PRE AND POST COVID BUSINESS SITUATION

SURVIVE,REVIVE & GROWTH MODEL OF AVIATION AND

HOSPITALITY SECTOR IN INDIA

SUBMITTED BY
DEEPAK KUMAR (C-16)
19020441080
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MY SECTOR FOR STUDY OF PRE AND POST COVID BUSINESS

SITUATIONS AND THE REASONS BEHIND IT
My sectors are Aviation and tourism, the reason behind these two sectors are mainly they are
badly impacted by the Pandemic, secondly they are strongly correlated to each other revive In
one sector will lead to life in other as in India a major tourist country spread over a very vast
area, the tourist prefers many mode of transport to reach this places hence they require
accommodation to stay and as the Aviation sector is badly impacted the same can be seen in
tourism and hospitality sector which is also has a significant impact on their business. As more
tourists fly to a certain destination, airlines Travel by air can be classified into two broad
categories:

1. Travel for Business

2. Travel for Pleasure
Sure, there are other reasons to travel by air, such as to go to a family event (wedding, funeral,
etc), but most things other than business can be lumped in with travel for pleasure. Both of
these categories lead to tourism. When people travel for business, on occasion, they have a
chance to enjoy the local culture where they conduct business. At the very least, business
travelers are very likely to stay in a local hotel, which as an outsider counts as tourism. With the
exception of travel to family events, most travel for pleasure is highly tourism centered. If
people can’t reach a major destination which is a great distance from where they live by air,
they will be very unlikely to travel to that destination. This makes places like Hawaii extremely
tightly linked to the aviation market. If aviation failed, more people would choose to visit
locations they could reach in a timely fashion by other means of transportation (taking a ship to
Hawaii is not a quick trip).

AVIATION SECTOR

Pre Corona situation

According to International Air Transport Association (IATA), India continued to be the fastest
growing domestic aviation market for 3 consecutive years ending 2017, as economic and
network expansion boosted the sector. India’s air transport sector has supported 8 million jobs
and contributed to USD 72 billion to its GDP. From a current domestic market of 117 million
passengers travelling in 2017, India is expected to be a market of 442 million passengers by
2035, with the aviation industry supporting 19.1 million jobs and contributing USD 172 billion to
the GDP, according to IATA. In India, low cost is critical to the airline industry which is
characterised by highly price-sensitive consumers. On one hand, increase in input costs such as
fuel prices and aircraft landing and en-route charges have added pressure to the industry’s
profitability. While on the other hand, demand for air travel continues to be robust at low fares
in the domestic market, thereby absorbing the rapid capacity expansion and stimulating higher
air travel demand. Amongst the macro-economic factors such as India’s relatively low per capita
income and low domestic air penetration levels, low cost carriers or LCCs continue to be one of
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the key
drivers for
traffic
growth by
offering
affordable
flying
options to
India’s
rapidly
growing
air travel
market.
With a
share of
over 65%
in India’s
air travel
market,
LCCs continue to gain increased acceptance not only amongst leisure travellers, but have also
turned into a favourite for corporate travellers by meeting their key expectations of network
density, schedule and on-time performance.

Air travel penetration in India stood at 0.10 trips/capita in FY17, which is 59% lower than
countries with similar GDP/capita, and 76% lower than BRICS nations (barring India), according
to the Directorate General of Civil Aviation (DGCA) and IMF. This gap is expected to dissipate
expeditiously at 18% CAGR over FY17-22E, due to the rising disposable incomes, supported by
increasing working age population. According to World Bank, India’s domestic passenger travel
market is projected to grow at 20% CAGR during FY17-22E, assuming 1.2% population CAGR.

KEY GROWTH DRIVERS

Strong Economic Growth

According to Economist Intelligence Unit (EIU), India is expected to be one of the fastest growing
major economies in the world, with real GDP growing a CAGR of 7.6% between CY16 and CY2,
surpassing that of China, APAC and the world average, which are expected to grow by 5.2%,
3.8% and 3.6%, respectively, during the same period.

