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Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited
Article Type: Editorial From: Worldwide Hospitality and Tourism Themes, Volume 4, Issue 5
In this theme issue Gunjan Sanjeev, Vinnie Jauhari and their team of writers explore the question “What are the emerging strategic and financial issues in the Indian hospitality industry?” The issue offers a fascinating collection of articles that draw equally from practitioner experiences and viewpoints and academic analysis to provide a rich picture of the challenges and potential solutions that could be deployed in support of the industry’s growth and development in one of the world’s largest economies. I should like to thank Gunjan, Vinnie and their team for forging an industry-education partnership that has worked so successfully in documenting the current issues and options for the future.
WHATT aims to make a practical and theoretical contribution to hospitality and tourism development and we seek to do this by using a key question to focus attention on an industry issue. If you would like to contribute to our work by serving as a WHATT theme editor, do please contact me.
Richard TeareManaging Editor, WHATT
What are the emerging strategic and financial issues in the Indian hospitality industry?
After several years of turmoil arising from the international crisis in 2008, the hospitality industry is on the mend and while demand is increasing steadily, supply is not growing at the same pace. Further, it is evident that emerging markets like India are a catalyst for accelerated growth and they will continue to be the prime choice for significant future investment. According to a recent Bloomberg survey, China, Brazil and India are the preferred choices for investment globally.
The Indian hospitality industry has experienced extensive global attention in recent years and it is anticipated that a range of growth opportunities will emerge in the coming decade, linked to rising disposable income in the upwardly mobile middle-class – especially in domestic markets – and in relation to multiple worldwide events. Although the operating environment in India is showing signs of recovery from a recessionary trend, the operators, investors, developers, owners, advisors and managers are still cautious about adopting innovative ideas.
This theme issue identifies some of the emerging strategic and financial issues that the Indian hospitality industry is currently facing. Most of the studies in the literature focus on operational aspects of hospitality management and less has been published in strategy and finance. This collection of articles aims to explore some of the topical aspects such as: growth challenges, risk and uncertainty, revenue management, cost management and innovative practices adopted in times of rising inflation. The issue also highlights some of the successful practices that have been adopted by the industry in India.
There are seven articles in total. The first, “The emerging strategic and financial issues in the Indian hospitality industry – an overview”, by Gunjan M. Sanjeev and Vinnie Jauhari, provides a snapshot of the current trends and the emerging strategic and financial issues facing the Indian hospitality industry.
The industry faces huge operating risks due to changes in the external environment like economic cycles, terrorism and other factors. What then are the risks that managers face in the Indian hospitality industry? Further, what are the key risk management practices they adopt?
The second article entitled “Risk identification and analysis in the hospitality industry: practitioners’ perspectives from India”, by Sonia Bharwani and David Matthews, identifies the risks and uncertainties that the hospitality industry is facing in current times. The paper also makes some suggestions to help mitigate the risks affecting the hospitality industry in India.
Although growth is desirable across all industries, the hospitality industry is affected by the external forces and economic fluctuations, more than any other industry. Thus, it is important to understand the current impediments affecting the growth of the industry. What is the industry doing to deal with these issues? Are some of the impediments internal to the industry? The third paper entitled “Key issues in setting up a hotel in India – a practitioner perspective”, by Amit Kapur and Kakoli Sen, highlights some of the challenges that hoteliers are facing which are detrimental to the growth of this industry.
With increasing competition and falling margins, hotels are striving hard to predict consumer behavior at the micro-market level, and to optimize product availability. They are also striving for price optimization so as to maximize revenue growth. What then are the emerging revenue management practices adopted and practiced by the Indian hoteliers? The next paper: “Revenue management and India: Rapid deployment strategies”, by P. Sirsi, K.Varini and S. Kamenski, discusses ways in which to build revenue management skills and stimulate the uptake of revenue management through partnerships between hospitality and tourism businesses.
Another important area is cost management, which is seldom mentioned in the hospitality management literature. A number of costs in a hotel are fixed: depreciation, amortization, management fees, property taxes, insurance, rent, interests and income taxes. Thus, hotels face the risk of high operating leverage. What are the emerging issues that the managers face in handling these costs? Are there any efforts to restructure these costs? What are some of the innovative practices that the industry is adopting to manage the costs better? The next paper: “A survey of factors influencing cost structures in the hospitality industry”, by Madhu Vij, is a survey-based study, and it highlights the current trends regarding cost structures adopted by the Indian hospitality industry. The study also suggests that hotels are increasingly challenged to find ways of reducing costs without sacrificing quality. Following on from this, the next paper “Applying innovative food cost management practices in inflationary times: Indian budget restaurant segment experiences” by Sandeep Munjal and Sanjay Sharma, give some interesting insights on the innovative practices that restaurateurs are adopting to beat costs in inflationary times.
The theme issue concludes with a summary article written by Vinnie Jauhari and Gunjan M. Sanjeev, critiquing each of the issues raised in this theme issue and discussing future directions in these areas.
This theme issue should engage with an international readership as the Indian economy and industry is drawing attention from all parts of the world. A number of global hotel chains have already entered India or are keen on launching their operations in India. To name a few, these are US-based MGM Mirage Hospitality, Amari from Thailand, Fairmont Raffles Hotels, Golden Tulip Hotels, Movenpick Hotels and Resorts, Corinthia Hotels group from Europe. The evidence suggests then that there is a great deal of worldwide interest in knowing about the key emerging issues in the Indian hospitality industry. Further, successful practices in India – an emerging economy – may be useful for countries such as China, Russia and Brazil, which are at a similar stage of newly advanced economic development.
About the Guest Editors
Dr Gunjan M. Sanjeev is Head, Post Graduate Studies, Professor of Finance, Institute for International Management and Technology (IIMT), Gurgaon, India. Her primary interests are in the areas of corporate finance, commercial banking, financial management in the hospitality industry and financial services. Gunjan has presented research papers at both national and international events and she has won awards for her work, including a case study competition sponsored by Emerald and at an IIM Lucknow conference. Gunjan conducts executive development programmes in corporate finance and the financial management of banks and travels widely in support of academic and collaborative initiatives with foreign universities.
Dr Vinnie Jauhari is Director, Institute for International Management and Technology (IIMT), Gurgaon, India. Prior to this she was the Region Lead for HP Labs Open Innovation Office, India where she was part of a global team bringing together expertise from around the world to foster discovery and develop next generation technologies. She was earlier Professor and Head, School of Management and Entrepreneurship at IIMT. Dr Jauhari is the founding editor of the Journal of Services Research and the author of more than 100 journal articles. Dr Jauhari has authored eight books and serves as an editorial board member and reviewer for numerous international journals.
Gunjan M. Sanjeev, Vinnie JauhariGuest Editors