Atithi Devo Bhavah: Guest Management

First Edition, 2009 ISBN 978 93 80075 45 7 © All rights reserved. Published by: Global Media 1819, Bhagirath Palace,...

Author: R. K. Singh

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First Edition, 2009

ISBN 978 93 80075 45 7

© All rights reserved.

Published by: Global Media 1819, Bhagirath Palace, Chandni Chowk, Delhi-110 006 Email: [email protected]

Table of Contents 1. Atithi Devo Bhavah 2. India: An Incredible Tourist Spot 3. Atithi Devo Bhavah Campaign 4. Indian Tourism and Hospitality Facilitation 5. Role of India in International Tourism 6. Opportunities and Challenges 7. Developmental Initiatives 8. Destination Management 9. Guests and their Well-Being

Atithi Devo Bhavah

India is amongst the most widely preferred tourist destinations today a phenomenon that is encouraged by the adage Atithi Devo Bhavah, which denotes the respect and honour that is meted out to the tourists who visit this country. The Ministry of Tourism has launched the Atithi Devo Bhavah campaign to attract more number of tourists and the end-results speak volumes about the progress. The concept is aimed at capacity building for service providers and stakeholders in the tourism sector to make the tourists aware of the benefits in India and the need to treat them with traditional care and utmost courtesy. This book is a one stop manual on what tourism in India entails. Taking an insightful and in-depth look into the factors which make India an attractive and fascinating destination on a tourist's itinerary, it also acts as an invaluable guide for those in the hospitality industry. It is hoped, that being an illumi-nating and insightful look into the tourist destination that india is, and what it means for the tourism industry in this country, the book would account for an enriching and satisfying reading experience.

1 India: An Incredible Tourist Spot India is one of the world’s oldest living civilisations and also the world’s largest democracy, which has made stupendous progress among developing nations. It is a land where temple elephants exist amicably with the microchip. India’s impressive variety of history and culture, from the ancient Gangetic kingdoms to the present state, harmoniously blend to form a unique atmosphere in more than a million square kilometres of scenic sights. Placid backwaters and lagoons, bays and rough lavarocked seas, marine estuaries with fish, crashing surf, powdery golden sand or palm-fringed shores... incredible India has them all. The economy is booming and so is incredible India. Various initiatives are under way in the tourism sector with the sole objective of providing visitors to the country with a world-class experience that differentiates itself as a spiritually enhancing, culturally enriching, physically invigorating and mentally rejuvenating experience. Tourism is a major social phenomenon of the modern society with enormous economic consequences. Its importance as an instrument for economic development

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and employment generation has now been well recognized the world over. The existing Tourism Policy provides a framework for development of tourism with the objective of reaping the socio-economic benefits of the sector. The traditional treatment of a visitor in India is based on the mythological concept of Atithi Devo Bhavah (Guest is God). This is the latest mantra of the Indian tourism sector. The Ministry of Tourism has launched the “Atithi Devo Bhavah” campaign last year under its ambitious programme to attract more number of tourists and the end-results speak volumes about the progress. The concept is aimed at capacity building for service providers and stakeholders in the tourism sector to make the tourists aware of the benefits in India and the need to treat them with traditional care and utmost courtesy. This has been further boosted by the National Tourism Policy 2002, which revolves round a framework - governmentled, private sector-driven and community-welfare oriented. The Tenth Plan approach to the sector is also aimed at ensuring that the tourist to India gets physically invigorated, mentally rejuvenated, culturally enriched, spiritually elevated and feels India within him.

STATUS

OF

INDIAN TOURISM INDUSTRY

The tourism industry is a composite of service providers which includes travel agents, tour operators, air, rail and sea transportation operators, guides, hotels, guest houses and inns, restaurants and shops selling handicrafts, souvenirs, clothing footwear, leather items and other objects of interest to the tourists. The common factor about these service providers is that all are involved in meeting the requirements of international and domestic tourists. These service providers are generally in the

India: An Incredible Tourist Spot

3

private sector. Public sector institutions such as the national or state departments of tourism are involved in planning, development and management of tourismrelated service providers.In many cases they even provide direct services to the tourists. Left to itself, the industry will develop naturally, but not necessarily, optimally on a sustainable basis. If the industry is properly planned, developed and managed at all levels of government in partnership with the private sector, it will strengthen the country’s cultural structure and natural heritage and lead to positive economic results including enhanced employment and income opportunities especially in rural areas. The 1982 Tourism Policy was drafted in a different socio-economic milieu in an environment of an economy with strict licensing procedures. Foreign investment in the economy was not anticipated, development of new technology was not envisaged and there was no focus on balanced development of various regions.The Policy did not differentiate specifically the roles of the government and the private sectors and there was no emphasis on the latter’s role in the development and promotion of tourism. In the post-liberalisation period various developments in the tourism sector have taken place. The sector has been accorded the status of export house and various incentives like income tax exemptions, interest subsidy and reduced import duty are available to the hotel industry, travel agents, tour operators and tourist transport operators.Several incentives have been made available for attracting private investment in tourism projects including those under the Liberalised Exchange Rate Management System (LERMS). The economic reforms introduced by the Centre are integrating India into the global economy and making

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Indian industry internationally competitive. Foreign direct investment and technical collaborations form a major platform of the economic reforms. With a view to attracting investment in this sector the hotel and tourismrelated industry has been declared as a ‘high priority industry’ for foreign investment. It is now eligible for automatic approval of direct investment upto 100 per cent of foreign equity. Non-Resident Indian (NRI) investment is allowed upto 100 per cent automatically. In a fast-changing world, the relationship between suppliers and users of technology, agreements have to be recognised. To promote technology upgradation in the hotel industry, approvals for technology agreements are now available automatically subject to the fulfillment of certain conditions. Applications for automatic approvals for foreign investment or technology agreements and management contracts can be made to the RBI for according such approvals and the entrepreneurs can approach authorised dealers for release of foreign exchange. Tourism development in India has passed through many phases. At Government level the development of tourist facilities was taken up in a planned manner in 1956 coinciding with the Second Five Year Plan. The approach has evolved from isolated planning of single unit facilities in the Second and Third Five Year Plans. The Sixth Plan marked the beginning of a new era when tourism began to be considered a major instrument for social integration and economic development. But it was only after the 80’s that tourism activity gained momentum. The Government took several significant steps. A National Policy on tourism was announced in 1982. Later in 1988, the National Committee on Tourism formulated a comprehensive plan for achieving a


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sustainable growth in tourism. In 1992, a National Action Plan was prepared and in 1996 the National Strategy for Promotion of Tourism was drafted. In 1997, a draft new tourism policy in tune with the economic policies of the Government and the trends in tourism development was published for public debate. The draft policy is now under revision. The proposed policy recognises the roles of Central and State governments, public sector undertakings and the private sector in the development of tourism. The need for involvement of Panchayati Raj institutions, local bodies, non-governmental organisations and the local youth in the creation of tourism facilities has also been recognised. The other major development that took place were the setting up of the India Tourism Development Corporation in 1966 to promote India as a tourist destination and the Tourism Finance Corporation in 1989 to finance tourism projects. Altogether, 21 Government-run Hotel Management and Catering Technology Institutes and 14 Food Craft Institutes were also established for imparting specialised training in hoteliering and catering.

TOURIST ATTRACTIONS India is a country known for its lavish treatment to all visitors, no matter where they come from. Its visitorfriendly traditions, varied life styles and cultural heritage and colourful fairs and festivals held abiding attractions for the tourists. The other attractions include beautiful beaches, forests and wild life and landscapes for ecotourism, snow, river and mountain peaks for adventure tourism, technological parks and science museums for science tourism; centres of pilgrimage for spiritual tourism; heritage trains and hotels for heritage tourism.

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Yoga, ayurveda and natural health resorts also attract tourists. The Indian handicrafts particularly, jewellery, carpets, leather goods, ivory and brass work are the main shopping items of foreign tourists. The estimates available through surveys indicate that nearly forty per cent of the tourist expenditure on shopping is spent on such items.

TOURISM

AND

ECONOMIC GROWTH

Domestic tourism is as old as the Indian society. According to available statistics, domestic tourism has grown substantially during the last one decade. It increased to 167 million in 1998 from just 64 million in 1990, thus registering a compound annual growth of 12.8 per cent. The growth of inbound tourism since Independence has been quite impressive. It was just around 17 thousand in 1951. From this level it rose to 2.36 million in 1998. Tourism receipts on the other hand have grown at a phenomenal rate of 17 per cent to Rs.11,540 crore in 1998 from Rs.7.7 crore in 1951. Tourism has emerged as an instrument of employment generation, poverty alleviation and sustainable human development. During 1998-99, employment generation through tourism was estimated at 14.79 million. Foreign exchange earnings from the tourism sector during 1998-99 were estimated at Rs.12,011 crore. Tourism has thus become the second largest net foreign exchange earner for the country. Tourism also contributed Rs.24,241 crore during 1998-99 towards the country’s Gross Domestic Product (GDP).

THRUST AREAS In order to speed up the development of tourism in the country several thrust areas have been identified for


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accomplishment during the Ninth Five Year Plan. The important ones are development of infrastructure, products, trekking, winter sports, wildlife and beach resorts and streamlining of facilitation procedures at airports, human resource development and facilitating private sector participation in the growth of infrastructure.

O RGANISATIONS The organisations involved in the development of tourism in India are the Ministry of Tourism with its 21 field offices within the country and 18 abroad, Indian Institute of Tourism and Travel Management, National Council for Hotel Management and Catering Technology, India Tourism Development Corporation, Indian Institute of Skiing and Mountaineering and the National Institute of Water Sports.

CELEBRATIONS During the Golden Jubilee celebrations of India as a Republic, the Ministry of Tourism made special efforts to publicise the tourism potential of India. The first-ever Indian Tourism Day was celebrated on January 25, 1998. Bauddha Mahotsav was organised from 24th October to 8th November 1998. The Year 1999 was celebrated as Explore India Millennium Year by presenting a spectacular tableau on the cultural heritage of India at the Republic Day Parade and organising India Tourism Expo in New Delhi and Khajuraho. The Wong La Millennium was held from April 1999 to January 2001. A special calendar of events has been formulated for highlighting contributions to Millennium events by various places in all the States. An official website of the Ministry of Tourism has also been created for facilitating dissemination of information on tourism.

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CONSTRAINTS The major constraint in the expansion of international tourist traffic to India is non-availability of adequate infrastructure including adequate air seat capacity, accessibility to tourist destinations, accommodation and trained manpower in sufficient number. Poor visitor experience, particularly, due to inadequate infrastructural facilities, poor hygienic conditions and incidents of touting and harassment of tourists in some places are factors that contribute to poor visitor experience. To sum up, Indian tourism has vast potential for generating employment and earning large sums of foreign exchange besides giving a fillip to the country’s overall economic and social development. Much has been achieved by way of increasing air seat capacity, increasing trains and railway connectivity to important tourist destinations, four-laning of roads connecting important tourist centres and increasing availability of accommodation by adding heritage hotels to the hotel industry and encouraging paying guest accommodation. But much more remains to be done. Since tourism is a multi-dimensional activity, and basically a service industry, it would be necessary that all wings of the Central and State governments, private sector and voluntary organisations become active partners in the endeavour to attain sustainable growth in tourism if India is to become a world player in the tourist industry.

POTENTIALS

OF

TOURISM INDUSTRY

Tourism provides enormous opportunity for employment generation. According to an estimate the travel and tourism industry would have directly generated 9.3 million jobs in India. The travel and tourism industry includes activities such as accommodation, transport,


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catering, entertainment, recreation and other travelrelated services. The travel and tourism economy which expresses the impact of travel and tourism and its flowthrough effect across the wider economy would have generated 17.4 million jobs in India.Travel and tourism jobs are rapidly generated at relatively low cost, are concentrated in small business and local communities, provide significant opportunities for women and young people, offer education, training and skills development and protect and revitalise traditional arts and crafts. Integrated development of infrastructure including basic amenities and onsite facilities like accommodation, restaurants, entertainment and shopping facilities in identified tourist centers is a primary requirement for achieving any large-scale expansion in the tourist traffic. Poor visitor experience particularly due to inadequate infrastructural facilities, poor hygienic conditions, incidence of touting and harassment of tourists in some places and the unscientific approach to taxation policy which includes heavy imposts on hotel room rents, sales tax on food and beverages, heavy excise on liquor, prohibitive customs duty on imported tourist vehicles and taxes on interstate tourist transport are factors that adversely affect the flow of tourist traffic to the country. As a service industry, it is also necessary to achieve high standards of professionalism in providing services to the tourists. The new tourism policy would take into account the role of Indian tourism as an engine for economic development, employment generation, social integration and promotion of its cultural image abroad. It takes into account the various barriers and constraints that it faces and find a solution to overcome them so as to be able to develop and promote tourism to greater heights.

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NEW INITIATIVES

Atithi Devo Bhavah IN

TOURISM SECTOR

The Tourism Ministry, through tourism offices abroad, undertakes a series of promotional activities in tourist generating markets for increasing the number of tourists visiting India. These include advertising, participation in fairs and exhibitions, organizing seminars, workshops and road shows, publication of brochures, joint advertising support and inviting media personalities, tour operators and opinion makers to visit the country under the Hospitality program of the Ministry. In India, the focus is to create infrastructure in rural areas having potential for tourism. The objective is to showcase rural life, art, culture and heritage at rural locations and in villages, which have core-competency in terms of craft/ handloom/textiles etc. For the last four decades, there has been a sweeping revolution in the tourism sector across the world. The number of tourists worldwide has been growing and it is expected to swell to 1.5 billion and the receipts from it are estimated to cross 2000 billion US dollars. India has taken note of the boom in the tourism sector and geared itself to meet the challenges. As a result, tourism in the present day world did not confine itself to hotels, restaurants and sea beaches alone its arena touched rural areas (Rural Tourism), health sector (Health Tourism) and environment (Eco-tourism). That is why it is said necessity is the mother of invention. The government’s policy is to take the benefits of tourism to people in rural areas to ensure socio-economic development of the village, society and the nation altogether. Despite several constraints facing the tourism sector, India’s share in world tourist arrivals was 0.44 per cent in 2004. The constraints include shortage of air seat capacity, high air fares, shortage of hotel accommodation and high


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hotel tariffs, deficiencies in infrastructure such as airports, roads, railways, facilitation of entry to India by International tourists, multiplicity and high level of taxation, restricted land use policies for tourism protects and absence of single window approach. The government has prepared 20 year Perspective Plans for tourism development in the country. The tourism policy encourages private sector to act as a main spring of the activities and impart dynamism and speed to the process of development as well as conservation, attaches importance to the improvements and environmental upgradation of the protected monuments and the areas around them. The Ministry has undertaken studies on taxes levied by the state/central governments in the Indian Tourism sector and the impact of Civil Aviation Policies on Tourism in the country. The study on taxes has highlighted the problem of high rate of taxation and multitude central and state level taxes leading to high cost of packages. The study has recommended rationalization of taxes like expenditure tax, service tax, customs duty and taxation of Aviation Turbine Fuel (ATF), need for introduction of new incentives to increase tourism expenditure and volume and promotion of investment in the industry. The government has decided to stimulate investment and encourage the state governments to develop unique tourism products suited to their genius. The aim is to enhance the employment potential within the tourism sector as well as to foster economic integration through developing linkages with other sectors. The new approach is to: — Position tourism as a major engine of economic growth;

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Atithi Devo Bhavah

— Harness the direct and multiplier effects of tourism for employment generation, economic development and providing impetus to rural tourism; — Provide a major thrust to domestic tourism which will act as a spring-board for growth and expansion of international tourism; — Position India as a global brand to take advantage of the burgeoning global travel and trade and the vast untapped potential of India as a destination; — Acknowledge the critical role of private sector with government working as an active facilitator and catalyst; — Create and develop integrated tourist circuits based on India’s unique civilization, heritage and culture in partnership with States, Private Sector and other agencies. The government has set up a monitoring mechanism for expediting projects sanctioned in the last ten years. In the 8th and 9th Plans, as many as 2,526 projects were sanctioned and these were supposed to be completed within 30 months from the date of sanction. The delay in implementation of the projects by the state governments led to slow progress in these works. As a result some of the projects sanctioned during the 8th plan are still incomplete. In order to ensure timely implementation and also coordination between various departments involved in the projects sanctioned under the schemes for Circuit Development, Destination Development and Rural Tourism, the Ministry of Tourism has requested all the State governments and Union Territory Administrations to constitute State level Monitoring Committees under the Chairmanship of Secretary (Tourism) including the district authorities concerned, representatives of the


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implementing agencies such as CPWD, HUDCO, ASI, Indiatourism and local authorities. Health Tourism

The Ministry of Health & Family Welfare and the Ministry of Tourism have jointly formed a Task Force with a view to promoting India as a Health Destination for persons across the globe so as to gainfully utilize the health care expertise and infrastructure available in the country. The new domestic and global campaigns for the current year focus on India as a destination for niche segments like Medical Tourism, Cruise Tourism, and Spiritual Tourism. The aim is to expand the range of the tourism products in India both for the domestic and international consumers. The Ministry has also promoted Monsoon Tourism in various states. The government has taken up a number of steps to increase foreign tourist arrivals to India. They include: Creation of World Class Collaterals, Centralized Electronic Media Campaigns, Direct cooperative marketing with tour operators and wholesalers overseas, Greater Focus in the emerging markets, particularly in the Region of China; North-East Asia and South East Asia, Participation in Trade Fairs & Exhibitions, Optimizing Editorial PR and Publicity, Use of Internet and Web marketing, Generating Tourist Publications, Reinforcing hospitality programmes including grant of air passages to invite media personnel and tour operators and Launching of Road Shows in key source markets of Europe. The government of India has introduced a new category of Medical Visa (M-Visa), which can be given for specific period to foreign tourists coming to India for medical treatment.

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Atithi Devo Bhavah

Conference and convention tourism

Conference and convention tourism is another segment gaining increasing importance in the modern world. The government of India, recognising the emerging importance of meetings and conventions, has announced several schemes to increase the capacity of existing infrastructure and to construct world-class international convention centres through private-public partnership in Delhi, Mumbai, Goa, Bangalore, Kochi, Hyderabad and Thiruvananthapuram. Cruise Tourism

Golf tourism and cruise tourism are other new products on the anvil. Even film tourism through promotion of Indian locales among foreign filmmakers has become quite popular. India is also a shopper’s paradise with its traditional handicrafts from different regions of the country along with the most modern shopping malls in cities across the country. The government has constituted a high-power Steering Group to formulate Cruise Shipping Policy in the country. The recommendations of this Group include formation of Working Groups to look into issues like immigration, customs clearances, quarantine restrictions, identification of ports, infrastructural facilities, connectivity, taxation issues, tourism related issue and cabotage to develop cruise shipping policy for India. On the Eastern part of the country, Tuticorin Port and Chennai Port, have been identified. Eco-Tourism

India, a region with the world’s greatest bio-diversity with varied natural locales, is an ideal destination for eco-


15

tourism, which has been recognised as a priority tourism product for India. The goal is to develop the country into a sustainable tourism destination. Wildlife tourism, associated with its world-famous national parks and tiger reserves, Himalayan tourism, island tourism at the Andamans and Laccadives are some of the products of the country’s eco-tourism sector. The National Eco-Tourism Policy and Guidelines aim to preserve, retain and enrich natural resources and to ensure regulated growth of Eco-Tourism with its positive impacts on environmental protection and community development. Under this guidelines, the government has prioritized several projects in Himachal Pradesh, Uttaranchal and Uttar Pradesh in 2005-06.

TOURISM BOOM There has been a global tourism boom in the recent times. Tourism has already achieved the distinction of being the world’s largest export industry. India had received just over 16,800 international tourists in 1951. The arrivals increased to 1.7 million in 1990 and further to 2.64 million in 2000. The growth rate between 1990 and 2000 has been 4.46 per cent per annum. A higher growth rate of 6.4 per cent has been achieved in the year 2000 over the previous year. However, India’s share in world tourism arrivals has remained virtually stagnant at 0.38 per cent from 1995 onwards. India with about 42 per cent share in the arrivals is the major receiver of international arrivals in the South Asia region in the year 2000 and yet its growth rate lags far behind that of many countries in the region. The tourism receipts of India went up from US$ 2583 million in 1995 to US$ 3168 million in 2000 showing an annual average growth rate of 4.17 per cent as compared to the

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Atithi Devo Bhavah

world’s average growth rate of 3.2 per cent during this period. However, in 2000 India’s growth rate of 5.3 per cent compares very poorly with many of the neighboring countries such as China (15 per cent), Hong Kong China (10.7 per cent), Malaysia (27 per cent), Thailand (12.5 per cent), Macau (25 per cent), Iran (28.4 per cent) and Pakistan (14.5 per cent). There has been a phenomenal growth in domestic tourism in the country during the last one decade. The domestic tourist visits increased from 63.8 million in 1990 to 210 million in 2000. Some of the recent initiatives taken by the Government to boost tourism include grant of export house status to the tourism sector and incentives for promoting private investment in the form of Income Tax exemptions, interest subsidy and reduced import duty. The hotel and tourism-related industry has been declared a high priority industry for foreign investment which entails automatic approval of direct investment up to 51 per cent of foreign equity and allowing 100 per cent non-resident Indian investment and simplifying rules regarding the grant of approval to travel agents, tour operators and tourist transport operators. As a result of Incredible India campaigns, the foreign tourist arrivals increased from (-) 6 per cent in 2002 to 23.5 per cent in 2004. An estimated 3.54 million foreign tourists arrived in India during 2004. The foreign exchange earnings in 2004 in terms of rupees registered a growth of 32.9 per cent. In absolute terms, the foreign exchange earnings increased from Rs.16,429 crores to Rs.21,828 crores. The Bureau of Immigration has estimated that about 6.2 million Indians went abroad during 2004 as compared to 5.4 million in 2003 and 4.9 million in 2002.


17

The tourist arrivals during January-June, 2005 also registered an increase of 18.6% over the arrival in corresponding period of 2004. Foreign exchange earnings through tourism up to, June this year has registered an increase of 25.2%. Total earnings during the period were Rs.12527.04 crore and in Dollar terms 2821.21 million, up by 26.4 per cent. The number of tourists including those from foreign countries visiting Cellular Jail in Port Blair (Andamans) during the last three calendar years has gone up from 48,594 in 2002 to 55,912 in 2003 to 94,311 in 2004. The number of foreign tourists visiting the 8 North Eastern States has gone up from 22,047 in 2002 to 29,478 in 2003 to 39,437 in 2004. The amount sanctioned for various projects for development of tourism in the northeastern states has gone up from Rs.1807.30 lakh in 200203 to Rs.4310.68 lakh in 2003-04. In 2004-05, a sum of Rs.6979.10 lakh has been sanctioned. Of this, Nagaland has got a major share of Rs.2165.69 lakh followed by Rs.1285.70 lakh (Arunachal Pradesh) and Rs.1086.35 lakh (Mizoram) and Rs.963.30 lakh (Meghalaya). Assam has witnessed a gradual increase in the inflow of domestic as well as foreign tourists. As many as 19,53,915 domestic and 6,409 foreign tourists had visited Assam in 2002. This was against 21,56,675 domestic and 6,610 foreign tourists visiting the state in 2003. In 2004, the number of domestic tourists has gone up to 22,88,093 and that of foreign tourists to 7,285.

P ROMOTIONAL C AMPAIGN There has been an increase of 26.8 per cent during 2004 and 13.2 per cent during 2005 in foreign tourist arrivals to the country. Foreign Exchange earnings during the same period increased by 35 per cent and 20.2 per cent

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respectively in dollar terms. The first three months of 2006 saw a further increase of 12.1 per cent in foreign tourist arrivals to the country, as compared to the corresponding period in 2005. Incredible India campaign was given a new dimension with the ‘Colour of India’ and ‘Wellness Campaign’ in the global market. These campaigns also went on to win several awards internationally. In addition to the global campaign, the domestic tourist market of 367 million was targeted for the first time through a series of campaigns such as Taj - 350 years, Andaman and Nicobar Islands, North Eastern India, including Sikkim, Jammu and Kashmir, Eastern India, Central India, Southern India, Buddhist Circuit, etc. A series of Incredible India road shows were also organised in important overseas markets with participation of senior level delegations from India. Infrastructural facilities in the country are being augmented in a well-planned manner, in partnership with the states and the private sector. A tourist’s dream holiday lies in visiting a good product. With an open sky policy providing better air connectivity the aviation system has been radically liberalised. The imbalance in demand and supply has been corrected. In addition 12 airports are being developed as model airports within the next five years. The plan is to make these airports cater to 40 million international and 65 million domestic travellers by 2010. In order to overcome the shortage in the accommodation sector, efforts are afoot to build 150,000 hotel rooms in the next four years. The new scheme of ‘Incredible India Bed and Breakfast’ has been inaugurated to cater to more tourists.


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The government has decided to open three new Institutes of Hotel Management - one each in Haryana, Uttranchal and Jharkhand. The CBSP (capacity building for service providers) schemes were launched in their revised form to ensure quality tourism service through various training programmes in public-public partnership. More than 40,000 people were given training under the CBSP scheme. Product diversification is also being given due consideration and importance. Medical tourism, a new product, has recently been launched and is being promoted in key markets. On the advice of the government, the Indian Health Care Foundation - an NGO (non-governmental organisation) affiliated with CII (Confederation of Indian Industry) - has prepared the accreditation norms, price banding for identified hospitals and identified specialised medical services along with a list of hospitals, which could be used for health tourism purposes. The recent introduction of the Medical Visa would help in the growth of Medical Tourism. Under this visa, a patient along with an attendant can come to India for a period of one year, which can be extended further up to three years. Seventy-four per cent of the people reside in villages and no tourism experience of India can be complete without an experience of this product. Hence, a Rural Tourism Scheme has been launched with the objective to showcase rural life, art, culture and heritage in villages, which have core-competency in terms of craft/ handloom/textiles etc. The new Athithi Devo Bhavah (guest is god) campaign is a social awareness campaign aimed at creating awareness and sensitising all levels of society about the

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Atithi Devo Bhavah

importance and economic benefits of tourism. The main components of the campaign are training and orientation to taxi drivers, tourist guides, immigration officers, tourist police and other service providers in this industry. We firmly believe that tourism is everybody’s business and are committed to providing the visitor an unforgettable experience.

2 Atithi Devo Bhavah Campaign Atithi Devo Bhavah is a pioneer initiative by Ministry of Tourism, Government of India that will help tap into the full potential of tourism in India. Ministry of Tourism, Government of India has introduced “Atithi Devo Bhavah Programme”— a nation wide campaign that aims at sensitising key stakeholders towards tourists, through a process of training and orientation. The programme is aimed at capacity building for service providers and stakeholders in the tourism sector to make the tourists aware of the benefits in India and the need to treat them with traditional care and utmost courtesy. The endeavour is to boost tourism in India, which in turn would act as a catalyst for India’s economic growth.

A IMS Atithi Devo Bhava aims at creating awareness about the effects of tourism and sensitizing people about preservation of our rich heritage and culture, cleanliness and warm hospitality. It also re-instills a sense of responsibility towards tourists and re-enforces the confidence of foreign tourist towards India as a preferred holiday destination. The entire concept is designed to complement the ‘Incredible India’ Campaign.

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Atithi Devo Bhavah

BACKGROUND In 2005 India had 3.3 million visitors, but when you consider that Singapore gets 7 million a year. Thailand 9.6 million a year. Malaysia 11.5 million. There is no reason why India can’t aim to increase our numbers by 100%. And that too would be just a beginning. However to do this we need to change our attitude towards those who visit us. Often tourists are Mistreated, Cheated and Rudely dealt with. It’s simple logic, if someone in a house is rude to you, as a guest, you don’t encourage your friends and relations to go there. This is perhaps the reason why in spite of an incredible wealth of Tourist spots, Cultural Attractions, Natural Wonders and Destinations for the soul, India still isn’t amongst the top 15 tourist destinations Of the world. The time has definitely come to get together to change this. The Atithi Devo Bhavah campaign targets the general public as a whole, while focusing mainly on the stakeholders of the tourism industry. The main components of the campaign are training and orientation to taxi drivers, guides, immigration officers, tourist police and other personnel directly interacting with the tourists, while simultaneously creating a brand equity for the trained persons. Atithi Devo Bhavah involves Sensitisation, Screening, Induction, Training and Orientation, Certification and Feedback of key stakeholders of the Tourism industry in India. It s a nationwide campaign aimed at sensitising people about India’s rich cultural heritage, its preservation, cleanliness, hospitality and bringing out an attitudinal shift among the masses towards tourists. It is a symbolic representation of India’s age old hospitality and

Atithi Devo Bhavah Campaign

23

with this campaign, we are trying to re-install in the stakeholders a sense of pride and responsibility towards tourists, while positioning India as a popular tourist destination worldwide. The Ministry of Tourism is thus looking at both the macro and micro perspective by promoting destinations on the one hand and bringing about a sea change in the mindset and behaviour of people, on the other.

INSPIRATION BEHIND

THE

PROGRAMME

Respect has always been an integral part of the Indian soul. From time immemorial we have always respected our teachers, our elders, our parents and our guests. Perhaps this is why a great Indian Emperor once observed: ‘In Hindustan our manner is very respectful and our hearts are always open’. In many ways, at that time India was the ultimate destination for the enlightened travelers. Now, thousands of years later, we can bring that golden age back again. This inspired us to go back to those years, when Indian hospitality set the standard for the world. And we found the keystone of what we want to do. Or guest is blessed. Our visitor is God. That how we arrive at our mission called: ’‘Atithi Devo Bhavah”

SEVEN POINT ATITHI DEVO BHAVAH PROGRAMME Atithi Devo Bhavah is a seven point programme of hospitality and training. These points are:

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Atithi Devo Bhavah

Samvedan Sheelta or Sesitisation

Here we will sensitise the various sections of the tourism industry about how each of them to contribute for the growth of the tourism industry and how they will benefit from it. Prashikshan or Training and Induction

This involves explaining to them the needs and expectation of the tourist, how they should respond and behave in order to satisfy them needs and meet those expectations. Prerna or Motivation

This is motivation to participate in this programme through various measures e.g. awards for the best worker in the segment. Because when you are enthused you can do wonders. Pramani Karan or Certification

Certification to ensure standards shall be done at an appropriate stage in the training programme. Pratipushti or Feedback

Feedback shall be obtained from tourists about the Service they have received and the experience they had, in order to improve the training programme on a continuous basis Samanya Bodh or General Awareness

The mass media communication campaign will be undertaken to create general awareness among the public


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about the necessity and the benefits of the Atithi Devo Bhavah programme. Swamitwa or Ownership

The Atithi Devo Bhavah programme is a movement we will urge all segments of the Indian society to adopt, and look upon as their own.

CHARTER

OF

ATITHI DEVO BHAVAH TRAINING PROGRAMME

Hygiene and Cleanliness

Hygiene and Cleanliness shall cover the areas of product for e.g. vehicles like taxies, hotel rooms, restaurants, shops, etc., personal hygiene & cleanliness of the person providing the service and cleanliness of the monuments / places of tourist interest. Conduct and Behavior

The person concerned for e.g. the taxi driver / hotel employee shall behave in courteous and polite manner towards tourists. Integrity and Honesty

The person providing service to the foreign tourists should display honesty and integrity. Safety and Security

The safety and security of the tourists shall be ensured.

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COMPONENTS

Atithi Devo Bhavah OF THE

ATITHI DEVO BHAVAH PROGRAMME

Training

In this we are going to train key stakeholders (of the tourism industry) in terms of changing their attitude and behaviour towards foreign tourists. The programme shall cover 4 areas: — Hygiene - This include personal hygiene of the person and also that of the product / service. — Conduct and behaviour - Politeness and basic courtesies in interacting with the foreign tourists. — Integrity - This implies that the person does not cheat the tourists and charges him a fair price for the service. — Safety and security - Person look after safety and security of the foreign tourists. Key stakeholders being covered in the training include taxi drivers, baggage handlers at airport, tourist guides, hotel staff, employees of tour operators, immigration and customs officials etc. Since these segments have diverse backgrounds, education and levels of sophistication, the training is divided into 2 categories: — Level 1 : Covers taxi drives, tourist guides and baggage handlers and porters. — Level 2 : The tour operators, shop owners / staff, hotel staff, immigration and customs officials. This training programme is initiated at the following places - Delhi, Mumbai, Hyderabad, Jaipur, Agra, Aurangabad, and Goa. In the next financial year this programme will be rolled out to other important cities in India.


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These people will be given certificates which shall be valid for about 6 months after which they have to come and get themselves re-trained. Till 31st March 2005, we plan to train about 26,000 people. From April 2005 to March 2006 these 26,000 people will be retrained and another substantially large number of people will be trained. Once a threshold level in terms of number of people trained is achieved, we shall introduce Atithi Devo Bhavah as a symbol of quality. Foreign tourists will be told to look out for the Atithi Devo Bhavah badge / sticker which will mean that the service is of certain minimum quality. PR Road Shows

Besides training we are also undertaking PR Road shows with the tourism trade in order to get their active participation and ownership of the Atithi Devo Bhavah programme. Right now the contact programmes are being conducted in 7 cities mentioned earlier. After April 2005 contact programmes will be conducted in other cities in conjugation with the roll out of the training programme. Mass Media Communication

We shall also be carrying out mass media communication in newspapers, TV, cinema and outdoors to create general awareness about the Atithi Devo Bhavah programme and to communicate to key stakeholders as to how it is in their own interest that foreign tourists be treated well and should go back happily from our country. Role of the India Tourism Offices

The India Tourism offices of Delhi, Jaipur, Agra, Mumbai, Aurangabad, Goa and Hydrabad have a crucial role to

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Atithi Devo Bhavah

play in the campaign. They act as nodal agencies to facilitate and coordinate the essential part of the programme. The nodal offices as we term it will have the following roles: a)

Provide their cooperation and support to make the training programmes run in an effective manner

b)

Registering the stakeholders who are contacting them for the purpose of training and deciphering the information to us, so that they can be contacted and made a part of the training programme

c)

Re-registration of the stakeholders who underwent a training programme after six months, the stakeholders will approach them for the purpose of re-training and re-certification.

3 Indian Tourism and Hospitality Facilitation Hospitality refers to the relationship process between a guest and a host, and it also refers to the act or practice of being hospitable, that is, the reception and entertainment of guests, visitors, or strangers, with liberality and goodwill. Hospitality frequently refers to the hospitality industry jobs for hotels, restaurants, casinos, catering, resorts, clubs and any other service position that deals with tourists. For an in depth understanding of the term of hospitality, the starting point is the etymology of the word itself. The word hospitality derives from the Latin hospes, which is formed from hostis, which originally meant a ‘stranger’ and came to take on the meaning of the enemy or ‘hostile stranger’ (hostilis) + pets (polis, poles, potentia) to have power. Furthermore, the word hostire means equilize/compensate. If now you combined the above etymological analysis with the story of Telemachus and Nestos you can start develop in your mind the concept and idea of hospitality. First of all Telemachus is a complete stranger for Nestor, however he was hosted and treated more than warmly. In the Homeric ages, hospitality was under the protection of Zeus. The God of the Gods. The semantic behind this was to highlight the fact that hospitality for

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Atithi Devo Bhavah

Ancient Greeks was of the utmost importance. A stranger lost in the night could be invited inside the house of a Greek family, been fed, offered wine and only after he/ she was feeling at home could be asked to tell his/her name. After having welcomed Telemachus, Nestor asks his unknown guest to introduce himself to find out that he was the son of Odysseus. By that time, the man in front of him was a complete stranger, a hostis as described in the etymological analysis of hospitality at the beginning. Nonetheless, Telemachus was equilized with his host. Another meaning that is included in the etymology of hospitality. Note also that one of the Nestor’s sons slept on a bed close by Telemachus to take care that he should not suffer any harm.This means that hospitality for Ancient Greeks include also the idea of protection. Lastly, Nestor put a chariot and horses at Telemachus’ disposal so that he could travel the land route from Pylos to Sparta in two days, having as charioteer Nestor’s son Pisistratus. The last element of hospitality as can be realized is guidance. To cut a long story short, hospitality is about compensating/equilizing a total stranger with the host, making him feel protected and at the end of his hosting, guiding him to his next destination an so on. Now bring in mind how many times you have been asked for your passport or credit card before even entering your room after a long and exhausting journey. Bring also in mind how many times has a waiter “invaded” your hotel room while having a shower, despite the “do not disturb sign” and lastly remember how many times have you been looking for a TAXI outside the entrance of a hotel in a foreign city while the bellboy or the concierge or whoever responsible was absent.

Indian Tourism and Hospitality Facilitation

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Contemporary usage seems rather different from historical uses that lend it personal connotations. Today’s hospitality conjures images of throwing good parties, gracious hosts entertaining, etiquette, Martha Stewart or even talk shows, or, the hospitality services industry as it relates to the entertainment and tourism business. On the other hand, hospitality used to be, and may still be, a serious duty, responsibility, or ethic. Hospitality ethics is a discipline that studies this usage of hospitality. Since hospitality is such a prosaic word, one which every culture and tradition can relate to, in consequence it seems to be a candidate for having something like a universal meaning or agreement, if not positive value. In the western context, with its dynamic tension between Athens and Jerusalem, two phases can be distinguished with a very progressive transition: a hospitality based on an individually felt sense of duty, and one based on “official” institutions for organized but anonymous social services: special places for particular types of “strangers” such as the poor, orphan(s), ill, alien, criminal, etc. Perhaps this progressive institutionalization can be aligned to the transition between Middle Ages and Renaissance. Indian hospitality is legendary. The maxim of hospitality in India has crossed generations and is not only learned but truly believed by each individual. The Sanskrit saying, “Atithi Devo Bhavah,” or “the guest is truly your god,” dictates the respect granted to guests in India. Each one is treated with the utmost consideration and each Indian extends more than his hand to a visitor. From the Indian man on the street, who when asked for directions, accompanies his company to their destination, to an Indian couple’s wedding invitation to a foreign visitor, to the sign reading, “The Holy City Welcomes You” at the Varanasi airport, India extends her arms wide

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to make a guest feel at home. Indian hospitality is not only spontaneous but also quiet. The Indian people are as Geeta Heble, a proud Indian woman, describes, “not ostentatious in speech or in treatment of guests”. For all Indians, hospitality, though not ostentatious, is a priority. The Indian people feel that their guests must be given proper hospitality, which certainly requires extreme care and attention. Although the head male of the clan, usually the grandfather or great grandfather, is the most prominent symbol of the family, the women are the backbone of traditional hospitality. Despite fulfilling her duty as a wife and a mother, a true Indian woman takes pride in herself, her family, and her house and will not let a guest go away unfed or unhappy from her home. An Indian woman shows her talents and her warmth through food and is known for her ability to serve fare to her guests, whether they be invited or uninvited. As soon as a guest arrives, every amenity is offered. The woman of the house provides water for the guest upon entry and then asks any preferences for food or drink. Then, female guests gather in the kitchen with the women as they prepare delicious food while male guests gather with other males to discuss news or events. When the food is prepared, the entire family and the guests sit down to eat. Customarily, the family talks of members’ health, children’s progress in school, and relationships while they eat. In addition, the guests are usually asked the details of any recent travels or tragedies. The majority of the conversation is done by the hosting family who attempt to show their pride in hospitality by not forgetting to mention every detail. Once the main meal is finished, whoever wishes to retire, does so. Whoever is awake will talk with the


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guests and partake in more intimate conversation or a few games. If any children are up, they will always try to teach the guest new games, but if not, the time after a meal provides quality moments for the female guests to really get to know the women and the male guests to really get to know the men. Unlike the intense period of food preparation, the women, at this time, are more personal and laid back. Their duty, as a cook and host, has been done. When time comes for the guest to retire, each family, in accommodating guests, takes important criteria into the decision such as the number of guests, the bathing and sleeping facilities, privacy for a lady guest, space for children, and the luxury of attending waiters. Traditionally, the best bed in the house is given to the honored guest.

