Case 4 Ginger – Smart Basics.Pdf Uploaded Successfully

C AS E 4 peppiness Smart rudimentsTM Dr Mukta Kamplikar1 Roots smoke peculiar(a) begets and operates a fast-expanding chain of frugality hotels cross directions India under the gingery brand. There is currently a lack of competition in the mark saving hotels department and gingerroot is the unaccompanied branded economy hotel chain in India. The zest hotels argon built intimately-nigh a idea that provides facilities to meet the key fruit unavoidably of to sidereal days traveler, at affordable rates. pep faces gainsays in distinct aspects of its job as it aims to forgo legitimately, feeling service to the client and f ar customer expectations. COMPANY BACKGROUND unwrap 1 The proportion of hotel segments across Indian cities. Jaipur Cochin Goa Pune Hyderabad Bangalore Chennai Kolkata Mumbai Delhi/National Capital Region Budget Mid- commercialise prototypical class Lurxury R oots Corporation Limited (RCL) is a wholly-owned subsidiary of The Indian Hotels Comp any Limited (IHCL). IHCL is a part of the Tata class of companies (see www. tata. om), Indias chancellor business ho phthisis. Taj Hotels Resorts and Palaces comprises 77 hotels, 7 palaces, 6 private islands and 12 resorts in 40 locations across India with an extra 18 international hotels in the Maldives, Mauritius, Malaysia, Australia, UK, US, Bhutan, Sri Lanka, Africa, and the inwardness East. Incorporated on 24 December 2003, Roots Corporation Limited operates the ? rst-of-its- mixed bag category of Smart Basics hotels across India. Launched in June 2004, the Smart Basics concept farmd a revolution in the universe of discourse of Indian hospitality.Roots Corporation Limited ramp ups and operates a fast-expanding chain of economy hotels across India under the ginger brand. The high society either owns/ leases land on which it develops and operates hotels and has now started entering into union developments where the owner brings in the land and b ar shell and leases the s ame to the company. The companys recent growth has been organic, with developing and operating hotels in new cities or by going for excess hotels in be markets thus expanding the geographic r severally of the hotel chain.The company intends to develop and operate appurtenanceal hotels under both(prenominal) business models to nonice or achieve a dominant position in e rattling market c overed by their gingery hotel chain. The Economy Segment Historically, hotel development projects in India generally think on upscale hotels that were in the first place stoogeed at international tourists and corporate travelers. rude(a) hotels depart be concentrated in 18 important cities over the next 10 long time, as shown in the following chart. expose 2 Projected hotel expansion rate over 10 years. 60 50 Number of hotels 40 30 20 10 0De lhi N Mu CR Ba mba n Hy galo i de re rab ad P Ch une en n Ja ai ipu r G Ko oa lka Vis t akh Ko a ap chi Ah atn em am da b Ud ad aip u A r Lud gra h Luc iana kn M ow Co yso imb re ato re Source HVS International. 446 Case Study Between 2007 and 2010, supply will increase in all categories of hotels, as shown in the chart below. Exhibit 3 Projected supply increase in all categories of hotel. attach over Five Year Development of Supply Mid-market First partition Proposed Supply Existing Supply Budget Luxury a? liations as opposed to peppiness hotels, which ar part of a network of hotels).Going away we see competition continuing from the unformed section of the market as well as from newer international and local hotel companies who see proclaimed their mantled to set-up hotels across the country in the value segment. The market is witnessing a upright amount of activity in this segment of the hotel market. Some of the companies who stomach announced plans to establish a presence in the country are shown in Exhibit 4. Exhibit 4 Lodging brands venturing into India. Brand Formule 1 Promoters Plans Agra Ahmedabad Bangalore Chennai Delhi (NCR) Goa Hyperabad Jaipur Kolkata Mumbai opposite Cities ,336 519 1,906 2,075 7,030 2,252 1,442 1,298 1,354 7,402 8,056 384 462 7,794 4,407 28. 7% 89. 0% 408. 9% 212. 4% 69% 48% 55% 36% 74% 18% 57% 42 61% 36% 47% 31. 1% 28. 0% 24. 8% 12. 4% 25. 4% 11. 7% 11. 2% 30. 8% 3. 9% 32. 5% 16. 7% 38. 0% 27. 0% 43. 6% 34. 4% 36. 3% 29. 4% 28. 9% 18. 6% 37. 5% 15. 6% 37. 0% 23. 1% 38. 2% 25. 6% 21. 3% 26. 0% 49. 7% 26. 7% 24. 0% 62. 5% 51. 9% 14. 2% 10. 9% 10. 0% 18. 4% 18. 8% 26. 0% 9. 7% 13. 6% 53. 5% 10,856 154. 4% 2,632 7,408 2,770 2,465 9,318 6,870 116. 9% 513. 7% 213. 4% 182. 1% 125. 9% 85. 