Impact of Global Financial Crisis on Hospitality Sector Based

regard of Global Financial Crisis on cordial reception Sector Based in Mumbai Region Oshma Ro dance orchestrate Pinto Assistant Professor, Pillai Institute of charge Studies and Research, New Panvel Navi Mumbai e-mail pinto. emailprotected com ABSTRACT The Global financial crisis from 2005 to the present is considered by m some(prenominal)(prenominal) economists to be the worst financial crisis since the Great Depression of the 1930s. It was triggered by a liquidity shortfall in the United States Banking system which resulted in the collapse of vast financial institutions, the bail egress of banks by national governments, and pour downturns in stock markets around the world.In India, the globular financial crisis badly mended the Indian touristry and hotel celestial sphere that resulted in deterioration in the publication of foreign tourists, decline of opposed betoken enthronisation Inflows and changeed the gross domestic product of India. The study is tie in wit h the Impact of Global Financial Crisis on cordial reception Sector base in Mumbai region, Mumbai region will include, Mumbai, Thane and Navi-Mumbai based Hospitality industries. The primary information is aggregateed through interview method. The questionnaire is chosen as resourcefulness to collect the information.The secondary entropy is collected through different magazines, journals, scholarly maneuvericles, query papers and various authentic websites of various Hospitality industries. The paper attempts to conk out the impact of global nook on Hospitality sector in India especially touristry and Hotel Industry in the country. progress the paper focuses on the challenges faced and opportunities that evoke be availed during and after global financial crisis. Keywords Challenges, Opportunities, external direct investment, overseas tourist inflows, Gross domestic product.INTRODUCTION The Hotel pains is link to the touristry constancy which forms the close to i mportant support service that affects the Foreign Tourist Arrivals to any Country. In recent yrs more(prenominal) transnational hotel chains like Marriott planetary, Intercontinental Hotels Group are setting up hotels in India and many international tour operators are establishing operations book zero(prenominal) 1, come in no 2 ISSN 2277-1182 1 ABHINAV theme periodical REFEREED JOURNAL OF REASEARCH IN humanistic discipline & pedagogy www. abhinavjournal. com rom India. A speedily growing middle class, the advent of corporate incentive tour and the international companies into India has boosted prospects for tourism. The turmoil in global financial markets had generated new concerns for the cordial reception industry. India had a biggest drop in corporate turn on spending falling to 25% in category 2009 correspondd to year 2008. Growth rate of the aggregate bargain of hotel companies fell down to 9. 1% during Dec. 2008 quarter from growth rate of 17. 4% during De c. 2007 quarter.There was decline in Indias average annual GDP Growth from historical high of 10. 10 percent in September of 2006 and a platter low of 5. 50 percent in December of 2004. The financial year 2008-2009 was an unforgettable one for the Indian tourism and Hotel industry, with the Mumbai threat attacks and global frugal down turn affecting the industries performance. The Hotel industry also, observed an overall decline in occupancy and Revenue per Available Room in most cities. The adverse impact of economic downturn on India? s tourism was far slight than global tourism industry.OBJECTIVES The objective of the study is To drop it away how the Hospitality Sector of India was affected during box. To get by the current overall industry position and how apprize it be developed in future. To know the locomote taken by the government activity of India to inhibit the effect of nook on Hospitality Industry through its policies. REVIEW OF LITERATURE The financial do wnturn that is impacting developed economies are likely to get worse as the European countries, the US and other(a)s go into a deeper depression collectable to the outgrowth in Job losses which often follows recession.The slump in the market and increase job losses will have some important implications for the changing tasks of human resource professionals. As the unemployment continues to increase, HR professionals are likely to be dealing with more stressed employees who are the sole wage earners in their families. Mujtaba, 2008 The global economic crisis has brought to the forefront of organizations the concepts of viability and survival which at these eras can be desperate pursuit.There are three main reactions in organizations, viz. the corporate reactions in organizations, namely the corporate reaction to remain viable, the employee reaction to survive the turbulence, and the human resources reaction including recruiting and hiring talent, corporate organization, traini ng and institutional attainment. Kathleen Patterson & Gray Oster, 2008 In emerging economies, growth is projected to slow down appreciably but still may reach 5. 