42

CHAPTER 3

TRENDS IN HOSPITALITY INDUSTRY IN ASSAM

3.1 HOSPITALITY INDUSTRY: AN OVERVIEW

Hospitality industry includes primarily the accommodation and food

establishments (hotels, lodges, restaurants, eating joints, etc.) for a large ingredient of

the service mix in the tourism industry. The hospitality services begin with a smile. This

is the universal language of ‘hospitality’, which means being friendly, helpful and going

out of the way to exceed guest’s expectations. The hospitality industry focuses on the

relationship with customers and has been focusing on how this relationship can be

measured in terms of satisfaction and value (Singh, 2007). In broader sense, hospitality

industry covers everything, i.e. providing attentive and courteous services, facilities and

amenities to a traveler meeting and greeting him at the door, providing efficient and

caring service of food and beverage, i.e. providing “a home away from home” and

making his visit a memorable and pleasant experience.

The hotel industry is perhaps one of the oldest commercial endeavours in the

world. The first inns go back to the sixth century BC where the products of the urge to

travel, spurred by the invention of the wheels. The earliest inns were ventures by

husband and wife and their family members who provided large halls for travelers to

make their own beds and sleep on the floor. They also provided modest wholesome

food, thirst quenchers like wine, port, ale, etc. and stabling facilities. Entertainment and

recreation were provided by the host’s wife or his wenches. The entire cooking, service

and recreation were provided by the husband and wife and team of their family

(Andrews, 1986). These conditions prevailed for several hundred years. The advent of

the industrial revolution in England brought ideas and progress in the business of inn

keeping. The development of railways and steamships made travelling more prominent.

The industrial revolution also changed travel from social or government travel to

business travel and there was an increasing need for quick and clean stay and eating

services.

The lead in hotel keeping was taken by the emerging nations of Europe, especially

Switzerland. It was in Europe that the birth of an organized hotel industry took place in the

shape of chalets and small hotels which provided a variety of services and were mainly

43

patronized by the aristocracy of the day. However, the real growth of the modern hotel

industry took place in the USA, which began with the opening of City Hotel in New York

in 1794. This was the first building specifically erected for hotel purposes. This eventually

led to great competition between different cities and resulted in frenzied hotel building

activity. Some of the finest hotels of the USA were built in this era, but the real boom in

hotel building came in the twenties of the last century. This period also saw the beginning

of chain operations under the guidance of E.M. Statler. It involves big investments, big

profits and trained professional to manage the business.

The economic depression in 1930 had a disastrous effect on the hotel industry. It

was felt that the industry would never recover; but the outbreak of World War II brought a

tremendous upsurge. This prosperity continued through the war years into the 1950s when

two new concepts in hospitality sector have emerged, viz. (a) motels and (b) international

chain operations. While the growth of motels was restricted to the North American

continent, international chain operations gradually spread into all continents of the world

(Andrews, 1986).

The Hotel Industry is considered as a part of vast concept of hospitality sector and

is more complex and sensitive to political systems and public policies than any other

category of tertiary activities. It is a service industry, being hospitality as its product. It

handles human beings. The success of the industry depends upon: a) political system and

its stability, b) level of economic development, c) judicial system, d) efficient and safe

transport and communication facilities, e) prescribed standard of cleanliness and public

health measures. In developing countries once political stability has been achieved, hotel

development quickly follows as an integral part of an overall socio-economic progress. An

example of this would be the former European Union countries and former Soviet

Republics, who for the past few years have offered development opportunities for Hotel

Corporation.

It is easy to understand the relationship between international development of

hotels and the increase in international tourism trade and commerce. The growth in

tourism in Pacific Rim countries is expected to continue at the same rate as in recent

years which give boost to the growth of hospitality sector. Several resorts are planned in

Indonesia, Malaysia, Thailand, Mexico and Vietnam. Further international hotel

development opportunities exist in Eastern Europe, Russia and other republics of the

former Soviet Union (Walker, 2005).

44

The global economy is splintered into massive trading blocks, such as European

Economic Community (EEC), and the North America Free Trade Agreement (NAFTA)

among Canada, the United States and Mexico comprising a total population of 444.1

million customers (NAFTANOW.org). The European Union (EU) with a population of

499.8 million (2009) in 27 nations is an economic union that has removed national

restrictions not only on trade but also on the movement of people and capital. The

synergy developed among these 27 member nations are beneficial to all and is a form of

self-perpetuating development. As travel, tourism, commerce and industry have

increased within the European Economic Community and beyond, so has the need for

hotel accommodation. In oriental world, it is noted that Hong Kong’s growth has been

encouraged by booming economies throughout Asia, and moreover the existing tax

systems are found to be more investor friendly. The Hong Kong government levied a

16.5 percent corporate tax and a 15 percent individual income tax and no tax on capital

gains or dividends. Several hotel corporations have their headquarters in Hong Kong.

Among them are Madrian, Oriental Peninsula and Shangri-la, all renowned for their five

star statuses in the hospitality sector around the globe. They are based in Hong Kong

because of corporate taxation and the ability to bring in senior expatriate executives

with minimum bureaucratic difficulties (Walker, 2005).