Continued Working-age Population Growth

India, currently the 2nd most populous country across the globe, is expected to grow its
population at a CAGR of 1.1% over CY17- CY22, according to EIU. This is higher than the average
population growth of the top 20 domestic air travel markets in the world, as per a report by
Center for Asia Pacific Aviation (CAPA).
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Expansion in Aviation Infrastructure

Increased focus of the Indian Government in infrastructure expansion is a key catalyst to growth
of India’s aviation market. In the Union Budget 2018-19, the Government has proposed to
expand India’s airport capacity more than 5 times to handle one billion trips a year under its
new initiative - NABH (NextGen Airports for Bharat) Nirman. Public private partnerships have
also yielded state-of-the-art Greenfield airports in Hyderabad and Bengaluru, while new airport
infrastructure investments in Delhi and Mumbai are further expected to increase capacity and
service quality

CURRENT SCENARIO
In the past few months, the world economy has undergone a severe crisis due to the outbreak
of COVID-19. As a response to the pandemic, Governments across the globe instituted strict
containment measures such as restrictions on businesses, public gatherings, labour mobility,
lockdowns and travel bans. All the major economies including India are suffering the economic
consequences of these restrictions. As per the International Monetary Fund’s (“IMF”) World
Economic Outlook (April 2020 edition), the global economy is projected to contract sharply by
negative 3% in 2020, much worse than during the 2008–09 financial crisis. Furthermore, the IMF
estimates that in a baseline scenario, which assumes that the pandemic fades in the second half
of 2020 and containment efforts can be gradually unwound, the global economy is projected to
rebound and to grow by 5.8% in 2021 as economic activity normalises, helped by policy support.
The advanced economy group is forecasted to grow at 4.5%, while growth for the emerging
market and developing economy group is forecasted at 6.6%.

Countries across the world are currently highly focused on addressing public health care
requirements by allocating additional resources. Beyond strengthening health care systems,
policies are also needed to limit the impact of the pandemic on economic activity. Several
central banks have also eased monetary policies to boost the economy. Broad-based stimulus
and liquidity facilities to reduce systemic stress in the financial system can lift the confidence of
investors and prevent an even deeper contraction in consumer demand.

The global growth forecast remains uncertain due to factors that are difficult to predict,
including the pathway of the pandemic, the intensity and efficacy of containment efforts, supply
disruptions, the repercussions of the dramatic tightening in global financial market conditions
and shift in spending patterns.

The Indian economy has also been disrupted by the COVID-19 pandemic. Initially, the World
Bank in its Global Economic Prospects (January 2020 edition) projected

As the COVID-19 pandemic continues to affect the economy and human health, the extent of its
impact on the future development of global commercial aviation remains uncertain. Airlines
around the world are confronting the challenge of a sharp decline in demand, complicated by
uncertainty as to when the virus will be under control and travel can return to normal. The
collapse in demand has led major global airlines to announce severe cost-cutting measures,
urgent requests for government assistance, and in some cases, grounding of fleet.
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Given the global

nature of the
COVID-19
pandemic that
threatens to
throw many
economies into
recession, it
could take
passenger air
travel demand
anywhere from
several months
to several years
to recover to
2019 levels. This return to normalcy in airline travel will depend on multiple factors including the
speed of virus containment, lifting of country border closures, restoration of confidence in air
travel, and a return to normal economic and social activity. After rapid expansion over the last
decade when Indian aviation registered a Compound Annual Growth Rate (“CAGR”) of around
13.6% in domestic demand measured in terms of Revenue Passenger Kilometers (“RPKs”), it
slowed down to 5% in 2019. The deceleration in growth was primarily driven by supply-side
constraints due to industry consolidation subsequent to the cessation of operations of Jet
Airways. Adding significantly to industry headwinds, COVID-19 hit the aviation Industry in Q4 FY
2020. In response to the virus, the Government banned international flights with effect from
March 22, 2020 and domestic flights with effect from March 25, 2020. Even before these
extraordinary measures were taken, the travel demand started to slow down significantly. This
had a major impact on the financial performance of the Indian carriers.

In the medium to long term, once the crisis is over, the demand outlook for aviation remains
very strong in India largely driven by under-penetration, rise in working population and
expansion of middle class. (Refer to the section below for key growth highlights in the Indian
aviation during the pre-pandemic period.) Furthermore, the rise in trade and tourism is also
likely to boost the industry. Based on the recent data published by the Civil Aviation
Administration of China (“CAAC’”), daily flights in China have recovered by 43% as of April 21,
2020 as compared to March 2020. Thus, although the COVID-19 outbreak will have a near-term
negative impact, aviation in India should gradually recover and get back on track for rapid
growth.
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INTERGLOBE AVIATION LIMITED -INDIGO

IndiGo has been India’s largest passenger airline with a market share
of 48.4 per cent as of February 2020. The company primarily
operates in India’s domestic air travel market as a low-cost carrier
with focus on three pillars – offering low fares, being on-time, and delivering a courteous and
hassle-free experience. IndiGo has become synonymous with being on-time.

