This presentation describes the Hospitality Industry in India and how to solve the possible quality, inventory management and other operational issues that are rampant there and what service level innovations can solve these issues. It also takes into account COVID-19.

1. SERVICES OPERATIONS MANAGEMENT
PRESENTATION
SERVICES OPERATIONS
MANAGEMENT
PRESENTATION
Section 1, Group 10:
Abhishek Dash | UM19010
Biswadeep Ghosh Hazra| UM19148
Devdutta Ray| UM19209
Rishab Dev Gupta| UM19174
Prabhu Samantaray| UM19115

2. Industry Analysis of the Hospitality Industry in India
247
309
424
475 498
600
0
100
200
300
400
500
600
700
2013 2015 2017 2019 2021 2023
Market valuation of Restaurants in India (Unorganized
and Organized) over the years [in ‘000s Crores)
Hospitality
Industry
Restaurant
Industry
Organized
Unorganized
Hotel
Industry
Organized
Unorganized
33 35 43
67 65 57
0%
20%
40%
60%
80%
100%
2016 2019 2023 (Forecasted)
Organized Unorganized
Share of Organized and Unorganized Restaurant
Industry
CAGR- 13%
2.92
5.13
9.55
0
2
4
6
8
10
12
2010 2015 2020
Market valuation of Hotel Industry in India (Unorganized
and Organized) over the years [in ‘000s Crores)
Segment Market Size
(Rs. Cr.)
Growth Rate
(in %)
Quick Service
Restaurants
4,675 21.5%
Casual Dining 2,365 11.9
Cafes 1,265 12.3
Fine Dining 1,045 12
Pubs, bars,
clubs,
lounges
963 11
Some Organized players throughout the
hospitality sector
Segments within the Hotel Industry

3. Quality Issues in the Hospitality Industry
Segmentation of Hotels and Restaurants
Hotel Industry in India
By Traveller
Type
Business
Leisure
Misc
By Region
East
West
North
South
By Hotel
Type
Unorganized
Organized
Franchisee
By City Type
Tier 1
Tier 2
Tier 3
Restaurant
Industry
Organized
Full Service
Kiosks and
Carts
Bars and
Lounges
Fast Food/Take
Away
Unorganized
Expecting the unexpected
• Customer satisfaction is the ultimate metric
• Everything depends on the interrelationship between expected demand
and unexpected service
• Competitors copy the best practices and it is difficult to have a
competitive advantage
Balancing Act
• Quality management professionals must balance between customer
demands and capacity of the company
• In addition to tracking the customer's needs and how to meet them, care
must be placed on the current structure (both physical and processes)
• Innovations must take into account this issue
Quality Systems not being followed
• Quality systems are not followed by employees mainly because
 Lack of qualification- Trainings are mostly seen as a formality and
employees learn mostly by trail and error
 Lack of motivation- Negligence by employees who are not easily
motivated for future perks
Difficulty in Quality measurement
• Self evaluation is extremely important and is seldom followed
• Bias is always there in measurements
• Some problems are inevitable due to the Intangible nature of Services
• The Five Gap model, Service Price matrix are possible things to look for

4. Possible Solutions
High Medium Low
High
Premium High Value Superb Value
Medium
Over-Charging Average Good value
Low
Rip-Off False Economy Economy
Price
Service
Quality
The Price Quality Matrix
• The Price Quality Matrix is one of the most important
matrices for determining the value of service provided
• The three red blocks are definitely to be avoided as they
provide little to no value to customers
• This matrix is not properly implemented in the
hospitality industry. Using this will help the restaurant
and hotel industry formulate effective pricing strategies
• The Pricing is dependent on the Service Quality- with a
high Service Quality, all three pricing ranges are
acceptable
• As the service quality declines, the available pricing
options also decline
Customer Expectation
Customer Perception
Service Delivery
Service Delivery
Policies
Understanding of
Customer Needs
Customer
Company
External
Communications
GAP 5
GAP 3
GAP 2
GAP 4
GAP 1
Gap 1 (Knowledge Gap) can be reduced by-
• Increasing interactions between management & customer
• Increasing interactions between management & staff
Gap 2 (Policy Gap) can be reduced by-
• Set SMART service quality goals
• Updating policies regularly
Gap 3 (The Delivery Gap) can be reduced by-
• Train and empower employees effectively
• Provide right technology to employees at the right time
Gap 4 (The Communication Gap) can be reduced by-
• Manage customer expectations realistically
• Employee input in advertising campaigns
Gap 5 (The Customer Gap) can be reduced by effectively addressing the other 4 gaps in model

5. Inventory Management Issues and Solutions In Restaurants
Issues
• Seasonal and consumer demand ; this is fuelled by the very small
shelf life of the product components.
• Lack of recipe management results in over portioning or food
wastage
• Inefficient and inaccurate counting processes
• Decentralized vendor management leads to huge loss of time
from manager’s schedule and creates huge risk for invoicing and
payment errors
Solutions
• Implementation of Food inventory software enabling the
suppliers to have access to the customer inventory so that the
fulfilment becomes much streamlined
• Applying “rotating spot check “ strategy to avoid the
cumbersome counting procedures.
• The whole system can be integrated with broad line suppliers
thus making the process error prone and becomes easier for
the managers
Issues
• Manual room tracking and food and beverage consumption
tracking becomes a cumbersome job for the managers
• Cash filling of memos often leads to wrong calculations and
leads to a misbalance at the end of the accounting period
• Getting clearance from the Finance department to pay
vendors often takes time and leads to loss of goodwill and
trust amongst the vendors
• Any breakage of items such as lamps or TV often takes time
to repair and leads to loss of customer service
Solutions
• Implementation of Property Management System
enabling to predict hotel demand and supply with greater
accuracy
• Use of ERP which will provide information about the
Vendor Performance, Vendor Accountability and Order
management.
• Use of Vendor managed inventory program – this will
outsource the stocking of the inventory to a specialized
service provider, so that minimized loss of customer
service is achieved
Inventory Management Issues and Solutions In Hotels

