Hospitality Sector: Value your Guests and Employees Alike

May 1st 2010

By Sudakshina Basak

A disastrous 2009, when demand was impacted by a global recession and the aftermath of 26/11, fueled
greater innovation and employee engagement in the Indian hospitality industry. People Matters first
Industry Focus explores the hospitality landscape in the backdrop of revived demand, increasing
pressures on the talent pool and an industry with unparalleled human touch points that is fighting off
attrition in a predominantly young workforce


As the signs of recovery from recession get stronger and surer, 2009 looks like a distant night-mare for
the hospitality sector. The last 6 months have seen a rise in business hotel occupancy by close to 100%
and industry bodies (and the tourism ministry) project a YOY demand growth of 150%.

Industry insiders predict an exponential increase in foreign tourist footfall, spurred by sporting events,
development at major airports and Government-led tourism campaigns and visa-on-arrival schemes.
Matthew Cooper, General Manager of Courtyard by Marriott, Gurgaon, believes growth of sub-sectors
within the industry including Spa/Holistic/Religious Tourism, Medical Tourism, Incentive/Conference
Tourism and Corporate Business travel will add to this macro trend. Growing income levels, thriving
aspirations and upward mobility among Indian professionals also contribute to creating greater travel
opportunities and providing the desired thrust to the hospitality sector. Adds Ashok Mittal, Chairman,
Ramada Plaza, Other factors like improvement in global as well as domestic conditions, Commonwealth
Games of 2010, the government being more stable as well as hopes of more favorable policies and
measure in the recent future would fuel the growth in Indian hospitality.

Evolution and Scope: The People Issues

There has been a sea change within the Indian hospitality sector in the course of its evolution and
growth. Professionals engaged in the hospitality industry today are remarkably different from what they
used to be half-a-decade back, in terms of personal aspirations, career planning and their openness to
make personal adjustments. While these are essential pre-requisites in a demanding industry, it is also
true that due to its unique characteristics, the hospitality sector is finding it increasingly difficult and
challenging to find and retain quality talent.

Liberalization of sectors like financial services and banking, a retail boom and exponential growth in the
Indian BPO sector in the last decade, with increasing penetration of KPO, BPO, IT and ITeS firms into tier-
II and tier-III cities have opened up new horizons for hospitality professionals in India. They have been
endowed with the choice of staying and working within the local environment rather than facing the
hazards of relocating.

Hospitality companies face the dual challenge of equipping their employees for the complex dynamics of
their industry while making themselves an attractive career destination for professionals under the age
of 30, who are spoilt for choice in the services sector. Training and Development is obviously a key
ingredient in addressing these challenges as it addresses issues related to homogenizing customer
experience, improving employee engagement and shifting the focus for young recruits from jobs to
careers. Ravi Shankar, Chief Human Resource Officer, Mahindra Holidays emphasizes, Developing
internal talent to take on Leadership roles, within a short time, is the biggest challenge. We have
instituted Developmental Centers to identify top talent as well as to identify key competency gaps. This
is followed by individual-focused training programs. Senior Vice President of Accor India, Jean-Michel
Casse believes that backed by highly respected, powerful brands, employees can help create lasting
interpersonal relationships and deploy their unique skills to develop and deliver solutions that create
wellness. To meet the expectations of the employees all over the world, Accor has defined the
framework of a worldwide compensation and benefits policy, which is adapted according to the specifics
of each country. Accor has a professional progression that enables the employees to experience faster
career advancement. The employees have a benefit from career development through a change of
function, profession or country, while remaining within Accor., he adds.

M&A Opportunities: Conditioning Human Resources

Indian hospitality assets have emerged as an attractive investment destination for global majors. A
number of renowned international hotel chains plan to enter India and some of those already present in
the country are keen to expand. The shortage of hotel rooms in India is the prime trigger factor for the
companies.

S-headquartered MGM Mirage Hospitality, Fairmont Raffles Hotels, Thailand-based Amari, Movenpick
Hotels and Resorts, Golden Tulip Hotels, Corinthia Hotels group from Europe are among the chains that
are betting high on Indian market. Industry experts predict that around 40 international hotels are
expected to be operational in India within the coming 3 years.

Jean-Michel Casse, Senior Vice President, Accor India elaborates, Initiatives like huge investment in
hotel infrastructure and open-sky policies are signs that the Indian Government is focused on propelling
growth in the hospitality sector. Indias hotel pipeline is the second largest in the Asia-Pacific after China,
making up 23 per cent of the total projects in the region.