In India, there were very few hotels prior to the 2nd

World War. During the

1940s, the hotels and restaurants in larger cities mushroomed, as they did a brisk

business on account of large number of foreign tourist influx into the country. However

the number of hotels was not up to the required standard. Some constraints prevailed

even after independence when first organized count was made in 1962-63. The total

number of guest rooms in hotels on the approved list was around 7055 rooms in 186

approved hotels. Incidentally in the same year (1962-63) hotels were classified under

the star categories. It was around 1960 that Government of India first gave serious

attention to this industry and thus ITDC entered the scene in a big way, taking the

tourist target into consideration. It envisaged a strategy for other infrastructural

development. Thereafter, the concept of hotel chains like the Taj Group, ITC group, the

Oberoi group, the Welcome group, etc. came into being. With the ASIAD and Non-

Aligned summit, the Hotel Industry received a big boost but still gross imbalance in the

location of accommodation units persists, which tends to hamper the India’s new line of

approach unless adequate rooms are offered to the tourists (Mohanty, 2008). In India

45

total number of approved hotels was around 1829 and number of rooms was around

92784 during 2009 which increased to 2483 number of hotels and 117815 number

rooms during the year 2010. Thus, there is a growth of 26.34 percent of the number of

hotels and 21.25 percent in the number of rooms over the year 2009 (Table 3.1).

Table 3.1: Approved hotels and availability of hotel rooms in India (2009 and 2010)

Source: India Tourism Statistics, 2010

In responds to the gradually growing hospitality sector and travel infrastructure,

there has been a continuous increase in domestic tourist visits in India. The compound

annual growth rate (CAGR) of domestic tourist visits to all States/Union Territories

from 1991 to 2010 being stands at 13.5 percent. The foreign tourist visits too have been

increasing over the years, though there was a negative growth in the years 1992, 2002

and 2009 (Table 3. 2). The foreign tourist visits to all States/Union Territories during

1991 to 2010 witnessed a compound annual growth rate (CAGR) of 9.6 percent. The

year 2010 witnessed a growth of 10.7 percent in domestic tourist visits over the year

2009, which is, however, lower than the growth of 18.8 percent in the year 2009 over

Category of Hotels

No. of Hotels No. of Rooms

As on

31.12.2009

As on

31.12.2010

As on

31.12.2009

As on

31.12.2010

One Star 55 67 2755 2537

Two Star 220 307 6539 8446

Three Star 511 869 23164 36585

Four Star 125 157 8652 12059

Five Star 98 149 11822 17144

Five Star Deluxe 109 153 23113 34187

Apartments Hotels 7 8 566 756

Time Share Resorts 1 1 62 62

Heritage Hotels 88 146 2545 3879

Silver bed & Breakfast

Establishment

357 469 1115 1540

Guest House 1 1 40 40

Unclassified 257 156 12411 580

Total 1829 2483 92784 117815

46

Table 3.2: Domestic and foreign tourist visits to States / UTs, 1991 – 2010

Source: India Tourism Statistics, 2010

2008. During 2010, the visits by foreign tourists have registered a growth of 24.2

percent over 2009, as compared to negative growth of 0.1 percent in 2009 over 2008.

With the many fold increase of tourist arrivals to the country, the hospitality

sector revealing immense potential and global hospitality majors are exploring plans of

entering the Indian market. These include Dawnay Day, White Bread, Jumeirah, Golden

Tulip, Istithmar and Mandarian Oriental apart from existing ones. Hotel companies like

Golden Tulip are looking to launch budget hotels in India. The Jumeirah and Mandarian

Oriental are the luxury hotel brands looking to set base in the country. Dubai’s leading

Alternative Investment house ‘Istithmer’ is looking for investment into luxury hotels in

Year Tourist Visits Annual Growth Rate

Domestic Foreign Domestic Foreign

1991 66670303 3146652 - -

1992 81455861 3095160 22.2% -1.6%

1993 105811696 3541727 29.9% 14.4%

1994 127118655 4030216 20.1% 13.8%

1995 136643600 4641279 7.5% 15.2%

1996 140119672 5030342 2.5% 8.4%

1997 159877208 5500419 14.1% 9.3%

1998 168196000 5539704 5.2% 0.7%

1999 190671034 5832015 13.4% 5.3%

2000 220106911 5893542 15.4% 1.1%

2001 236469599 5436261 7.4% -7.8%

2002 269598028 5157518 14.0% -5.1%

2003 309038335 6708479 14.6% 30.1%

2004 366267522 8360278 18.5% 24.6%

2005 392014270 9947524 7.0% 19.0%

2006 462321054 11738892 17.9% 18.0%

2007 526564478 13256637 13.9% 12.9%

2008 563034107 14380633 6.9% 8.5%

2009 668800482 14372300 18.8% -0.1%

2010 740214297 17852777 10.7% 24.2%

47

the key gateway cities around the globe and emerging markets. Hospitality majors in

India and abroad are likely to pump in close to US dollars 1 billion in the next two years

into the sector (Ministry of tourism, 2007). Indian hotel industry is going through

transformation, changing trends and entry of many more global players in the Indian

market spells great future for the hospitality industry. Apart from many more luxury

hotels coming up in every corner, the budget hotels spreading wings across the country.

This boom is here to stay giving guest true value for their money (Berry, 2008). Other

reasons for the boom are the low cost carriers which have changed the very concept of

travel within the country. Flying till now was always associated with the moneyed class

just like staying in good hotels was. The low cost carriers have brought affordability to

the sky just as the budget hotels have got affordability on the ground. Together these

two will be combination worth keeping a close look at in the coming years (Anand,

2008).

While India has a booming domestic market there is also the inbound leisure

segment which is looking for well priced and clean accommodation in places of tourist

interest. India as a destination falls woefully short in this offering. According to the

India Tourism Statistics, 2010, the hotel industry in India has a supply of 1, 17,815

rooms. With the increase in growth of tourist arrivals (domestic and international), there

is a shortage of hotel rooms in India. With this opportunities India is a destination for

hotel chains looking for growth. India ranks 18th in tourism business travel and will be

among top five in this decade. It is estimated that demand is going to exceed supply by

hundred percent over next two years. With this disparity, the hotel room rates in India

are most likely to rise 25 percent annually and occupancy will rise 80 percent over the

next two years. Thus the hotel industry in India will be eroding its competitiveness as a

cost effective destination (India Tourism statistics, 2010)

Though hotel industry is at infancy stage in Assam, it is gaining momentum due

to its gradually transforming economy of the state along with the reduction of

insurgency problems. At the same time the cost of travel has also fallen down following

the government liberation of the airline industry which has initiated a price war among

the airlines. As a result, the domestic market continues to expand, the escalating

economy provides the rising middle class with increased disposable income. The travel

of low cost airlines and the associated price wars have given domestic tourists more

options than ever before. The “Incredible India” campaign has also helped the growth

48

of domestic markets including religious tourism. All these factors have further enhanced

the demand for hotel rooms in the state.