Since its inception in August 2006, it has grown from a carrier with one plane to a fleet of 255
aircraft today. A uniform fleet for each type of operation, high operational reliability and an
award-winning service makes IndiGo one of the most reliable airlines in the world. It currently
operates flights to 89 destinations – 63 domestic and 24 internationals. Fourteen codeshare
destinations beyond Istanbul on Turkish Airlines are also open for sale. They include, Athens
(ATH), Budapest (BUD), Brussels (BRU), Tel Aviv (TLV) , Malta (MLA), Paris (CDG) , Dublin (DUB),
Copenhagen (CPH) , Prague (PRG), Vienna (VIE), Zurich (ZRH), Amsterdam (AMS), London
Gatwick (LGW) and London Heathrow (LHR).

SURVIVE,REVIVE & GROWTH STRATEGY

IndiGo is India’s largest passenger airline operating as a low-cost carrier. Serving 86 destinations
including 24 international destinations,provide passengers with a simple, unbundled product,
fulfilling singular brand promise of providing “low fares, on-time flights, and a courteous and
hassle-free service” to customers. In addition to passenger transportation,activities primarily
include cargo and mail services on scheduled flights.

IndiGo commenced operations in August 2006 with a single aircraft and has grown its fleet to
262 aircraft as of March 31, 2020.Company had placed an order of 430 fuel-efficient A320 NEO
family aircraft in 2011 and 2015, of which 114 have been delivered as of March 31, 2020. In
addition to this, in October 2019,Company placed an additional firm order for the 300 A320 NEO
family aircraft, which includes A321 XLRs in addition to A320 NEOs and A321 NEOs.

At the end of March 2020,100 fuel-efficient A320 NEOs giving 15% lower fuel burn compared to
the current generation of A320 CEOs without sharklets.They also have 14 A321 NEOs in our fleet
with higher seating capacity, lower unit costs and longer range compared to A320 NEOs,had
placed an order with Pratt & Whitney to power 150 of A320 NEO family aircraft. All the A320
NEO family aircraft that we have today use the Pratt & Whitney GTF engine. In addition to this,
in June 2019, placed an order with CFM to provide engines for 280 of our NEO aircraft. With this
order, they have identified engine partner for the initial 430 A320 NEO family order.

Recently placed an order with Avions de Transport Regional GIE, or ATR, in August 2017, for the
purchase of up to 50 ATR72-600 turboprop aircraft. These aircraft have given the opportunity
to, once again, redefine air travel in cities that were devoid of reliable air service so far, or were
subject to exorbitant airfares. As of March 31, 2020, we had 25 ATR aircraft in our fleet. In FY
2020, Company was awarded the ‘Best Low-Cost Airline in Central Asia and India’ for the tenth
consecutive time at the Skytrax World Airline Awards 2019. Company is ranked as one of the
best airlines in terms of on-time performance for the third consecutive year amongst the top 20
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global mega-airlines based on data compiled by the OAG. IndiGo is the only Indian carrier to
have made it to this list, three years in a row.

IndiGo has been recognised among the most valuable and strongest airline brands, as per the
Brand Finance Airlines 50 report for 2020. Further, Company was also awarded the ‘Safety
Partner - Best Aircraft Turn Around Activity’ by DIAL; the ‘Best Domestic Airline’ at FICCI’s first
edition of Travel and Tourism Excellence Awards; and the ‘Companies with Great Managers
Award’ by People Business in partnership with The Economic Times. These awards are a
testimony to best-in-class service quality.Company’s learning academy ‘ifly’ also won awards for
best practices in Learning and Development under six different categories at the TISS
LEAPVAULT Chief Learning Officer (“CLO”) awards by the Tata Institute of Social Sciences.

Impact of COVID-19 and Company Outlook

COVID-19 has led to major disruptions across world economies, and has led to the
implementation of several government-imposed restrictions, particularly in the travel sector. In
India too, the Government took early actions that led to cessation of all scheduled passenger
flights for a period of 61 days starting March 25. While, the domestic business largely remained
as expected during January to February 2020, company began reducing international operations
from January 2020. January and February 2020 results were not materially impacted by this,
however, March numbers were particularly impacted. Consequently, the overall Q4 FY 2020
results were impacted as well.

Indigo have taken a number of actions to mitigate the impact and risks of COVID-19 to the
business. These actions include cost reduction initiatives, liquidity enhancement, capacity
reduction, and improvement in fleet mix. Company are extremely focused on ensuring the
health and safety of the customers and employees, and have designed and implemented a new
set of standard operating procedures to combat the virus.

Company have planned a phased ramp-up of capacity in line with demand expectations going
forward. Basis this, company aim to deploy around 60-70% capacity in the third quarter of FY
2021, on a year over year basis. Given the uncertainty of the environment,the company will
continue to monitor these plans and make adjustments on the basis of demand, as required.