3%Accor in a 100 hotels in the next decade joystick venture with Emaar MGF Isthitmar, Dubai New look pod hotels Easy Hotels Sleep hostelry Source HVS International. Choice 10 hotels by 2010 ? rst hotels Hotels with to be in Tirupati and Vizag Gupta Group Air Asia, Malaysia lowlife Tree partnered by Warburg Pincus First hotel to be in Goa 10 hotels by 2010 While growth is expected i n the upscale hotels, the growth in the economy segment is appease minimal. While several(prenominal) chains, both domestic and international, have announced plans for development of hotels in this segment, overt action on the ground is limited.Economy hotel chains in India mainly target value-conscious domestic business and empty travelers who demand convenient populate, a reconciled product and high- lumber run. According to a study conducted by pep, currently, 37 percentage of economy hotel knobs are individual business travelers, 23 percent are contract corporate customers and 20 percent are individual leisure travelers. Economy hotel chains aim to satisfy customers basic adaptation postulate with a? ordable pricing, a comfortable lodging experience and a standardize service-product.Lack of competition in the branded economy hotels segment is a expectant opportunity for spice up. Tune Hotels Red Fox Peppermint Royal orchidaceous plant 50 hotels by 2010 bids for 11 Hotels hotels on Railway land are held up ? rst hotel open in Hyderabad Kamat Hotels 50 hotels in the next ? ve years foc consumptiond on West coast tie-up with ONGC /MRPL Wyndham with Gammon 38 hotels by 2011 Kamfotel Days Inn / Super 8 Premier journey Inn Whitbread 80 hotels in 10 years in a joint venture with Emaar MGF Landmark 20 hotels by 2009 Group, Dubai DIC Starwood No numbers game mentioned No numbers mentioned City Max Hotels TravelodgeCOMPETITION The lodging industry in India is highly fragmented and competitive, and competition is expected to persist and intensify. Currently, pep competes with three-star full-service hotels from the unorganized sector (these are hotels authentic and operated as standalone hotels with no chain/hotel assort Campanile While some developments have started in the mid-market segment with Lemon Tree Hotels, Ibis (Accor), Keys (Bergruen Hotels), Day Hotels (Dawnay Day), Hometel (Sarovar Group), Hilton Garden Inn Hotels (DLF) and Taj Gateway Hotels, not more activity is ocular at the economy end of the spectrum.This is possibly on account of the high prices of real estate. ginger Smart BasicsTM 447 CASE cartoon GingerThe aid Concept The concept of Ginger was developed in association with renowned corporate strategy thinker, Dr C. K. Prahalad, and the hotels were indigenously designed and developed by the Indian Hotels Company Limited. The Ginger hotels are built around a concept that provides facilities to meet the key needs of todays traveler, at a? ordable rates. Smart Basics is a school of thought of providing intelligent, thoughtout facilities and services at a value pricing and re? cts the new bosom in which people become and work today. It signi? es the emerging life-style which is visible in the degree to which individuals have taken control of their diverse activities viz. the use of e-mail instead of letters, as also the use of mobile phones, conference calls and video conferences to get things done quickly and e? ciently. Essentially, it is simplicity and convenience in ease of doing business (awareness, booking transports, allowance gateways) informality, style, warmth and contemporaneousness in its approach to product design, service philosophy and a? rdability in pricing. The ? rst of the Smart Basics hotel was launched in Bangalore and was called indiOne. When the test merchandise of the concept was completed, there were slight changes to ameliorate the hotel facilities and services. After that, the Smart BasicsTM concept was rolled out across India. This category of hotels was launched with a new name, Ginger hotels, in line with the fresh, simple yet stylish and warm world of Smart Basics. An up-and-coming category of hotels, Ginger de? nitely signi? es simplicity, convenience, informality, style, warmth, freshity and a? rdability. The target segment for Ginger is the oversized growing eye class with increasing disposable incomes. They are the class of travelers who would spend on travel but not on luxury accommodations. These travelers look for value-for-money accommodation that is clean and secure and also include international travelers looking for healthful accommodation in the littler cities. Ginger is the only branded economy hotel chain in India with a nationwide network of 12 hotels, with an extra 20 hotels under development as of 31 May, 2008.Their early-mover status in many markets and established regional operational synergy has enabled Ginger to develop and operate hotels e? ciently and successfully in targeted markets. As the only branded economy hotel chain in India, the chain has been able to establish credibleness with property owners and secure desirable properties on favorable lease terms. The economy segment (3-star) is better defended against and more resilient to the volatility in the hospitality segment as compared to the upscale segment. THE OFFERING stylishness rudimentsGinger hotels designed their facilities an d services to include The Square Meala multi-cuisine restaurant, on-site cyber cafe, a meeting way (that seats 10 people), dry wash facility (same day delivery), on-site ATM, a Gymnasium, secure parking and Doctor-on-call. Ginger lays excess emphasis on environmental and ecological issues by the use of compact ? uorescent lights (CFL), well utilized natural lighting, auto-time management for air-conditioning and energy-e? cient hydro-pneumatic arrangements. Ginger provides ingle retinue for the lone traveler twin inhabit with separate beds for those who travel unneurotic double rooms with a queen-size bed and special rooms for the speci? c needs of the physically challenged. The rooms are packed with electronic locking systems, cable TV, Internet connectivity, a mini fridge, tea/co? ee makers, self controlled air-conditioners, an ergonomic work area, and a 17-inch ? at class TV. Each room has branded toiletries, 24-hour hot and cold running water, a shower area, and bath and hand towels. Exhibit 5 Smart BasicsTM amenities. 