Submitted by:

Hari Shanker – 273 || Ravindra Makwana – 281 || Sachin kumar – 294 || Suseendran – 308 || Yogesh - 317

Table of ContentsExecutive Summary...............................................................................................................................3

Introduction of the company.................................................................................................................3

ITC Hotel business:................................................................................................................................4

Hotel Industry Introduction...................................................................................................................4

Structure of the industry:..................................................................................................................4

Key stats for hotel Industry:..............................................................................................................5

Key Consumer Segments:..................................................................................................................5

Analysis of External Environment factors influencing Hotel Industry....................................................6

Political/Legal Segment:....................................................................................................................6

Economic Segment:...........................................................................................................................7

Sociocultural Segment:......................................................................................................................7

Technological Segment:.....................................................................................................................7

Global Segment:................................................................................................................................8

For Industry Attractiveness- Porter Five forces.....................................................................................8

Threat of entry: (LOW)-high entry barriers........................................................................................8

Threat of Substitutes: (HIGH).............................................................................................................8

Bargaining power of the customers :( Moderate).............................................................................8

Bargaining power of the suppliers: (MODERATE)..............................................................................9

Internal rivalry :( HIGH)......................................................................................................................9

For Internal Analysis of company: SWOT Analysis.................................................................................9

Strength:............................................................................................................................................9

Weakness:.........................................................................................................................................9

Opportunities:...................................................................................................................................9

Threats:............................................................................................................................................10

Resources:...........................................................................................................................................10

Tangible Resources:.........................................................................................................................10

Intangible Resources:......................................................................................................................11

Capabilities:.........................................................................................................................................11

Value Chain Analysis............................................................................................................................12

Performance of ITC hotels:..............................................................................................................13

Recommendations...............................................................................................................................14

Bibliography:.......................................................................................................................................15

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Executive SummaryThe project looks at the various challenges and opportunities provide by the Indian Hotel industry and what should be the strategy of ITC in order to overcome the challenges and to utilise the opportunities in its benefit. First we studied the external environment using PESTEL analysis and used Porter’s Five forces tool to analyse the attractiveness of the industry. Then we did a value chain analysis of ITC hotels to gauge its capabilities and core competencies. The analysis threw light upon the strengths of ITC which were a strong distribution system for sales and services, strong brand name, sound financial base and an efficient and dynamic management. The main problems in the hospitality industry were in loss of revenues due to recession and recent terrorist attacks. But surge in tourism and slew of government subsidies had placed the industry in growth track. Apart from international tourism the industry was supported by large number of business travellers and domestic tourists. Lowering of airfares and open sky policies has also had positive externalities on the hotel sector.

Based on our study and analysis we have conclude that ITC has to make huge investments in the emerging markets which is the tier 2&tier 3 cities and also increase the number of rooms available in the luxury collection segment. We have also recommended that ITC should also focus on new opportunities like MICE, eco tourism, medical tourism and adventure tourism. Finally we have also stressed upon the development of human resources.

Introduction of the companyITC was incorporated in 1910 under the name of Imperial Tobacco Company of India Limited. The first six decades of the group's existence was primarily devoted to the growth and consolidation of cigarettes and leaf tobacco businesses. In 1974, it was renamed as ITC Limited. In 1975, the group forayed into the hospitality business. In 1979, ITC entered the paperboards business by promoting ITC Bhadrachalam Paperboards.Currently ITC LTD. is in following businesses:

Cigarettes Hotels Paperboards & Speciality papers Packaging Information Technology Branded Apparel FMCG Products Greeting cards, safety match e.t.c

Presently ITC is one of INDIA’s foremost private sector companies with market capitalization of over 13 billion USD and a turnover of more than 4 billion USD. Winning various top ranks in various surveys and ratings, ITC ranked 3rd in terms of pre tax profit among INDIA’s private sector companies.

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ITC Hotel business:ITC went into hospitality sector in 1975 with the acquisition of a hotel in Chennai, which was renamed ITC-Welcomgroup Hotel CHOLA. ITC – Welcome group pioneered a holistic concept of “Branded Accommodation” in the hospitality industry. It was first to launch the powerful idea of “Hotel within a hotel” by segmenting and branding the hotel services. They created hotels each catering to the needs of various kinds of travellers and tourists. Now it is INDIA’s second largest hotel chain across all segments. It contributes around 4% of total revenue of ITC Company.

