The Indian hospitality industry

INTRODUCTION TO FOOD AND BEVERAGE INDUSTRY

The food and beverage industry is commonly defined by the output of its products which satisfy the various demands of food and beverage of people or consumers, this sector or industry is specialized in conceptualizing, making and delivery of food and beverage items.

In the current times the food and beverage industry has expanded on a very large scale, so much so that it serves up to 100 million meals per day. The industry has now spread across all the areas and activities of life, being hotels, restaurants, institutional caterings/canteens, industrial caterings, hospital and welfare catering and in railways and even airlines, all these above mentioned fields now come under and are a part of the food and beverage service industry.

“Inviting a person for dinner means caring for his happiness throughout the time he is under your roof.” (Jean Brillat-Savarin)

If we look at the history pineapple is considered as a symbol of welcome, friendship and hospitality since the days of the early American colonies. Sir Walter Raleigh called the pineapple as the princess of fruits. The native Americans used to hung pineapples over the entrance to their homes as a symbol of welcoming the guests. It all started when the sea captains of New England used to sail among the Caribbean Islands and returned to the colonies with fruits, spices and rum. The captain would spear a pineapple on a fence post outside his home. This would let his friends know that he has come back from sea safely. The pineapple was an invitation for his friends to come and enjoy the food and drinks with him. It is now recognised internationally and is considered as the foundation for concept of service. [Web: http://www.hawthornetours.com]

The basic or the primary function of this industry is to serve people with their desired food and beverage that satisfy their various different needs and wants. The main and prior aim of the industry is customer satisfaction following are some of the most general and basic needs of a customer entering a food and beverage service organization

• Physiological:- The need for a specific or special food dish or cuisine which is desired by the customers.

• Economical:- The need for good food and the value for the price the customer is paying.

• Social:- The need for a good and a pleasant atmosphere and ambience, and a free space and forum of expressing their experiences frankly.

• Psychological:- The need for enhancement of self esteem .

• Convenience:- The desire to be treated and getting work done from others and getting what a customer needs.

FOOD AND BEVERAGE OPERATIONS

Food and beverage operations or service is the service of providing food made in the kitchens and drinks tendered from the bar to the customers or guests.

The different types of food and beverage operation organizations are restaurants, clubs, bars, airlines, railways, cruise ships, companies, schools, hospitals, prisons and takeaways

This can be clearly understood in the following table which shows the variety of food and beverage operations carried out in different organizations.

Variety of food and beverage operations

CHARACTERISTICS OF THE FOOD AND BEVERAGE INDUSTRY AND THE FACTORS AFFECTING THE INDUSTRY

Following are the different characteristics of the food and beverage industry or sector

• Plays a vital role in everyday life

• Majorly contributes in the national income

• It is highly diverse and complex

• It highly generates employment

• Encourages and promotes entrepreneurship

• Encourages and promotes many different food concepts and cuisines

• Supports innovation

• Acts like a local multiplier in many other out line services

• It led by the consumers

• It is highly competitive in terms of market

• Gives the opportunity to socialize with family and friends and fulfils their needs and wants

Following are the factors which affect the food and beverage industry, and also are the things which are to be looked upon before establishing a food and beverage organization

• The type of establishment
• The type of customers
• The time aspect of serving a meal
• The annual turnover of consumers
• The type of food and cuisine to be served
• The average cost of meals served
• The site and location of the establishment

INDIAN HOPITALITY INDUSTRY

Hospitality is to serve the guests provided them to 'feel good'. "Athithi devo bhavha" has been one of the core values of Indian culture. In India, guest is treated with maximum cordiality and respect, and offers the best services. The hospitality sector is today one of the fastest growth sectors in the India. This is expected to grow at a rate of 8% between 2010 and 2016. Many international hotels, Sheraton, Hyatt, Radisson, Meridian, Four Seasons Regent, and Marriott International are already established in the India market and they are still expanding.

The Indian hospitality sector can be largely classified into two broad groups:

• Hotel industry
• Tourism industry

The hotel industry can be further considered into three segments: hotels, restaurants and contract caterers.

Hotels: The hotels in India can be broadly classified into these segments:

1. Star rated hotels

2. Heritage hotels

3. Budget hotels

4. Unclassified hotels

Features of the Indian Hospitality Industry

• The industry is more dependent of metropolitan cities, Delhi and Mumbai to be at the top.
• Average room rate (ARR) and occupancy (OC) are the two most important factors that determine the profitability. ARR depends on the location, the image of brand, number of stars, the quality of the facilities and services offered.
• Occupancy depends on other seasonal factors. The India is an ideal destination for tourists.
• The growth Outlook is also is very high. In the hotel sector, several multinationals have strengthened its presence. On the other hand, the hotel chains in the India are also expanding internationally.

A combination of all these factors could result in a strong emergence of cheap hotels, which could reduce the cost of travel and related costs.