The A320 NEO aircraft that indigo operate have structurally lower costs than A320 CEOs.
Hence,plan to increase the mix of NEO aircraft to our fleet to leverage these cost advantages.
company will continue to take deliveries of new NEO aircraft and balance this with gradual
retirement of CEO aircraft. Most of the new aircraft will be financed through an operating lessor
model, generating significant liquidity in FY 2021.

company have a strong balance sheet and healthy cash balance. As of March 31, 2020, ended
with a total cash balance of 204 billion rupees, of which 89 billion rupees was free cash.

STRATEGIES ADOPTED AT OPERATIONS LEVEL-

Single type of aircraft-Indigo’s whole fleet consists of A-320-232 aircraft while Air India, Jet
Airways and Spice Jet use 10, 9 and 3 different makes of aircraft respectively. This result is in
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greater flexibility by making use of the same crew from pilots to flight attendants to the ground
force thereby cutting hiring, training and up gradation costs.

Single Class -Having only Economy class means that Indigo does not have to spend time, money
and crew on privilege passengers. They also don't need to maintain expensive lounges at
airports further reducing costs.

Low average fleet age- Indigo has an average fleet age of less than 3 years. A younger fleet
means less maintenance costs. Indigo plans to maintain a lower fleet age as all its aircraft are
leased for a period of 5-6 years. This way they
avoid the D-Check which is done after 8 years of
operation of an airplane. (A D-check may take
up to 2 months during which the aircraft
remains out of service.)

Fuel- Domestic fuel taxes can be as high as 30

per cent along with an 8.2 per cent excise duty.
As a result, fuel for Indian airlines accounts for
about 45 per cent of total operating costs,
compared to the global average of 30 per cent.
Indigo’s aircraft try to save fuel by using
software to optimize flight planning for
minimum fuel burning routes and altitudes and
also by making use of latest fuel saving
technology.

Route Planning- Indigo operates over a lesser

number of destinations than its competitors but
with a higher frequency - with a fleet of 78
planes for 36 destinations while Spice Jet flies to 46 destinations with 58 planes.. The network
maps show that all Indigo's destinations are connected to at least two cities while most are
connected to 3 or more destinations, whereas this is not the case with Jet Airways. This means
Indigo can keep its aircraft in the air for a longer period of time and save up on airport charges.
Because of this Indigo has a high aircraft utilization rate of more than 11.5 hours per day per
plane. This also means that customers don't have to look for connecting flights with other
competing operators.

Tightly framed maintenance contracts- Indigo has a Power by the Hour contract with
International Aero Engines (IAE), which provides the engines that put the onus of performance
delivery on the manufacturer. Indigo has similar agreement with Airbus, as well as with vendors
for other critical components, These contracts probably come at a premium but it means that
Indigo does not have to pull out planes from services for repairs and also does not have to
maintain a large inventory of spare.
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HOSPITALITY SECTOR
PRE- CORONA SITUATION
Travel and tourism industry contributed 10.4% to total GDP and registered healthy growth of 3.9%
in 2018 (Source: World Travel and Tourism Council (WTTC)). In the past five years, one out of every
five jobs were created by this industry. International tourist arrivals grew by 5.6% in 2018
representing a strong year of progress for global travel and tourism industry (Source: United Nations
World Tourism Organization). The growth in arrivals was broad-based, with Africa, Asia Pacific and
Europe growing by 7.3%, 6.1% and 5.7%, respectively. The Americas recorded a 2.9% rise in
international tourist arrivals. Global air passenger traffic increased by 6.4% for the year, until
November 2018 (Source: International Air Transport Association).Regional hotels’ performance in
2018 was generally positive, with Europe, the Americas and Asia Pacific flourishing across each of
the three key performance indicators (KPIs):occupancy rates, average daily rates and revenue per
available room. North Africa was the standout performer of 2018 with double-digit growth, partly
due to a low base in markets like Egypt. In contrast, the Middle East recorded declines across all
three measurement parameters. However, hotel performance metrics need to be viewed in the
context of supply trends. Global inbound air travel bookings rose by 6% in 2018 (Source: WTCC) with
Asia Pacific, Europe and Africa leading from the forefront. During the year, outbound air travel
bookings growth was strongest in Asia Pacific (7.8%) and Africa (7.4%). In Europe and the Americas,
the segment expanded at 6.1% and 4.9%, respectively. The Middle East was again the slowest
growing region for both inbound and outbound bookings. Global domestic air travel bookings
thrived at 5.8% in 2018, supported by strong double-digit growth in Asia Pacific (14.0%) and the
Middle East (10.9%). The segment also performed well in Europe and the Americas, with 5.4% and
4.0% growth, respectively. Africa was the only region to report a decline of 0.9% in Domestic air
travel bookings. The hospitality industry has been undergoing tremendous changes and disruptions
over the last two decades. The key trends that are reshaping the industry are listed here:
• Virtual communities across social networks like TripAdvisor and Google, among others
influence tourists and lead to more transparency • Online Travel Agents (OTAs) have altered
distribution channels, facilitated a shift towards large brands and have built enduring relations
with travellers

