Ginger Hotels – Use of IT in Budget Hotels in India

sanjay mohapatra, associate professor, xavier institute of management bhubaneswar, india

rajeev roy, associate professor, xavier institute of management bhubaneswar, india

ABSTRACT

Budget, no-frills hotels are a fast growing segment in the hospitality industry. Ginger hotels were among first chains
of budget hotels in India. This case explores how the IT infrastructure in Ginger Hotels is essential to their service
offering. The paper also states how the IT had to be significantly changed to align with their business imperatives.

BUSINESS SCENARIO

Lomanno (2004) defines budget hotels as the hotels which are the lowest priced in the markets they serve.
Suggs (2004) goes a little further in listing the characteristics of budget hotels as current, functional, affordable,
stylish and technological. As early as 1990, a report in the Economist indicated that there is likely to be high growth
in this segment. Simmons (1995) had indicated that there was significant growth in budget hotels around the world.
Bland (2002) had reported the phenomenal growth of budget hotels over the preceding 15 years.

Ginger has positioned itself as a no-frills budget hotel. The Ginger hotels are built around a unique concept
that provides facilities to meet the key needs of today's traveller, at surprisingly affordable rates. With rooms priced
under Rs 1,000 per night, Ginger hotels have created a new category in the domestic hospitality landscape, while
giving a major fillip to Indian tourism and other ancillary industries. The primary objective behind the launch of
these hotels is to provide a superior product offering and consistent experience to travellers, beyond the present
offerings in the industry. Room tariffs vary across properties, in accordance with real estate value and hospitality
market scenario.

ABOUT THE COMPANY

The Roots Corporation (RCL) is a wholly owned subsidiary of Indian Hotels (IHCL). Incorporated on
December 24, 2003, RCL operates the first-of-its-kind 'Smart Basics' category hotel in India.

Launched in June 2004, the 'Smart Basics' concept created a revolution in the world of Indian hospitality. A
gen-next category of hotels, they signify simplicity, convenience, informality, style, warmth, modernity and
affordability. The concept was developed in association with renowned corporate strategy thinker, Dr CK Prahalad,
and the hotels have been indigenously designed and developed by IHCL.

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 The first of the 'Smart Basics' hotel was launched in Bangalore and was called IndiOne. Having completed
the test marketing of the concept and subsequent fine-tuning of the hotel facilities and services, the Smart Basics
concept is now ready to roll out across India. These hotels have been launched with a new name — Ginger — in
sync with the fresh, simple-yet-stylish and warm world of Smart Basics.

The Indian Hotels Company and its subsidiaries are collectively known as Taj Hotels Resorts and Palaces,
recognized as one of Asia's largest and finest hotel company. Incorporated by the founder of the Tata Group,
Jamsetji N Tata, the company opened its first property, The Taj Mahal Palace Hotel, Bombay, in 1903. The Taj, a
symbol of Indian hospitality, completed its centenary year in 2003. Taj Hotels Resorts and Palaces comprises 59
hotels at 40 locations across India with an additional 17 international hotels in the Maldives, Mauritius, Malaysia,
United Kingdom, United States of America, Bhutan, Sri Lanka, Africa, the Middle East and Australia.

ORGANIZATIONAL STRUCTURE

CEO
(Mr. Prabhat Pani)

COO
(Mr. Uday Narain)

Operations GM Finance GM Sales and Marketing GM Human Resources GM

(Mr. Dalais Merchant) (Mr. A.V.K. Rao) (Mr. Kishore Madikar) (Ms. Sheetal Benot)

Legal Department Project and planning GM

(Mr. Dhanraj) (Mr. Tambawala)

BUSINESS PROCESSES

Business processes in a hotel industry can be divided into following three broad categories:
• Management processes
• Core processes
• Support processes

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 Levitt (1972; 1976) had strongly stressed the desirability of transferring manufacturing logic and practices
to service operations. Bowen and Youngdahl (1998) describe how diverse service providers like Taco Bell,
Shouldice Hospitals and Southwest Airlines have applied the principles of lean manufacturing to their service
operations.