ITC’s different brands in hotel segment and available rooms are as following:

Brand Location No. of hotels No. of roomsSheraton Chennai,jaipur,new delhi 4 800+Welcomgroup Vadodra,Vishakhapatnam,

Aurangabad3 330+

Luxury collection(Mughal,Windsor,Maurya,Grand,Royal)

Agra, mumbai,bengaluru,Kolkata,hydrabad

8 2400+

Fortune Across India- all major cities

40+ 3500+

Welcomhertage More than 17 states 70+ 3000+

Hotel Industry IntroductionHotel industry is a major part of the tourism industry, the growth of hotel industry is directly proportional to the growth of tourism industry in any country. Before 1980 the hotel industry in India was growing with a slow pace but 1982 after partial liberalization and ASIAD in New Delhi demand increases for the quality hotels, which was further increased in 1990’s. In recent years the growth of hotel industry is more than the GDP, which is mainly due to good economical and political condition in India. A GDP growth of 9.4 per cent was witnessed in 2006-07, thus creating a trickledown effect for the growth of support industries such as hospitality. In near future the growing economy will increase the spending power and will fuel the growth of tourism industry.

Structure of the industry:Total capacity of about 130,000+ hotel rooms is available till 2010, which are categorized as following:

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Total room capacity of Taj Group: 12000, Total room capacity of ITC hotels: 8000

Key stats for hotel Industry: Revenue: Revenue is dependent on the Average room rate (ARR), revenue per available room

(RevPAR) and the occupancy rate (OR). The factors affecting these parameters are location of the hotel, demand for rooms and supply of rooms (availability). Also the industry is vulnerable and cyclicality of OR and there is also the issue of seasonality. The occupancy rate is significantly higher during the holiday season than the rest of the year.

Revenue distribution .o 60% of the revenue comes from rooms sales. This depends on average room rate(ARR),

no of rooms and the occupancy rate (OR)o 35% of the revenue comes from Food & Beverage serviceso The other 5% comes from services like telecommunication, laundry, transport etc.o F&B revenue is indirectly dependent on the Occupancy rate.

Cost o Most of the cost is for infrastructure development. A 5 star luxury room on an average

costs Rs 1Crore. So most of the cost is fixed.o The employee cost of salaries, training and other compensations account for 20% of the

cost.

Key Consumer Segments:The Business Traveller: The senior executives usually stay in 5 star hotels and the middle level executives, who are more in number, stays in budget hotels. So this segment offers better realizations because they demand relatively smaller discounts on room rents (about 10%-15%) uses

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more facilities such as PCs, fax multi-media, conference halls e.t.c. Also, the Food & Beverage revenues are better as they usually eat in the hotel itself due to their busy schedules.

The Leisure Traveller: India is largely known for its cultural attraction followed by conferences and conventions, tourist attractions like beaches, wild life, hill resorts etc. Usually, leisure travellers are part of a package run by a tour operator and the margins offered by them tends to be lower this is because they seek higher discounts and also provide less Food & Beverage revenues as they usually eat out. The business offered by this segment is also very seasonal in nature and tends to peak in the month of September to March.

Airline Cabin Crew: Airline Cabin Crew forms another important segment as it provides repetitive and guaranteed nature of the business. Basically these are part of an annual contract which has a fixed rate and a certain number of rooms are provided on the demand of cabin crews. With high discount rates in the range of 40%-50%, so that is why this segment is a low-yield segment for hotels.

The growth in foreign tourists in India was 78% during 2001-2006. Similarly the domestic tourists are also growing with high speed.

Year Domestic Foreign Total2007 5265.64 132.67 53982008 5629.82 141.13 57712009 6500.39 137.8 6638

All data in Lakhs.

The number of households with annual income greater than Rs 1 million is expected to grow at a CAGR of 15 per cent between 2006-07 and 2010-11, which will boost domestic inbound travel and lead to higher demand for hotel rooms and foreign travellers are expected to grow with 7% in 2010-15 period.