• Digitalised guest experiences through apps are increasingly helping hoteliers manage many
aspects of the guest cycle and experience

• Booming global tourism, owing to enablers like low-cost carriers and healthy GDP growth in
emerging markets

• Rising trend of experience economy wherein customers request extreme personalisation,

unique experiences, and so on.
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• Generations Y and Z have

different requirements and needs
compared to older generations

• Sustainability approach of hotels

is growing as patrons become
increasingly sensitive towards
environmental and social issue

The hospitality industry is evolving

with the advent of new
technology and concepts. While
technology plays a significant role
as a differentiator in the industry,
sustainable practices are growing
fast to become a major
determinant of success for
tourism businesses. Overall,
hoteliers need to understand
what's at stake and focus on the
following five dimensions:

• Standardisation can no longer be the norm: It is becoming critical to personalise and tailor services
to the needs and preferences of travellers

• Technology as an accelerator for business: Technology will be at the core of the hotel experience
both in rooms, and before and after the trip. This will lead to the development of new concepts and
more innovation in the industry

• Social responsibility is an economic obligation: It is essential for governments and corporations to

build real, sustainable business models for the travel and tourism industry

• Develop more responsive and durable business models: Agility and resilience is very important for
efficiently mitigating risks facing the industry

• Manage talents actively: Attracting, developing, and retaining the right talent in the hospitality
industry continues to remain a core challenge.

The global travel and tourism industry continued to see encouraging momentum during FY 2018-19.
Interestingly, 2019 marks a decade since the US travel and tourism industry

recovered from the depths of economic recession. The recovery coincided with the economic
resurgence in emerging markets, translating to a historic growth in travel demand, felt by segments
across the travel industry. India’s travel and tourism sector witnessed healthy growth during the
year with the Government’s focus on making the country an attractive tourist destination with
advanced communication facilities and digital

conveniences. Technology and digital innovation have immensely benefitted the travel and
hospitality industry in a very short period of time. Occupancy levels stood robust at 65.3% in 2018
highest in the past 10-years at all-India level*. Favourable demand-supply dynamics

aided an upswing in average room rates (ARR) as well as revenue per available room (RevPAR).
Global travellers are increasingly demanding more personalised, exclusive and authentic experiences
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from luxury hotels. Wellness and

sustainability are two emerging dimensions
in this segment with our patrons looking for
holistic experiences that include

nutrition and yoga. Customers are

increasingly preferring hotels that have
embedded eco-friendly practices in their
operations. In parallel, demand is growing
rapidly in the midscale and upscale segments.
Leading hospitality players like us are well
poised to benefit from these trends, given
that we offer a full-suite of hospitality
services to our guests.

INDIAN HOSPITALITY AND TOURISM

INDUSTRY
Travel and tourism industry contributed 9.2%
to India’s GDP and registered a growth of
6.7% in 2018 (Source: WTTC). The industry
supported 43 million jobs in the country
(8.1% of total employment). India offers a
diverse portfolio of niche tourism products,
including cruises; adventure; medical; wellness; sports; meetings, incentives, conventions, and
exhibitions (MICE) eco-tourism; films; rural and religious tourism. The country has been

recognised as a destination for spiritual tourism for domestic and international tourists. Besides, the
introduction of a new category of visa—the medical visa or M visa—is expected to encourage
medical tourism in India. Several other factors promoting tourism, in general and hospitality, in
particular are:

• Focus on improving infrastructure, including airports, roads, and rail connectivity across the
country

• Positive amendments to Coastal Regulation Zones Rules are expected to facilitate development of
beach resorts across the coastline

• Digitisation of services, including payment mechanisms • E-visas offered to nationals of 166

countries is expected to increase foreign travellers

• New avenues of funding Real Estate and Hospitality assets through institutional equity by way of
listing Real Estate Investment Trusts (REIT) and Initial Public Offers (IPOs) of certain hospitality
companies .

