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The History Of The Ginger Smart Basics Tourism Essay

Paper Type: Free Essay Subject: Tourism
Wordcount: 2654 words Published: 1st Jan 2015

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Roots Corporation Limited is a wholly owned subsidiary of the Indian Hotels Company Limited. IHCL is a part of the Tata Group of companies, which is Indias premier business house.

On December 24, 2003, RCL operated the first of its kind category of ‘Smart Basic’ hotels across India. RCL develops and operates a fast expanding chain of economy hotels across India under the “GINGER” brand.

The ‘Smart Basic’ concept created a revolution in the Indian Hospitality Industry. These hotels are termed as GenNext category of hotels. GenNext means generation next, i.e., these hotels are completely new concept, which has changed the outlook of hospitality industry in India. They signify simplicity, convenience, informality, style, warmth, modernity and affordability.

The concept of Ginger hotels was developed in association of renowned corporate strategy thinker Dr. C.K. Prahalad and the hotels have been inherently designed and established by IHCL.

The first of the Smart basics hotels was launched in Bangalore and was called as IndiOne. First, they completed the test marketing and subsequent fine-tuning of hotel facilities and services of IndiOne then rolled out the concept across India. Now the category of hotels has been launched with a new name “Ginger Hotels” which is in accord with the fresh, simple and stylish world of Smart basics.

The ginger Hotels are built in such a way that they meet the key needs of today’s travellers at affordable rates. It follows the concept of “Smart Basics” which is a ‘philosophy of providing intelligent, thought out facilities and services at a “value” pricing and reflects the new spirit in which people live and work today.

Ginger Hotels target middle-income group people with increasing disposable income. This class likes to spend on travel but not on luxury accommodation, they look for accommodation, which can provide value for their money. All they want is a clean, secure and hygienic accommodation at affordable prices.

Ginger Hotels follow generic strategy of growth in which they focus on the cities which has already experienced significant growth. Such cities generally show growth in certain business activities like population growth rates, tourism and convention activities, air traffic volume, local commercial real estate occupancy and retail sales volume. These cities tend to have strong demand for hotel facilities and services.

They invest in hotels that are situated near both business and leisure centres which tends to create great demand for hotel services and enables them to attract both weekday business guests and weekend leisure travellers.

They have a separate team consisting of members from finance, marketing, development and hotel management departments who assess the financial return of every new investment that the group decides to make and the team clears only those projects that they find are financially viable and which would provide them profitable returns. They target markets that do not have wide seasonal fluctuation in occupancy and focus on small entrepreneurs, traders etc.

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Ginger has the first mover advantage. Looking at the increasing cost trends in real estate market in the last few years. Ginger Group of hotels lease out the area, building, or takeover some non-branded hotel, in this way they save significant amount of cost and time and moves into the market early which helps them in capturing significant market share ahead of its competitors. The company has identified over 80 cities and intends to focus more cities in the future. In order to increase their customer base, the company intends to continue growing organically in the existing cities in which they operate by selectively establishing more ginger hotels. The Indian Hospitality Industry is highly competitive and fragmented. Ginger hotels compete with three star full service hotels from unorganised sector. Earlier ginger hotels were the only branded three star hotels from the organised sector but the competition for ginger hotels have grown significantly after the announcement by newer international and local hotel companies to set-up hotels across the country in the value segment. Some of the potential competitors of ginger hotels are Lemon Tree Hotels, Ibis (Accor), Keys (Bergruen Hotels), Hilton, Garden Inn Hotels (DLF) etc.

Initially Ginger Hotels leased land in order to build hotels but now they are doing things differently – from building a hotel on the top of a shopping mall and redeveloping an existing property.