Management business processes plays a pivotal role for progress of the core business processes, as well as
that of support process. Management business processes are usually related to development, planning, quality
management and management of hotel organisation. Core business processes are responsible for the satisfaction of
customers, i.e. hotel guests. Core business processes are business processes whose result, in form of product or
service has direct value confirmation on the market. Support processes are directed towards achieving satisfaction
for the internal users within hotel organisational structure. Support processes are supplementary business processes
and represents support to the core business processes.

Complete workflow of a hotel consists of processes of service activities and production activities. Purpose
of service activities is providing guests with: accommodation, serving of meals and beverages, entertainment, sale of
goods, various handicraft-and-services, laundry washing, ironing, and similar. Purpose of production activities is
rendering of services which have product characteristics, like: various food, beverages that are specifically prepared,
bread, desserts, and similar.

The processes can be clustered into the following categories:

Management Business Processes in • Planning

a Hotel • Market development
• Marketing
• Quality management
• Environment management
• Security/safety at work management

Core Business Processes in a Hotel • Producing food and beverages

• Serving meals and beverages
• Reception and accommodation of guests

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 Support Business Processes in a • Human resources management
Hotel • Financial management
• Infrastructure maintenance
• Information management
• Purchase
• Sale at restaurant

FACILITIES IN GINGER

 Ginger hotels have 100 / 200 'Smart Space' rooms to choose from in single, twin and double configurations
with one room for the physically challenged. The rooms have contemporary features such as electronic
locks, a 17-inch LCD flat screen TV, Wi-Fi connectivity, mini bar, tea / coffee maker and a self-controlled
AC.
 The Square Meal — the multi-cuisine restaurant for wholesome breakfasts, lunches or dinners
 On-site cyber cafe
 Meeting room which seats 10 people
 Laundry (same day laundry facility)
 Gym equipped with treadmill and weights
 On-site ATM
 Secure parking
 Doctor on call
There is a selection of menus from local restaurants available in the lobby, guests may order the cuisines they
want, and collect it at the Give 'n' Take counter.

IT STRATEGY AT GINGER

Hotel and hospitality flourishes only when the customer satisfaction level is high, but the here the needs of
guests vary over a large spectrum. IT in a hotel industry enables the organization to improve in terms of quality and
speed of service.

Schmenner (2004) highlighted the role of information technology in productivity enhancement which has
enabled leading service companies to sustain their competitive positions. In a case on the London Taxi Cabs, Skok
and Braid (2005) demonstrated the importance of technology in gaining a competitive advantage in services.

Ginger is a unique business model, the only one in country, where the management has outsourced majority
of the processes and focus only on occupancy of rooms. Peripheral services like laundry, restaurant, house keeping
etc have been given to vendors on a corporate contract for properties across the country. So lot effort is put in for
vendor management.

Ginger makes an effort to make each and every interaction that a guest has with them to be a comfortable
and pleasant one. So they have a website which enables the guest to have a feel of the kind of service and ambience
he is going to experience at ginger. Apart from the basic reservation, the website also allows the guest to view
special services like Café Coffee day or a shopping discount available at selected properties.

Ginger has its focus on automating as many processes possible so that manpower requirement is minimized
and standardization of services and processes can give the guest a level of comfort across all properties in India. In
line to this they have facilities of self check in kiosks, system generated bills for any transaction done for the
peripheral services like restaurant. The telephone billing is also system generated as per the usage.

Earlier they were running with servers in all properties interacting with a central server in Mumbai for
sharing of data for business needs. They were running on software package “ShawMan” with modules of PMS –
Property Management system and POS Point of sale. In late 2007 they have moved on to SAP supporting their back
end jobs like accounting etc and for the front end package of SIM Hotel and a Internet Booking engine.

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 They have also incorporated the Yield Management strategy, which is common in Hotels and airlines, as
the website very aptly communicates “Book early and pay less.” Such a business strategy cannot be successful
without the IT support.

THE INITIAL SOFTWARE

The ShawMan PMS is an integrated and comprehensive Hospitality system software solution consisting of
several Modules including the Front Office System, today the ShawMan Point of Sale Management System and the
Property management Systems . The ShawMan POS is being used due to the flexibility of the system.

All modules of the ShawMan Hospitality Systems software are coded in MS FoxPro 2.6 (32 bit extended)
version for DOS and are compiled using the Watcom “C” compiler into true 32 bit free standing executables.

