Study about Lemon Tree budget hotels , comparing with ginger hotels, fortune , courtyard marriott etc. Identify the current business strategy , current problems and limitations and suggest future marketing strategies for the hotel

1. Budget Hotels Industry
LEMON TREE HOTELS

2. INDUSTRY ANALYSIS
• Economic developments and a growth of trading activities have led to travelling
• Tourism boards in different states have been paying attention to provide budget
accommodation facilities for visiting tourists
• India's room supply pipeline represents 17% of the Asia-Pacific pipeline.
• It was moving at a CAGR of 10.8% for last 10 years and is now expected to grow at a
CAGR of 6% for the next 5 years
• Middle class with more disposable income at hand
• Present budget hotels follow the no frills principle

3. NO OF HOTELS IN INDIA

4. PEST ANALYSIS
Political Factors
– Depended on the political framework of the
government of the country
– Operating environment is impacted by trade and
labor laws, tax laws, environmental policies and
trade restrictions
• Trade license
• ESI and EPF
• Music License:
• Elevator license.
• Bar license:.
• Food license:.
• Trademark of name and logo

5. Environmental Factors
• To monitor water consumption and rationalize its use
• To save and protect local resources, to control energy use and monitor its consumption
• To save energy and reduce atmospheric pollution
• To reduce waste at the source and improve waste management
• To implement a recovery and recycling strategy
• To reduce the impact of consumption on the environment
• To promote the development of local, ecological and social product flows
• To limit noise pollution
• To improve air quality inside buildings
• To reduce the impact on the local landscape

6. • Economic Factors:
– Factors like inflation and exchange rate impacts the firm’s behavior
– The capital budgeting of the firms have become difficult over the years
due to global crisis and highly volatile currency
– Rise in the paying power of the visitors
• Social Factors:
– The availability and willingness of the workforce is a major factor which
affects the hotel industry
– People have started vacationing often
– People on a holiday want a sense of calm and safety

7. • Technological Factors:
– Chunk of the hotels are still using the manual book
– Hotels are starting to upgrade themselves with the latest technology
– Benefits of IT system are already showing.
• Less inventory cost.
• Forecast the room occupancy better.
– Wi-Fi services to its customers
– EPABX facilities in all rooms

8. PORTERS 5 FORCES
Threat of entry
HIGH
Attractive market- less supply, more demand during
different periods
Comparatively less capital requirement to enter
Customer switching cost nil
Relaxed government regulations
Power of Suppliers
MEDIUM
Small number of quality training providers and skilled
employees
Less availability of skilled people then required
Higher attrition rate of employees
The Power of buyers
HIGH
Customer driven market
Size and customer concentration high
Easy access to internet
Customers are highly informed
Huge offers and packages given by travel booking sites
Threat to substitutes
MEDIUM
No direct substitues available
Over 81% comprises of unorganized sector
Price sensetive customers
Rivalry among Existing
Competitors
HIGH

9. LEMON TREE HOTELS
• Started in 2002 by Mr. Patu Keswani
• Currently own 25 hotels in 15 cities with 2800 rooms and 3000 emplyees
• They are second as per market share in the segment, behind Ginger Hotels
• Operates under 3 brand names:
– Red Fox – Economy Range
– Lemon Tree Hotel – Mid-Scale
– Lemon Tree Premier – Up-Scale

10. LEMON TREE HOTELS – GENERIC
STRATEGY

11. PREVIOUS SUCCESSFUL
STRATEGIES
• FLEUR HOTELS – A JOINT VENTURE BETWEEN LEMON TREE HOTELS AND
DUTCH PENSION FUND MANAGER APG
– In May 2012, Lemon Tree Hotels formed a joint venture with the
Dutch Pension Manager APG group.
– It has confirmed to invest more than Rs. 2000 Cr in Fleur Hotels for
development and management of around 35 hotels by the end of
2016.

12. PREVIOUS SUCCESSFUL
STRATEGIES
• THE IMPACT OF RATEGAIN
– RateGain is a company that provides SaaS solutions
– It tracks the competitor prices on real time basis and helps the Lemon
Tree Group with its pricing strategies.
– RateGain has helped the hotel chain in increasing its resources and
capabilities

13. CURRENT STRATEGY – COST
LEADERSHIP
• The group was amongst the first to successfully reduce the size of the rooms from
320sq ft to 240 sq ft
• Lemon Tree group incorporated the concept of built in beds . This essentially
meant that the worker could clean 22 rooms instead of 15,in one shift
• They have employed disabled people
• Unlike other hotels, the air conditioning and the water pipes are horizontal rather
than vertical in the Lemon Tree hotels. This enables the group to shut the entire
floor down during periods of low occupancy.