• Introduction of the Insolvency and Bankruptcy Code (IBC) to resolve insolvencies efficiently, which
in turn gives rise to opportunities for expansion The industry's concern however, are high GST rates,
which at 28% for room tariffs above ₹7,500 are amongst the

highest in South East Asia positioning the country as an expensive destination in comparison with
regional peers. Further, the recent turmoil within the airline industry in India leading to a decline in
flights has impacted travel, notwithstanding the high demand for air travel
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India’s gateway cities outpaced most of

their counterparts in the Asia Pacific region
in 2018 (Source: India Hotel Market Review
2018). The three pivotal metrics for like-for-
like hotels reported an improvement in
2018 with Occupancy at 67% (+1.7%points),
Average Daily Rate (ADR) at ₹5,920 and
RevPAR at ₹3,968 over 2017. The demand
for rooms has outpaced supply of rooms
over the past six years and this trend
continued in 2018 as well. Hyderabad,
Delhi, Mumbai and Pune recorded the
highest demand growth. Barring Goa and
Kochi, all key markets saw a positive
RevPAR growth in 2018.

India’s hotel industry is on an upswing on

the back of robust prospects in the
domestic tourism industry, increasing
foreign tourist arrivals, improving forex
inflows, high demand for air travel and
muted supply growth. These factors
corroborated by domestic macroeconomic
data suggest the road ahead will bring
higher revenues and margins for the hospitality industry in the ountry. Growth in the upscale and
Budget hotels, in particular is expected to be buoyant with other segments too witnessing healthy
momentum.

CURRENT SCENARIO
The tourism industry has been affected both in terms of the demand for its products and its people,
given that the industry is highly people-centric and service delivery involves close interaction
between guests and the service-providers. The government’s response to the situation, which
includes social distancing norms, global travel advisories, suspension of visas, prohibition against
mass gatherings, cancellation of sporting and cultural events, halting of inter-state transport,
railways, etc. has impacted the hospitality industry.

India ranks 3rd in World Travel & Tourism Council’s list for Travel & Tourism Power and
Performance. It markedly improved its position from the 40th rank in 2018 to 34th in 2019 in the
World Economic Forum’s Travel and Tourism Competitive Index (TTCI). Some key trends that are
expected to prevail for India’s tourism industry in a post-COVID-19 environment are:

Rise of staycations

Over the past couple of years, there has been an increased demand for more frequent holidays near
home as working millennials look to escape city life in search of tranquillity or a break from
monotony. In the short term, people are expected to visit hotels within drivable distances from their
homes.
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leisure travel

This year, Bleisure travel, a combination of business and leisure, was at an all-time high and will
continue to be popular in 2020. The quest for a better work-life balance is growing stronger among
Indians. Most new-age corporate travellers will continue to make the most of their business trips by
exploring local culture, food and other attractions by extending their stay.

Tech-enabled and tech-reliant travellers

With millennials preferring pre-payments, travellers go cashless today. A booming fintech industry
and cashless transactions are setting the tone for travel and leisure, which no longer involve the
hassle of handling physical cash. According to a report by Bain & Company, nearly 35% of Indians will
book their travels online by 2021. COVID-19 has further compelled businesses and consumers to
adopt contactless payment.

Food & Beverages (F&B)

F&B, which generally provides sustainable revenues to the Indian hospitality industry, is likely to see
lower revenues in a post-COVID-19 environment. The trends in F&B are likely to veer towards online
food ordering, food delivery to home and offices, meetings and events for smaller corporate groups,
catering at residences of high net worth individuals for small gatherings, etc. Seating capacity at
restaurants is expected to fall in order to provide space for social distancing, which will reduce meal
volumes. High street restaurants are likely to suffer the most while and restaurants in hotels that
enjoy the trust of patrons and meet their safety and hygiene concerns may see a higher footfall.

Value for money

Millennials are spending more on experiences like food, adventure, etc. As a result, India, is seeing a
widening base of customers who prioritise travel that give them quality experience while being
wallet-friendly as well.

Policy support

The Government of India plans to develop 17 iconic tourist sites in India into world-class destination
as per Union budget of 2020. Campaigns such as Swadesh Darshan, theme-based tourist circuits,
were launched to harness the potential of the tourism industry.

Diverse attractions

India offers tourists a vast geographical diversity, attractive beaches, a chance to see 37 World
Heritage Sites and 10 bio-geographical zones.

SURVIVE, GROWTH & REVIVE

STTRATEGY FOR THE INDIAN HOTELS
COMPANY LIMITED(IHCL)
The Indian Hotels Company Limited (IHCL) and its subsidiaries bring together a group of brands and
businesses that offer a fusion of warm Indian hospitality and world-class service. These include Taj –
the hallmark of iconic hospitality, SeleQtions, a named collection of hotels, Vivanta, sophisticated
upscale hotels and Ginger which is revolutionizing the lean luxe segment.
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Incorporated by the founder of the Tata Group, Jamsetji Tata, the Company opened its first hotel -
The Taj Mahal Palace, in Bombay in 1903. IHCL has a portfolio of 196 hotels including 40 under
development globally across 4 continents, 12 countries and in over 80 locations.