The property management system handles all the front office as well as back office applications. It features
a full-fledged Front Office system comprising of the following modules:

Reservation module

 FIT reservations
 Conference or Group reservations
 Rooming Lists
 Amendments and Cancellations
 Public area bookings
 Special discounts, instructions and requests
 Advance collection
 Reservation slip and Advance receipt printing

Registration module

 Walk in registration
 Registration from reservation
 Pre check in and registration from pre check in
 Individual, room and group check out
 Modify guest information and change check out date
 Discounts
 Guest messaging and paging
 Guest History
 Individual guest movement and room movement
 Guest credit limits
 Housekeeping functions such as room status change, block room, room occupancy

Telephone module

 Interface to telephone exchange to capture call data

 Option to manually enter calls if necessary
 Void bills

Marketing module

 Imports data from the front office to give various statistical information

Maintenance:

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 Maintenance of the hardware, software and network has been outsourced to Net link. The annual fee paid to
Net link is One Hundred and Fifty Thousand Rupees. Net link provides twenty four hours online support for any
software related problem. Any software problem is solved within an hour.

Reports generated in the organization:

The reports generated can be broadly classified into two categories.

 Daily Report
 Monthly Report

Daily Reports: These reports, as the name suggests, are generated daily at the end of business day and sent to head
office located at Mumbai. The reports include daily bills of phone line used by guests, room reservations and daily
food orders; also it has a section where feedbacks from guest are conveyed.
They also have a daily report in which they compare the occupancy levels with Hotels like Trident Hilton, Mayfair,
Swosti Hotel and Triumph Residency.

Monthly Reports: All events such as board room meetings and parties that are held in the hotel go to the head office
in monthly reports. The formats of the reports sent are the same.

www.gingerhotels.com
G
I
N
G
E
R

CENTRAL SERVER P
(Mumbai) R
O
P
E
Most common Data Flow R
From Property Server
T
From Central Server
Internet reservations Walk-in reservations Y
Policies Room Sales
Authorization for various activities Peripheral services sale
Room availability check for web Vendor Billing
bookings Payroll Data
Guest Feedback
Room availability status for web bookings

LIMITATIONS OF CURRENT SOFTWARE

1. Integration of all ginger hotels into one chain was not possible which created problems of managing the
properties centrally.

2. There is an issue that the reservations made on website are at times not reflected in the system at property, this
may be an issue of the interface of the two softwares i.e. website and Shawman supplied. This causes lot of
chaos and spoils the Brand image of the hotel in the market.

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3. Same day reservations cannot be made over the net, only walk-in is possible. Also a room is reserved only on
payment of advance so calling up and making a reservation is also ruled out.

4. High cost of maintaining existing business application. The fact that these applications were implemented and
operated locally in each hotel limited overall IT operating efficiencies.

5. The software gave errors and could not hold on if the no of transactions went high, so the day number of
transactions is high; seeking support of Shawman technical staff becomes inevitable to run the system.

6. If a group reservation is made and there is a partial check in i.e. only few people arrive and seek rooms to be
billed on individual basis, the Shawman system could support that.

OVERCOMING THE LIMITATIONS

Luftman and Brier (1999) stress the importance of aligning IT to business and corporate goals. Using
survey data from business executives worldwide, Tallon, Kraemer and Gurbaxani (2000) found that corporate goals
for IT can be classified into one of four types: unfocused, operations focus, market focus, and dual focus. Their
analysis found that these goals are useful indicators of payoffs from IT in that executives in firms with more focused
goals for IT perceive greater payoffs from IT across the value chain. So, when current IT strategy and resources are
unable to achieve goals, IT strategy needs to be changed to be aligned correctly.

Ginger hotels and TCS, a group company of TATA formalized a team to replace Shawman system with a
single integrated, centralized solution for back-office and front-office related functions related to hotel operations.

For the back-office functions, the project team considered SAP R/3. SAP R/3 was selected on the basis of
recommendation from TCS, broad functional coverage, and the availability of SAP skills at TCS.

The team also evaluated different front-office solutions: Simhotel from Spainbased CCS, Opera Enterprise
Solution and Fidelio Financials from U.S.-based Micros for front office tasks. Finally the team selected Simhotel
because of its built-in integration with SAP, which was real-time and certified by SAP. Additionally, because
Simhotel was built as a SAP module, it provided the best support for the vision of a single, centrally-hosted solution.