14. CURRENT STRATEGY
• There are no carpets in the hotels. This concept removes foul smell during the
time when the air-conditions are switched off
• Lemon Tree Smiles- the loyalty program
• The Lemon Tree group has also successfully found a Blue Ocean in a highly
creative domain .Its parties range from Kitty parties to regular office parties to
even birthday parties, for the mid-market customer
• The hotel also successfully reduced the number of offerings from the rooms and
installed only the necessities

15. SWOT ANALYSIS
Strength
 Provide a variety of hotels covering mid
market to upscale market
 Provide a refreshing and fun experience,
produce their toiletries on their own.
 They have an extremely friendly staff
,separate staff present to resolve
grievances
 A very good place to work at, recently
has been listed in top 50 companies to
work for in India
Weakness
 New in the market so have less market
share
 Hospitality experience cannot match to
the existent market leaders
Opportunities
 Increasing demand for budget hotels in
India due to frequent travels of officials
 lemon trees’ presence in major cities
which involve travel for business
 Utilization of internet to exploit their
product , offer visibility, presence,
marketing and distribution
 Affordable hotels are an ideal option for
a weekend stay
Threats
 High competition in which involves
poaching the staff
 As budget hotels are preferred for their
economic viability price wars and better
facilities by competitors can be
deteriorating
 A lot of high end hotels have come up
with new brand of budget hotels which
adds to their competition apart from
new players

16. Ginger Hotels
• Indian hotel chain formed as a part of Tata group ,1st hotel in 2004 , Bangalore
• Started with 999/night to up to 2500/ night today
• One of the first premier Indian hospitality group to get into budgetary hotels, 1st of its kind chain of smart basic
hotels , No frills hotel
• Smart basics signifies simplicity, informality, warmth, style, modernity and affordability
• Segment group -Executive level employees, Regular business travellers
• Currently are 28 in number, future expansion to 50 by 2015
Smart Basics Concept – please help yourself
• No provision of bell boy
• Room AC in lieu of central AC
• Single quality restaurant
• A hotel could be established in 40,000 sq
feet
• Size of the room was around 180 sq ft
small compared to 250 -400 sq ft
Reduce
the
manpower
to 1/3rd
Smart basics provides facilities intelligently to reflect
modern way of life –
• meeting room
• conference room
• restaurant and WiFi and net zone
• CCD, water dispenser
• 20 inch flat-TV in each room with satellite
channel and Mini fridge
• 24 hr hot /cold water

17. Ginger Hotels
Smart planet –doesn’t compromise environmental and ecological issues
• CFL lighting , energy saver key tag system in rooms, maximum use of natural light, thermal insulation, and
gas fired water boiler system
• Water conservation measures ground water recharging system, rain water harvesting, auto-flush in public
urinals.
• Waste management done through proper sewage treatment.
• Noise pollution measures such as use of acoustically sealed noiseless diesel generators and vacuum sealed
windows to maintain external noise level up to 50 decibels.
Awards
2009- CNBC travel award for Best budget hotel
2010- Scurry award for creating new market/category at Leap Vault Change Leadership Awards
2010-11- Best economy hotel
2010 -11- Outlook’s travellers award
2011-12 -Best budget hotel , golden star awards

18. COMPETITOR ANALYSIS
Hotel Originated in Tagline Branches USP Segment group Planned Expansion
ITC fortune hotels In 1995 Let Fortune take you
places
40 hotels, 66
operational alliances
in over 50 cities
Provide top quality
accommodation at
affordable prices
Business and leisure
travelers
90 hotels strong
chain by 2015
Ginger hotels 2004, as a part of
TATA group
Please help yourself Around 28 hotels in
different locations of
the country
One of the first premier
Indian hospitality
group to get into
budgetary hotels
Executive level
employees, Regular
business travelers
50 hotels by 2015
Courtyard Marriott In 1990s By business travelers
for business travelers
16 hotels in different
cities
Have a high brand
recognition owing to
Marriott
Business
travelers
Around 47
properties by 2017

19. SUGGESTION FOR BEATING THE
COMPETITION
• Identifying the current strategy of the company
• Identifying the changes in the environment along
with the resources and capabilities of the company
• Devicing a new strategy

20. SUGGESTIONS
• Lemon tree hotels can diversify into heritage tourism
• Lemon tree can leverage upon India’s increased pilgrimage tourism
• New and aggressive marketing strategy
• Improved hr strategy

21. LEMON TREE HOTELS CAN DIVERSIFY
INTO HERITAGE TOURISM
STRENGTH
• India has 28 world heritage sites
• Provide travelers luxurious and unique experience
• Heritage hotel provides facilities of 5-star hotel
• Attracts foreign tourists
• Foreign tourists arrival in 2013 increased by 6.4%
compare to 2012
• Shift in demographics with rise in expenditure on
leisure service
• Incentives provided by MoT on heritage basic category
will be Rs Three lakh per room, subject to a maximum
of Rs 100 lakh
WEAKNESS
 Seasonality of Indian hotel industry
 Lack of knowledge and education about Indian culture
 Locations usually remote and rural places
 Human resource required not same as a typical hotel
 Heritage properties difficult to maintain
 Prior approvals by Archeological Survey of India
 Marketing a heritage property is not the same as any
other hotel
OPPORTUNITIES
• Traveler looking for heritage and culture rather than
just high-tech hotel rooms
• Revenue from leisure travel totaled USD 66.5 bn in
2012 and is estimated to reach over USD152 bn in
2023
• Foreign tourist’s arrival increased at a CAGR of 7.8 %
during 2005-2012
THREATS
 Substitutes like unorganized hotels and rest houses
available
 Poor infrastructure, safety and hygiene in rural and
remote places

