18 Jan, 2010
Domestic Indian Hotel Chains Will Challenge Foreign Ones, HVS Report
International hotel chain brands now rushing into India will find themselves under competitive pressure from domestic hotel chains and an increasingly demanding, well-informed, well-travelled Indian consumer, according to a forecast for the next decade released by the consultancy company HVS Hospitality Services India last week.
Entitled “Indian Hospitality – Game Changers in the last decade…and the next!” , the report notes that the Indian hotel scene is exploding thanks to a booming economy, rising middle class, emergence of secondary and tertiary cities and the continued marketing of Brand India to attract more visitors from abroad.
In addition, the expected emergence of dedicated convention centres in more cities will also help hotel development, as will the expected rationalization of costs, with government intervention in relaxing the license process.
Says the report, “Not only is the elephant dancing today, but it’s actually one of the only few circuses around. It has been a fantastic growth story for a country that in 1990 attracted only US$ 150 million of Foreign Direct Investments (FDIs), and then received US$ 4 billion in 2000 to over US$ 90 billion in just the past three years.”
It says that “India’s GDP has grown at an impressive 8.5% during the six years spanning 2003/04-2008/09. The recent global financial crisis has only reduced the rate by 2-3 percentage points and even then the economy continues to grow at the annual rate of 6% following the three quarters after the meltdown.”
Many international hotel-chain brands have flooded India to take advantage of the emerging opportunities but the report says that they will face significant challenges as the concept of branding has changed dramatically over the last decade.
Said the report, “Ten years ago, the marketing mantra that worked best for hotels was the creation of a brand; make it exclusive, market the experience as surreal and the customer’s decision to purchase was expected to automatically follow suit.
“This worked at that time because there was a narrow playing field with few domestic and international hotel chains in the country. Not surprising then that in 2010, India has seen an increased supply of international and domestic hotel chains that now volley with independent hotels for market share.
“Moreover, consumer generated media and mobile technology had yet to hit India in 2000 where the foremost influencer for the customer in making a purchase decision was the brand.”
According to the HVS report, a decade ago, the brand “was conceptualized by its custodians – the internal stakeholders – to reflect the persona of the product, which made branding a one-way stream of communication mostly. Hence, Brand 2000 was a product of the internal stakeholders accented with high flying Brand Promises which translated into the Consumer Purchase Decision of 2000.”
Today, however, it “is a different story as the consumer is well educated, travelled, experienced and looks beyond the gloss of the brand to the value proposition and the actual delivery of brand promises. Thus, in the Year 2010, the marketing mantras are differentiation, consistency, customer satisfaction, delivery of brand promises and customer retention.
“Today, Brand 2010 has evolved from a one-way communication stream to a two-way one that is more flexible and accommodates the customer’s needs and wants. Hence, Brand 2010 is a product of the External Stakeholder – the needs and wants of the Customers – accented by experience led, sustainable Brand Promises which now translates into the Purchase Decision of 2010.”
It says that “today, the state of economic flux wherein each dollar spent is being analyzed, renegotiated and then minimized, the marketing dilemma of marketing spend vs. incremental revenue assumes more importance.”
The report asks, “How do marketing resources of the Indian Hospitality sector continue to build their brand and market their product successfully? Consistent delivery of a superior and differentiated product experience that offers a greater perceived value will result in the acquisition and retention of customers.”
It says that “the pressure on consistent delivery of brand promises is further maintained by online customer feedback which impacts the attraction quotient of the product for other prospective customers.
“Customers in the coming decade will want to ‘Find Even Before they Seek’ and the advent of social networking has given a new power to customers like none other before.
“In addition, to make things just a bit harder the new technology paradigm will make customer decisions even more fickle. In this decade, the customer will make purchase decisions based on the entire experience offered, its perceived value and the consumer feedback it has received as against just the brand, brand promises and product offerings alone.
“The customer of the coming decade will evolve to be the real custodians of the Brand,” the report said.
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