OVERVIEW of Hospitality of ITC

8/7/2019 OVERVIEW of Hospitality of ITC

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iNTRODUCTION TO HOSPITALITY

Hospitality refers to the relationship process between a guest and a host, and italso refers to the act or practice of being hospitable, that is, the reception andentertainment of guests, visitors, or strangers, with liberality and goodwill.

Hospitality frequently refers to the hospitality industry jobs forhotels, restaurants,casinos, catering, resorts, clubs and any other service position that deals withtourists.

Hospitality is also known as the act of generously providing care and kindness towhoever is in need.

The word hospitality derives from the Latin hospes, which is formed from hostis,which originally meant a 'stranger' and came to take on the meaning of theenemy or 'hostile stranger' (hostilis) + pets (polis, poles, potentia) to have power.Furthermore, the word hostire means equilize/compensate. Hospitality as acultural norm or value is an established sociological phenomenon that peoplestudy and write papers about (see references, and Hospitality ethics). Someregions have become stereotyped as exhibiting a particular style of hospitality.Examples include:

Minnesota nice Southern hospitality

The hospitality industry is a 3.5 trillion dollar service sector within the globaleconomy. It is an umbrella term for a broad variety of service industries including,but not limited to, hotels, food service, casinos, and tourism. The hospitalityindustry is very diverse and global. The industry is cyclical; dictated by thefluctuations that occur with an economy every year.
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OVERVIEW OF COMPANY

The ITC Maurya, New Delhi has been the preferred residence of visiting heads ofstate and global business leaders for over 25 years. This extraordinary hotelcombines an historic aura with contemporary facilities to create an unrivalled

luxury hotel experience.

Situated in the heart of the exclusive Diplomatic Enclave and surrounded byviews of Delhis green belt the forested ridge, our business hotel is aconvenient 14 kilometers (25 minutes) from the International Airport. An imposingstructure of timeless luxury boasts inspiring architecture and a majestic ambiance

a tribute to the age of the great Mauryan Dynasty, which created the golden eraof Indian history.

440 rooms, including 29 uniquely-designed suites, are available in a bouquet ofroom categories, from the Executive Club which pioneers a tradition in corporate

hospitality to the Towers eight luxurious floors of elegance and tranquility. TheLuxury Room combines the best of opulence, space, and service standards andthe ITC One our premium room category offers magnificent decor,impeccable service, and the latest in modern conveniences and amenities.Behind the lavishness is a crisp efficiency and a deep understanding of theneeds of the global traveler.

One of the most popular dining destinations in the city, ITC Maurya, New Delhiadditionally offers an assortment of internationally acclaimed cuisine.


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HISTORY OF ITC

ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco

Company of India Limited'. Its beginnings were humble. A leased office on RadhaBazar Lane, Kolkata, was the centre of the Company's existence. The Companycelebrated its 16th birthday on August 24, 1926, by purchasing the plot of landsituated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkatas, for thesum of Rs 310,000. This decision of the Company was historic in more waysthan one. It was to mark the beginning of a long and eventful journey into India'sfuture. The Company's headquarter building, 'Virginia House', which came up onthat plot of land two years later, would go on to become one of Kolkata's mostvenerated landmarks.

The Company's ownership progressively undiagnosed, and the name of theCompany was changed to I.T.C. Limited in 1974. In recognition of the Company'smulti-business portfolio encompassing a wide range of businesses - Cigarettes &Tobacco, Hotels, Information Technology, Packaging, Paperboards & SpecialtyPapers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting & Stationery- the full stops in the Company's name were removed effective September 18,2001. The Company now stands rechristened 'ITC Limited'.
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ITC GROUP OF HOTELS