There has been a increase in domestic tourists to the state, though there was a

negative growth in the financial year 1998-99, 2000-01 and 2005-06 with compound

annual growth rate of domestic tourists from the financial year 1996-97 to 2011-12

being 14.21 percent (Table 3.3). The foreign tourist visits to the state too have been

Table 3.3: Domestic and foreign tourist arrivals to Assam, 1996-97 to 2011-2012

Financial

year

No. of tourist Annual growth rate

Domestic Foreign Domestic Foreign

1996-97 7,37,793 5,752 - -

1997-98 8,93,902 3,208 21.16% -44.23%

1998-99 7,71,567 4,322 -13.69% 34.73%

1999-2000 9,81,985 6,344 27.27% 46.78%

2000-01 9,61,954 6,490 -2.04% 2.30%

2001-02 16,90,672 5,210 75.75% -19.72%

2002-03 20,02,455 7,028 18.44% 34.89%

2003-04 20,30,107 6,845 1.38% -2.60%

2004-05 21,86,240 9,363 7.69% 36.82%

2005-06 25,86,428 8,309 18.30% -11.28%

2006-07 34,79,870 13,657 34.54% 64.36%

2007-08 34,89,814 13,799 0.29% 1.04%

2008-09 36,98,706 14,533 5.99% 5.32%

2009-10 38,95,525 14,699 5.32% 1.14%

2010-11 41,27,447 15,633 5.95% 6.35%

2011-12 44,08,336 16,660 6.81% 6.57%

Source: Directorate of Tourism, Assam Statistics, 2011 – 12

increasing over the years, though there was a negative growth during the financial year

1997-98, 2001-2002, 2003-2004 and 2005-2006. The foreign tourists visit to the state

49

during the financial year 1996-97 to 2011-12 witnessed a compound annual growth rate

of 10.83 percent. The financial year 2011-12 witnessed a growth of 6.37 percent in

domestic tourists visit over the financial year 2010-11 which is more than the growth of

5.95 percent in the financial year 2010-11. During 2011-12, the visits by foreign tourists

have registered a growth of 6.57 percent over the financial year 2010-11, as compare to

the growth of 6.57 percent in 2010-11. Among the states and union territories of India,

Assam ranked 20th in terms of receiving domestic tourist and 24th in terms of receiving

foreign tourist with a share of 0.5 percent domestic tourists and 0.1 percent foreign

tourists (Indian Tourism statistics, 2010)

With the increase in both domestic and foreign tourist inflow to the state, it has

fueled demand for accommodation across Assam. Assam has a good number of hotels

and lodges to meet the growing demand of the tourist of different economic

background. As the movement of tourist to the state is increasing, the hotel business is

also increasing gradually. Apart from the private operator, department of tourism, Govt.

of Assam has also set up several tourist lodges in all leading tourist spots of Assam

(Table 3.4). These accommodations are either for economic category or for budget class

of tourists. From the field survey it was found that the tourist lodges of Guwahati and

Kaziranga are doing good business in terms of room occupancy and rest of the lodges

hardly receive tourists. This is because of the poor management of the lodges.

Table 3.4: Distribution of government tourist lodges in Assam, 2012

Sl.no. Place No. of accommodation unit Bed capacity

1 Guwahati 2 70

2 Kaziranga 5 116

3 Barpeta Road 2 26

4 Bhalukpong 1 12

5 Nagaon 1 19

6 Sivsagar 1 14

7 Diphu 1 12

8 Haflong 1 16

9 Chandubi 1 14

10 Manas 1 10

11 Hajo 1 8

12 Pobitora 1 14

50

13 Jorhat 1 8

14 Sadiya 1 8

15 Silchar 1 16

16 Golaghat 1 14

17 Dhubri 1 12

18 Tezpur 1 31

19 Jorhat 1 24

20 Hailakandi 1 12

21 Karimganj 1 10

Source: Assam Tourism Development Corporation Ltd., 2012

At many tourist spots, the tourists prefer to stay at the privately managed hotels/lodges

over the govt. tourist lodges because private hotels and lodges are better managed with

hygienic rooms at almost the same price or below. Now department of tourism, Govt. of

Assam has transferred 5 numbers of its lodges to its sister concern ‘Assam Tourism

Development Corporation Ltd.’ for managing these lodges which is engaged in

developing tourist infrastructure including construction of tourist lodges, restaurants,

wayside amenities etc. in the state for tourism development and for marketing tourism

products of the state within the state and in the country.

Tourism sector cannot grow to its full potential with Government efforts only.

However, at present there are 220 different developmental projects undertaken for

execution by Assam Tourism Development Corporation limited and some of them will

be leased out to the private parties for management after completion of the projects

(Table 3.5). These projects includes tourist lodges, restaurants, way side amenities for

tourist, tourist arrival cum reception centre, eco tourism projects, information and

technology projects, development of cruise vessel, sound and light show at specific

sites, etc.

ATDC has also taken a mega project of luxury cruise named ‘M .V.