22. LEMON TREE HOTELS CAN DIVERSIFY
INTO HERITAGE TOURISM

23. LEVERAGE UPON INDIA’S INCREASED
PILGRIMAGE TOURISM
• Due to the diverse background of Indian population and the religious
inclination of people we can see a huge potential of pilgrimage tourism

24. MARKETING STRATEGY
• Better Deals and Discounts
– Airport shuttle service
– Sweet suit deal
– Free WIFI 24*7
– Save 2 nights or more and save
Recommended offers:
• Early Bird Special: As Taj Hotel offers a value for money deal on early booking.
• Special offers on holidays: More offers should be given on holidays. Currently Lemon Tree in not offering
any special holiday offer.
• Breakfast inclusive deal: Extra discount can be given to the customer if he wants to have breakfast at
hotel only. This will bind the customer to enjoy good cuisine in hotel itself.
• Extended Stay: Deals if a family wants to extend the stay, then a discount should be given. This will
increase the average number of staying days of a customer.
• Business Offer: The hotel should provide a conductive atmosphere and ambience for corporate people
who generally come in group for a project or dealings. This is offered in Leela hotels.

25. MARKETING STRATEGY
• Search Engine Optimization
– Subscribe for paid search as done by Ginger Hotel
Ranking Score = bid * Quality Score
• Improve Facebook Page
– The Facebook page of Lemon Tree hotel was last updated in Oct 2013
• Increase visibility and awareness
– Increase involvement of people: Currently there is no campaign organized by the hotel
group itself.
– There is no proper Wiki page: A wiki page should be there, explaining in and out of the
hotel that is from history to future plans.
– More tie ups with companies: More and more tie ups should be done to increase
customer base and hence increasing awareness.

27. HR STRATEGY
• ISSUE : Inadequate supply of quality talent.
– RECOMMENDATION: The hoteliers are now starting to setup training institutes of their
own and train newly joined recruits according to their preferences.
• ISSUE: Growing attrition rates in the industry.
– RECOMMENDATION: Provide ESOP to employees in the lower hierarchy too.
• ISSUE :Low Employee Productivity.
– RECOMMENDATION: Introduce employee monitoring systems using CRM technologies

28. OPPORTUNITIES
• Opportunity: The number of foreign guest is about 1/10th the no of Indians who move
around the country and settle in local and regional unbranded hotels.
– Suggestion: Lemon tree should try and expand in the middle segment at more than the
other segments. Currently its growth pace is immense and thus it just need to focus at
the right segment.
• Opportunity: Lemon tree can go for international expansion in countries like Sri Lanka and
Nepal.
– Suggestion: Lemon tree enjoys high brand value in the hotel industry and has attracted
foreign investors for its high repute. The company should now go for IPO without
further delay and raise fund to fulfill its expansion plan both in Indian and International
domain.

29. STRATEGY ACTIVATION MAP
BASIC EXPANSION PLAN
(INCLUDING HERITAGE
SITES AND PILGRIMAGE
SITES)
AGGRESSIVE AND
INNOVATIVE
MARKETING
STRATEGY
BETTER HR
STRATEGY
COMPTETITIVE
PRICING
STRATEGIESTHRO
UGH RATEGAIN
MORE JOINT
VENTURES FOR
ENTRY INTO
NEIGHBOURING
COUNTRIES
FURTHER
DISCOUNTS ON
LOYALTY
PROGRAMS
BETTER
INVLENTORY
CONTROL AND
DISTRIBUTION
STRATEGIES

30. REFERENCES
• http://delhipolicelicensing.gov.in/hotel/hotel.htm
• http://www.iracst.org/ijrmt/papers/vol3no12013/1vol3no1.pdf
• http://www.sacredyatra.com
• http://120.117.3.21/sysdata/40/21440/doc/85ec28e04d7591d2/attach/812397.pdf
• http://www.livemint.com/Companies/JBRVLcYwDXQAUshcxevfyL/Skilled-manpower-shortage-threat-to-
hotel-industry-growth.html
• http://articles.economictimes.indiatimes.com/2013-03-14/news/37713890_1_hotel-properties-lemon-
tree-hotels-patu-keswani
• http://www.ibef.org/industry/tourism-hospitality-india.aspx
• http://www.pwc.in/assets/pdfs/publications-2012/hospitality-insights-from-the-indian-ceo-desk.pdf

31. THANK YOU