Two teams (Functional team and Technical team) team were formed for the smooth implementation of SAP
and SIMhotel. Technical team was responsible for the implementation of SAP and simhotel, whereas functional
team was responsible for the smooth migration from old system to the new system ensuring that no data is lost.
Training of the employees on new system was also responsibility of the functional team.

NEW SYSTEM BENEFITS

• Accelerated integration of all hotels into the chain: It takes one week to implement and configure the SAP
R/3/Simhotel applications and train staff.

• Reduction of accounting support staff per hotel: Productivity per additional accounting employee would
increase as now many accounting activities can be handled centrally against individual accounting practices
at each property.

• Faster execution of key processes. Monthly and annual consolidation of accounts would now take far
lesser time. It is also possible to get reports in real time for properties centrally which significantly
improves the information available to top management.

• The main savings result from staff reassignment and cost avoidance from centralizing accounting and IT,
improved volume purchase efficiencies, scrapping legacy systems, and faster execution of internal
processes

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 New system would enable ginger to take right decisions on pricing a certain room category to a particular
sales channel, such as a travel agent, a hotel portal, or a certain type of customer, depending on the number of
available rooms, season, and other factors is crucial to success.

CONCLUSION

Information Technology improves the productivity in two ways: (i) by increasing efficiency of the existing
processes as repetitive activities are automated and (ii) Helping to retrieve information in a timely manner for
effective decision making. Automation helps to generate invoices, purchase orders generation of goods receipt made
etc. With automation, these activities which were carried out manually earlier can be generated automatically. This
saves time and the saving in time can be used in a productive manner with automation through technology, can
allow move people to access as well as share information. Automation also helps in performing different activities in
parallel, thus allowing faster access to information. This helps in taking decision at a faster rate which makes it
effective and provides opportunities to address changing market and environment conditions. This provides the
competitive edge to Ginger which has automated its business processes and allows it to be competitive.

By using Information Technology as a strategic tool, Ginger has been able to modify or introduce
completely new set of business process which would transform the way hotel industry worked earlier. A new
business module equipped with better process to handle customer requirement can average which will become the
differentiating factor for the organization. For example, self booking, no assistance for carrying the luggage, one
square meal system (where the guest has to server for himself in a buffet) have reduced the cost of operation
substantially. This benefit has been passed onto the customers in terms of reduction of room tariffs. The business
class travellers and budget oriented pleasure trips are attracted towards the hotel and occupancy rate have been
steadily increasing.

REFERENCES:

Bland, N (2002) European strategy crucial to growth of budget hotels. Leisure and Hospitality Business, May 30.

Bowen, D.E. and Youngdahl, W.E. (1998) “Lean” service: in defense of a production-line approach International
Journal of Service Industry Management Vol. 9 Issue. 3.

Economist (1990) A hard Bed. Economist Vol. 317, Issue 7678.

Levitt, T (1972) Production-line approach to service. Harvard Business Review. Vol. 50 No. 5 September-October.

Levitt, T (1976) The Industrialization of Service. Harvard Business Review. Vol. 54 No. 5 September-October.

Lomanno, M.V. (2004) Budget segment revPAR up despite occupancy decline. Hotel & Motel Management,
February 16.

Luftman, J. and Brier, T. (1999) Achieving and sustaining business-IT alignment. California Management Review.

Schmenner, R.W. (2004) Service Businesses and Productivity Decision Sciences 35 (3), 333–347.

Skok, W and Brais, S (2005) Strategic use of emerging technology: the London taxi cab industry. Strategic Change.
Volume 14, Issue 6.

Simmons, J. (1995) Budget hotels aren’t bargains abroad. Wall Street Journal – Eastern Edition, Nov 17, Vol. 226
No. 98.

Suggs, J. (2004) A better budget hotel. Lodging Hospitality. Vol. 60, No. 3.

Tallon, P.P.; Kraemer, K.L. and Gurbaxani, V (2000) Executives' perceptions of the business value of information
technology: a process-oriented approach Journal of Management Information Systems Volume 16 , Issue 4 March.

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