Mahabaahu’, a four-storied luxury cruise liner in collaboration with Far Horizon, a

Delhi-based travel firm in the line of public-private partnership to boost the river

tourism in a bigger way. The cruise liner will be travelling a long distance touching

attractions like Kaziranga and Majuli river island. The cruise liner will be one of the

finest in Asia. The cost of the project is 7.42 Crore and is funded jointly by the Ministry

of Tourism Government of India and Far Horizon with the share being Rs. 3.92 Crore

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Table 3.5: Tourism projects that have been undertaken by ATDC

Year No. of Projects Amount involved( in Lakhs)

2002-03 7 938.28

2003-04 3 399.27

2004-05 5 909.58

2005-06 34 1597.61

2006-07 44 2318.31

2007-08 38 2263.86

2008-09 40 2850.07

2009-10 10 2504.92

2010-11 37 2597.16

2011-12 2 1159.46

Source: ATDC Office, Guwahati, 2012

and Rs. 3.50 Crore respectively. The centrally air conditioned cruise will have the best

of amenities including swimming pool, boutique, multi-cuisine restaurant with ethnic

food, bar, dance floor, library, home theater, Ayurvedic massage room, saloon, sauna

bath, gym etc. The luxury liner will have eight deluxe rooms and two suites. Everything

has been done meticulously to meet international standards and every norm for long

distance river cruise. This luxury curse liner has been developed to attract international

tourist and to showcase Assam’s rich heritage before a global audience. This will also

help to utilize the river tourism in a long way. This cruise will have additional facilities

like excursion boats and night cruising, enabling the travelers to go for occasional short

sight-seeing trips during the course of the cruise. Far Horizon will be responsible for

maintaining the cruiser’s day to day operation and also will be responsible for global

marketing while ATDC will get a share of revenue generated. The cruise liner is

expected to operate from January 2011. Once the operation is started it will open up

new vistas on Tourism front of Assam (The Assam Tribune, 26th October, 2009).

52

Apart from these tourist accommodations available, there are also circuit houses,

inspection bungalows of public works department and forest department have some

beds available meeting the need of official visitors of concerned government

departments. Another trend which has come into accommodation sector in Assam

especially at Guwahati is the setting up of guest houses or taking on contract basis.

These guest houses are generally managed by corporate house itself. These guest houses

are confined to the big corporate houses. The corporate houses prefer to keep their

supervisors, junior and middle level managers in the guest house over the hotels for

cutting company costs.

Department of Tourism, Government of Assam has also recognized a number of

hotels and lodges for the tourists visiting Assam for their comfortable stay throughout

state comprising of economic, budget and luxury category (Table 3.6). At present,

Department of Tourism, Government of Assam has recognized 240 numbers of hotels

and lodges for the tourist in the state.

Table 3.6: Recognized hotels and lodges of Assam, 2012

Sl. no. Place No. of accommodation units

1 Abhayapuri 1

2 Balipara 2

3 Barpeta 3

4 Barpeta Road 4

5 Bhalukpong 3

6 Bongaigaon 9

7 Bokakhat 3

8 Chandubi 1

9 Dhubri 4

10 Digboi 1

11 Diphu 5

12 Doomdooma 1

13 Dibrugarh 7

14 Dhemaji 3

15 Goalpara 3

16 Guwahati 70

17 Haflong 4

53

Source: Directorate of Tourism, Govt. of Assam, 2012

Assam has to its credit 20 numbers of approved hotels having a room capacity

of 723 (www.tourism.gov.in). Out of 2483 approved hotels (India tourism statistics,

2010) of India, Assam has a share of only 0.81 percent of total approved hotels in the

country. The maximum numbers of approved hotels are in the category of three stars (14

numbers) with a room capacity of 523 followed by two star hotels (5 numbers) with a

room capacity of 129. Assam, has also one four star hotel having a room capacity of 71.

It is located at Guwahati. The two star and three star hotels are spread over cities like

Guwahati and many important towns and tourist places of the state. Apart from

Guwahati, these hotels are located at Tezpur, Kaziranga, Jorhat, Dibrugarh and

Karimganj. However major share of the approved hotels i.e 60 percent with a room

capacity of 67.63 percent are located at Guwahati. The internationally famous tourist

spot Kaziranga which has also been able to attract many foreign tourists has only 2 three

star hotels having a room capacity of 66 rooms. Though there are only 20 numbers of

approved hotels i.e two, three and four star but many of hotels are there which can be

classified as four, three and two star category looking at the physical facilities they are

providing to their guests apart from the approved one. From the discussion with the

owners/directors during the field visit it came to light that many of them are either

planning for classification or have already applied for classification. However, Assam

18 Jorhat 16

19 Kaziranga 45

20 Kokrajhar 3

21 Lakhimpur 3

22 Majuli 7

23 Mangaldoi 2

24 Nagaon 6

25 Nalbari 3

26 Numaligarh 3

27 Silchar 5

28 Sivsagar 10

29 Tezpur 9

30 Tinsukia 4

Total 240

54

does not have any five star and five star deluxe hotels for the high end domestic or

foreign tourists.

With the improving law and order situation, Assam has registered a positive

growth in terms of tourist arrivals to the state. If the economic growth continues and

law and order situation further stabilized in future, it will attract more and more

corporate, business and leisure tourists, etc. In Assam, especially Guwahati, the

gateway to the northeast which is one of the 100 fastest growing cities in the world

(www.guwahati.com) has registered potential growth in terms of physical expansion,

population and commercial activities. With the commercial activities increasing in

many folds, Guwahati has been able to attract more and more corporate, business and

leisure travelers to the city. This unprecedented growth is likely to substantiate demand

for accommodation units. Seeing this prospect, a good number of hospitality giants,

both national and international like Taj group, Mariott group, Radision group, Hyatt

group, Lemon Tree group apart from local entrepreneur/ companies have spread their

wings and eyeing for Assam’s hospitality market and are in the process of setting up

approved hotels ranging from three star to five star category at Guwahati (Table 3.7)

Table 3.7: Proposed hotels in Guwahati

Sl.

no.