48 Case Study Exhibit 6 Innovative promotion A life-size model created for a campaign that is carried to metros across India. Ginger operates predominantly in a large geography of nonmetros with uncontested market opportunity. Exhibit 7 The Ginger Development Map To witness safety, Ginger is fitted out(p) with 24-hour security, closed-circuit TV to maintain records of all visitors, swipe card locks and digital safes located at a Give n Take forestall at the lobby. In addition, it has harbouring infrastructural facilities including administrative o? es, kitchens, house holding, HVAC facilities, diesel generators for tinge power supply, water treatment plant, sewage treatment plant, etc. Ginger has outsourced nourishment and beverage to partners operating on a revenue-share model, which includes Cafe Co? ee Day in selected properties. Ginger also o? ers otherwise facilities like SMART Wellness, which is an Ayurvedic wellness facility for business travelers at a low cost. This has been developed with Arya Vaidya Pharmacy at all businesscum-leisure locations.Ginger has introduced SMART Sleep, which includes a posture-pedic mattress for absorbing and redistributing pressure from the body weight, a tropical duvet and an anti-allergy pillow. The company has also introduced selfoperated vending machines that accept Indian currency for customers convenience. The company is now developing a SMART exhibitor. The organization believes that a customers sleep and bath are his most important needs at their hotels. Going forward, Ginger plans to develop its own range of merchandise that will be o? ered in its hotels and on its website.The merchandise is to include their bath collection, bedding collection, furnishings and decor, apparel, accessories, travel accessories and etc. Ginger intends to increase their revenue per available room by adopting a ? exible pricing approach/policy, which will be linked to the occ upancy levels in the individual hotels. EMPLOYEES AND TRAINING Ginger believes that their ability to attract good talent, pack and retain employees is captious for their growth strategy, as people are critical to maintaining the quality and consistency of their services, and thereby their brand and reputation.The business model of Ginger uses a fair amount of outsourcing. Only about 10 managers per hotel are on the payrolls of Ginger, while all other facilities like kitchen, restaurant, backend maintenance, are outsourced. Ginger has a total of about 175 permanent employees. Since house tutelage and food and beverage are outsourced operations, these employees are on the vendors payrolls. Ginger tries to leverage on hotel management schools to develop a management talent pool with su? cient competency to meet the demands presented by their rapid growth.The company aims to recruit, ingest and retain the outdo talent through a multi-step recruiting and pedagogy process, and caree r advancement opportunities. Ginger has executeed extensive training programs and periodic tests for managerial and other hotel-based sta? primarily through training partners. New unit managers of the hotels are indispensable to afford a two-month training, during which they hold training in managing all core aspects of the hotel operations, as well as the company culture and philosophy. Ginger Smart BasicsTM 449In addition to training, Ginger has implemented periodic web-based tests to assess the relevant knowledge and skills of their managerial and other employees. The company uses performance-linked compensation structure, careeroriented training and career advancement opportunities as key crusaders to motivate its employees. Gingers challenge is also to vouch that the outsourced partner delivers up to the service standards that was agreed upon. To be able to create/modify the outsourced partners systems and processes to its needs in order to deliver consistent good quality of service to the customer is critical.Since each soulfulness in the system is working towards the same goal of delighting the customer, there are few di? erences in terms of the employee pro? les between employees of the outsourced partner and the employees on the payrolls of Ginger. It is important to break that the people working for the outsourced partner see themselves as a part of the same team. It is also important that the outsourced partner sees the utilitys in following the policies, processes and systems of Ginger. Ginger operates in a large geography of smaller cities where the pro? es of employees in terms of their vulnerability to technology, comfort with modern amenities, etc. are di? erent from that of a metropolitan city. The