to the traditional means. They do not want to let it go by giving a nod, in a subtle way, Henry Ford, who said, “People could have a Model T in any color they want as long as it’s black”. Hotel industry chased the black phenomenon till the arrival of the internet. The availability of the internet has increased immense competition and pressure on room rates. Owners are reducing room rates to increase the occupancy levels of their hotels as customers have started showing expertise in knowing about the brands and the amenities that are on offer. This expertise where earlier an ego boost to the frequent business travellers. In a way, the hospitality business has come a long way. There are numerous hotels in business with very less dearth of customers, thanks to the domination of online hotel booking apps who stand as TPIs (Third Party Intermediaries) who just as a travel agent years ago would take a commission for each room booked through their service.

The new age traveller or customer is so tech savvy that they are demanding enough to put the hotels on their toes to give the best amenities. These amenities should also give a varied experience to the customer who would then recommend it to prospective customers worldwide through reviews. A small gaffe from the hotel’s part is enough to create a dent in their reputation. The foreign tourist arrival in India in 2017 has been 700,000 on an average each month. The growth in the hospitality sector and its contribution to the GDP will continue to be high on the back of huge tourism potential. This unprecedented growth must be tapped by the hotel industry by not just increasing the frequency of hotels by increasing the occupancy of their hotel. The occupancy rate of hotels in India has risen from 63.4% to 65.6% in 2017 but the revenue per available room of hotels in India since 2017 has been Rs 3542 from Rs 3477. A very meagre increase in revenue to say the least.

Businesses and Internet companies, who brought in the disruption, are tweaking and changing the game of the so-called traditional methods of hospitality. Businesses are targeting not only the traditional Numero Uno customers, the business travellers,  but they are targeting shoppers, wedding guests and even people who would potentially get stuck in traffic to check in on non-traditional check-in times and have the freedom to check out on their free will. This comes with terms and conditions though, but such is the trade-off the customers are willing to take. The revenue model for such disruptive business models will help the hoteliers increase their “per day” revenue and the free hand of timings will charm the customers.  

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