Analysis of External Environment factors influencing Hotel Industry

Political/Legal Segment:In recent years government has taken several steps to boost travel & tourism which have benefited hotel industry in India. For example:

1. Abolishment of the inland air travel tax of 15%2. Reduction in excise duty on aviation turbine fuel to 8% - reducing air fares3. Tourist friendly visa regime.4. Removal of a number of restrictions on outbound chartered flights.5. Government's recent decision to treat convention centres as part of core infrastructure,

allowing the government to provide critical funding for the large capital investment that may be required has also fuelled the demand for hotel rooms

6. Government's decision to substantially upgrade 28 regional airports in smaller towns and privatization & expansion of Delhi and Mumbai airport will improve the business prospects of hotel industry in India

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7. Upgrading of national highways connecting various parts of India has opened new avenues for the development of budget hotels in India. Taking advantage of this opportunity Tata group and another hotel chain called 'Homotel' have entered this business segment.

8. The 'Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' (ADB) campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry.

9. Development of basic infrastructure such as road (5,400 million National Highways Development Project, 5,846 km Golden Quadrilateral project, 7,300 km north-south and east-west corridors), power supply e.t.c.

Economic Segment:Recent year changes in economic condition of India have fuelled the growth of Indian hotel industry.

1. Growth in domestic travellers because the number of households with annual income greater than Rs 1 million is expected to grow at a CAGR of 15 per cent in future due to high economic growth in India.

2. Arrival of low cost airlines and the associated price wars has reduced the travelling cost significantly

3. Opening up of the aviation industry in India has exciting opportunities for hotel industry as it relies on airlines to transport 80% of international arrivals.

4. Capital investment in India's travel and tourism sector is expected to grow at 8.8 % between 2010 and 2019 this will in turn help tourism industry which will also increase the hotel industry growth rate.

5. The per capita income in India also has rose to a new extent enabling the common man to go to luxurious hotels to have a lunch or a dinner.

Sociocultural Segment:1. The income of people in India is increasing due to fine growth of economy, so due to

increase in disposable income the demand for luxury services is increasing in Indian hotel industry. So the growth of luxury hotel segment looks rosy in near future.

2. Energy resources high prices and global warming issues are also creating few hindrances in the growth of hotel industry. Green lodging certification programs are popping up at the state level around the country.

3. The growing concern for environment has put lots of taxes on transportation industry in turn affecting the demand side of hotel industry due to high travelling cost.

Technological Segment:

1. The advancements in computer technologies had made the distribution system in hotel industry more efficient and effective leading good quality services.

2. Internet facilities are providing online booking facilities, which are very helpful for the travellers.

3. Video-conferencing, 3G- services –video calls has been used instead of holding a conference in hotel, so development of this kind of connectivity services will definitely affect the growth of hotel industry (Applicable for business Traveller segment)

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Global Segment:1. Due to the economic downturn of economies, swine flu in various countries has affected the

hotel industry badly. In 2009 the tourism and travel industries growth in India has slowed down to 1%.

2. Terror Activities in India in yr 2009 also affected the hotel industry badly.3. ICC world cup and Common wealth game these kind of activities have increased the demand

of luxury hotels in India.

For Industry Attractiveness- Porter Five forces

Threat of entry: (LOW)-high entry barriers1. Capital requirement is high.2. Product differentiation- Brand Identification in hotel industry creates a barrier by forcing

new entrants to spend heavily to overcome customer loyalty.3. Poor infrastructure and low availability of land especially in metros are also entry barriers.4. Access of raw material and distribution channels are controlled by existing players such as:

Taj group, ITC- LTD. Leela palace e.t.c.

So from this we can say that in case of luxury hotel category the threat is low, but in case of budget hotel category due to low brand association factor and demand supply disparity the threat is high.

Threat of Substitutes: (HIGH) 1. Not many substitutes are available in the luxury hotel segment. But in budget hotel segment

few options like Govt. guest houses, company’s own accommodation facilities (for business traveller segment). In case of budget hotels in religious tourist destinations- Dharamshala’s are giving option to the travellers.

2. Customer can easily stay at friends/ relatives houses.3. Uses of recreational vehicles can provide options to the travellers.4. Use of video- conferencing and 3g services are adversely affecting the hotel industry.

In present scenario demand is more than what no. of rooms are available, so there is a possibility of increment in the demand of substitutes.

Bargaining power of the customers :( Moderate)1. Apart from crew members group the buyers are booking rooms in low volume.2. Backward integration is not possible for the buyers.3. Services are standard or undifferentiated in hotels so they can easily choose other options.4. Due to technological advancement they have many options so bargaining power is

increasing.5. Hotels are not saving the buyer’s money in case of charges charged by the hotels in same

category so again low switching cost.