HOSPITALITY SERVICES The concept of hospitality services, also known as “accommodation sharing”, “hospitality exchange”, and “home stay networks”, refers to centrally organized social networks of individuals who trade accommodation without monetary exchange. While this concept could also include house swapping or even time share plans, it has come to be associated mostly with travelers and tourists staying with one another free of charge. Since the 1990s, these services have increasingly moved away from using printed catalogs and phone trees to connect users towards Internet websites. These have grown exponentially since 2000 and as of March, 2007 over 500,000 people are registered users of these networks. These vary in operational structure, place different emphasis on graphical vs. textual formatting, and cater disproportionately to specific geographic regions.

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Atithi Devo Bhavah

In 1949, Bob Luitweiler founded the first hospitality service called Servas Open Doors as a cross national, nonprofit, volunteer run organization advocating interracial and international peace. The next earliest began in 1965 when John Wilcock set up the Traveler’s Directory, originally as a listing of his mutual friends willing to host each other when traveling. This later became the Hospitality Exchange in 1988 when Joy Lily rescued the organization from imminent demise. Hospitality Club is the direct successor Hospex, the first Internet-based service, operating out of Poland since 1992. It is currently the largest hospitality exchange network, growing rapidly. CouchSurfing is a newer but also rapidly growing hospitality exchange organization founded in 2004. Just as all the individual services have their own individual creation stories and organizational histories (often including demise and resurrection), many also have specific niche markets that they cater to including students, activists, religious pilgrims, and even occupational groups like police officers. However, the trend in recent years points to a greater consolidation of users in networks without a specific group, value, or lifestyle affiliation. In essence, these systems employ reciprocity – users gain access to other users’ information only by posting their own. Required fields normally include name and contact information, though newer services encourage users to include more detailed personal material, including likes and dislikes, hopes and dreams, and even photographs. Of course, more information included tends to improve the chances that someone will find them trustworthy enough to host or stay with while traveling. It is very much akin to online dating services.


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Benefits Monetary Savings

Staying in private homes means that travelers can save lots of money on accommodation that they would usually be spending on hotels or hostels. Used over a long period of time (2 to 4 weeks), this strategy can cut overall travel budgets in half, or even more combined with hitchhiking. These savings can then be passed on towards more generously patronizing local establishments or simply staying abroad for longer periods of time. Local Economic Sustainability

Many tourist vacations today are sold in package form, often including flights, hotels, rental cars, sightseeing tours, and coupons for chain restaurants and bars. While this makes purchasing more convenient, it also puts more money in the hands of large multinational corporations exploiting the synergy strategy of marketing their products in the context of their subsidiary companies operating in other markets. Many years ago, this might have been termed collusion; today, however, it is the norm. This comes at the expense of locally owned independent businesses. Accommodation sharing helps to break apart this monopoly and hopefully redirects some of the tourist revenue back to the local or national economy. Ecological Sustainability

While this is especially important in more rural travel venues where hotels are often built in very picturesque, though fragile environments, every night stayed at a local’s home means that much less demand for such hotel rooms. Also, if accommodation sharing does in fact

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Atithi Devo Bhavah

increase the length of average stays, it may reduce the amount of trips to and from different locations and back home again, thus reducing the overall fuel expenditures in the process. Local Contact

Ostensibly, one of the primary reasons we travel is to experience what life is like for people living in other countries. Making interpersonal connections and fostering understanding of different cultures may in the long run also be important to international relations. However, even in our increasingly globalized world supposedly rife with diversity, in many popular travel destinations we find tourists milling around “tourist enclaves” where the companies they patronize back home have set up shop to cater to their desires while they are abroad. Sociologist George Ritzer has referred to this phenomenon as the “McDonaldisation of society” and the more recently, the “globalization of nothing”. The location of hotels near these centers only fosters more convenient envelopment of the tourist dollar. During hospitality exchanges, hosts want to show off their local knowledge and exciting “off the map” venues. Not only may travelers get a distinctly different experience, but they will also get a feel for the everyday lives of local residents. Reciprocity

These systems foster richer and more convenient travel experiences not so much on the premise of altruism, but on the basis of social exchange theory. Implicit in the agreement to host travelers is the ability to ask to be hosted by them in the future. If one enjoys having interesting guests in their home, this works out well for both parties. It works comparatively better if you are


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visited by travelers from a locale you find particularly attractive. Thus, hosting someone from New York City in Gainesville, FL seems to be an unbelievable opportunity. Moreover, if you are a Westerner visiting someone in a developing nation, your stay might be the only way that this individual or family could afford a trip to a rich nation. This may mean more than just a relaxing vacation for such disadvantaged parties. Authenticity and Adventure

Tourism has always searched for these two qualities, but much like Midas and his golden touch, the reach of tourism has to a large extent destroyed the opportunity to encounter them in most places. Unluckily, the experience has been thoroughly commodified by everyone who wanted to secure their opportunity to make a buck in the process. Accommodation sharing offers a way out of this bind and a viable alternative to having one’s desires manipulated by corporate conglomerates who never had the best interests of the place or the people foremost in their minds. Drawbacks Lack of Guarantee

There is no contractual agreement between users in these systems. Reservations are made, but if they are for some reason broken, there is no higher authority to which one could plead for a refund or other compensation. The only repercussion will be the poor rating you give that user and your only consolation will be that your warning will deter others from visiting or hosting them. For those who feel insecure unless their travel arrangements are written in stone before departure, this system will not be comforting.

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Potential Interpersonal Conflict or Awkwardness

There is a chance that guest and host will not get along. Perhaps there will be scheduling or ideological conflicts. Maybe you will find that hosts or visitors have misrepresented themselves. Perhaps the experience will not live up to your expectations. Intense interpersonal communications in advance and a flexibility once you have arrived is your best bet. These experiences require additional planning and courtesy towards the demands of your host. Thus, your living conditions, length of stay, and overall experience will be circumscribed by the living conditions you enter into. Digital Divide and Demographic Segregation

The average user is a young white person who speaks English and lives in a developed nation. While there are many users who do not fit this description, the more different they are, the less likely they will be involved. This is especially true for persons living in the developing world who likely do not have easy access to the fundamental prerequisite for using these services: computers and the Internet. Thus, the sample population found in searches of these databases are really much less diverse than a geographical representation of worldwide users might suggest. Security

There is a distinct possibility that someone will abuse the system and that innocent users (especially women) will get hurt. All services include disclaimers that require users to waive their rights to hold anyone but themselves responsible for any harm that may come to them in using the system. They advise that the best defense mechanism


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is to only involve oneself with users that have extensive personal information and interpersonal networks within the system that have been verified by others. It does seem entirely plausible that someone clever and patient enough might be able to invent an entire group of complex user identities and build histories convincing enough to fool even more cautious patrons. Still, the difference between these systems and the other social networking platforms popular nowadays on the web is that any agreement reached through the accommodation sharing medium is contingent on actually meeting other people face-to-face. Other web scams are easier because interpersonal interactions rely so much on putative identities that are never actually verified in the real world. However, this does not diminish the greater risk to physical well being that this kind of traveling by definition must entertain. The best advice is to meet unknown persons in public spaces first, and try to meet some of their acquaintances in person before agreeing to a hospitality exchange.

HOSPITALITY ETHICS Hospitality Ethics is used to refer to two different, yet related, areas of study: — The branch of business ethics that focuses on the commercial hospitality and tourism industries. — The philosophical study of the general moral relationships and obligations that hold between guests and hosts. As a standard of conduct, hospitality has been variously considered throughout history as a law, an ethic, a principle, a code, a duty, a virtue, etc. These prescriptions were created for negotiating ambiguous relationships

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between guests, hosts, citizens, and strangers. In many ways, these standards of behavior have survived into the present day in the commercial hospitality industry, where descendents of the ancient ideas continue to inform current standards and practices. Despite its ancient origins and ubiquity amongst human cultures, the concept of hospitality has received relatively little attention from moral philosophers, who have tended to focus their attention on other ethical concepts, e.g. good, evil, right, and wrong. Yet, the Ethic of Hospitality preceded many other prescriptions for ethical behavior: In ancient Middle Eastern, Greek and Roman cultures, the Ethic of Hospitality was a code that demanded specific kinds of conduct from both guests and hosts. Beyond antiquity, this ethic has lived on in various cultures, subcultures, traditions, and religions.

M ISSION

OF

INDIAN H OSPITALITY

The intangibility of service makes seeing hospitality as an industry a little difficult for many people. Often when people think of industries, they picture large manufacturing complexes with towering smokestacks and noisy production lines. These industries produce tangible products that usually can be handled, stored for future use, and uniformly produced. Service, on the other hand, is an intangible product. Respect shown to a guest cannot be held in the hands; pulling out a chair for a guest cannot be stored for future use; and acceptable practices in one culture may be considered rude in another, rendering uniformity in service impractical. Some business related to hospitality also produce tangible products, such as special kitchen equipment used in commercial restaurants. But for most hospitality businesses, the main business is the creation of


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memorable experiences through furnishing services. Restaurants and hotels have a two-fold purpose: to satisfy the physical and psychological expectations of guests. They accomplish this through providing a good product (the meal or the room) and a good service (delivering the meal or room appropriately). Product Delivery

Delivery of an intangible product naturally leaves room for conflicting perceptions of its quality. Not only might people within the industry disagree on some theoretical points, but customers and employees may also view the service delivery from quite different perspectives. A oncein-a-lifetime experience for the guest is often a routine occurrence for the employee. The guest is investing time, money, and emotions in the hope of receiving a pleasurable experience. All these are lost if the service fails to meet that expectation. The employee, however, can merely resolve to do better with the next guest. Service does not run on a continuum from good to poor. Such a scale is impossible because the variables involved in determining good or poor service - guest expectations and the firm’s image - are not fixed. Even the concept of value or relative worth is based upon guest perception. It is fair to say, however, that most guests want quality service at a fair price. Guests perceive good service on the basis of their own expectations of the hospitality staff. Similarly, value based on the customers’ expectations in relation to how much they spend for the service and how much they would spend for a similar service elsewhere. Certainly, people do not expect the same services from a low-priced hotel as they do from a high-priced hotel. However, what they do expect are the same or better services at the hotel

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or restaurant where they are guests than at the competition. Good service is often equated with the number of amenities, the degree of personal attention/interaction, or the speed of service delivery. While these factors are related to service, identifying them with service quality is misleading. Service, and service quality, are contextually defined by the guest’s expectations as well as the organization’s image. The period of time in which a customer directly interacts with a service is known as the service encounter. That interaction may take place with either personnel or the physical facilities and other visible elements. If the hospitality establishment’s advertising leads a guest to expect valet parking, the presence or absence of such service affect’s the guest’s perception of the firm. In human interactions, both guests and employees bring to the encounter certain expectations and personality traits. What do guests expect of hospitality establishments? The specific answer may vary, but will always include that guests want, expect, and demand service - service delivered in a courteous, efficient manner. Guests measure the quality of service by comparing the services received with what they expected to receive, given the type of establishment offering the service. Five general elements comprise the scale by which service may be judged: (1) tangibles, (2) reliability, (3) responsiveness, (4) assurance, and (5) empathy.


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Since a majority of these are an assessment of human interaction, how an employee performs during a service encounter contributes heavily to the perception of quality service. Most employee-guest interactions that significantly influence the guest’s perception of satisfactory or dissatisfactory service fall under one of three general categories: 1.

Employee response to service delivery system failure.

2.

Employee response to customer needs and requests.

3.

Unprompted and unsolicited employee actions.

Service does not need to be “spectacular” to be considered good. In some settings, good service is almost unnoticeable, because everything goes along according to the guest’s expectations. Generally, it is only when the service falls outside the limits of the guest’s expectations that it is deemed satisfactory or unsatisfactory. Marketing Service Businesses

The product that hotels and other service organisations offer is very different from the product offered by other businesses because our products are intangible. Its difficult to measure the satisfaction that a guest has received when he is served a cocktail as many variables are involved. The differences between an organisation selling tangible products and onethat sells intangible products are the following:— The nature of the product is different — Customers are more involved in the production process — People are part of the product

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— Its harder to maintain quality control standards — There are no inventories — The time factor is more important — Distribution channels are different — Achieving Superior service in a less than perfect world — To ensure that superior service is provided consistently Managers must develop strategies and ensure that these strategies are implemented. — To start with every company must have a Mission statement, which are the general business objective of the company. Strategic Planning

To achieve the mission statement a proper course of action must be undertaken the first step being a SWOT analysis of the company. This will help managers formulate their strategies as the SWOT will help them evaluate how well the company is serving current markets. The next step is implementing the strategies laid out. For this it is essential that the Managers must explain their strategies to employees. The organisational structure must be changed in order to implement the strategy. Also the employees of the company must share the same values and ethics as those of the company. Finally it is important that regular monitoring and evaluation must be done to see if the strategies were effective in achieving the organisational objective. Most businesses in the hospitality industry have a capacity constraint, as it is not possible to increase the quantity of the product during peak periods and decrease it during off peak periods. For example in the winter


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months occupancy in hotels in India is 100% and it is not possible to accommodate all the guests yet new rooms cannot be added suddenly nor can the number of covers in a restaurant be increases. To some extent restaurants can accommodate more guests by taking reservations or asking walk-in customers to wait till a table is available and hence the demand can be managed. Just as managing demand is difficult so also increasing and reducing supply is also difficult. Some hospitality firms follow a chased demand strategy in which capacity is varied to suit the demand level Generally staff reduction during off peak periods is a way of managing supply. Strategic Service Vision

It is important to concentrate on two aspects to ensure that strategies are successful. 1.

Target a market segment

2.

Focus on a service strategy

Target a market segment: There is no such thing as a product or service that appeals to everyone. Customer needs vary and it is important to concentrate on one type or group of customers and ensure that there needs are met. For example if your target customer is a busy office executive who has only half an hour to spare for lunch and you modify your restaurant menu from a casual café menu to a fine dining restaurant menu he may not find it suitable for his needs. Also people who like fine dining restaurants will not come to your restaurant as they will find it too casual for the experience they are looking for and hence you will not be satisfying either group of customers. Focus on a service strategy: Once you have decided the market segment you are targeting ensure that the service

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you provide meets the needs of this segment. To elaborate using the earlier example a customer who has only half an hour for lunch must get his food served in 710 minutes so that he has enough time to finish his meal. If it takes longer he will choose to go somewhere else next time even if the quality of your food and service is excellent. Successful hospitality companies focus a good deal of management attention on establishing quality standards for services, communicating these standards to employees through training programs, and measuring performance. For example Haldirams ensures that all there products are hygienically served thus ensuring that guest feel safe eating Chaat. This service standard that they have set helps them to meet the needs of the customer and also ensures consistency in there service and product. An effective service strategy must also provide a means of achieving levels of productivity that will satisfy the business’s economic goals as well as customer expectations. One way managers do this in service companies is by job restructuringchanging the nature of the work or the way it is done. Carrying on from the previous example about Haldirams: They serve there chaat in sealed containers hence a plate of Gol Gappas is served much faster than if the server was actually putting one filled Gol gappa at a time in front of the customer. Along with controlling the quality of service goes controlling payroll and other costs involved in providing that service. Any hotel or restaurant could schedule more than enough employees to give good service all the time, but that would not be profitable.


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Delivering on the Service Promise

It is essential that you deliver the service that you promise to the customer consistently every time to ensure repeat business. Just creating a mission statement is not enough. Given below are some points to ensure that you deliver Good service consistently. 1.

Don’t forget who you are. Don’t change your product or your service standards suddenly as this will mean that you are not satisfying the needs of your target market segment.

2.

Encourage every employee to act like a manager: Empower your staff so that they feel confident taking decisions themselves.

3.

Hire good people and keep them happy A high staff turnover would mean that service would suffer hence it is important to take good care of your human resources. The Disney organisation believes very strongly in recruiting by values - and that it is then their responsibility to find where an individual can make the best contribution.

4.

Handle moments of truth correctly

5.

Respond in a timely manner.

4 Role of India in International Tourism The travel and tourism as an industry earns more foreign exchange than any other single sector. Its multiplier effect means the influence is felt across many non-related industries. A tourist can be from a nearby town or from overseas and is defined as ‘a person travelling for pleasure’. The activities on offer for any visitor domestic or international are part of the fabric of the tourism industry. People on holiday, those visiting friends or relatives, travelling for business or sport need a whole range of services. They need a way of finding out about your business. They need transport from where they live their ‘point of origin’. They need transport once they have reached their destination. They need accommodation. They need food and drink. They need activities to entertain them. If you provide any of these things you are in the tourism industry. Tourism is not a quick fix for a declining region. It is a competitive industry where the rewards are subject to seasonal highs and lows and changing fads in destinations can shrink your supply of visitors - as can economic difficulties in the countries where your overseas visitors come from. Shocking international events such as September 11 can potentially have a dramatic effect on

Role of India in International Tourism

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the numbers of overseas visitors-decreasing numbers from certain markets yet increasing interest from others. Experience has shown that these effects are not always long-lasting if a destination still holds appeal for the traveler. Despite these pitfalls, the potential for supplementing your local economy through tourism makes it worth investigating. In order to cater for visitors facilities have to be provided which are also available to local population. Local businesses servicing those who service the visitor also get a boost - the multiplier effect in action. If your area is successful in attracting tourists it may also attract outside investment in your businesses. And whatever your local asset is that attracts visitors, whether it is snow, sand, mountain or bush, it is more likely to be looked after if income is derived from it. Tourism can be a rewarding yet exhausting industry. Remember that your visitors are likely to need your services at times of the day and days of the week when you would much rather not be working. You will be on duty while others are enjoying themselves.It is therefore important to enjoy your work and a genuine interest in people must be a prerequisite to entering the tourism industry. Tourism, if successful, can leave a very large footprint on your area. Its impact on local facilities such as transport, shops and places to eat can cause friction and resentment between people making money from tourists and those who feel their quality of life is compromised. Volumes of people passing through a region cause wear and tear on infrastructure that is often repaired or replaced at the expense of the community as a whole. Striking a balance between attracting visitors and maintaining a quality of life for local residents is a serious

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challenge. The week or two a tourist spends with you is likely to be their one break from a year of work and routine. If you are successful it will be a highlight to be remembered for many years. If this is so they may well come back. Even if they can’t come back they will tell their friends, show them the holiday snaps and the souvenirs. Tourism is about people caring for people. Given below are two definitions of Tourism: The sum of phenomena and relationships arising from the interaction of tourists, business suppliers, host governments, and host communities in the process of attracting and hosting these tourists and other visitors.

GROWTH

OF

INTERNATIONAL TOURISM

Since the Second World War, the growth of international tourism has been phenomenal. Annual tourist arrivals worldwide increased from 25 million in 1950 to 450 million in 1990. Between 1969 and 1979, the World Bank encouraged developing countries to invest in tourism as a strategy for attracting foreign investment, and the governments of developing countries began to see tourism as a means to redistribute resources from North to South. In the words of the World Tourism Organization (WTO), tourism became “one of the most important economic, social, cultural and political phenomena of the twentieth century”. Today tourism is often described as the world’s “biggest” industry on the basis of its contribution to global gross domestic product (GDP), the number of jobs it generates, and the number of clients it serves. However, these conclusions are based largely on arrivals statistics, which focus on international tourism and therefore hide the significance of domestic tourism. These


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statistics may also underestimate regional tourists traveling by land rather than air or sea. Statistics produced by the World Travel and Tourism Council (WTTC) indicate that tourism generates 11 percent of global GDP, it employs 200 million people, and transports nearly 700 million international travelers per year-a figure that is expected to double by 2020. According to the World Tourism Organization, international tourism: — accounts for 36 percent of trade in commercial services in advanced economies and 66 percent in developing economies; — constitutes 3-10 percent of GDP in advanced economies and up to 40 percent in developing economies; — generated US$464 billion in tourism receipts in 2001; — Is one of the top five exports for 83 percent of countries and the main source of foreign currency for at least 38 percent of countries. Multiplier Effect

The Multiplier effect is a basic economic concept, which refers to changes in the level of activity that brings further changes in the level of other activities throughout the economy. When an injection of expenditure into an economy leads to an increase in national income more than the original injection, this is the multiplier effect. In other words, the multiplier effect is the effect from continuous respending of incomes. There are different types of multipliers, such as the sales or transaction multiplier, the output multiplier the employment multiplier, government revenue multiplier and the import multiplier.

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The multiplier indicates how many times that the injection of original spending circulates through a local economy. As a result of respending, it benefits the local people. According to “Tourism: Economic, Physical and Social Impacts”, “tourists expenditures in a destination creates new incomes and outputs in the region which, in turn, produce further expenditures and incomes. “ How to calculate the multiplier and how does it work in tourism? Some examples will be given to illustrate the economic concept of multiplier effect. The income multiplier considers three levels of impact created by the change in tourist expenditure, which includes direct spending, indirect spending and induces spending.

IMPACTS

OF

TOURISM

Direct impact: A tourist stays in a hotel and eats at the food establishment there. The tourist pays for the hotel accommodation, food and beverages. Indirect impact: Upon receipt of the tourist dollars, the process of respending begins. The hotel makes payments to its employees, suppliers, and so on. Induced impact: The employees receive incomes and consume on goods and services. The supplier replenishes its stock makes payments of wages to their employees etc. This is induced effect of the tourist’s initial expenditure, which creates further economic activities. The various reasons for why people travel can be placed into five broad categories: 1.

Recreation. Recreation includes leisure and activities related to sports, entertainment, and rest. Beach vacations, ski vacations, and adventure travel such as white-water rafting all fall into this category.


53

Destinations such as the Caribbean, Disney World, and national parks benefit largely from recreational travel. 2.

Culture. People travel for cultural reasons as well-a desire to learn about things and places that interest them. These interests can be historical, ethnic, educational, or they can relate to-the arts or religion.

3.

Business. Business travel is a significant portion of all travel. This category includes individual business travelers as well as travelers attending meetings and conventions. The trend now is to combine business and recreational travel-thus business meetings and conventions are held at resort hotels, theme parks, and even on cruise ships, and spouses and even children often come along.

4.

Visiting Friends and Relatives (VFR). Research has shown that much travel involves visiting friends and relatives. This is difficult to measure, however, and has little economic impact compared to recreational, cultural, or business travel.

5.

Health. Many persons travel to visit diagnostic centers and receive treatment at clinics, hospitals, or spas such as the Mayo Clinic in Rochester, Minnesota, or the Canyon Ranch in Tucson, Arizona. This type of travel, too, has relatively little economic impact.

GLOBAL STATUS

OF

TOURISM

Although global recession and the September 11, 2001, events are estimated to have resulted in a temporary decline in travel and tourism demand in 2001-02, international and domestic tourism is expected to boom over the next two decades. The World Travel and Tourism Council (WTTC) estimates a 4.5 per cent per annum increase in the total amount of travel and tourism

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economic activity between 2002 and 2012. This is largely attributed to a rise in global wealth, liberalisation of international airspace, cheaper flights and the use of the Internet as a travel tool. The earnings from tourism have made it one of the world’s largest industries and the fastest growing sectors of global trade accounting for 10.7 per cent of global gross domestic product (GDP), 12.8 per cent of global exports, 8.2 per cent of global employment (or one in every 12.2 jobs), and 9.4 per cent of global capital investment. Tourism in the least developed countries is growing faster than the world average, holding the promise of prosperity for many. International tourist arrivals worldwide reached 698 million in 2000, generating $ 595 billion revenues. International tourism flows are expected to reach 1.5 billion by 2020 and revenue estimated to cross $ 2000 billion. Today, only 3.5 per cent of the world population travels internationally but the number of Asian, particularly Chinese, tourists is predicted to grow enormously as the region becomes more integrated with the global economy. The scale of world domestic tourism, on the other hand, exceeds world international tourism by a ratio of 10:1. In India, for every interna-tional tourist, there are 80 domestic tourists. Domestic tourism can form the basis of a viable and sustainable tourism industry in India. Consumer trends in tourism are gradually changing and require an appropriate response in terms of both policy formulation and investment. Current market trends indicate that: — Long haul travel will grow faster than intra-regional travel. A growth of 24 per cent is expected by 2020.People with less time for leisure are likely to take


55

more frequent but shorter trips nearer home, opening up opportunities for ‘neighbouring country’ tourism. — The experienced traveller wants authentic, off-thebeaten-track vacations in remote and less well-known places as against luxurious five-star vacations, leading to an interest in rural and ethnic tourism. — The increase in the number of people with lots of money but little leisure time has resulted in a growing emphasis on rest and relaxation, and ‘wellness’ and ‘health’ holidays. — The elderly population in key tourismgenerating markets has shown a preference for cultural tourism against sun-and-sand vacations. — There is notable and increasing interest in spiritualism. — The demand for eco-tourism and naturebased holidays is expected to double and even triple in the next 20 years.Sports and adventure holidays continue to be popular with the young. The interest in cultural tourism, spiritualism, ‘wellness’ holidays, eco-tourism and rural tourism would tend to favour India, provided the country can avail of the opportunities offered to maximise its natural advantages in these areas. The development of new tourism products and destinations during the Tenth Plan must be based on market research and demand, keeping the source markets and the age groups of the tourists in mind. At the same time, the Government must develop new source markets nearer home and make India a safer destination for women tourists and family holidays.

INDIA’S PLACE

IN

WORLD TOURISM

The World Tourism Organisation forecast indicates an increasing tourism preference towards East Asia, the

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Pacific, West Asia and South Asia, although Europe and America still remain the world’s foremost tourism destinations commanding 77 per cent of the global market. East Asia/Pacific achie-ved the highest rate of growth of 14.5 per cent in tourism and travel in 2000 followed by West Asia and South Asia. With this gradual shift in focus, the outlook for the growth of tourism in the region is promising. In Asia, China has emerged as a leading tourist destination and is poised to become the world’s top tourist destination by 2020. Table 1. Share of India in World Tourist Arrivals Year

World Tourist Arrivals (1) (2) 1995 544.9 1996 575.3 1997 597.8 1998 617.4 1999 641.1 2000 685.5 2001 683.8 2002 702.8 2003 690.9 2004 766.0 2005 808.0 * Provisional

Tourist Arrival to India (3)

2.12 2.29 2.37 2.36 2.48 2.65 2.54 2.38 2.73 3.46 3.92

Share of India in World Tourism (4) 0.39% 0.38% 0.38% 0.38% 0.38% 0.39% 0.37% 0.34% 0.39% 0.45% 0.49%

The WTTC has identified India as one of the world’s foremost tourist growth centres in the coming decade. After Turkey, India is expected to achieve the fastest rate of growth of the total amount of economic activity likely to be generated by travel and tourism, at 9.7 per cent over the next 10 years. Also, the largest employment creation after China is expected to take place in India over the same period. The growth in ‘visitor exports’ or spending


57

by international tourists, is likely to be the fastest in India at 14.3 per cent per annum over the next decade. On the whole, the WTTC forecast for India is promising, subject to key policy issues that affect the growth of the sector being addressed. Table. 2. Estimated foreign exchange earnings per tourist in Selected countries of the world and in india’s Neighborhood in 2005 Country

Average per tourist estimated foreign exchange earnings (In US $)

(1)

(2)

WORLD France Spain USA Italy China

844 556 862 1653 970 626

INDIA’S NEIGHBOURHOOD Sri Lanka Hong Kong Malaysia Thailand Singapore Indonesia INDIA

984 685 520 763 892 863 1462

If India is to realise its enormous potential in tourism it must provide exclusive world-class tourism products and destinations to compete successfully for a larger share of the Asian tourism market. Today, outbound tourism from India far exceeds visitor traffic to the country partly because 820 there is a lack of world-class destinations within the country and partly because the domestic

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tourism policy has been largely directed towards those in the lower end of the spending spectrum. The high spender from India prefers to visit neighbouring countries as he gets better value for money. The scope and reach of domestic tourism will have to be broadened in the Tenth Plan through the development of competitive destinations that match international standards in terms of price and quality and also satisfy the international traveller. Table 3. International tourist arrivals by regions (in millions) Region WORLD Arrivals % Annual Change AFRICA Arrivals % Annual Change AMERICAS Arrivals % Annual Change ASIA & THE PACIFIC Arrivals % Annual Change EUROPE Arrivals % Annual Change MIDDLE EAST Arrivals % Annual Change INDIA Arrivals % Annual Change Share of India * Provisional

2000

2001

2002

2003

2004

2005*

685.5 6.9

683.8 -0.3

702.8 2.8

690.9 -1.7

766 10.9

808 5.6

28.6 4.9

29.2 2.3

29.9 2.2

30.8 3.1

33.4 8.4

36.8 10.0

128.2 5.1

122.2 -4.7

116.6 -4.5

113.0 -3.1

125.9 11.4

133.6 6.1

114.9 12.3

120.5 4.9

131.1 8.8

119.3 -9.0

145.4 21.9

156.7 7.8

389.6 5.8

387.8 -0.5

397.3 2.4

399.0 0.4

424.5 6.4

441.6 4.0

24.3 13.0

24.0 -1.0

27.9 16.1

28.8 3.4

36.3 26.0

39.7 9.5

2.6 6.7 0.39

2.5 -4.2 0.37

2.4 -6.0 0.34

2.7 14.3 0.39

3.5 26.8 0.45

3.9 13.2 0.49


59

India’s international arrival figures have not been able to keep pace with neighbouring countries and have been exceeded by Thailand, Malaysia, Indonesia, Dubai and the Maldives. Since 1995, India’s share of the world market has remained virtually stagnant at 0.38 per cent, while domestic tourism has grown at a phenomenal rate and India now accounts for 4.6 per cent share of domestic tourism worldwide. Table 4. International tourism receipts by regions (in billion us $) Region WORLD Receipts % Annual Change AFRICA Receipts % Annual Change AMERICAS Receipts % Annual Change ASIA & THE PACIFIC Receipts % Annual Change EUROPE Receipts % Annual Change MIDDLE EAST Receipts % Annual Change INDIA Receipts % Annual Change Share of India

2000

2001

2002

2003

2004

2005*

476.4 3.7

464.4 -2.5

482.3 3.9

524.2 8.7

633 20.8

682 7.7

10.6 2.8

11.6 9.4

12.1 4.3

14.3 18.2

19.1 33.6

21.3 11.5

131.0 9.3

120.0 -8.4

113.8 -5.2

114.4 0.5

132.1 15.5

145.3 10.0

89.0 7.5

91.8 3.1

100.4 9.4

96.6 -3.8

127.7 32.2

138.9 8.8

232.5 -0.7

228.3 -1.8

243.2 6.5

285.1 17.2

328.2 15.1

347.4 5.9

13.2 10.0

12.7 -3.8

12.9 1.6

13.9 7.8

25.5 83.5

28.6 12.2

3.2 5.3 0.66

3 -4.0 0.66

2.9 - 3.9 0.62

3.5 19.7 0.69

4.8 37.1 0.76

5.7 20.2 0.84

* Provisional

In terms of tourism receipts, India has shown relative buoyancy because of the interest shown by visitors in

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traditional handicraft items and particularly in diamonds. The Tenth Plan visualises a mutually supportive role for tourism and handicrafts by encouraging haats and shilpgrams and recognising shopping as an integral part of the tourism experience to promote the ‘Made in India’ brand. Table 5. Foreign tourist arrivals to india (in million) Year

Arrivals (in Million) previous year

% Change over the

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*

1.68 1.87 1.76 1.89 2.12 2.29 2.37 2.36 2.48 2.65 2.54 2.38 2.73 3.46 3.92

--11.3 -5.5 6.9 12.6 7.8 3.8 -0.7 5.2 6.7 -4.2 -6.0 14.3 26.8 13.2

* Provisional Table 6. Foreign tourist arrivals in india during 2006 (january-july) and corresponding figures for 2004 & 2005 Foreign Tourist Arrivals (Nos.) Month

Percentage Change

2004

2005

2006*

2005/04

2006/05

January 337345 February 331697 March 293185 April 223884 May 185502 June 223122 July 272456 Total 1867191

386260 389081 367068 260825 229172 258822 292345 2183573

444753 428325 407446 325249 262860 286257 331227 2486117

14.5 17.3 25.2 16.5 23.5 16.0 7.3 16.9

15.1 10.1 11.0 24.7 14.7 10.6 13.3 13.9

* Provisional


61

India receives the largest number of overseas tourists from the United Kingdom, which is its largest source market, followed by the United States, Sri Lanka, France, Germany, Canada, Japan, Australia and Singapore. Table 7. Share of top ten markets for india in Tourist arrivals during 2005 (in million) Country UK USA Canada France Sri Lanka Germany Japan Malaysia Australia Singapore Others Total

Arrivals 0.647 0.618 0.156 0.151 0.137 0.129 0.102 0.098 0.096 0.071 1.715 3.920

% Share 16.5 15.8 3.9 3.8 3.5 3.3 2.6 2.5 2.4 1.8 43.9 100.0

Table 8. Share of top ten countries, as also india, in international tourist arrivals during 2005 (in mill ion) Country

Arrivals

% Share

France Spain USA China Italy UK Mexico Germany Turkey Austria India Other World

76.00 55.58 49.40 46.81 36.51 29.97 21.92 21.50 20.27 19.95 3.92 426.17 808.00

9.41 6.88 6.11 5.79 4.52 3.71 2.71 2.66 2.51 2.47 0.49 52.74 100.00

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Of the tourists coming to India, 27.5 per cent are in the age group of 35-44 years, 23.4 per cent in the age group of 25-35 years and 20.8 per cent in the age group of 45-54 years. Women constitute only 30.5 per cent of India’s total international arrivals. Repeat visitors account for 44.9 per cent of the overseas visitors. Table 9. India’s foreign exchange earnings through tourism (in rs. Crores) Years

Earnings

% Change

1991

4318

—

1992

5951

37.8

1993

6611

11.1

1994

7129

7.8

1995

8430

18.2

1996

10046

19.2

1997

10511

4.6

1998

12150

15.6

1999

12951

6.6

2000

14238

9.9

2001

14344

0.7

2002

14195

-1.0

2003

16429

15.7

2004*

21603

31.5

2005*

25172

16.5

* Provisional

A substantial number of these may be non-resident Indians, as hotel reservations do not correspond to the number of international arrivals in the country. The average length of stay of foreign tourists in the country in 1998 was 31.2 days. Domestic tourism, on the other hand, is largely pilgrimage-oriented and requires improvement in travel facilities and pilgrim destinations.


63

Table 10. India’s foreign exchange earnings through Tourism (in million $) Years

Earnings (In Million US $)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005*

% Change

1861 2126 2124 2272 2583 2832 2889 2948 3009 3168 3042 2923 3533 4769 5731

-14.2 -0.1 7.0 13.7 9.6 2.0 2.0 2.1 5.3 -4.0 -3.9 20.9 35.0 20.2

* Provisional

An important highlight of the India tourism during 2005 was an increase of 20.2% witnessed in the foreign exchange earnings in dollar terms. The estimated foreign exchange earnings during the year touched the level of US $5731 million during 2005 against US $ 4769 million during 2004 - - a growth of about US $960 million in one year. Table 11. Foreign exchanage earnings during 2006 (january-july) and corresponding figures for 2004 & 2005(in rs. Crores) Month

Foreign exchange earnings (in rs. Crores) 2004

2005*

2006*

% change 2005/04

2006/05

January

2084.59

2326.20

2722.07

11.6

17.0

February

2049.70

2343.18

2635.98

14.3

12.5

March

1811.71

2210.62

2434.32

22.0

10.1

April

1368.42

1649.96

2127.44

20.6

28.9

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Atithi Devo Bhavah

May

1133.82

1452.72

1673.91

28.1

15.2

June

1363.76

1637.29

1847.26

20.1

12.8

July

1776.60

2048.78

2308.98

15.3

12.7

11588.60 13668.75

15749.96

17.9

15.2

Total

* Provisional Table 12. Foreign exchanage earnings during 2006 (january-july) and corresponding figures for 2004 & 2005 (in million us $) Months

Earnings (In Million US $) 2004

January February March April May June July Total

460.67 452.96 400.37 304.77 252.51 303.72 384.87 2559.87

2005* 532.19 536.07 505.74 378.38 333.15 375.47 470.08 3131.08

2006* 632.43 594.64 547.17 473.44 368.56 401.23 497.27 3514.74

% Change 2005/04

2006/05

15.5 18.3 26.3 24.2 31.9 23.6 22.1 22.3

18.8 10.9 8.2 25.1 10.6 6.9 5.8 12.3

Another important feature of India tourism during 2005 was the per tourist earnings in India. It was observed that on an average, per tourist foreign exchange earnings in India was about US $1462 against the estimated world average of US $844. Even when the average earnings per tourists are compared with those of the top world tourist generating countries or with countries in India’s neighborhood, it was highest in India with an exception of USA. Table 13. Share of top ten countries, as also india, in international tourism receipts during 2005*(in billion us $) Sl.No.

Country

1 2 3 4 5

USA Spain France Italy China

Tourism Receipts*

% Share

81.68 47.89 42.28 35.40 29.30

12.0 7.0 6.2 5.2 4.3

Role of India in International Tourism 6 7 8 9 10

UK Germany Turkey Austria Greece India Others World

65

30.37 29.20 18.15 15.47 13.73 5.73 332.80 682.00

4.5 4.3 2.7 2.3 2.0 0.8 48.8 100.0

* Provisional Table 14. Domestic tourist visits (in million) Years

Number of Domestic Tourist Visits

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*

66.7 81.5 105.8 127.1 136.6 140.1 159.9 168.2 190.7 220.1 236.5 269.6 309.0 366.2 382.1

%Change --22.2 29.8 20.1 7.5 2.6 14.1 5.2 13.4 15.4 7.5 14.0 14.6 18.5 4.3

* Provisional Table 15. Share of top ten states/uts in domestic tourist visits during 2005 States/UTs Andhra Pradesh Uttar Pradesh Tamil Nadu Karnataka Rajasthan Uttaranchal Maharashtra West Bengal

% Share* 24.5 24.3 11.3 6.5 4.9 3.7 3.7 3.6

66

Atithi Devo Bhavah Bihar Gujarat Other Total

2.3 2.2 13.0 100

* Provisional Table 16. Indian nationals going abroad (in million) Years 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*

Departure 1.94 2.16 2.73 2.73 3.06 3.46 3.73 3.81 4.11 4.42 4.56 4.94 5.35 6.21 7.18

%Change -11.3 26.4 0.0 12.1 13.1 7.8 2.1 7.9 7.5 3.2 8.3 8.3 16.1 15.6

Table 17. Economic Benefits of Tourism Indicators Contribution of Tourism to GDP

Employment in Tourism Sector

Year 2002 2003 2004 2005 2002 2003 2004 2005

-

03 04 05 06 03 04 05 06

India

World

5.83% 5.90% NA NA 38.6 million 41.8 million NA NA

NA NA 10.4% (2004) 10.6% (2005) NA NA 214.697 million 221.568 million

The high spent in India can be mainly attributed to more number of days spent by a foreign tourist in India compared to other countries besides the visit of high end tourist to India. According to the foreign tourist survey


67

conducted by India, a foreign tourist from the top 15 international markets for India spend from 7 to 18 days in India, the overall average being 16 days.

IMPACT

OF

TOURISM POLICY

Tourism Policy, as a statement of intent by the Government, would form the reference point for action and criticism. Any initiative by Government in Tourism by way of legislation or direct investment is envisaged within the framework of Tourism Policy. The debates in Parliament had taken recourse to the received policy of the Union Government while making references to particular cases. The backdrop of a policy always serves as a guideline for further executive and legislative initiatives. It would be cynical to regard these policy statements as mere exercises in eloquence and additions to the already existing volumes of wishful thinking. Furthermore, Policy statements by Government should be viewed in their evolutionary stance. It would be a negation of the democratic content of our political system to view a Policy statement as a static and rigid formulation, at a point in time, applicable for years to come. Thus, since 1982, various initiatives undertaken by the Government need to be perceived as additions or modifications to the received Policy. While it may be argued that these changes in the policy are only marginal and superficial from the viewpoint of equity and social justice, it would be an oversimplification to view the latest policy statement as nothing but the “nth” version of the Policy formulated in 1982. Recognising the all-pervading inertia that looms large in matters governmental, one is often tempted to deny the scope for lobbying which makes possible the desired modifications in the policy corpus. In short,

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policy, as a body incorporating proactive intentions, is amenable to periodic reviews and possible modifications. The issues stressed in the preceding paragraphs provide the framework within which Tourism Policy needs to be considered. In brief, there is more to policy in tourism than is found in the Tourism Policy. Perhaps, the links within a macro-economic framework need no special mention. The first ever Tourism Policy was announced by the Government of India in November 1982. It took ten long years for the Government to feel the need to come up with a possible improvement over this. Thus the National Action Plan for Tourism was announced in May 1992. Between these two policy statements, various legislative and executive measures were brought about. In particular, the report of the National Committee on Tourism, submitted in 1988 needs special mention. In addition, two five-year plans - the Seventh and the Eighth - provided the basic perspective framework for operational initiatives. The Seventh Plan advocated a two-pronged thrust in the area of development of tourism, viz., to vigorously promote domestic tourism and to diversify overseas tourism in India. While laying stress on creation of beach resorts, conducting of conventions, conferences, winter sports and trekking, the overall intention was to diversify options available for foreign tourists. The Tourism Policy, 1982 was more an aggressive statement in marketing than a perspective plan for development. Its main thrust was aimed at presenting India to the foreigners as the ultimate holiday resort. With a view to reach this destination, the following measures were suggested by the Policy:


69

1.