Hotel Name Star Category

City Address

ITC HOTEL MAURYASHERATON & TOWERS

5 StarDeluxe

New Delhi DiplomaticEnclaveS.P MargNew Delhi Delhi

HOLIDAY INN, AGRA 4 Star Agra 16/2/8Sanjay PlaceM.G. Road, AgraUttar Pradesh

ITC HOTEL WINDSORSHERATON & TOWERS

5 StarDeluxe

Bangalore No. 25Golf CourseRoad

BangaloreKarnataka

ITC HOTEL PARK SHERATONAND TOWERS

5 StarDeluxe

Chennai 132T.T.K. RoadChennai TamilNadu

ITC HOTEL KAKATIYASHERATON & TOWERS

5 StarDeluxe

Hyderabad 6-3-1187BegumpetHyderabadAndhra Pradesh

ITC HOTEL GRANDMARATHA SHERATON &TOWERS

5 StarDeluxe Mumbai Sahar, Andheri(E)MumbaiMaharashtra

ITC HOTEL SONAR BANGLASHERATON & TOWERS

5 StarDeluxe

Kolkata 1, HaldaneAvenueKolkata WestBengal

LOCATION OF ITC GROUP OF HOTELS
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LANDMARKS OF ITC HOTELS


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Various landmarks of itc hotels are as follows:-

1. EXPORT HOUSE STATUS FOR TOURISM AND HOSPITALITYINDUSTRY

The first and probably the most important break through was theconferring of 'Export House Status' for Tourism and Hospitality Industry. Aseries of interactive meetings were organized with the concernedMinisteries of the Government of India. A high level conclave presided bynone other than Shri Ramakrishna Hegde, the then Hon'ble Minister ofCommerce himself, cleared the decks for getting the official seal ofapproval for the action plan that was blue-printed by HAI. This recognitionplaced hotels and tourism units at par with industries engaged in export ofproducts for the purpose of imports of projects and products against theirforeign exchange earnings.This landmark achievement resulted in IndianHotels acquiring the ability to provide world class facilities to their clients

and compete with hotels worldwide.

2. TOURISM EXPORT PROMOTION COUNCIL

A parallel achievement to the grant of Export House Status, was theformulating of the constitution of the Tourism Export Promotion Council(TEPC) crafted on the 20th of November 1998, it was approved by theCompany Law Board under section 25 of the Companies Act 1956. TEPCrepresents an unique experiment in bringing together for the first time, allconstituents of the tourism sector namely hotels, travel agents, touroperators, transporters airlines and tourism finance companies on acommon platform & under the same umbrella.

3. SAARC HOTEL ASSOCIATION ESTABLISHED

Hotel Association of India has gone beyond National boundaries. Bycontacting Hospitality Industry Organisations of Bangladesh, Bhutan,India, Maldives, Nepal, Pakistan and Sri Lanka, a move has been madetowards extending regional cooperation. HAI played a pivotal role in theprocess that took a formal shape in the form of SAARC Hotel Associationlaunched in Mumbai on 7th April 1999. Nepal was assigned theresponsibility of hosting the SAARC body for the initial two years to befollowed by the rest of the member countries by rotation.

4. INTERNATIONAL CODE OF CONDUCT TO GOVERN RELATIONSBETWEEN HOTELIERS, TRAVEL AGENTS AND TOUR OPERATORS


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An International Code of Practice governing the relations betweenHoteliers on one part and Travel Agents/ Tour Operators on the other wassigned between HAI and the two National travel trade associations namelyIndian Association of Tour Operators (IATO) and Travel AgentsAssociation of India (TAAI).The signing of this code sent a clear signed to

the International traveler and travel fraternity that India would adopt globalpolicies of hotel bookings, cancellations, refunds, claims etc.

5. LEGAL 'FIRST' FOR HOTEL INDUSTRY

HAI sought the intervention of the High Court of Delhi by filing a writagainst an arbitrary and adhoc administrative directive requiring the hotelsin the approved categories, classified by the Ministry of Tourism to follow aregime of 'Single Tariff'. The industry perspective, presented by HAI wasaccepted by the High Court of Delhi which granted a stay in favour of thehotel industry.This vindicated the industry's system of operation across thecountry in a matter of great importance not only to the hotels but also tothe domestic and international travelers staying in hotels.