Ginger Hotels provide similar services that a normal hotel provides like rooms with T.V>, fridge, tea/coffee makers, laundry, restaurants, Wi-Fi connections, meeting rooms, business centres, Gyms, Car rental services, Doctor on call, Currency exchangers etc. The manner in which these services are provided differentiates it from other normal hotels. The tag line of Ginger hotels is “PLEASE HELP YOURSELF” which means most of the services offered have to be carried out by the customer himself. There are no room services or bellhops this strategy adopted by ginger, benefits customers and the hotel, customers, can save upon the tips, which otherwise they would have to pay for room services and hotel can save upon the cost of human resource. Most of the services have to be carried out by the guest himself like while checking into the hotel a guest does not need the assistance of the reception counter as ginger hotels have Self Check-In Kiosk. In addition, there is “Give n’ Take” Counter that the guest can use to deliver used clothes for laundry. There is an ironing room in every floor of ginger hotels. Further are water dispensers on each floor. Ginger hotels also have round the clock vending machine to provide with packed snacks and hot/cold beverages irrespective of the working of the restaurant. In addition, a vending machine to supply other things like toiletries, combs, toothpastes, soaps, mosquito repellents etc. ginger has outsourced food and beverage partners operating on a revenue share model. They have introduced facilities like SMART wellness, which is Ayurvedic wellness facility for business travellers at a low cost. In addition, SMART sleep that includes posture-pedic mattress for absorbing and redistributing pressure from the body weight. In future Ginger Hotels intends to develop its own merchandise range that will be offered in hotel and on the website. The size of the room in the hotel is kept small around 180 sq. Feet as compared to 250-400 sq. Feet of premium hotels. The concept of “Help Yourself” has helped the company in operating the hotel with just 25 staff members as compared to premium hotels where they employ around 250 people. The room charges range from Rs. 999 to Rs. 3000, which is quite affordable. All this practice has helped them to cut their marketing costs significantly.

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Early Mover status and establishes regional operational and synergy has enabled ginger to develop and operate its hotels efficiently and successfully. Ginger Hotels offer standardised products and maintain uniformity of hotel chain. They have come up with unique product features consisting of design, appearance, decoration, colour that attracts the customer’s attention. The company has developed a record of accomplishment of expanding the business operations through organic growth and maintain high quality, also achieve their financial target. Since there is a shortage of Human resource in ginger hotels, they have adopted a flexible and robust IT system in collaboration with Tata Consultancy Services, which is a company- wide seamlessly, integrated IT system developed by SAP.

Ginger hotels has a unique value proposition that appeals the middle class budget people and makes it a flourishing business. If we look at the Indian Hotel Industry, there are certain strengths or favourable factors that contribute to the prosperity of the company in the industry. Ginger hotels are associated with low cost airlines and low cost mode of transportation thus providing a low price better quality accommodation. Apart from this Ginger hotels are located near railway stations and bus stops and are situated in places, which can be beneficial for both business people and tourists. They are mostly located in the city with less seasonal fluctuations in accommodation. Most of the employees are outsourced thus ginger maintains a low amount of staff as the hotel does not offer any room service thus it helps in providing cost benefit. Ginger hotels also provide all basic amenities like gym, ATM, Wi-Fi etc. that helps the hotel in maintaining its standard and quality. This brand is very fresh and simple. It gives a new feeling as expected by the new emerging middle-income group in the country. Ginger relies on regional advertising rather than spending on national campaigns thereby cutting significant amount of cost and successfully building a brand. They have also been able to gain a lot of reputation by being a part of Tata Group, which is a pioneer in the Indian market. Another aspect of their brand strength comes from their holistic value. They have also taken a great consideration for disabled people by designing the last room in the hotel especially for them. They are budget hotels and operate on low cost. They have the ability of spreading themselves quickly across the county in just span of 8 years they have opened up around 40 hotels across the country. The brand Ginger has become very successful hotel chain in India by achieving the occupancy rate of 80%.

As Ginger Hotels enjoy certain advantages and strengths they have to face various threats and weaknesses. Ginger hotels is unable to attract higher-middle class and upper class who look for more luxury and services and ginger being a budget hotel does not provide much services. Since ginger is economy chain of hotels, they have a high employee turnover due to limited scope and remuneration provided by the group. This makes ginger incur huge costs by training new employees repeatedly. Ginger comes under the category of three star hotels and it has to face a tuff competition from the local hotels of unorganised sector that are even cheaper and provide services. Apart from these local hotels there are many new brands which have announced their desire to enter the budget hotel segment thus providing more competition to ginger hotels.

