Case of Ginger Hotels in India

Ginger Hotels having operational properties at more than 20 locations tops the list of budget hotel movement. The plan is to have 70 operational locations with an average 100 rooms each by 2012 13. They have been able to successfully capture the imagination of budget business travelers with their value products. The company claims to be having around 65-70% average room occupancy with some properties fully booked for weeks in advance. Ginger group of hotels is run by Roots Corporation Ltd., a wholly owned subsidiary of Indian Hotels Co. Ltd. which also owns the Taj group of hotels. The Ginger business model was developed with guidance from Prahlad C K, the Indian born, business guru and author of The Fortune at the Bottom of the Pyramid. This is a book about transformative impact of profit oriented businesses catering to the Indias emerging mass consumers of the market. Gingers positioning reflects the broader push to cater to the needs of the mass like their Nano car. Given the history of this Company the fact that, it has always been at the high end of the market. It has taken a fair amount of courage to take a look at a completely different segment. Regarding the Ginger hotels, Pani P, CEO, Roots Corporation Ltd. says, Ginger brand corroborates the need for more definition. The newfound economic upsurge in the middle class has spawned a new market of more-traveled and knowledgeable customers, who is not willing to compromise even though he might be on a budget. Speaking on the definition of budget he says Budget hotels fall in the 2-3 star category offering clean, secure, hygienic hotels that have an inventory of about 150 rooms priced under Rs.2500/-. Ginger boasts the concept of Smart Basics in its hotels. Pani P, CEO of the Company says, In the last few years, the dynamics of the hotel industry have changed and smart basic hotels have emerged as a compelling business opportunity. The Company does not want to have place for fancy restaurants, swimming pools and other luxuries as customers do not need them in a no-frills hotel. Priced between Rs.950 for a single and Rs.1, 175 for a double (in the branded budget sector), Ginger hotels have created a new category in the domestic hospitality. Ginger hotels are centered on its core concept of Smart Basics. The group has very clearly elaborated the same. It says, Smart Basics is not just a catchy phrase. It is much more. It is a philosophy to provide thought-out facilities and services in an intelligent way at a value pricing. Their hospitality product has been designed to reflect a modern way of life, an emerging life style which people live and work. The essence of Smart Basics signifies simplicity, informality, warmth, style, modernity and affordability. The simplicity speaks of convenience and ease of doing business through awareness, booking channels, payment gateways; informality, style, warmth and modernity relates to its approach to product design, service design and affordable pricing band.

Smart Basics: Please help yourselves! This concept statement surely and clearly speaks about no elaborate and personalized service. There is self help type of service in almost all the areas for its hotel guests. Smart Basics facilities and services includeThe Square Meal: The multi-cuisine restaurant for breakfast, lunch, dinner and snacks; Cyber caf on-site, Meeting room with sitting capacity of 10 people, Laundry facility which features same day delivery. Gymnasium which is equipped with treadmill, exer-cycle, weights, air power bike, dumbbells, dual action poles with stepper, wrist curler, doorway chinning bar and punching bag; On-site ATM. , Secure parking, Doctor on call. Smart prices- They speak of transparent pricing policy with no hidden cost and levies. They emphasize delivering true value for money to its guests. Smart planet- The Company in its operations, makes deliberate attempts to provide facilities to the guests without compromising on the environmental and ecological issues. All Ginger hotels have taken eco measures such as energy conservation by using CFL lighting systems, energy saver key tag system in rooms, maximum use of natural light, thermal insulation, and gas fired water boiler system etc. Water conservation measures through ground water recharging system, rain water harvesting, auto-flush in public urinals. Waste management is being done through proper sewage treatment. Noise pollution measures such as use of acoustically sealed noiseless diesel generators and vacuum sealed windows to maintain external noise level up to 50 decibels. Smart sleep- Expressing understanding to a good nights sleep of its guests, they offer state-of-the-art posturepedic mattresses which can sense body motion and respond with increased support (only in Pune now). Smart space- Rooms have been designed with practicality and comfort for the guests. The types of rooms include single, twin, double, family and special room for physically challenged. Provision of luxury in the rooms has been accentuated with simplicity. Amenities include electronic door locks, Mini fridge, cable TV with major channels and Wi-fi internet connectivity. Tea / coffee maker in the room, Direct dial STD / Local telephone in room. Voice mail, self programmed alarm on phone. Ergonomic work area, Full length mirror, Ward robe and luggage rack, remote controlled A/C. The attached bath room has facilities of 24 hours hot and cold water, shower area, branded toiletries for body, hair and hand wash, supply of hand / bath towels. Safe zone- Safety and security of the hotel as well as its guests are ensured with close circuit TV in all the areas keeping record of visitors. Digital safes for safe keeping of valuables at the lobby counter and electronic key cards for maximum safety of rooms.