CALLLENGES FACED BY THE INDIAN HOSPITALITY INDUSTRY

1. Shortage of skilled employees: One of the biggest challenges for the hospitality industry is the lack of availability of quality manpower at different levels of ability. The tourism industry has stopped acquiring good professionals.

2. Retaining quality workforce: Retention of the workforce through training and development in the hotel sector is a problem; moreover, attrition levels are very high. One of the reasons for this is unsatisfactory pay packets. Although there is a boom in the service sector, most of the graduates of hotel management retail and aviation are joining other sectors like trade.

3. Shortage of rooms: The hotel industry is facing heavy shortage of rooms. Although the Government is trying to encourage investment, but still persist the shortage.

4. Intense competition and image of India: The industry is witnessing a growing competition with the arrival of new players, new products and new systems. Competition from neighbouring countries and the negative perceptions about the Indian hospitality industry restricts the growth of tourism. The image of India in the eyes of other countries influenced by poverty, political instability, disease and safety problems, which creates a negative impact on the tourism and hospitality sector.

5. Customer expectations: As emerging India as a destination on the map of world tourism, customer expectations are increasing. Companies have to focus on customer loyalty and repeat purchases.

6. Manual back-end: Respected players in the industry that it have enabled systems of management of the property, reserves, etc, but then also the majority of the data that actually do the work of the company are filled manually or simply not followed.

7. Human resource development: Some of the services that are required in the tourism and hospitality industries are highly personalized, and automation can replace personal service providers. India is more focused on jobs from white collar to blue collar work. The scarcity of blue collar workers will invite various threats to the industry.

Now to analyse the external factors which affect the growth of hospitality industry of India can be easily analysed by the “pestle” which cover the external factor which affect the industries growth and sustainability

• PESTLE ANALYSIS

(Anon., n.d.)

This concept is also referred to as the PEST analysis based on the four most important factors being POLITICAL, ECONOMICAL, SOCIAL and TECHNOLOGICAL

This analysis is used in the industry to find out the current status position of an organisation or individual in relation to their external environment and current role. It is actually used as an environmental scanning component for future planning and strategic management.

So now let’s look and analyse the growth and sustainability of the Indian hospitality industry or the Indian food and beverage industry and the external factor affecting the industry, by the help of the “PESTLE” concept

POLITICAL FACTORS:

The political factors are one of the main driving forces of the industry. These refer to the government policies in the economy. The Indian hotel industry or the F&B industry is built upon the backbone of the government support; the industry cannot see success and cannot sustain the competitive world, government any small change in the laws and policies and it would greatly affect the hotel industry, more over for 5 star hotels and luxury properties hotels need lands which are of archaeological and historical importance, and such lands and properties are in the hand of the government, moreover the roads , railways and airlines are also controlled by the government any small bit of change that come into application can have a great impact on the industry.

For example: There are high changes in the rate of tax on star hotels which has always been a major concern for the hoteliers in the country, there are many areas where the growth of tourism and hospitality industry have not been so rapid due to political instability or due to the unpleasant government atmosphere, moreover The Terror attack on the city of Mumbai well-known hotels Taj and the Oberoi’s had got a concern on the faces of the hoteliers with a considerable drop in foreign travellers to India taking the terror threat into excuse.

ECONOMIC FACTORS:

These include interest rates, taxation changes, economic growth, inflation and exchange rates. The hospitality industry is unlike the other industries, it grows with the spending power of the people and customers the more the people devote the more the industry develops. The expenditure power of the general public has been growing in the country and all over the world. Since we are focused on the international travellers, the large increase in the expenditure power in most developed countries has left a large aggregate of idle cash in their hands.

For example: In the last 3-4years there has been huge increase in the prices of raw materials resulting to which these industries have started using products like curries, etc from outside which gives them, constant taste, no labour work and is also cost effective.

SOCIAL FACTORS:

Tourism, which is a part of the hospitality sector, was always seen as something which led to the destruction of the social fabric of the place. How much more amount of outsiders to a place, translates into higher risk that the place will be losing its original identity. The social factor refers mainly to the demographic factors which basically includes of population growth rate, cultural aspects, age distribution and health awareness. The trends in this factor affect the demand for a company’s products and how that company works.

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For example: Big brans like MC Donald’s, KFC and others have started adjusting according to religion and culture of the country like these brands have started home delivering hot food to their customers and also make sure they get satisfied as if they are having their food at one of the outlets.

TECHNOLOGIC FACTORS:

Though technology does not seem to be a foremost influence at the first glimpse, it plays an important part in the advertisement of a place. Better communication services are one of the first requirements for the progression in the hospitality industry the technology used in VITS is not up to the principles when considering it to the Hotel management software and the Mini Bar system. Till todays date some technologies used in VITS are quite old and need to be replaced as soon as possible with the new ones in the market. For example: With the advancement of technology the cooking temperature could be accurately measured as earlier thermometers were used for medical purpose but now digital thermometer are available in the market which is helpful as it makes the task much easier.