To take full advantage of the national heritage in arriving at a popular campaign for attracting tourists;

2.

To promote tourist resorts and make India a destination of holiday resorts;

3.

To grant the status of an export industry to tourism;

4.

To adopt a selective approach to develop few tourist circuits; and,

5.

To invite private sector participation into the sector.

The Planning Commission recognised tourism as an industry by June 1982. However, it took ten years to make most of the States to fall in line and accord the same status within their legislative framework. At the beginning of the Eighth Plan (1992-97), 15 States and 3 Union Territories had declared tourism as an industry. Four States had declared hotels as an industry. The National Committee on Tourism was set up in July 1986 by the Planning Commission to prepare a perspective plan for the sector. Within the broad framework of the Seventh Plan, the Committee had to evolve a perspective plan for the coming years. The Committee, headed by Mr. Mohammed Yunus, submitted its recommendations in November 1987. The list of Members was as impressive Mr. S.K. Mishra (Secretary, Department of Tourism), Mrs. Kapila Vatsayan, Mr. K.L. Thapar, Mr. Rajan Jaitley, Mr. A.B. Kerker, Mr. R.K. Puri and Mr Pran Seth. The Committee in its Report recommended that the existing Department of Tourism be replaced by a National Tourism Board. It suggested that there be a separate cadre of Indian Tourism Service to look after the functioning of the Board. It also submitted proposals for partial privatisation of the two airlines owned by the Union Government.

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By September, 1987, the Central Government declared more concessions for the sector: these included tax exemption on foreign exchange earnings from tourism (a 50% reduction on rupee earnings and a 100% reduction on earnings in dollars), a drastic reduction in tariff on import of capital goods, and concessional finance at the rate of 1 to 5% per annum. The Tourism Development Finance Corporation was set up in 1987 with a corpus fund of Rs. 100 crores. Until then, the sector was financed on commercial lines by the Industrial Development Bank of India, Industrial Credit and Investment Corporation of India and other commercial banks. The National Action Plan for Tourism, published in May 1992, and tabled in the Lok Sabha on 5 May 1992, charts 7 objectives as central concerns of the Ministry: — socio-economic development of areas; — increasing employment opportunities; — developing domestic tourism for the budget category; — preserving national heritage and environment; — development of international tourism; — diversification of the tourism product., — and, increase in India’s share in world tourism (from the present 0.4% to 1% during next 5 years) As per the Action Plan, foreign exchange earnings are estimated to increase from Rs.10,000 crores in 1992 to Rs.24,000 crores by 2000 AD. Simultaneously, the Plan aims at increasing employment in tourism to 28 million from the present 14 million. Hotel accommodation is to be increased from 44,400 rooms to 1,20,000 by 3 years. Other provisions in the Action Plan include a discontinuance of subsidies to star hotels, encouraging


71

foreign investment in tourism and the setting up of a convention city for developing convention tourism. The Action Plan envisages the development of Special Tourism Areas on lines of export processing zones. Special Central assistance is to be provided for the States to improve the infrastructural facilities at pilgrimage places. It proposes to set up a National Culinary Institute, and projects a liberalised framework for recognition of travel agents and tour operators. The Eighth Plan document makes a special mention that the future expansion of tourism should be achieved mainly by private sector participation. The thrust areas as enumerated in the Plan include development of selected tourist places, diversification from cultural related tourism to holiday and leisure tourism, development of trekking, winter sports, wildlife and beach resort tourism, exploring new source markets, restoration of national heritage projects, launching of national image building, providing inexpensive accommodation in different tourist centres, improving service efficiency in public sector corporations and streamlining of facilitation procedures at airports. The Eighth Plan aims at luring the high spending tourists from Europe and USA. It also envisages a ‘master plan’ to integrate area plans with development of tourism. This is envisaged to ensure employment opportunities for the local population. In April 1993, the Government announced further measures aimed at export promotion. The existing Export Promotion of Capital Goods Scheme (EPCG) was extended to tourism and related services. Against the existing 35%, the tourism sector would now pay an excise duty of 15% only on capital goods import, subject to an export obligation of 4 times the cargo, insurance and

72

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freight (CIF) value of imports. With an obligation period of five years, this came as a boon to the hotel industry. The cost of construction had also come down by 20%. In addition to the above policy pronouncements by the Union Government, our planners had envisaged the possibilities of developing specific regions on a zonal plank. Special area programmes like the Hill Area Development Programme and the Western Ghats Development Programme form part of the overall national plan. The Eighth Plan document stipulates that the strategy in such designated special areas is to devise suitable location-specific solutions, so as to reverse the process of degradation of natural resources and ensure sustainable development. This approach perhaps needs to be integrated into the project of special tourism areas, now being made popular by the Government. Administrative Control and Developmental Compromises The federal principles enshrined in the Indian Constitution require that the tourism sector be treated as a State subject. As such, the Department of Tourism (under the Ministry of Civil Aviation and Tourism at the Centre) undertakes certain promotional and developmental activities with a view to enhance the sectoral potential. The Department has certain regulatory functions to perform involving the hotel industry, travel agencies and tourist operators. Over the years, there has been considerable erosion of powers so far as State Governments are concerned. The sustained campaign for privatisation in all the policy documents has left limited space of operation for the States. The public sector is increasingly being perceived as an agent of inertia than of change and hence the pressure for a hands-off policy. On the other hand, the Union


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Government has been usurping the powers of the State with some pretext or the other. Promotion schemes, designed at the Centre, are transferred for implementation at the State level. The special Central Assistance, for example, granted for the development of infrastructure at the pilgrim centres, carries with it a pre-defined scheme and mode of execution. Furthermore, there are occasions when the Centre forces the State Governments to extend certain subsidies and concessions to the sector. The terms of such concessions would have been fixed by the Centre and the States would have no choice but to fall in line. For example, during the State tourism minister’s conference in December 1991, the States were urged to freeze water and electricity rates for 10 years. They were also asked to exempt certain hotels from local and state taxes for 10 years. Seventeen circuits and destinations were identified under the National Action Plan for development through Central assistance and investment by the States and the private sector. The centres were identified by the Centre and the States were asked to do the needful. There were also times when the federal division of power resulted in operational contradictions. For instance, by 1989, many foreign hotel chains like Hilton, Hyatt, Penta and Kempinski had applied for licenses for investing in India. However, the revenue departments of the respective States failed to locate and allocate land for the construction of hotels. The scheme, thus, fell flat. Curiously, the Union Government was not hesitant to make use of Constitutional provisions when it suited its interests. The Yunus Committee had suggested the creation of the Tourism Board on lines of the existing Railway Board. (Perhaps, it was the brainchild of Mr. K.L. Thapar, then

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adviser to the Planning Commission, in charge of Transport and Tourism Sector. Being from the Railway Service, it is not surprising that Thapar thought about a ‘Tourism Board’). To begin with, the empowered committee of secretaries challenged the idea of creation of a Board. It was said that the Railway Board as an independent entity was created for historical reasons. It would be difficult for tourism to be looked after by a Board, because legally the sector would come under the Industrial (Development) Act. It was also found that such a Board would not be viable financially. In 1991, the think-tank on tourism created by Minister Madhavarao Scindia rejected the idea of a Board in toto. It was emphasised that the Board cannot be in charge of a sector that is basically under the jurisdiction of the States. There is a vast potential for development of tourism in the country. Tourism should be accorded the status of an industry. Private sector investment will have to be encouraged in developing tourism and public sector investments should be focused only on development of support infrastructure”. Thus the seeds of private initiatives were sown during the Seventh Plan. The Government took the matter of privatising the tourism sector seriously by 1988. It was during the tenure of Mr. S.K. Mishra as Tourism Secretary that the talk of inviting private investment into the sector began. The Government permitted foreign equity participation up to 5 1 %in tourism projects. Foreign charters were allowed to operate in the country for the first time. Foreign companies were allowed to repatriate their profits to the extent of 3%. The structural adjustment programme, initiated in June, 1992, paved the way for privatisation in almost all sectors of the economy.


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The Annual Plan (1992-93) document emphatically enunciated the Government’s position vis-a-vis tourism: “(T)he future growth of tourism will have to be achieved mainly through private initiative. The State will contribute to tourism by planning broad strategy of development, provision of monetary and fiscal incentives to catalyse private sector investment.” The process of privatisation brought in its wake big investments and private involvement at various levels. As an offshoot, environmental considerations were thrown to the winds and there were instances of large scale human rights violation. The self- correcting nature of policy made provisions for stricter controls in this regard. More seriously, privatisation meant alienation of the majority of our population and their deprivation. Employment generated in tourism is generally seasonal and ill paid. The private sector- induced pockets of tourism had the potential of turning into centres of pollution, drug trafficking and prostitution. The Seventh Plan proposed that tourism be declared an industry. However, it took time for the States to implement this, even though they agreed in principle. The smokeless industry had the advantage of generating maximum value-added, because of low-cost inputs. The Tourism Policy Statement carried certain provisions in favour of the hotel industry. It stated that there should be provision for depreciation in the balance sheets of hotels. Being an export industry, hotels were to be given excise concessions. The provisions of the Monopolies and Restrictive Trade Practices (MRTP) Act were relaxed for hotels, because any hotel with 300 or more rooms would have incurred an investment of Rs. 25 crores. The document also hinted at lower tariffs for power and water and regulations for easy import of equipment. As a

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follow-up, hotel and shipping were added to the list of 27 industries exempted from Section 22 A of the MRTP Act. The arena of policy formulation should be selfevaluating and self-correcting. In the case of Tourism Policy, this has proved to be the plus point. As an illustration, the Policy statement of 1982 made no mention of infrastructure development. The successive governments at the Centre failed to create proper tourism infrastructure, thus resulting in loss of traffic. This lacuna was corrected in the National Action Plan. However, much of this change was due to intensive lobbying by such agencies like the Indian Association of Tour Operators (IATO), the Travel agents Association of India (TAAI) and the Indian Hotels and Restaurants Association (IHRA). It is for the voluntary agencies and pro-people forces to exploit the avenue of lobbying at various levels. The environmental implications of tourism development did not form part of the 1982 Policy. Our successive policy pronouncements in the realm of tourism falls within the “liberalising” framework of the macro- economic policy environment. The Finance Bill, 1988, had assured 50% tax exemption on foreign exchange earnings in the sector, and a further 50% exemption if reinvested. In effect, it amounts to 100% tax concession. Luxury hotels enjoy exemptions of all kinds with a view to encourage tourism earnings. These tax exemptions coupled with provision of soft loans to the sector led to a boom in the tourism related private investment. In line with the new directions and priorities envisaged for India tourism, the Government of India has formulated a new Tourism POlicy to guide development of the tourism sector. The key elements of the National Tourism Policy, 2002 are:


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— Position tourism as a major engine of economic growth — Harness the direct and multiplier effects of tourism for employment generation, economic development and providing inpetus to rural tourism. — Focus on both international and domestic tourism — Position India as a global brand to take advantage of the burgeoning global travel and trade and the vast untapped potential of India as a destination. — Acknowledges the critical role of the private sector with overnment acting as a proactive facilitator and catalyst. — Create and develop integrated tourism circuits based on India’s unique heritage in partnership with States, private sector and other agencies. — Ensure that the tourist to India gets physically invigorated, mentally rejuvinated, culturally enriched and spiritually elevated. The New Tourism Policy has outlined the following policy initiatives for the tourism sector: — The new policy is built around the 7-S Mantra of Swaagat (welcome), Soochanaa (information), Suvidhaa (facilitation), Surakshaa (security), Sahyog (cooperation), Sanrachnaa (infrastructure) and Safaai (cleanliness). — The new policy envisages making tourism a catalyst in employment generation, wealth creation, development of remote and rural areas, environment preservation and social integration. The policy also aims to spruce up economic growth and promote India’s strengths as a tourism destination that is both safe and at the same time exciting.

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— The policy proposes the inclusion of tourism in the concurrent list of the Constitution so as to enable both the central and state governments to participate in the development of the sector. — No approval is required for foreign equity of up to 51 per cent in tourism projects. Enhanced equity is considered on a case-to-case basis. NRI investment is allowed up to 100%. — Approvals for Technology agreements in the hotel industry are available on an automatic basis, subject to the fulfilment of certain specified parameters. — Concession rates on customs duty of 25% for goods that are required for initial setting up, or for substantial expansion of hotels. — 50% of profits derived by hotels, travel agents and tour operators in foreign exchange are exempt from income tax. The remaining profits are also exempt if reinvested in a tourism related project. — Approved hotels are entitled to import essential goods relating to the hotel and tourism industry up to the value of 25% of the foreign exchange earned by them in the preceding licensing year. This limit for approved travel agents/tour operators is 10%. — Hotels located in locations other than the four major metro cities are entitled to 30% deduction from profit, for a ten-year period. — The expenditure tax has been waived in respect of hotels located in the hills, rural areas, places of pilgrimage or specified place of tourist importance.

TENTH PLAN APPROACH TOWARDS TOURISM The travel and tourism sector creates more jobs per million rupees of investment than any other sector of the


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economy and is capable of providing employment to a wide spectrum of job seekers from the unskilled to the specialised, even in the remote parts of the country. The Tenth Plan approach towards tourism signifies a distinct shift from the approach adopted in earlier Plans. Apart from acknowledging the wellaccepted advantages of developing tourism for the promotion of national integration, international understanding and earning foreign exchange, the Tenth Plan recognises the vast employment generating potential of tourism and the role it can play in furthering the socio-economic objectives of the Plan. In order to create a supportive environment for the promotion of tourism, the New Tourism Policy, 2002, that is to be implemented during the Tenth Plan, will generate awareness about the benefits of tourism for the host population. It will mobilise state governments to use tourism as a means for achieving their socio-economic objectives, encourage the private sector to enhance investment in tourism and provide legislative and regulatory support for sustainable tourism and to protect the interests of the industry and the consumer. The policy envisages involving the rural sector in the promotion of rural, heritage, adventure and eco-tourism and will promote the development of competitive high quality products and destinations. Most importantly, it will remove the barriers to growth and resolve contradictions in policy to achieve inter-sectoral convergence of activities that help the growth of tourism. The initiatives taken by the state so far have not yielded the desired result and India’s tourism performance has failed to match its potential even as countries not blessed with its natural and cultural endowments have taken the lead in reaping the benefits of tourism development for their people. The reasons for

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this poor performance need to be speedily addressed to enable tourism to make an appropriate contribution to national development. As observed in the Planning Commission Report of the National Committee on Tourism, the public sector made a significant contribution to the growth of tourism in the initial stages of planned development by providing a reasonable infrastructure base. During the Ninth Plan it was recognised that a reappraisal of the role of the State in tourism development and the extent of its participation was needed as it is neither necessary nor feasible for the State to make large investments in areas that are best left to the initiative of the private sector. The state can contribute through infrastructure development, the planning of broad development strategies, the provision of fiscal and monetary incentives to catalyse private sector investment and devise an effective regulatory and supervisory mechanism to protect the interests of the industry and the consumer. The acceptance of this view also led to the commencement of the process of disinvestment in 18 hotels of the India Tourism Development Corporation (ITDC) hotels. The ITDC will have to redefine its role in the Tenth Plan. The State can also play an effective role in ensuring that tourism development does not harm the environment. The interaction between tourism and environmental pollution requires sensitive handling. There is comp-lementarity, not conflict, between the high quality environmental requirements of tourism and the imperatives of maintaining the ecological balance. Objectives of Tenth Plan

Tourism in India has tended to be regarded as an elitist


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activity conducted primarily for the purpose of earning foreign exchange. Its vast potential as an engine of growth and employment generater has remained largely untapped. Although, with 25 million jobs, India ranks second in terms of number of persons employed in travel and tourism, yet the contribution of the sector as a percentage share of all employment is amongst the lowest in the world. The Tenth Plan objective is to integrate tourism with the socio-economic objectives of the Plan by creating 3.6 million jobs a year through the promotion of domestic and international tourism and to enhance India’s share of international arrivals from 0.38 per cent to at least 0.62 per cent by 2007. Role of the Department of Tourism

Being the nodal agency for the development of tourism in the country, the department of tourism needs to make greater efforts to co-ordinate and integrate the policies of central ministries that have an impact on the development of tourism and to mobilise state governments and the private sector to develop unique and competitive tourism products and destinations. Crucial decisions affecting tourism are taken by other ministries viz. the Ministries of Finance, Home, Civil Aviation, Surface Transport, Environment and Forests, Urban Development, Rural Development, Ocean Develop-ment etc. The Department of Tourism has tended to concentrate largely on its role as the promoter of international tourism and generator of foreign exchange earnings while paying relatively less attention to inter-sectoral policy co-ordination and the allimportant development of tourism infrastructure and product quality. In the Tenth Plan, the Department will redefine and expand its role and work towards

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intersectoral convergence and policy integration to remove the barriers to the growth of tourism. Barriers to Growth

There are several factors that are responsible for the inadequate growth of the tourism sector in India. These are: barriers related to approach, barriers that discourage private investment, factors that affect competitiveness and factors that affect the long-term sustainability of tourism. The effective and early removal of these barriers during the Tenth Plan is an essential determinant for the success of the New Tourism Policy. The need for a national consensus on the role and level of tourism deve-lopment in the country has been voiced repeatedly but a concerted effort to achieve a consensus has not been made. Tourism should not be limited by state or regional boundaries if distortions in policies are to be avoided. It is important that a consensus among all states is evolved through the National Development Council (NDC) and the barriers to the growth of tourism removed. Tourism has been denied the priority it deserves over successive Plan periods because its potential as an engine of economic growth has not been appreciated. This is visible in the low allocation of resources. Allocation to tourism has averaged 0.16 per cent of the total Plan outlay from the Third Plan to the Ninth Plan. In the Tenth Plan, it is likely to receive an allocation of 0.72 per cent. According to the WTTC, India is one of the lowest spenders on tourism - 153rd out of 160 countries - while its neighbouring competitors and China invest far more: Malaysia (5.1 per cent), Nepal (5 per cent), Indonesia (8.4 per cent), Maldives (15.7 per cent), China (3.8 per cent).


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The growing domestic and international demand, which is set to boom, reinforces the need for higher investment. Failure to measure up additional investment demand for domestic tourism is likely to lead to the over-exploitation of existing facilities, discouraging foreign visitors while leading to an increase in the outflow of high-spending domestic tourists from the country. Most State Governments give scant importance to tourism even though they virtually control the tourism product located within their boundaries. They are responsible, inter alia, for local infrastructure, transport systems, sanitation and hygiene, leisure and recreation, law and order, the upkeep of local monuments and the general well-being of the tourist. Their support and participation is essential for tourism to succeed and spread its benefits among the host population. Their lack of interest has resulted in an unprofessional ad hoc approach that acts as a deterrent to the growth of tourism. The approach of the state governments needs to be focused, highly professional and result-oriented if India is to avail of the opportunity that the currently favourable market trends have to offer. Apart from the State Governments, the private sector plays a vital role in the growth and development of tourism. Although the Central Government and certain state governments have, from time to time, announced incentives to involve the private sector in tourism development, the results achieved have fallen short of expectations. To provide a conducive environment for private sector investment, it is important to realise that the travel and tourism sector is adversely affected by the lack of synergy in inter-sectoral policies. The growth of the sector requires well-integrated and co-ordinated policies and stability in approach. Contradictions and arbitrary changes in policy send confused signals to the

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investor. Unless infirmities in policy are expeditiously removed well before the end of the Tenth Plan period, the New Tourism Policy is unlikely to succeed. Being a long haul destination, India is more conveniently accessible by air and cannot be easily reached by rail or road. A restrictive air transport policy has a very deleterious effect on tourist traffic. There are insufficient connections to most tourism destinations. The situation could be eased if the large number of regional airports could open up as international airports. The existing international and national airports also require improvement. The price of aviation turbine fuel needs to be lowered to make air transport competitive and affordable. Today, it is cheaper to travel by air to neighbouring countries from India than to travel to certain parts of India itself. A more liberal aviation bilaterals regime and a new aviation policy to benefit the economy of the country as a whole rather than the national carriers alone would greatly aid the development of tourism. Central and state governments need to evolve a taxation regime, which is revenue generating without being burdensome. Accommodation and transport taxes tend to be very heavy in certain states while the excise policy in others is extremely harsh. The land policy in some states makes the setting up of a hotel a formidable exercise and as many as 48 clearances are required for the construction and running of a hotel. Such policies deter private sector investment. The importance of protecting private investment in tourism must also be appreciated and activities such as mining, unauthorised construction, encroachments and haphazard development around tourist resorts must be prevented through appropriate legislation and public support.


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As tourism is a highly competitive industry; the traveller has a wide range of choices and looks for good value for money. The lack of quality infrastructure, uncompetitive rates, indifferent or poor product quality, difficulty in getting access to information on travel and tourist destinations, untrained service providers, and above all, the lack of hygiene, have an enormously negative effect on the competitiveness of the tourism product. A world class destination requires professional planning to prevent haphazard, uncontrolled growth, spatial and land use planning, strict architectural controls, sewerage infrastructure and water treatment plants. It requires improvement of entry points and appropriate facilitation services. The lack of a visaon-arrival regime on account of security considerations places India at a disadvantage vis-à-vis its competitors. It is necessary that India strikes a balance between security considerations and the need for tourism development and reviews its visa policy to permit tourists from its major source markets to obtain visas on arrival. Equally important is the behaviour of the host population. Training programmes are required not only for hotel managers but also for tourist guides, taxidrivers, staff at eating places, porters etc., as the manner in which they conduct themselves affects the tourist’s experience of the country. Important do’s and dont’s in terms of a code of ethics need to be inculcated among the service providers. During the Tenth Plan, the Department of Tourism will organise capacitybuilding programmes for service providers through mobile training units. A major impediment to the growth of tourism in India has been the lack of awareness about the benefits that it can bestow upon the host population. Unless the

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host population, both in the rural and urban areas, is supportive of tourism, it cannot become a vibrant economic force. The rural sector, in particular, has been largely ignored in tourism development and has consequently been deprived of the benefits of employment and income generation accruing from tourism. The Tenth Plan will seek to rectify this, particularly in view of the world-wide interest in rural tourism. While an awareness campaign that elicits local support for travel and tourism is essential for the long-term growth of the sector, it is also important to create awareness about the environmental impact of tourism by generating respect for the carrying capacities of tourist destinations. This is imperative as excessive exposure of ecologically fragile areas to human interference can lead to irreparable environmental degradation. As the demand for ecotourism is expected to grow enormously in the next decade, it is important to have regulations in place to prevent such damage. The local population must be convinced of the need to support such regulations in the interest of long-term sustainability. India’s hill resorts have already suffered seriously from a lack of concern for their carrying capacities and the unchecked influx of tourists during the summer months. If India’s forest sanctuaries and pristine beaches are not to suffer the same fate, attention will have to be paid during the Tenth Plan to obtaining regulatory and public support for sustainability concerns. The Tenth Plan Strategy

The Tenth Plan strategy is to work towards a national consensus on the role of tourism in national development and to focus on the removal of barriers that hamper its


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growth. To make public sector investment more effective, it is necessary to work towards the inter-sectoral convergence of policies and programmes that could benefit tourism. The New Tourism Policy envisages a framework, which is Government-led, private sector driven and oriented towards community welfare, with the Government creating the legislative framework and basic infrastructure for tourism development, the private sector providing the quality product and the community providing active support. The overall vision of the development of tourism embodied in the new policy will be achieved through five key strategic objectives. These are: (i) Positioning tourism as a national priority. (ii) Enhancing India’s competitiveness as a tourist destination. (iii) Improving and expanding product development. (iv) Creation of world class infrastructure. (v) Effective marketing plans and programmes. Positioning Tourism as a National Priority

A concerted effort will be made, through the NDC, to arrive at a consensus on the role of tourism in the development agenda of the nation. Inclusion of tourism in the Concurrent List of the Constitution will provide constitutional recognition to the tourism sector and enable the central government to legislate for tourism development. A proposal to this effect has been circulated by the Department of Tourism to the state governments for comments and has also been discussed at a Chief Ministers’ conference and a majority of the states have agreed to the proposal. Other initiatives include the

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setting up of Tourism Advisory Council with key stakeholders functioning as a think tank and the constitution of a Group of Ministers on Tourism to improve policy integration and co-ordination. The adoption of a tourism satellite accounting system is underway to gauge more precisely the contribution of tourism to the national economy. A national awareness campaign in order to create a popular movement in favour of tourism is being planned through a professionally managed communication strategy. Most importantly, the efficiency of public investment in tourism supporting activities will be improved through effective inter-sectoral coordination and prioritisation. Enhancing India’s Competitiveness as a Tourist Destination

As air capacity available to India is woefully short during the peak travel months, ranging from October to March, especially for the main tourism originating regions such as North America, Western Europe and South Asia, it is necessary to open India’s skies to increase capacity and help enhance tourism. Additional seat capacity from the major tourism generating destinations would significantly benefit the national economy and provide a major impetus to tourism. Improvement in the standard of facilities and services at the international and national airports will need to be speeded up by employing professional manage-ment agencies and by privatising and leasing out airports. To enhance India’s competitiveness as a tourist destination, it is proposed to simplify the visa procedures and consider strategies for the speedy issue of visas including electronic visas and visas on arrival. An attempt will be made, through a consensus, to reduce the heavy and multiple taxes that reduce the competitiveness


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of the Indian tourism product. Special tourism police will be deployed at major tourist destinations during the Tenth Plan to provide security to travellers and promote India as a safe destination. Improving and Expanding Product Development

Product development strategy during the Tenth Plan will be related to the special interests of tourist target markets. — Cultural and heritage tourism will be expanded. India has a vast array of protected monuments with 22 world heritage sites, 16 of which are monuments. The integrated development of areas around these monuments provides an opportunity for the development of cultural tourism in India. — For the development of beach and coastal tourism, a number of sites on the west coast of India will be identified for the development as beach resorts by the private sector. The sites will be offered on long term lease at preferential terms. These sites will primarily be on the beaches of Goa, Kerala, and North Karnataka because of easier access by air. During the Tenth Plan Kochi in Kerala and the Andaman and Nicobar Islands will be developed as international cruise destinations because of their proximity to international cruise routes and their exotic appeal. — India’s unmatched variety of cuisine is becoming increasingly popular in the world and will be developed as a special attraction. It is proposed to create a highly skilled workforce of culinary professionals through an innovative incentive scheme not only for India but also to promote Indian cuisine internationally.

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— Village tourism will be promoted as the primary tourism product of India to spread tourism and its socio-economic benefits to rural areas. — India’s great wildlife variety has not been developed as a tourist attraction. Wildlife sanctuaries and national parks will become an integral part of the Indian tourism product. Priority will be given to the preparation of site and visitor management plans for key parks. The quality of tourist facilities available at the parks will be enhanced after a prioritisation of parks. Tentatively these will be: Corbett National Park, Kanha National Park, Bandhav Garh National Park, Kaziranga, Madhumali, Bharatpur, Periyar, Ranthambore, Little Rann of Kutch, Chilka, and the Sunderbans. — India has the greatest adventure tourism assets in the world in the Himalayas and its rivers. Mountain-based adventure activities will be developed and promoted. Regulations and certification for adventure tourism operators will be introduced so that the minimum standards of safety and conservation are met. — India receives only a minuscule proportion of the global meetings, conventions and exhibition market. It is important that India develops a world class international convention city not just for the sake of tourism development but also for international and domestic trade and commerce. India’s most unique tourism product during the Tenth Plan will be holistic healing and rejuvenation packages. In focussing on this, it will capture the essence of Indian culture for international and Indian visitors alike. — India’s fairs and festivals, some of which are already well established such as the Pushkar mela, the Desert Festival at Jaisalmer, the Kumbh Mela etc. will be


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promoted as unique products of India. The Festivals of India programme will be re-introduced in the top 12 future markets for India - initially with an annual event in the United Kingdom and the United States, to be followed by triennial events in the other markets. — Shopping will be recognised as an integral part of tourism. The development of dedicated shopping centres for traditional crafts designed along the lines of village haats such as Dilli Haat and Shilpgram will be encouraged and information on where to procure specific crafts made available through shopping guides. — Delhi will be positioned as the cultural capital of India supported by an ongoing and vibrant calendar of cultural events. The development of such a nichebased special interest productmix will position India as a unique and competitive destination. Creation of World Class Infrastructure

The need for physical infrastructure for tourism ranges from ports of entry to modes of transport to destinations (airways, roadways, railways or waterways), to urban infrastructure such as access roads, power, water supply, sewerage and telecommunication. This underscores the need for inter-sectoral convergence of infrastructural schemes and programmes that could support tourist destinations. The road network is vital for tourism as almost 70 per cent of passengers in India travel by road. Many tourist circuits are entirely dependent on roads. The current government plan for the road system in the country covering both inter-state highways and improvements to rural roads directly supports tourism development. There is urgent need to construct and

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improve highways linking the 22 world heritage sites and places of tourist significance. The Ministry of Road Transport and National Highways will collaborate with the Ministry of Tourism in this effort. The Indian railway system can also become an enormous asset to the development of the tourism and hospitality industry in the country. The railways hold a special fascination for foreign tourists who wish to travel the country. For the vast majority of domestic tourists also, the railways is the most affordable means of travel linking the length and breadth of the country. Introduction of special tourist trains with pre-set itineraries and private sector participation will be encouraged. The Indian Railways plan to establish 100 hotels at railway stations to serve specific tourist centres. The private sector will be given incentives to operate these hotels on long-term leases. These hotels will provide clean and inexpensive accommodation for budget tourists. The Indian Railways also owns a number of heritage structures, which, if effectively maintained and marketed, could serve, both as railway stations and places of tourist interest. India has five hill railways, which compare with the best hill railway systems in the world. The enormous tourist potential of these products will be tapped during the Tenth Plan. As steam-hauled trains like the Royal Orient, Buddha Parikrama, PalaceOn-Wheels and Fairy Queen are extremely popular with tourists, steam traction for special tourist segments will be continued. Trains like the Shatabdi and the Rajdhani with a special tourism and hospitality focus will be planned both for foreign and domestic tourists. India’s 7,000-km coastline and her mighty rivers will be tapped for the promotion of cruises. Care will be taken


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to develop world class tourism products. As the Ministry of Tourism’s financial assistance to the states has not been able to have the desired impact in terms of creating of world class tourism infrastructure, the emphasis must shift to the development of specific travel circuits as internationally competitive destinations and the convergence of resources and expertise for these circuits. The availability of trained manpower is essential to achieve excellence in the tourism sector. At present, there are 21 Institutes of Hotel Management and Catering Technology (IHM&TC) and 13 Food Craft Institutes in the country. In addition, a good number of accredited institutes also cater to the growing demand in the service sector. It is estimated that only 50 per cent of the requirement of the market is met by these institutes. Five new Institutes of hotel management would be set up in the Tenth Plan - three in the newly created states of Uttaranchal, Jharkhand and Chhattisgarh and two in the northeast. In addition, 15 more Food Craft Institutes will be set up in the Tenth Plan, and efforts will be made to take culinary crafts and training to the rural areas through mobile training units. A new scheme on capacity building to train service providers in the unorganised sector such as small hotels, dhabas, restaurants and other eating joints is also proposed. Strategy for Effective Marketing

As there is fierce competition for tourists from India’s source markets, India needs to change its traditional marketing approach to one that is more competitive and modern. It needs to develop a unique market position, image and brand, which cannot be held by any other competitor. India’s positioning statement will capture the essence of its tourism product to convey an ‘image’ of the

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product to a potential customer. This image will be related not only to its ancient Vedic civilisation with a cultural heritage that continues to thrive especially in its rural areas but also to its essentially secular nature. In the Tenth Plan, an extensive market research programme will be launched in the target source markets and tourism products developed to cater to the interests of each source market. An effective and ongoing market representation presence will be established with the travel trade in each source market and an Internet portal set up in various languages to provide information, a description of the product and the product requirements of the target market segments. The Internet has a great impact on the marketing of travel and tourism. It has already established itself as a channel through which tourism organisations can promote their destinations and products. Indian tourism will utilise both the Internet and other emerging interactive technologies to avail of the benefits to be gained. The Path Ahead

The tourism sector needs a national consensus on the role and place of tourism in national development and the early removal of impediments that have hitherto handicapped its growth. The Tenth Plan target of the creation of 18 million jobs through tourism requires a substantial investment of Rs. 38,800 crore at the rate of 47 jobs per one million rupees of investment, both from the public and the private sector. Public sector investment, though limited, can be made more efficient through the intersectoral convergence of policies and programmes supportive of tourism. An integrated inter-sectoral investment plan that provides effective infrastructural support to tourism


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through the Ministries of Railways, Surface Transport, Shipping, Civil Aviation, Urban Development, Rural Development and Environment and Forests etc. can be achieved through the preparation of a tourism component plan. Private sector investment can be enhanced by removing the barriers to growth and expediting critical policies that are being evolved. Public and legislative support will be essential for the sustainable development of the sector.

5 Opportunities and Challenges in Hospitality Industry

Economic liberalisation has given a new impetus to the hospitality industry. Today it costs an average of US0-80 million to set up a five-star hotels with 300 rentable rooms in India. The gestation period is usually between three and four years. Movements in real estate prices have to be watched, though they have stabilised in the past three years or so. Non-five-star hotels are obviously cheaper and have have smaller gestation periods, but international chains are expected to go into the five-star category. The Indian hospitality industry is growing at a rate of 15 percent annually. The current gap between supply and demand is expected to widen further as the economy opens and grows. A rapidly growing middle class, the advent of corporate incentive travel and the multinational companies into India has boosted prospects for tourism. India’s easy visa rules, public freedoms and its many attractions as an ancient civilisation makes tourism development easier than in many other countries. Many foreign companies have already tied up with prominent Indian companies for setting up new hotels,

Opportunities and Challenges in Hospitality Industry

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motels and holiday resorts. The entry of McDonald’s, Pepsico’s Kentucky Fried Chicken, Domino’s and Pizza Hut have given an international glitz to the hospitality sector. Several international chains including Sheraton, Holiday Inn, Intercontinental, Hyatt, Radisson, BestWestern, Days Inn, Hilton, Quality Inn, Ramada Inn, Meridien, Kempenski, Four Seasons Regent, Accor, and Marriott International are entering or expanding their hotel network in India. Hotels in India have an infinite variety that you can hardly fathom. Much like the diversity of its national culture, the hospitality industry in India too has different ways of treating different guests coming from different parts of India as well as from all over the world. Hotels in India have understood that the only way to survive in the rat-race is by providing anything and everything that a customer asks for. The hospitality industry has taken up the arduous task of providing guests with an unprecedented level of comfort. Be it hotels in Mumbai or hotels in Delhi, the wish of the guest is their order. People stay in hotels for various reasons and the hotels are trying to identify the exact requirement of the guest in order to provide customized service. The economic growth of India has had an impact on the hospitality industry too. Traveling is now no more limited to leisure tourism only. People travel extensively for the sake of business and the hotels are cashing in on it. Today, the utility of a hotel is not just limited to being a place for relaxation, it is also used as a place of meeting. No wonder, hotels across India are furnishing themselves with meeting facilities. Hotels in Pune and Mumbai, the economic nerve center of India, are making sure that the guests on

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business tours get the best of facilities and are not troubled by petty matters. To help them focus on the business, the hotels are going all out to make them as comfortable as possible. Food too is not a problem. Whatever your food-habits are, vegetarian or nonvegetarian, hotels throughout India will serve you according to your choice of food. Making hotel reservation in India is not at all a difficult proposition or a cause of concern. Most hotels now-a-days have the facility of online hotel booking. With the click of a mouse you can reserve a room in luxury hotels across India. If you are on a tour and are on the look out for unadulterated luxury, there are many hotels in India from which you can pick and choose. Eco-tourism is gaining momentum and hotels are upgrading their facilities so that people who come to enjoy nature do not end up confined in a jungle of brick and concrete. Various hotels and resorts in India are offering package tours and safari tours to the guests. Hotels located near reserved forests and sanctuaries are especially benefited by the prospect of eco-tourism. Indian hotels are offering facilities that match international standard.

WORLD

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HOTELS

The healthy economy at the beginning of the twentieth century ushered in the Golden Age of hotels, during which time a number of large hotels were constructed in the United States. On its heels came the Great Depression, a time when banks failed, unemployment skyrocketed, and travel sharply decreased. Many of the hotels that survived the depression are nowhighly familier - Statler, Ritz-Carlton, and Hilton, to name a few. Another major economic boom occurred in the 1980s. Tax incentives to


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investors, expectations of higher demand, and a growing economy helped fuel extensive hotel development. In the late 1980s and early 1990s, however, further development was curtailed and the industry was seriously hurt by excessive room supply, economic recession, and elimination of tax incentives. In recent years, there have been more hotel rooms available than guests to fill them. The lodging industry is steadily emerging from this crisis situation. An economy recovery, an increase in domestic demand and international travel, and a slight but significant upturn in occupancy rates are all expected to help return the lodging component of the hospitality industry to profitability. Classification of Hotels

Because of constant changes, staying current just with who is offering what and where can be difficult for the guest. The necessity for classifying hotels came about when hotels began to differ from one another enough to appeal to different group of people. Long gone are the days when the guest had two choices - luxury hotels or budget hotels. Hotel entrepreneurs such as Kemmons Wilson created a third option when they built facilities intended to serve middle-class families. These property classes had clear-cut boundaries in the beginning. Potential guests knew they could expect more services at a luxury hotel than a budget motel, and something in between at a midpriced hotel. As the economy in general boomed and room supply increased, hoteliers focused on setting themselves apart from the crowd by offering specialized accommodations. No longer just a place to sleep, hotels were appealing to conventioneers, business groups, and special-interest groups. Descriptive hotel classifications

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helped potential guests locate suitable lodgings, and as such, became a valuable marketing tool. As this diversity flourished, so did competition for customers and brand loyalty. As properties continually upgraded their services, boundaries between the descriptive labels blended into one another. Old systems of classification were not as clear. For instance, the Marriott brand, once recognizable as a midpriced hotel, began to include hotels classified as economy (Fairfeilds Inns), business (Courtyard), extended-stay (Residence Inns), all suite (Marriott Suites), and upscale (Marriott Hotels and Resorts). Other chains also began to cater to a myriad of guests - from business to pleasure travelers and from individuals to groups. Consequently, lodging classification became more complex. Facilities were then grouped according to size, amenities offered, price, type of guest (business or pleasure), or type of hotel (luxury, full-service, or economy, extended stay to name a few). Many facilities fit two or more categories, and did so in order to attract different types of guests. Motels and hotels are the most widely recognized forms of lodging. They can be found almost anywhere from the center of a huge metropolis to the streets of a small town. For the most part, hotels and motels attract transient guests who need a place to stay for a night or two while traveling for business or pleasure. Hotels that specialize in residence or extended-stay accommodations serve guests looking for more permanent lodging. Hotels

From the age of grand hotels to the troubled 1990s, the hotels has been the most fabled type of lodging. Varying greatly in style and service, most hotels share a similar


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structure. They generally have more than two stories with guest rooms located along common hallways. Guests rooms usually have a bed, bath, telephone, and television. In addition to housekeeping, services may include luggage assistance, access to a business center for use of a photocopier or fax machine, and availability of recreation facilities, restaurants, or bars. Hotels are most often located in or near business districts, travel destinations, and airports. Motels

Motels offered fewer amenities and were less expensive to build and operate than downtown hotels. The lower rates, basic accommodations, roadway locations, and lack of a central lobby were well-suited for the new overnight automobile traveler. Motels are generally less formal than hotels. Guests usually carry their own luggage, and free parking is available, often adjacent to the guest’s room. Many motels provide swimming pools and restaurant service. Guests who prefer to save money may opt for a budget motel that has smaller rooms, no pool, and fewer amenities. All-suite hotels

Unlike regular hotels, all-suite hotels rent only suites, often combing living space with kitchen facilities, or a bedroom section with an attached parlor. To keep rates competitive with other hotels, many all-suite hotels have small lobbies and no public meeting rooms. Some do not offer restaurant or bar facilities. As the market has expanded, through, some all-suite hotel hotels have reintroduced public areas and limited foodservice.

