Professional Documents
Culture Documents
Services Marketing Notes
Services Marketing Notes
A product is tangible, which means the customer can touch and see the product before
deciding to make a purchase. Items such as packaging and presentation may compel a
customer to purchase a product. Services, on the other hand, are not tangible, which can
make them more difficult to promote and sell than a product.
Products tend to fill a customer's need or want, so companies can use this to sell a product.
A service is more about selling a relationship and the value of the relationship between the
buyer and seller of the service. For example, a car is something a buyer can touch and see
as well as use. A service, such as lifestyle coaching, for example, is not tangible. A lifestyle
coach may be able to assist clients in creating a life plan and implementing steps to
transform his life into one that the client wants to live, but it is not something tangible that
the client can place in his home and look at every day. Therefore, the client needs to
perceive the value of the service, which can be harder to get across.
1. Research:
Our method involves studies on qualitative situational analysis and market trends
measurement.
2. Implementation:
Our expert team strategizes on the best-integrated marketing campaigns.
3. Understanding Consumer:
We research on a client project and technological advancements, brand focus, corporate
culture, and the identity that their brand is trying to express through marketing efforts.
1. Market Size
The services sector is a key driver of India’s economic growth. The sector
contributed 55.39% to India’s Gross Value Added at current price in FY20#. GVA
at basic prices at current prices in the second quarter of 2020-21 is estimated at Rs.
42.80 lakh crore (US$ 580.80 billion), against Rs. 44.66 lakh crore (US$ 633.57
billion) in the second quarter of 2019-20, showing a contraction of 4.2%. According
to RBI, in February 2021, service exports stood at US$ 21.17 billion, while imports
stood at US$ 10.61 billion.
The India Services Business Activity Index/Nikkei/IHS Markit Services Purchasing
Managers’ Index fell to 54 in April 2021, from 54.6 in March 2021, due to pandemic -
induced constraints in business activities and weakened sentiments towards growth
prospects.
2. Industry developments:
Some of the developments in the services sector in the recent past are as follows:
The services category in India attracted cumulative foreign direct investment (FDI)
worth US$ 85.86 billion between April 2000 and December 2020. The services
category ranked 1st in FDI inflow as per data released by the Department for
Promotion of Industry and Internal Trade (DPIIT).
In April 2021, the Ministry of Education (MoE) and University Grants Commission
(UGC) started a series of online interactions with stakeholders to streamline forms
and processes to reduce compliance burden in the higher education sector, as a
follow-up to the government’s focus on ease of doing business to enable ease of
living for stakeholders.
On March 17, 2021, the Health Ministry’s eSanjeevani telemedicine services crossed
3 million (30 lakh) teleconsultations since its launch, enabling patient -to-doctor
consultations from the confines of their home and doctor -to-doctor consultations.
In April 2021, Elon Musk’s SpaceX has started accepting pre -orders for the beta
version of its Starlink satellite internet service in India for a fully refundable deposit
of US$ 99. Currently, the Department of Telecommunications (DoT) is screening the
move and more developments will be unveiled soon.
In December 2020, a cohort of six health-tech start-ups—AarogyaAI, BrainSightAI,
Fluid AI, InMed Prognostics, Wellthy Therapeutics, and Onward Assist—have been
selected by the India Edison Accelerator, fuelled by GE Healthcare. India Edison
Accelerator, the company’s first start-up partnership programme focused on Indian
mentors, creates strategic partners to co-develop healthcare solutions.
The Indian healthcare industry is expected to shift digitally enabled remote
consultations via teleconsultation. The telemedicine market in India is expected to
increase at a CAGR of 31% from 2020 to 2025.
In December 2020, Gamma Skills Automation Training introduced a unique robotics
& automation career launch programme for engineers, an ‘Industry 4.0 Hands -on
Skill Learning Centre’ located at IMT Manesar, Gurgaon in Haryana.
In December 2020, the ‘IGnITE’ programme was initiated by Siemens, BMZ and
MSDE to encourage high-quality training and technical education. ‘IGnITE’ aims to
develop highly trained technicians, with an emphasis on getting them ready for the
industry and future, based on the German Dual Vocational Educational Training
(DVET) model. By 2024, this programme aims to upskill ~40,000 employees.
In October 2020, Bharti Airtel entered cloud communications market with the launch
of business-centric ‘Airtel IQ’.
3. Government Initiatives:
The Government of India recognises the importance of promoting growth in services sector
and provides several incentives across a wide variety of sectors like health care, tourism,
education, engineering, communications, transportation, information technology, banking,
finance and management among others.
The Government of India has adopted few initiatives in the recent past, some of these
are as follows:
Under Union Budget 2021-22, the government allocated Rs. 7,000 crore (US$ 963.97
million) to the BharatNet programme to boost digital connectivity across India.
FDI limit for insurance companies has been raised from 49% to 74% and 100% for
insurance intermediates.
In May 2021, the Ministry of Commerce and Industry announced that India received
an FDI inflow of US$ 81.72 billion, the highest FDI during FY 2020 -21.
In March 2021, the central government infused Rs. 14,500 crore (US$ 1.99 billion)
capital in Central Bank of India, Indian Overseas Bank, Bank of India and UCO
Bank through non-interest-bearing bonds.
On January 15, 2021, the third phase of Pradhan Mantri Kaushal Vi kas Yojana
(PMKVY) was launched in 600 districts with 300+ skill courses. Spearheaded by the
Ministry of Skill Development and Entrepreneurship, the third phase will focus on
new-age and COVID-related skills. PMKVY 3.0 aims to train eight lakh candidates.
In January 2021, the Department of Telecom, Government of India, signed an MoU
with the Ministry of Communications, Government of Japan, to strengthen
cooperation in the areas of 5G technologies, telecom security and submarine optical
fibre cable system.
On November 4, 2020, the Union Cabinet, chaired by the Prime Minister, Mr.
Narendra Modi, approved to sign a memorandum of understanding (MoU) between
the Ministry of Communication and Information Technology and the Department of
Digital, Culture, Media and Sports (DCMS) of United Kingdom Government to
cooperate in the field of telecommunications/information and communication
technologies (ICTs).
In October 2020, the government selected Hughes Communications India to connect
5,000 village panchayats in border and naxal-affected states and island territories
with satellite broadband under BharatNet project by March 2021.
In September 2020, the government announced that it may infuse Rs. 200 billion
(US$ 2.72 billion) in public sector banks through recapitalisa tion of bonds
In the next five years, the Ministry of Electronics and Information Technology is
working to increase the contribution of the digital economy to 20% of GDP. The
government is working to build cloud-based infrastructure for collaborative
networks that can be used for the creation of innovative solutions by AI
entrepreneurs and startups.
On Independence Day 2020, Prime Minister Mr. Narendra Modi announced the
National Digital Health Mission (NDHM) to provide a unique health ID to every
Indian and revolutionise the healthcare industry by making it easily accessible to
everyone in the country. The policy draft is under ‘public consultation’ until
September 21, 2020.