Indian Hotels Company Limited (IHCL) provides a fusion of warm Indian hospitality and world class
services to its guests. The group was incorporated in 1903 with its first ever hotel, The Taj Mahal
Palace, Mumbai. It is present in 12 countries across four continents including India, North America,
United Kingdom, Africa, Sri Lanka, etc. The group has a portfolio of about 200 hotels and an
inventory of over 25,000 rooms in over 100 locations. Taj, Vivanta, and The Gateway are the three
award winning brands functioning under the group with 37, 33 and 28 hotels operating under the
brands, respectively.

For the travel and tourism sector, the end of the decade saw greater emphasis on the industry as a
significant contributor to the overall global economy and employment. A strong economy, rising
global consumer purchasing power and digital disruption was paving the way for a bright future, and
FY 2019/2020 was, in fact, a tipping point, presenting tremendous potential for the sector.

However, this buoyant sentiment was upended by a sudden outbreak of a pandemic that has had no
parallels in recent history in terms of scale and impact. The world was placed under suspended
animation, and the industry was brought to a halt, with estimated losses at trillions and millions of
jobs at risk. With the very foundation of the world altered, the need of the hour is to see our
industry, and IHCL, through the crisis with greater urgency, revised strategy and more agility
(stragility).

It also calls for a greater need for communities to unite and support one another in this time of
need. Guided by our values as a Tata company, our priority besides ensuring the safety and security
of our guests and employees, was to help the community in any manner we could. We are humbled
to have been given the opportunity to be of service to the nation by providing over 2 Million meals
to healthcare workers and migrant labourers throughout the lockdown. Some of our hotels were
also offered to doctors and healthcare workers, while some were converted into quarantine
facilities.

A SILVER LINING – EVERY CRISIS ALSO PRESENTS AN OPPORTUNITY

The travel and tourism industry accounts for 10% of the global GDP and generates 1 out of 10 jobs.
In India, it is a significant contributor to GDP and also contributes 8.1% to the overall workforce.
Thus, given its significance, the industry will have a crucial role to play in any economic revival and
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with tourism likely to look inwards in the new normal, India is well placed with its rich heritage and
NEW OPENINGS cultural diversity.
FY16 FY17 FY18 FY19 FY20
With a 116-year legacy honed by Tata
Hotels 8 5 10 5 12 values, our ability to consistently deliver
Rooms 1,065 442 625 524 1,565 industry-leading growth while

FRAMEWORK FOR ACHIEVING TARGETS

Aspiration 2022 strategy is based on three pillars R.E.S.E.T

RE-STRUCTURE

•Scale up inventory across multi-product and multi-segment categories, expanding land and
entering into strategic mergers and acquisitions.

• Sell non-core assets, non-performing hotels having bleak prospects and extend the tenure of
hotels performing better.

• Simplify holding structure and processes for seamless and integrated functioning of the business.

RE-ENGINEER

•Expand margins by strengthening the culture of operational excellence

• Embrace technology and digitalisation to improve our processes, streamline acquisition and
enhance guest experience

• Engage closely with our people and build a strong talent pipeline to deliver industry-leading
outcomes for today and tomorrow.

RE-IMAGINE

• Manage brandscape and grow across different segments of luxury, upscale and lean luxe

• Multiply portfolio and reach in select markets by strengthening our sales force

• Manoeuvre excellence to enrich traditions and integrate local flavours and thereby offer new-age
experiences to our guests

SCALE UP INVENTORY

During the year, the company accelerated the pace of new openings as well as signings across all
brands and segments. In fact, they have opened 1 hotel a month in FY 2019-20. Despite temporary
roadblocks arising from unforeseen macro challenges, we are confident of crossing more milestones.
They have also fostered a strategic partnership with GIC to acquire hotel assets that are currently
underperforming but demonstrate potential for growth, and make them turn a corner

SELL NON-CORE ASSETS

Unlocking value in non-core and latent assets is an ongoing process at IHCL. During the year,
unlocked value by monetising owned assets in Pune, Maharashtra, sold land worth ₹ 63 Crore in
Pune and residential apartments worth ₹ 104.5 Crore in Mumbai. In Mumbai they are looking to
unlock the value of the land they own near the airport for the past 25 years. This will be achieved by
building a 371-room flagship Ginger hotel. Located strategically between terminal I and terminal II of
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the airport, this property could attract significant patrons from the micro markets in the vicinity. The
capital so freed up can be deployed not just to drive our growth, but also to de- leverage our balance
sheet.