So we can say that they can bargain due to low switching cost but due to limited option availability this power is hampered after certain point.

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Bargaining power of the suppliers: (MODERATE)1. Due to increase in fuel prices and energy resources (such as: lpg) the suppliers are gaining

power in hotel industry.2. 20% cost is of man power and supply of qualified man power is low which leads to high cost.3. No. of suppliers are high.4. Possibility of forward integration is low.5. The possibility of supplier’s switching from one hotel chain to other is low due to high

purchase volume of the hotel chains.

Internal rivalry :( HIGH)1. With the entry of foreign hotel chains in the market the no. of competitors will increase

even more.2. Due to various factors such as slow economic growth, terror activities, and Delayed policy

implementations, poor speed of infrastructure development the growth of the industry is relatively slow.

3. Services provided by the hotels are standard or less differentiated.4. Fixed cost is high in this industry.5. Exit barriers are high due to high capital investment in land and infrastructure. It is very

intense in metro cities and slowly increasing in tier two cities also.

For Internal Analysis of company: SWOT AnalysisStrength:

The group has enormous power and strengths, which make it the best and competitive, some of them are:

o USP : exclusive tower concept-hotel within a hotel, executive club, ITC ONE- Power of personal space, EVA System-exclusive rooms for single lady travellers, promotion of India’s cultural heritage-collection of fine art paintings

o Wide variety of hotels covering all segments and prime locations of hotel industry o Strong brand name

o Strong financial base and fund generating capabilityo Cost advantage due to direct supply of food grains, spices e.t.c with the help of ITC e-

choupal

o Trusted brand chain of Food and Beverage which gives excellence and quality product to ITC-hotel

chain (Ex: Bukhara, Peshawri, Dumpukht, Dakshin and PanAsian)

o Low attrition rate among the employees - providing better quality of services

Weakness:o Shortage of skilled labour forceo High tariffs and service charges o Huge competition with Taj, Oberai, leela groups.

Opportunities:o The gap between demand and supply in hotel industry leads to good opportunity for

expansions in varies areas

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o Natural and cultural diversity in India can be explored and more tourist can be attracted

o Govt. proposed 540 crores rupees to develop tourism industry in India, which will increase the demand in hotel industry as well

o India’s share in international tourism industry is set to increased in future(Due to open sky policy, various initiatives such as Incredible India, Atithi Devo Bhawa, high economic growth rate ) which will increase the demand of hotels in India

o Rising income of the people in India has created new opportunities in luxury segment so growth of this segment in future is good

o Budget segment is also increasing with good pace

Threats:o Union Budget 2011-12 announces an Increase in service tax in Hospitality sector (Increase of

tax in Domestic and International Air travel also) and No major capital investment in this sector. This can decrease the revenue of the ITC hotel business in the year 2011-12.

o Terror activities, riots and Naxalite problems in India can affect the whole hotel industryo Low infrastructure development rate, policies implementation problem in India can hamper

the overall growth of industryo Cheaper international airfares increasing affordability of travel to international destinationso Entrance of international hotel chainso Increasing customer expectation with high competition among the existing player will

reduce the operating profit

Resources:

Tangible Resources:

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Financial Resources

Strong financial base:Gross Turnover for the year 2010 grew by 13.5% to Rs. 26259.60 crores. Net Turnover at Rs. 18153.19 crores grew by 16.3%Being a part of the reputed ITC group. ITC hotels have the easy acess to loans

Organizational Resources

ITC follows a systematic process by which employees are directed and controlled to enhance companie's wealth generating capacity.ITC has won the National Award for Excellence in Corporate Governance 2006ITC has three-tiered interlinked strong leadership processBoard of directors carries the responsibility for strategic supervision of company.The executive management of each business division along with Divisional Management Committee is responsible for the management of assigned business.