For every M&A activity and expansion plan, there is a need to align the employees with the emerging
outcome and new challenges. The senior management must invest time and effort to season the
employees with the shift in paradigm. H.N. Shrinivas, Senior Vice President - Human Resources, The
Indian Hotels Company Limited believes that Cultural integration is the most crucial objective which
must be addressed while operationalizing acquisitions. To achieve the cultural integration, one needs to
initiate internal communication, create employee awareness, undertake relevant training programme
which all go a long way in ensuring seamless integration of the new entity. The free flow of
communication and adequate training programmes would guarantee that the brand value remains
intact, post acquisition. According to him, the second most important aspect to deal with during M&A
is rationalizing and revising pay scale to optimize processes. By modulating an apt HR policy we can
remove the hindrances in the way of expanded entity.

According to Prabhjot Singh Goomer, Director of Human Resources, Hilton, New Delhi, The
organizational and people-related challenges related to operationalizing acquisitions are as follows:
firstly, communicating how and when to the people concerned; secondly adapting to new philosophies,
new culture and new leadership style; thirdly,re-aligning with new business goals; and finally, creating a
comfort zone at various levels by minimizing resistance to change.

While responding to the recent spur in merger and acquisition activities within the Indian hospitality
space, Mr. Ramanathan, MD, Mahindra Holidays & Resorts says Issues relating to compensation, titles,
and responsibilities, if any, should be ironed out before the merger /acquisition, in a very transparent
manner, and therefore these have not posed issues to us. The focus should be in integrating values and
culture, in Mahindra we do it in a very systematic manner.

Challenges

Easy Alternatives: The hotel industry in India is fast losing educated and efficient professionals to other
segments in the services sector. With new opportunities in sectors like BPO and retailing both for
experienced hotel executives as well as for entry-level hospitality degree holders hospitality industry
is no more the career path of choice for them. Sectors that offer better work-life balance, greater
comparative remuneration and faster professional growth are catching the attention of young and
experienced in the hospitality field. As per Bhasker Sen, AGM Training, Jaypee Palace Hotel and
Convention Centre, Agra, the shortage of skilled manpower in Indian hospitality industry is basically
coming out of career move (plenty of options to choose from), economic growth (enhanced
compensation) & enhanced quality of life (childrens education, medical facilities, entertainment),
convenience or closeness towards family (elderly parents, only offspring, working spouse etc). We
source fresh talent from the hotel management and catering institutes through both campus and off
campus recruitment. Some numbers are always moving on to larger/metro cities to join hospitality
trends, BPO business, banking industry or to join call centers.

The industry is facing a consistent problem of attrition over the years. While analyzing the triggers of
attrition, a host of factors can be identified. Prabhjot Singh Goomer -Director of Human Resources for
Hilton New Delhi says that the factors which primarily contribute to attrition are: a) The way people are
treated; b) Working conditions; c) Careers prospects; d) Salaries offered. He also feels that these factors
trigger almost 70% of all attrition within the hospitality industry and believes that half the battle would
be won if the people are treated fairly at work. The attrition would be minimal if the working conditions
are good and the people are looked after. He sums up by making a point that, As we say the guest
returns to the hotel if he is made to feel welcome, it is true for the employees as well.

Homogenizing Customer Experience across Hotels for Large Chains: The customer experience is made up
of multiple interactions. Bhasker Sen, AGM Training, Jaypee Palace Hotel and Convention Centre, Agra
believes that, The creation of standards in practically all the services offered to the guest is the greatest
challenge of all i.e. standardizing the products & services and the delivery. This happens despite SOPs
and process governance as each property is unique in its people, hardware, the business operations, et
al. To create the magic across hotels, employees are encouraged to give suggestions and own up the
processes. Bhasker Sen continues that, Personalized services too have become important to better the
customer experience. Employees are encouraged to interact proactively with the customers and walk
that extra mile to address their concerns and requirements, in fact proactively anticipate their needs.

Pressure of Rising Benchmark: In the ever-changing world of rising customer expectation, unpredictable
revenue generation and growing competition, the managements of hotel companies are increasingly
faced with severe challenges on how to run the business. According to Matthew Cooper, General
Manager, Courtyard by Marriott, Gurgaon, Maintaining profit margins in a dynamic market is very
tough. As we wow our guests with a unique service today, tomorrow it becomes the norm and then
becomes a cost of doing business. For example if one chain decides to include airport pickups in the
rate, the customer expects this from all hotels in the market. This is not limited to India but the key to
success in this situation is to understand the customer and the value perception inherent to that
particular market segment.