In September 2020, the Government of Tamil Nadu announced a new electronics &
hardware manufacturing policy aligned with the old policy to increase the state’s
electronics output to US$ 100 billion by 2025. Under the policy, it aims to meet the
requirement for incremental human resource by upskilling and training >100,000
people by 2024.
Government of India has launched the National Broadband Mission with an aim to
provide Broadband access to all villages by 2022.
4. Road Ahead:
By 2023, healthcare industry is expected to reach US$ 132 billion. India’s digital
economy is estimated to reach US$ 1 trillion by 2025. By end of 2023, India’s IT
and business services sector is expected to reach US$ 14.3 billion with 8% growth.
The implementation of the Goods and Services Tax (GST) has created a common
national market and reduced the overall tax burden on goods. It is expected to reduce
costs in the long run-on account of availability of GST input credit, which will result
in the reduction in prices of services.
UNIT-II
DEFINITION OF BANKING
The Banking Regulations Act 1949, Sec.5 (b) defines the term banking as “Banking means
accepting, for lending or investment, of deposits of money from the public repayable on
demand or otherwise and withdraw by cheque, draft, and order or otherwise.”
Sec.5(c) of the BR Act defines a “banking company” as a company that transacts the
business of banking in India. Since a banker or a banking company undertakes banking-
related activities we can derive the meaning of banker or a banking company from Sec 5(b)
as a body corporate that:
(a) Accepts deposits from the public.
(d) Allows withdrawals of deposits on-demand or by any other means.
Accepting deposits from the ‘public’ means that a bank accepts deposits from anyone who
offers money for the purpose. Unless a person has an account with the bank, it does not
accept the deposit. For depositing or borrowing money there has to be an account
relationship with the bank. A bank can refuse to open an account for undesirable persons.
It is the bank’s right to open an account. Reserve Bank of India has stipulated certain norms
“Know Your Customer” (KYC) guidelines for opening accounts and banks have to strictly
follow them. In addition to the activities mentioned in Sec.5 (b) of the B R Act, banks can
also carry out activities mentioned in Sec. 6 of the Act.
DEFINITION OF CUSTOMER
The term Customer has not been defined by any act. In simple words, a customer is such a
person to whom you extend your services in return for consideration. A customer is a
person who maintains an account with the bank without taking into consideration the
duration and frequency of operation of his account. To be a customer for any bank the
individual should have an account with the bank. The individual should deal with the bank
in its nature of regular banking business.
Those who do not maintain any account relationship with the bank but frequently visit a
branch of a bank to availing banking facilities such as for purchasing a draft, en-cashing a
cheque, etc. Technically they are not customers, as they do not maintain an account with
the bank branch. The term ‘customer’ is used only concerning the branch, where the
account is maintained. He cannot be treated as a ‘customer’ for other branches of the same
bank. However with the implementation of’ ‘Core Banking Solution’ the customer is the
customer of the bank and not of a particular branch as he can operate his account from any
branch of the bank and from anywhere. In the event of arising any cause of action, the
customer is required to approach the branch with which it had opened an account and not
with any other branch.
As per ‘Know Your Customer’ guidelines issued by Reserve Bank of India, customer
has been defined as:
1. A person or entity that maintains an account and/or has a business relationship with
the bank;
2. One on whose behalf the account is maintained (i.e. the beneficial owner);
3. Beneficiaries of transactions conducted by professional intermediaries, such as Stock
Brokers, Chartered Accountants, Solicitors, etc. as permitted under the law, and
4. Any person or entity connected with a financial transaction, which can pose significant
reputation or other risks to the bank, say, a wire transfer or issue of a high-value demand
draft as a single transaction.
BANKER CUSTOMER RELATIONSHIP
It means that to become a customer account relationship is a must. Account relationship is
a contractual relationship. Banking is a trust-based relationship. There are numerous kinds
of relationships between the bank and the customer. The relationship between a banker and
a customer depends on the type of transaction. Thus the relationship is based on contract,
and certain terms and conditions.
These relationships confer certain rights and obligations both on the part of the banker and
on the customer. However, the personal relationship between the bank and its customers is
long-lasting. Some banks even say that they have a generation-to-generation banking
relationship with their customers.
CLASSIFICATION OF RELATIONSHIP
The relationship between banker and customer is of utmost importance. The relationship
between a bank and its customers can be broadly categorized into General relationships
and Special relationships.
A. GENERAL RELATIONSHIP
If we look at Sec 5(b) of the Banking Regulation Act, we would notice that the bank’s
business is accepting deposits for lending. Thus, the relationship arising out of these two
main activities is known as General Relationship.
1. DEBTOR AND CREDITOR
When a ‘customer’ opens an account with a bank, he fills in and signs the account opening
form. By signing the form he agrees/contracts with the bank. When a customer deposits
money in his account the bank becomes a debtor of the customer and the customer a
creditor. The money so deposited by the customer becomes the bank’s property and the
bank has a right to use the money as it likes. The bank is not bound to inform the depositor
of the manner of utilization of funds deposited by him. Bank does not give any security to
the depositor i.e. debtor. The bank has borrowed money and it is only when the depositor
demands, the banker pays. Bank’s position is quite different from normal debtors.
While issuing Demand Draft, Mail / Telegraphic Transfer, the bank becomes a debtor as it
owns money to the payee/ beneficiary.
2. CREDITOR AND DEBTOR
Lending money is the most important activity of a bank. The resources mobilized by banks
are utilized for lending operations. Customer who borrows money from the bank own
money to the bank. In the case of any loan/advances account, the banker is the creditor and
the customer is the debtor. The relationship is the first case when a person deposits money
with the bank reverses when he borrows money from the bank. Borrower executes
documents and offers security to the bank before utilizing the credit facility.
B. SPECIAL RELATIONSHIP
In addition to these two activities banks also undertake other activities mentioned in Sec.6
of the Banking Regulation Act. In addition to opening a deposit/loan account banks
provide a variety of services, which makes the relationship more wide and complex.
Depending upon the type of services rendered and the nature of the transaction, the banker
acts as a bailee, trustee, principal, agent, lessor, custodian, etc.
1. TRUSTEE AND BENEFICIARY (BANK AS A TRUSTEE AND
CUSTOMER AS A BENEFICIARY):
As per Sec. 3of Indian Trust Act 1882, a “trust” is an obligation annexed to the ownership
of property, and arising out of a confidence reposed in and accepted by the owner, or
declared and accepted by him, for the benefit of another, or of another and the owner. Thus,
the trustee is the holder of property on behalf of a beneficiary.
In the case of a trust, a banker customer relationship is a special contract. When a person
entrusts valuable items to another person with the intention that such items would be
returned on demand to the keeper the relationship becomes of a trustee and trustier.
Customers keep certain valuables or securities with the bank for safekeeping or deposits
certain money for a specific purpose (Escrow accounts) the banker in such cases acts as a
trustee. Banks charge fees for safekeeping valuables.
2. BAILEE AND BAILOR (BANK-BAILEE AND CUSTOMER- BAILOR):
Sec.148 of Indian Contract Act, 1872, defines “Bailment” “bailor” and “bailee”. A
“bailment” is the delivery of goods by one person to another for some purpose, upon a
contract that they shall, when the purpose is accomplished, be returned or otherwise
disposed of according to the directions of the person delivering them. The person
delivering the goods is called the “bailor”. The person to whom they are delivered is called,
the “bailee”.