6. SEEKING REPEAL OF ANTI-WOMEN LEGISLATION

The Punjab Excise Act, passed in 1914 during the British rule in Indiacontained an archaic and anti-women provision that prohibited theemployment of women in duly licenced premises i.e. bars and restaurantsin hotels. HAI challenged the validity of this legislation before the Hon'bleHigh Court, declaring it to be ultra vires under article 226 of theconstitution of India.The 92 year old legal section 30 of the Act was struckdown by the Delhi High Court. HAI thereby achieved a singular judicial

success in providing women equal opportunities for work in hotels acrossthe country.

7. SURVEYS ON THE IMPACT OF TRAVEL ADVISORIES INHOSPITALITYINDUSTRY

Foreign missions embassies often issue travel advisories to their citizen.Issued from time to time with respect to certain countries, these advisoriesdiscourage citizens to undertake travel to these countries on account ofperceived threats like disease / epidemics, political instability, securityconcerns, etc.Travel advisories have been issued against travel to India

on several occasions. Most foreign tourists surveyed, conducted amonghotel guests the survey viewed these advisories as coloured by politicalconsiderations' and based on 'inadequate knowledge of ground realities'.The results of this survey when conveyed to the embassies facilitated theirgovernments in reviewing and in certain cases withdrawing the advisories.


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8. FIRST AFRO-ASIAN INFOTECH HOTELS EXPO

An initiative led by HAI resulted in the Afro Asian Region and Conferencecum Exposition on Information Technology being institutionalized as anannual event in New Delhi for the South Asian Region countries. The first

conference organized from 10/11 April 2000 at the ITC Maurya SheratonHotel, was supported by United Nations Economic and Social Commissionfor Asia & the Pacific & the SAARC Tourism Council. Support was alsoextended by the Ministries of Tourism and Information Technology,Government of India who Co-sponsored the event.

9. CREATING A NATIONAL NETWORK OF HAI CHAPTERS

Having established itself in New Delhi in April 1997, the Associationproceeded towards enlisting co-operation of hoteliers from across thecountry. Support poured in by way of local chapters from twenty-fivestates and fifty-three cities, on a completely voluntary basis. Each of thesechapters monitors hospitality related developments in its region enablingthe Association to address the concerns of the hotel industry at grass rootlevel.

10. GOING GLOBAL WITH KNOWLEDGE EXCHANGE PARTNERS

In addition to establishing Chapters at a state and city level, theassociation has forged partnerships and alliances with severalInternational Bodies in the field of Tourism and Hospitality, to mention afew World Travel and Tourism Council (WTTC), the Pacific Asia TravelAssociation (PATA), World Tourism Organization (WTO), the International

Hotel and Restaurant Association (IH & RA), The united Nation Economicand Social Commission for Asia and the Pacific (UN-ESCAP), the SouthAsia Association of Regional Countries (SAARC), the World HealthOrganization (WHO) and the European Union's South Asian IntegratedTourism Human Resource Development Programme (EU-SAITHRDP).The affiliations enable exchange of knowledge on several subjects helpingthe Association in its effective functioning.

11. INTER-SECTORAL LINKAGES WITH APEX NATIONAL FORA

Hotel Association of India has not limited itself to the Tourism Industry

alone. It has also developed working relationships with apex industrybodies of the country. It liases with Federation of Indian Chamber ofCommerce and Industry (FICCI), Associated Chamber of Commerce andIndustry of India (ASSOCHAM) and the Confederation of Indian Industry(CII).


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12. MAKING INDIAN HOTELS DISABLED FRIENDLY

The Association took the initiative of formulating a comprehensive set ofguidelines to make hotels more accessible and comfortable for thedisabled. The guidelines related to provision of facilities in parking and

approach areas, lobby, public areas, lifts, rooms and bathrooms andundertaking of special fire prevention measures.

13. SPECIAL PROMOTION WITH NATIONAL CARRIER

HAI galvanized the entire hospitality industry to come together under asingle banner and offer as many as 62 special promotional packages inassociation with Air India. Launched in the Gulf Region, these packagesprovided a wide choice to the traveler from Middle East to India.

