Services retailing gaining momentum

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Inflation, fuel price hike, fares hike… none of the issues seems to have been a deterrent for travellers or the ones who hang out to eat. Service retailing, primarily the hospitality industry, has seen considerable growth in the last few years. The public sector undertakings (PSUs) under the union ministry of tourism have recorded substantial profits.

To illustrate, according to the Press Information Bureau’s release, Hotel Ranchi Ashok’s profits before tax increased from Rs 2.17 lakh in 2005-06 to Rs 34.13 lakh in 2006-07, marking an increase of 1,472 per cent.

Hotel Pondicherry Ashok’s profits before tax increased by 279 per cent, from Rs 25.23 lakh in 2005-06 to Rs 95.67 lakh in 2006-07.

For Hotel Lake View Ashok, Bhopal, the loss of Rs 17.90 lakh in 2005-06 has been overturned with profit before tax of Rs 23.87 lakh in 2006-07, an increase of 233 per cent.

Earlier, India Tourism Development Corporation (ITDC) had declared a dividend of 20 per cent on paid-up capital amounting to Rs 13.50 crore for the year 2006-07. This was the first dividend declared since 1998-99.

All these figures indicate a healthy growing market for the hospitality sector, and help service retailing – probably the least-talked-about segment of Indian retail – gain an upper hand.

Retailing in hotels
Although most of the premium brands are moving out of the hotel arcades to expand their reach, the burgeoning business of hospitality indicates that retail space in hotels cannot fade and footfalls at shops in hotels will continue to grow.

One of the many different ways that retailers are adopting to attract hotel consumers is synchronising the store ambience with that of the hotel. For instance, Apple, one of the world’s largest computer manufacturers, has adopted a unique design strategy for stores that it will open in five-star hotels. Under its new initiative, Apple will match the ambience of the hotels where it sets shop. Besides Apple, numerous luxury retailers of the United Kingdom and the United States have found it a profitable proposition to open stores in hotel premises.

The Indian government seems to have understood the significance of hotels with high standards, as it is upgrading various hotels in cities across the country.

According to Minister of Tourism and Culture Ambika Soni’s statement, communicated in the PIB release, ITDC has launched a major renovation and upgradation drive for all its hotel properties throughout the country. For instance, work on the renovation of 40 rooms at the Brahmaputra Ashok, Guwahati, has been completed. The front wing of Hotel Janpath, New Delhi, has been fully renovated, while the back wing and the lobby are to be renovated this year. About 59 rooms of Hotel Ashok, New Delhi, have been upgraded; another 182 rooms along with the convention centre, the lobby and some public areas are to be renovated.

All these initiatives by the government are expected to provide further boost to the services retailing sector, as this will not only increase the footfalls in the hotel arcades but also enhance the retail environment within the hotel premises.

– Ranjan Kaplish and Satrajit Sen

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