Banks secure their advances by obtaining tangible securities. In some cases, physical
possession of securities goods (Pledge), valuables, bonds, etc., are taken. While taking
physical possession of securities the bank becomes bailee and the customer bailor. Banks
also keep articles, valuables, securities, etc., of their customers in Safe Custody and act as
a Bailee. As a bailee, the bank is required to take care of the goods bailed.
3. LESSOR AND LESSEE (BANK- LESSOR AND CUSTOMER- LESSEE):
Sec.105 of ‘Transfer of Property Act 1882’ defines lease, Lessor, lessee, premium, and
rent. As per the section “A lease of immovable property is a transfer of a right to enjoy
such property, made for a certain time, express or implied, or in perpetuity, in consideration
of a price paid or promised, or of money, a share of crops, service or any other thing of
value, to be rendered periodically or on specified occasions to the transferor by the
transferee, who accepts the transfer on such terms.”
Definition of Lessor, lessee, premium, and rent:
(1) The transferor is called the lessor,
(2) The transferee is called the lessee,
(3) The price is called the premium, and
(4) The money, share, service, or another thing to be so rendered is called the rent.
Providing safe deposit lockers is an ancillary service provided by banks to customers.
While providing a Safe Deposit Vault/locker facility to their customers’ the bank agrees
with the customer. The agreement is known as the “Memorandum of letting” and attracts
stamp duty.
The relationship between the bank and the customer is that of the lessor and lessee. Banks
lease (hire lockers to their customers) their immovable property to the customer and give
them the right to enjoy such property during the specified period i.e. during the office/
banking hours and charge rentals. Bank has the right to break open the locker in case the
locker holder defaults in payment of rent. Banks do not assume any liability or
responsibility in case of any damage to the contents kept in the locker. Banks do not insure
the contents kept in the lockers by customers.
4. AGENT AND PRINCIPAL (BANK- AGENT AND CUSTOMER-
PRINCIPAL):
Sec. 182 of ‘The Indian Contract Act, 1872’ defines “an agent” as a person employed to
do any act for another or to represent another in dealings with third persons. The person
for whom such act is done or who is so represented is called “the Principal”.
Thus an agent is a person, who acts for and on behalf of the principal and under the latter’s
express or implied authority, and the acts that were done within such authority are binding
on his principal and, the principal is liable to the party for the acts of the agent.
Banks collect cheques, bills, and makes payment to various authorities’ viz., rent, telephone
bills, insurance premium, etc., on behalf of customers. . Banks also abides by the standing
instructions given by their customers. In all such cases bank acts as an agent of its customer,
and charges for these services. As per the Indian contract, the Act agent is entitled to
charges. No charges are levied in the collection of local cheques through the clearing house.
Charges are levied only when the cheque is returned to the clearinghouse.
5. INDEMNITY HOLDER AND INDEMNIFIER (BANK-INDEMNITY
HOLDER AND CUSTOMER-INDEMNIFIER):
The dictionary meaning of the word Indemnity means ‘security or protection against a loss
or other financial burden’. As per Section 124 of the Indian Contract Act 1872, the
definition of Indemnity is as follows. ‘A contract by which one party promises to save the
other from loss caused to him by the contract of the promisor himself, or by the conduct of
any other person, is called a “contract of indemnity”. The right of indemnity-holder is
defined in Section 124 of the Indian Contract Act 1872. An indemnity is an obligation by
a person to provide compensation for a particular loss suffered by another person. In the
case of banking, the relationship happens in transactions of issue duplicate demand draft,
TDR, deceased account payment, etc. In that case, the indemnifier will compensate any
loss arising from the wrong or excess payment. In these cases, the bank is an Indemnity
Holder (Promisee) and the customer is Indemnifier (Promisor).
6. HYPOTHECATOR AND HYPOTHECATEE (BANK- HYPOTHECATEE
AND CUSTOMER- HYPOTHECATOR):
The relationship between customer and banker can be that of Hypothecator and
Hypothecatee. This happens when the customer hypothecates certain movable or non-
movable property or assets with the banker to get a loan. In this case, the customer became
the Hypothecator, and the Banker became the Hypothecatee.
7. PLEDGER AND PLEDGEE (BANK- PLEDGEE OR PAWNEE AND
CUSTOMER- PLEDGER OR PAWNOR):
The relationship between customer and banker can be that of Pledger and Pledgee. This
happens when the customer pledges (promises) certain assets or security with the bank to
get a loan. In this case, the customer becomes the Pledger or Pawnor, and the bank becomes
the Pledgee or Pawnee. Under this agreement, the assets or security will remain with the
bank until a customer repays the loan.
8. MORTGAGOR AND MORTGAGEE (BANK- MORTGAGEE AND
CUSTOMER- MORTGAGOR):
As per section 58 of Transfer of Property Act 1882, the mortgage is the transfer of an
interest in specific immovable property to secure the payment of money advanced or to be
advanced by way of loan, an existing or future debt, or the performance of an engagement
which may give rise to a pecuniary liability. The mortgagor only pats with the interest in
the property and not the ownership. The transferor of interest in the property is called a
mortgagor and the transferee is called a mortgagee. In this case, the customer became the
Mortgagor, and the Banker became the Mortgagee.
9. AS A CUSTODIAN:
A custodian is a person who acts as a caretaker of something. Banks take legal
responsibility for a customer’s securities. While opening a D-Mat account bank becomes a
custodian.
10. AS A GUARANTOR:
Banks give guarantees on behalf of their customers and enter into their shoes. A guarantee
is a contingent contract. As per sec 31, of Indian contract Act guarantee is a “contingent
contract”. A contingent contract is a contract to do or not to do something, if some event,
collateral to such contract, does or does not happen.
11. ADVISOR AND CLIENT (BANK- ADVISOR AND CUSTOMER-
CLIENT):
When a customer invests in securities, the banker acts as an advisor. The advice can be
given officially or unofficially. While giving advice the banker has to take maximum care
and caution. Here, the banker is an Advisor, and the customer is a Client.
Customer Services:
The Regulations That Govern Banking in India
The banking system in India is regulated by the Reserve Bank of India (RBI), through the
provisions of the Banking Regulation Act, 1949.1
Some important aspects of the regulations that govern banking in this country, as well as
RBI circulars that relate to banking in India, are explored below.
India's banking system is regulated by the RBI and the Banking Regulation Act, 1949.
Bank lending to single and group borrowers is limited to 15% and 30% respectively, with
some exceptions.
Sectors given lending priority are micro and small enterprises; agriculture, education, and
housing; and the low-earning and less privileged.
Those who willfully default on loans may be criminally prosecuted.
India's banking regulations underscore the country's preference for financial stability and
economic inclusiveness.
1. Exposure Limits:
Lending to a single borrower is limited to 15% of the bank’s capital funds (tier 1 and tier
2 capital). This limit may be extended to 20% in the case of infrastructure projects.