Small sized commercial hotels catering to budget guests: new alternative. (Swig, 2000) has explained candidly, how broadening the foundation of services and technology can strengthen the independent hotels. Regardless of above current trends, independent small and mid-scale hotels will continue to be a viable brand alternative. SMALL SIZED COMMERCIAL HOTELS IN INDIA Changing customer demographics, evolving products with new environments and new technologies will add strength to this sector. The success of independent hotels depends on their ability to be distinctive in their market. They are more introspective in relation to their customers. They seek to develop products and link them to the specific consumer demand source. Without opting relationship to any soft brand, use of new technology as a vehicle can lower the competitive barriers. Utilization of internet to exploit their product will offer same visibility, presence, marketing and distribution as others. There are defined and willing customer bases to occupy their rooms and use facilities. The marketing options available should be applied favorably. However, previously narrow customer niches have to be expanded to find different products which reflect their own individuality and personality. (Gupta, 2009), feels with excellent hospitality at affordable rates, budget hotels can be the approach of the hoteliers. DEMAND / SUPPLY MIX OF INDIAN BUDGET HOTELS This, new genre budget / small-sized commercial hotels in city centers are poised to grow, nurture, slowly shaping themselves to be a class to reckon with. Not being in any star category they are steadily inching forward to convince and claim recognition among the potential guests. They are big enough now to function in the lines of full service hotels providing all sorts facilities in a compact manner like their big counterparts.(Florentino, 1995), vividly supports the fact that the budget hotel product concept provides more value for money to the new value conscious travelers, because they represent an innovative product concept. They are now a cluster of hotels; recognised as business class, having a definite market segment, catering to the needs of mid rank business executives who are on the demand side. This segment forms the main business block. They are the repeat guests, their needs such as accommodation; conferences, meeting, convention etc. are the main stay of this operation. Ready to offer reasonably priced accommodation, offering world of facilities and professionalism which most business executives / travelers in the above segment are on the lookout on a recurring basis. Although chains of hotels are coming up in a big way, standalone hotels still form the bulk in two tier and three cities. To woo the potential guests, activities are in top gear. Successful models are getting replicated. Structural changes to existing operational properties are being done to redefine it. Many individual hotel properties are refining their product mix to come up with a winning model. Market survey of this class hotels indicates that they have been able add touches a glamour to an extent. The professional management and operations are still limited to those hotels which are being operated under the banner of established branded names. However, there is no scope of denial to the existence of professionalism in single units/multi units individually owned and operated properties. They too have caught up with the trend of development professionally.