SIMPLIFY HOLDING STRUCTURE

Company operate through a combination of multiple associate companies, management contracts

and owned properties. However, strive to reduce complexities in the processes and holding
structures to foster seamless functioning of the business. During the year, sold 50% stake in Taj
Madras Flight Kitchen for 29.8 Crore to TajSATS and made it a 100% subsidiary of IHCL. This
reorganisation of shareholding was done to simplify the holding structure of both Taj SATS Air
Catering and Taj Madras Flight Kitchen to achieve better operational and management synergies and
reduce duplication of compliance and regulatory costs

Re-engineer
EXPAND MARGINS

Company continue to maintain a razor-sharp vigil on the operations, so that they can navigate
challenges and make some headway. At IHCL, the identification of inefficiencies/redundancies is an
ongoing process, and trying to improve efficiencies in the best way .The approach is to grow with a
long-term perspective by mobilising capital through various routes (equity, divestment) and
fostering win-win partnerships.

The company have built multiple revenue streams (including F&B, management fees, among others),
and have ramped up the share of managed assets, and focused on improving cashflow generation of
all group companies to enhance our overall profitability.

EMBRACE TECHNOLOGY

To digitalise ecosystem, they have undertaken some important initiatives:

• Rolled out digital workplace framework – IDiWork – for employees, which works on four key
principles of

- Anywhere, anytime access to critical applications

- Providing best-in-class user experience

- Secured access through remote devices

- Managing and measuring insights

This framework is helping the organisation to collaborate better and communicate more effectively
in a remote and yet secure work environment, thereby ensuring employee productivity even during
the lockdown

• Introduced an iPad-based Check-in and Check-out system. The system helps streamline property
operations and eliminates the need for paper folios, reservation cards, permissions to share
Personally Identifiable Information (PII), among others. It is integrated with the payment gateway,
allowing guests to pay securely through a payment instrument of their choice. This has also helped
us support sustainable hospitality practices by eliminating paper completely from the Check-in/
16 | P a g e

Check-out
process. We
now use
emails to
capture
feedback for
Guest
Experience

Measurement (GEM) survey, instead of physical forms

• Digitised the process of capturing basic health information about guests arriving at the hotels using
a QR code-based system, where they can furnish the details using their mobile devices Developed a
digital pulse survey, VConnect to capture frequently and timely feedback from employees to get
insights into their thoughts, feelings, engagement, and understanding. This is integrated with
tablet-based time attendance systems

• Built a cloud-based application for digitising and automating internal audit processes of Taj Positive
Assurance Model (TPAM)

• Launched websites for each brand – Tajhotels. com, seleqtionshotels.com, vivantahotels.com,

amastaysandtrails.com as well as the corporate B2B website ihcltata.com

• Launched an integrated booking engine on the websites to provide a seamless on-brand website
booking experience to our guests

• Built a corporate booking portal for providing quick and direct access to bookers in the enterprises
for corporate bookings. In addition, we revamped the Taj Inner Circle website with single sign-on
implemented across all websites

• Implemented a cloud-based tablet-driven Property Management System (PMS) for AMA Stays.

AT THE END

Company recognise the need for extra-ordinary measures to navigate through these
unchartered waters. However, they are well placed to combat COVID-19 owing to the
following reasons:
They now have a clear, enabling and diversified brandscape to capitalise on all trends and
opportunities.
1. Brands enjoy immense emotional connect and trust with customers. The iconic brand ‘Taj’ is
recognised as the country’s strongest brand.
2. They have an exceptional legacy of 116 years, further strengthened by parentage with the
Tata Group.
3. The culture and value systems, together with an engaged workforce, position them well in
terms of resilience and courage.
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4. Company started on the execution of focused strategy (Aspiration 2022) over two and a half
years ago. This has helped achieve a financial turnaround, in turn leading to a reasonably
healthy balance sheet and cash position.
REFERENCES
1. http://www.oliverwyman.com/content/dam/oliver-
wyman/global/en/2016/jan/oliver-wyman-airline-economic-analysis-
2015-2016.pdf
2. https://www.ibef.org/industry/indian-aviation/showcase/indigo
3. ANNUAL REPORTS OF INDIGO FY 2019-20.
4. INDIGO OFFICIAL WEBSITE
5. https://www.ibef.org/industry/tourism-hospitality-india/showcase/taj-
hotels
6. IHCL OFFICIAL WEBSITE
7. IHCL ANNUAL REPORT FY 2019-20