Physical Resources

Trusted brands chain of Food and Beverage which gives excellence and quality product to ITC-Welcomgroup (Ex: Bukhara, Peshawri, Dumpukht, Dakshin and PanAsian)The brand image helps ITC hotels to have a good access to its raw materials

Technological Resources

ITC-Welcomgroup has world class technology which enhance its hoteliering capability and strong positioning in chosen consumer segments results in its leadership in all present locations.ITC-welcomegroup uses GDS and Internet technology for its hotel room booking which increase the service rate and consumer satisfaction rate

Intangible Resources:

Capabilities:Functional Area CapabilitiesDistribution ITC has different suppliers and it

effectively use logistics management technique for better services and for better cost management

Valuable and Costly-to-Imitate

Human Resources ITC continuously invest in the up-gradation of the quality of human resource by Motivating, Training, empowering their employees that’s why the attrition rate is also low

Valuable, Costly-to-Imitate, non substitutable

Management Information system

ITC uses IT(Information technology) for effectively booking of its hotel rooms and managing various function across the hotel for better services

Valuable

Marketing ITC brand and its products in FMCG and other services helps to further strengthen ITC hotel brand nameEffective consumer service provided by ITC and the advertisement and promotional activities further strengthen its brand name

Valuable and Costly-to-Imitate

Management ITC’s experience in other business and huge financial base helps to effectively manage its ITC hotel business organization structure.ITC has three-tiered interlinked strong

Valuable, Rare, and Costly-to-Imitate

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Human Resources

ITC continues to invest in the up-gradation of the quality of human resource, which makes the decisive difference in hotel industry (service industry)ITC focused on “quality of life” for its employees for all locations through the creation of quality accommodation.Huge manpower strength (greater than 5000 employees)

Innovation Resources

ITC’s superior service and product offering is preferred by most of the world leaders including prime ministers of Hungary, Switzerland, Brazil and Mauritius, US secretary of state Mr. Colin Powell, Ms. Madelene Albright and Ms. Benazir Bhutto.ITC invest huge amount every year to bench mark and innovate new ideas which helps to promote its Hotel businessITC hotel business encourage innovation by employees and give rewards to motivate them

Reputational Resources

High Brand ValuePeople consider ITC as a branded and reputated companySuppliers and consumers both consider ITC brand as one of the most reputed brand in India

leadership process.Board of directors carries the responsibility for strategic supervision of company.

Research and Development

ITC invest huge amount every year to bench mark and innovate new ideas which helps to promote its Hotel businessITC hotel business encourage innovation by employees and give rewards to motivate them

Valuable and Costly-to-Imitate

Value Chain AnalysisPrimary Activities:

Activities which involved product’s physical creation

Inbound Logistics:

ITC-Welcomgroup has connection with famous and trusted food and beverage chain brands which supply them quality food products. Help from ITC –e- Choupal reduces the procurement cost of food grains, spices etc.ITC received goods from its own suppliers. ITC has a strong and efficient logistic management which has strong connectivity from its factories and warehouses.

Operations:

Being a service oriented business, there are very few operational activities involved in ITC hotel business. Individual operations could include room service in a hotel etc. ITC is regarded as one of the most reputed companies with excellent operational structure in hotel as well as other business.

Outbound Logistics:

Main outbound logistics activities involved in ITC hotel business is booking hotel rooms online or via GDS or booker.

Marketing and Sales:

ITC hotel builds its brand via different advertising and promotional campaigns. It also has a strong brand value due to its existence in other businesses. ITC always made offering which meets the needs of targeted customers. ITC focus on strong marketing communications and promotions which creates brand image in the mind of the customers

Service:

This involves all services which are after sales like complaint handling, training etc. ITC invest every year a huge amount to train and motivate their employees to perform effectively and satisfy their consumers. ITC not only provide good service to its customers but its distributers and suppliers also so that it can enhance companies’ goodwill.

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Support Activities:

Activities which provide the assistance necessary for the primary activities

Procurement:

It involves purchase of goods, services and raw materials. Aim is to secure the lowest possible price for purchase.ITC procures most of its food and beverage items from the famous and branded suppliers (Ex: Bukhara, Peshawri, Dumpukht, Dakshin and PanAsian). The goodwill they develop through their superior service helps them to procure items at lowest prices as compared to its competitors.

Technological Development:

Apart from traditional booking system, ITC use internet and GDS system to enhance its booking system. ITC use Internet marketing activities, lean manufacturing, CRM and many other technological techniques to gain a edge over its competitors.

Human Resource Management:

As employees are expensive and vital resources. ITC continues to invest in the up-gradation of the quality of human resource, which makes the decisive difference in hotel industry (service industry). ITC also focused on “quality of life” for its employees for all locations through the creation of quality accommodation. ITC use reward and remuneration system to motivate its employees.

Firm Infrastructure:

ITC has strong financial base and very good government relations. Its initiative like E-choupal helps to improve its public image and currently ITC is one of the most reputed brands in Indian market.