Lending to group borrowers is limited to 30% of the bank’s capital funds, with an option
to extend it to 40% for infrastructure projects. The lending limits can be extended by a
further 5% with the approval of the bank's board of directors. Lending includes both fund-
based and non-fund-based exposure.
2.Cash Reserve Ratio and Statutory Liquidity Ratio:
Cash Reserve Ratio (CRR):
Banks in India are required to keep a minimum of 4.5% of their net demand and time
liabilities (NDTL) in the form of cash with the RBI. These deposits currently earn no
interest.
The CRR needs to be maintained on a fortnightly basis, while the daily maintenance needs
to be at least 95% of the required reserves.
In case of default on daily maintenance, the penalty is 3% above the bank rate applied on
the number of days of default multiplied by the amount by which the amount falls short
of the prescribed level.
Statutory Liquidity Ratio (SLR):
Over and above the CRR, a minimum of 22% and a maximum of 40% of NDTL (known
as the SLR) needs to be maintained in the form of gold, cash or certain approved
securities.
The excess SLR holdings can be used to borrow under the Marginal Standing Facility
(MSF) on an overnight basis from the RBI. The interest charged under MSF is higher than
the repo rate by 100 bps, and the amount that can be borrowed is limited to 2% of NDTL.
Learn more about how interest rates are determined, particularly in the United States.
Provisioning
Non-performing assets (NPA) are classified in three categories: substandard, doubtful and
loss. An asset becomes non-performing if there have been no interest or principal
payments for more than 90 days in the case of a term loan.3
Provisions for NPAs
Substandard assets are those assets with NPA status for less than 12 months. After that
time, they are categorized as doubtful assets. A loss asset is one for which the bank
or auditor expects no repayment or recovery and is generally written off the books.
Substandard assets require a provision of 15% of the outstanding loan amount for
secured loans and 25% of the outstanding loan amount for unsecured loans.
Doubtful assets require a provision for the secured part of the loan of:
25% of the outstanding loan for NPAs in existence less than one year
40% for NPAs in existence between one and three years
100% for NPA’s with a duration of more than three years
The unsecured portion of such loans requires a provision of 100%.
Provisions for Standard Assets:
Provisioning is also required on standard assets. Provisioning for agriculture and small
and medium enterprises is 0.25% and for commercial real estate it is 1% (0.75% for
housing), while it is 0.4% for the remaining sectors.
Provisioning for standard assets cannot be deducted from gross NPA’s to arrive at net
NPA’s. Additional provisioning over and above the standard provisioning is required for
loans given to companies that have unhedged foreign exchange exposure.
Priority Sector Lending
The priority sector broadly consists of micro- and small enterprises, and initiatives related
to agriculture, education, housing and lending to low-earning or less privileged groups
(classified as "weaker sections").4
The lending target for domestic commercial banks and foreign banks with greater than 20
branches is 40% of adjusted net bank credit (ANBC).4
ANBC is whichever is higher of:
Outstanding bank credit minus certain bills and non-SLR bonds
Or the credit equivalent amount of off-balance-sheet exposure (the sum of current credit
exposure plus potential future credit exposure that is calculated using a credit conversion
factor)
The lending target for foreign banks with less than 20 branches is 40% of ANBC.4
Lending to the Ag Sector
The amount that is disbursed as loans to the agriculture sector should either be the credit
equivalent of off-balance-sheet exposure or 18% of ANBC, whichever of the two figures
is higher.
Lending to Micro- and Small Enterprises:
Of the amount targeted for micro-enterprises and small businesses, 40% should be
advanced to those enterprises with equipment that has a maximum value of 200,000
rupees, and plant and machinery valued at a maximum of half a million rupees.
Of the total amount lent, 20% should be advanced to micro-enterprises with plant and
machinery ranging in value from just above 500,000 rupees to a maximum of a million
rupees and equipment with a value above 200,000 rupees but not more than 250,000
rupees.
Lending to Weaker Sections:
The total value of loans given to weaker sections should either be 12% of ANBC (for
2023-2024) or the credit equivalent amount of off-balance sheet exposure, whichever is
higher.
Weaker sections include specific castes and tribes that have been assigned that
categorization, including small farmers.
There are no specific targets for foreign banks with less than 20 branches.
Lack of Private Bank Lending:
The private banks in India until now have been reluctant to directly lend to farmers and
other weaker sections. One of the main reasons is the disproportionately higher amount of
NPA’s from priority sector loans, with some estimates indicating it to be 60% of the total
NPAs.
They achieve their targets by buying out loans and securitized portfolios from other non-
banking finance corporations (NBFC) and investing in the Rural Infrastructure
Development Fund (RIDF) to meet their quota.
New Bank License Norms:
The new guidelines state that:
Groups applying for a license should have a successful track record of at least 10 years
and the bank should be operated through a non-operative financial holding
company (NOFHC) wholly owned by the promoters.
The minimum paid-up voting equity capital has to be five billion rupees, with the NOFHC
holding at least 40% of it and gradually bringing it down to 15% over 12 years. The shares
have to be listed within three years of the start of the bank’s operations.
Foreign shareholding is limited to 49% for the first five years of its operation, after which
RBI approval would be needed to increase the stake to a maximum of 74%.5
The board of the bank should have a majority of independent directors and it must comply
with the priority sector lending targets discussed earlier.
The NOFHC and the bank are prohibited from holding any securities issued by
the promoter group and the bank is prohibited from holding any financial securities held
by the NOFHC.
The new regulations also stipulate that 25% of the branches should be opened in
previously unbanked rural areas.
Willful Defaulters
A willful default takes place in three circumstances:
1. When a loan isn’t repaid even though resources are available
2. If the money lent is used for purposes other than the designated purpose
3. If a property secured for a loan is sold off without the bank's knowledge or approval.
In case a company within a group defaults and the other group companies that have given
guarantees fail to honor their guarantees, the entire group can be termed as a willful
defaulter.
Willful defaulters (including the directors) have no access to funding, and criminal
proceedings may be initiated against them.
The RBI recently changed the regulations to include non-group companies under the
willful defaulter tag as well if they fail to honor a guarantee given to another company
outside the group.
Banking Regulators in India:
The Reserve Bank of India regulates the banking industry, as part of its duties as the
country's central bank.
RBI Regulate Banks:
The Reserve Bank of India regulates banks through inspections carried out at bank
locations and through off-site surveillance.7
India's Bank Regulations Important:
They're important because they reflect India's desire to protect the integrity of its financial
system, to maintain trust in its banking system, and to protect its consumers from financial
fraud.
The Bottom Line
The way a country regulates its financial and banking sectors is in some sense a snapshot
of its priorities, its goals, and the type of financial landscape and society it would like to
engineer.
In the case of India, the Banking Regulation Act and the regulations passed by its central
bank give us a glimpse into its approaches to financial governance. They show the degree
to which the country prioritizes stability within its banking sector, as well as economic
inclusiveness.
Though the regulatory structure of India's banking system seems a bit conservative, this
has to be seen in the context of the relatively under-banked nature of the country. The
excessive capital requirements are needed to build trust in the banking sector. Priority
lending targets are needed to make financial inclusion available to those to whom the
banking sector generally would not lend.
