Impact of Global Financial Crisis on Hospitality Sector Based

Impact of Global Financial Crisis on cordial reception Sector base in Mumbai Region Oshma Rosette Pinto Assistant Professor, Pillai Institute of Management Studies and Research, sassy Panvel Navi Mumbai E-mail pinto. email&160protected com ABSTRACT The Global fiscal crisis f fixed storage 2005 to the presend is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It was triggered by a liquidity shortf every in the United States Banking system which resulted in the collapse of rotund financial institutions, the bailout of banks by national governments, and toss offturns in contrast grocerys around the world.In India, the spheric financial crisis badly impacted the Indian touring carry and hotel celestial sphere that resulted in autumn in the identification emergence of alien tourists, decline of Foreign Direct Investment Inflows and affected the gross domesticatedated produce of India. The study is related with the Impact of Global Financial Crisis on cordial reception Sector based in Mumbai region, Mumbai region leave alone include, Mumbai, Thane and Navi-Mumbai based cordial reception industries. The primary information is collected with interview method. The questionnaire is elect as resource to collect the information.The junior-grade data is collected through dissimilar magazines, journals, scholarly articles, research papers and various trusty websites of various cordial reception industries. The paper attempts to analyse the impact of ball-shaped recession on Hospitality sector in India especially Tourism and Hotel constancy in the country. that the paper focuses on the challenges faced and opportunities that brush off be availed during and after world-wide financial crisis. Keywords Challenges, Opportunities, Foreign direct enthronisation, Foreign tourist inflows, Gross domestic product.INTRODUCTION The Hotel fabrication is linked to the touristry industry which form s the most great guard service that affects the Foreign Tourist Arrivals to any Country. In recent age many external hotel chains like Marriott International, Intercontinental Hotels Group atomic outlet 18 setting up hotels in India and many international tour operators argon establishing operations loudness nary(prenominal) 1, income tax return zero(prenominal) 2 ISSN 2277-1182 1 ABHINAV NATIONAL periodic REFEREED daybook OF REASEARCH IN arts &038 education www. abhinavjournal. com rom India. A rapidly growing middle class, the advent of corpo commit bonus drop dead and the multinational companies into India has boosted prospects for tourism. The turmoil in global financial markets had generated upstart concerns for the cordial reception industry. India had a biggest drop in corporate travel disbursement falling to 25% in year 2009 comp bed to year 2008. Growth rate of the aggregate sale of hotel companies fell down to 9. 1% during Dec. 2008 quarter from evolutio n rate of 17. 4% during Dec. 2007 quarter.There was decline in Indias average annual gross domestic product Growth from historical tall of 10. 10 percent in kinsfolk of 2006 and a record low of 5. 50 percent in celestial latitude of 2004. The financial year 2008-2009 was an unfor shittable one for the Indian tourism and Hotel industry, with the Mumbai flagellum attacks and global scotch down turn affecting the industries performance. The Hotel industry also, sight 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 less than global tourism industry.OBJECTIVES The purpose of the study is To know how the Hospitality Sector of India was affected during recession. To know the actual overall industry position and how can it be developed in future. To know the steps taken by the Government of India to curb the found of recession on Hospitality Industry through its policies. REVIEW OF belles-lettres The financial downturn that is impacting developed economies are likely to get worse as the European countries, the US and others go into a deeper depression receivable to the increase in Job losses which often follows recession.The slump in the market and increased job losses will amaze somewhat important implications for the changing tasks of human resource professionals. As the unemployment continues to increase, HR professionals are likely to be dealing with to a greater extent hard-pressed employees who are the bushel 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 times can be desperate pursuit.There are three of import answers in organizations, namely 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, train and institutional learning. Kathleen Patterson &038 Gray Oster, 2008 In emerging economies, emergence is intercommunicate to reluctant down appreciably but still may go across 5. 0 percent in the year 2009. The overall recruitments are decline 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 gathered by use Interview Method of various majority no(prenominal) 1, aftermath nary(prenominal) 2 2 ISSN 2277-1182 ABHINAV NATIONAL MONTHLY REFEREED daybook OF REASEARCH IN ARTS &038 EDUCATION www. abhinavjournal. com hospitality industries? authorities. The data will be analysed by apply MS-EXCEL to find out various trends and to dra w 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 give frank and fair answers in a hardheaded way and without any bias. LIMITATIONS The study is limited to major 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 severely or gradually decreases with new initiative policies. The service program of the study is to know how are the Hospitality industries growing after global recession in terms hostile tourist arrivals, generation of foreign exchange reserves and how are they contributing to the Indian economy in terms of GDP, step-down in inflation, rising of stock markets. FINDINGS AND DATA compend ?To know how the Hospitality industry of India was affected during recession. send back 1. Growth of the hospitality sector before the recession Name of the Hospitality industries Taj hotel Kamat Hotel Leela Hotel Growth of the hospitality sector before the recession significantly proscribe Slightly negative No impact Slightly positive 4 4 Significantly positive 5 variation Before the global recession began, we can see that Taj hotel had significantly positive growth, Kamat and Leela hotel had slightly positive growth. evade 2. final result on the operations of your company during recession.Year 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 zero(prenominal) 1, ISSUE NO. 2 ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN ARTS &038 EDUCATION www. abhinavjournal. com description The operations of the hotels from 2004-2010 vary mainly repayable to global recession and consternation attack on Taj and Oberio hotels in 2009 which sent threat waves to the world.Most of the customers and shareholders became unemployed due to cost cutting and there was long 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 number of employees during the recession. Year 2004 2005 2006 2007 2008 2009 2010 look 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 explanation The average number of employees during the recessio n 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 less compare to other years. The change in number of employees in the hospitality sector during the recession was due to sudden reduction in creation of employment new appointees to the organisations were sent back seat with advance 3months salary due to company policy of cutting cost 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 r ecession and terror attack on Taj and Oberio hotels in 2009 . In the year 2005 the taxes paid were actually 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 &038 EDUCATION www. bhinavjournal. com Table 5. Net hit 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 kale earned 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 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. Investme nts 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 &038 EDUCATION www. 