OPERATIONS ISSUES Managing such properties could be an extremely uphill task. Professional operations of these hotels cannot be said to be a smooth journey, because, expectations of the guests are liable to run high. Central to successful and profitable operations are right human resources. A crystal clear need of professionally qualified managerial cadre as well as the staff team is essential. Barring few, many of these hotels face a dire shortage of trained and skilled human resource. However, this is all pervasive, because staff shortage is a situation many hoteliers of all categories would admit to. Past has witnessed how this category of hotels were poles away in adopting hospitality management procedures and greater even was unwillingness of technically skilled personnel of hospitality industry to work here. In the circles of employment, negative perceptions still prevails about the salary package offer and working conditions etc. which are the root causes, mainly acting as stumbling blocks. Since, situation is continuously improving for better turn; this misconception needs be dispelled from the minds of young and qualified professionals who are taking up hospitality management as a career option. (Chun and Davies, 2006), the study brings out strong sketches relating to satisfaction of customers and employees. This being a people intensive business, a satisfied team helps in delivering service products to the satisfaction of the customers. But, retaining educated young talent has not been easy in many well managed organisations. It is not uncommon, because some of them drift for a while before settling down, and some good talents in search of fat salary quit hotel industry to join in BPO, Retail trade etc. But, it is very encouraging to note that suitably qualified hospitality professionals have been taking up positions in these hotels recently. The largest contributing factor in accepting employment here could the challenges involved and independence they enjoy in implementing management procedures and systems. It goes without saying that the working conditions are generally in acceptable form now and the pay packages have become quite agreeable. Ample of scopes that exist for experimentation are being exploited to a great extent by these professionals employed in this sector. They work like hospitality management experts in a scientific zeal with their successful team. This is to highlight that this may not be the right choice for those who look for glamour as the key factor. HR CHALLENGES (Cherian, 2009) according CRISIL Research, each year around 10,500 graduates come out of the 25 institutes of Hotel Management (IHMs) and other 150 private institutions in the country. Apart from the 5-star category, the 3-star and 4-star categories also compete for this pool of graduates. The research firm projects that by 2011 12, when at least 30,000 rooms are added to the current stock; around 54,000 employees would be required in the premium segment alone. Institutions imparting hospitality education in India produce graduates who are given foundation education in all the areas of hospitality management, operations and service. Obviously the learning method is classical type. Fresh graduates look forward to work for established and large brands. Traditionally the Indian hotels have been able to nurture classical industry professionals. Present situation is giving way to moderation. Considering the slew of budget hotels, mid-market hotels in the individually owned and branded category, (Nagar, 2009) ED, HVS International, has pointed out at an

interestingly new angle worth noting. He views present budget hotels with their value products, would breed a new hotel professional completely different in attitude and aptitude from existing pool of Indian hospitality professionals, who will have to acknowledge their presence and emergence. COMPETITION In current business era, outburst of these hotels, what can be foreseen is neck to neck competition among similar types for their share of pie, including poaching of staff. (Akehurst et al., 1986) has pointed out to certain angles and private face strategies in terms of discounting, the hotel managers resort to in the event of competition. But following a proven successful business model always existed. It will continue to be so. CONCLUSION Emergence of budget hotels and transformation of the small sized commercial hotels in India has been overwhelming. In order to manage and handle the situation by the principles of management, hospitality management education institutes have been producing able managers and other related skills for today and future. But, overall industry requirement exceeds supply. The micro factor boosting growth and appreciable changes in this segment is owing to burgeoning of mid rank business executives as well as unexpected preference of these hotels by price sensitive corporate. These hotels are not limited by word as budget, they are professionally managed, compact full service business class hotels limited by their size, luxury and scale of operation. Hotels of this order are now object of fascination and competition is only growing. They have to face the challenges by uniqueness of the product. The product innovativeness, service augmentations are necessary ways and in order to excel for most coveted front runner positions, service excellence will always remain as a key area of study. Discussion Questions: 1. Visit the website of Ginger hotel (http://www.gingerhotels.com) & other luxury hotels like Taj. Do comparative analysis of Ginger hotels with that of a luxury hotel. How the strategic intent of Ginger hotels is different. The relevance of the same, in the context of the target customer segments for the business. 2. Comment on the operational elements constituting the strategic intent of Ginger Hotel. The potential benefits, the distinctive operational aspects of such a strategy of Ginger hotels.

Discussion Questions
1. Toyota Motor Company: Losing its quality edge?

a. Comment on quality management practices at Toyota that helped it earn a reputation for quality. b. Analyze the importance of quality in the Toyota Production System. c. Understand the manufacturing principles adopted by the Toyota Production System. d. Examine the reasons for the quality-related problems faced by Toyota. e. Discuss and debate whether Toyota was losing its quality edge. f. Explore strategies that Toyota could adopt in the future to regain its quality edge