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Convention hotels

Convention hotels provide meeting and banquet facilities for large groups (usually five hundred or more) booked in their guest rooms. Because they target groups, these hotels need large lobbies to accommodate group arrivals. They also have a high percentage of double-occupancy rooms and emphasize food and beverage services. Convention hotels may also offer concierge floors to cater to individual guests’ needs. Classifying Hotels by Service

At one time, hotels differed distinctly by the services they offered. Recognizing that all guests do not expect the same services nor have the same amount to spend on lodging, the hotel industry offered a variety of services at different prices aimed at particular markets (groups whose members have similar expectations and budgets). Familiarity with these labels is helpful in understanding guest perception as the transition is made from one system to another. Also, classification’s short history shows how dynamic the industry is and how important service is at all levels. Classifying hotels by service contains four broad categories: luxury, full-service, limited-service, and economy. Luxury Properties

Traditionally, independent hotels offer the finest accommodations money can buy. Luxury properties are descendants of the grand hotels, featuring expensive, lavishly decorated public areas and the high levels of customer service. They offer the finest cuisine and the full range of amenities from shampoos and hair dryers to private Jacuzzis and fireplaces. Whether parking your car,


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carrying your luggage, or delivering room service, staff members - including concierges, bell persons, front desk attendants, and wait staff - are well-trained and efficient. Luxury resorts offer the finest entertainment and recreational facilities available. A part of luxury properties’ attraction is their ability to perpetuate an exclusive image by charging high rates. Hotels in the category include Four Seasons and Ritz-Carlton properties, the Waldorf-Astoria, and the Trump Plaza in New York. Full-service Hotels

Featuring properties operated by Hilton, Hyatt, Westin, and Marriott, this category of hotels attempts to offer a wide range of services at lower rates than luxury hotels. Full-service hotels generally offer clean, well-decorated hotels with meeting and restaurant facilities, a limited room-service menu, and a variety of recreational activities. Although not as extravagant as the luxury properties, fullservice hotels generally have large, attractive public areas. The ratio of service of the concierge or other staff may be limited to designated VIP floors. Some all-suite and extended-stay hotels with goodsized public areas also fit into the full service category, with amenities like in-room coffeemakers, microwave ovens, and refrigerators. Limited-service Facilities

Lodging establishments like Days Inn, Hampton Inn, and Quality Suites & Inns were once considered limitedservice facilities. Usual offerings included simple, clean rooms with a telephone, free cable television, swimming pools, and an adjacent restaurant. Staff services, other than housekeeping, were limited, but some offered a few

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extra amenities such as complimentary shampoo and lotion to distinguish themselves from the economy properties. The remaining all-suite hotels fit into this category because of their limited services and amenities, and small public areas. Economy Properties

Once offering only the basic bed and bath facilities, economy properties focus on “more values for the dollar” with clean and low-priced lodging. Economy properties generally did not offer meeting and recreational facilities or food and beverage services, with the possible expectation of a vending area featuring prepackaged snacks and video games. Staff was limited to only those required to provide basic front office services, security, and housekeeping services. Generally, the smaller guest rooms of the economy hotels offered one or two double beds and a separate bathroom equipped with no more than towel and soap. Marketing Segmentation

The lodging industry’s target market is all the potential guests of lodging properties -whether visiting relatives, conducting business, or relaxing on vacation. Because the total market is so vast, marketers break it into market segments - smaller, identifiable groups with common characteristics. These segments can be defined using any set of characteristics, such as those found in geographic, demographic, or psychographic information. Often, information from different sources is combined. For example, one hotel may first narrow its target segments by focusing on one geographic area. The segments may then be further narrowed by financial status. By continuing this process, marketers can find increasingly


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more precise targets. Marketing narrow targets is a more efficient use of marketing dollars but is also the most expensive form of marketing, since most companies must tarb t several segments at once. The most common marketing segment is defined by trip purpose-either business or leisure. In an effort to maximize their occupancy rates, most lodging facilities attempt to attract members of both groups since their differences are sometimes complimentary. For instance, business guests are more likely to need lodging from Monday through Thursday, and hoteliers can lessen the weekend slack by planning specials for leisure guests who are more likely to travel on weekends. Not all of the differences balance one another so nicely, however. Since many of the needs of both groups are often specific to each, different marketing strategies are necessary. Business Guests. Business travel is the most important source of guests for 80 percent of all hotels. For this reason, recognizing and catering to the special needs of the business traveler is vital to the success of the lodging industry. Traditionally, business travel is high on weekdays and low on weekends, with the average trip lasting approximately 3.5 days. During their stay, business travelers usually spend the majority of their time working. This means their needs are specific: well-lighted workspaces; a telephone; and access to equipment like personal computers, modems, photocopies, or facsimile machines. The business segment can be further defined by socioeconomic and psychographic factors. Some business travelers are on limited budgets, while other spare no expense for their accommodations. This letter group often expects VIP treatment and luxury accommodations. In some cases, business travelers need lodging for extended periods. For conferences, business guests may need access

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to meeting and banquet facilities. The possible segments are legion.

DEVELOPMENT

OF

HOTEL INDUSTRY

India’s hotel industry has entered the global stage, supported by its growing economy and the development of the ‘Incredible India’ tourism brand. Previous security concerns due to the Kashmir situation have reduced due to improved relations with Pakistan. Meanwhile the cost of travel has fallen following the government’s liberalisation of the airline industry. Given that these two main barriers to travel have been tackled, not surprisingly, hotel performance has benefited. With India capturing the attention of the world, Deloitte has responded by dedicating the 18th edition of the HotelBenchmark Survey to report each month on the country’s hotel performance. To put the size of India’s gigantic domestic market into perspective, it equates to over one third of total international arrivals received by all markets globally. While current mid-market players like Choice Hospitality India, Best Western, Fortune Park and Sarovar Park Plaza have catered for domestic tourism for some time - this market has recently exploded and demand is growing. As the domestic market continues to expand, the escalating economy provides the rising middle classes with increased disposable income. The arrival of low cost airlines and the associated price wars have given domestic tourists more options than ever before. The ‘Incredible India’ destination campaign has also helped the growth of many domestic markets including religious tourism. As a next step, the government has recently launched the Atithi Devo Bhavah (ADB) campaign aimed at increasing awareness of tourism in India.


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To respond to the needs of this growing giant, companies like Choice and Best Western plan to significantly increase their portfolio over the next two years, by 100% and 50% respectively. Other hotel companies have also taken steps to ensure they benefit from the country’s huge domestic demand. Indian Hotels launched its IndiOne brand with huge success last June in Bangalore. Accor has entered into a joint venture with InterGlobe Enterprises to introduce 25 Ibis branded hotels, the first will arrive in 2006. InterContinental Hotels Group is also introducing their economy brand, Holiday Inn Express, with ten properties planned, starting later this year. Marriott has also announced plans to introduce the Courtyard brand in India. Catching the eye of the international market Despite the international market being significantly smaller than India’s domestic market, it also shows promising growth. The country’s appeal to international visitors has previously been affected by the political situation in Kashmir as well as the global events of the past few years. However this has now improved due to relative geo-political stability and international economic growth. Tourism in India is also benefiting from the stronger economies of India’s two major source markets, the United Kingdom and the United States. The peace talks with Pakistan have also improved the situation, with the ongoing cricket test series between the two countries further instilling confidence of future harmony. Currently corporate travel dominates the international arena. The Indian subsidiary of Kuoni estimates that 80% of foreigners staying in their hotels are there on business. While corporate business will naturally continue to expand as the economy grows, there is enormous untapped potential in the country’s leisure market. “Incredible India” has focused not only on

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promoting traditional holiday attractions and cultural experiences, but on defining unique markets from medical to religious tourism. In fact, India has already seen growing Japanese arrivals due to the promotion of Buddhist travel. But India still faces many challenges in attracting the international traveller. This will continue whilst the government addresses the quality of India’s infrastructure. Although the World Travel and Tourism Council rated India second in price competitiveness (after Brazil) there are many factors which need to be dealt with to encourage foreign visitors. Poor roads, overstretched railways and old airports discourage international travellers. Add to that hotel taxes higher than most Asian countries and a bureaucratic visa process - and you start to get a clear picture of the challenges facing India. According to the new India edition of the HotelBenchmark™ Survey by Deloitte, the growth in hotel performance is impressive. As indicated in the graph below, all markets tracked by the survey reported double-digit growth in the twelve months to February 2005 compared to the same period the previous year. This is not surprising given the global economic growth in 2004, India’s bustling domestic economy and reduced travel barriers. Amongst the unique features of the hotel industry in India is the sheer volume of the domestic market. Hotels receive twice as many domestic guests as international guests. With most branded supply in India sitting in the top tier of the market, the hotel industry is currently very top heavy. While many companies are addressing the needs of the growing domestic market for more economical hotel products, most projects are still in development. Future growth of the hotel industry will


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not be helped by archaic land laws that make construction of new hotels time-consuming and expensive. What is interesting to note, is that the demand for hotel rooms far exceeds the country’s supply. While an opportunity exists to develop the hotel industry to meet this demand, India experiences large seasonal shifts in demand and corporate travellers currently represent the bulk of guests. Due to the lack of a widely distributed business mix, annual occupancies and average room rates in India did not rank very high in the 2004 HotelBenchmark Global Ranking Index. The industry must explore ways to seize untapped potential demand whilst addressing the down-time to maintain profitable operations. Developing a more diverse business mix is key. The opening up of the aviation industry in India brings exciting opportunities for hotels; as they rely on airlines to transport 80% of international arrivals. Increased airline activity has stimulated demand and has helped to improve India’s troubled infrastructure. Increased competition will lead to the development of new and improved services. In addition to new aviation brands, many existing companies have ordered new planes. This is long overdue considering state-owned Indian Airlines has not purchased a new plane in 16 years. The open skies policy has benefited both international and domestic travel. On the international front, the capacity and availability of destinations serving India continues to grow. In late 2004, India and the UK agreed to double (in phases) the number of direct flights per week. Earlier this year, Malaysia Airlines announced their plans to add 18 new routes in India within the next

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five years. Jet Airways and Air Sahara, two privately owned airlines have launched services to other South Asian destinations, and will shortly launch services to Singapore. The increasing competition in the domestic airline industry will continue to drive the growth of India’s domestic market. In May, two new private domestic airlines (SpiceJet and Kingfisher Air) are expected to enter the market. They will compete head on with current operators Jet Airways, Air Sahara and Air Deccan. It is expected that the tumbling cost of travel will continue, given the growing number of seats available. The government has expanded the scope of airline liberalisation with its approval in January for private airlines to fly all international routes excluding the Gulf. To qualify the government requires a company to have a fleet of at least 20 planes and five years domestic experience. Jet Airways and Sahara will be able to benefit immediately. In three years time India’s state-run carriers will also have to share their Gulf routes. These routes currently earn them most of their operational revenue and profit. The recent IPO (Initial Public Offering) by Jet Airways was over-subscribed several times - indicating the confidence this industry has gained over recent years. The aviation industry in India will drive future tourism growth, with the continued increase of flights and options for travel. But the question remains, can the country’s accommodation meet the increasing expectations of the global traveller? Hotel supply must catch up with demand whilst creating a healthier business mix. Mid-market properties especially need to respond to the growing middle class. But even as the hotel industry joins the airlines in responding to India’s thriving economy and driving future tourism growth infrastructure challenges could still prevent India from grasping its full tourism potential. Encouragingly major


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government initiatives such as ‘Incredible India’ and tax policy revision are well underway. With the growth of the economy expected to continue, and considering the size and dynamics of the domestic market, Indian hotel performance will be exciting to watch over the coming years. Future performance should reflect a country of vast opportunities, especially as mid-market products develop to satisfy the country’s thriving domestic market. Growth of the travel industry has been spurred by a continuing need for fast, accurate and cheaper travel options. Technological breakthroughs with a trend towards automated platforms are driving the growth of this industry. But when it comes to hospitality, which is an integral part of the tourism industry, the situation is different. The distribution dynamics are changing across all industries but the hospitality industry has been little slow to catch up since it is a very fragmented industry. The West is enough proof that technology is historically changing the way we function. The customer is becoming more and more technology-savvy even as we speak. The industry needs to overcome its general reluctance to invest in new ideas and technologies and look for applications that will drive the bottom line. This includes using distribution channels, agents and intermediaries to develop customer information sources, and using technology to bring customers what they want - in real time anywhere in the world. But in future the industry has to think on greater investment in technology, e-commerce and commoditisation. The constant pressure of business targets, sales figures with rising competitiveness in the Indian market has made it vital that focus on customers’ needs is viewed as providing opportunities to business.

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Ongoing expansion of the distribution system continues to facilitate bookings and increased consumer skills in navigating the Web are generating a huge upswing in online reservations of hotel bookings. India’s major hotel chains develop more robust online marketing and distribution strategies and online intermediaries race to become one-stop shops for hotel deals. However, currently, business generated through the Internet by the hospitality segment is almost negligible. But within the next two to three years the numbers is expected to go up. The industry has realised that it helps shift the controls from the intermediary to the consumer. So hotels that will be technology-savvy and have the rate parity will be able to generate a large chunk of business through the Internet. As hotels grow into large multi-location outfits with increasing size and business volumes, to sustain in a dynamics environment, they need to keep abreast with well-established IT infrastructure that simplifies its daily workings. The future of the hotel technology lies on Inter Protcol (IP), say IT experts. Therefore, hotels need to upgrade their IT-enabled services and simultaneously integrate various operational platforms. The increasing use of IT applications has given a new meaning to service; effective service is measured vis-à-vis guest convenience using technology know-how.

DESIGNING

A

SUCCESSFUL HOTEL

In the past several years, hoteliers have responded ever more boldly to their guests’ demands for both luxury and aesthetic sophistication. The result has been the emergence of new trends in hotel design, which at one extreme increasingly blur the border between lodging, lifestyle, and living theatre, and at the other seek to reinvent the more


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discreet manners and style of the grand hotels of the late nineteenth century. Newly built hotels are being admired throughout the world by travelers and architects, and this strikingly illustrated survey features the best new designs. An interesting evolution in hotel design over past several decades. At the beginning of the 20th century, the wealthy traveled in grand style at a leisurely pace, with vast amounts of luggage and, quite frequently, large numbers of staff. The design of the hotels that catered to them reflected that style, in size, proportion and atmosphere. The tumult of the 20s, 30s, and 40s disrupted travel patterns, but when people began traveling more consistently in the ensuing years, the look and feel of hotels changed. Opulence and exclusivity are associated with innovative and somewhat theatrical design, rather than traditional signifiers like Persian carpets and wood paneling. Built-in case pieces, flat-screen televisions and simplified bedding materials are used to maximize guestrooms space. Furthermore, bathrooms have become more spacious and an important part of guestroom design. What worked a decade ago for the guestroom does not work today. The concept of ‘zones’ within the room has not changed, there is still a sleeping, relaxing, working, dressing and bathroom ‘zone’ but the way in which these zones are now laid out and have started to overlap has changed and is continuing to evolve with the increased focus on guest ‘life-style’. The guestroom must be able to function on a number of levels in addition to providing a comfortable place to sleep. For the business traveler, the room should be able to function as office and meeting space. At then end of the day, literally, it should also feel more like an entertainment area than strictly a bedroom. Technological capabilities that enable the guest to accomplish various

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tasks from the privacy of the room are highly desirable— Interactive in-house television systems that let the guest review the bill, order movies, check e-mail and check out are increasingly popular. But it certainly is not just the guestroom that is critical to effective design. Public areas are increasingly being incorporated into the rhythms of the guest experience. “Many newer hotels use their lobbies or spaces immediately adjacent as gathering places, most frequently putting a bar or lounge next to or in the lobby. The activity is now seen as fashionable, where a hushed, silent lobby remains at a minority”. “The creation of large scale residential settings where the guest almost feels like they are at a party at a friend’s house is becoming a concept for hotel lobbies and public area spaces. The set area boundaries of the past are melting away to give us the ability to cross-utilize spaces depending on the demand for each area at different times.“ There are also critical elements of the exterior design which are different now from ten years ago and can have an impact on customer perception. With increased competition, hotels must be creative in attracting guests’ attention, before they even enter the lobby. wwsith so many new hotels around the world in mixed-use complexes, the entrance to the hotel are often the only exterior part of the hotel the guest sees. Luxury properties are housed in buildings whose overall appearance is very plain. Chic resort hotels, particularly in warm climates, have definitely pushed owners towards more innovative architecture and the use of more luxurious materials. In addition to spas which have become increasingly popular in recent years, other amenities, such as media rooms, libraries, screening rooms and full-fledged theaters, are now being considered as


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developers are looking to add new dimensions to the guest’s perception of overall value, and which lend a unique aspect to the hotel atmosphere. These areas offer obvious benefit to the individual traveler, but can also be used very creatively for groups and incentives as ways to generate additional revenue. The guest is better traveled, more educated, sophisticated and surrounded by design elements through all forms of media therefore the expectations are far more difficult to meet. Another trend in hospitality design is the “designer‘ touch. Armani just announced the opening of its new hotel in Dubai, following the Palazzo Versace and Bulgari openings. In any case or era, the success of a hotel’s design can be gauged by how well it has anticipated and met the tastes and needs of its guests. More importantly, the continuing success of an innovative change lies in how functional that change is. New just for the sake of being new doesn’t last long. “Comfort and practicality are all important, and this is often forgotten in striving to achieve avant garde and stylish design. The architecture creates the base, whether the building is an old or modern one, and defines the overall feel of the hotel. Some hotels are architecturally beautiful but lack a human dimension. Design has to create a sense of intimacy and proportions to which the guest can relate, leaving him in comfort and at ease. A touch of excitement and glamour will also help. Good design should be visually exciting and original. It should be functional but above all it should offer great comfort.As is true of any successful business person, hoteliers must know and anticipate what their guests want. Whatever changes are instituted, they must continue to fulfill their brand promise to the customer. This is not to say that very forward-thinking innovations won’t work, but they must be delivered in a context which is consistent with the customer’s expectations. Any design

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component must be regarded from the point of view of how it will enhance the overall guest experience, and how will it augment guest satisfaction. No hotel company operating today can be unaware of the swift pace of global change and its impact on every facet of the hospitality industry. With just five years left in this century, we can expect change to be the only constant. New business practices are evolving virtually as fast as our technologies, while resistance to change has become one of the primary causes of business failure. The future success of hotel organizations will be driven in large part by the ability to foresee—and capitalize – on change. Beyond this truism, however, there is an urgent need to identify what will be required in the competitive environment of the future with its intense focus on serving customer needs. The hospitality industry—as is the case with business generally—is subject to deep currents of change set in motion as economic and social systems shaped in the industrial era evolve to a knowledge-based era driven by technology advances. In this period of global transition, it behooves hotel organizations to examine the key factors that will not only define success, but the ability to survive in coming years. Its mission was to identify the characteristics needed to lead successful businesses in the next century. These executives offer a number of compelling messages regarding the key success factors of the future. Customers will have the strongest influence on the corporation in the year 2000. Indeed, these executives believe that the customer will be “king” in the new century. Exceptional leadership was by far the attribute most frequently cited by CEOs and senior executives; the consensus appears to be that successful companies in the year 2000 will be led by corporate visionaries.


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A strategic planning focus is not only essential, but must embody a concept of planning for the future that anticipates change, rather than being based exclusively on historical models. In structuring organizations for the future, companies must build management capabilities to deal with one of the most critical challenges—diversity in the marketplace. Employing information technology to drive business success in this information-driven era is not only the path of least resistance, but vital to virtually every aspect of operations. Recognizing that the hotel industry has a somewhat split personality reflecting the inherent conflicts between its real estate and operational aspects, it is important to understand the industry’s real estate origins and how they are shaping the challenges ahead. The origins of the industry’s real estate persona are embodied in the classic theory of location - “if we build it, they will come.” As a result of this “building” complex, the industry has tended to have a real estate and asset orientation, rather than a customer focus. From the hotel company perspective—especially that of the brand-oriented “chain”—the varied interests of a diffused property ownership group can be quite different than the singular interest of the chain that operates and markets the properties. Even when the ownership of geographically dispersed hotel properties is controlled by a single hotel organization, the financial structuring tends to be propertyspecific. Corporate financial strategies are frequently subjugated to the needs of the last property deal brought into the company’s fold. Each property in a so-called “chain,” is frequently the subject of a unique and distinctive ownership and financial structure. This phenomenon—quite common in the real estate sector, but unusual for business enterprises generally—makes for elusive economies of scale in the structuring and financing of property-driven expansion.

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Collectively, these factors have produced low comparative returns in real estate, although criticism leveled at commercial real estate returns is somewhat less germane to the hotel industry, where management and franchise fees can produce high returns for those companies where property ownership is held by third parties. While hotel chains have adopted traditional corporate frameworks, there are a number of predominantly real estate-driven, family-owned businesses in the hotel sector that continue to operate as relatively unstructured organizations. In meeting the future, these businesses will need plans, people and processes in order to establish viable corporate forms that can compete in tomorrow’s marketplace and capitalize upon its opportunities. In today’s changed environment, the hotel organization must deal with a number of new realities. Investors in our industry are no longer satisfied with longterm capital appreciation and psychic income that heretofore were often the justification for otherwise seemingly uneconomic investments in hotel property or, indeed, hotel chains. The first reality is that there is a very specific and identifiable relationship between bottom line performance and value. Improvements in business operations raises values. It is not surprising, therefore, that the new owners attracted to this industry in recent years have new sets of demands. This transformation from an old-guard group of investors and owners to income and return-driven newcomers has meant that the once “quiet enjoyment” of operators in their management of hotels for third parties is being disturbed, interrupted and overturned. These challenges all take place in an environment where capital has become extremely selective in markets that have little stability. A global shortage of capital will not remain a short-term problem, and future


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hotel organizations must have a stronger alignment to capital providers—a critical “customer” group. Hotel companies will need to compete by offering better returns and performance than in the past. Hotel chains have found their development timetables quashed in recent years, making it difficult to achieve goals of critical mass often required to improve performance. These factors are driving consolidation in the brand “sweepstakes.” Capital markets, therefore, continue to favour well-established companies, a reality that must drive entrepreneurial organizations to meet the future now by planning for an evolving corporate context in which to operate. Hotel developers, owners and management companies will all need to develop new strategies, skills and processes that look forward to the competitive demands of the future. These ultimately must address issues related to vision and planning, as well as organizational skill sets and processes to attract and retain customers. To stake a claim in the future, current business practices should be examined in light of what can be expected to be the key success factors in the year 2000. As the information age produces greater worldwide integration of business activities, a global knowledge base will become invaluable. Success in local and regional hotel markets will be shaped decisively by a global business environment that defines capital movement, customer expectations and applications of new technologies. If the customer is king in the 21st century, hotel organizations will be best served by focusing less on their hotel assets as measures of success, and more on their customers. This involves a fundamental shift in viewing the real estate asset as the wealth creator—to the customer as the key to building shareholder wealth. A customer focus must imbue business decisions at all levels of

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developing and operating a hotel organization. Pursuing such a course will inevitably impact shareholder wealth. To accomplish this, however, customers need to participate in the product development process. Fully realizing a customer focus in the industry poses a significant challenge. The hotel industry must confront problems due to conflicts between operational needs and real estate goals. Quite simply, an operator must remain customer-focused, but the short-term strategies to meet these needs may be inconsistent with the long-term objectives of property owners. Balancing those goals will be essential. A customer focus implies a significant shift in what drives hotel development—placing primary emphasis on the customer with the locations to follow. Nevertheless, a hotel organization with its large investment in fixed assets—the real estate—can never be as nimble as a consumer products company in adjusting products and services to match rapid shifts in the marketplace. The Japanese taught us that the concept of zero defects” in products and services can yield tremendous benefits. But today an even more rigorous standard dominates—quality that surprises. In practical terms, the hotel industry finds it extremely difficult to meet the standard of zero defects in service. Hotel services are based primarily on people, not computers or other equipment. Quality that surprises takes the concept of zero defects a step further. Yesterday’s surprising product or service is today’s status quo. Twenty years ago, a business executive did not expect a consistent and predictable level of service wherever he or she traveled in the world. Today that is a standard— not the exception—as is the expectation for sophisticated technology in hotel rooms to support business needs. With customer discrimination so acute, it is not surprising that


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brand loyalty is a diminishing “commodity” in the hotel industry. Find the ingredients for visionary leadership. Today’s hotel organizations need to recognize the need for visionary leadership. The ability to forecast the future—to anticipate change rather than react to it—will be one of the single greatest determinants of market dominance in the years ahead. The old “command and control” model of leadership is giving way to a focus on leadership in ideas, information, inspiration, vision and teamwork. “For the most part, failing organizations tend to be overmanaged and under-led. The leader sets the tone for the moral character, the vision, the corporate culture and the fiber of the institution.” While visionary leadership is essential, it must be linked to business operations and foster a risk bias, rather than a procedural bias. This will allow the organization to stretch and, in turn, change. And it must be shared by empowered professionals and staff throughout the organization, including those who meet the customer. Overcoming the resistance to change can be a daunting task, particularly in large hotel organizations in which diversions from the status quo may threaten established management lines. It suggests that a culture based on conformance may need to be replaced by an emphasis on flexibility, learning and cooperation. Management competencies will need to be aligned in order to achieve the desired result. For many organizations, this may mean a shift from traditional hierarchies typical of companies in an industrial era to a flatter organization with a more transparent interface between leadership, organizational functions and employees. Create a defensible position through corporate strategy. For many of the industry’s leaders, vision is

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driven by the strategic planning process, a function which has become critical for success. Strategic planning, however, has at times been a stepchild in the hotel industry, and it is often the first to be cut when organizations are downsized. It is clearly in transition. There also has been a tendency to decentralize and simplify this function—both actions of potential benefit. Strategic planning must be led by the top people in the organization—the CEO and COO. On the other hand, it should be close enough to the customer to ensure that planners can “listen” to and be influenced by customer needs. Beyond the ability to envision the future, core management capabilities will make the difference—they are essential. A clear vision without the management skills to support it cannot be a recipe for success. First and foremost, hotel management must have strategic development skills and the ability to integrate complex factors affecting success. Market volatility has become the norm, in part caused by the rapidly changing tastes of customers. Customers are increasingly approaching the hotel industry with widely different social, economic and political backgrounds, to say nothing of employees. Being able to deal with these diversities in a positive and constructive fashion that capitalizes on the differences, rather than working to find ways to mitigate them, is the clear path for successful management in the future. The organization will also need to be imbued with a sense of entrepreneurship that reacts proactively to the market’s diversity. Traditional organizations that follow well-documented rules must give way to leaders who can balance a sense of discipline with that of flexibility. Talent and resources must be marshaled and leveraged. In an industry with high fixed costs and labour intensity, the


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concept of leverage in the hotel business is an all-important one. Improving labour productivity through technology must be a goal for today’s forward-looking hotel organization. Management must also be able to narrow the gap between the employer and the employee, forcing a flatter organization in the process. This will put management closer to the customer and speed the twoway communication process up and down the organization. The traditional role of information technology (IT) as a back office support for accounting and bookkeeping has clearly moved front and center stage. IT today influences all aspects of business from corporate strategies to organizational structure—and from the very business processes it is designed to support to performance measurement. In a world where the customer is “king,” IT must also deliver in two critical areas: sales and marketing and customer service. Technology was once viewed as a way to reduce costs by replacing people. That attitude has been firmly supplanted by one that seeks IT support for the creative work that all organizations must pursue. IT must allow organizations to react more speedily to market needs and, of course, produce the fulfillment of customer demands both quickly and accurately. To do this IT must operate on a decentralized basis. IT delivers, but it has to be the right information to the right people, and it needs to be done on a timely basis. Starting a Hotel Business

The hotel business has picked up pace with more and more people taking to traveling. Steps for start a hotel:— Do proper market analysis and feasibility study — Make sure that the hotel is located strategically and is easily accessible to the tourists

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— Make sure that the hotel is located strategically and is easily accessible to the tourists — Hire a specialist interior designer to design your hotel to suite a specific theme — If you are planning to open a luxury hotel then be sure to choose a location within the main city near major attractions. — In case of a cheap hotel the best place is on the outskirts of the city where more tourists looking for a cheap accommodation are likely to come — Make sure to provide online hotel reservation services with proper cancellation rules — Be sure to open an online website for your hotel and register it with travel services — Make sure to offer special discounts and best deals on a regular basis — Offer combination deals by partnering with l ocal car rental companies and airlines How to start a hotel business is not very important; though the part that plays the most important role is the planning. Building a Hotel

If you are planning to build a hotel then there are certain steps that you need to follow. Steps are — First and most importantly you should do a market analysis and feasibility study. The best way to do this is by hiring an independent consultancy. The hotel planning should be carried out based on the study — Making use of the study report layout a plan for your hotel, that includes the hotel location hotel architecture, rates and amenities to offer


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— After determination of these key factors hire an engineer to build your hotel. Interior designers can be consulted to fix the hotel design — Frame proper laws and regulations for your hotel along with getting proper registrations and rights — Promote your hotel online by opening a websites and submitting the links to the databases of online reservation services — Make sure to provide online reservation facilities for you hotel in your website — Offer best deals and special offers on a regular basis Role of Hotel Manager

Hotel managers are responsible for operations, including reservations, food services, housekeeping and conventions. In a small hotel, one manager usually makes all the important daily decisions, whereas in a large establishment, a general manager hires a number of managers to be in charge of individual departments. — Ask yourself if you have excellent interpersonal, communication and organizational skills. They are necessary for a successful hotel management career. — Obtain a college degree in hotel management or restaurant management. Remember that a food services department contributes greatly to the profits of a hotel; a successful restaurant manager can his or her career advance quickly. — Take advantage of work-study programmes offered by many colleges so that you will gain solid experience working in hotels. — Expect to go through a hotel’s training programme once you are hired after college. During the first

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couple of years you will be handling only relatively mundane duties, instead of providing your input on issues such as staffing, hotel decor or conventions. — Understand that you might be offered a position as a front office manager, a food and beverage manager, a convention services manager, or any of a number of administrative positions after your training period. If you are successful at different managerial positions, your career will benefit in the long run. — Be aware that a promotion might require you to relocate for a few years if you work for a hotel chain that has properties throughout the country.

COSTS

OF

DEVELOPING

A

HOTEL

The process of developing a hotel requires packaging five components—land, improvements, furniture and equipment, pre-opening and operating capital—in a manner that meets the needs and desires of travelers visiting the marketplace. This delicate balancing act requires precise coordination of design, function and cost. The hotel development process starts with the land acquisition. Generally, the land component cost represents between 10% to 15% of the total project cost. When land cost exceeds 20%, project feasibility could be in doubt. The improvements represent the actual building with all its mechanical, electrical and plumbing systems. The cost of the improvements is directly related to construction quality, spatial utilization, design consideration and the local development cycle. During the building boom of the late 1980s and, to a lesser extent, today increased construction activity produces a more rapid rise in building development costs. The large amount of furniture and equipment within a hotel is unique to this form of commercial real estate.


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Depending on whether the property has foodservice or not, the furniture and equipment component generally represents between 10% and 20% of the total project cost. As hotels start installing more expensive technology, expect these percentages to increase, which could affect the balance between cost and value. Another two components unique to the hotel industry are pre-opening expenses and operating capital. Pre-opening costs include items such as initial marketing, recruiting and training. For large convention hotels, these, activities can occur years before the property opens and often represent a significant expenditure. Operating capital is the money needed to purchase inventories and supplies. Once a hotel becomes operational, its actual working capital diminishes. When government has commonly stepped in, support has focused on the development of key hotel properties deemed essential to stimulate business travel and tourism, and create new jobs. Formal public/private alliances in these cases have often opened the door to lower-cost financing of hotel development, as well as a host of other incentives to stimulate private investment. Public entities have at their disposal a wide array of programmes and financial vehicles that can assist in making a hotel project feasible and thus contribute to an area’s overall economic well-being. The potential to access lower-cost financing, tap redevelopment incentives, structure favourable land lease terms, secure site improvements and other alternatives should not be overlooked by hotel developers when development projects have a clear link to public interests. The interdependent economics of convention centers and the hotels that serve them create opportunities for public/private partnerships of benefit to government entities and private investors. The evolution of public/ private partnerships to support development of convention

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headquarters hotels, as a result, offer an excellent foundation for examining how public sector financing and other incentives can support private hotel investment. Most cities require a convention headquarters hotel to market their convention center successfully. Yet many mid- to upper-tier cities often lack sufficient hotel inventory that can be specifically committed to this purpose. Conversely, room nights generated from a convention center are often insufficient to exclusively support a convention headquarters hotel serving the meetings and trade shows so important to local economies. Further complicating the problem, convention headquarters hotels often incur higher than typical development costs due to the amount and quality of public areas required. A need for public/private partnerships to support the economic feasibility of a convention headquarters hotel. This hotel, in turn, will support the public investment made in a convention center, as well as generating other local economic benefits. They also evidence the range of options available to the public sector to support private hotel development. While these types of incentives most often may be used to support convention hotels, they may also be important tools for other types of hotel projects in which there is a strong relationship between public interests and private investment. Convention facilities in these cities may be located in areas peripheral to hotel concentrations. In addition, existing hotel operators are often reluctant to commit the room inventory required to serve convention delegates— typically offered in package deals at lower room rates— while simultaneously reducing rooms available to serve guests that make up their core business. The basic economics in hotel development and operations pose


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additional challenges. Convention-oriented hotels are typically 10 to 20 percent more expensive to develop than a comparable size, group-oriented hotel. At the same time, room rates for a convention hotel’s core market segment may run 20 to 30 percent below comparable business hotels due to discount package deals negotiated for delegates as part of convention attendance. To remain successful, a convention center must attract annual national bookings in the range of 25 to 30 events that have a minimum of 2,500 participants each. These bookings, however, on average support occupancies of only 30 to 35 percent in terms of total room nights. As a result of these factors, convention center hotel properties must either achieve higher average occupancies, develop other sources of business or realize higher room rates attributable to non-convention guests to succeed. Convention hotels can often attract alternative sources of revenue, including sponsoring convention and meeting trade separate from a convention center. Sources of business may include smaller group business, commercial activity, and wholesale and tour operator business. Nevertheless, the hotel is in most cases fundamentally dependent on the convention center for its core business. To entice new development, local government entities must often work jointly with hotel developers to overcome the obstacles that tend to make these hotels more costly to develop and less profitable to operate. What tools can government bring to bear to attract private hotel investment by improving their economics. The city acquired land, provided a 45-year lease with attractive terms and furnished off-site improvements, as well as site utilities. The hotel additionally was awarded the food & beverage concession for the convention center, and real estate property taxes were abated during

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construction. Tax increment financing was used to support public improvements, while real estate taxes were abated. In addition, the hotel was supplied with convention centerowned parking at prevailing market rates. More recent public/private partnership successes include the Westin Hotel venture in Providence, Rhode Island, which involved a $290 million bond issue, that covered the convention center, hotel and parking. A Sheraton Hotel at the Jefferson Center in Birmingham, Alabama, involved a $148 million low-interest bond offering, guaranteed by JCA and supported by city and county occupational taxes. Convention and Visitors Bureau has contended that a convention hotel within walking distance is required to make the city more competitive for attracting large conventions. Yet the downtown Los Angeles hotel market has been weak since the onset of the recession early in this decade, a condition which has been further exacerbated by the Los Angeles riots in 1992 and the Northridge earthquake last year. Downtown’s primary convention hotels, all located within seven blocks of the convention center, collectively posted occupancies in the mid-50 percent range last year with projected occupancies edging toward 60 percent this year. Thus far, it has been concluded that a major new convention hotel is not economically feasible, even with generous public incentives. These initiatives demonstrate the range of strategies available to the private sector to attract private hotel investment. At their best, these partnerships make it possible to reduce hotel development costs, set the stage for more profitable hotel operations, and allow a government jurisdiction to safeguard public investment and achieve local economic development goals. Generally, public contributions that can drive development of a hotel may include land at favourable lease terms, off-street parking facilities, construction/use


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rights of public space and marketing support. Hotel developers may also be granted the convention center’s food and beverage service concession. This ancillary revenue can be an important step to offset the lower room rates often associated with delegate business. Among the contributions made by the hotel developer are equity funding, the track record of team members, a superior product development plan, and strong management and marketing. In addition, the public and private entities must have controls in place to ensure that relationship objectives are maintained. A convention headquarters hotel, for example, must commit room nights to the convention center, even at the cost of displacing higher rated business. Conversely, the convention center must book events, which generate room nights, perhaps foregoing higher revenue-generating consumer shows that tend to be oriented to a local audience. A range of successful private/ public techniques are available to further these partnerships: Site Control

Land values in urban or resort environments are generally very high with these costs typically representing a significant component of hotel development. Government participation is often essential, either by writing down the market value of a property or purchasing a property to lease to a hotel owner on a long-term basis at an economic cost. Miami Beach’s experience is instructive. The city in 1992 expanded its existing convention center located near City Hall, a location remote from Miami Beach’s highly developed existing hotels. No new major hotels have been developed in 27 years. Studies commissioned by the city addressed several pivotal issues. It was determined that none of the existing hotels—clustered primarily at some distance along the coastline—would or could continuously

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sell room nights to major national conventions that desire to book the city’s convention center. Additionally, major hotel developers would be unlikely to develop a new hotel away from the beach area without significant incentives. To advise the city on incentive parameters required to entice developers and financial institutions in the development and financing of the 800-room hotel. Among the most important of the incentives was site control. Arthur Andersen advisors concluded that the city’s purchase of the site adjacent or proximate to the convention center was essential. It was further determined that the hotel site should have ocean-front exposure. After analysis of three potential locations, the city purchased an ocean-front site at a cost of $24 million. The site is five blocks from the city’s convention center. Low-cost Financing

In the past five years, new full-service hotels have been extremely difficult to finance. Convention hotels, furthermore, are generally regarded as being of even higher risk—a result of the uncertainty related to occupancies and above-average development costs. As a result, public financing can be the key element in making a convention center hotel feasible. Again, a number of options are available to the public sector. While taxexempt public bond issues are subject to ‘private purpose’ limitations, there are techniques which can blend in public funding to privately owned and operated hotel ventures. These include financing and leasing back the ‘public’ areas of a hotel facility. Public revenues from hotel taxes or real property taxes may be designated for the facility through non-tax exempt issues. In addition, cities, counties and other government entities may offer certain operating guarantees, such as payment of debt service, for a specified period of time.