Name of the hotels Proposed star

category

Expected year

of completion

No. of rooms

1 Taj Vivanta 5 2014 240

2 Prithani Group 5 2015 200

3 Saradha Group 5 2015 50

4 Spring Valley 5 2013* 120

5 Belle View 5 2013* 200

6 Charter Hotel 5 2013* 220

7 Maxion Infrastructure 5 2013* 149

8 Radisson 5 2012* 200

9 Bora and sons pvt. Ltd. 4 2014 50

10 Shoolin Grand Deltoid

Con. Pvt. Ltd.

4 2013* 44

11 Ramee Guestline 4 2013* 100

12 Grand Plaza 4 2012* 73

13 Mriduli properties pvt. 3 2012 40

55

Ltd.

14 Lemon Tree 3 2015 52

15 Decolite 3 2015 48

16 Yatri Nivas 3 2012 26

Source: A final project report on market survey for hotels in Guwahati, 2010-11

and field survey, 2010-11(*project yet to be completed)

3.2 TRENDS IN HOTEL DEVELOPMENT

Accommodation sector includes such establishments and facilities where the

tourist stops being travelers and become guests. These are the places, where the tourists

spend most of the travel time and money. Accommodation facilities constitute a vital

and fundamental part of the tourist supply and the most visible segments of the

infrastructural facilities among the important inputs which cater to the tourists forming a

vital component of the tourism infrastructure and an important feature of the total

“tourist image” of the state. It is, rather the core of the tourism industry. There exists a

strong correlation between tourist’s arrivals and availability of accommodation facilities

of a place. Thus, the provision of proper accommodation of acceptable standards,

largely determine the level and rate of flow of tourists traffic to the state. (Mohanty,

2008).

The growth of hotel industry in any region or state largely depends on the flow

of tourists and strangers with other travel purposes. Supply of tourist product is greatly

influenced by the level of development of other constituent activities in the region i.e.,

development of tourist spots, transport and communication facilities, marketing,

entertainment, travel agencies, courier services, etc. Thus the growth of hotel industry

involves in the development of uncoordinated sectors in order to achieve coordinated

results by breaking the vicious circle somewhere (Mohanty, 2008).

So far the hotel industry is concerned; it is observed that there has been

considerable degree of variation in its growth in different parts of the state. The factors

responsible for localization of the initial establishments and the present hospitality firms

are numerous. The geographical spread of the industry is determined by great

complexity of consideration namely, historical, political, economic, natural and many

other factors. Data pertaining to the hotel development in Assam could not be traced

from any secondary source like Department of Tourism, Government of Assam, Hotel

56

Owners Association, etc. However study conducted by Bhattacharya (2004) made a

pioneering attempt to provide a spatio-temporal picture of accommodation sector of the

state. The work has categorized 419 accommodation units during 1998-99, which is the

result of the intensive door to door survey by the author. However over the years the

number of accommodation units has gone up. As the Department of Tourism,

Government of Assam, hotel owners association etc., do not yet attempted to generate

fresh data regarding the development of hotels, it was found necessary to take up an

investigation of hotels and lodges of the state to get an overall picture of the

accommodation sector at present. A door to door survey of accommodation units was

carried out in as many as 9 important towns and cities of Assam covering all the

accommodation units in those places. These 9 cities and towns cover around 80 percent

of the total accommodation units in the state.

The history of development of hotel business in Assam can be linked to the

establishment of Berry White School of Medicine which was established at Dibrugarh

in 1900 and later renamed to become Assam Medical College in the year 1947 and was

the first medical college of the north eastern region serving patients of Assam and the

neighboring states. The flow of patients and their attendants to the hospital from other

areas eventually led to the demand for accommodation. Capitalizing this, the first

accommodation unit of the state came up at Dibrugarh in the year 1945 in the form of a

lodge named “Asha Refreshment lodge” to cater to the needs of the patients and the

attendants of the patients, with a room capacity of four. However, to meet the need of

official visits, network of Dak Bungalows, circuit house, etc. were established in district

headquarters and major places of importance in the British era. Subsequently, the

number of hotels and lodges started growing steadily in the administrative and

important communication nodes like Dhubri and Silchar in the year 1950 and 1955.

Although Guwahati emerged as the gateway to the north east India, hotel business

started only in the late fifties (1956) with a hotel named “Hotel Suravi” and over the

years the number of hotels rose to 171. Most of the star category hotels of Assam are

located at Guwahati. To develop Kaziranga as one of the potential tourist spots in the

state, the Department of Tourism, Govt. of Assam constructed a tourist lodge at

Kaziranga named “Banani Lodge” in the year 1960 with five double bedded rooms.

With the declaration of Kaziranga as National park in 1968, the number of hotels

increased with the increase of domestic and international tourists. Another landmark for

57

the development of hotel industry at Kaziranga is the declaration of Kaziranga National

Park as a world heritage site by UNESCO in the year 1985. Over the years the

accommodation units at Kaziranga rose to 32 (2009). In the rest of the towns, the

growth of hotels/lodges started in and around seventies except Tezpur, where the hotel

business started with a lodge named “Southern Lodge” in the year 1960 with a room

capacity of five. In the later stage many hotels/lodges have come up with the

development of township elsewhere in the state catering to the market demand for the

service of the hospitality industry (Table 3.8). There are more concentration of hotels

and lodges in the areas especially near to the hospitals, nursing homes, bus terminus

Table 3.8: Growth of hotels and lodges in Assam

Sl no. Period No. of hotels

and lodges

established

No. of rooms No. of beds

1 1945-1950 1 4 9

2 1950-1955 2 7 10

3 1955-1960 4 9 22

4 1960-1965 7 31 80

5 1965-1970 6 42 90

6 1970-1975 8 65 130

7 1975-1980 25 279 503

8 1980-1985 28 419 730

9 1985-1990 35 644 1028

10 1990-1995 41 1164 2162

11 1995-2000 45 1221 2187

12 2000-2005 84 2119 3884

13 2005 onwards 105 2498 4449

Total 391 8502 15284

Source: Field survey, 2008-2009

58

and railway stations due to connectivity advantages. There is a trend in the increase of

economic category of hotels/lodges in comparison to the growth of luxury and budget

class hotels. The economic category has registered a very impressive growth trend in the

state.