0 percent in the year 2009. The overall recruitments are lower for the industry this time as companies remain cautious amidst the global financial crisis. Srivastav, 2009 METHODOLOGY The data is collected through various sources like secondary data from various magazines, journals, scholarly articles, research papers and various authentic websites of various Hospitality industries. The primary data is ga on that pointd by using Interview graze of various VOLUME no(prenominal) 1, publication NO. 2 2 ISSN 2277-1182 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN humanistic discipline & education www. abhinavjournal. com hospitality industries? authorities. The data will be analysed by using MS-EXCEL to govern out various trends and to draw the graphs for the interpretation of data.The selected respondents will be representatives of the total population. here the higher authorities of hospitality industries become the population. The questionnaire is chosen as resource to collect the information. Research will be conducted on clear assumptions that the respondents would upset frank and fair answers in a pragmatic way and without any bias. LIMITATIONS The study is limited to major(ip) Hospitality Industries of India and the data is limited to 7years. The major hospitality Industries includes Taj Hotel, Kamat Hotel and Leela Hotel.UTILITY The rationale of the study is that there are various factors that affect the Indian economy but the researcher through this study wants to find whether the impact of global recession has affected the Indian economy staidly or gradually decreases with new initiative policies. The utility of the study is to know how are the Hospitality industries growing after global recession in terms foreign tourist stretchs, generation of foreign exchange reserves and how are they contributing to the Indian economy in terms of GDP, diminution in inflation, rising of stock markets. FINDINGS AND DATA ANALYSIS ?To know how the Hospitality industry of India was affected during recession. Table 1. Growth of the hospitality sector in the first place the recession Name of the Hospitality industries Taj hotel Kamat Hotel Leela Hotel Growth of the hospitality sector in the predate the recession Significantly negative Slightly negative No impact Slightly positive 4 4 Significantly positive 5 Interpretation Before the global recession began, we can see that Taj hotel had importantly positive growth, Kamat and Leela hotel had slightly positive growth. Table 2. Effect on the operations of your phoner during recession. form 2004 2005 2006 2007 2008 2009 2010 Operations of Hotels in Crores Taj Hotel Kamat Hotel Leela Hotel 699. 16 45. 86 123 873. 24 48. 04 154 1127. 57 56. 98 112. 34 1617. 31 124 158 1823. 16 152. 67 125 1534. 03 112. 68 133. 09 1520. 36 134. 08 145 ISSN 2277-1182 3 VOLUME NO. 1, ISSUE NO. 2 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN ARTS & teaching www. abhinavjournal. com Interpretation The operations of the hotels from 2004-2010 vary mainly receivable to global recession and terror attack on Taj and Oberio hotels in 2009 which sent threat waves to the world.Most of the customers and shareholders became inert due to cost cutting and there was huge downfall in the financial market. ? To know the current overall industry position and how can it be developed in future. Table 3. Changes in the weigh of employees during the recession. stratum 2004 2005 2006 2007 2008 2009 2010 play of Employees of in thousands Taj Hotel Kamat Hotel Leela Hotel 7609 4200 4500 8005 5000 6000 7500 6500 7500 6405 6700 8400 6700 7600 8600 4300 5000 5300 6500 6800 6700 Interpretation The average number of employees during the recession in Taj Hotel is 6568, for Kamat Hotel is 5971. 429 and Leela Hotel is 6714. 86. As per the table, in the year 2009 the number employees in Taj, Kamat and Leela hotels are slight compare to other years. The change in number of employees in the hospitality sector during the recession was due to sudden reduction in institution of employment new appointees to the organisations were sent back home with advance 3months salary due to company policy of cutting costs and salary of many employees were reduced by 20% of their actual salary. Table 4. Taxes paid by the company during Global Recession Year 2004 2005 2006 2007 2008 2009 2010 Taxes paid by the hospitality sector in Crores Taj Hotel Kamat Hotel Leela Hotel 35. 