Managing Medium and Long-Term Hindrances: Just like any other service sector, in hospitality also the
CEOs and General Managers are faced with short, medium or long term challenges. According to
Saurabh Rai Bhatnagar, Regional Director, India; Director Global Sales, India, Middle East & Africa,
Preferred Hotel Group, In the short run, these challenges revolve around the immediate and ongoing
economic, social, political and technological environment. A medium term issue could be to do with a
hotels full renovation that could last up to a few years and long term challenges would encapsulate
ongoing operational aspects like constant innovation, adopting new service trends, company expansion
plans, etc. He believes that While the short term issues are easier to plug with training and minor
investments, it is the medium to long term challenges that the management needs to be proactive and
foresighted about, as these have a direct influence on the companys corporate culture and consumer
brand perspective.

The Winning Ways

There is no doubt that Indian hospitality industry has been inward looking in its approach, with owners
and managers being slow in realizing, recognizing and adopting employee best practices. In a 24x7
industry like hospitality, the pressure of retaining people and the adjustments that require to be
initiated to facilitate this process would eventually change the work environment as well as the
management structure in Indian hotels. Managers would be required to pay more minute attention in
building the team and boosting employee motivation. The managers in Indian hospitality industry need
to be more conversant with the maxim, The only constant is change, continuing change, inevitable
change. (Isaac Asimov) and must plan out a strategy which allows them to formulate new ideas more
regularly and enables them to be put into practice. Traditional practices should pave the way for more
challenging ones, and faster, newer career progression, coupled with innovative HR concepts, like
Career path, OD intervention and HRIS should be the new buzz word in Indian hospitality world.

The hospitality sector in India has not been much successful in attracting fresh talent from outside. It
must find a new way of attracting talent from other sectors to combat the attrition problem. However,
in a more constructive note, the need of the hour for the senior management is to become more flexible
in terms of hiring from outside the hospitality industry, and more accommodating with fresh recruits
from other fields. The prevalent apprehensions among the hoteliers that outsiders would not perform
well enough must be substituted with a more visionary approach which calls for finding, attracting,
investing and retaining talent. Indian hospitality industry can learn a lesson from the burgeoning
telecom industry and other fast-growing industries in India who are inviting people across sectors to join
them, giving time and space to adjust, perform and be a partner in the growth.

L&D initiatives must be a top priority for the sector as this will chart a definitive career progression path
for the employees. Ashok Mittal, Chairman, Ramada Plaza says, In this cut-throat market, training
session plays a very important role to meet the expectation of employer and employees both. Industry
experts believe that employee engagement is the key in maintaining goodwill so necessary for a
value-based industry like hospitality. According to Senior Vice President of Accor India, Jean-Michel
Casse, Orienting employees to delight customers is critical to the success of an organization. Volumes
can be written on the need to imbibe qualities such as a positive approach, etiquette, proactiveness,
values, leadership and the organizations culture as essential steps to achieve the goals.

Another important and intelligent facet of the HR service in hospitality industry is the growing
outsourcing of select activities, which are aimed at reducing the burden on the parent company while
not affecting the customer experience and expectation. According to Saurabh Rai Bhatnagar, Regional
Director, India, Preferred Hotel Group, Services like security, kitchen stewarding, transport, landscaping
et al. which are non-guest contact in nature, have been traditionally outsourced by quite a few hotel
companies. Moving forward, this trend also includes services like management, spa, salon, laundry, IT
support & telephone systems, engineering and facility management; essential services that have a direct
influence over the overall guest experience would continue to remain an in-house specialty as these
services are the primary differentiator that sets a hotel apart from its primary competitors. However,
Prabhjot Singh Goomer, Director of Human Resources for Hilton New Delhi thinks that, With more and
more areas getting identified which can be outsourced without affecting the guest journey, outsourcing
would only grow with time thus contributing to the bottom-line of the business.

To sum up, we can quote H.N. Shrinivas, Senior Vice President - Human Resources of The Indian Hotels
Company Limited who believes that the real issue is not the shortage of skilled manpower in India. The
actual issue is finding the right people for the right position and investing in systematic talent
cultivation. As opposed to the perceived idea of talent crunch, I think the right way is to provide training
assistance to new recruits and help them in finding their niche.


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