Government is trying to improve the tourism industry by the help of “Incredible India” campaign and ITC hotel business also tries to attract foreign and domestic tourist by bench marking and improving its existing hotel business.

Performance of ITC hotels: After analyzing whole hotel Industry and then after mapping the Strength and weakness of ITC Hotels let’s see how well or bad ITC hotel has performed in recent years with respect to Industry and the leading market player i.e Taj group:

Total industry growth in terms of CAGR: 5.38% (From 2005-10)

Taj groups growth rate in terms of CAGR: 7.88% (From 2005-10)

ITC hotel growth in terms of CAGR: 1.75% (from2005-10)-excel is attached in exhibits.

We can clearly see that the performance of ITC hotels in past few years is not good in spite of decent growth in industry. Till 2010 130,000 rooms are available in India and in next to 2-3 years 50,000 more rooms will be in demand (According to WTCC report). So let’s see what are the main strategical issues for further investment and expansion decisions:

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Recommendations

Strategic Issues Influencing Investment and Expansion Decisions:

The Growing Economy : The economy has been growing at a steady rate with exponential growth in FDI. Investment will be supported by parallel growth in other service sectors like Banking, BPO, and Telecom etc.

Development of Indian Hotel Market : The Indian Hotel market is experiencing an upward surge with emergence of secondary and tertiary cities and infrastructure development in most of the cities and towns. The market has benefited from growth in Indian Tourism especially niche tourism like medical and adventure tourism.

Hotel Brand Explosion: There has been change in perception of the Indian hotel industry as a lucrative investment due its strong economy, huge FDIs and growing tourism sector. This has resulted in the entry of many international players like Marriott, Starwood, Hilton, Hyatt, Accor etc.

The MICE opportunity : The MICE (Meetings, Incentive, conventions and Exhibition) business is a major contributor to hotel revenues in many developed countries. HVS research says that 20% of international arrivals around the world are contributed by Meeting and Convention tourism.

Operational opportunities to be explored:

Marketing of Hospitality (Branding): Marketing is a major issue with increased global and international players giving more options for the customers who are well educated and well travelled.

Hotel Development Costs: Infrastructure cost is always high for the hotel industry and with the increasing real estate rates which account for 30-50% of the cost, this is a major issue. Also there is problem of license and permits which cause delay in the construction work and this again accentuates the cost.

Capital availability : Indian banks, typically, lend only 60% of construction cost and that too for a short duration. This coupled with classification of hotel industry as part of Commercial Real Estate led to high lending rates. But RBI notifications that hospitality will not be considered a CRE really should help in increased investors. Also the entry of Private Equity in India has made financing of projects easier.

Food & Beverage sector : There has been a stark increase in the number of standalone restaurants and they have gained much popularity due to fine dining experiences resulting from rich & varied cuisine and aesthetic ambience they provide. This has boosted the F&B sector.

Human Resources Availability : The key area of concern is availability of sufficient number of trained and qualified staffs. A well trained service staff can be a key differentiator in this service intensive industry.

To capture above opportunities and to improve on operational efficiency following recommendations should be followed:

1. There is need for rooms in the near future. So ITC should invest more in supply of rooms to meet the demand.

In recent time India has become Outsourcing hub so ITC should increase its hotels in these cities. These travellers are foreigners so hotels should be opened in Luxury segment. So ITC should expand more in BANGLORE, HYDRABAD and PUNE.

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2. The no. of foreigners is expected to grow at 6% annually due to high growth in visitors in Prime Tourist Locations in INDIA. As many promotional schemes such as “Incredible India” and “Atithi Dewo Bhawa”, infrastructure development, low airfares.

So ITC should expand more in Prime Tourist Locations such as NCR, Agra, Jaipur, Mumbai, and Goa.

3. Due to high growth rate in no. of people with income more than 1mn. (@ 15% 2007-16), ITC should focus on mid segment and should invest more in FORTUNE brand.

4. In budget segment ITC should Expand more in following two sectors:a. Small tourist locations and religious places such as: Banaras, Ooty, Shimla, kochin, Gaya, Purib. Expansion in Industrial areas and near SEZ’s to cover growing budget segment of small

business travellers of cities like Bangalore, Pune, Kolkata, Baddi, Surat 5. To improve on operational effectives- Hotel management institute can be developed.6. As more and more foreign players are coming into picture, ITC can try for mergers, acquisitions

and franchises as both the companies can benefit from such alliances. The foreign company can gain a foot hold in the market and ITC can leverage the company’s brand equity. This is all the more possible as there is advantage of the lower costs of debt and easier access to equity capital.