Since the private banks, in reality, do not directly lend to the priority sectors, the public
banks have taken up the slack. A case could also be made for adjusting how the priority
sector is defined, in light of the high priority given to agriculture even though its share
of GDP has been going down.
For related reading, see "The Increasing Importance of the Reserve Bank of India"
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What is Commercial Bank?
A commercial bank is a kind of financial institution that carries all the operations related
to deposit and withdrawal of money for the general public, providing loans for investment,
and other such activities. These banks are profit-making institutions and do business only
to make a profit.
The two primary characteristics of a commercial bank are lending and borrowing. The bank
receives the deposits and gives money to various projects to earn interest (profit). The rate
of interest that a bank offers to the depositors is known as the borrowing rate, while the
rate at which a bank lends money is known as the lending rate.
Related link: Banking and its Type
Function of Commercial Bank:
The functions of commercial banks are classified into two main divisions.
(a) Primary functions
Accepts deposit : The bank takes deposits in the form of saving, current, and fixed
deposits. The surplus balances collected from the firm and individuals are lent to the
temporary requirements of the commercial transactions.
Provides loan and advances : Another critical function of this bank is to offer loans and
advances to the entrepreneurs and business people, and collect interest. For every bank, it
is the primary source of making profits. In this process, a bank retains a small number of
deposits as a reserve and offers (lends) the remaining amount to the borrowers in demand
loans, overdraft, cash credit, short-run loans, and more such banks.
Credit cash: When a customer is provided with credit or loan, they are not provided with
liquid cash. First, a bank account is opened for the customer and then the money is
transferred to the account. This process allows the bank to create money.
(b) Secondary functions
Discounting bills of exchange: It is a written agreement acknowledging the amount of
money to be paid against the goods purchased at a given point of time in the future. The
amount can also be cleared before the quoted time through a discounting method of a
commercial bank.
Overdraft facility: It is an advance given to a customer by keeping the current account to
overdraw up to the given limit.
Purchasing and selling of the securities: The bank offers you with the facility of selling
and buying the securities.
Locker facilities: A bank provides locker facilities to the customers to keep their valuables
or documents safely. The banks charge a minimum of an annual fee for this service.
Paying and gathering the credit : It uses different instruments like a promissory note,
cheques, and bill of exchange.
Types of Commercial Banks:
There are three different types of commercial banks.
Private bank –: It is a type of commercial banks where private individuals and businesses
own a majority of the share capital. All private banks are recorded as companies with
limited liability. Such as Housing Development Finance Corporation (HDFC) Bank,
Industrial Credit and Investment Corporation of India (ICICI) Bank, Yes Bank, and more
such banks.
Public bank –: It is a type of bank that is nationalised, and the government holds a
significant stake. For example, Bank of Baroda, State Bank of India (SBI), Dena Bank,
Corporation Bank, and Punjab National Bank.
Foreign bank –: These banks are established in foreign countries and have branches in
other countries. For instance, American Express Bank, Hong Kong and Shanghai Banking
Corporation (HSBC), Standard & Chartered Bank, Citibank, and more such banks.
Examples of Commercial Banks
Few examples of commercial banks in India are as follows:
1. State Bank of India (SBI)
2. Housing Development Finance Corporation (HDFC) Bank
3. Industrial Credit and Investment Corporation of India (ICICI) Bank
4. Dena Bank
5. Corporation Bank
Regional Rural Banks
Regional Rural Banks (RRBs) are financial institutions in India that are designed to
provide banking services in rural areas. They were established under the Regional Rural
Banks Act of 1976, with the aim of bringing banking services closer to rural and
agricultural communities and promoting rural development.
RRBs are structured as scheduled commercial banks and are regulated by the
Reserve Bank of India (RBI). They operate in a specific region, generally consisting of
districts within a state. Each RRB is sponsored by a commercial bank, which provides
necessary support and assistance.
RRBs are jointly owned by the Central Government, the State Government, and the
sponsoring commercial bank in a specific ratio. The central government holds a 50% stake,
the state government holds a 15% stake, and the sponsoring commercial bank holds a 35%
stake.
Regional Rural Banks Functions
1. Banking Services: RRBs provide banking services like savings accounts, current
accounts, deposits, and basic transactions to rural areas.
2.Credit Facilities: RRBs offer loans to farmers, agricultural laborers, artisans, and small
entrepreneurs for agriculture, livestock, machinery, housing, and small businesses.
3.Agricultural and Rural Development: RRBs support agricultural activities, rural
infrastructure development, and small-scale industries for overall rural growth.
4.Financial Inclusion: RRBs promote financial inclusion by opening bank accounts,
encouraging savings, and providing institutional credit to unbanked and underbanked rural
areas.
5.Cooperative Banking Activities: RRBs work with agricultural cooperatives and
self-help groups to provide financial support and foster cooperation among rural
communities.
6.Priority Sector: Lending RRBs prioritize lending to sectors like agriculture, micro and
small enterprises, and weaker sections of society as mandated by the RBI.
Challenges Faced by Regional Rural Banks:
Financial Viability:
Maintaining financial viability is a challenge for RRBs due to factors such as low-profit
margins, high operating costs, and loan recovery issues in rural areas.
Asset Quality:
RRBs often face challenges in managing asset quality, especially in the agricultural sector
where loan defaults can occur due to factors like crop failure, natural disasters, or price
fluctuations.
Capital Constraints:
RRBs may face capital constraints, limiting their ability to meet the increasing credit
demand in rural areas and comply with regulatory requirements.
Technological Advancements:
Adopting and integrating new technologies pose a challenge for RRBs, particularly in
remote rural areas where infrastructure and connectivity are limited.
Human Resource Development:
RRBs face challenges in attracting and retaining skilled personnel in rural areas,
which can impact their ability to deliver efficient banking services and implement effective
risk management practices.
Governance and Management:
Effective governance and management practices are essential for the smooth
functioning of RRBs. However, challenges related to governance, leadership, and internal
controls may arise, impacting operational efficiency and transparency.
Regional Rural Banks Reforms Needed:
Several committees have been constituted to recommend reforms for Regional
Rural Banks (RRBs). Here are recommendations of some notable committees:
Vyas Committee (2004):
Recommended the conversion of RRBs into full-fledged commercial banks to enhance
their financial strength and operational efficiency.
Suggested raising the capital adequacy ratio to 9% to ensure the financial stability of RRBs.
Advocated for the strengthening of governance and management practices in RRBs.
Chore Committee (2015):
Recommended measures to improve the financial viability of RRBs, including capital
infusion by the government and sponsorship by strong commercial banks.
Emphasized the need for performance-based incentives and a robust business strategy for
RRBs.
Suggested the adoption of technology-driven banking practices and enhanced risk
management frameworks.
Nayak Committee (2018):
Recommended a comprehensive reform package for RRBs, including the recapitalization
of financially weak RRBs.
Suggested consolidation of RRBs to create stronger and more sustainable entities.