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In some cases cities have made equity investments in convention hotels. The municipality may become the junior equity partner in the hotel with ‘first-in’ risk capital, and ‘last-out’ return. In a broad policy sense, the city’s rate of return is potentially greatly enhanced by an improved local economy, higher visitation and associated tax revenues. Bond financing, and public ownership of the asset, for example, is a cornerstone of the financing structure for a new convention center hotel at McCormick Place, the final phase of its exposition center. Other Public Incentives

Local governments also have incentive options that will have significant impact on the economies of building a convention headquarters hotel. These include incorporating public spaces and amenities, such as joint parking or meeting facilities to reduce the overall cost of the convention hotel. Municipalities may also provide property tax abatements, as well as redevelopment zone benefits such as expedited permitting and access to other public funding sources. From a development and operational standpoint, there are a number of challenges facing hotel companies as they consider convention headquarters hotels. In addition, many deals have failed because a city has insufficient resources to close a transaction, or lacks an understanding of the resources it can bring to bear in support of these developments. What is fundamentally at stake is shifting a portion of the risk from the developer to public entities, since the public jurisdiction stands to benefit economically if the hotel is a success. More than a standard Request for Proposal (RFP) to attract a quality developer is often needed. The public sector must understand what types of incentives it has

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available to drive a project—and the best way to frame the RFP process. And it will clearly require specialized expertise to ensure that financial incentive structures make the most of available opportunities and that the expectations are realistic. In setting parameters for competitive bidding on these projects, municipalities or other public jurisdictions need to be specific about certain factors, such as the hotel size, design, quality of facilities and amenities, and management. But rather than defining the competition in a rigid envelope, it is more important to ensure that respondents customize a proposal that meets the city’s criteria and defined needs, and includes financial structures crafted to match the public resources available. Clearly defined procedures for evaluation of proposals are also crucial. Hotel development can generate a significant stream of economic benefits for a community including support for a tourism industry, job creation and an expanded tax base. Public incentives to support private hotel investment, as a result, can become a decisive component required to assure that public economic development goals are achieved.

CHALLENGES

IN

HOTEL TECHNOLOGY ARENA

Many of the challenges in the hotel technology arena have been created by policies and practices of hotel companies themselves. In order to achieve success, a substantial number of hotel companies may need to change key elements of how they measure, fund, and purchase technology. Despite the level of interest among CEOs and CIOs within the industry, technol-ogy cost measurement has proven extremely elusive. There is a widespread view among many companies that, while service delivery models for technology are attractive, the current offerings


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on the marketplace seem too expen-sive in comparison to acquisition costs. While this may be true in some cases, there are fundamental issues with attempts to compare service models with capital spending models. First, current hotel accounting standards make it virtually impossible to measure technology costs. Most technology costs within the hotel are buried within departmental budgets. Costs for a single technology initiative typically span across departmental borders. Technology that is provisioned by management companies or franchisors is often priced to the hotels at an amount that bears at best a loose relationship to underlying costs. Second, many of the costs borne within the service model are typically excluded when estimating the total cost of ownership of an alternative capital-acquisition based solution. Internal cost calculations rarely include the time of all of the IT and non-IT management and staff needed to manage the operation on an ongoing basis. Furthermore, hotel companies rarely hold internal service departments to the same service-level agreements that they insist upon with external service providers. In order to manage technology spending appropriately, the hotel industry’s accounting, budgeting and Return on Investment (ROI) analysis approaches need to: — Clearly identify technology costs by category, regardless of which department funds them. — Clearly measure or, at a minimum, estimate, in-direct costs of technology projects, including management staff time, burdens on support de-partments such as accounting and human resources, and similar resources.

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— Measure technology costs actually incurred by the hotel, management company, and franchi-sor levels, and paid to third-party (unrelated) vendors. Too often, technology projects are mis-analysed and underfunded because a manager or franchisor imposes a cost on a hotel that covers the provision of both technology-based and non-technology services. The hotel experiences a single price for the service and may not be able to assess the technology com-ponents independently. — Make explicit assumptions about technology refresh costs, and in particular about the organisational costs when change is generational (as is often the case with the capital acquisition model) vs. incremental (as is more common with the service model). — Identify costs shared among multiple applications as infrastructure, and evaluate infrastructure costs within the context of all supported applications and operations rather than just the single application that forced an upgrade or replacement Hotels should establish, and owners should demand, explicit technology reserves, just as they create reserves to refurbish the hotel’s physical plant. The need to spend money on an ongoing basis to ensure a stable but evolving technology environment is not optional, but rather is a cost of staying in business. While it may be possible to defer a given expenditure from one year to the next, technology refresh cannot be put off forever any more than can refurbishment of the physical plant. The need to measure shared infrastructure costs, discussed above, is generated by the need to budget for it separately from end-user projects. A solid technology foundation within each hotel and hotel company is required to operate any of the more modern hotel systems.


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Today, the property management system, the sales system, the local presence of the central reservation system, the office automation software, and many other applications often share the network infra-structure and workstations, which taken together can account for half or more of the hardware costs within a hotel. In the future, PABXs, telephone handsets, in-room entertainment and Internet services, door locking, and energy control systems (among others) will likely share the same infrastructure. The cost of maintaining reasonably current technology for the shared infrastructure elements cannot reasonably be burdened on any one application and justified by the project’s ROI. Rather, infrastructure costs should be determined, component by compo-nent, with reasonable lifetimes, and an annual budget established for technology refresh. The particular systems being deployed or upgraded within a given budget year may dictate which infrastructure elements are refreshed first, but should not be expected to provide the financial justification for infrastructure elements that would eventually be needed with or without the project. An example of this approach is the widespread use in other industries (and in isolated pockets within the hotel industry) of leasing models for technology infra-structure. Many companies, for example, routinely replace all PCs on a three-year cycle. The vendor that provisions the PCs (whether internal or external) charges the users a monthly lease rate that enables it to deliver, install, maintain, and replace PCs. This maintenance and replacement cycle allows every technology project to assume that it has the workstations needed, at a current level of technology. The incremental cost of the project is affected only if it creates the need for additional workstations. Vendors within the hotel technology community each have their own business models and agendas. Ultimately,

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however, the hotels are their customers, and those vendors who listen to hotels and who provide technology that hotels can use more effectively, will prosper along with their clients. Hotel companies should talk with their current vendors and determine their willingness to commit to the standards. If vendors understand that their future business from enough hotel companies is dependent on their operating within a standard technical and business framework, most of them will adapt very quickly. There are no requirements imposed by these standards that have not been widely adopted by the technology communities in other industries. Individual vendors may balk, but at the end of the day, it is the hotel’s money to spend with the vendors who can best serve their needs. The hotel industry as a whole, and individual hotel properties in particular, have failed to embrace the establishment of adequately funded and qualified technical staff. While there are many structural reasons why hotel technology has failed to deliver to its potential, many could have been avoided, or could be compensated for, if an adequate IT skill base were available. Only a few hotel companies, mostly larger ones, have embraced this concept. As an industry, we would not promote an accountant or front desk clerk to the top position in food and beverage, yet hotels routinely promote unqualified staff into key technology positions. If the food is bad and the restaurant service surly, we find a qualified F&B manager and give him or her what is needed to succeed. When technology fails to deliver to expectation, we find the staff member who seems to know how to use a computer and ask them to solve it. This is akin to selecting, for the next F&B manager or Executive Chef, someone who likes to eat.


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For many hotels, and particularly those lacking centralised support from a chain or management company, hiring qualified IT staff can be an immense challenge. An IT professional sufficiently skilled to manage all of the technology in a midsized or large hotel can command a salary equal to or greater than that of the General Manager. Larger management companies, chains, and thirdparty service providers are inherently in a better po-sition to attract qualified staff with the necessary range of expertise. It is for this reason that most larger companies and some service vendors have begun pulling technology out of hotels, wherever feasible, operating it in a centralised or regionalised environ-ment, and delivering it as a service to hotels. This is not to say that hotels do not need their own IT staff, or to suggest that it would allow hotels to continue to get by with the current insufficient levels of IT skills. Rather, it will allow a competent IT manager within a hotel to deliver and support a broad range of technol-ogy services cost effectively.

TRENDS AND OPPORTUNITIES It is boom time for India’s Tourism and Hospitality sector. Driven by a surge in business traveller arrivals and a soaring interest in India as a tourist destination, the year 2006 has been the best year till date, with foreign visitor arrivals reaching a record 4.5 million. Foreign tourist arrivals have grown by 10-15 per cent in the last one year. Over the last few months, tier-II cities like Jaipur, Gurgaon, Hyderabad, Pune, Bangalore are seeing growth both in occupancy and room rates. While occupancy is around 75-80 per cent, room rates are up by 15-20 per cent in these markets.

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Atithi Devo Bhavah Table 1. Foreign tourist arrivals and foreign exchange earnings

Year

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Foreign Tourists Exchange Earnings

Estimated foreign

Number in Lakh

Million US$

23.97 25.05 26.99 24.28 24.54 29.33 36.03 40.53

Growth Rate 1.1 4.5 7.7 -10.0 1.0 19.5 22.8 12.5

2993 3036 3168 2910 3029 3979 5029 5931

Growth Rate 2.7 1.4 4.3 -8.1 4.1 31.4 26.4 17.9

The importance of tourism for the Indian economy is evident from the fact that it contributed to 5.9 per cent of the Gross Domestic Product and provided employment to 41.8 million people. The year 2006 was not only a record year for India’s inbound tourism but was the fourth year showing a double-digit increase in arrivals. Moreover, arrivals recorded a double-digit growth in all 12 months of last year — even during the lean months of summer and the monsoon period. The 4.5 million arrivals recorded were 13 per cent above the level of 2005 and reflected an average annual growth of nine per cent over the six year s from 2000. In a bid to encourage the tourism sector further, the Government is planning to infuse equity capital of over US$ 55.5 million for reviving Ashok Hotel, Samrat Hotel and Hotel Janpath in New Delhi. Further it has spent a sum of US$ 16.2 million has been spent in the current fiscal on the Incredible India campaign to promote tourism both in the domestic and overseas markets. The Government has also proposed to declare a conditional 10-year tax holiday for all tourism projects in the country.


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While companies would enjoy full tax exemption up to 50 per cent of the profit, for enjoying tax benefits for balance amount they would be required to re-invest that part of the profit in tourism projects. With the tourism sector revealing immense potential, global hospitality majors are exploring plans of entering India. These include Dawnay Day, Whitbread, Jumeirah, Golden Tulip, Istithmar and Mandarin Oriental. While hotel companies like Golden Tulip are looking to launch budget hotels, others like UK’s financial and real estate major, Dawnay Day and Whitbread’s Premier Travel Inn, are launching cookiecutter business models. The Jumeirah and the Mandarin Oriental are the hi-end luxury hotel brands looking to set base in the country. Dubai’s leading alternative investment house, Istithmar, is looking to invest in luxury hotels in key gateway cities around the world and emerging markets. Hospitality majors from India and abroad are likely to pump in close to US$ 1 billion in the next 2 years into the sector. Travel portals are cashing in on the booming demand for hotel rooms. There has been a surge in hotel booking on travel portals in the past 12 months. Online travel industry is a US$ 800-million industry in India, that is, about 14 per cent of the entire travel industry. With India becoming a major hub for medical tourism, leading corporate hospitals like Apollo, Fortis and Wockhardt are eyeing alliances with foreign airlines to reach out to prospective markets. The alliances provide a win-win situation, as foreign carriers are also believed to be exploring similar opportunities in India. A study by McKinsey and Confederation of Indian Industry (CII) says that at its current pace of growth, healthcare tourism alone can rake over US$ 1.7 billion

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additional revenues by 2012. Medical tourism is now a US$ 299 million industry, as about 100,000 patients come each year. The country needs to exploit the cost advantage it can offer to a health tourist, the study said. Medical tourism, Adventure tourism, Heritage tourism, Wellness tourism, Pilgrimage tourism, Golf tourism, Eco-tourism, Wildlife tourism—the scope for theme travel is also vast in India. Significantly, the 100 per cent foreign direct investment regime in tourism permitted through the automatic route will help boost the country’s tourism. With the country hosting the 2010 Commonwealth Games, this share will only increase to about 1.5 per cent in 2010, from a mere 0.52 per cent in 2006. India?s tourism industry is poised to grow to about US$ 90 billion—from the current US$ 39 billion—in the coming decade. The economy performed extremely well during 2003/04, with GDP growing by 8.2%. While agriculture accounted for most of the rebound, other sectors also showed a strong performance. Industry grew at above 7.0%. Services, which account for more than half of total GDP, expanded 8.7%. A key component of Services - the trade, financial services, hotels, insurance, transport and communications component -expanded by a seven-year high of 11.2% amid a credit-fuelled consumer spending spree. The economy’s buoyancy, together with initiatives by the erstwhile NDA government - to improve India’s deficient infrastructure, divest loss-making enterprises and ease restrictions on foreign investment, and perhaps most importantly, make peace with neighbouring Pakistan - did much to convince the world of India’s investment worthiness. More than $10 billion in foreign capital poured into India in 2003/04. However, this sense


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of bullishness has been somewhat dampened, following the NDA government’s failure to return to power in the General Elections in April-May 2004, despite having done well in state elections last year. The present Congress-led United Progressive Alliance (UPA) government’s efforts to ‘open up’ the economy are being thwarted by its main ally, the Left government. There are essential ideological differences between the two main parties: the Congress is progressive in outlook and both Prime Minister Singh and Finance Minister Chidambaram have been champions of reform; the Left, on the other hand, is not in favour of liberalisation and disinvestment. This has led to a sense of uncertainty as to the course government policy will take, causing foreign investors to hold back, and wait and watch, at least for the time being. The Reserve Bank of India and leading research agencies have forecast a GDP growth of 6.0-6.5% in 2004/ 05, taking into account the likely adverse effects on agriculture of a late and erratic monsoon. However, recent data on first quarter (April-June) performance reveals the economy has, in fact, done better than expected. GDP growth for the period April-June 2004 is 7.4%. Agricultural production witnessed higher-thanexpected 3.4% increase. Manufacturing grew at 8.0% during this period, exceeding the strong growth momentum witnessed in 2003/04. Demand for manufactured goods has, and will continue to, benefit from low interest rates, inexpensive and easily available financing options, and an overall rise in the purchasing power of India’s population, over the last number of years. The trade, financial services, hotels, insurance, transport and communications component, which accounts for 50% of the Services sector, registered

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an 11.0% increase. Services and Industry will continue to drive the economy in the current fiscal. In the economy’s favour is its health: the balance of payments position is stable, a current account surplus is forecast for 2004/05 and India’s foreign exchange reserves are amongst the highest in the world. Moreover, the finance minister has strongly emphasised the government’s commitment to liberalisation and key reform initiatives, assuring that they will be implemented, ‘even if there is a delay’. The government is also contemplating using a part of the foreign exchange reserves towards major infrastructure development. The new government has been concerned about inflation, which has been rising steadily over the past three months, and touched a four-year high of 8.0%. The increase is the result of seasonal factors and the higher prices of fuels and manufactured goods. The year 2003 was an outstanding year in terms of inbound tourism, with tourist arrivals reaching 2.73 million. The strong growth in tourist arrivals in 2003 is partly attributable to the outbreak of SARS in east Asia, as well as the war on Iraq, which resulted in India being perceived as a safe region to visit. The more fundamental reason, however, relates to a strong sense of business and investment confidence in India: inspired by India’s strong GDP performance, and initiatives taken by the erstwhile Prime Minister, to make peace with Pakistan, strengthen ties with the developed world and open sectors of the economy to private sector/foreign investment. Significantly, the bulk of international arrivals in India, both in 2003 and 2004, have been business travellers. Domestic travel, both business and leisure, also benefited from a thriving economy. Prior to being voted out of power, the NDA government implemented certain


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important measures to provide a much-needed boost to travel & tourism. These included the abolishment of the inland air travel tax of 15%; reduction in excise duty on aviation turbine fuel to 8%; and removal of a number of restrictions on outbound chartered flights, including those relating to frequency and size of aircraft. The provision included allowing Indian charters to land at all airports in the country, and Indian passport holders to travel on inbound charters. The new government, it appears, is taking active interest in developing tourism in India. The continued Incredible India campaign has had a strongly positive impact on tourist arrivals in 2004. Definite efforts are being made to communicate the Brand India message: India made its presence strongly felt at the WTTCpromoted Global Travel & Tourism Summit held in Doha, Qatar in May this year. An important new development is the 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. The government has identified Delhi, Mumbai and Goa as the markets to develop these convention centers, which is likely to further fuel demand for hotel rooms. Another effort is the decision to substantially upgrade 28 regional airports in smaller towns, slated to be completed by 2006. Expressions of interest have been received for the proposed privatisation of the Delhi and Mumbai international airports, but, as expected, the Left government has opposed the move. Substantial investments in tourism infrastructure are, undoubtedly, essential for this industry to continue to evolve and grow, and ultimately achieve its potential. The upgrading of national highways connecting various

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parts of India has opened new avenues for the development of budget hotels alongside. Taking advantage of this and certain other key locations is the Tata group that has developed IndiOne, a 101-room economy hotel outside Bangalore; they hope to duplicate this across India in the next few years. Another hotel chain called ‘Homotel’, being promoted by Sarovar Park Plaza group is also likely to compete in this new economy segment. International majors like Accor are also planning to bring in Ibis into India. The year 2004 has been a record year in tourist arrivals, as is evident from data on foreign arrivals for the first eight months of the year. According to provisional estimates of the Ministry of Tourism, January to August 2004 saw approximately 2,093,600 visitors to India, 25.8% more than in the corresponding period of 2003. Growth has been spurred by large increases in airline passenger capacity: international airlines have added more than 4,000 seats a week on international routes to India in the last six months alone. Increases in passenger capacity will play a significant role in fuelling growth in travel & tourism. British Airways has recently been permitted to triple its flights to India, and carriers from Australia are now allowed to offer 4,500 seats a week to India, more than double existing capacity. Moreover, Indian private carriers have recently commenced flights to the SAARC region, and have asked the government to be permitted to fly to East Asian countries. Capacity increases will not only bring in more international arrivals, but will, over a period, reduce airline fares to India, which are currently amongst the highest in the world. Assuming a stable economic and political climate worldwide, the outlook for inbound tourism - both


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business and leisure - is strongly encouraging. Many international investors, particularly those who have invested heavily into China in the past few years, are now looking at India as the next opportunity. Conde Nast Traveller, in its readers’ travel awards for 2004, has placed India at number six among the world’s tourist destinations. Domestic tourism will continue to develop rapidly and will be the real driving force for this industry over the next decade or so. This segment will be helped by the growing wealth base of India’s population and discounted fare options. A significant new development is the arrival of low-cost carriers, pioneered in India by Air Deccan, with other industry players such as Air India and Indian Airlines readying themselves to enter the lowcost market. According to recent estimates of the WTTC, Indian tourism will grow at 8.8 per cent over the next 10 years, which would place India among the most rapidly growing tourism markets in the world. A longer term, sustained growth of the industry depends on how successfully several issues are addressed - relating to old and poorly facilitated airports, inadequate hotels, poor road and transport infrastructure, high levels of taxation and a bureaucratic visa processing system. As of now, at least, India is clearly taking steps in the right direction. Future Trends

Results of the recent Indian Hotel Industry Survey shows that the industry is robust at present, and there are clear indications are that the next two to three years will be even stronger. Certain markets are already seeing huge un-accommodated demand during weekdays, with average rates in some of these markets witnessing

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unprecedented increases. Recent indications are that the hotels in south Mumbai have also started to see improvements in performance. This effectively means that Mumbai is poised to see good growth in terms of both occupancy and room rate increases as demand outpaces supply. Goa and Delhi are also expected to see some rate increases. The Goa market has performed exceptionally well and in the years to come will be one of the best performing markets. The city over the past two years has seen substantial increases in rooms supply, despite this demand continues to outstrip supply, resulting in occupancies to go up marginally even in the current year. At present there is not much new hotel activity planned for Goa, making this one of the preferred location for investment. Another market performing extremely well is the Pune market. The sharp upturn in Bangalore’s performance is beyond what most hotel owners and developers had anticipated. Existing hotel owners can expect a windfall gain this year as well as for the next few years, until new supply enters the market. The Leela Bangalore is amongst the biggest beneficiaries; this hotel is already setting records for highest average rates in the country for a business hotel. The trends witnessed in Delhi in 2004 have been quite positive. Occupancies have picked up over the past few months, especially in hotels closer to Gurgaon. These hotels enjoy much healthier occupancies than city centre hotels which, in fact, are pulling down overall occupancy levels. Opportunities for the Indian hotel sector continue to be in the budget and mid-market segment: we anticipate these segments to witness huge growth and expansion, in


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the next year or two. The luxury segment is set to perform extremely well over the next few years until the supply- demand gap is bridged. The average rates to grow in all major cities across India. New opportunities lie in the extended stay segment, which many potential developers are currently shying away from. Also, owners interested in developing extended stay properties are keen to partner with existing branded chains already operating in India. This is an area where specialized serviced apartment chains like Oakwood and Ascot have tremendous scope for involvement. This is particularly true in destinations that are near large concentrations of IT and related services development. Medical tourism could also be the next big thing, and, while we are yet to see any development in this area, we consider that there could be some potential. If world class convention centres are indeed developed in Mumbai, Delhi and Goa, these cities are sure to benefit. Similarly the further liberalization of the aviation sector would mean additional tourists, and with supply unable to keep pace with demand, nearly all segments of the hotel industry would see improvement. Hotels in metro cities, with an average rate of Rs 2,600-3,000, and hotels in non-metro cities, with an average rate of Rs 1,800-2,400, are likely to experience rapid growth in demand in the next year or two. Cities to watch out for, in terms of development opportunity, are Pune, Goa, and certain pockets in major cities like Delhi (west) and Mumbai (mill lands). In response to the rapid growth of the hotel market in India over recent years, hotel performance in India is booming. Lower costs of travel following the liberalisation of the airline industry as well as reduced

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security concerns due to improved relations with Pakistan have helped boost performance. A strong economy and increasing inward investment have elevated India’s international profile. With a domestic tourism market roughly one third of the total international arrivals received by all global markets - it’s exciting to watch. The evolving business dynamics in India continue to provide the hospitality industry further potential for impressive growth as an international destination. Hotel companies are responding to the growing domestic market by adding India to their development agenda for mid-scale products. Infrastructure and geopolitical concerns continue to limit India’s ability to develop as a tourist destination. Fortunately recent government initiatives including the liberalisation of the airlines and tourism awareness campaigns such as ‘Incredible India’ and ‘Atithi Devo Bhavah’ — take India one step closer to achieving its true potential.

6 Developmental Initiatives for Tourism Sector In order to develop tourism in India in a systematic manner, position it as a major engine of economic growth and to harnessits direct and multiplier effects for employment and poverty eradicationin an environmentally sustainable manner, the National Tourism Policy was formulated in the year 2002. Broadly, the policy attempts to: a.

Position tourism as a major engine of economic growth;

b.

Harness the direct and multiplier effects of tourism for employment generation, economic development and providing impetus to rural tourism;

c.

Focus on domestic tourism as a major driver of tourism growth.

d.

Position India as a global brand to take advantage of the burgeoning global travel trade and the vast untapped potential of India as a destination;

e.

Acknowledges the critical role of private sector with government working as a pro-active facilitator and catalyst;

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f.

Create and develop integrated tourism circuits based on India’s unique civilization, heritage, and culture in partnership with States, private sectorandother agencies; and

g.

Ensure that the tourist to India gets physically invigorated, mentally rejuvenated, culturally enriched, spiritually elevated and “feel India from within”.

h.

Keeping is view the basic principles and guidelines of the Tourism Policy, the Ministry of Tourism has been broadly implementing the following schemes/ programmes during the 10th Five Year Plan: — Scheme for Product/ Infrastructure Develop-ment and Destination & Circuits — Scheme for Integrated Development of Tourist Circuit — Scheme of Assistance for Large Revenue Generating (LRG) Projects — Scheme of Capacity Building for Service Providers (CBSP) — Scheme of Rural Tourism — Scheme of Financial Assistance to States for Organization Tourism Related Events — Scheme of Central Financial Assistance for Information Technology (IT) Projects — Scheme for support to Public Private Partnership in Infrastructure Development (Viability Gap Funding) — Scheme of Market Development Assistance (MDA) — Capital Subsidy — Time Share Resorts (TSR) — Market Research- Professional Services.

Developmental Initiatives for Tourism Sector

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R EVISED G UIDELINES OF S CHEME FOR P RODUCT / I NFRASTRCUTURE D EVELOPMENT FOR D ESTINATIONS AND CIRCUITS In the 9th Plan assistance was provided in the following fields: 1.

Construction of budget accommodation.

2.

Tourist complexes.

3.

Wayside amenities.

4.

Tourist Reception Centre.

5.

Refurbishment of monuments.

6.

Special tourism projects.

7.

Adventure and sports facilities.

8.

Sound and Light shows and illumination of monuments.

These schemes were merged into following two schemes during the 10th five year plan. 1.

Integrated Development of Tourist Circuits

2.

Product/Infrastructure and Destination Develop-ment.

In order to carefully regulate the Product Development the above two schemes are now merged into one scheme Product/Infrastructure Development for Destinations and Circuits. This scheme will have the following two components; a)

Major destinations and circuits development

b)

Rural Tourism infrastructure development

Major Destinations and Circuits Development

The focus under this revised scheme will be on the improvement of existing product and developing new tourism products to the world standard. It will also focus

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on Integrated Infrastructure Development of the tourist sites. These tourist sites/destinations would be carefully selected based on its tourism potential. The aim would be to provide all infrastructure facilities required by the tourists within such destinations and circuits. Master Planning of these destinations and circuits will be undertaken so as to develop them in an integrated holistic manner. The aim will be convergence of resources and expertise through coordinated action with State Governments/U.Ts and Private Sectors. Tourist Destinations and Circuits in each State would be identified in consultation with the State Governments and would be taken up for development. This would include activities ranging from preparation of a master plan to implementation of the master plan. Projects to be taken up under this scheme should follow an integrated, projectised, area development approach. Comprehensive DPRs should be prepared for each project after consultations with all the stakeholders. Definition of a destination: Destination is a place of tourist interest. For being eligible under this scheme the destination must be among the most visited sites in the State, or a recognized Heritage monument. A group of tourist attractions located in the same village, town or city would also qualify. Definition of a Circuit: A tourist Circuit is defined as a route on which at least three major tourist destinations are located such that none of these are in the same town, village or city. At the same time they are not separated by a long distance. It should have well defined entry and exit points. A tourist who enters at the entry point should get motivated to visit all the places identified on the circuit. The objective of having a tourist circuit is to increase the total number of visits to all the destinations


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on the circuit on the one hand and to provide to the tourist the attractions of all the destinations located on the circuit. Identification of tourist destinations and Circuits: The destinations & circuits will be selected on the basis of its tourism potential in consultation with the State Governments. The Destinations/ Circuits to be taken up for development will be identified by the Ministry of Tourism at the beginning of each year. A tourist circuit could be limited to a State or it could be a regional circuit covering more than a State/UT. The identification of the project, the implementing agency, and the mode of channelisation of funds would be done in consultation with the State Govt./UT Administration. Funding pattern of the project: The Ministry of Tourism would bear 100% of the project cost based on the project plan and estimates submitted, excluding the items which are the exclusive responsibility of the State Governments, as mentioned at para 8 below. While there may be no ceiling on project cost, Government of India contribution would be capped at Rs. 25 crore for destination development and Rs.50 crore for circuit development for identified major destinations and circuits based on tourist traffic. However, the existing ceiling of Rs.5 crore and Rs.8 crore for destination and circuit respectively would continue for other projects. In respect of each large project involving central financial assistance of Rs.25 crore and above, the Ministry should formalise MOUs with State Government and other stakeholders indicating the works to be undertaken by them in physical and financial terms. Total project should include contribution from State Government and contribution from other stakeholders. State Government contribution towards land, rehabilitation package, O&M and external infrastructure like water supply, electricity and roads, as envisaged in

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para-8 below, should be quantified in the DPR. The provisions for preparation of comprehensive DPRs for Destinations/Circuit Project will be as follows: a)

Large Destinations/Circuit Project involving central financial assistance of Rs.25 crore and above will be assisted towards the cost of DPR preparation amounting to 50% of the total cost of DPR preparation or Rs.15 lakh, whichever is lower.

b)

As far as the assistance towards preparation of DPR for smaller projects of destination/circuits are concerned, the assistance will be limited to 50% of the total cost of DPR preparation or Rs.10 lakh, whichever is lower.

Activities/items under State/UT component: The State/UT Governments will be fully responsible for the following components of the project: i)

Making the land available for development.

ii) Implementation of rehabilitation package, where shifting of dwellings or commercial units is required. However, the Government of India would provide assistance for construction of Tourist Reception Centres including shopping complexes to house the displaced shops. iii) Operation, maintenance and management of the assets created. iv) External infrastructure like Water Supply, Electricity and Roads (not covered under para 9 (iv) below) Activities/items under Central component: The assistance under this scheme will be focussed on development of public goods instead of private goods. There should also be convergence with other programmes of Government and duplication shall be avoided. The following works may be taken up under the Scheme under the Central component-


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i.

Improvement of the surroundings of the destination. This would include activities like landscaping, development of parks, fencing, compound wall etc.

ii.

Illumination of the Tourist destination and the area around and SEL Shows etc.

iii. Providing for improvement in solid waste management and sewerage management, Public Conveniences, etc. iv. Improvement of road connectivity leading to the tourist sites, especially from the National Highways/ State highways and other entry points. v.

Construction of Wayside Public Conveniences

vi. Construction of Budget Accommodation, Restaurant & Wayside Amenities including one time assistance for its air-conditioning and furnishings. This component will be supported only in selected places of Jammu & Kashmir and all North Eastern States, and Eco-tourism projects where private sector investment is not forthcoming or not possible. vii. Procurement of equipments directly related to tourism, like Water Sports, Adventure Sports, Eco-friendly modes of transport for moving within the Tourism Zone and equipments for cleaning of the tourist destination will be eligible for 25% grant. viii. Construction of public buildings which are required to be demolished because of implementation of the Master Plan. ix. Refurbishment of the Monuments. x.

Signages and display boards showing Tourist Area Maps and documentation on places of interest at the locations.

xi. Tourist Arrival Centres, Reception Centres, Interpretation Centres

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xii. Improvement of municipal services directly related to Tourism xiii. Other work/activities directly related to tourism. Release of Funds: The funds would be released to the implementing agency as indicated in Para 6 above in three instalments for identified destination and circuit amounting to Rs.25 crore and Rs.50 crore respectively, once the detailed cost estimates of the projects are received. On sanction of the project, the first instalment of 50% of the approved Central Financial Assistance (CFA) will be released to the implementing agency. The second instalment of 30% will be released after receipt of 50% utilisation certificate of the previous instalment. The balance 20% would be released on the completion of the work and on receipt of the Utilisation Certificate. However, CFA in two instalments would be released for other destination and circuit sanctioned for Rs.5 crore and Rs.8 crore respectively. The first instalment in this case will be 80% of the approved CFA on sanction of the project and second instalment will be balance 20% of the approved CFA on the completion of the work and on receipt of the Utilisation Certificate. Codal formalities: The Implementing agency shall follow all codal formalities while awarding contracts and procurement of equipment and ensure complete transparency in its transactions. There would not be any compulsion to execute projects through CPWD. The execution of projects would primarily be the responsibility of State Governments and local agencies. However, whenever a project is to be driven by the Central Government, central agencies could be engaged both for project preparation and for implementation with consent of State/U.T. Govt. concerned.


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Management of assets created: The infrastructure and assets created will be maintained and managed by the State/UT Governments or their agencies with no financial commitment to Govt. of India. The sustainable maintenance plan for the assets to be created must be built into the project proposal for this purpose. Monitoring Committee: State level Monitoring Committees would be set up under the Chairmanship of the respective Secretary (Tourism) of the State/UT Government. This Committee would consist of a nominee of the Ministry of Tourism, Govt. of India and a nominee of the implementing agency. This committee will monitor the physical and financial progress of the sanctioned projects and submit the reports to the Ministry on regular basis. The Committee will be responsible for completion of projects within the stipulated period. Rural Tourism Infrastructure Development

Tourism growth potential can be harnessed as a strategy for Rural Development. The development of a strong platform around the concept of Rural tourism is definitely useful for a country like India, where almost 74% of the population resides in its 7 million villages. Across the world the trends of industrialization and development have had an urban centric approach. Alongside, the stresses of urban lifestyles have led to a “counter-urbanization” syndrome. This has led to growing interest in the rural areas. At the same time this trend of urbanization has led to falling income levels, lesser job opportunities in the rural areas leading to desertion of villages. Rural Tourism is one of the few activities which can provide a solution to these problems. Besides, there are other factors which are shifting the trend towards rural tourism like increasing levels of

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awareness, growing interest in heritage and culture and improved accessibility, and environmental consciousness. In the developed countries, this has resulted in a new style of tourism of visiting village settings to experience and live a relaxed and healthy lifestyle. This concept has taken the shape of a Rural Tourism Product. Under this Scheme, thrust will be to promote village tourism as the primary tourism product to spread tourism and its socio-economic benefits to rural and new geographic regions. Key geographic regions would be identified for development and promotion of Rural Tourism. The implementation would be done through a Convergence Committee headed by the District Collector. Activities like improving the environment, hygiene, infrastructure etc. would be eligible for assistance. Apart from providing financial assistance the focus would be to tap the resources available under different schemes of Ministry of Rural Development, State Govts. and other Ministries/Departments of the Govt. of India. Definition of Rural Tourism: Any form of tourism that showcases the rural life, art, culture and heritage at rural locations, thereby benefiting the local community economically and socially as well as enabling interaction between the tourists and the locals for a more enriching tourism experience can be termed as rural tourism. Rural tourism is essentially an activity which takes place in the countryside. It is multi-faceted and may entail farm/ agricultural tourism, cultural tourism, nature tourism, adventure tourism, and ecotourism. As against conventional tourism, rural tourism has certain typical characteristics like: it is experience oriented, the locations are sparsely populated, it is predominantly in natural environment, it meshes with seasonality and local events and is based on preservation of culture, heritage and traditions.


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Identification of villages: Each State/UT Govt. would be requested to furnish proposals for promotion of Rural tourism. Based on the merits, the proposals would be identified for implementation in the country. Preparation of detailed plan for implementation of the project: After short listing the proposals, the State/UT Govts would be requested to draw up a detailed plan of action. The thrust here would be to achieve convergence between the different schemes of the Govt. of India and the State Govts. It should be ensured that at least 50% of the project should be implemented through achieving convergence of different schemes. Assistance upto Rs.3.00 lakh would be provided to the State Govt. for engaging an expert for preparing the project report. Assistance under the Scheme: A maximum of Rs. 50 lakh would be sanctioned under this scheme. The activities listed under the para 19 could be taken up. Permissible activities: The following works may be taken up under the Scheme: i)

Improvement of the surroundings of the village. This would include activities like landscaping, development of parks, fencing, compound wall etc.

ii) Improvements to roads within the Panchayat limits. This shall not include any major road which connects the village. iii) Illumination in the village. iv) Providing for improvement in solid management and sewerage management. v)

waste

Construction of Wayside Amenities.

vi) Procurement of equipments directly related to tourism, like Water Sports, Adventure Sports, Eco-friendly modes of transport for moving within the tourism zone.

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vii) Refurbishment of the Monuments. viii) Signages. ix) Reception Centres. x)

Other work/activities directly related to tourism.

xi) Tourist Accommodation. Constitution of a Convergence Committee: A Convergence Committee would be set up under the District Collector with all stakeholders as members, to oversee the implementation of the project. Since, there is a need for flexibility and innovation while implementing such projects, therefore, this Committee will also decide to change sanctioned items based on new perceptions emerging during implementation within overall project plan and cost already sanctioned keeping the Ministry of Tourism informed for record. Execution of the works: The execution of the work would be entrusted to any Central Govt./State Govt. agency and the funds would be released directly to the implementing agency by the Govt. of India as recommended by the State Govt. Instalments of release: On sanction of a work the first instalment of 80% of the sanctioned amount of CFA will be released. The second instalment of 20% would be released on submission of the UC and completion certificate. Codal formalities: The implementing agency shall follow all codal formalities while awarding contracts and procurement of equipments and ensure complete transparency in its transactions. While executing the works the implementing agency shall follow the Schedule of rates prescribed by the CPWD or the State PWD or Zila Parishad/Panchayat or DRDA or Rural Engineering Department. However, if there is any item of work to be


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undertaken does not have rates prescribed by any one of the above mentioned agencies then the District Collector could certify the reasonableness of the rates. Management of assets created: The infrastructure and assets created will be maintained and managed by the State/UT Governments or their agencies with no financial commitment to Govt. of India. The sustainable maintenance plan for the assets to be created must be built into the project proposal for this purpose.

S CHEME CIRCUITS

FOR

I NTEGRATED D EVELOPMENT

OF

T OURISM

Under this Central Financial Assistance scheme the Ministry of Tourism Government of India has been extending assistance to States for development of tourism infrastructure. Experience has shown that in the past funds under the CFA have been used to fund a large number of small isolated projects, spread throughout the length and breadth of the country resulting in the resources being spread very thinly. Therefore, in order to provide quick and substantial impact, during the 10th Five Year Plan, this new scheme of Integrated Development of Tourist Circuits have been taken up. The objective of the scheme is to identify tourist circuits in the country on an annual basis, and develop them to international standards. The aim is to provide all infrastructure facilities required by the tourists within these circuits. The Ministry of Tourism aim at convergence of resources and expertise through coordinated action with States/UTs and private sector. 1. Definition of a Circuit

A tourist Circuit is defined as a route on which at least three major tourist destinations are located such that none

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of these are in the same town, village or city. At the same time they are not separated by a large distance such that a tourist would not like to cover them in a sequence. It should have well defined entry and exist points. A tourist who enters at the entry point should get motivated to visit all the places identified on the circuit. The objective of having a tourist circuit is to increase the total number of visits to all the destinations on the circuit on one hand and to provide to the tourist the attraction of all the destinations located on the circuit. 2. Identification of the Circuit

The Circuit to be taken up will be identified by the Ministry of Tourism at the beginning of each year, in consultation with the State Government. While selecting the Circuit, the tourism potential of the places included would be borne in mind. It will be ensured that a circuit is identified for each State/UT in the full Plan period. A circuit could be limited to a State or it could be a regional circuit covering more than a State/UT. The identification of the project, the implementation agency, and the mode of channelisation of funds would be done in consultation with the State Government/UT Administration. However, for projects in the ‘protected areas’ under ASI, the implementing agency would be ASI/CPWD or any other agency to be decided by the Ministry of Tourism. The Ministry of Tourism would bear 100% of the project cost (Capital cost only, except for Refurbishment of Monuments where it would be 66:33 i.e. CFA of 66%) based on the project plan and estimates submitted, excluding the items which are the exclusive responsibility of the State Governments as listed in para 3. The maximum amount that could be sanctioned under this scheme would be Rs. 8.00 crores.


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3. Funding pattern

All activities agreed to by the Ministry of Tourism will be funded on 100% basis i.e. 100% of the capital cost would be borne by the Ministry of Tourism, Government of India, subject to the ceiling of Rs. 8 crores (except, for refurbishment of Monuments where CFA would be 66%). However the State/UT Governments will be fully responsible for the following components of the project. i)

Making the land available for development.

ii) Implementation of rehabilitation package, where shifting of dwelling or commercial units is required. However the Government of India would provide assistance for construction of Tourist reception centers including shopping complexes to house the displaced shops. iii) Maintenance and management of the assets created. iv) Any other item decided by the High Power Committee. v)

External infrastructure, like water supply, Electricity and Roads.

4. Permissible activities

The following works may be taken up under the Scheme: i.

Improvement of the surroundings of the destination. This would include activities like landscaping, development of parks, fencing, compound wall etc.

ii.

Illumination of the Tourist destination and the area around the SEL Shows etc.

iii. Providing for improvement in solid management and sewerage management.

waste

iv. Construction of budget accommodation, wayside amenities.

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v.

Atithi Devo Bhavah

Procurement of equipment directly related to tourism, like water sports, adventure sports, eco-friendly modes of transport for moving within the tourism zone.

vi. Construction of public buildings which are required to be displaced because of implementation of the master plan. vii. Refurbishment of the monuments. viii. Signages. ix. Tourist arrival centers/reception centers/interpretation centers. x.


5. Release of Financial Assistance

On sanction of a work, the first installment of 30% of the approved CFA will be released, and the second installment of 50% will be released on receipt of utilization certificate of the first installment. The balance would be released on completion of the work. 6. Codal formalities

The executing agency shall follow all codal formalities while awarding contracts and procurement of equipments an ensure complete transparency in its transactions. 7. Management of assets created

The infrastructure and assets created will be maintained and managed by the State Government/UT Administration of their agencies with no financial commitment to Government of India, except for those assets which are created in the ‘protected areas’ of ASI.