There are always two faces of a coin, same is the case with ginger hotels, if there are strengths, weaknesses also prevail.

Ginger is characterised by a high turnover of frontline staff, rapid, growth and dispersed location. Ginger’s ability to attract good talent and retain employees is critical for their growth strategy and that people are critical to maintaining the quality and consistency of its services and thereby their brand and reputation. Ginger has outsourced most of its activities only 8 to 9 managers per hotel are on the rolls of ginger rest other facilities like kitchen, restaurant, and backend maintenance are outsourced.

Ginger has 175 permanent employees. Ginger hotels have collaborated with various hotel management schools to develop talented students who can meet the rapidly growing demands of the company. The company uses a multi- step recruitment process for retaining and recruiting the best talent. Ginger has implemented extensive training programs and periodic tests for managerial and other hotel-based staff primarily through training partners. They provide various career advancement opportunities to their employees. Ginger hotel organises a two-month extensive training period for new unit managers during which they receive training in managing all core aspects of the hotel operations and they get familiar with the company culture and philosophy. Ginger group also conducts timely web based tests to assess the knowledge and skills of the workers. The company uses performance linked compensation structure, career oriented training to motivate its employees.

Even after having such an extensive human resource strategy. Ginger hotels face various challenges as it mainly operates in smaller non-metro cities where the employees are less exposed to new technology, comfort and modern amenities, it becomes a difficult task for the company to gear up the employees upto the standard of ginger hotels. Designing a system to recruit right kind of people and provide right training to employees is a difficult question for ginger hotels as the development inputs are different for different locations. Additionally acquiring professionally qualified employees in remote areas and non-metro cities and retaining them is an area of concern. In order to retain the employees, ginger has come up with various measures so that employees can get additional value in terms of non-monetary rewards like developing employee competencies by providing certifications etc. but consistently ensuring this across all the locations is a big challenge. Ginger uses unconventional recruitment process as conventional recruitment becomes very expensive for the group. They have created a portal called careers@ginger from where almost 48% of the company’s recruitment takes place and rest of the recruitment takes places through referral programmes in which existing employees refer a new employee and if the referred person gets selected the referrer gets reward in this way the company satisfies both the existing and new employees. They have also merged with various management schools and employees go to colleges and collaborate with them by linking with their syllabi, they call students for get together and use students as summer interns so that they build relationship even before the recruitment starts. They try to keep their staff motivated by giving them a chance to learn new things and upgrade their skills. Since they are budget hotels so they choose e-learning initiatives to cut costs. They have in house training, induction and e-learning modules based on customer feedback systems. The compliance with quality standards are monitored through both scheduled and unscheduled visits, periodic tests and reviews at each hotel. In addition, the practice of mystery audits and of tracking customer comments through guest comment cards, allows ginger to improve its services and facilities at each hotel.

Ginger’s corporate marketing and advertising strategies are designed to enhance consumer awareness and preference for the ginger brand as offering the value, convenience and comfort in the economy hotel segment in Indian Hospitality industry. Ginger has to reshape the customer expectations, as still Indian customers are uncomfortable with the concept of smart basics and self-service. Each day they have to entertain many customers who enter the hotel without knowing what to expect. Customers often complaint about services which are not provided by the ginger hotels. However, creating awareness for ginger brand is a difficult task to perform, as ginger is a budget hotel, as its business model does not allow huge expenditure on media and promotion. Nevertheless, even after facing various challenges. Ginger has been able to respond effectively to the changing dynamics and economies of the Indian Hospitality Industry. With the continuing expansion across the country, customers are now seeing a greater value in ginger hotels. Ginger CEO Prabhat Pani said,” Ginger hotels, like any other Tata enterprise, would continue to be driven by respect for people and nature, and would like to epitomise environment-friendliness and social responsibility in all aspects of business.”


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