Emphasized the importance of enhancing digital banking capabilities and financial
inclusion efforts.
Sudarshan Sen Committee (2019):
Recommended a roadmap for the transformation of RRBs into “Universal Banks for Rural
India.”
Advocated for the strengthening of governance, risk management, and internal controls in
RRBs.
What is Retail Banking?
Retail banking, also known as consumer banking or personal banking, offers financial
services to individual consumers rather than enterprises. Customers can manage their
money, get credit, and deposit money safely and securely when via retail banking services.
In the United States of America, commercial banks are also called retail banks, and
investment banks can only invest money in market operations.
Since this demarcation was done away with in the 1990s, commercial banks now handle
deposits and loans from corporations and other large businesses. In contrast, retail banks
handle deposits and loans for regular consumers.
How does Retail Banking Work?
Retail banks offer a wide range of services to the general public, such as bank
accounts, fixed deposits, credit and debit cards, loans, etc. These services help people
efficiently manage their finances. Retail banking services, like deposits and withdrawals,
can be done both online and at the bank branch.
Online retail banking has made it easier for individual consumers to avail of home loans,
personal loans, car loans, open fixed and recurring deposits, transfer money, etc. However,
the range of services and products offered could vary from bank to bank.
Example of Retail Banking
Let’s say you are going to a bank with the sole intention to deposit money. In the bank, you
come across a bank representative. The representative tells you some of the lucrative
investment schemes available. You get impressed and you invest a certain sum in the
scheme. Simultaneously, the representative tells you about a senior citizen FD scheme.
Since, FD interest rates are higher than that of normal FD schemes, you open an FD account
for your parent or any relative.
All these facilities or services fall under retail banking.
Types of Retail Banks:
The following types of retail banks can be categorised under them:
1. Large Bank
These are well-established banks having a national presence. Retail consumers trust these
banks because of their prominence and the variety of services.
2. Community Bank
Community banks offer loans and depository services and mostly operate in a smaller
geographical area.
3. Online Bank
Online banks offer digital-only products and services. You can access their products via
computer or mobile device.
4. Regional Rural Bank
These banks were set up in rural areas to serve the needs of people living in rural areas.
Such banks are mostly present in Tier 2 , Tier 3 and Tier 4 cities.
5. Post Office
Post office offers depository and other savings schemes. People living in the rural area
prefer post office services due the age-old trust built by the institution.
Types of Retail Bank Services and Products
Some of the services and products offered by retail banks include:
1. Bank Account Opening
Checking accounts, savings accounts, and retirement accounts are just a few of the different
types of bank accounts that you can have via retail banking services. Certain banks let you
open a zero-balance savings account where there’s no cap on minimum account balance.
2. Deposits
You can open a fixed deposit (FD) or recurring deposit (RD) account via retail banking.
FDs are a preferred choice for risk-averse investors due to assured returns and interest rates
that are higher than savings accounts. NRIs also have the option to open NRE, NRO or
FCNR accounts.
3. Loans
You can get home loans, personal loans, two-wheeler loans, auto loans, etc., via retail
banking. In case you were looking for a home loan or an instant personal loan in a 100%
paperless way, download the Navi app.
4. Cards
Debit cards and credit cards are the two most popular cards offered by most retail banks in
India. Other than these, there are Prepaid cards, No-cost-EMI cards, etc.
5. Investment and Insurance
Retail banks also offer other investment avenues like mutual funds, NPS, etc. Similarly,
some retail banks also have an insurance arm through which you can buy a general health
insurance policy.
6. Other Services
Other services include money transfer, account balance check, issuing cheque books,
setting up auto debit or standing instruction to pay EMIs, card upgrade request, utility bill
payment, bancassurance, safe deposit lockers, demat account, demand draft, etc.
Retail Banks Generate Income:
Retail banks receive money from their customers’ deposits. These banks use the deposited
funds from clients to lend money to clients who want a loan at a higher interest rate on the
principal amount compared to the interest rate it offers to depositors. This difference in
interest rate spread is how retail banks make profits.
Retail banks also generate income from fees on various services, including account opening
charges, brokerage fees, loan processing fees, credit card charges, etc. as well as from their
investments and services in the capital markets.
In India, the Reserve Bank of India (RBI), regulates the functioning of all retail banks. It
has the power to regulate the funds that retail banks are required to hold as deposits with
them, which ensures that anyone can make withdrawals. In addition, it provides funds for
banks for their daily functioning.
Retail Banking vs. Corporate Banking:
Retail banks are customer oriented whereas corporate banks cater to businesses. The
various products these two banks offer their consumers are also very different. The retail
bank provides services to individuals and small businesses but not to large enterprises.
In retail banks, financial transactions are much smaller than in corporate banks and they
make most of their profits by creating a margin between the interest it receives from
borrowers and the interest it pays to depositors.
On the other hand, corporate banks make profits primarily by charging interest and fees for
the services they provide to large businesses. These banks also provide investment banking
services to the general public, as well as asset management services.
Benefits of Retail Banking:
Here are some of the benefits of retail banking:
1. Offers individual customer services with the help of a relationship manager
2. Multiple products and services under one roof – from deposits to loans
3. Deposits like FD offers guaranteed returns
4. Innovative products that can be accessed easily via net banking
5. Home to thousands of banks and NBFCs
6. Access personal finance products from anywhere, anytime
What is financial service marketing?
Financial service marketing is the process of promoting the products and services of a
financial services firm. Marketing efforts for any company typically have the goals of
raising brand awareness, attracting customers, making sales and generating revenue. Here
are some examples of financial services firms that may benefit from marketing:
Commercial banks
Credit unions
Financial planning firms
Accounting firms
Investment banks
Insurance companies
Brokerage firms
Mutual funds institutions
These organizations may aim to help customers by providing support services, such as:
Banking
Loans
Wealth management
Insurance
Financial advice
Stocks and investments
Accounting and bookkeeping
Tax consulting
Who uses financial services?
Financial services are useful to a variety of institutions. This is because many organizations
and agencies, whether for-profit, nonprofit or government, require funds and resources to
operate. Financial service businesses have teams of experts in complex financial and
economic matters and can help companies or individual clients with managing money and
capital responsibly. Marketers for finance businesses can create content for specific target
audiences to capture attention and attract clients. Here are some common clients of
financial service firms:
Individual customers: Many people use financial service firms like banks daily to save
and transfer money, take out and pay back home and auto loans and make investments.
Commercial businesses: These clients may pay financial services companies to manage
their books and ensure adherence to tax and other business-related financial laws and
regulations.
Health care facilities: Health care facilities often work with insurance companies and
other financial institutions to process insurance claims and transfer payments for services
rendered.
Educational institutions: Schools, colleges and universities may require the services of
accounting firms and other finance businesses to keep track of school expenses and support
the finances of staff and students.
Financial service marketing:
1. Digitization:
Providing digital products can help you market your financial services and gain
more customers. For example, you might develop a mobile app for customers to sign in to
online accounts, view their finances, gain customer support, schedule services or make
purchases from their phones or tablets. Along with increasing convenience for both
customers and employees, digitization can help to keep sensitive financial information safe.