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8. Prescription of the Schedule of Rates

While executing the works, the executing agency shall follow the Schedule of rates prescribed by the CPWD or the State PWD. 9. Submission of the utilization certificates

The executing agency shall furnish the utilization certificate through the State Government for release of second instalment, a completion certificate has also to be furnished through the State Government before the release of the final installment. In case the works are executed by a Central Agency in a ‘protected area the UC would be obtained from them directly. 10.Monitoring Committee

A State level monitoring committee would be set up under the Chairmanship of the respective Secretary (Tourism) of the State Government. The Committee would comprise a nominee of the Ministry. of Tourism of Government India, and a nominee of the executing agency.

SCHEME OF ASSISTANCE PROJECTS

FOR

LARGE REVENUE GENERATING

1. Preamble

It is recognized that the development of tourism infrastructure projects requires very large investment that may not be possible out of the budgetary resources of the Government of India alone. In order to remove these shortcomings and to bring in private sector, corporate and institutional resources as well as techno-managerial efficiencies, it is proposed to promote large revenue

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generating projects for development of tourism infrastructure in public private partnerships and in partnerships with other Government / Semi-Government agencies. 2. Scope of the Scheme

Large revenue generating project, which can be admissible for assistance under this scheme, should be a project, which is also a tourist attraction, or used by tourists and generates revenue through a levy of fee or user charges on the visitors. Projects like Tourist trains, Cruise vessels, Cruise Terminals, Convention Centres, Golf Courses etc. would qualify for assistance. However, this is only an illustrative list. Hotel & Restaurant component will not be eligible for assistance under the scheme either on a stand-alone basis or as an integral part of some other project. Besides hotel & restaurants, procurement of vehicles and sports facilities like stadiums will also not be eligible for assistance under the scheme. 3. Promoters of Project

While considering projects for Grant-in-aid under this scheme, priority will be given to projects promoted by private sector and the projects with public private partnership. However, in some cases where private sector participation is not possible or is not forthcoming, then the proposals/projects promoted by State Govts. State PSUs, Central Govt, Ministries/Departments like Railways, ASI and Central agencies like Port Trust and CPSEs will be eligible. 4. Eligibility for assistance

Justification for providing assistance/subsidy would be


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ascertained on the basis of feasibility study/DPR at the stage of consideration of the project by the Competent Authority. While selecting projects, priority would be given to projects which have strong private sector participation and involve least subsidy outgo. The projects selected for assistance under this scheme would not be eligible for subsidy from other schemes of Central Government or State Governments. Similarly, the projects which have already availed subsidy/financial assistance from any other scheme of the Central or State Govt., would not be eligible for Government of India assistance under this scheme. 5. Requirement of a Special Purpose Vehicle (SPV)

A SPV would have to be set up by the implementing partners in case a private party is promoting the project, prior to the consideration of their project under this scheme. However, where the promoter of the project is a State Govt., State PSU or Central Agencies like Port trust or Central PSU, a separate SPV need not be required. In both the cases, a separate Project Management Group would be required and separate accounts would be maintained for the project. The Project Management Group, where SPV has to be set up will consist of (i) MD/CEO of the SPV (ii) Project Director/Manager (iii) Finance Director (iv) A representative of the State Govt. to be nominated by them. In the other cases, the Project Management Group will consist of (i) MD/CEO of State PSUs/Central PSUs/ Statutory Body, (ii) State Tourism Secretary(where State Govt. is directly involved), (iii) Project Director/Manager (iv) Finance Director of the Central/State PSU/Statutory Body or the Director-Finance Department of State Government.

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6. Appraisal/Feasibility Report

All project proposals under this scheme must be accompanied by project appraisal carried out by an independent public financial institution. Grant-in-aid for preparation of DPR would be admissible at 50% of the actual cost subject to a maximum of Rs.25 lakh per project. No Grant-in-aid would be admissible for preparation of Feasibility Report. Public financial institutions, in this case, will include a public financial institution under Section 4A of the Companies Act, 1956 and any institution notified by the Government as authorized to discharge the functions of a public financial institution under this Scheme. Anyone of these institutions could also fund the large revenue generating projects admissible under the scheme. 7. Norms for Funding

The amount of assistance under the scheme would be released to Government agencies or PSUs, if the project is promoted by them. In case a private party is promoting the project, the assistance would be released to SPV through the financial institutions. The quantum of subsidy for the projects will normally be determined through a competitive bidding process, with a cap of Rs.50 Cr. subject to a maximum of 25% of total project cost or 50% of equity contribution of the private promoter, whichever is lower. Specific reasons will be required to be brought on record in case competitive bidding process is not adopted for determining the quantum of subsidy. The minimum equity stake of the private promoter would be 51%, wherever the private sector participation is envisaged in the projects.


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The total project cost in this case will mean the total of: i.

Capital cost of the project, including cost of land, material, labour, transport, consumables, testing, commissioning, overheads, contingencies, interest during construction, insurance and supervision (including any taxes and levies);

ii.

Pre-operative cost such as formulation, development, design and engineering; and

Expenses related to fund mobilization if required, such as fees for financial services and brokerage. The assistance would preferably be credit linked and back ended and would be released in three installments. The first installment, limited to 25% of the assistance to be provided by the Ministry, will be released only after 25% of the total cost of the project has been contributed by the promoters. The second installment, limited to 50% of the assistance to be provided by the Ministry, would be disbursed only after 50% of the promoter’s amount is contributed. The last installment of balance 25% of the assistance, to be provided by the Ministry, will be released after the project is fully functional. 8. Recovery of Government Grant

In case the project does not succeed, and there is any default by the promotees, the Financial Institution can recover its loan component and also recover the Grant-inaid component on behalf of Ministry of Tourism. 9. Approval Procedures

The project proposals will be appraised by SFC/EFC depending upon the cost of the project before obtaining approval of the competent expenditure sanctioning authority.

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10. Monitoring and Evaluation

The financial institution, which is funding the project, will be responsible for regular monitoring and periodic evaluation of project compliance with agreed milestones and performance levels. In case there is no financial institution involved in the project then an agency will be designated while sanctioning the project for regular monitoring and evaluation as stated above and the cost for the same will be met out of the scheme. Ministry of Tourism will have a separate Monitoring Group consisting of the concerned Joint Secretary & Director in charge of the scheme alongwith Financial Controller to regularly monitor and review the sanctioned projects.

CAPACITY BUILDING (CBSP)

FOR

SERVICE PROVIDERS SCHEME

A large segment of people are involved directly and indirectly in the tourism industry. Professional expertise is required for specialized vocations in this field. At present there are Food Craft Institutes (FCIs) and Institute of Hotel Management (IHMs) where technical training is being provided to persons for the Hospitality Industry. Tourism training is being provided by the Indian Institute of Tourism and Travel Management, Gwalior, its Eastern Regional Centre at Bhubneswar, and through its various “Chapters” located at different places in the country to persons for taking up professions in the Travel and Tourism Industry. The tourism service providers are both in the approved/ organized and also the unorganized sector. The IHMs and FCIs cater mainly to organized sector i.e. Hotels and Restaurants. At the same time, there are a large number of persons who are engaged in the unorganized sector such as small hotels, road side eating places, ticketing/ travel agencies, dhabas etc.


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There is a segment of tourism service providers who are engaged in other professions but come in contact with the tourist. These persons, such as staff at bus/ railway stations, police personnel, immigration staff at airports, coolies, taxi/ coach drivers, staff at monuments, guides etc. The tourists come in contact with various service providers and it is this experience they have while interacting with the cutting edge governs their experience of India as a tourist destination. It was therefore felt necessary that this large number of service providers are given certain inputs which can improve their behavior and service levels. Therefore a scheme was formulated wherein these service providers in the unorganized sector are given some inputs so as to upgrade their behavior and service skills. Some of the important areas being covered under the training include Health & Personal Hygiene, Cleanliness, Basic Service techniques, Cooking Techniques, Garbage Disposal, Etiquette and basic manners, basic nutrition values. Energy saving and basic tourism awareness, Communication skills, Behaviour Skills, First Aid, Client Handling & Behaviour Skills etc.are also covered in the training programmes. The duration of the course ranges from 1 day to 3 days. The implementing agencies have been given flexibility in devising the training programmes/ modules. However, general parameters have been fixed. Under this scheme the institutions are conducting Training using their own infrastructures in their own premises or are providing the training at site of the service providers. In the case of IHMs and FCIs the Faculty and students are being used widely. A large number of the Service providers are located around the

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tourist sites and therefore such persons have to be trained at their place of work. Similarly, the IITTM has been providing training to such persons either at their own campuses at Gwalior and Bhubneswar or at the sites like at Railway Stations, Taxi Stands, etc. The scope of the implementing agencies has been enlarged as detailed below: India tourism offices, Institutes of Hotel Management, Food Craft Institutes, Indian Institute of Tourism and Travel management, NCHM&CT, Tourism Departments of State / UT Governments, State Tourism Development Corporations, India Tourism Development Corporation (ITDC), State/Centre Training/academic institutions. The specialized academic training institutes in the private sector engaged in giving training in the hospitality sector. Funds are provided to the implementing agencies by the Ministry of Tourism as per the Guidelines of CBSP Scheme.

SCHEME

OF

RURAL TOURISM

Tourism growth potential can be harnessed as a strategy for Rural Development. The development of a strong platform around the concept of Rural tourism is definitely useful for a country like India, where almost 74% of the population resides in its 7 million villages. Across the world the trends of industrialization and development have had an urban centric approach. Alongside, the stresses of urban lifestyles have led to a “counterurbanization” syndrome. This has led to growing interest in the rural areas. At the same time this trend of urbanization has led to falling income levels, lesser job opportunities in the rural areas leading to an urbanization syndrome in the rural areas. Rural Tourism is one of the


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few activities which can provide a solution to these problems. Besides, there are other factors which are shifting the trend towards rural tourism like increasing levels of awareness, growing interest in heritage and culture and improved accessibility, and environmental consciousness. In the developed countries, this has resulted in a new style of tourism of visiting village settings to experience and live a relaxed and healthy lifestyle. This concept has taken the shape of a formal kind of Rural Tourism. Under this Scheme, thrust is to promote village tourism as the primary tourism product to spread tourism and its socio-economic benefits to rural and its new geographic regions. Key geographic regions are identified for development and promotion of Rural Tourism. The implementation is done through a Convergence Committee headed by the District Collector. Activities like improving the environment, hygiene, infrastructure etc. are covered for assistance. Apart from providing financial assistance, the focus is to tap the resources available under different schemes of Department. of Rural Development, State Governments and other concerned Departments of the Government of India. 1. Definition of Rural Tourism

Any form of tourism that showcases the rural life, art, culture and heritage at rural locations, thereby benefiting the local community economically and socially as well as enabling interaction between the tourists and the locals for a more enriching tourism experience can be termed as rural tourism. Rural tourism is essentially an activity which takes place in the countryside. It is multi-faceted and may entail farm/agricultural tourism, cultural tourism, nature tourism, adventure tourism, and eco-

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tourism. As against conventional tourism, rural tourism has certain typical characteristics like; it is experience oriented, the locations are sparsely populated, it is predominantly in natural environment, it meshes with seasonality and local events and is based on preservation of culture, heritage and traditions. 2. Identification of Villages

Each State/UT Govt. would be requested to furnish one proposal for promotion of Rural tourism. Based on the merits and after a joint inspection by the Deptt. Of Tourism, and the State/UT Govt. if required ten proposals would be identified for implementation in the country. 3. Preparation of Detailed Plan for Implementation of the Project

After shortlisting the proposals, the State/UT Govts would be requested to draw up a detailed plan of action. The thrust here would be to achieve convergence between the different schemes of the Govt. of India and the State Govts. It should be ensured that atleast 50% of the project should be implemented through achieving convergence of different schemes. Assistance upto Rs. 3 lakhs would be provided to the State Govt. for engaging an expert for preparing the project report. 4. Assistance under the Scheme

A maximum of Rs. 50 lakhs would be sanctioned under this scheme. The activities listed under the para 5 could be taken up.


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5. Permissible Activities

The following works may be taken up under the Schemei)

Improvement of the surroundings of the village. This would include activities like landscaping, development of parks, fencing, compound wall etc.

ii) Improvements to roads within the Panchayat limits. This shall not include any major road which connects the village. iii) Illumination in the village. iv) Providing for improvement in solid management and sewerage management. v)

waste

Construction of Wayside Amenities.

vi) Procurement of equipments directly related to tourism, like Water Sports, Adventure Sports, Eco-friendly modes of transport for moving within the tourism zone. vii) Refurbishment of the Monuments. (66:33 basis, i.e. CFA of 66%) viii) Signages. ix) Reception Centres. x)


xi) Tourist Accommodation. 6. Constitution of a Convergence Committee

A Convergence Committee would be set up under the Collector to oversee the implementation of the project. 7. Execution of the Works

The execution of the work would be entrusted to any Central Govt./State Govt. agency and the funds would be

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released directly to the implementing agency by the Govt. of India as recommended by the State Govt. 8. Installments of Release

On sanction of a work the first installment of 30% of the sanctioned amount of CFA will be released. The second installment of 50% would be released on submission of the UC for the first installment. The balance would be released on the completion of the work. 9. Following Codal Formalities

The executing agency shall follow all codal formalities while awarding contracts and procurement of equipments and ensure complete transparency in its transactions. 10. Management of Assets Created

The infrastructure and assets created will be maintained and managed by the State/UT Governments or their agencies with no financial commitment to Govt. of India except those assets created in the protected areas of ASI. 11. Prescription of the Schedule of Rates

While executing the works the executing agency shall follow the Schedule of rates prescribed by the CPWD or the State PWD. 12. Submission of the Utilisation Certificates

The executing agency shall furnish the Utilisation Certificate through the State Government for release of the second installment. A Completion Certificate has also to be furnished through the State Govt. before the release of the final installment.


SCHEME OF FINANCIAL ASSISTANCE TO STATES ORGANISING TOURISM RELATED EVENTS

179 FOR

Under this scheme, the Ministry of Tourism provides financial assistance to States/UTs for organizing events for promotion of tourism. The conditions for providing the financial assistance are as under:1. Definition of Event

An event can be a fair, festival, show, seminar, conclave, convention relating to tourism and has a national/ international impact and will build a Brand Equity for India. The events which would fall in this category will be those which transcend the boundaries of State, and are focused on promotion of tourism domestically and internationally. These will not include local events like fairs, festivals, celebrations etc. 2. Number of Events per Year

The Ministry of Tourism will provide financial assistance for only one event per State/UT, in one financial year, subject to availability of funds and the relevance of the event to being a national level tourist attraction. 3. Financial Limit

The financial assistance by the Ministry of Tourism will not exceed Rs.15 lakhs for each event. 4. Permissible Activities

The activities permissible under the financial assistance would include creation of semi-permanent structures, seating arrangements, lighting, sound, remuneration to artists, lodging & boarding, production of posters,

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pamphlets, advertisements in newspapers, hiring of space, transportation etc. 5. Publicity to Ministry of Tourism

Adequate publicity to the Ministry of Tourism would be given in the different advertisements or media releases issued by the State Tourism. Department of Tourism’s logo and website would also be given due publicity. 6. Contribution of State/UT in the Event

The State Government organizing the Event should contribute at least 50% of the total expenditure involved. 7. Release of Financial Assistance

The amount shall be released in 2 installments. The first installment being 80% and the balance 20% shall be released as reimbursement after full details of expenditure (including State/UT components) and Utilization Certificate for the amount released by Ministry of Tourism and a brief note on the advantages gained as a result of the event. These should be furnished to the Ministry of Tourism latest within 6 months of the conclusion of the event. The final installment shall be released after received of Utilization Certificate from the State. State Government should ensure that the accounts of the previous year event must be submitted before applying for the next event. 8. Special Provision for North Eastern States

A maximum amount of Rs.10 lakhs per annum will be given to the North Eastern States irrespective of the number of festivals.


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9. Proposal for Financial Assistance

The proposal for the financial assistance should include in detail the break-up of expenditure and the agencies involved in organizing the event. The proposal should also include the names of sponsors if any and the amount being contributed by them. 10. Codal Formalities

The State Governments/UTs must follow all codal formalities while spending the money released by the Ministry of Tourism as financial assistance.

SCHEME OF CENTRAL FINANCIAL ASSISTANCE PROJECTS

FOR IT

The Ministry of Tourism, Government. of India has in the recent past taken major initiatives in the field of Information Technology with a view to benefit the tourists. The aim of these initiatives have been: a)

To bring improvement and efficiency at Government of India Tourist Offices, and the Ministry Headquarters;

b)

To provide improved & quality tourist information to tourists; and

c)

To provide improved tourist facilitation.

In order to encourage the State Tourism Departments to take major IT initiatives for improved tourist information and facilitation as well as marketing and publicizing their tourist products. To achieve this Central Financial Assistance for IT was formulated to extend assistance to the State/UT Governments to enable them to adopt wide spread use of Information Technology in their tourism products and services comprising publicity, promotion

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and marketing etc. Under this scheme, assistance up to 50% of the IT project is given to the State/UT Governments subject to the following conditions: 1.

The CFA on IT projects will be on 50:50 basis. The CFA will be restricted to an annual ceiling of Rs.75 lakhs for each state/UT irrespective of number of projects. 90% of the central component will be released as 1st installment.

2.

The State/UT Governments should submit their IT proposals for Central Financial Assistance by 30th of October for consideration during the financial year.

3.

State/UT Governments should give a write up on the scope and benefits of the project duly supported by a project/feasibility report preferably prepared by a professional agency/organization. An officer not below the rank of Director Tourism should certify the project report.

4.

The project should be supported in revised Form ‘P’ with full details of the Hardware/Software to be procured/developed and terms and conditions of the procurement and how it’s going to benefit the state. The State/UT Government should clearly mention the cost of the project with state share, schedule of implementation, implementing agency, date of completion and method of funding.

5.

The State/UT Government will bear all expenses for the operation and maintenance including recurring charges of the project and a prescribed undertaking to this effect should be sent along with the proposal.

6.

The State/UT Governments should ensure that the details of the hardware/software components submitted with the project should remain the same at the time of actual procurement. If there are any


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changes in the procurement prior approval of Ministry of Tourism has to be obtained before procurement of hardware/software. 7.

Central Financial Assistance up to 90% of the share of the Ministry of Tourism, GOI will be released to the State/UT Government as an advance subject to the production of a proof for placement of order for procurement/development of Hardware/Software. The balance amount of the Central Financial Assistance in full will be released to the State/UT Governments on production of proof of codal formalities followed, copy of placement order, completion certificate and production of proof of utilization of funds for the purpose for which it was released.

8.

Special assistance (100%) to new states and north eastern states on case to case basis with approval of Secretary (Tourism).

9.

Details of Hardware and Software to be considered for Central Financial Assistance is as follows:

Sl. No. Hardware

Software

1.

Desktop Computer

2.

Laptop Computer

Operating Software Windows all versions Application Software all versions

3.

Scanner

Software for Networking & VPN

4. 5.

Printer LCD Projector

6. 7.

CD Writer Slide Projector

8.

Visualizer

Software for MIS Software for Online Payment Gateway Software for GIS & Multimedia CD ROMs (Thematic, Walkthrough, Virtual Reality and Photo CD) Specialised Software like Photoshop, Corel Draw, Oracle,

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Atithi Devo Bhavah SQL Server, Linux, Autocad, etc. Website Development/Translation of website in foreign languages. Any other software for marketing and publicity purpose.

9.

Portable Screen

10.

Upgradation of Hardware

11. 12

Networking Interactive/virtual walkthrough CD ROM – on destinations CDs/VCDs on culture, traditional art forms Launching of dynamic tourism portals Major revamping of the existing sites Remote Sensing Equipment at monuments Handy Audio Research Kit (HARK) at monuments IVRS facility for dissemination of tourism information Pen Drive Wireless set of North East & Himalayan states Coin operated sightseeing Binocular in Hill regions Photographic capability long range telescope Other hardware equipments

13 14 15 16 17 18

19 20 21 22 23

Ceiling proposed on CFA for different items: i)

Production of CD/VCD/DVD : Rs.10.00 lakhs — Maximum number of topics/themes allowed : Five — No. of copies of CD/VCD/DVD : 5000 — Additional copies for participation in Int’l tourism fairs : 5000


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ii) Preparation of CDs/VCDs on culture, traditional art forms : Rs. 7.00 lakhs — No of themes allowed during a financial year : Five — No of copies of CDs/VCDs : 5000 — Additional copies for participation in Int’l tourism fairs : 5000 iii) Sponsored CD/VCD/DVD on culture, traditional art forms : Rs. 5.00 lakhs — No of themes allowed during a financial year : Five — No of copies for CD/VCD/DVD : 5000 — Additional copies for participation in Int’l tourism fairs : 5000 iv) Web-sites — Launching of Tourism Portals : Rs. 10.00 lakhs — Revamping of existing sites/translation in foreign languages : Rs. 10.00 lakhs v)

Remore Sensing Facility, HARK etc. — Remote Sensing equipment at each monuments : Rs. 15 lakhs — HARK system Each monuments : Rs. 15 lakhs

vi) IVRS — IVRS facility for each connection :Rs. 5 lakhs — Information Kiosk for each site (5 at one site) :Rs. 10 lakhs 17. State/UT wise ceiling : Rs. 75 lakhs during a financial year as central component relaxable for deserving cases with the approval of the competent authority and subject to availability of funds.

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18. Year Wise ceiling for each States/UTs Rs. 75 lakhs 19. Special assistance to New and North East States 100% on case-to-case basis. The above terms and conditions are subject to change based on a review to be made.

SCHEME FOR SUPPORT TO PUBLIC PRIVATE PARTNERSHIPS INFRASTRUCTURE (VIABILITY GAP FUNDING)

IN

A. Whereas the Government of India recognizes that there is significant deficit in the availability of physical infrastructure across different sectors and that this is hindering economic development; B. Whereas the development of infrastructure requires large investments that cannot be undertaken out of public financing alone, and that in order to attract private capital as well as the techno-managerial efficiencies associated with it, the Government is committed to promoting Public Private Partnerships (PPPs) in infrastructure development; and C. Whereas the Government of India recognizes that infrastructure projects may not always be financially viable because of long gestation periods and limited financial returns, and that financial viability of such projects can be improved through Government support. D. Now, therefore, the Government of India has decided to put into effect the following scheme for providing financial support to bridge the viability gap of infrastructure projects undertaken through Public Private Partnerships. 1. Short Title and Extent

(i) This scheme will be called the Scheme for Financial Support to Public Private Partnerships (PPPs) in


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Infrastructure. It will be a Plan Scheme to be administered by the Ministry of Finance. Suitable budgetary provisions will be made in the Annual Plans on a year-to year basis. (ii) The scheme shall come into force with immediate effect. 2. Definitions

In this scheme, unless the context otherwise requires: Empowered Committee means a Committee under the Chairmanship of Secretary (Economic Affairs) and including Secretary Planning Commission, Secretary (Expenditure) and the Secretary of the line Ministry dealing with the subject. Empowered Institution means an institution, company or inter-ministerial group designated by the Government for the purposes of this scheme. Lead Financial Institution means the financial institution (FI) that is funding the PPP project, and in case there is a consortium of FIs, the FI designated as such by the consortium; Private Sector Company means a company in which 51% or more of the subscribed and paid up equity is owned and controlled by a private entity; Project Term means the duration of the contract or concession agreement for the PPP project; Public Private Partnership (PPP) Project means a project based on a contract or concession agreement, between a Government or statutory entity on the one side and a private sector company on the other side, for delivering an infrastructure service on payment of user charges;

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Total Project Cost means the lower of the total capital cost of the PPP Project: (a) as estimated by the government/statutory entity that owns the project, (b) as sanctioned by the Lead Financial Institution, and (c) as actually expended; but does not in any case include the cost of land incurred by the government/statutory entity; and Viability Gap Funding or Grant means a grant onetime or deferred, provided under this Scheme with the objective of making a project commercially viable. 3. Eligibility

1. In order to be eligible for funding under this Scheme, a PPP project shall meet the following criteria: (a) The project shall be implemented i.e. developed, financed, constructed, maintained and operated for the Project Term by a Private Sector Company to be selected by the Government or a statutory entity through a process of open competitive bidding; provided that in case of railway projects that are not amenable to operation by a Private Sector Company, the Empowered Committee may relax this eligibility criterion. (b) The PPP Project should be from one of the following sectors: (i) Roads and bridges, railways, seaports, airports, inland waterways; (ii) Power; (iii) Urban transport, water supply, sewerage, solid waste management and other physical infrastructure in urban areas; (iv) Infrastructure projects in Special Economic Zones; and


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(v) International convention centres and other tourism infrastructure projects; Provided that the Empowered Committee may, with approval of the Finance Minister, add or delete sectors/sub-sectors from the aforesaid list. (c) The project should provide a service against payment of a predetermined tariff or user charge. (d) The concerned Government/statutory entity should certify, with reasons; (i) that the tariff/user charge cannot be increased to eliminate or reduce the viability gap of the PPP; (ii) that the Project Term cannot be increased for reducing the viability gap; and (iii) that the capital costs are reasonable and based on the standards and specifications normally applicable to such projects and that the capital costs cannot be further restricted for reducing the viability gap. 4. Government Support

(1) The total Viability Gap Funding under this scheme shall not exceed twenty percent of the Total Project Cost; provided that the Government or statutory entity that owns the project may, if it so decides, provide additional grants out of its budget, but not exceeding a further twenty percent of the Total Project Cost. (2) Viability Gap Funding under this scheme will normally be in the form of a capital grant at the stage of project construction. Proposals for any other form of assistance may be considered by the Empowered Committee and sanctioned with the approval of Finance Minister on a case-by-case basis.

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(3) Viability Gap Funding up to Rs. 100 crore (Rs. One hundred crore) for each project may be sanctioned by the Empowered Institution subject to the budgetary ceilings indicated by the Finance Ministry. Proposals up to Rs. 200 crore (Rs. Two hundred crore) may be sanctioned by the Empowered Committee, and amounts exceeding Rs. 200 crore may be sanctioned by the Empowered Committee with the approval of Finance Minister. (4) Unless otherwise directed by the Ministry of Finance, the Empowered Institutions may approve project proposals with a cumulative capital outlay equivalent to ten times the budget provisions in the respective Annual Plan. (5) In the first two years of operation of the Scheme, projects meeting the eligibility criteria will be funded on a first-come, first served basis. In later years, if need arises, funding may be provided based on an appropriate formula, to be determined by the Empowered Committee, that balances needs across sectors in a manner that would make broad base the sectoral coverage and avoid pre-empting of funds by a few large projects. 5. Approval of project proposals.

(1) Project proposals may be posed by a Government or statutory entity which owns the underlying assets. The proposals shall include the requisite information necessary for satisfying the eligibility criteria specified in paragraph 3 above. (2) Projects based on standardized/model documents duly approved by the respective Government would be preferred. Stand-alone documents may be subjected to detailed scrutiny by the Empowered Institution.


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(3) The Empowered Institution will consider the project proposals for Viability Gap Funding and may seek the required details for satisfying the eligibility criteria. (4) Within 30 days of receipt of a project proposal, duly completed as aforesaid, the Empowered Institution shall inform the sponsoring Government/statutory entity whether the project is eligible for financial assistance under this Scheme. In case the project is based on standalone documents (not being duly approved model/standard documents), the approval process may require an additional 60 (sixty) days. (5) In the event that the Empowered Institution needs any clarifications or instructions relating to the eligibility of a project, it may refer the case to the Empowered Committee for appropriate directions. (6) Notwithstanding the approvals granted under this scheme, projects promoted by the Central Government or its statutory entities shall be approved and implemented in accordance with the procedures specified from time to time. (7) In cases where viability gap funding is budgeted under any on-going Plan scheme of the Central Government, the inter-se allocation Between such ongoing scheme and this scheme shall be determined by the Empowered Committee. 6. Procurement process for PPP Projects

(1) The Private Sector Company shall be selected through a transparent and open competitive bidding process. The criterion for bidding shall be the amount of Viability Gap Funding required by a Private Sector Company for implementing the project where all other parameters are comparable.

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(2) The Government or statutory entity proposing the project shall certify that the bidding process conforms to the provisions of this Scheme and convey the same to the Empowered Institution prior to disbursement of the Grant. 7. Appraisal and Monitoring by Lead Financial Institution

(1) Within four months from the date on which eligibility of the project is conveyed by the Empowered Institution to the concerned Government/ statutory entity, the PPP project shall be awarded in accordance with paragraph 6 above; provided that upon application made to it by the concerned Government/ statutory entity, the Empowered Institution may extend this period by not more that two months at a time. (2) The Lead Financial Institution shall, within three months from the date of bid award, present its appraisal of the project for the consideration and approval of the Empowered Institution; provided that upon application made to it by the concerned Government/statutory entity, the Empowered Institution may extend this period by not more than one month at a time. (3) The Lead Financial Institution shall be responsible for regular monitoring and periodic evaluation of project compliance with agreed milestones and performance levels, particularly for the purpose of disbursement of Viability Gap Funding. It shall send quarterly progress reports to the Empowered Institution which will make a consolidated progress report once every quarter for review by the Empowered Committee.


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8. Disbursement of Grant

(1) A Grant under this scheme shall be disbursed only after the Private Sector Company has subscribed and expended the equity contribution required for the project and will be released in proportion to debt disbursements remaining to be disbursed thereafter. (2) The Empowered Institution will release the Grant to the Lead Financial Institution as and when due, and obtain reimbursement thereof from the Finance Ministry. (3) The Empowered Institution, the Lead Financial Institution and the Private Sector Company shall enter into a Tripartite Agreement for the purposes of this scheme. The format of such Tripartite Agreement shall be prescribed by the Empowered Committee from time to time. 9. Revolving Fund

A revolving fund of Rs. 200 crore (Rs. Two hundred crore) shall be provided by the Finance Ministry to the Empowered Institution. The Empowered Institution shall disburse funds to the respective lead financial Institutions and claim reimbursement thereof from the Ministry of Finance. 10. Guidelines

The Guidelines issued vide Ministry of Finance Press Release as well as OM of F. No. 2/10/04-Inf. dated 19th August 2004 stands withdrawn with immediate effect.

SCHEME

FOR

MARKET DEVELOPMENT ASSISTANCE (MDA)

The Marketing Development Assistance Scheme (MDA),

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administered by the Ministry of Tourism, Government of India, provides financial support to approved tourism service providers (i.e. hoteliers, travel agents, tour operators, tourist transport operators etc., whose turnover include foreign exchange earnings also) for undertaking the following tourism promotional activities abroad: (A) Sales-cum-study tour (B) Participation in fairs/exhibitions (C) Publicity through printed material A. Sale-cum-Study Tour

In order to encourage the small and medium level service providers to go and promote Indian tourism products abroad, Ministry of Tourism, Government of India provides financial assistance to approved tourism service providers for undertaking sale-cum-study tours to foreign countries. Terms and Conditions

1.

Financial Assistance would be permissible on travel expenses by air from India to any other country and/ or by air/eurorail from one country to another country abroad, in economy excursion class fare @ 75% of the fare. This would, however be subject to an upper ceiling to Rs.75,000/- (Rupees seventy five thousands only) per tour. No financial assistance is provided for travel within India.

2.

One sale-cum-study tour by the tourism service provider to a particular country in one financial year is eligible for MDA assistance.

3.

The tour to single country or a group of countries shall be for a minimum of two-nights stay abroad excluding journey period.


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4.

Assistance shall be permissible to one regular employee/Director/ partner/ proprietor of the company.

5.

The assistance would be available to tourism service providers with foreign exchange earnings up to Rs.10.00 crores (Rupees ten crores only) during the preceding financial year.

6.

The company shall not be under investigation or charged/ prosecuted/ debarred/ black listed by Ministry of Tourism, Govt. of India or any other Government Agency. The service provider should furnish a declaration to this effect.

7.

The applicant would furnish a declaration in the prescribed format as “ I hereby declare that I have not claimed/received any financial assistance for this sale-cum-study tour from Government/Government Agency.”

8.

In case of more applications, priority would be given to those service providers who have not availed financial assistance in the past under MDA Scheme.

Procedure for Submission of Application

(i) The eligible tourism service provider shall obtain prior approval of the Department of Tourism, Government of India, before undertaking the tourism promotional activity/tour abroad. The application shall be submitted direct to the Additional Director-General (Tourism), Department of Tourism, Transport Bhawan, Sansad Marg, New Delhi, in the prescribed format at least 14 days in advance, along with following documents: 1. Proof of approval of the company by Department of Tourism (Copy of approval letter is to be attached)

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2. Certificate of Foreign Exchange Earnings duly certified by Chartered Accountant. 3. Details of financial assistance availed during the last three years from the Government including Ministry of Commerce/FIEO and Department of Tourism. (ii) After undertaking the tourism promotional activity/ tour abroad for which prior approval had been accorded by the DOT, tourism service provider would submit the application for MDA claim, in the prescribed format, to the Ministry of Tourism, Government of India, immediately on return to India but positively within one month of his/her return to India, along with the following documents: (a) Details of financial assistance availed during the last three years from the Government including Ministry of Commerce/FIEO & Department of Tourism. (b) Certificate of Foreign Exchange Earnings duly certified by Chartered Accountant. (c) Self-certified copy of approval certificate issued by the Ministry of Tourism. (d) Legible photocopy of passport highlighting the entries about departure from India and arrival in India and also the countries visited. In case passport does not have arrival/departure dates regarding visits to various countries, documentary evidence such as Hotel Bills, Boarding pass, lodging pass, etc. may be submitted. (e) Original air ticket/jacket used during the journey along with three self-certified photocopies. The following details should be given separately in a statement:


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i) Name of the Traveler ii) Ticket number iii) Flight No. iv) Date of Departure from India v) Sectors/countries visited vi) Class in which traveled vii) Economy excursion class fare for sectors/ countries visited. (f) Brief Report about the tour and achievements. (g) Claim form received after one month of return to India or wherein the deficiencies in the claim as intimated are not fully completed within 30 days of the date of information given, would not be entertained and would be rejected. B. Participation in Trade Fairs and Exhibitions

The Ministry of Tourism, Government of India provides financial assistance to approved tourism service providers for participation in tourism related trade fairs and exhibitions abroad. Terms and Conditions

1)

Financial Assistance would be permissible on travel expenses by air from India to any other country & by air/eurorail from one country to another country abroad, in economy excursion class fair and/or charges of the built up furnished stall, electricity and water charges etc. @75% to the service providing companies. This would, however, be subject to an upper ceiling of Rs.1,10,000/- ( Rupees One Lakh and Ten Thousand only) per participation. No financial assistance is provided for travel within India.

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2)

A maximum of only five participations in a particular trade fair/exhibition by a tourism service provider would be eligible for MDA assistance.

3)

Assistance for travel expenses would be permissible to one regular employee/ Director/partner/proprietor of the company.

4)

The assistance would be available to companies with foreign exchange earnings up to Rs.10.00 crores (Rupees Ten Crores only) during the preceding financial year.

5)

The company shall not be under investigation or charged/ prosecuted/ debarred/ black-listed by Ministry of Tourism, Government of India or any other Government Agency. The service provider should furnish a declaration to this effect.

6)

The applicant would furnish a declaration in the prescribed format as “ I hereby declare that I have not claimed/received any financial assistance for participation in this fair/exhibition from Government/ Government Agency.”

7)



(i) The eligible tourism service provider shall obtain prior approval of the Ministry of Tourism, Government of India, before proceeding abroad to participate in trade fair/exhibition. The application shall be submitted direct to the Additional Director-General (Tourism), Ministry of Tourism, Transport Bhawan, Sansad Marg, New Delhi, in the prescribed format at least 14 days in advance, along with following documents:


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1. Proof of approval of the company by Department of Tourism (Copy of approval letter may be attached). 2. Certificate of Foreign Exchange Earnings duly certified by Chartered Accountant. 3. Details of financial assistance availed during the last three years from the Government including Ministry of Commerce/FIEO & Department of Tourism. (ii) After participating in the Trade Fair/ Exhibition abroad for which prior approval had been accorded by the DOT, tourism service provider would submit the application for MDA claim, in the prescribed format, direct to the Department of Tourism, Government of India, immediately on return to India but positively within one month of his/her return to India, along with the following documents: a) Details of financial assistance availed during the last three years from the Government including Ministry of Commerce/FIEO and Department of Tourism b) Certificate of Foreign Exchange Earnings duly certified by Chartered Accountant. c) Self-certified copy of approval certificate issued by the DOT. d) Legible photocopy of passport highlighting the entries about departure from India and arrival in India and also the countries visited. In case passport does not have arrival/departure dates regarding visits to various countries, documentary evidence such as Hotel Bills, Boarding Pass, lodging pass etc. may be submitted.

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e) Original air ticket/jacket used during the journey along with three self certified photocopies. The following details should be given separately in a statement: i) Name of the Traveller ii) Ticket number iii) Flight No. iv) Date of Departure from India v) Sectors/countries visited vi) Class in which travelled vii) Economy excursion class fare for sectors / countries visited. f) Original copy of receipts/bank advice etc. along with three photocopies, evidencing payment(s) made; if applicable. g) Brief Report about the participation and achievements. h) Claim form received after one month of return to India or wherein the deficiencies in the claim as intimated are not fully completed within 30 days of the date of information given, would not be entertained and would be rejected. C. Publicity through Printed Material

The Ministry of Tourism, Government of India provide financial assistance under the MDA Scheme to approved tourism service providers for production of tourism related publicity material for distributing in foreign countries and in tourism related fairs and festivals abroad in order to promote Indian tourism products.


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Terms and Conditions

1.

Cost of production of publicity material like product catalogue, brochure, information handout etc., for use abroad during sales cum study tour, participation in trade fair/exhibition, MOT sponsored buyer cum seller meet/trade delegation etc., would be permissible for assistance under MDA scheme @25% of the total approved cost subject to an upper ceiling of Rs.15,000/ - (Rupees Fifteen Thousands only).

2.

Assistance would be provided once in a financial year.

3.

A copy of the publicity material is to be submitted along with the claim.

4.

Quotations from a minimum of three printers are to be obtained and submitted along with the claim. Assistance will be allowed on the lowest quotation subject to the upper ceiling as mentioned above.

5.

The company shall not be under investigation/ charged/prosecuted/ Debarred/ blacklisted by Ministry of Tourism, Government of India or any other Government Agency. The service provider should furnish a declaration to this effect.

6.

The applicant would furnish a declaration in the prescribed format as “ I hereby declare that I have not claimed/received any financial assistance for production of this publicity material from Government/Government Agency.”

7.



(i) The eligible tourism service provider shall obtain prior

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approval of the Department of Tourism, Government of India, before printing of publicity material for distribution abroad. The application shall be submitted direct to the Additional Director-General (Tourism), Ministry of Tourism, Transport Bhawan, Sansad Marg, New Delhi, in the prescribed format at least 14 days in advance, along with following documents: 1. Proof of approval of the company by Department of Tourism (Copy of approval letter may be attached) 2. Certificate of Foreign Exchange Earnings duly certified by Chartered Accountant. 3. Details of financial assistance availed during the last three years from the Government including Ministry of Commerce/FIEO & Ministry of Tourism. (ii) After distribution of the publicity material abroad for which prior approval had been accorded by the DOT, tourism service provider would submit the application for MDA claim, in the prescribed format along with necessary documents as indicated in the claim form, direct to the Ministry of Tourism, Government of India, immediately on return to India but positively within one month of his/her return to India, along with the necessary documents. General Conditions Governing the MDA Scheme

1.

For sale-cum-study tour, a tourism service provider is eligible for financial assistance under MDA Scheme for a maximum of two trips in one financial year.

2.

For participation in fairs/exhibitions abroad, a tourism service provider is eligible for financial assistance


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under MDA Scheme to participate in two exhibitions/ fairs abroad in one financial year. 3.

For production/printing of publicity material, MDA would be available once in a financial year.

4.

The financial benefit under MDA Scheme would be given up to a maximum of only two times to the same person in one financial year, irrespective of the number of tourism service providing companies he/ she is associated with.

5.

These revised MDA guidelines are in supercession to guidelines issued vide this Department’s letter No. 15TP(58)/2001 dated 21.8.2003.

6.