14. STUDY PROJECTS

A study project was initiated by the Association to assess and thereafterimprove upon, the skills of staff, particularly in smaller hotels to handleforeign tourists by sensitizing them to cultural differences across countries.

15. ENCOURAGING INVESTMENTS

Hotel Association of India orchestrated the strategy that led to increasedavailability of funds for the hotel industry. Benefits on loans to hotels in thecategory of three stars and above were announced in the Union Budget of

2003-04. The benefits allowed under Section 10(23)g of the Income TaxAct facilitated the lending institutions to give loans at reduced interestrates to the hotels by giving them a tax break on interest earned on hotelproject loans.

16. RE-STRUCTURING IN HOSPITALITY BUSINESS

At the behest of HAI, the Finance Ministry constituted a working groupunder the Chief Commissioner of Income Tax, Mumbai. The workingGroup recommended the grant of benefits under Section 72 A of theIncome Tax Act which helped loss-making hotel companies to re-organize

their business. The facility of mergers and acquisition, hitherto availableonly to industrial and manufacturing units was extended to hotelcompanies as well. This allowed hotel companies to enter into strategicalliances thereby releasing resources blocked in non-performing assetsand enabled them to improve service standards.


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Growth

In the wake of a fairly good performance in the fiscal year to date, freshinvestments can be contemplated in the ITC stock with a long-term perspective.

But there may be a downside in the near-term, especially in the first quarter ofthe next year coinciding with the Budget blues.

ITC would be spending Rs 5,000 crore in the next four to five years on hotelprojects. With 75 hotels (5,500 rooms) under the chain, ITC is expecting to addanother 27 properties (3,000 rooms) under its management in the coming years.

Declining to comment on growth in coming quarters, the head of India's biggest

cigarette maker, Mr Deveshwar, said the company's targets for the next fiveyears were to double sales, increase operating profits 2.5 times, and net turnover2.5 times.

With a turnover of almost Rs 15,000 crore ($3.5 billion), the Kolkata basedcompany also has interest in packaged food, paper, retail, and agarbattis.

Deveshwar said that the company's operating performance was good,considering the 18 per cent growth in net profit in the first quarter of 1998-99,over and above the 67 per cent profit growth recorded in the first half of 1997-98.


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Major achievements

Several important achievements emerged from an independent evaluation of tenyears of cooperation between Romania and ITC. Among them:

- Top-ranked trade information services. The Romanian Foreign TradeCentre, set up in 1996 with the strong support of ITC, has rapidly emerged as thecountrys best provider of trade information services. ITC contributed heavily tothe centres conceptual framework, web site development and staff training.

- Nationally-reputed Romanian Association of Purchasing and SupplyManagement.Romanian purchasing experts created this association in 1996, following a series

of ITC training sessions. Over the last five years, the establishment has carriedout dozens of courses, training over 300 Romanian specialists, bringing a newbusiness efficiency to their companies. For example, BADUC, a privatisedtrading house in construction material, credits ITC training as being fundamentalin changing attitudes and introducing modern import techniques.

Today the association has 35 member companies and is Government-accreditedto issue training certificates. Due to their experience and skill, these Romanianspecialists are increasingly being engaged by ITC to conduct training oninternational projects in purchasing and supply management.

- New Romanian versions of major international business publications.Romania is the first country to translate and nationally adapt three of ITCs top-selling business publications: the Business Guide to the World Trading System;Trade Secrets; and Secrets of Electronic Commerce. All three of these practicalguides are aimed at helping the business community improve their exportcapacity.

The Business Guide to the World Trading System provides a practical, business-oriented overview of the WTO agreements, and is accessible to readers. Now inits second edition, it has been expanded to incorporate recent developments,including a new section that focuses on six new WTO areas of work:

environment; investment; competition policy; government procurement; and e-commerce facilitation. Trade Secrets provides answers to the top questions thatfirst time exporters need-to-know. Building on international research,development and guidance from ITC, the Romanian Foreign Trade Centrecarried out national research to adapt the questions and answers specifically toRomania. Secrets of E-commerce provides questions and answers to frequentlyasked questions related to e-trade and Internet use by small and medium-sizedexporters.