2. User experience:
Optimizing user experience means making it easy for users to navigate a business's
digital resources. Ensuring a company's website, app and other resources are free of errors
is critical to maintaining customers. By offering a high-quality user experience, you can
convince customers of the superior quality of your financial products and services.
3. Social media marketing:
Many modern consumers use social media daily. Advertising your finance business
services on various social media platforms can reach a large variety of audiences and
encourage people to visit your website, explore more about the business and even make
purchases. Make sure to include easy links to email lists, apps and other financial resources
so customers can navigate from social media apps to the business.
4. Education:
Providing educational materials to customers can be a great way to promote your
services and raise awareness of your brand. Consider publishing articles, infographics and
ebooks about popular financial topics to help customers learn about finance and discover
the business. Answering questions and providing information can help teach customers the
importance of your services.
5. Customer support:
Develop ways to provide customer support and help consumers with the unique
issues they may be experiencing. Many companies hire specific team members to work in
customer support departments, answering calls and responding to messages. Strong
customer and technical support can show customers you care about their needs and
encourage them to continue using your services.
6. Data analysis:
Data analysis is the process of gathering and assessing large amounts of information
to gain actionable business insights. Financial service companies can track customer data
to determine customer behaviors, needs and feelings. Then, marketers can collaborate with
product development teams to solve any issues, optimize services and provide more value
to customers.
7. Customer outreach:
Customer outreach is the process of communicating with customers and trying to
increase customer engagement rates. Initiating a relationship with customers can help raise
awareness about a business, encourage customer loyalty and improve customer retention
rates. Financial service firms can perform outreach by offering resources like free
consultations, webinars or financial management programs. They can also engage
customers through email marketing strategies, like mailing lists.
8. Relationship-building:
Beyond digital engagement, financial businesses can practice relationship-building
to connect with customers personally. As a marketer, salesperson or account manager,
consider reaching out to customers personally to schedule meetings. These meetings could
be to answer questions, give sales pitches or discuss business in general. Client
relationship-building can occur over lunch and dinner dates, sports games or other social
activities.
9. Customer feedback:
Customer feedback is essential for gauging customer satisfaction with a company's
products and services. Conducting surveys over social media, email or in person can help
you gather qualitative and quantitative data. You can then use this data to develop relevant
promotional material.
10. Creative marketing:
Being creative is key to setting your marketing campaigns apart from competitors.
Consider promoting your business mission and characterizing your brand with a specific
social goal. Then, create and deliver emotional and powerful stories that display the
company's work to reach this goal.
Unit-III
Hospital Services:
Overview
India’s healthcare system has undergone major changes in recent times and has
become one of the largest industries in terms of employment and revenue. Indian healthcare
systems consist of two major components namely; Public (or the Government) and Private.
The government or the public healthcare sector consists of few secondary healthcare
institutions in few major cities focussed to providing basic healthcare by setting up
community-level healthcare centers mostly in the rural areas. While the private sector
largely concentrates in metro, tier I and tier II cities. India has a large number of well-
specialized medical personnel in various medical fields which gives it a competitive edge.
India is also cost effective when compared to other countries in Asia and in the West.
The Healthcare Industry in India is segmented as;
Hospitals
Pharmaceuticals
Diagnostics
Medical Equipment and Supplies
Medical Insurance
Telemedicine
Healthcare Market Size in India
The Healthcare Industry in India was estimated at INR 18.8 trillion and it is expected to
reach INR 25 trillion by 2022. The industry is expanding at a CAGR of 22% till 2022.
Competitive Landscape
India’s healthcare industry is primarily dominated by hospitals that accounts for
approxiamtely 80% of the total market. The increase in medical tourism is paving a way
for foreign investors to invest in Indian healthcare industry. Some of the leading hospitals
include; Apollo, Aster DM Healthcare and Fortis Healthcare. As the world is becoming
digitalized, we see a lot of new players entering the digital healthcare space in the country.
Some well known players are; Practo, 1MG, Pharmeasy, Netmeds, Medlife and Lybrate.
We see a fierce competition in the healthtech companies as more people are adapting to the
technology enabled healthcare services.
Growth Drivers for Indian Healthcare Industry
Favourable Government Initiatives & Policy
Pradhan Mantri Jan Arogya Yojana (PMJAY) was launched in 2018 to provide health
insurance worth INR 500,000 to over 100 million families every year.
Ayushman Bharat-National Health Protection Mission was approved to cover secondary
and tertiary care hospitalization of poor and vulnerable families in the country.
Mission Indradhanush was introduced in 2014 aimed to achieve 90% full immunization
coverage for all children upto two years of age both in rural and urban areas.
The government of India approved a 100% FDI in Greenfield and Brownfield projects.
Single window clearance e-portal to improve ease of doing business in the country.
Medical Tourism
Over the years, India has transformed into a top-tier destination for medical tourism. Low
cost of medical treatment is the major reason that motivates many tourists to visit India for
their medical assistance. Also the process to obtain a visa is much more efficient when
compared to other countries.
Rising Minimally Invasive Procedures
An increasing number of hospitals are transitioning towards minimally invasive surgeries
in recent times. These surgeries benefit the patients by early discharge from hospital and
return to normal life and for the hospitals with higher profitability.
Changing Disease Profile
Increasing prevalence of life-style and non-communicable diseases such as diabetes,
cardiovascular diseases etc among young adults may fuel the demand for healthcare in the
country.
Increased Affordability
The rapidly growing middle class population, their rising income levels and awareness
increases the demand for better healthcare services.
Challenges for Indian Healthcare Industry
Low Spending on Healthcare
Indian government’s spending on healthcare still remains a major challenge for the
industry. According to the 2021 budget, public expenditure stood at 1.2% of the overall
GDP of the country. This is too low when compared to WHO’s recommendation of 5%.
Inadequate Healthcare Infrastructure
Being the second most populous country in the world, the current healthcare infrastructure
is insufficient to meet the demands of the expanding population. Lack of well-equipped
medical institutes burdens the industry. Also, the doctor-population ratio is 1:1456 against
1:1000 recommended by WHO. The country faces a severe shortage of doctors and
specialists especially in the rural areas and makes it difficult for healthcare to reach every
citizen.
Low Insurance Penetration
Over 80% of the population in India is not covered under health insurance and due to this
the economically backward people are not able to access proper healthcare.
Indian Healthcare Industry
The healthcare industry has been at the epicenter of the coronavirus pandemic.
Similar to other industries in the country, it also faced severe challenges. The private
healthcare sector that accounted for a major portion of inpatient care faced various
challenges due to changing government regulations, increasing cost of human resources,
high procurement cost of medical consumables & disposables, unreasonable price caps etc.
Although, majority of the people prefer private healthcare over government healthcare,
privately run hospitals suffered massive losses during the pre-covid times and now the
situation has turned worse leaving hospitals with uncertainty on profitability for the post-
covid period. According to FICCI, footfall & test volumes declined by 70-80 per cent and
the healthcare sector in India witnessed a revenue drop of 50-70 per cent by end of March
2020.