3.3 TREND IN FOOD AND BEVERAGE OPERATION

From time immemorial the human race has explored the world in search of food.

Hunger has been the force behind its onward march. This march has led the way for the

art of cooking since ancient times. The first cook was a primitive man who had put a

chunk of meat close to the fire, which he had lit to warm himself. He discovered that the

meat heated in this way was not only tasty but it was also much easier to masticate.

From that moment in unrecorded past, cooking had evolved to reach the present level of

sophistication (Arora, 2006).

With the passage of time food service operations continues to enjoy tremendous

improvement and development together with considerable advances in quality. The

demand for food and beverages away from home has increased and with a broader

spectrum of the population eating out, customer needs have diversified. Food and

restaurant styles are also diversifying to meet the challenges of the demand being made

by increasingly knowledgeable and value conscious customers. Menu and beverage list

contents are also continually being influenced by trends, fads and fashions, the

relationship between health and eating, special diets, cultural and religious influences,

the advance of vegetarianism and customer acceptance, or otherwise, of irradiation and

genetically modified foods.

The customers are now seen as being central to the process and also an active

participant within it. Increasing competition has also meant the quality of the food and

drinks and the perceived value of the experience by customers are the main

differentiators between operators who are seeking to attract similar customers.

Consequently, understanding the customer’s involvement in the process and identifying

the experience, they are likely to have, has become critical to the business of food

service operations. Good food and beverage service in any sector is achieved where

customers’ needs are being met and where management consistently reinforce and

support service staff in the maintenance of clearly identified technical standards and

service goals.

59

As an important constituent of hospitality service, restaurants play an important

role in society. Dining out in restaurants fulfills an important sociological need as

people need not only nourishment, but also the social interaction that takes place in a

restaurant setting. Restaurants are one of the few places where we use all of our senses

to enjoy the experience. Our taste, sight, smell, hearing and touch are all employed to

savor the food, service, and atmosphere of the restaurant.

Successful restaurant concepts are created with guests in mind. Restaurants

provide a social gathering place where employees, guests and management can get their

adrenaline flowing in positive ways. The restaurant business is exciting and challenging.

With the right location, food, atmosphere and service, it is possible to attract the market

and make a good return on investment. There are several examples of restaurant

concepts that have endured over the past few decades. Applebee’s, Chart House, Hard

Rock Café, Olive Garden, Red Lobster and TGI Friday’s are some of the better known

U.S. chain restaurant concepts (Walker, 2005).

The Indian restaurant services sector is estimated to be worth Rs. 57,000 crore,

out of which only Rs. 3,940 crore or 6.9 percent is shared by the organized sector. The

vast unorganized segment mainly comprises street side stalls/kiosks constituting the

majority of consumers food service units and is characterized by intense fragmentation

and a virtual absence of standardization of operations. Business of this segment was

Rs.35,000 crore in 2004, which grew by about 18 percent to Rs. 41,400 crore in 2005

and in 2006 the segment recorded a growth of nearly 19 percent over previous year and

business stood at Rs. 49,200 crore based on constant prices 2003-2004 as base (Fig.

3.1).

In India, major domestic and international players in the arena have on an

average extended their retail reach by 45 percent in 2006 as compared to 2005. Tier-II

cities are currently the biggest growth drivers. The total number of outlets increased

dramatically in 2006 registering an annual growth of around 70 percent as compared to

the rate of 29 percent in 2005 (Gopal and Shetty, 2008). The trend towards home

delivery is also fast gaining popularity with value sales shooting the roof over the last

couple of years. India is one of the few countries where foreign players like MC

Donald’s have introduced its home delivery service.

60

Figure 3.1: Size of Indian restaurant and catering (F&B) services

(Value in Rs. Crore at 2003-04 Prices)

Source: India Retail Report-2007, Indian Retail Forum 2007

In Assam, 99 percent of the restaurant business is occupied by the low scale

restaurant comprising of street side stalls, kiosk and “Bhator hotel”(locally known as in

Assamese) whereas about 0.75 percent is occupied by the upscale restaurant and about

0.25 percent is occupied by the fine dining restaurant (Fig.3.2). Fine dining restaurants

are limited to Guwahati city whereas upscale restaurants are scattered in all the major

cities and towns of Assam. Low scale restaurants are found in all the towns and cities of

Assam. Taking the advantage of the situation in this sector, some of the people have

chosen entrepreneurship as an alternative to the government jobs. So it is expected that

the market of the fine dining and upscale restaurant will also flourish in the near future.

The gradually emerging consumers of the state of Assam with increased

disposable income invariably seek variety and are willing to experience new cuisine.