7. ITC can provide facilities for Meetings and conventions and can attract more business travellers and business tourists. The MICE business gains more priority in the light of global companies’ foray into India and the ever growing IT industry.

8. ITC can also augment its F&B business as it cashes in lot of revenues. Branding and extensive marketing can help reap the benefits of F&B sector.

Bibliography:

http://www.itcportal.com/

www.moneycontrol.com

www.crisil.com

www.datamonitor.com

http://www.capitaline.com/user/framepage.asp?id=1

http://www.businessindiagroup.com/

http://www.equitymaster.com/

http://www.rediff.com/business/slide-show/slide-show-1-2010-hospitality-sector-bids-adieu-to-hard-times/20101221.htm

Report on Indian Hotel Market, Knight Frank Research, December 2010

Report on ITC Company profile, October 2010, Datamonitor

http://www.hospitalitynet.org/news/4045090

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Exhibits:

Exhibit 1.1

Prime Tourist locations2009-2010

NCR Agra Mumbai Goa JaipurRoom availability (nos)

7,787 1,601 7,529 3,429 1,736

Room demand (nos)

5,040 971 4,588 2,194 934

Occupancy rate (%)

65 61 61 64 54

Exhibit 1.2

IT cities 2009-10

Bengaluru Pune Hyderabad3,149 556 1,977

1,929 262 1,099

61 47 56

Exhibit 1.3

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Budget cities

Agra1,601

971

61

Exhibit 1.4

Annexure:Future Development plans of ITC hotels: Fortune Hotels plans to maintain its leadership position in the mid-market to upscale segment

by following a balanced approach towards growth, expansion, brand extensions and providing the same assured quality of product and service across all extension brands. The company’s priority will continue to be to consolidate its position domestically.

ITC revealed its plan to open 60 new hotels in the next 3-4 years, Fortune Park Hotels, ITC's wholly-owned subsidiary, said that it had plans to add 25 new property by 2011-end.

Capacity expansion underway at Bangalore and Chennai; plans for other locations also being progressed

Plans to invest close to $2 billion in the next 3-4 years in building capacities across the country Fortune Hotels has 62 signed alliances and 35 operational hotels across 46 cities. The properties

are being set up in major metros, mini metros, state capitals and business towns. (business line jan 3 2011)

ITC-Welcomgroup foresees a steep increase in business-induced tourism in the country. ITC has been focusing on “super luxury” properties when it comes to investing in physical assets,

according to Deveshwar. It would, at the same time, expand in the five-star and budget hotel segments as well. Mint 23 july 2010

ITC's 600-room Chennai hotel to open doors by end 2011 business line, 11 jan 2011

Development Incentives:

The Government of India in the Union Budget of 2007-08 introduced a 5 year tax holiday incentive scheme for 2, 3 and 4 Star hotels in the National Capital Region. The scheme was applicable to projects that completed construction and commenced operation between 1st April 2007 and 31st March 2010.This provision in Union Budget 2010-11, was further extended till 31st July 2010.

The Reserve Bank of India also said loans for hotel construction will not be classified as commercial real estate. It also relaxed external commercial borrowing norms lifting a previous cap of $100 million under the automatic route and allowing hospitality firms to borrow more than that.

Also, the government of India, in its Finance Act, 2009, inserted Section 35 AD to allow all hotels rated 2 Star and above in any location, a 100% reduction in capital expenditure (other than on land, goodwill and financial instrument), given the property commences operation on or after 1st April 2010.

Foreign Players

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Microsoft founder Bill Gates- promoted luxury hotel group Four Seasons has plans to open four new properties in India within the next five years.

Global hospitality chain Carlson announced plans to open its luxury brand Regent here with the opening of a hotel in Gurgaon in 2013.

Similarly the InterContinental Hotels Group launched its first Holiday Inn brand in India with a 225-room property in Mumbai.

Even Thai hospitality group Amari expressed its desire to open seven hotels across the country by 2018.

Other big names that joined the bandwagon include Singapore-based hospitality firm Alila Hotels and Resorts, US-based Choice Hotels International, JW Marriott and Accor

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