2 4. 12 34. 33 88. 22 7. 40 33. 77 13. 35 8. 10 23. 04 12. 43 11. 03 34. 44 13. 45 67. 29 43. 35 15 31. 8 25. 89 25. 07 55. 55 30. 09 Interpretation As per the data , the taxes paid by the hotels vary from 2004-2010 as the operations and gross revenue slowed down due to global recession and terror attack on Taj and Oberio hotels in 2009 . In the year 2005 th e taxes paid were very high as we had high tourists inflow from both inbound and outbound. VOLUME NO. 1, ISSUE NO. 2 4 ISSN 2277-1182 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN ARTS & EDUCATION www. bhinavjournal. com Table 5. Net profit of the company during the Recession. Year 2004 2005 2006 2007 2008 2009 2010 Net Profit of hotels in Crores Taj Hotel Kamat Hotel Leela Hotel 60. 65 0. 70 11. 78 105. 86 6. 97 21. 35 183. 78 4. 069 105. 98 322. 39 15. 57 110. 07 580. 47 27. 40 134. 08 107. 11 5. 66 50. 78 153. 10 7. 08 154 Interpretation As per the data , the net profit earned by the hotels vary from 2004-2010 as the operations and sales slowed down due to global recession and terror attack on Taj and Oberio hotels in 2009 .In the year 2008 the profit earned by most of the hotels was very high as we had high tourist? s inflow from both inbound and outbound. Table 6. Investments make by the company during the recession Year 2004 2005 2006 2007 2008 2009 2010 Taj Hotel 600. 83 607. 01 656. 57 962. 81 977. 58 1182 1169 Investments in Crores Kamat Hotel Leela Hotel 0. 17 117 0. 164 124 0. 163 135 3. 98 156 15. 08 147 25. 07 126 74. 70 112 Interpretation As per the data, investments made by the hotels vary from 2004-2010 as the operations and sales slowed down due to global recession and terror attack on Taj and Oberio hotels in 2009 .In the year 2007, 2009 and 2010 the hospitality sector had to investment more on assets in order to earn more customers and to generate employment Table 7 Number of tourist passengers in India during the recession Year 2004 2005 2006 2007 2008 2009 2010 Number of tourist arrivals in India Including Inbound and Outbound Taj Hotel Kamat Hotel Leela Hotel 1234153 967494 550000 297538 192061 290000 1710434 1594735 1650000 828695 488491 385000 156370 289915 158000 360971 590286 490000 2129544 1371613 1470000 ISSN 2277-1182 5VOLUME NO. 1, ISSUE NO. 2 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN ARTS & EDUCATION w ww. abhinavjournal. com Interpretation The number of tourist arrivals during the recession vary year wise. In the year 2005, 2007, 2008 and 2009 the number of tourists in India from both inbound and outbound are less compare to other years. This decrease was due to slow down of phone line in Indian and foreign Market, high attrition rate, unemployment, reduction in move over scale, no incentives and cost cutting.Due to these reasons tourists could not afford to travel either for line of business or for vacationing with family. Table 8. Effect on the remittances/ foreign currencies during global recession Year 2004 2005 2006 2007 2008 2009 2010 Remittances of foreign currencies from hospitality sector in Crores Taj Hotel Kamat Hotel Leela Hotel 245. 03 150. 22 200. 25 300. 50 225 245 315 275 215 275 300 225 345 285. 25 230 200. 02 110. 45 100. 03 445 250 300. 05 Interpretation The remittances from foreign currencies during the recession vary year wise.In the year 2009 the number o f tourists in India from other countries is less compare to other years. This decrease was due to slow down of business in Indian and foreign Market, high attrition rate, unemployment, reduction in pay scale, no incentives and cost cutting. Due to these reasons tourists could not afford to travel either for business or for holidaying with family. Table 9. Affect on the full assets of the company during Global Recession Year 2004 2005 2006 2007 2008 2009 2010 Total Assets in Crores Taj Hotel Kamat Hotel Leela Hotel 2371. 11 16. 3 1145 1068. 85 14. 72 1234 4336. 59 11. 78 1156 5242. 55 15. 91 2116 6848. 77 17. 78 4234 9160. 22 13. 09 2349 8646. 01 15. 90 3450 Interpretation The total assets during 2005 are less compared to 2004. There was increase in investment of assets during 2006-2008 but there was decrease in investments of assets as the operations and sales slowed down due to global recession and terror attack on Taj and Oberio hotels in 2009. In the year 2009 and 2010 the hospi tality sector had to investment more on assets in order to earn more customers and to generate employment.VOLUME NO. 1, ISSUE NO. 2 6 ISSN 2277-1182 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN ARTS & EDUCATION www. abhinavjournal. com ? To know the steps taken by the brass of India to curb the effect of recession on Hospitality Industry through its policies. ? The hotels Taj, Kamat and Leela powerfully agree for the importance of branding of their products during recession. 