6. • Regulatory Committee – The Hotel and Restaurant Approval and Classification
Committee (HRACC)
• Hotels & Inns are subject to state legislations
• Entry no. 34 of list II of Schedule 7 – Individual state have full right and
legitimate authority to make laws
• Entry no. 62 of list II of Schedule 7 – Authority to states for taxing gambling
& betting events
• The SARAI Act, 1867 – still operational, mentions the requirements of any place
used for shelter and accommodation, duties of keeper and gives free access to
governing authority
• Income Tax Act, 1961 – Tax structure by central government
• Some important licenses required are –
• Licence under Shops & Establishment Act
• Licence under Prevention of Food Adulteration Act
• Registration under contract labour act
• Licence to deal in foreign exchange under FEMA
• Bar Licence (Foreign Liquor)
• Copy right licence for playing music
• Total Approvals for Delhi
• 26 Approval to open a restaurant
• 45 Documents needed
Regulations & uncertainty in Hospitality Industry
Associations governing the hotel industry
•The Federation of Hotels and Restaurants
Association of India
•The Hotel and Restaurant Association of Eastern
India
•The Hotel and Restaurant Association of Northern
India
•The Southern India Hotel and Restaurant Association
•The Hotels and Restaurant Association (Western
India)
•Hotel Association of India
Licenses required for opening a hotel
•Police License / Registration.
•A license under Shops & Establishments Act.
•A license under Prevention of Food Adulteration Act
•Registration under the Luxury Tax Act.
•Registration under the Sales Tax Act.
•Registration under the Contract Labor Act.
•Registration under the Pollution Control Act.
•Registration under the Apprentices Act.
•Registration under the Provident Fund Act.
•Registration under the ESI Act.
•Entertainment License on Festival Occasions.
•License for Chimney under the Smoke Nuisance Act
•Registration under the Weights & Measures Act

7. Political shocks – Fallout from
political events is highly
dependent on the influence of
diplomatic travel advisories,
press coverage and consumer
perception. Long term demand
trends indicate that recovery is
relatively quick provided it
doesn’t weaken the underlying
demand driver.
Impact of shocks – Consumer
spending is directly corelated
with GDP performance, so an
economic recession has a great
impact of all demand shocks on
hotel sector.
Pandemic – The impact of
pandemic such as SARS, Swine
Flu, COVID etc. is generally
contained to the affected
regions. It triggers a deep
decline than any other shock
but bounce-back to normal level
is most rapid. Since it is short
lived, Contingency plan & good
management can help survive.
Terrorism shock – Industry is
becoming more resilient to
shocks from terrorism. While
regional and domestic travelers
are less deterred, international
demand is very sensitive to the
threat.
Uncertainties

8. Innovation Issues
• Implementation & Integration Challenge
• Support & Service of the Technology
• Sustainability
• Talent Management & working condition
• Technology Adoption and Success Challenge
• High Capital Expenditure
• Greater Customer Expectations
Technology Innovations
• Using Data to better understand customer
• Use of Cloud/SaaS Service for better Demand Management
• Keyless Entry, Easy Check-In facility to avoid any contact
• Use of Workflow Management Tool
• Greater Technology Adoption for Security & Privacy of Customers
Service Innovation

9. Service Innovation
• This is a service innovation used by an Indonesian restaurant
• Customers can share their meals peacefully without having to worry
about social distancing
• This is an example of how structures are adopted to work with the
changing needs
What is cloud kitchen?
• Commercial cooking facilities
• No physical dining space
• Catering only to online orders
• $400 million industry in 2019
• $2 billion industry by 2024
• Better suited to needs of socially distanced customers
• Helps minimize costs and rent. No Capex.
• Requires fewer people on payroll

10. Issues Faced Due to Pandemic
• Dine-in business capped at 50% seating capacity
• Sharp decline in order volumes
• 60-75% decrease in no. of restaurant partners
delivering food on its platform
• Further demand compression owing to closed
offices
• Fear of dining out might result in a surge in online
orders
Firm in Question: Swiggy
Strategy adopted
• Helping partner restaurants resume operations by offering their cloud
kitchen facilities
• Investing in kitchen space especially in geographies with supply gaps
• Optimizing current kitchen footprint
• Adopted “Swiggy Genie” for Buying and/or Picking Up items
• Leveraging its ‘BrandWorks’ platform to create delivery-only brands
and menus
• Investing 250 crores into Swiggy Access
Benefits
• Low Overheads
• Better efficiency
• Optimizing kitchen footprint
• Access to user data and real time adaptability
• Digital brand awareness without high marketing spend

11. THANK YOU