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92 year old anti-women law struk down

Issues represented by HAI to the Government of India and Milestonesachieved as reflected in union budget 2003-2004

Adopting Technology Base

Stretching beyond the frontier

Pioneers adoption of Global Code of Conduct

Towards quality service

Strengthening our cause

Better incentives

PERFORMANCE:

The company's earnings performance for the year ended March 2002 was notimpressive. Sales revenues during the period fell 16 per cent to Rs 112.08 croreover the corresponding previous period. Given the tight economic conditions andthe post-September 11 developments, this was more or less expected. Hotelierswere hit this year by the drop in tourist travel.
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For instance, during April to February 2002, tourist arrivals dropped 2 per centand earnings from tourists 10 per cent.

This was mainly on account of the security risk posed by travelling to South Asiaafter the act of terrorism in the US on September 11 followed by the start of the

war in Afghanistan.

This came at a time when confidence was slowly building and tourists wereexpected to arrive during the Christmas holidays.

But the threat of an outbreak of war and sporadic incidents of terrorism andcommunal violence kept security risk high. Eventually, as expected, tourismdeclined.

Further, with economic conditions the world over also being tight, business traveldid not lend a helping hand. It is also evident from the numbers that the

company's operational risk profile is on the rise.

Operating profits were down 65 per cent over the previous year and operatingmargins declined by around 11 percentage points to 7.76 per cent. Thesenumbers indicate that the scope for boosting profitability purely on the basis ofcost control may be limited.

At the end of the year, the company has moved into the red. It posted a loss ofRs 3.12 crore compared to a profit of Rs 10.87 crore the previous year.

In this backdrop, the near-term prospects depend on whether there is an inflow of

tourists and business travellers into the country.

The first half of the financial year is normally not very good for hoteliers.

Therefore, any improvement may be visible only from the company'sperformance in the third quarter of 2002-2003.

In this backdrop, only investors with a penchant for risk need consider aninvestment. Given the uncertainties, an exit price of around 25-30 per cent fromthe entry price can be considered.

FINANCIAL STATUS

Financial Results for the quarter ended 31st December, 2006

23.2% growth in Post-tax ProfitsNon-Cigarette businesses now constitute 52% of Net Turnover


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ITCs Net Turnover at Rs. 3166 crores posted a strong growth of 24% driven bythe non-cigarette businesses which grew by 31% during the quarter and nowaccount for 52% of the Companys Net Turnover. The key drivers : the significantgrowth in the non-cigarette FMCG businesses, higher agri-business revenuesand the continuing strong performance by the Hotels business.

The Companys pre-tax profit for the quarter ended 31st December 2006recorded a growth of 26% over last year and crossed the Rs.1000 crore mark.Post-tax profit at Rs. 717.4 crores grew by 23.2%. Earnings Per Share for thequarter stood at Rs. 1.91.

The sops given in the Budget to hotels and tourism will also favour ITC. It has 20

per cent of its capital employed invested in hotels and also holds a 71 per centstake in ITC Hotels. Earnings of hotels have been badly hit in the last 12 months,affecting ITC.

MARKET SHARE OF ITC HOTELS


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Investors looking for exposures in sectors spanning FMCG, hotels and paper canconsider ITC, utilising the current sharp declines. At current price levels, the ITCstock, which trades at about 26 times its trailing 12-month earnings, is be a goodbet in the large-cap space.

ITC's hotels division outperformed most of its peers in the hospitality industry inFY-06, registering a 35 per cent revenue growth; its earnings also registered asignificant rise. Though revenues and earnings from this division are onlymarginal, there appears to be a lot of potential for growth. ITC has firmed upplans to expand its hospitality business by setting up hotels in Chennai andBangalore. ITC Hotels Limited, has undertaken a re-branding exercise to enableconsumers identify the various products offered by the company. To further focusthe positioning strategy, hotels in the ITC-Welcomgroup chain at the upper end ofthe market would be branded into four categories.