LEGAL FACTORS:

The legal factor refers to all the laws directly related to a business or company and its area of motion, including consumer law, antitrust law, anti-discrimination law and health and safety law. It can affect how a company operates, its costs, and the demand for its products.

There are a number of legal issues facing the hospitality industry, some of the topics included the development of a fair and transparent process in the determination of rates, Ministry of tourism, and also issues related to regional differences in tourism-related policies and Hotels. All these legal factors create a huge impact on the hospitality industry business.

For example: The introduction of policies and regulations under which serving of liquor without checking up customers ID is not legal and to those who are under age cannot be served liquor by any hospitality or culinary outlets, this is one of the legal factor affecting food and beverage outlet.

ECOLOGICAL FACTORS:

The environmental factor refers to the factors that are directly linked, influenced or determined by the surrounding environment. This includes climate, weather, geographical position, tourism, farming, climate change and as well as insurance. This can really influence a company`s way to operate or even the product it offers. On the other hand, tourism has the potential to create beneficial effects on the environment by contributing to environmental protection and conservation. It is a way to raise awareness of environmental values and it can serve as a tool to finance protection of natural areas and increase their economic importance.

For example: McDonald’s Corporation, the world’s largest fast food franchise, will replace polystyrene foam hot beverage cups with paper-based cups at all its 14,000 U.S. restaurants. This change in the decision of using paper-based cups instead of using foam beverage cups will be helpful as ecological factor as will reduce the threat of plastic pollution an provide a more recyclable, valuable alternative in paper fibre. (http://ens-newswire.com/2013/09/26/mcdonalds-to-replace-foam-beverage-cups-with-paper/, n.d.)

CONCLUSION

At the end of this document I would successfully like to conclude that the food and beverage industry is truly the vastest and the most important amongst all the other industries of the world, the industry is not limited to hotels but they have taken several steps ahead of the hotels and restaurant world and deviated its branches in many other areas such as speciality restaurants, coffee shops, small snack bars, railways, airways, and cruise ships etc, in short we can say that the food and beverage industry has turned into one large and most wide spread industries of the world, this industry has proven to be the highest income generator for the government in all ways, it gets the most amount of foreign capital and also forces and increases the FDI that is the foreign direct investment, where in many international brands of hotels, restaurants want to open and enter the country.

On talking about the hospitality and food and beverage industry of India I would like to conclude that The Indian hospitality industry has emerged as one of the key industries driving growth of the services sector in India It has evolved into an industry that is sensitive to the needs and desires of people. The fortunes of the hospitality industry have always been linked to the prospects of the tourism industry and tourism is the foremost demand driver of the industry. The Indian hospitality industry has recorded healthy growth fuelled by robust inflow of foreign tourists as well as increased tourist movement within the country and it has become one of the leading players in the global industry

The most significant factors affecting hospitality and tourism in India are: infrastructure management; government policy; workforce issues and education in hospitality and tourism; strategies for growth; crisis management; the management of destinations in India and the deployment of online techniques for marketing.

REFRENCING AND BIBLIOGRAPHY

BOOKS:

• Aurelio G (2007) Yield Management and Perceptions of Fairness in the Hospitality Business, International Review of Economics.
• Barth,S. (2001), “Hospitality Law – managing legal issues in the hospitality industry ”John wiley and sons, Canada
• Mill, Robert & Christie, (2007), Restaurant Management: Customers, Operations and employees, Pearson Education, New Delhi.
• Reynolds,D., (2003), On-Site Food Service Management, John Wiley & Sons Inc, Canada.
• Suddaby (2007), The Top Ten Issues for 2007, Fort Quarter 2006 edition

WEB-SITES

• Answers, U. (2010)Hospitality Industry. [online] Available at: http://www.ukessays.com/essays/finance/hospitality-industry.php [Accessed: 20th April 2013 ].
• Dnb.co.in (n.d.)Travel Tourism & Hospitality - Indian Hospitality Industry. [online] Available at: tapish(http://www.dnb.co.in/Travel_Tourism/Indian_Hospitality_Industry.asp, n.d.) (http://www.dnb.co.in/Travel_Tourism/Indian_Hospitality_Industry.asp, n.d.)[Accessed: 25th April 2013 ].
• Scribd.com (2012)indian hotel industry analysis. [online] Available at: http://www.scribd.com/doc/26045770/indian-hotel-industry-analysis [Accessed: 21st April 2013 ].
• Unknown. (2013) Untitled. [online] Available at: http://www.hospitalityinfocentre.co.uk/Learning%20Resources/Workbooks/F&B%20Service%20Types.pdf [Accessed: 27th April 2013].
• Unknown. (2013) Untitled. [online] Available at: http://ncba.ie/student_and_teacher_resources_files/Food_and_Beverage_Operations.pdf [Accessed: 27th April 2013 ].
• Unknown. (2013) Untitled. [online] Available at: http://www.southernpower.com/pdf/woods/foodbeveragebrochure.pdf [Accessed: 26th April 2013].

BANSAL, T (C-1503)