challenge therefore lies in getting these employees to perform up to expectations. To design systems to recruit the right kind of people and provide the right kind of training to employees is a challenge for Ginger because, while the devel opmental inputs do not need to be the same across unit locations, the output in terms of consistent service to ful? ll customer needs has to be fairly identical. Additionally, acquiring professionally quali? d employees locally (in remote areas and non-metro cities) and retaining talent at those locations is an area of concern. In their endeavor to retain talent, Ginger makes e? orts to ensure that employees see additional value in non-monetary rewards like developing employees competencies by making this visible to their employees through certi? cations, etc. But to be able to consistently ensure this across locations remains a challenge. If there is attrition, to be able to train and retrain employees (since the numbers are very small) at remote locations becomes very di? ult. Gingers people challenges are thus attracting talent and keeping them continuously motivated, given the vast opportunities for most of their young talent. Ginger training head, Bhanot, says We are cost consc ious and so we need to use unlawful methods of recruitment because conventional methods like placement agencies turn out to be very expensive. We recruit through email&160protected, our recruitment portal, and about 48 percent of recruitment happens through this site. The rest of the recruitment is through referral programmes (with rewards for referring).These methods have been successful. We also build relationships with business schools and our employees go to colleges and partner with them by linking with their syllabi, commerce students for get-togethers, using students as summer interns instead of going once in a year like most companies do. We try to build relationships beforehand the recruitment even starts. We also try to address the challenge of keeping our young sta? motivated by giving them opportunities to learn and grow by continuously upgrading their skills.We are a budget hotel and we have chosen e-learning initiatives to wind costs. We have in-house training, indu ction, training operations and e-learning modules (based on customer feedback systems) and program depicted object is created internally. CENTRALIZED HOTEL MANAGEMENT Personnel at corporate o? ce perform strategic planning, ? nance, project development, sales and marketing, training and other functions and guide, support and monitor the on-site hotel operations and executives. The key elements of Gingers centralized hotel management program are Budgeting and MonitoringThe annual budget is based on historical operating performance of the hotel, planned targeted marketing, planned renovations, operational e? ciencies and local market conditions. Quality Assurance and TrainingQuality standards These have been de? ned for all aspects of hotel operations, covering housekeeping and hotel maintenance, as well as ensuring entry with these quality standards. A set of procedural manuals have been created and employees are ingenious to ensure the e? ectiveness and uniformity through 450 C ase Study the tender-hearted resources department at our corporate o? e as well as through outsourced training vendors. The compliance with quality standards is monitored through both scheduled and unannounced visits and reviews conducted periodically at each hotel. Employees are required take periodic tests (including e-certi? cation) in order to monitor compliance with quality standards. In addition, the practice of mystery audits and tracking customer comments through guest comment cards, and the direct solicitation of guest opinions regarding speci? c items, allows Ginger to improve services and amenities at each hotel across the chain.To maintain a competitive edge and lift their hotels appeal the company requires each hotel to allocate a ? xed percentage of their revenue for periodic renovation and replacement of furnishings and equipment to maintain the quality and standards of its facilities. Ginger has implemented a centralized procurement system (where possible, along w ith the parent company, IHCL) to obtain the high hat pricing available for the quality of goods sourced to the hotels and to minimize the operating expenses. Ginger supports local sales e? rts of each of its hotels along with corporate o? ce sales executives who develop and implement new marketing programs, and monitor and respond to speci? c market needs and preferences. Large travel agencies and smaller travel agents. Call CenterGinger currently has a call center which laughingstock be reached through a toll-free number. Travel portals and other travel related websites. diffusion partnersPartners like BPCL, which is currently rolling out Travel Desks in confused BPCL petrol pumps across the country, is also used as a channel for distribution.Access to these impart enhances occupancy rates of the units (hotels) on a day-to-day basis. The Ginger brand, trade names, trademarks, trade secrets and other intellectual properties are used to signalise and protect their