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With neck to neck competition, is adequate financial cushioning sufficient to make a tremendous difference?

While the industry experts underline the strength of the regional hospitality market, they also feel that the sector is going through a temporary 'bubble', which a lot of us have not noticed till now. Is it that we are getting too small for our jacket when you consider all the major development region-wide? Taking into count the real challenges service is one area where standards have actually declined over time. This is something that we have to look at now as it is core to the value proposition that we offer. 

A lot of experts have endorsed this view and shared that it was extremely important in the immediate future to focus on developing properties in the midscale level. For the growth of the sector in India, particularly in terms of attracting large conventions and events, it is imperative to start investing in these properties. Investments in travel-related projects should be encouraged as tourism is expected to bring good revenues and this is not a temporary phenomenon. We still have a long way to go!

AirBnB as an example: Hotel Industry is no more the playground for local players. We have global pioneers entering the Indian market. They are getting into partnership with big giants and thus getting a niche network and a strong investor. The biggest example is of AirBnB which made all the other companies actually pull up their socks! With the most recent funding of $447.8M in the month of March, AirBnB has the strongest financial cushioning in the entire Hotel Industry so far.

Other players and their story: Sadly the commission margins in this sector are so thin, that a lot of companies feed and rely heavily on their funding. Though OYO Rooms incurred losses, the company is still operational. The last funding round of the company was in Aug, 2016 $62M by SOftBank. Thus, it’s a sound funding that has helped the brand to survive! MakeMyTrip is another example, which got the last funding in $180M in January 2016 and stratergised well post it completed the ibibo merger. It marked the consolidation of India’s biggest travel booking portals. Yatra.com, HomeAway, Clear Trip are some other players whose revenues are fairly better than others in the Industry. The new entrants like Fab Hotels and Room N Home, etc. are struggling with fund constraints, but they need to start scaling faster.

What’s in store!

The competition in increasing and changing every day and reaching a different level. In addition to focusing on concepts other than services and product they are providing standard amenities at partner sites and a lot more. With so many global players entering and startups gaining a good market share based on funding and next level promotion. The future is of some great collaborations, consolidations, acquisitions. We can also expect shut-downs when the reservoir of their funding dries up!

In conclusion, while the basic economics dictate the bubbles of success and failure, but hospitality professionals need to have deep insights into both local and international hospitality markets and how can hospitality in India  go up and only up! Whenever the hospitality experts talk about the problems in the hospitality industry, one topic that always pops up is How to process and effectively use the massive wave of technology that is washing over our industry. To pace up we need to think about the ramifications that come with the unprecedented time in which we live. We have a good number of young people today in this domain. The industry is moving away from its long standing emphasis on customer service and the current time is to give an emphasis on uber-technology.

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