Assam is having quite a good number of restaurants with context to the above in various

categories ranging from low price, medium price and high price serving Chinese,

Indian, and Thai etc. apart from its own cuisine and are doing good business especially

in the major nodes like Guwahati. Of late, the local Assamese cuisine in gaining

momentum because of its exotic and mild flavors. Some indigenous dishes with less

oily and less spicy foods have been able to attract consumers from inside and outside

the state. Some of the restaurants like Khorika, Juti Logai Kham, Gums delicacy,

Paradise, etc. are doing brisk business by selling local food. As the people of Assam

0

10000

20000

30000

40000

50000

60000

2004 2005 2006

Ru

pe

es

(in

cro

res)

<--------------------Year------------------------>

61

Source : Field survey 2008-09

are seeking varieties and are willing to experience with new food, the trends within the

restaurant industry is changing. The restaurant industry is expected to respond to

consumer demand by offering more variety and ordering options. Of late, some of the

national and international chains of restaurants have opened up outlets like Yellow

Chilly, Kentucky Fried Chicken (KFC), Pizza Hut, Dominos, Café Coffee Day etc., in

Guwahati, seeing the potential of the food business in the state. As the guest opts for

various types of food in the restaurant, therefore a good number of restaurants have

come up in the state serving fast food, North Indian, Chinese, local foods etc.

An assessment of the food preference in the restaurants of the state shows an

interesting pattern (Table 3.9 and fig. 3.3). Preference for local food stands at 45.45

percent, followed by north Indian food with 35.45 percent. On interaction with the

guest, it was found that local foods are more preferred over the other foods, because of

its less oily and spicy nature and comparatively less priced on the menu. The restaurants

serving local foods are being preferred by the lower middle class customers, whereas

the elite class is attracted by upscale restaurant. The survey also reveals that fast food

0%

20%

40%

60%

80%

100%

120%

Low scale

restaurant

Upscale

Restaurant

Fine Dining

Restaurant

Pe

rce

nta

ge

of

Bu

sin

ess

Category of Restaurants

Fig. 3.2: Percentage of business by different category of restaurants of

Assam

62

Table 3.9 : Food preference in restaurants of Assam

Sl.

no. Place

Type of food/preferences of respondents

Con

tin

enta

l/

resp

ond

ents

%

Ch

ines

e/

resp

ond

ents

%

No

rth

In

dia

n

/ re

spo

nd

ents

%

Lo

cal

food

/res

pon

den

ts

%

To

tal

resp

ond

ents

1 Dhubri -

- 1 10 3 30 6 60 10

2 Barpeta

Road

- - 1 10 4 40 5 50 10

3 Guwahati 1 5 3 15 5 25 11 55 20

4 Tezpur - - 2 20 3 30 5 50 10

5 Kaziranga 2 20 2 20 4 40 2 20 10

6 Sivsagar - - 1 10 3 30 6 60 10

7 Dibrugarh 1 6.67 3 20 7 46.67 4 26.66 15

8 Tinsukia - - 2 20 5 50 3 30 10

9 Silchar - - 2 13.34 5 33.33 8 53.33 15

Source : Field survey, 2008-09

is preferred by 90 percent of the customers belongs to the age group below 25 whereas

preference for local food is more i.e., 70 percent among the people of the age of 40

Fig 3.3: Preference of customers for different types of food

Source: Field survey 2008-09

3.64%

15.46%

35.45%

45.45%

Food preference of people of Assam

Continental

Chinese

North Indian

Local food

63

years and above (Table 3.10 and Fig. 3.4). The customers in the age group between 25

and 40 has a mixed response for food preference (15 percent prefers fast food, 40

percent prefers North Indian food, 10 percent prefers Chinese food whereas 35 percent

prefers to have local food in their meal).

Table 3.10: Preference of food according to age group of guests in the restaurants

of Assam

Type of food Age group/respondents

<25 % 25-40 % >40 %

Fast Food 18 90 3 15 -

North Indian

Food 1 5 8 40 5 25

Chinese 1 5 2 10 1 5

Local Food - - 7 35 14 70

Total Sample 20 100 20 100 20 100

Source : Field survey, 2008-09

Along with the rest of the world, the concept of restaurant business is also

changing in Assam. To encash the situation, the owners should also change their

strategies to have a market share as per the requirement of the customers. The trend of

eating out has increased as compared to the previous years being nuclear family with

one or two children and husband and wife both working and having more disposable

income. It is frequently observed that business man and executives working in the

multinationals have further added to the list of the eateries, especially in the major

business and administrative nodes of the state. This class generally visits branded fine

dining restaurant rather than the upscale restaurants minimum once in a month. They

keep on switching over from one restaurant to another in search of new dish and taste.

The people having more disposable income with their own vehicle, would like to break

their hectic schedule so they prefers to visit during weekend to restaurants for dining,

generally to nearby places (generally outskirts of the city), having a place for recreation,

within a journey of half an hour to one hour with their children. These are generally

expensive restaurant having spacious ambiances.

64

Source : Field survey, 2008-09

A good number of ethnic restaurants have been opened up at nodes like

Guwahati accommodating cuisines of local communities like Assamese, Mishing, Naga,

etc., to attract customers from those communities along with food lover from different

section of the society. Hopefully, this concept will flourish and will be taking a good

share of food business in near future.

With the coming up of shopping mall culture, a good number of fast food joints

are mushrooming in the major cities and towns of Assam. As a result, a number of

multinational and national fast food chains like Kentucky Fried Chicken (KFC), Pizza

Hut, Dominos, Café Coffee Day etc., have opened up their outlets, eyeing on the

younger generation market, with quick and efficient service, colorful décor and fun

music playing in the background. Besides, the menu options are diverse and innovative

and the taste and quality of foods are being maintained at a consistent level.

Some of the restaurants attached to the hotels, especially at Guwahati, in the fine

dining category, have opted for show kitchen to attract the high income group where the

kitchen is partitioned with a glass attached to the restaurant. The guest can see the

preparation of their dishes by the chef, from the restaurant. This is totally a new trend in

0

10

20

30

40

50

60

70

80

90

100

Fast Food North Indian Food Chinese Local food

Pe

rce

nta

ge

s o

f p

refe

ren

ces

Type of food

<25

25-40

>40

Fig. 3.4: Preference of food by different age groups

65

Assam in the restaurant business, which is likely to be followed by many of the fine

dining restaurants. As there are tough competitions between the restaurants to attract

more and more guests, they are now concentrating more on the service part. Many

restaurants are trying to have niche marketing over service to have advantage on their

competitors. Therefore they are putting more emphasize on getting smart, professionally

trained service brigade for their restaurants.