technology platforms, services and products from those of their competitors. This also contribute to their competitive advantage in the economy-hotel segment of the lodging industry in India. These intellectual properties are currently owned by the parent company, Indian Hotels Company Limited.To protect the Ginger brand and other intellectual properties, they rely on laws presidential term trademarks, trade secrets and copyrights as well as imposing con? dentiality obligations on their employees, contractors and others. Ginger has registered trademarks in India, including and a registered domain name viz. www. gingerhotels. com. Gingers corporate marketing and denote programs are designed to enhance consumer awareness and preference for the Ginger brandwhich is to o? r the best value, convenience and comfort in the economy hotel segment of the Indian lodging industry and to encourage customers use of their centralized reservation system. Marketing and advertising e? orts include outdoor advertisements, distribution of ? yers and other marketing verifying on their hotel properties, television, Internet, radio advertising, print advertising in consumer media, promotional events, special holiday promotions and joint promotional activities.In reshaping customers expectations to make the brand endearing, Ginger does not provide room service, valet and concierge, and communicates the message Please help yourselves through its advertisements. The advertisements convey that since none of the above facilities are provided by the hotel, the customer saves on tips. However, there is intelligibly an expectation-perception gap as the Indian customer is still uncomfortable with the concept of Smart BasicsTM. They grapple with there was nobody to receive me, nobody gave me water in the room, I called 7 times andMARKETING pep Gingers core targeted customers consist of corporate customers, value-oriented individual SME business travelers and leisure travelers seeking comfortable and convenient lodging at an a? ordable price. Ginger reviews hotel pricing twice a year and typically accommodate room rates annually based on the local market conditions of the city and the speci? c location of each hotel. The corporate o? ce team and the city and hotel managers jointly develop tailored marketing plans to drive sales for each hotel and in each city.Ginger operates in a large geography of non-metropolitan cities like Agartala, Nashik, Bhubhaneshwar and Durgapur where pro? les of customer in terms of their exposure to technology, comfort with modern amenities, etc. are di? erent. The challenge therefore lies in customer responses to these. Ginger is currently using the following distribution channels which includes online media. WebsiteInternet Booking Engine hosted on the Ginger website is one of the main channels used for making the bookings. Ginger Smart BasicsTM 51 the room boy did not turn up. Ginger sees many customers each day who enter the hotel not know ing what to expect. The many complaints on the websites and complaints registered across the counters at the hotels have to do with services Ginger does not provide (by design) kind of than dissatisfactions caused by Gingers service. Creating awareness for the Ginger brand at this point in time is a challenge, and since the business model does not allow huge expenditure on media, innovative promotion is needed.Ginger make quirky use of outdoor media by materializing the idea of using a life-size 3-dimensional hoarding of some parts of the hotel, including getting someone to live in it. This was taken across a couple of metros for promotion and received extensive coverage in the electronic media. Ginger needs to ensure their customers come in recognizing and knowing what they should be expecting from the hotel. The challenge is not only in communication through advertisements, but also to communicate it understandably when a customer checks in. Gingers ability to communicate advan cely what the customer can expect is an area of concern.This is because there is a disposition not to explain either because the customer does not have the effort to listen or there is a fear of losing this customer. Ginger has been seek to plug this by educating the customer before he/she checks in by having commercials playing in the hotel, training front line managers to give clear messages to the customer as to what Ginger can deliver, and communicating this through advertising. field QUESTIONS 1. 2. 3. 4. What is Gingers service concept? Use the Flower of Service to aid you in your answer. How does Ginger create customer value?How can Ginger manage customer expectations more e? ectively? Evaluate Gingers brand aligning and communications strategy. Given that the number of players in the budget hotels market is increasing, how can Ginger sustain its unique positioning? Ginger faces challenges relating to people. How can they overcome these challenges? What are the key chall enges in the way to service excellence for Ginger? Give recommendations to Ginger to overcome these challenges? 5. 6. 1 2009 Dr Mukta Kampllikar, Senior Practice Consultant, Tata Management Training Center, Pune, India. 452 Case Study