These Revised Guidelines will come in force with effect from 16th March, 2004 and till further orders.

PROFESSIONAL SERVICES - MARKET RESEARCH SCHEME G UIDELINES I. Objective of the Scheme :

To undertake the following by using professional Services from Consultant Agencies:

(i) Tourism related Surveys, Studies, Plans, Market Research etc. for making available relevant data/ information/report /inputs to the Department for policy making and planning purposes; and (ii) Feasibility Studies and Detailed Project Reports for specific tourism projects II. Coverage of the Scheme:

The Scheme would mainly cover the following activities:

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(i) Surveys/Master Plans/Studies to be undertaken by Department of Tourism directly as per their own requirements or for State Government/Stake Holders/ Tourism Industry; (ii) Project specific DPRs/Feasibility Studies etc. for Circuit/Destination Development for State Governments/UT Administrations, through professional consultants to be considered under the Scheme of Product Infrastructure Development for Destination and Circuits, pertaining to the States of North East, Sikkim and J&K. Similar requests from other States would be considered on Need Basis; (iii) Collection, compilation, analysis and publication of statistical data; (iv) Meetings /Conferences etc. organized for the purpose of getting inputs from Experts, State Governments, Industry, Intellectuals, etc. for development of Tourism; (v) Funds will not be sanctioned for preparation of DPR/ Feasibility Report for Hotels, Tourists Resorts, etc. However, Ministry of Tourism may consider sanctioning of Surveys for determining the requirement of hotel accommodation etc. in the country. III. Selection of Consultant:

(i) The Department of Tourism will maintain different subject specific Panels of “Consultants” for getting professional services for the purpose of Surveys/ Studies. The Panels will be prepared through an open advertisement in the leading national dailies with the approval of Secretary, Department of Tourism and concurrence of Financial Adviser and their validity will be normally 2 years.


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(ii) The Department of Tourism will invite the proposals from the empanelled Consultants. However, wherever felt necessary, and where the estimated cost of Survey/ Study/Report is likely to exceed Rs. 25 lakh, the Ministry would invite Expression of Interest/Open Tenders through advertisement in leading National dailies, with the approval of Secretary, Department of Tourism. IV. Financial Limit:

(i) For preparation of DPRs/Feasibility Studies etc. for projects under the scheme of Product/ Infrastructure Development for Destination and Circuits, a maximum assistance of Rs. 10 lakh will be provided. (ii) For the preparation of DPRs/Feasibility Reports for projects falling under the other Schemes like LRGP, the financial limits as prescribed in the respective Scheme will be applicable. V.

Release of Financial Assistance:

(i) For the projects taken up by the Department of Tourism, release of Consultancy Fee will be in appropriate installments. In such cases, an advance payment may also be released before start of work, on signing of work agreement and on submission of Bank Guarantee by the Consultant. (ii) In case of DPRs/feasibility studies taken up on the request of States/UTs the Consultancy Fee would be released to the Consultant directly after preparation/ submission of DPR etc., and its acceptance by the State/UT Government concerned.

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GUIDELINES FOR PROJECT APPROVAL OF TIME SHARE RESORTS

Atithi Devo Bhavah AND

CLASSIFICATION

Hotels and other supplementary accommodation are an integral part of a tourist’s visit to a place and the services offered by them can make or mar a visit completely. Vacation ownership popularly known as Time Share is one of the fastest growing component of tourism. Time Share Resorts (TSR) are increasingly becoming popular for the leisure holidays and family holidays, etc. With the aim of providing standardized world class services to the tourists, the Government of India, Ministry of Tourism has a voluntary scheme for classification of fully operational Time Share Resorts in the 5 Star, 4 Star and 3 Star categories. The Hotel & Restaurant Approval & Classification Committee (HRACC) inspects and assesses the TSR based on facilities and services offered. Project approvals are also given in all the abovementioned categories at the project implementation stage. Classified Time Share Resorts approved/approved projects are eligible for various concessions and facilities that are announced by the Government from time to time besides, getting worldwide publicity through the Indiatourism Offices located in India and abroad. TSRs and Hotels are permitted for mixed use. However, if the TSR intends to use as hotel also i.e. mixed purpose, it must provide all facilities and amenities as required or the specified star category of hotel in accordance with the Guidelines. TSRs will be used as vacation ownership. In no circumstances apartments in TSR will be sold individually for residential or any other purpose.


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TSRs including heritage and resorts which are the members of All India Resort Development Association (AIRDA) will be considered for classification/project approval. Details of the criteria set and the documents required are given in this document. For classification and project approvals in the 5 Star, 4 Star and 3 Star, the applications along with the requisite fees may be sent to:Hotel and Restaurants Division Ministry of Tourism, Government of India C-I Hutments, Dalhousie Road, New Delhi-110001. General Terms, Conditions & Application Format For Project Approval At Project Level & Classification Of Time Share Resorts

1.

The Ministry of Tourism approves TSR at project stage based on documentation, which enables the TSR to get certain benefits from the Govt. as may be announced from time to time. The documents required for project approvals are listed below.

2.

Project approvals are valid for 5 years. Project approvals of the Govt. of India, Department of Tourism cease 3 months from the date that the TSR becomes operational even if all its rooms are not ready. The TSR must apply for classification within these 3 months.

3.

The Ministry of Tourism, Govt. India reserves the right to modify the guidelines/terms and conditions from time to time.

4.

Application form. This covers i. Proposed name of the TSR

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ii. Name of the promoters with a note on their business antecedents iii. Complete postal address of the promoters/tel./ fax/email iv. Status of the owners/ promoters 1.

If Public/ private limited company with copies of Memorandum and Articles of Association

2.

If Partnership, a copy of partnership deed and certificate of registration

3.

If proprietary concern, name and address of proprietor/certificate of registration

v. Location of TSR site with postal address vi. Details of the site 1.

Area (in sq. meters)

2.

Title – owned/ leased with copies of sale/ lease deed

3.

Copy of Land Use Permit from local authorities

4.

Distances from Railway station, airport, main shopping centers (in Kms)

vii. Details of the project 1.

Copy of feasibility report.

2.

Star category planned

3.

Number of apartments and area for each type of room (in sq.ft.)

4.

Number of attached baths and areas (in sq.ft.)

5.

Details of public areas – Lobby/lounge, restaurants, bars, shopping, banquet/


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conference halls, health club, swimming pool, parking facilities. 6.

Facilities for the physically challenged persons.

7.

Eco-friendly practices and any other additional facilities (please indicate area in sq.ft for each facility mentioned above at 5,6 &7) Date by which project is expected to be completed and operational.

viii. Blue prints/ sketch plans signed by owners and architect showing 1.

Site plan

2.

Front and side elevations

3.

Floor plans for all floors

4.

Detail of guest room and bath room with dimensions in sq.ft.

5.

Details of Fire Fighting Measures/ Hydrants etc.

6.

Details of measures for energy conservation and water harvesting.

ix. Air-conditioning details for guest rooms, public areas x. Local approvals by 1.

Municipal authorities

2.

Concerned Police Authorities

3.

Any other local authority as maybe required.

4.

Approval /NOC from Airport Authority of India for projects located near Airports

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The above mentioned approvals/NOCs are the responsibility of the promoters/ concerned company as the case may be. The Department’s approval is no substitute for any statutory approval and the approval given is liable to be withdrawn in case of any violations without notice. xi. Proposed capital structure 1. Total project cost a. Equity component with details of paid up capital b. Debt – with current and proposed sources of funding xii. Letter of acceptance of regulatory conditions. xiii. Please indicate whether the promoter intends to give a few rooms or all rooms on a time- share basis. xiv. Application Fee 5.

In the event of any changes in the project plans, the approval must be sought afresh.

6.

Authorised officers of the Department of Tourism should be allowed free access to inspect the premises from time to time without prior notice

7.

The TSR must immediately inform the Department of the date from which the TSR becomes operational and apply for classification within 3 months of this date.

8.

The fees payable for the project approval and subsequent extension, if required are as follows. The demand draft maybe payable to” Pay & Accounts Officer, Department of Tourism, New Delhi “.


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Star category

Amount in Rs.

5-Star

15,000

4-Star

12,000

3-Star

8,000

9.

The promoters must forward regular progress reports for each quarter failing which the project approval would be considered withdrawn.

10.

All documents must be valid at the time of application and a Gazetted officer or Notary must duly certify copies furnished to the Department. Documents in local languages should be accompanied by a translation in English/official language and be duly certified.

11.

For any change in the category the promoters must apply afresh with a fresh application form and requisite fees for the category applied for.

12.

Any changes in the project plans or management should be informed to the, Department of Tourism/Regional Directors Office (For 3,2 &1 Star categories) (for 5-D, 5, 4 Star and Heritage categories) within 30 days otherwise the approval will stand withdrawn/terminated.

13.

Applicants are requested to go through the checklist of facilities and services contained in this document before applying.

14.

Incomplete applications will not be accepted.

15.

The Govt. India Ministry of Tourism reserves the right to modify the guidelines/ terms and conditions from time to time

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TSR Classification/ Reclassification

1.

Classification for newly operational TSR must be sought within 3 months of completion of approved TSR projects. Operating TSR’s may opt for classification at any stage. However, TSRs seeking reclassification should apply for reclassification one year prior to the expiry of the current period of classification.

2.

If the TSR fails to reapply three months before the expiry of the classification order, the application will be treated as a fresh classification case.

3.

Once a TSR applies for classification/ re-classification, it should be ready at all times for inspection by the HRACC. No requests for deferment of inspection will be entertained.

4.

Classification will be valid for 5 (Five) years from the date of issue of orders or in case of reclassification from the date of expiry of the last classification provided that the application has been received within the stipulated time mentioned above, along with all valid documents. Incomplete applications will not be accepted.

5.

TSRs applying for classification must provide the following documentation. a. Application Form detailing i.

Name of the TSR

ii.

Name and address of the promoters/owners with a note on their business antecedents

iii.

Complete postal address of the hotel with tel. no/fax/email

iv.

Status of the owners/ promoters


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1. If Public/ private limited company with copies of Memorandum and Articles of Association 2. If Partnership, a copy of partnership deed and certificate of registration 3. If proprietary concern, name and address of proprietor/certificate of registration. v.

Date on which the hotel became operational.

vi.

Details of hotel site with postal address and distance from Airport/Railway Station/City Centre/Downtown shopping area (in kms)

vii.

Details of the hotel 1. Area (in sq. metres) with title – owned/ leased with copies of sale/ lease deed 2. Copy of Land Use Permit from local authorities 3. Star category being applied for 4. Number of rooms and area for each type of room in sq.ft. (single/double/suites) 5. Number of attached baths 6. Details of public areas – Lobby/lounge, restaurants, bars, shopping area, banquet/ conference halls, health club, swimming pool, parking facilities, facilities for the physically challenged persons, Eco-friendly practices and any other additional facilities. The area for each facility should be indicated in sq.ft 7. Detail of guestroom and bathroom with dimensions in sq.ft. 8. Details of Fire Fighting Measures/ Hydrants etc.

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9. Details of measures for energy conservation and water harvesting and other Eco-friendly measures and initiatives. 10. Air-conditioning details for guest rooms, public areas Certificates/No Objection Certificates (attested copies) a) Certificate/ licence from Municipality/ Corporation to show that your establishment is registered as a hotel b) Certificate/ licence from concerned Police Department authorizing the running of a hotel c) Clearance Certificate from Municipal Health Officer/ Sanitary Inspector giving clearance to your establishment from sanitary/hygienic point of view d) No Objection Certificate with respect to fire fighting arrangements from the Fire Service Department (Local Fire Brigade Authorities) e) Public liability insurance f) Bar Licence g) Money Changers Licence h) Sanctioned building occupancy certificate i)

plans/

If classified earlier, a copy of the earlier “Certificate of Classification issued by Department of Tourism


j)

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For Heritage property, certificate from the local authority stating age of the property and showing new and old built up areas separately.

k) Any other local authority as maybe required. l)

Approval /NOC from AAI projects located near Airports

for

m) Please indicate whether a few rooms or all rooms are to be let out on a time-share basis. n) Application fees The above-mentioned approvals/No Objection Certificates are the responsibility of the Owners/ promoters/concerned Company as the case may be. The Department’s approval is no substitute for any statutory approval and the approval given is liable to be withdrawn without notice in case of any violations or misrepresentation of facts. 6. All applications for classification or re-classification must be complete in all respects – application form, application fee, prescribed clearances, NOCs, certificates etc. - incomplete application is liable to be rejected. 7. TSRs will qualify for classification as Heritage hotels provided a minimum 50% of the floor area was built before 1935 and no substantial change has been made in the facade. Hotels, which have been classified/, re-classified under Heritage categories prior to issue of these Guidelines will continue under Heritage categories even if they were built between 1935-1950.

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8. The application fees payable for classification/ reclassification are as follows. The demand draft maybe payable to” Pay & Accounts Officer, Department of Tourism, New Delhi “. Star Catgory 3-Star 4-Star 5-Star

Classification/Reclassification fees in Rs. 10,000 15,000 20,000

9. The classification committee will consist as follows: (a)

Chaired by Chairman(HRACC) or his representative. Representatives from AIRDA/FHRAI/HAI/IATO/TAAI/IHM/ RD/local Indiatourism office /Member Secretary will constitute the other members of the Committee.

(b)

The Chairman and any 3 members will constitute a quorum.

(c)

The minutes will be approved by the Chairman (HRACC).

(d)

In case of any dissatisfaction with the decision of HRACC the hotel may appeal to Secretary(T), Government of India for review and reconsideration within 30 days of receiving the communication regarding classification/reclassification. No requests will be entertained beyond this period.

10. TSR will be classified following two stage procedure. The presence of facilities and services will be evaluated against the enclosed checklist. (a)

TSRs will be required to adopt environment friendly practices and facilities for physically challenged persons.


(b)

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The quality of facilities and services will be evaluated against the mark sheet.

11. The TSR is expected to maintain required standards at all times. The Classification Committee may inspect a hotel at any time without previous notice. The Committee may request that its members be recommended overnight to inspect the level of services. 12. Any deficiencies/rectification pointed out by the HRACC must be complied with within the stipulated time, which has been allotted in consultation with the hotel representatives during inspection. Failure to do so will result in rejection of the application. 13. The Committee may assign a star category lower but not higher than that applied for. 14. The TSR must be able to convince the Committee that they are looking sufficient steps to conserve energy and harvest water, garbage segregation, and disposal/recycling as per Pollution Control Board (PCB)norms and following other Eco-friendly measures. 15. For any change in the star category the promoters must apply afresh with a fresh application form and requisite fees for the category applied for. 16. Any changes in the plans or management of the hotel should be informed to the HRACC, Govt. of India, Ministry of Tourism within 30 days otherwise the classification will stand withdrawn/terminated. 17. Applicants are requested to go through the checklist of facilities and services contained in this document before applying,.

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18. Incomplete applications will not be considered. All cases of classification would be finalised within three months of the application being made. 19. The Govt. of India, Department of Tourism reserves the right to modify the guidelines/ terms and conditions from time to time.

7 Destination Management A tourist destination is a city, town or other area the economy of which is dependent to a significant extent on the revenues accruing from tourism. It may contain one or more tourist attractions or visitor attractions and possibly some “tourist traps”. Natural attractions draw visitors to see what the world was like before tourism left previous, traditional cultures abandoned, as Western influence swept the world. Popular cities such as Paris, London, Washington, DC, New York City, Madrid, Sydney, Tokyo, Toronto and Rome have a large number of tourists each year, making them a huge tourist destination. Managing tourism destinations is an important part of controlling tourism’s environmental impacts. Destination management can include land use planning, business permits and zoning controls, environmental and other regulations, business association initiatives, and a host of other techniques to shape the development and daily operation of tourism-related activities. The term “destination” refers broadly to an area where tourism is a relatively important activity and where the economy may be significantly influenced by tourism revenues. Destination management is

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complicated by the fact that a single, recognizable destination may include several municipalities, provinces, or other government entities - in island environments it may be the entire country. Participating governance structures led by local authorities, with the involvement of local NGOs, community and indigenous representatives, academia, and local chambers of commerce, make up what are known as “Destination Management Organizations” (DMOs). Often DMOs take the form of local tourism boards, councils, or development organizations. The network of local tourism businesses (hotels, attractions, transportation services, service providers such as guides and equipment rentals, restaurants, etc.) are also a significant part of a destination. The needs, expectations and anticipated benefits of tourism vary greatly from one destination to the next, and there is certainly no “one size fits all” approach to destination management. As local communities living in regions with tourism potential develop a vision for what kind of tourism they want to facilitate, a comprehensive planning framework such as Local Agenda 21 has proved useful and is being used more and more often. Promoting sustainable tourism within Local Agenda 21 processes is a way to strengthen local stewardship of the environment.

TOURIST A TTRACTION Tourist attraction is a place of interest where tourists visit. Some examples include historical places, monuments, zoos, museums and art galleries, botanical gardens, buildings and structures (e.g., castles, libraries, former prisons, skyscrapers, bridges), national parks and forests, theme parks and carnivals, ethnic enclave communities, historic trains and cultural events.

Destination Management

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Tourist attractions are also created to capitalise on unexplained phenomena such as a supposed UFO crash site near Roswell, New Mexico and the alleged Loch Ness monster sightings in Scotland. Ghost sightings also make tourist attractions. Ethnic communities may become tourist attractions, such as Chinatowns in the United States and the black British neighborhood of Brixton in London. In the US, owners and marketers of attractions advertise tourist attractions on billboards along the side of highways and roadways, especially in remote areas. Tourist attractions often provide free promotional brochures and flyers in information centres, fast food restaurants, hotel and motel rooms or lobbies, and rest areas. While some tourist attractions provide visitors a memorable experience for a reasonable admission charge or even for free, others can have a tendency to be of low quality and to overprice their goods and services (such as admission, food, and souvenirs) in order to profit from tourists excessively. Such places are commonly known as tourist traps.Many tourist attractions have a higher concentration of hotels and motels located nearby.

C OMMUNITY

AND

D ESTINATION B RANDING

The task of creating a community brand that is going to hit customer hot buttons, stand out from competitors, and resonate with the values of residents requires vision, extensive research, strategic thinking, and a lot of creativity. The reputations, credibility, and perceptions of communities are influenced by every encounter with customers. This philosophy has shaped our proprietary

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methods for building easy to implement brand strategies for communities. Decades of practice in building destination brands has shown us the need to go beyond the traditional positioning statement used for consumer goods to capture the most relevant and sustainable brand platform, and present it as a promise to guide the community and its partners. For instance, the 7A Destination Branding System is an overall process that guides the brand building from the “inside out”. It engages stakeholder buy-in from the earliest stages and aligns them with the insights learned from extensive qualitative and quantitative research. This forges strong positioning that is steeped in the realities of the city’s markets, its capabilities, its competitors, and importantly the values of the local community and partners. The guiding principle of 7A approach is that it takes local people to breath life into a community’s Destination Promise and to take responsibility for the brand’s ongoing vitality. We create the customized strategies, designs, educational programs, and tools to ensure that the brand has a ‘soft landing’ and is well received, endorsed, and adopted by key partners and residents. A rich, relevant, and respected brand will not emerge in an afternoon. There is no “silver bullet” or onesize-fits-all solution that can quickly deliver a winning brand strategy for a community. Like the great chefs of Europe, it cannot be rushed. One of the special considerations is that communities are usually a compilation of many independent and competing entities owned and managed by many different organizations with no single owner, brand custodian, or decisionmaking group. We are driven by the fact that sustainable community brands require an approach that differs


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somewhat from branding corporate products and services. The 7A Destination Branding System follows a systematic path to ensure that all stages are given thorough consideration. Our first objective is to craft the Destination Promise which will influence all aspects of the community’s brand. 7A charts over 300 brand audit questions, and follows cost-effective qualitative and quantitative research techniques, dozens of interviews, workshops, experience mapping exercises, and creativity sessions to identify the ideal competitive advantage, compelling brand platform, and distinctive visual and verbal identity elements to inspire marketing communications. 7A not only leads to stunning marketing materials, importantly it provides the strategic foundation to elevate all marketing and brand experiences to levels of excellence that may otherwise have not been possible. Simply put, great strategies require great strategic input, something that the 7A system always delivers. While the 7A Destination Branding System is at the heart of our approach, we constantly adapt it to suit the particular situation of each city or region. Visitor Readiness Reports

At the heart of the destination branding approach is ensuring that communities delight their customers throughout the total destination experience. Like your car, a community’s visitor preparedness is in need of a tune-up to keep it running exactly as it should in order to deliver the best results for everyone. There are often dozens of low cost (and no cost) solutions that can attract more visitors, hold their interest, and increase their spending.

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A Visitor Readiness Report is great “insurance” and a cost effective way for small ambitious communities to put their best foot forward and fine-tune the performance of their visitor economy. This report is specifically designed to meet the needs and resources of volunteer committees and small destination marketing organizations. Tourism Planning

An easy to follow tourism development plan is an important step for any city, county or region that wants to realize its tourism potential. Without hesitation, the clients and colleagues attest to our ability to foster a collaborative approach between the private and public sector. The diversity of stakeholders involved in a city’s tourism economy underscores the need for a comprehensive master plan that can draw together and deliver value to everyone. A Tourism Development Plan generally focuses on five key destination elements: — Attractors. Create awareness for the destination and attract customers Infrastructure Provide the logistics and create a sense of place — Product Development. Increase the accessibility, understanding and engagement with the destination to make it more enjoyable for visitors. — Visitor Services. Enhance the visitor’s experience and satisfaction — Brand Management and Marketing. Provide clarity, consistency, and distinctiveness for projecting and delivering the destination


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— Organization. The partnerships, networks, business support and skills that are essential for successful destination management. Speaking Engagements

As an author and international destination branding and marketing expert, Bill Baker has been a popular presenter at over one hundred seminars, conferences and workshops. His energizing and thought-provoking presentations show how cities and regions, can build distinctive identities, and unlock their market potential. In recent years, Bill has conducted engaging presentations in places as diverse as New Delhi, Hong Kong, Monaco, Rome, and in dozens of places in the U.S.A. His popularity comes from his ability to demystify and communicate important and easy to use concepts relating to destination branding and marketing. It is not uncommon to hear “Ahaa’s” from delegates as they realize the benefits and solutions arising from the ideas and tools that he shares with them. Bill generously delivers the kind of material that delegates can walk away and start using immediately. Participants appreciate receiving the checklists, templates, practical tips, and insights that can only be gleaned from someone with a lifetime of hands-on experience. Delegates can anticipate a fast-moving, humorous, and high-content program that will be customized to suit the needs of your audience.

IMAGE BUILDING

OF

DESTINATIONS

The destination management can be defined as a system of managerial skills and activities used for coordinated planning and organizing of tourism for a particular

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destination. In other words, in the process of strategic planning for regional development representatives should be involved not only from the public sphere, but also businessmen, non-profit sector and civic initiatives. Primarily in tourism the cooperation of public and private sectors is especially important, because the satisfaction of a client in tourism influences the entire complex of services and if one of the services doesn’t function properly or doesn’t function at all, then it projects negative impressions on other service providers, even if their services are of high quality. That concludes, that a well functioning cooperation of a public and private sector contributes to forming of positive image of a region, which then significantly influences the decisionmaking of potential customer in destination selection. In relation to this we can often see a term “marketing of local government”, which might be for many people somewhat unusual term. Nevertheless, it’s nothing else but “attracting investors to a region, attracting tourists, communicating with public and promotion of a region”. These are the main objectives of the local government representatives. Marketing of a region (place or area) is thus marketing of local authorities. A destination can be considered as a product of tourism, which is a combination of many partial products (services), components. Under a product destination, we understand everything, that a town offers its residents, visitors, businesses and potential investors, and what contributes to satisfying their individual or common needs. Some entities are then both parts of the product and its consumers.


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Jane kova and Vastikova define destination as a symbiosis of impact of material resources (such as recreation area, infrastructure) and non-material resources (climate, personalities - such as guides etc.). The level of the product interrelates directly with its image, its quality, and quantity. The image of local authorities and the image of individual services provided in the destination put the finishing touches to summary image of a destination. The image of a place, a region or a town is not only an important part of the product, but first of all it can play an important role in destination promotion. Each tourist destination should strive for creation of a specific image. An image of a place or a destination is rather a complex variable. It is influenced both by internal and external environment that is formed by a number of factors. It stems from the history of a town or a region, as much as from its present. An image of a place is also interconnected with its positioning in individual market segments, because for each of these segments the destination presents its different image. Very clearly define positioning Ries and Trout, who say that “positioning is not what you do with a product, but what you do with perception or the mind of the potential customers.” The image of a country may, but doesn’t necessarily need to conform to its reality. Often an image comes across the same way as a clich. It underlines certain characteristics of a country while it leaves out different ones. Despite the fact, or maybe because of that has an image such importance and many times it influences people’s behavior and attitudes. A majority of researches of place’s image from the point of view of tourism take account of the acquired image, most of all the characteristics of how the people perceive the particular places and how they react to these

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perceptions, and whether this acquired image influences their present, existing concepts and their behavior as customer of tourism products. When creating an image of a place, the municipalities or organizations involved must start with their own ideas and expectations about the place, town, destination, from its history and local conditions. The important factors are: — Size of the location — Natural and tourism conditions — Economic activities — Regional and international importance of the location — Relations among the communities — Marketing activities of the town and municipalities — Relations among local municipalities and interest groups — Local politics. When planning and building image, Ashworth and Goodall use these three basic types of research sources: 1.

Geographic research: analyzes the natural, cultural and economic specifics of a destination (e.g. cultural traditions, customs). Exploiting the local traditions can intensify the feeling of pride of the locals for their place (area, region), which helps to better acceptance of and life together with tourists.

2.

Marketing research: the goal is to find a competitive advantage of the analyzed destination. We presume that the individual destinations are substitutes for each other and our effort is to convince the potential clients to select our particular destination as their recreation resort. Marketing theory describes this technique also as branding. The goal is simple and quick identification of a particular destination by


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introduction of a specific name, logo and other symbols contributing to differentiation from other competing destinations. 3.

Sociological research: it is based on differences among people in various communities. The foundation for properly built image is in its authenticity and specification, which provides the place with competitive advantage. People should perceive the destination as something unique.

An important term in this subject is also so called as Corporate Identity. It is the summary image of a destination (generally applies also to any organization or institution). It is represented by shared values, opinions, and attitudes of each sector (commercial, public and nonprofit) in a destination, which differentiate the destination. On the outside, the destination is represented both by tangible elements (corporate design, name, logo, symbols, etc.), and intangible elements, such as the shared values, that contribute to the corporate culture. The four advantages of using the image of a country: 1.

Building a country’s identity: By analyzing the image of a country, we can reveal the important unique selling proposition of a country. If the country’s image proves to have positive influence on the perception of the country and its products, then it is in interest of the export policy to support the image and systematically develop it. This position is described as USP-strategy. This strat-egy provides numerous advantages - first of all, it promises success with use of just a bit of resources.

2.

Cost-saving effect: The majority of the businesses are small or middle size, and when entering the international market, they are not well known or not known at all. Raising awareness and building a high

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level of knowledge about them is very costly from the financial point of view. 3.

Image transfer strategy: If there are any strengths associated with a country, where it is reasonable to take advantage of them and use them as a support also for other services and products of that particular country that are not so well known.

4.

Increased efficiency of advertising: Based on emotionally charged elements of promotion supporting exports, the efficiency of marketing communication can be increased. It leads to higher sensitivity to advertising and positive image transfer. An important factor of building an image is establishment of the brand of a destination. It is clear that a country (a destination) with strong, positive and generally accepted associations lead to trust, quality and integrity, which provide the producers or services provider with a competitive advantage.

Smart country representatives base their brands and their reputation and their attitudes exactly the same way as smart companies do. Globalization and harmonization effects of European integration contribute to the pressure on countries to create, manage and increase the value of their “brand”. The countries are aware that most of them provide similar products: area, infrastructure, educated citizens and very often also almost identical government system. To stand out in a crowd, it is necessary to really work on building your own brand. It is a difficult and longterm task, which can, however, significantly influence foreign investment decision-making and a market capitalization of the country. The countries need to search for a market niche and get involved in competitive struggle with marketing of other countries with the goal to satisfy customers and first of all to create


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a loyalty to their brand. In reality, a brand is ethically neutral term - it is simply a name representing perceived values related to the reputation of a product or a company. When building and maintaining the image of tourist destination these following factors are important: 1.

The research of current attitude and awareness about the country. An important and basic condition of success is knowledge and availability of information. Knowing, how the country is perceived, is very important information.

2.

Be active. When creating and sustaining an image, we cannot wait for someone to come to us. It is necessary to take the initiative and let the others know about us. Then you can control the extent and form of provided information. That gives more possibilities to better prepare for various problematic topics.

3.

Clearly define image you aspire to have. In order to work on image and influence its characteristics, it is necessary to have clear idea of how it should be like, what we aspire to. Otherwise it could happen that media or someone else would define, who we are and where we fit. It is important to realize that an image has certain time stability and, therefore, it requires longer time period to change the image.

4.

Stress benefits and the uniqueness.

5.

Define the audience. Just as in marketing plan of a product, the marketing plan of a country needs to define certain target segments that we want to address. Targeting the message can save costs and increase efficiency.

6.

Create and use marketing plan. Marketing a country is a very complex thing. It is necessary to create

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mutual cooperation among individual participating entities in order to reach consistency and efficiency. Marketing plan should include these basic elements: analysis of current situation, objectives, strategies and methods, how to reach the stated objectives, time schedule and budget. 7.

Create and maintain a steady flow of information. If we want to create or change perceptions, it is impossible just to wait for something to happen. It is up to our own initiative to provide enough press releases, promotion materials, advertisements, surveys.

8.

Be specific in your information. If we want to differentiate from other countries, we have to clearly exhibit, why we deserve the support and interest. We should offer the best or at least an original idea.

9.

Don’t exaggerate. The right solution is not boasting and promises you cannot fulfill, the goals can be reached, when the communication and presentation will be direct, confident and honest. The goal is to gain goodwill and respect.

10. Be patient. Image can hardly change over a short period of time. Creating and maintaining an image is not a question of few years, but rather decades of a consistent work. 11. The first rule of effective public relations is to be good. When creating the marketing plan to support an image of a country, it is necessary to stay realistic. A skilled PR person can tell something good about anything. But you cannot look good unless you are good. Using PR to hide problems is unfruitful, expensive and can lead to embarrassing situations. A guarantee of high quality of production, providing services, respectful treatment, quality of legal system then lead to achievement of the requested results.


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12. Using celebrities as spokespeople can bring both positive and negative effect. Celebrities usually attract more attention faster, they can help to win, by association, goodwill of their fans. The effect can also be opposite - the celebrity’s private life can hurt the image of the country even more. So the choice of such a personality has to be very sensitive, if we want to achieve our objectives. 13. Image Marketing overlaps practice and budget areas. The brands, logos and symbols representing the country is necessary to apply to as many different fields as possible (promotion materials, catalogues, web sites, headed papers, etc.), so their knowledge is as high as possible, otherwise they don’t fulfill their purpose. 14. Image is based on emotions. Promotion and other marketing activities can help to influence, how people will perceive our country. Making a list of benefits and unique features of what we represent can help us to better affect emotions and feelings, which stay after our campaign is over.

M ANAGING H EALTH

AND

S ANITATION C ONDITIONS

As tourism continues to grow, becoming an important input to the economics of most of the countries of the Americas, so grow concerns for and attention to tourismrelated aspects of infrastructure, safety, security, health, and environmental conservation. The relation between health and tourism has long been recognized, not only as a significant driving force for travel but also in terms of the potential health risks stemming from contacts by visitors, with the environment and the host population. When, in 1963, the United Nations Conference on Travel and Tourism defined tourism, “health” was

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recognized as a major reason for travel. Health issues related to travel and tourism have promoted strong working links between the World Health Organization (WHO) and WTO. Regional WHO Offices, such as the Pan American Health Organization (PAHO), are also building strong links with regional organizations and mechanisms, such as the Caribbean Tourism Organization (CTO) and the Inter-American Travel Congress (IATC). Note should also be taken of the important collaboration between the Organization of American States (OAS) and PAHO in the area of tourism, including aspects of environmental health in the context of sustainable tourism development. WHO has affirmed its leadership by establishing criteria and guidelines for drinking and for recreational water quality; for airplane catering and for publishing such classic texts as “Guide to Sanitation in Tourist Establishments” and “ Guide to Health and Salubrity in Air Transport.” This, together with the vaccination certification requirements, attest to the great importance WHO gives to the link between health, travel and tourism. Regional publications such as “The Hygienic Handling of Food” and “Environmental Health and Sustainable Tourism Development in the Caribbean” further WHO’s leadership role in this area. In 1992, PAHO and the International Institute of Tourism Studies of the George Washington University, published the results of a bibliographic research of annotated English referenceson health and tourism interaction available on electronic data bases. The interesting aspect of this research is that, although 147 references were identified, in certain areas the bibliography is limited. One possible explanation of this fact is that almost all documents were written by authors


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from developed countries, catering to information needs of potential tourists from these countries. People travel for a variety of reasons: business, congresses, cultural enrichment, ecological explorations, family reunions and to visit with friends; but the most ancient and most frequent reason to engage in tourism is health. The 1983 World Tourism Meeting stated that “the right to rest, a natural consequence of the right to work, must be affirmed as a fundamental right in terms of human happiness”. In this context, tourism serves to fulfill the basic human need to recover mental and physical well-being. When the right for vacations was achieved by employees, it was defined as leisure time aimed at recovering capacity to work, thus meant to be spent in quality environment proper for the recovery of physical and mental strength. This need for recovery of working capacity is even more true now-a-days as demonstrated by the growing trend by employees to request more frequent yet shorter vacations rather than one long annual vacation. The growing popularity of vacationing at spas and thermal baths is another indication of how health and tourism are related, constituting what has been named “therapeutic travel.”This form of travel accounts for the popularity of thousands of such places around the world. Many of these places associate leisure time with professional care for weight loss, physical fitness, rehabilitation and stress reduction. Many of them incorporate programs for treatment of drug and alcohol addiction. Cuba presents an interesting form of therapeutic tourism by offering highly qualified medical services to

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patients from other countries at costs considerably lower than those at their place of origin. Many times these medical services come as part of a tourist package and special housing arrangements are available for this purpose.

HEALTH IMPACTS

OF

TOURISM

Impacts on Visitors

There are plenty of publications available in developed countries describing health hazards to tourists planning to travel to countries and places with developing economics. Although normally very general in their contents, and many times based on perceptions or projections rather than concrete facts, these publications respond to most of the concerns potential travelers have. A recent version of the book published in Canada under the title “Don’t Drink the Water” describes a long list of potential risks and suggests ways and means to avoid exposure to these risks. Tourists can feel the health impacts very early in their journey, at the onset of jet lag or sea-sickness. Although they pose no major health risks, these two problems can cause considerable distress, mainly in elderly people and those with pre-existing health conditions. Most attention is normally placed on the occurrence of diarrheas caused by parasites, bacteria or virus. Most of the travelers are not exposed to these microorganisms in their environment of origin, making them prime victims in some of the tourist places. Mainly associated with the consumption of contaminated food or water, such diarrheas rarely require intensive or extensive medical care. Escherichia coli, shigella and salmonella are


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among the most frequent agents of diarrheas in tourists. These microorganisms are also present in swimming pools and costal waters where they are sometimes related to gastrointestinal, respiratory and skin infections. The consumption of contaminated seafood has been shown to be associated with the occurrence of Hepatitis A, since shellfish and, very specifically the bivalves, concentrate the microorganisms, exposing consumers to high doses of infectious agents. In some instances, the consumption of seafood, specifically carnivorous fish, has been linked to Ciguatera, which is an intoxication of tourists due to the presence of high concentrations of Cigua-toxins produced by the algae. Outbreaks of Legionnaires disease have gained significant visibility in recent years. A respiratory disease caused by a bacteria called Legionella pneumophila associated with the water and the air conditioning systems in hotels and other closed environments. There are many more potential biological health risks to which unprotected non-immune tourists may be exposed. Some of the more frequently identified agents are entamoeba, vibrio cholerae, giardia, helminths and the virus which cause gastroenteropathies. All of these are associated with the consumption of unsanitary food and water. Another group of health risks to which travelers are often exposed are those transmitted by vectors like mosquitos, ticks, lice, fleas and mites. Malaria, dengue, yellow fever and lyme disease are among the vectortransmitted diseases sometimes diagnosed among tourists. Most of the above health problems can be adequately controlled through the application of wellknown procedures for food handling and environmental

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sanitation. As a general statement, it could be said that a clean environment is a seal of quality for tourists, since it indicates the concern local authorities have with environmental health matters. It is legitimate to say that the environment is a major determining factor for tourists’ health and that an adequately maintained environment not only attracts tourists, but it is also a very effective measure to protect their health. Investment in the environment is, therefore, cost-effective input to tourism. The appearance of the virus responsible for the human immunodeficiency (HIV) and the epidemic of acquired immunodeficiency syndrome (AIDS) brought about a very special chapter in the health aspects of traveling and tourism. Sexually transmitted diseases, on the rise in the world, require an urgent change in behavior vis-a-vis occasional sexual contacts which are greatly responsible for the spread of HIV and the continuous growth in the number of AIDS cases. From the above, it is evident that responsibility for tourist health lies not only with local authorities but also with prospective tourists who must have a proactive position on this issue. Since tourism-related diseases are not equally distributed in all places, it is very important to seek as much information about the travel destination as possible. This attitude will provide an adequate basis for observing immunization requirements and recommendations. While yellow fever is the only disease for which some countries require presentation of an International Certificate of Immunization, there are several additional vaccines available to tourists. Among the frequently recommended ones for travelers are the vaccines for Typhoid, Hepatitis B, poliomyelitis and rabies.


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In conclusion, it should be said that while recognizing the potential health risks involved in traveling and tourism, there are plenty of ways to reduce or eliminate such risks. This requires a concerted effort by local authorities and by potential travelers. Health education and health promotion, including environmental health, are fundamental to bringing about appropriate attitudes and behavior. Environmental sanitation and preventive medical measures should always be employed by authorities and by travelers. Impacts on Hosts

The bibliographic search by the International Institute of Tourism Studies in 1992 identified among the 147 citations collected, 36 dealing with the impact of tourism on the health of residents. Most of these documents and publications were written in the last 10 years, indicating a new trend in looking at the health impacts of tourism on host countries. Sexually transmitted diseases and environmental degradation brought about by tourism seem to be among the main concerns within this context. Some of the texts also deal with aspects of drug addiction and the import of cultural values from other countries. Nevertheless the positive impacts are also identified and discussed. Beneficial changes including earning foreign currencies, development of labor markets and the improvement of local infrastructures, such as the provision of health and environmental services, are also recognized. There is little doubt that promiscuous behavior has contributed significantly to the import and spread of AIDS and other sexually transmitted diseases. Initially strongly linked to homosexuality, in the last 10 years the transmission has been more and more through

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heterosexual contacts. Some tourists tend to have behaviors more relaxed than those they have at home. This is one of the major reasons for alcohol overuse, use of drugs, promiscuous sexual behavior, and neglect of protective habits. Most of these problems must be dealt with through health promotion methodologies and strategies. This should be accepted by promoters of tourism and by host authorities. Tourist health promotion ought to become an integral component of tourism promotion. Although there are several successful cases in this regard, it is far from becoming a standard procedure. It is also urgent that health professionals become advocates and agents for the promotion of tourists’ health. In the Americas Region, there is a very special situation related to the potential health impacts on host communities. A very strong region-wide campaign for the eradication of immuno-preventable diseases has produced important results. Since September 1994, the American region has been declared free of the transmission of the wild virus causing poliomyelitis. In other regions of the world, this exceptional result has yet not been achieved. This poses a potential possibility of reintroducing the disease in this region. Health authorities are maintaining strong monitoring mechanisms in all countries of the region. Along the same line, after a strong vaccination campaign, the Caribbean region has not reported any case of measles. This probably means that these countries are very close to eradicate this disease. A similar effort is now being carried out by all Latin American countries. Here also is a risk that measles could be re-introduced from a country in which measles is still prevalent.