1. Importance of branding during recession 2. Policies undertaken by Government during the recession period. Looking at the slowdown in tourism sector seriously, the ministry announced Policy measure to promote tourism in the country and it declared year 2009 as Visit India year?. ? merely the Government tried to provide Complimentary services to foreign tourist, involving take hotels, tour operators in its tourism promotion programs and stressed on providing security system facilities for touri st arrivals. 3. Measures or future developments made by your company ring mail global recession. TAJ HOTEL New Properties Opened- The telephoner? efforts of restoring the once resplendent Falaknuma Palace, Hyderabad eventually fructified with the wonderful opening of the Taj Falaknuma Palace in November 2010, with an exclusive get together of global connoisseurs of luxury who came together in Hyderabad for this occasion. Expansion in Domestic and International Markets- The Company ventured into new geographies by entering into management contracts in Mexico and British Virgin Islands for development of high end Luxury Resorts.The Company go along its thrust on flagging properties under the Gateway brand in prominent economic, commercial and industrial centres of India by signing management contracts for hotels in Chandigarh, Ludhiana and Kolhapur. It has signed management contracts in leisure destinations such as Shimla and Rishikesh for a Gateway and Vivanta by Taj resort respe ctively. KAMAT HOTEL Expansion of projects B W street Star Private Limited which is the subsidiary of Kamat hotel has presently two available hotels at Pune under the brand name The Orchid? and VITS? esides eaterys and banquet halls. Management Contracts- the Company is having management contracts for managing hotel properties at Aurangabad, Karwar, Udaipur, Delhi and Pune. LEELA HOTEL Expansion of projects The opening of Gurgaon hotel and residences heralded the arrival of the Company in the Delhi National Capital Region. This property, with 322 guest rooms and suites and 90 serviced residences, is operated under the The Leela Kempinski brand. This contemporary designed hotel with large banquet halls and state of the art facilities has been well received by the business clientele.VOLUME NO. 1, ISSUE NO. 2 7 ISSN 2277-1182 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN ARTS & EDUCATION www. abhinavjournal. com Marketing federations- the Company has Sales and Marketing alliances with Kempinski Hotels, Europe? s oldest Hotel Group, established in 1897, and is also a member of The Global Hotel Alliance based in Geneva, Switzerland, which is an alliance of high profile independent hotels worldwide. The Company has entered into an alliance with Preferred Hotel Group whereby all our hotels from June 2008 have become members of this noble-minded collection nder their most premier segment Preferred Hotels and Resorts. This will modify our hotels to acquire greater recognition of this brand in the USA as premium and luxury hotels and would give opportunity to leverage further 29 global sales offices in the USA, Singapore, Hong Kong, Japan and Australia among others. This will also speed our relationship with four of the largest consortia American Express, CWT, BCD and Hogg Robinson. SUGGESTIONS Need to rationalise the receipts on the hospitality industry.The hospitality sector has to adopt a undivided luxury tax across the country. To reduce proced ural delays a grooming of single-window clearances at the local, State and Central Government levels has to be formed. Tax holiday would encourage Foreign Direct Investment in this sector, more players to set up hotels and to bridge the shortage of rooms. Need to provide Capital Investment to the country The India? s hospitality sector is judge to grow at 8. 