3.4 ECONOMIC ASPECTS OF HOSPITALITY INDUSTRY

Hotels have long been important contributors in the economies of many

countries. The enormous increase in tourism and travel trade of the 21st century has

caused the hotel business to outgrow national boundaries and become global in

character. Hotels are directly linked to and are integral part of many other economic

activities. In particular, the relationship between tourism and hotels is very crucial in

understanding of the role of the hotels in the process of economic development of a

state. Ogilvie is perhaps the first economist, to realize the impact of tourism on the

accommodation infrastructure when he observes ‘a nation of shopkeepers has, in a large

measure, become a nation of inn keepers’ (Mohanty, 2008). Thus, hotel industry plays a

very pivotal role in tourism and has tremendous potentialities for earning foreign

exchange, yielding tax revenues, providing employments, promoting the growth of

ancillary industrial activities and overall development of industrially backward regions

through its broader linkage effects.

Assam is a state which lies in the North Eastern region of India with its

economic potentialities. Different valuable natural resources are in the possession of this

state. But as the nature is niggardly, it never allowed Assam to flourish economically

with its resources as the state is subjected to variety of problems which include

geographical location, transport bottleneck, insurgency problem and infrastructural

development. However, with the development of touristic infrastructure in the state, the

valuable natural and cultural resources can be utilized and the economy of Assam can

be given a boost to a great extent. The term “tourist infrastructure” associated with the

development of accommodation sector, food and beverage sector, transport system,

touristic spots, travel agencies, tour operators, the entrainment industries, art and crafts,

the souvenir industry and so on. Economist frequently put stress on the development of

touristic infrastructure as it is the prerequisite for its accelerating economic growth. The

66

hospitality sector can act as a catalyst for accelerating economic growth for

economically backward state like Assam. Though the hospitality sector in Assam is at

budding stage the hospitality sector is one of the important sector for economic

development of Assam in terms of its contribution to employment generation, foreign

exchange earnings, income generation, and output growth that hospitality sector has

significant impact on state economy (Table 3.11). Though the direct earning from

tourist is not that impressive, but the increasing trend reflects the increasing inflow of

tourists to the state and it has a multiplier effect in overall economic health of the state.

Table 3.11: Revenue earned by the Government of Assam from

government owned tourist lodges

Year Revenue earned (Rs in lakh)

2000-01 35.87

2001-02 38.89

2002-03 41.03

2003-04 60.44

2004-05 69.01

2005-06 87.11

2006-07 81.30

2007-08 94.99

2008-09 103.91

2009-10 131.63

Source: Directorate of Tourism, Govt. of Assam.

The employment and income effects of hospitality sector are very closely related

and follow a common source, namely expenditure on accommodation and food and

beverage by the tourist. Tourist expenditure provides direct income and also generates

employment in hotels, restaurant, bars, bakery etc. This sector also generates an

immense volume of indirect employment and income with a multiplier effect. Apart

from the first recipient of the tourist money, there are many others who become

beneficiaries. Although often, as and when the money changes hands, its size gets

67

reduced because several successive recipients retain a parts of it for services they

provide and pass on the balance to the others. With the coming of tourists to the state

the demand of hotels and catering outlets will generate direct employment in one hand

and it will open up yet another dimension in the economic scenario. The additional

consumption demand arising indirectly out of this sector will generate more

employment and income and once again generate a further multiplier effect through a

chain of transactions. However the multiplier effect will be greater if all the requirement

of this sector is met from the local market. Hospitality sector has good potential to

create both direct and indirect employment. The hotel and catering houses provides

direct employment to various categories of people at various positions whether it is in

the front desk or at the back of houses. The indirect employment which is generated by

this sector are the people who are supplying vegetables, fish, poultry, cereals etc. to the

hotel and catering houses. Electricians, plumbers, furnishings and furniture repairs, in

fact, all those who are providing ancillary services to the hotel customers. Every hotel

room, the World Bank estimates, creates 1 to 2 jobs directly or indirectly. In theory a

hotel with 300 rooms can create 600 jobs (Rao, 2001). According to the study of the

Institute of Public Opinion, in 1980, over 6 million people were employed only in hotels

approved by the department of tourism, Govt. of India (Sengupta, 2006). The accepted

ratio of employees to hotel rooms in India is 2.5:1 however in Assam it stands around

3.5:1, as reveled from field investigation.

With the increasing movement of tourist, indirect economic sectors like

agriculture, fisheries, transport system and local crafts get stimulated and thus indirect

employment increases. In the handicraft sector quite a good number of people are

employed as because the mass tourism could ask for a souvenir or memento to take back

home either to keep it for remembrance or to present it to their friends and relatives.

Development of hospitality sector encourages domestic and international tourists, which

in turn improves the frequency and quality of air transport, road transport and railways.

An economic analysis of tourism activity normally focuses on changes in sales,

income and employment in a region resulting from tourism activity (Sengupta, 2006).

Government of Assam earns revenue from the hospitality sector in the form of luxury

tax, sales tax, value added tax, entrainment tax, excise duty, etc. Luxury taxes earned

alone from the hotels and lodges in the year 2006-07 stands at Rs. 2.70 crores

68

(Statistical Handbook of Assam, 2007). Keeping such prospect in the backdrop,

Government of Assam has to play a leading role to bring all the stakeholders in tourism

and hospitality sector to ensure a sustainable development initiative of the sector.

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