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Tourism is no longer seen as a privilege and a luxury. It is perceived as a very basic right in order to recover mental and physical well-being, thus reestablishing the capacity for an active life. Although driven by the desire to recover health, tourism is not free from health risks itself. It can impact not only the health of tourists but also the health of host communities. Nevertheless, most of these risks can be avoided or considerably reduced by means of environmental health, health promotion and disease prevention. Home and host authorities, tourism promoters and health professionals all have important responsibilities in making tourism what it is supposed to be: a life-enriching experience with quality time spent in a quality environment recovering health and building memories forever. It must be health-oriented and diseases should be kept as far as possible from it.

QUALITY M ANAGEMENT

OF

TOURISM DESTINATIONS

Quality in tourism has many dimensions. Through quality management, efforts are being made to take account of the growing importance of individual aspects of quality. Quality is gaining in importance in all areas of modern life. In tourism too, guests require “products” where they are sure of getting top-quality, value-formoney services. The further reasons for systematic quality management in tourism are widely documented: growing competition, lack of willingness to provide a service, growing loss of individuality by standardization of products, adverse price-performance ration etc. To satisfy more demanding and fast-changing customer wishes, various tools on Total Quality

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Management (TQM) lines have been developed, whereby: — Total stands for the inclusion of all areas of the business and all staff: principle of staff briefing — Quality stands for the consistent gearing of all activities to the quality requirements of internal and external customers/guests: principle of guest-led action — Management stands for the responsibility and initiative of the top management as regards systematic quality development and assurance: principle of management responsibility TQM also involves the principle of process orientation, thus emphasizing that each product or service is the result of a process, with each step being linked to the one before and after it. The quality of the individual processes makes for the quality of the whole, and in time, quality standards are raised by means of the permanent cycle of planning – implementation – reviewing – correction. Total Quality Management comprises three aspects: — Quality target, ie. the self-set high standard of service to satisfy the wishes of particular guest segments and of staff — Quality development, ie. active cultivation of this standard of service and its constant improvement — Quality assurance, ie. the conscious monitoring of the standard of service as well as reactions if anomalies gradually creep in. From a guest’s point of view, tourism services are always the product of a whole package of individual services. Like a chain, these services are all linked: advance information from a Tourist Centre, the train journey to


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the destination, stay in vacation hotel, eating in a restaurant, mountain-railway excursions and lastly the trip home. Each individual service leaves its mark on and influences the holiday experience. Also at the level of the individual hotel, a guest experiences the whole service package as a chain in which one service is linked to the next: information, arrival, check-in, moving into the room, eating in the restaurant, check-out. These service chains which are specific to guests provide an aid for systematic checking of a hotel’s services and processes, showing where practical quality improvements can be made and promoting the introduction of appropriate measures. Providing services and direct contact with guests are exacting tasks because each guest has his specific expectations, needs and opinions. However tactful staff may be, the odd mistake or misunderstanding is virtually unavoidable. Such occurrences are described as “critical incidents”; these are defects of varying degrees in a service chain which result in failure to satisfy guest expectations and hence trigger dissatisfaction. Guests tend to remember critical incidents and do not hesitate to talk about them. Research has shown that it takes seven positive points to compensate for just one guest-care slip up. Managers would do well to put themselves in the guests’ place on a regular basis, taking their remarks and reactions seriously, communicating with them direct and systematically reviewing individual sequences and processes for critical incidents. Service chains are a useful tool for tracking down potential critical incidents and deriving “good service” from them in the shape of inhouse quality standards.

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To imporve destination quality four instruments for promoting in-house quality of servicemust be systematically implemented. These are: 1.

Service chains: service chains should be checked for potential critical incidents in respect of key guest groups. “Good service” should be set out in the form of quality standards and the necessary measures derived from them

2.

Quality profile: the operational fields of crucial importance for quality of service should be reviewed for quality awareness (by way of a cross check). Six quality aspects can be chosen from the ten listed below: — knowledge of guest expectations — further training of staff — care of aids and facilities — taking account of special wishes — knowledge of guest satisfaction — knowledge of staff satisfaction — attentive guest service — putting mistakes right — teamwork — cooperation with associated hotels

3.

Complaints: a questionnaire must be used to check how complaints are dealt with so that appropriate measures can be derived from them.

4.

Action Plan: The measures with the highest priority formulated in the service chains, quality profile and complaints instruments are combined in an Action Plan for the year ahead.


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Quality coaches who fit the prescribed qualification profile are taught how to handle the instruments and prepared for implementing a quality management system in their own hotel. Guidelines, transparencies, a video, floppy disk and help desks are available to simplify this demanding task.

8 Guests and Their Well-being Good guest service is about creating a sense of well being in the guests—a feeling that their needs are being met, that their business is valued, that they matter to us. It is difficult to define the personal service concept as it cannot be weighed or measured. Good service will mean different things to different people and the challenge for people working in the hotel and tourism industry is to anticipate and meet as far as possible the needs of all the guests. There are two main types of service - material and personal. The term “material service” relates to the quality, quantity, price and timing of food, drink, physical comfort, information and working methods. This could mean: — An appetizing lunch special in the coffee shop — Spotlessly clean toilet facilities in the hotel — The wide range of souvenirs available in the hotel gift shop The hotel information pack provided in each guestroom Material service is generally something concrete and visible that the guest can easily identify. It would not be possible to provide good personal service without the

Guests and Their Well-being

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back up of good material service. Yet often the guest is unmoved by the material service no matter how good a standard it is, and it often has, at best, only a neutral effect on him. Guests are more likely to comment on material service when it is below standard than to praise it. “What clean toilets!” is less likely to be heard than loud complaints if the toilets are dirty. Because material service is easier to define and analyze, most companies give priority to this in terms of investment and advertising aspects of their business. Yet research shows that it is the level of personal service that is most often the deciding factor in guests’ choice and that where the material service falls below par, it may well be forgiven if the guest is treated with warmth and kindness. Personal service is about creating a sense of well being in the guests - making them feel welcome and valued while at the same time ensuring that their needs are looked after. Personal service is not tangible therefore it is difficult to measure, as it is largely more emotional that rational and is very subjective. While you may not be able to actually see personal service, you will notice if it is not there. The key to success in the hotel business is to provide a high standard of both material and personal service - every hotel supplies its guests with food, drink and accommodation but if your hotel is also providing a high level of personal service then you will have the competitive edge. That is the reason you and the job you do are so important to the business - you are the key -to providing a high level of personal service. Good service means giving guests a little more than they expect. Excellent service is enjoying giving people a little more than they expect. Often as guests, the point of contact makes no impact - it is neutral, neither good nor

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bad. However if we are ignored, treated rudely or cheated, we are left with negative feelings of anger and frustration. We may never do business with that company again. At other times the attention we receive as guests seems special. The service-giver is friendly, warm, and attentive and is prepared to go to trouble on our behalf. This scenario leaves us with positive feelings of appreciation and pleasure that encourage us to do repeat business with the company in question. Guest loyalty means good business. There are three parties involved in guest care and they are: 1.

the guest

2.

the company

3.

you

All three parties can feel the benefits of good and effective guest care - there is something in it for everyone and not just the guest. These benefits may be identified as follows: For the guest: — pleasant experience — attractive, welcoming surroundings — helpful, interested staff — finding what they want — being cared for and treated as an individual — respect and recognition For the company — satisfied guests — guest loyalty and goodwill — increased sales and profit


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— good “word of mouth” publicity — staying ahead of the competition — meeting guests’ needs for better service — repeat business as satisfied guests will return again and again — greater job satisfaction for staff For you — guests being pleasant to you — the pleasure of seeing the guest satisfied — the satisfaction of doing a good job and using your skills and knowledge — knowing you have done your best — the satisfaction of being pleasant to people and giving them what they want — more happiness, less stress

PROVIDING

A

QUALITY SERVICE

Don’t confuse the idea of offering a perfect service with the idea of having the perfect product. It is possible to deliver a really good service to guests in a hotel or guest house that has no star rating and it is also possible to deliver a poor quality service in a five star hotel! You are the central and key element in the delivery of quality you are in the driving seat - you have a very important role to play. Providing a quality service means: — offering a high quality experience to every guest every time — maintain with high standards and repeat them every time

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— developing systems and making them work every time — developing routines for tasks that have to be done again and again so that completing them becomes a habit and nothing gets left out. Even when things go wrong you can still offer the guest a quality service by sorting out the problem promptly, efficiently and courteously. Working in the hotel business means coming in contact with a wide cross-section of the public. In your job you will have to learn to recognize. Who your different types of guests are and the service that they will both expect and require - meeting their different needs to the highest possible standard is guest-care in action. Some of the obvious ones are: — the business and conference guests. They will expect and demand an efficient professional service to act as a backup to their activities. Their priorities might be punctuality, availability of high standard secretarial services, privacy and unobtrusive service. — The holidaymaker or tourist. They may be more interested in the hotels leisure facilities, friendly service and value for money. It is your job to identify these individual needs and to ensure the service you provide matches if not exceeds the guest’s expectations. The less obvious type of guest is those who may have special needs, requiring understanding and sensitive handling, such as: — The elderly — Children — Disabled guests — Visitors from different cultural backgrounds.


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The elderly. Older guests may have mobility problems and may tire easily. Some people in their eighties are very active, others are not. Your common sense should tell you if they need special help. Elderly visitors should be treated with respect and patience. Children. Families comprise a major segment of the holiday market, yet many staff appear to tolerate children under sufferance. Parents and children will appreciate staff who facilitate and welcome families. For instance, involving children in the commentary when accompanying guests to their room - “We have a lovely pool for children in the commentary when accompanying guests to their room - “We have a lovely pool for children and lots of toys in our playroom”, offering to heat a baby’s bottle, assisting parents carry small children and so on…..these are the extra bits of service that you and your hotel will be remembered for. With children, it is possible that they may drift away from their parents and get lost in the hotel. This can be a very frightening experience for them, try to reassure lost children while following the hotel procedures for dealing with this situation. Disabled visitors. Disabled visitors can easily be handicapped not by their disability but by staff attitudes towards them. Try to treat them as you would any other visitor, while making allowances for their disability. Guests with restricted hearing may not be able to benefit from your announcements. During a conversation, they may be trying to lip read so it is important that you face them and speak very clearly. If necessary write down the information for that you face them and speak very clearly. If necessary write down the information for them. Similarly blind or partially sighted people may require special assistance.

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Overseas visitors. It helps to understand and respect some of the basic cultural differences between various nationalities so as to avoid offending visitors unwillingly. For instance, recognizing religious dietary restrictions and codes of behaviour will help you in your understanding of guests needs. Caring, being professionally concerned and noticing things is one of the secrets of success in the hospitality industry. If you care about others, you take trouble to see that they are comfortable and have everything they need. Caring is both the way you do things and the reason why you do them. Dos and Donots

Keep this checklist with you as a constant reminder to think and act “guest care” when doing your job. Do

— Think guest — Anticipate his requirements. — Act without being asked. — Try to meet his needs. — Do more than is asked for. — Do so willingly. — Enjoy dong. — A job well. — Be conscious of those needing special assistance. — Give a little bit extra. — Get it right every time.


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Don’t

— Begrudge helping other. — Wait to be asked. — Hesitate - act immediately. — Forget - the guest is important to you.

SECURITY

OF

GUEST

Security of guest and his property is of great concern for the hotel. In India very few cases (hardly any) have been filed in the civil court asking for compensation for alleged security deficiencies whereas in the hundreds of cases of negligence of law suits for large sums (thousands of dollars) are filed. A hotel would always prefer to have an outof-court settlement to not only avoid money and time wastage but also to keep itself from controversy and save its reputation. At any reasonable cost, the hotel management would want the complaint withdrawn. Room Break-Ins Security

By far the most common security problems are in guest rooms (mostly with the traditional, metal locking systems). Next comes the parking area. As per Ray Ellis Jr., the director of Risk Management for AHMA, there is 75-80% drop in ‘Room Break-Ins’ cases in America after the electronic card key system has been installed. Sometime even the traditional cards keys themselves are easy to copy. It is important to keep pace with technology and the management should have foresight while choosing a system that is compatible with future trends of technology or enhancement. Appoint a systems manager to provide the ‘band aid’ support to your systems. The

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supervision staff would be trained to change their supervisory techniques and vision. Proper training to staff should be given before installing the system. The hotel can reduce electricity consumption through the key card operated energy saving system, which could distinguish between a guest and a maid. Bomb Threat Security

Set up security nets with bags and body searches for guests who are not known to the staff. Banqueting suites should be security checked and locked after use; it way all nonpublic areas should be treated. All cluttered items should be removed as they interfere in security checks. Freestanding deep ashtrays are suspicious objects. Toilets should be checked. Staff entrances should be secured at night. Goods received and bags should be checked and kept tidy. If we get a scare or an alert we should not ask people to evacuate the building as we could be sending them into a danger area. Warn them to stay away from windows and leave them slightly open. Heavy curtains should be closed. If a bomb threat is received the telephonist must note carefully what exactly is said, what time the call is received, the sex, and accent of the caller and background noise if any. After the alert the G.M. should stay put in lobby where he can be reached immediately. The duties and responsibilities of staff during such emergencies should be defined. Work closely with police to keep updated on sensitive events in the area. Bring in sniffer dogs before a big conference commences. Chambermaids and housekeeper should be trained to keep security checks in room; particularly if they notice that the carpet has been moved, they must report immediately.


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safety and security measures

Following are some of the safety and security measures: 1.

Use of resident card (identity card).

2.

Key control system should be employed. Bellboy errand card.

3.

Maintain record of master key used by staff.

4.

Housekeeper’s occupancy report to me bade regularly, proper procedure of checking keys in rack should be followed.

5.

Double lock system, magic eye and a door chain system to be used.

6.

Proper “left luggage system” to be followed.

7.

Safety lockers for guest valuables should be provided.

8.

Modern and efficient fir fighting systems should be used.

9.

Smoke detectors to be installed.

10. Proper regular maintenance of equipment, appliances and building should be done. 11. Close circuit camera at parking and other strategic areas in the hotel. 12. Fire escape route must be designed. 13. Frequent patrolling b y the security staff must be made. 14. Security frisking if needed. 15. Heavy drapes to be drawn during night on windows and exposed glass panels. 16. Computer and data processing security (safeguarding of computer information, so that it does not reach the competitors and protection against virus in the programme.)

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17. Avoid use of hotel name and room number on keys (use code words on the fobs). Preferably use of computerized room keys or magnetic keys. 18. Employ a house detective. Types of Security

With regards to hotels the security can be classified under following three aspects: 1.

Physical aspects

2.

Security of persons(guest and staff)

3.

Security of systems

The Physical aspect security can further be divided into two parts: (i) internal, and (ii) external. — Internal security — against theft(close circuit camera and burglars’ alarms). — fire security(smoke detectors, fire alarm, water sprinklers, fire extinguishers). — Proper lighting of corridors, fire escape, basement and other areas). — Safeguarding assets (proper inventory, regular physical checks, e tc.) — Keeping track of unwanted guests. — External Security — Proper lighting of boundary and outside of the building. — Proper fencing of the building. — Fencing of pool area to avoid accidents in night. — Planting of shrubbery can also help in restricting perimeter access of properly.


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— Avoid poisonous and thorny bushes and barbed wire. — Manning of service gates to restrict entry. — Fixing of closed circuit T.V. cameras. Security aspects of persons can further be subdivided into two parts: (i) staff and (ii) guests. 1.

Staff. A fourteen points effective programme for this is suggested as follows: (i) Effective recruitment and selection: References checked, properly screened etc. (j) Identification of staff: Issue identity badges and use distinct uniform for easy identification. (k) Key control: Maid should carry the key in her possession and issuance and return should be properly recorded. (l) Red tag system: Proper system for hotel property being taken out. (m) Training: Proper training to employees to note unusual things, safety drills. (n) Adherence to management policy of security: An employee disregarding policy should not be confirmed. (o) Trash handling: Trash should be checked to see if employees are smuggling out things out of hotel with trash. (p) Employees’ parking: Proper checking of employees’ vehicles at the time of going off duty. If possible it should be away from the main parking. (q) Locker inspection: From time to time surprise checking of staff lockers.

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(r) Inventory records of linen, stores and other items. (s) Bring in experts (snoops): Hire an outsider, bring him as an employee to check and report about the culprit staffs. (t) Security consciousness: Guest should be told to be careful about his property. (u) Enlist employees: Employees should be asked to report about suspected persons - guests with scanty\ baggage etc. (v) Set example: Management should follow these rules and should encourage employees to follow the same. 2.

Guests — Take care about scanty baggage guest. — A guest suspected of taking away hotel property should be charged on the bill. Not many guests will protest if told they are being charged for souvenirs. — Rooms should not be opened for guests coming and saying that they have left their keys inside unless their identity is established Guest Room Security: Guest rooms are critical areas of hotel security programme. Personal belongings of guest may be stolen, guest may be subjected to criminal assault, etc. Room furnishing such as curtains and supplies may be stolen. — Provide wide-angle door viewer, dead bolt locks, night torch and chains on doors. — Employee should b e instructed not to divulge information about guests to outsiders. While giving room key card from the guest in case of


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doubt. Any suspicious person roaming in corridor must be immediately reported. Housekeeping staff should ensure never to leave keys lying exposed on unattended carts in corridors. 3.

Security aspect of systems in hotel is equally important to physical and persons’ security. — Record all losses and missing items immediately. — Inventory control should be proper. — Auditing should be done on regular basis. — Proper system for cash receipts and disbursements should be made.

The term ‘systems’ mean the operations of the hotel e.g. all the equipment used for operation, procedures laid down for operations and policies to be followed. The objective of such security is to safeguard the assets of the hotel. Systems, procedures and the policies followed properly shall safeguard the assets and shall increase the life span of equipment as well as avoid any breakdown maintenance. This would mean the following: (i) Fix duties and assign responsibility: Fix duties of the staff so that people do their duties and don’t interfere with others’ work. This will help in pinpointing responsibility in case of theft, losses due to negligence and any other similar eventuality. Make people responsible for what they are doing and for equipment they are handling. (ii) Make surprise checks. (iii) Bonding of employees: People who have access to liquid assets should be bonded so that in case of any theft etc. the concerned person may be caught.

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(iv) Hiring of an independent agency for checking of your systems of security. Security points for women travelers

Security is a concern for all hotel guests, but women travelers can especially appreciate certain features, such as: — Mirrored walls of the guest room floor elevators so that you can see who is walking behind you. — Well-lit public area such as lobby bars. — Key cards for guest room doors instead of metal door keys that could be duplicated. — Valet parking to eliminate the need to enter a parking garage by women. — If a woman traveler is not assigned a guest room on the special executive floor, hotels often will, upon request, upgrade her accommodations to that floor without and increase in room rate. This floor is staffed almost 24 hours a day with a concierge. — If possible, hotels will honor requests for rooms close to the elevator. Safety and Fire Precautions

The staff should provide plenty of ashtrays and pleasantly request all visitors to use them if they smoke. cigarettes left smouldering on the edges of tables or window - sills are a fire hazard. The staff should not empty ash trays into a waste paper basket without ensuring that all cigarettes are thoroughly extinguished and wastepaper baskets should not be placed too near to an electric fire or other heating appliance. All personnel should know fire precautions. The receptionist and other


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staff should be aware of the positions of all the fire extinguishers an should know the drill for evacuating the premises in case of fire. The staff must also know how to prevent the rapid spread of the fire by closing windows and doors and unplugging all the electrical appliances. He should, personally, escort visitors to safety if possible. In a hotel, however, it would not be possible for the receptionist to make himself responsible for the visitors. The current fire precautions, however, ensure that fire escapes are provided and fire doors installed. Electrical cables, switches and plugs must be carefully maintained and not left to fall into disrepair. Plugs must be earthed and no sockets should be overloaded, electric machines such as duplicators should have a ‘fail-safe’ switch and electric fires must be guarded. The Socket should be switched off and the plug removed when equipment is not in use. The receptionist may contribute tremendously to make the organization to safer place to work by own vigilance and by warning the management of potential danger spots. It is the duty of the employer to consult representatives of the employees with a view to enable him and his employees to co-operate effectively in promoting and developing the health and safety at work of the employees and in making sure that the measures are effective. Every employee has a duty while at work: 1.

to take reasonable care for the health and safety of himself - and of other persons who may be affected by his acts or omissions at work.

2.

as regards any duty or requirement imposed by his employer or any other person or under any of the

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relevant statutory provisions to cooperate with him so far as is necessary to enable that duty or requirement to be performed or complied with. In other words, it is the employer’s duty to provide and maintain a safe environment in which employees may work. It is the duty of the employees to take reasonable safety precautions and to co-operate with the management in making the organization’s premises a safer and healthier place to work. An accident book should be kept in every organization and the receptionist should record all details of accident, which have occurred to employees whilst they were engaged in carrying out their normal daily duties. The book must be kept at such place as to be readily accessible at all reasonable times to any injured employee and any person bona fide. Particulars of an accident may be entered herein either by the injured person himself or by someone acting on his behalf. The accident book when filled up should be preserved for a period of three years after the date of the last entry. Every employer is required to take reasonable steps to investigate the circumstances of every accident recorded herein and, if there appears to him to be any discrepancy between the circumstances found by him and the entry made, he is required to record the circumstances so found. Protecting Guests From Terrorist threats

This has been dealt with in a previous module, and includes bomb threats. There is little, if anything, a front office manager and his staff may do if there is some kind


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of assassination attempt for instance. However, bomb threats are received by someone at the front line - a telephonist or a front office clerk - and a procedure must be in place to ensure that all the information that can be taken about the nature of the threat is in fact recorded. Threats to privacy

It is the duty of front office to protect the privacy of its guests -even and perhaps especially if they are in the public eye. It is very tempting to tell one’s friends all about a well-know person who might be staying at your hotel, but you will have no control over the information passed over from your friends to their own friends. In no time at all, the guest may be pestered by fans, autograph hunters, paparazzi and reporters. However, it is not only the privacy of well-known guests that must be respected. Every one of the guests is entitled to his or her own privacy and steps must be taken to ensure that information about the guests is not divulged to outsiders. Giving room numbers to individuals other than the persons being accommodated in those rooms is unethical and should be avoided at all costs. There is a tendency amongst representatives locally to divulge room numbers to taxi drivers, restaurants etc. It may prove difficult to ascertain whether the breach of confidentiality is the responsibility of the hotel or not, but guests have every right to hold the hotelier accountable. Threats to guests’ property

Although the hotelier’s liability is limited, it is in the interests of the hotel to ensure the safety of its guests and their property - if anything to protect the reputation of the hotel.

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If the hotel is in an unsafe area, or in an area roamed by unscrupulous characters, guests should be made aware of this -especially if they intend to venture out of the hotel at night. In India, hotels should be especially aware of the problems caused by prostitution. Prostitution is not per se illegal but a hotel would be acting illegally if it were to knowingly encourage or allow prostitution within its premises. It is not for us to make a general characterisation of prostitutes, but some prostitutes may well be thieves and since hotel guests will often negate their involvement with a prostitute they may accuse hotel staff of pilfering their property rather than admit to the fact that they hosted a girl in their room. Unfortunately, we must also face the fact that there are instances where guests are robbed by staff. There may be a “social divide” between staff and guests, which may lead the former to pilfer money or valuable items from a guest (although this is by no means the only reason why guests may be robbed by staff). If the hotel has a policy of randomly checking staff’s property before they leave the hotel, this may act as a deterrent and waive the hotel’s liability should this arise. Confidence tricksters or conmen may also find themselves into a hotel. There is very little a hotel can do if a confidence trickster makes his way into a guest’s “life”. These type of people often settle their own room accounts and are simply guests from a hotel point of view. However, when the identity of a conman is known the hotel is ethically bound to blacklist him and refuse him accommodation in the hotel. Guests themselves may also threaten each other’s enjoyment. If a traveller turns up in a drunken state asking for a room a hotel is entitled to refuse him on the


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grounds that he is not a fit state to be received. This is true even if he already has a booking, as he has broken one of the implied conditions of the contract. Similarly if the guest misbehaves throughout his stay the hotel is not obliged to let him stay. When guests complain about being kept awake by a noisy couple or a drunkard next door, it is not good enough to tell a guest that “nothing can be done about that.” One must employ considerable tact in dealing with such situations. Protecting Guest from Theft

It is unfortunate even the wealthiest of guests may have a propensity to pilfer a hotel’s property if the opportunity arises. This normally happens at check out when a guest leaves the hotel with a variety of items - virtually anything that is not securely fastened down: soap, towels, mats, sheets, blankets, coathangers, lamps, trouser presses, electrick kettles, TV sets and even plumbing fixtures! Some hotels ask housekeepers to check rooms for pilfering as soon as a client leaves the room to check out. This is not however always practical. Again considerable tact has to be employed when dealing with such situations and there are no fast rules to follow. There are instances where a hotel will simply have to write off stolen items rather than insist on ensuring that no items have been stolen. There a number of guests who leave without paying. These guests can generally be divided into three groups: 1.

The ‘accidentals’. These are guests who simply forget to pay, often their extras bills. Most of these guests do not intend to leave the hotel without paying - they simply believe their account is being settled by someone else. When contacted these guests pay their

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bill immediately and are highly embarrassed. The hotel should deal with them courteously. 2.

‘Opportunists’. These guests check in with the intention of paying their bill on departure, but when they realise that they can get away with not paying their bill (or simply a transaction that should have found itself on their bill - eg. last minute breakfast or minibar consumption) they make a run for it!

3.

‘Premeditators’. These are guests who, from the start, have the intention of leaving the hotel without paying. Some of these guests go into considerable lengths in order to avoid paying. These guests generally stay for short periods and will move to other hotels as soon as payment is demanded. When hotels network between themselves they are in a position to warn each other of such guests. Experienced room staff can often detect premeditated walkouts because generally they do not unpack their belongings to facilitate a quick run. If the hotel staff communicate effectively it may be possible for a hotel to operate like an intelligencegathering machine, with the doubtful guest being reported on all his activities whilst the security manager determines whether or not he or she is a bona fide guest.

Protecting from Immorality

An immoral contract, under our law, is void. This will mean that if you knowingly allow a guest to take a room with the purpose of using it for prostitution, you will not be able to enforce the contract because it based on an illicit purpose. A contract must be based on a lawful consideration—if it is not, then it may not be enforced in a court of law.


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It is in the interest of a hotel to discourage prostitution, not only because it has a reputation to protect but also because prostitution may bring about a number of difficulties. Similarly a hotel must ensure that other illegal practices, such as illegal gambling, are not conducted on its premsises.

H ANDLING C OMPLAINTS People on holiday, traveling on business or celebrating a special occasion have high expectations of everything going well. When something does go wrong, they will often confront the first staff member they can find. The complaint will often be unrelated to you personally or to your job, but they will still expect you to solve the problem. Knowing how to respond to a complaint and how to resolve the problem will be of great importance to you in your job as a receptionist. There are many reasons why guests complain. Situations, which might lead to a complaint from a guest, are: Where a member of staff has - failed to do something properly - misunderstood the guest - forgotten to do something

where the guest - has been kept waiting - expects something which is not usually provided - feels that he is not getting value for money

- forgotten to pass on a message - Equipment or supplies are broken, damaged or missing.

Sometimes the complaint arises simply because the guest has had a bad day and what normally would have been a minor hiccup now becomes a major tragedy. You may be more sympathetic to some complaints than to others,

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but all complaints must be treated as genuine and handled according to company policy. This will go a long way to ensure that guests will return again and again. In many ways you should consider a genuine complaint as an opportunity and turn it around to your advantage. Remember, guests don’t always complain when they have reason to. Unspoken dissatisfaction is the most damaging to any business, whereas a complaint allows you the opportunity to remedy the situation and to regain the guest’s goodwill. Most complaints are genuine and should be regarded as a very important source of information about the quality of your service or product. While many complaints are received in hotels about efficiency and the product itself, a high proportion concern staff and the way they treat guests. Therefore proper handling of a complaint can make a very favorable impression. Complaints Procedure

Feelings of anger and upset can cause guests to react differently as they complain. Some appear aggressive and loud, others are timid and there are others who calmly insist on their rights. Staffs have to cope with the moods as well as the facts of the complaint. Showing empathy that you appreciate how the guest feels - will make things easier. It is important to avoid arguing with guests who complain - they are already angry and upset. It is important to avoid justifying or making excuses from your own or the company’s viewpoint - guests are not interested in excuses, they want results. While all complaints are different and will need a different approach, the following listening techniques in six steps offers a guideline for dealing with them.


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1.

Lend an ear to the guest’s problems. The first thing he wants to do is get it off his chest. Pay concerned attention to his story. If he is really angry, let him blow his top. Avoid interrupting and never show annoyance, resentment or fear.

2.

Identify the important points. While you are listening, sort out the important facts of the situation. Keep an open mind. If necessary, ask clarifying questions, without appearing to crossexamine the guest or doubt his judgment.

3.

Sympathize. “I’m sorry”, is the least that can be said in the circumstances. Show that you are concerned and regret the problem or the inconvenience caused. But don’t keep on apologizing or be too willing to admit your hotel is at fault.

4.

Thank the guest. Thank the guest for bringing the matter to your attention and show that the trouble he is taking in making the complaint is appreciated by you.

5.

Explain what can be done. Make sure the guest understands what you and the company can and will do about the complaint.

6.

Now act quickly. Whatever is to be done by yourself or anyone else, ensure that it is done quickly and efficiently.

Always try and put yourself in the guest’s shoes when dealing with a complaint. Ask yourself how you would like to be treated in the same circumstances. Guests have rights, the most basic of which is the right to expect good service. They also have other rights, which have a basis in law. You should always familiarize yourself with the hotel policy as they will reflect the relevant laws in your country.

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Dealing with Difficult Guests

All guests are important, no matter what the reason is that makes them demanding. You will find that most guests are reasonable - however you need to be able to deal with the unreasonable. Turn the difficult guest’s strength against them. The following tips may help to you, should you find yourself faced with a “difficult” guest: Type

Technique

Argumentative Disbelieving Expert

Do not argue back Keep to the facts, not opinions Give the facts and let the guest express his views Show range of alternatives Establish confidence, do not rush Allow guests to maintain dignity Tact, patience and firm response Use questioning technique Listen with tact and patience and give a firm response Respond to both, but concentrate on the “leader”

Indecisive Nervous Pompous Short-tempered Silent Talkative Two people

As a receptionist there is a lot you can do to satisfy a difficult or awkward guest. Avoid the temptation to act in the same way as the guest. Try to see the situation as a challenge to your skills, and use these tips to help you deal with guests as real people - just like you, rather than viewing them as tiresome problems. Recording Complaints

Both compliments and complaints are a comment from guests on the service, which they have received and are also an opportunity, to improve service. Compliments, which are passed on to staff, are a useful means of


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increasing motivation and of raising standards throughout the business. Praise for a job well done is always very satisfying so accept compliments from guests graciously and be sure that they are passed on to staff members concerned and that your manager or supervisor is made aware of the positive feedback. Keeping a record of special compliments and displaying thank-you letters and complimentary guest comment cards can give staff a welcome morale boost. You should know the policy and procedures in your hotel for both handling and reporting complaints. If you remember, complaints should be regarded as an opportunity - not just an opportunity to make amends to the guest but also to get to the source of the problem to ensure it does not happen again. It is therefore essential that the relevant information is filtered back to the appropriate person or department so as the hotel can safeguard against the same problem occurring again and again. You should record all complaints according to the hotel policy and make sure your supervisor knows about it. The best way to deal with a complaint is to prevent it from occurring.

GUEST CARE

AND

ETIQUUETTES

The first time you meet some one presents an opportunity that will never come your way again the chance to make a good first impression. Even more informal is “Hi”; a friendly greeting for people who already know one another which should not be used in answer to a formal introduction. A verbal greeting should be accompanied by direct eye contact which indicates that you are actually paying attention to the person you are acknowledging. Verbal greetings may be accompanied by a handshake, especially during as introduction or when two acquaintances meet one another in passing.

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Formal Greeting

”Hello” is the universal form of greeting and it is acceptable in any situation except after a very formal introduction. Even comparative strangers say “hello” in passing and it is the friendly response to first name introduction. Greeting in Public

A nod and a smile are all that are necessary when casual acquaintances pass by chance. It is safer to nod to someone whose face is familiar than to run the risk of seeming to ignore an acquaintance. Often what is perceived, as rudeness is absentmindedness. Absorbed in their own thoughts, people do not hear the voice or see the motions made by someone trying to greet them. It is important to make allowances for absent mindedness or poor eyesight before believing that you have actually been snubbed. In places of worship, or during a performance in a theatre, people should only no and smile. It is thoughtless to engage in conversation until the service or performance is over. It does not serve you well to ignore everyone in the building or the floor when en route to your office, no matter how important or how busy you are. There is no need to stop and chat at every desk along the way. You can be friendly, but purposeful on your way to work. Keep in mind that most people are sensitive and an unintentional snub when you ignore someone because you are in a hurry or preoccupied is more often assumed to be intentional. Addressing of Guests

Introductions are required on many occasions; and


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especially when two strangers meet. It is inexcusably rude of the one who knows the other two to chat with one and leave the other unacknowledged and left outstanding by as if they did not exist. Te three basic rules are (a) A man is always introduced to a woman. “Mrs. Barret, I’ d like you to meet Dr. Farnham.” (b) A young person is always introduced to an older person. (c) A less important person is always introduced to a more important person. To help introductions develop into a few minutes of cordial conversation, the one making the introduction can provide additional information for the two persons. Introductions were viewed as the vital step in establishing a proper communication channel between two individuals. In addition to the rule that younger people do not address significantly older people by their first name unless asked by the older person to do so, there are other persons for whom first names may not be used except by specific request: A superior in one’s business, unless it is requested to do so. Person of higher rank (a governor, a diplomat, for example) Professional persons offering you their services, such as doctors and lawyers, who are not personal friends. In turn, these professionals should not use your first name unless you request them to. When you are talking with someone whose name you are struggling to remember and a friend joins you and looks inquiringly from you to the nameless person, there is nothing you can do but introduce your friend to

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the stranger by saying to the latter “ Oh, haven’t you met Janet Caldwell?” Hope fully, the stranger will be tactful and understanding enough to announce his own name. If he doesn’t the solution then is to frankly admit you do not remember the name and ask them to complete the introduction themselves. Strangers sitting next to each other at the table should introduce themselves. Whether they exchange names or not, people who find themselves seated together at any table must accept the obligation of talking. To sit side by side without talking is a great discourtesy to your hostess, as well as to devote all your time to the person sitting on one side of you and ignore the guest on the other side. When someone is introducing a stranger to a number of people and consistently says the wrong name, the person being introduced should correct the host as soon as he realizes that it is not only a slip of tongue. He should not do so with annoyance but make light of it. All he need say is “Just so you can find me in the phone book, I’m Bob Lord and not Jim Lord. A handshake can create a feeling of immediate friendliness or of instant irritation between two strangers. No one likes a “Boneless” hand that feels like one is grasping an empty glove, nor does one appreciate a vice like grasp that cuts rings into one’s flesh and temporarily paralyses every finger. The proper handshake is brief, but there should be firmness and warmth in the clasp. It should always be accompanied by a direct look into the eyes of the person whose hand one is grasping. When a men is introduced to woman it is in her place to offer her hand or not, as she chooses, but if he were to extend his hand she must give him hers as nothing could be ruder than ignore spontaneous friendliness.


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When you meet someone whose right arm or hand is missing or is deformed, extend your right hand even though he or she cannot shake hands in the normal way. The handicapped person will appreciate that you made no unnatural gesture to accommodate his or her disability. He or she will respond by offering his or her left hand, or by saying, “Please forgive me if I don’t shake hands, but I am glad to meet you.”

DEALING

WITH

GUEST ENQUIRIES

The type of enquiry you can expect to get on reception usually falls into three categories: 1.

Reservation. To deal with enquiries about reservations either over the telephone or in person, the receptionist must have on hand up-to-the-minute information of room status, the advance reservation chart, and the hotel directory and room rates/tariffs.

2.

Information for the guest. Guests have come to expect reception staff to have all sorts of information at their fingertips. Enquiries can range from the cost of sending a postcard to Europe, to car rental facilities, to information on places of interest in the locality.

3.

Information regarding guests. Enquiries about guests should be handled with caution and discretion. All guests are entitled to a measure of privacy and protection and any person requesting information about a guest, for example, the name and room number of a resident, should be referred to a supervisor or manager.

Every effort should be made to assist the guest with his enquiry. To do so promptly and accurately will require you having access to a range of information directories.

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— details of what is happening from day-to-day throughout the hotel — the hotel facilities and services — the locality - geographic location — the locality - places of interest — local services, e.g. transport, places of worship, airline offices, etc. — entertainment - restaurants, theatre, etc — additionally, foreign visitors may request information on local customs, cultural issues and language. So while it may not be possible for the receptionist to have the answers to all questions, it is important to know where to get the answer and how. You should have: — a list of all the facilities and services in the hotel, with details such as opening times — a list of names of members of staff, their job titles and telephone extensions — a good idea of what goes on in the locality so that you can inform guests looking for details of church services, entertainment and so on — good reference sources to hand, such as local papers (for entertainment, shopping), telephone and trade directories, relevant street maps and so on — timetables of local transport services — tourist guide book of the region Having the information on hand is of no use unless you know how to use the reference material you have. Make sure you find out how to use the reference books in the hotel to get the information you need - know how to use the index system, read timetables and interpret the postal tariffs.


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Many requests or enquiries are received which do not involve information, the guest wishes to have, for example, extra towels. Requests for assistance of this kind could be received by telephone or in person. The basic principles of dealing with a general enquiry remain the same with the inclusion of two important steps: 1.

Record or log the requests in the reception log box. Note the room number, request details, time request were received, action taken, e.g. reported to housekeeping, your initials. If any follow-up action is taken this should be recorded in a similar way.

2.

Notify the appropriate department, e.g. house-keeping if the request is for extra towels, maintenance if the air-conditioner is not working and so on.

You should always try and deal with a guest enquiry yourself as it is very annoying for the guest if he has to ask several different staff members the same question. However there will be times when you cannot answer the enquiry and will have to direct the guest elsewhere. You should know what type of enquiries it is better not to try to answer but to pass on to the appropriate person. Some examples of these may include: — What special discounts can be given to a group booking - refer to the front office manager or another senior manager — Whether the hotel can accommodate a wedding on a particular day- refer to the banqueting manager — Can the receptionist book an airline seat - refer to the local travel agent The important points to remember when referring enquiries elsewhere are:

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— Know who it should be referred to — Explain to the guest why be you are referring it — Do so promptly You should be aware of enquiry situations, which could be regarded as emergencies, requiring an immediate and urgent response, for example, and a request for medical attention. Each hotel will have its own procedure for dealing with these situations and you should familiarize yourself with the practice in your hotel. Very often the principle will remain the same: — Ascertain the facts — Repeat and confirm the essential details — Action immediately - it is usual in emergency situations to contact the supervisor or manager immediately — Record the incident in the reception log book In cases of emergency the essential points to remember are: Remember that the most important part of the enquiry process is communication. Effective communication with guest, colleagues and interdepartmental is essential to ensure a high level of guest service and guest satisfaction.

Atithi Devo Bhavah: Guest Management

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The Tiger Guest

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The Unexpected Guest

The Unexpected Guest

The Unexpected Guest

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Compassion [Special Guest-Witchblade]

The Doubtful Guest

Guest Of Honor

Stoker, Bram - DRACULA'S GUEST

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The Evil Guest

The Summer Guest

Atithi Devo Bhavah: Guest Management

Maurice Guest

Unexpected Guest

The Guest

Unexpected Guest

Mind Guest

The Guest

Draculas Guest

Unexpected Guest

Guest Law

Guest House

Guest Law

The Guest

The Unexpected Guest

The Unexpected Guest

The Unexpected Guest

The Tiger Guest

Sharon Green - Mind Guest

The Unexpected Guest

The Unexpected Guest

The Unexpected Guest

The Unexpected Guest

Guest In Sodom

Compassion [Special Guest-Witchblade]

The Doubtful Guest

Guest Of Honor

Stoker, Bram - DRACULA'S GUEST

Guest of Honor

Sonny, A Christmas Guest,

The Evil Guest

The Summer Guest

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