The exercise is part of the companys strategy to gain dominance in theupmarket business traveller segment while establishing presence in the mid-market as well as leisure segments through the Fortune and WelcomHeritagebrands.Work has started on two other projects the ITC Sonar Bangla atCalcutta and ITC Grand Towers at Upper Worli, Mumbai, Deveshwar said. TheCalcutta hotel would cost Rs 2.65 billion. The land for the project has alreadybeen acquired.

MAJOR COMPETITORS


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TAJ GROUP OF HOTELS

HILTON HOTELS

RADISONS

BAUER PALLADIO HOTEL AND SPA

BOSCOLO DEI DOGI HOTEL

APEEJAY SURENDRA GROUP PARK HOTEL

HOTEL PRESIDENCY

HOTEL LE LODGE

HOTEL MERIDIEN

Future Plans

As part of its growth plans, construction of two more business hotels, one atMumbai and one at Kolkata, has already commenced. When they open, the

Grand Towers at Mumbai and the ITC Hotel Sonar Bangla at Kolkata will add500 more rooms to the ITC - Welcomgroup chain. The 400-room ITC HotelGrand Maratha which opened for guests in February 2001 is being perceived asthe finest property in Mumbai. The company has planned investments toaugment the total room capacity of the chain by building hotels at Kolkata,Jaisalmer and other locations. It has added 80 rooms to ITC Maurya Sheraton,Delhi. It has opened up a new Hotel Welcome in Saket with a capacity of 220rooms. Other projects at Bangalore and Hyderabad are in pipeline. It is alsolooking at Chennai seriously. The company is planning to invest Rs15bn in thenext three years starting FY02. The investment in Mumbai and Kolkata isexpected to be Rs5bn (Rs2.5bn in each project). The company's strategy at

present is to concentrate on India and after expanding in all major locations ofIndia, it will look at the international market. Similar projects such as theHyderabad golf project are not likely to happen in the near future.

FUTURE PROSPECTS OF ITC HOTELS

Realising the importance of the Tourism and Hotels sector in contributing toeconomic growth and to significant employment generation and foreign exchange

earnings in particular, a number of policy level initiatives were taken further tothose contained in the Union Budget 2003 and the Exim policy thereafter. Theseinclude (a) earmarking Rs. 2,500 crores for setting up world-class conventioncenters (b) enabling cheaper domestic air travel (c) planned outlays towardsupgradation of airport infrastructure etc. Earnings from incoming tourists istargeted at Rs.22,000 crores for 2004 - a growth of nearly 30%. Even at theselevels, travel and tourism would constitute barely 2% of India's GDP, well belowthe world average of 10.7%.


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Hotels constitutes critical infrastructure to support the growth of trade, commerceand industry. India is grossly under-roomed in relation to the growth potential ofthe Indian economy. Even at conservative GDP growth assumptions, the currentroom supply of approximately 90,000 rooms would need to increase to at least130,000 rooms by 2008. The accommodation sector therefore presents attractive

growth opportunities for companies like ITC that can sustain the impact of capitalintensity through the strength of its balance sheet.

The expected growth of Indian economy is the wake of continuing reforms willlead to increase business travel in the India. Itc is well praised to seize theunfolding opportunities.

The consolidated ITC is not much larger than the cigarette company -- the totalsales of the group is Rs 8,600 crore against ITC's Rs 7,950 crore. ITC's paperand hotels businesses are small while it is yet to take up real-estate developmenton any significant scale. The contribution of cigarettes to the total group revenues

continues to be a significant 80 per cent.

http://www.hinduonnet.com/businessline/iw/2000/10/29/stories/0229b103.htm

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http://en.wikipedia.org/wiki/Hospitality

http://www.thehindubusinessline.com/iw/2006/06/11/stories/2006061101150900.htmhttp://www.thehindubusinessline.com/iw/2003/03/09/stories/2003030900310900.htm

http://www.hotelassociationofindia.com/hai_activities.htm
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OVERVIEW of Hospitality of ITC

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