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 business in Indian and foreign Market, high detrition rate, unemployment, reduction in pay scale, no incentives and cost cutting.Due to these reasons tourists could non afford to travel either for business or for holidaying 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 fore ign currencies during the recession vary year wise.In the year 2009 the number of 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. refer on the summate 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 hospitality 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 &038 EDUCATION www. abhinavjournal. com ? To know the steps taken by the Government of India to curb the effect of recession on Hospitality Industry through its policies. ? The hotels Taj, Kamat and Leela untroubledly agree for the importance of mark of their products during recession. 1. Importance of branding during recession 2. Policies undertaken by Government during the recession period. Looking at the retardent in tourism sector seriously, the ministry announced Policy measure to come on tourism in the country and it declared year 2009 as insure India year?. ? Further the Government tried to bring home the bacon Complimentary operate to foreign tourist, involving leading hotels, t our operators in its tourism promotion programs and stressed on providing security facilities for tourist arrivals. 3. Measures or future developments made by your company post global recession. TAJ HOTEL new-fangled Properties Opened- The Company? efforts of restoring the once first-class Falaknuma Palace, Hyderabad eventually fructified with the grand interruption 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 highlife Resorts.The Company continued its thrust on flagging properties under the approach brand in prominent economic, commercial and industrial centres of India by sign language management contracts for hotels in Chandigarh, Ludhiana and Kolhapur. It has signed man agement contracts in leisure destinations such(prenominal) as Shimla and Rishikesh for a Gateway and Vivanta by Taj resort respectively. KAMAT HOTEL Expansion of projects B W Highway Star Private Limited which is the subsidiary of Kamat hotel has this instant two operational hotels at Pune under the brand name The orchid? and VITS? esides restaurants and feast 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 thickening 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 &038 EDUCATION www. abhinavjournal. com selling Alliances- the Company has Sales and merchandise alliances with Kempinski Hotels, Europe? s oldest Hotel Group, established in 1897, and is also a part 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 favourite(a) Hotel Group whereby all our hotels from June 2008 need become members of this luxurious collection nder their most premier segment Preferred Hotels and Resorts. This will enable our hotels to acquire greater recognition of this brand in the USA as premium and luxury hotels and would give opportunity to supplement further 29 global sales offices in the USA, Singapore, Hong Kong, Japan and Australia among others. This will also facilitate our relationship with four of the largest consortia American Express, CWT, BCD and Hogg Robinson. SUGGESTIONS motif to rationalise the taxation on the hospitality industry.The hospitality sector has to embroil a single luxury tax across the country. To reduce adjective delays a provision 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. conduct to provide Capital Investment to the country The India? s hospitality sector is expect to grow at 8. 8% between 2010-19 and India to get capital investment worth US $ 94. one thousand thousand by 2019. Measures have to be taken to achieve the judge growth of Capital investment in India. Need for Economic generation to the country-The hospitality industry provides extreme opportunity to India in terms of contribution to its GDP and employment generation. The Government policies should focus at increasing tourist arrivals in the country and facilitate investments in touris m 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 network- The hospitality industry lacks highly trained and motivated sales cast in India excluding few hotels like Taj, Oberio and Leela. A Strong sales fury always provides extensive reach and penetration in the market. Need to have Strong Food &038 Beverage Skills There is a requirement of strong Food beverage 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 accession cities and resorts in South East Asia and other countries. VOLUME NO. 1, ISSUE NO. 2 8 ISSN 2277-1182 ABHINAV NATIONAL MONT HLY REFEREED JOURNAL OF REASEARCH IN ARTS &038 EDUCATION www. abhinavjournal. com CONCLUSION Service sector plays important authority in Indian economy. 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 carry for travel and tourism in India is expected 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 expected 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 touri st 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 Tourism. Government of India is allowing 100% Foreign Direct Investment in Hotels and Tourism, through the automatic route. This forms as investment opportunity that helps the Indian hospitality sector to contribute 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 Relations agencies need to be appointed in international level to achieve step-up media visibility in foreign countries. all over the years the hospitality sector needs to build a large network of partners and associates to participate in its growth as they form an important part of the Hotel/restaurant strategy.To succes sfully counter the risk from growing argument and the new properties, The hotels and restaurants have to renovate and reposition all their key properties. It should advance 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 &038 Restaurants joining 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 REFERE ED JOURNAL OF REASEARCH IN ARTS &038 EDUCATION www. abhinavjournal. com 3. Manpower recruitment in Hotel industry, A market plus report of Ministry of tourism, Government of India. . Meyer, D, Foreign Direct Investment in Tourism The Development Dimension Expert Advisory Committee (2005- 2006). Funded by United Nations league 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