|
|
|
You can get e-magazine links on WhatsApp. Click here
|
|
|
|
|
|
HoReCa to reach Rs 341,877 cr by 2023
|
|
Tuesday, 27 June, 2023, 08 : 00 AM [IST]
|
|
Venkatesh Ganapathy
|
India has about 53,000 hotels and 70 lakh restaurants in organised category and 2.3 crore restaurants in unorganised sector. The organised sector comprises hotels, restaurants, cafes and clubs. The unorganised sector of the industry consists of street vendors, dhabas, food stalls, roadside food courts, food streets and so on.
The HoReCa (hotels, restaurants, catering) industry contributes approximately $78 billion annually to Indian economy. This roughly translates to 7% contribution to India’s GDP. The HoReCa sector is expected to reach Rs 341,877 crore by end of 2023 and reach over $280 billion by 2025. Over the next five years, India's hospitality industry will expand at a CAGR of 4.73%. The typical Indian household food budget share will reach 35.4% by 2025 indicating a bright future for the HoReCa sector in India.
Tracing the genesis of the HoReCa sector
The foundation of the modern HoReCa sector in India can be traced back to the colonial era when hotels and restaurants began to emerge to cater to the needs of British officials and travellers. The iconic Taj Mahal Hotel in Mumbai, established in 1903, is one of the earliest and most renowned examples. Post India’s Independence in 1947, the hospitality industry experienced steady growth. The government's emphasis on tourism and infrastructure development, coupled with an increase in business travel and foreign visitors, led to the expansion of hotels, restaurants, and catering services across the country.
In the 1980s and 1990s, the HoReCa sector witnessed the entry of international hotel chains and fast-food brands. The global hospitality players brought in standardised services, modern amenities, and international cuisines, influencing the overall hospitality landscape. India's diverse culinary traditions and regional cuisines played a vital role in shaping the HoReCa sector. Alongside international cuisines, restaurants and hotels started showcasing authentic regional dishes, attracting both domestic and international tourists seeking an immersive dining experience.
With the advent of technology and the rise of online platforms, food delivery services and catering gained prominence in the HoReCa sector. This development further widened the scope of the industry, allowing customers to access a variety of food options at their doorstep. Over time, changing consumer preferences and demands have influenced the HoReCa sector. Health-conscious dining, sustainable practices, farm-to-table concepts, and experiential dining have become significant trends, prompting establishments to adapt and innovate to meet evolving customer expectations.
Today, the Indian HoReCa sector encompasses a wide range of establishments, from luxury hotels and fine-dining restaurants to cafes, street food vendors, and catering services. The sector is a shining example of India's evolving culinary landscape and the growing hospitality demands of both domestic and international consumers.
Growth drivers
Almost 3/4ths of the industry in India is concentrated in Tier I and Tier II cities. Increasing urban populations, particularly, in major cities, have led to a greater need for dining options, hotels, and hospitality services to cater to the growing urban consumer base.
Growth of tourism sector in India, the predilection of millennials and zoomers (Gen Y and Gen Z) to order food from the convenience of their homes, the popularity of food delivery aggregators and curiosity to explore regional cuisines and international cuisines are factors shaping the future prospects of the HoReCa business. Rising disposable incomes, coupled with changing lifestyles and urbanisation, have led to increased consumer spending on dining out, leisure activities, and travel. This has led to a surge in demand for dining and hospitality services. India's rich cultural heritage, diverse landscapes, and historical attractions have attracted a significant number of domestic and international tourists. The influx of travellers has created a demand for accommodation, dining, and catering services, resulting in the expansion of hotels, restaurants, and catering establishments.
The emergence of food delivery platforms and online ordering services has revolutionised the HoReCa industry. The convenience and accessibility offered by these platforms have increased consumer engagement with restaurants and catering services. Changing consumer preferences and demands have driven innovation and growth within the HoReCa sector. Consumers are increasingly seeking unique dining experiences, high-quality food, personalised services, and diverse culinary options. This has led to the emergence of niche restaurants, themed establishments, and fusion cuisines, catering to specific consumer preferences.
The adoption of digital solutions, such as online reservations, mobile apps, and contactless payments, has improved operational efficiency and enhanced customer experience. Technology has also enabled better inventory management, data analysis, and personalised marketing strategies, contributing to the growth of the sector.
Supportive government policies, tourism promotion initiatives, and ease of doing business measures have encouraged investments in the HoReCa sector. Governments have implemented reforms to boost tourism, streamline licensing procedures, and provide financial incentives, attracting both domestic and foreign investors. These growth drivers collectively contribute to the expansion and development of the HoReCa industry, making it a vibrant and dynamic sector with significant economic potential.
Challenges faced by HoReCa sector
Despite the hospitality sector employing close to 16 million people in India, this is not enough to sustain the growth momentum in the future. The absence of a service-orientation mindset, inadequate training and high attrition levels are dampening the prospects of this business. The industry requires a diverse range of skilled professionals, including chefs, managers, service staff, and housekeeping personnel. However, there is often a shortage of adequately trained and experienced individuals.
Huge marketing budgets for the HoReCa sector and inadequate RoI are threatening the long-term sustainability of the business. Apart from their inability to attract funds, the HoReCa businesses face loss of revenue due to their inability to offer delivery services on par with food delivery aggregators like Zomato and Swiggy.
Adequate infrastructure, including reliable power supply, water availability, and waste management systems, is crucial for the smooth functioning of the HoReCa sector. However, infrastructure gaps and logistical challenges can pose hurdles, particularly in certain regions or remote areas. Lack of efficient transportation and supply chain networks can lead to delays, higher costs, and difficulties in sourcing quality ingredients and supplies.
There are numerous licensing and compliance requirements that establishments must adhere to, including health and safety standards, food hygiene regulations, liquor licensing, and labour laws. Ensuring compliance with these regulations can be complex and time-consuming, particularly, for small- and medium-sized enterprises with limited resources. The evolving nature of regulations and the need to stay updated adds to the challenge.
The Future
The HoReCa industry in India is highly competitive, with a large number of players operating in the market. This poses challenges for both existing establishments and new entrants. Establishments must differentiate themselves through unique offerings, quality services, and innovative concepts to attract and retain customers. Competition also puts pressure on pricing and profit margins, requiring efficient cost management strategies.
The future of the HoReCa sector in India holds immense potential with sustained growth expected driven by rising consumer spending, increasing tourism, and evolving consumer preferences. Technology adoption, innovation in concepts, and enhanced sustainability practices will play a pivotal role in shaping the industry, while addressing challenges related to competition, skilled manpower, and regulatory compliance will be crucial for long-term success.
(The author is associate professor (marketing) at
Presidency Business School, Bengaluru)
|
|
|
|
|
|
|
|
|
|