8% between 2010-19 and India to get bang-up investment worth US $ 94. billion by 2019. Measures have to be taken to fulfil the expect growth of Capital investment in India. Need for Economic generation to the country-The hospitality industry provides extreme opportunity to India in terms of office to its GDP and employment generation. The Government policies should focus at increasing tourist arrivals in the country and facilitate investments in tourism infrastructure, which will lead to significantly higher multiplier effect on the key economic parameters of the Indian economy.Need to generate Strong Sales and Marketing mesh topology- The hospitality industry lacks highly trained and motivated sales force in India excluding hardly a(prenominal) hotels like Taj, Oberio and Leela. A Strong sales force always provides protracted reach and penetration in the market. Need to have Strong victuals & deglutition Skills There is a requirement of strong Food drunkenness skills in Hospitality sector as it becomes a forte of any hotel or restaurant. This strengthens the hospitality sector to open number of Food and Beverage outlets, in partnership with celebrity chefs.Reduction of Geographical and economic risk. The hospitality sector has to reduce the Geographical and economic risk in order to increase its presence internationally in key gateway cities and resorts in sulfur East Asia and other countries. VOLUME NO. 1, ISSUE NO. 2 8 ISSN 2277-1182 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN ARTS & EDUCATION www. abhinavjournal. com CONCLUSION Service sector plays important role in Indian eco nomy. Within the Service sector tourism and hospitality industry has more importance about generating employment, yielding foreign exchange.National income growth and providing base to other industries regarding tourism directly or indirectly The demand for travel and tourism in India is expect to grow by 8. 2% between 2011 and 2019 placing India at the third position in the world. With its close ties to the tourism industry, the Indian hospitality sector is judge to see an estimated investment of USD 12. 17 billion during 2011, and in addition of over 20 new international hotel brands by 2011. Further capital investment in Indias travel and tourism sector is expected to grow at 8. % between 2011 and 2019 while India is expected to get capital investment worth US$ 94. 5 billion in the travel and tourism sector in 2019. Foreign tourist arrivals are expected to grow to 10 million by 2012 and the domestic tourism is expected to increase by 15% to 20% by 2015 as per the Ministry of Tou rism. Government of India is allowing 100% Foreign Direct Investment in Hotels and Tourism, through the involuntary route. This forms as investment opportunity that helps the Indian hospitality sector to fetch Rs. 8,50,000 crores to the GDP by 2020 ( approx. 800 million USD). The Hospitality sector has to initiate a number of steps to further strengthen the sales and marketing network in the domestic as well as the international markets by conducting successful road shows in international fairs and. New Personal dealing agencies need to be appointed in international level to achieve step-up media visibility in foreign countries. Over the years the hospitality sector needs to build a large network of partners and associates to move in its growth as they form an important part of the Hotel/restaurant strategy.To successfully counter the risk from growing competition and the new properties, The hotels and restaurants have to renovate and reposition all their key properties. It shou ld improve its service levels by providing uniform and best service across all their subsidiary hotels. The hospitality sector has to aim for control its operating and financial leverage by expanding through management contracts and leveraging the strengths of their Associates. REFERENCES I. Journals and Magazines 1. Batra G. S. , Tourism in the 21st century, (1996) Anmol publications Pvt. Ltd 2.Dirk William velde and Swapna Niar, (2005), Foreign Direct Investment, service trade negotiations and development -Federation of Hotels & Restaurants Association of India ltd, Govt. to review FDI in Tourism Sector, News and Features, New Delhi, February 13, (2007), Investment opportunities in Tourism Sector, Government of India portal Investment Commission. VOLUME NO. 1, ISSUE NO. 2 ISSN 2277-1182 9 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN ARTS & EDUCATION www. abhinavjournal. com 3. Manpower recruitment in Hotel industry, A market plus write up of Ministry of tourism, Gove rnment of India. . Meyer, D, Foreign Direct Investment in Tourism The using Dimension Expert Advisory Committee (2005- 2006). Funded by United Nations assemblage on Trade and Development, Geneva, Switzerland. 5. Usha C. V. Haley, (2001), Tourism and FDI in Vietnam, Haworth Press, pp 67-90 6. Conference on Tourism in India Challenges Ahead, 15-17 May 2008, IIMK 109 II. Websites 1. www. fhrai. com, 2. http//www. investmentcommission. in/tourism. html 3. http//tourismindia. com 4. www. sarkaritel. com 5. www. ar-khil. com 6. www. Ihcl. com 7. www. theleela. com VOLUME NO. 1, ISSUE NO. 2 10 ISSN 2277-1182