ADVANTAGE INDIA
ROBUST
DEMAND
*The Medical Tourism sector is predicted to increase at a CAGR of 21.1% from 2020-27.
*The travel market in India is projected to reach US$ 125 billion by FY27 from an
estimated US$ 75 billion in FY20.
*International tourist arrivals are expected to reach 30.5 million by 2028.
ATTRACTIVE
OPPORTUNITIES
*India is geographically diverse and offers a variety of cultures that come with its own
experiences, making it one of the leading countries in terms of international tourism
expenditure.
*Travel and tourism are two of the largest industries in India, with a total contribution of
about US$ 178 billion to the country’s GDP.
*The country’s big coastline is dotted with attractive beaches.
POLICY
SUPPORT
*US$ 2.1 billion is allocated to Ministry of Tourism in budget 2023-24 as the sector holds
huge opportunities for jobs and entrepreneurship for youth. Rs. 2400 crores (US$ 289.89
million) allocated to the Ministry of Tourism as the sector holds huge opportunities for jobs
and entrepreneurship for youth.
*Under the Union Budget 2023-24, an outlay of US$ 170.85 million has been allocated for
the Swadesh Darshan Scheme.
*68 destinations/sites have been identified in 30 States/UTs for development under the
PRASHAD Scheme as on March 31, 2022.
DIVERSE
ATTRACTIONS
*India is geographically diverse and offers a variety of cultures that come with its own
experiences, making it one of the leading countries in terms of international tourism
expenditure.
*Travel and tourism are two of the largest industries in India, with a total contribution of
about US$ 178 billion to the country’s GDP.
*The country’s big coastline is dotted with attractive beaches.
Last updated: Oct, 2023
Hospital Supportive Services:
1. Outpatient Services:
Walk-in health care is given to patients who are most certainly not confined to bed and can
be treated at a general hospital, a specialised hospital, or a welfare hospital. When such
care is rendered at premises which are a piece of a hospital (outpatient division), then they
are called outpatient care. Furthermore, the management stemming from it is named
outpatient services. Outpatient division is characterised as a section of the hospital with
designated physical offices, medicinal staff, regular planned hours, to give care to patients,
who are not enlisted as inpatients. Size and importance of outpatient services A survey of
the rank of outpatient services provided by medical facilities in India requires attention.
2.Nursing Services:
Nursing services stand out amongst the most critical services of medical facility.
Nursing services in a more extensive setting is that part of the complete healthcare
management, which intends to fulfil the nursing needs of the network, the significant
targets of which are:
Nursing care required for the prevention of sickness and improvement of
well-being.
3.Radiology and Imaging Services:
It goes without saying that the technical aspects of hospitals are of immense value.
With out its aid, the whole healthcare system will be on the road to ruin. Thus,
services like Radiology and Imaging holds especial place in the scheme of healthcare.
The modern drug can’t be prescribed without certain insights. Radiology or
Radiodiagnosis is one such vital division of the hospital, which clearly contributes
to the patient’s care. It gives, alongside pathology, an essential demonstrative
reinforcement to every one of the specialities which can’t work successfully without
its help. Consequently, the organisation turns into a necessary part with everything
being the same except for little hospitals and nursing homes. Radiology has
immensely expanded in the recent decades. The term imaging includes:
X-Ray
Ultrasound
CT Scan
Magnetic Resonance Imaging (MRI)
Digital Subtraction Angiography (DSA)
4. Laboratory Services:
Similar to the radiology and imaging department, laboratory services too are
indispensable part of the hospitals. The whole healthcare system rely on it to diagnose the
patients’ ailments correctly and treat them successfully.
5. Pharmacy Services:
Purchasing medicines and keeping up an excellent stock of medications,
manufactured substances, and chemicals render a considerable amount of cash, next to
compensations and wages. Around 20 percent of the hospital costs are represented by drugs
and pharmaceutical supplies. Accessibility to the correct medication at the required place
at the critical moment is the means to the hospital’s existence.
6.Administrative Services:
For any organization to work properly, its administration should be well-oiled
machinery. This is especially true for hospitals. It is extremely important for the proper
functioning of a hospital.
7.Hospital Linen Services:
Quality bed material, arrangement of good, clean cloth for patients and continuous
supply of required material to wards and departments positively affect the image of a
hospital. However, because of insufficient availability of Operation Theatre material and
complaints of inadequately washed and rarely changed bed cloth by patients can be often
heard in hospitals.
8.Hospital laundry services:
The services rendered by a hospital laundry are drastically different from a
commercial laundry. A commercial laundry is responsible for household laundry, which
include massive amount of material that must be assorted, pressed by hand, NOTES Self-
Instructional Material 15 Principles and Methods of Organising Hospital Support Services
and arranged. Then, again a hospital also has a pile of clothes, for example, sheets, covers,
clothes, and towels, which require no work or planning.
9.Dietary Service:
This offers a variety of food items which are hygienically prepared and served. A
spacious canteen which is capacious to accommodate many people to dine is the Favorite
food corner of the staffs, patients and bystanders as it offers food items at an affordable
cost. It takes special consideration of the dietary nature of the patients and offers them such
desirable prepared food particulars.
General Acts/Legislations for Hospitals:
In order to secure hospitals’, hospital staff’s, as well as patients’ rights, certain acts
were imposed. These acts were meant to bring justice to the victims and avoid wrong
conviction. Some of these acts are: I. Industrial Disputes Act, 1948:
Under this act, clinics were incorporated under the term ‘business’. The Industrial
Disputes Act is relevant, where the number of workers is at least 50. It provides a method
to deal with disputes emerging in a modern organisations. A 1982 alteration to the act
exempted hospitals and dispensaries, among others, from the purview of the act,
nevertheless, this arrangement was revoked by a revision in 1984. The administration has
now an extensive enactment under its effective idea to manage modern disputes. II.
Minimum Wages Act, 1948:
Under this act, minimum wages are fixed for various classes of labourers.
III. Employees’ Provident Fund Act, 1952:
The clinics as businesses are required to contribute an equivalent sum as the
employees’ salary and acknowledge the reserve consistently for the government. It is
relevant to hospitals if the number of employees is more than twenty. Violation of this act
is can lead to imprisonment.
IV. The Payment of Bonus Act, 1956:
This act is pertinent to hospitals with at least forty workers. Welfare or non-profit
hospitals are exempted from this act.
V. The Payment of Gratuity Act, 1972:
Gratuity is payable to workers for each finished year of service at the time of his or
her retirement or demise. This act is applicable, where there are at least 10 surgeons and
applied on those who have finished five years of service (or at least one year if there they
died).
VI. The Payment of Wages Act, 1936:
This act ensures that the employees are paid on time without any illegal deductions
from their salaries. VII. Indian Medical Council Act, 1933: Indian Medical Council Act,
1933 sets out the code of morals for medical surgeons and directs medical education. State
Medical Councils built under the act have the same responsibility in their respective states.
Apart from that supporting hospitals is partly administered by the IMC act.
VIII. The Indian Nursing Council Act, 1947:
Indian Nursing Council Act, 1947 sets out the instructive models and necessities for
enrolment of medical caretakers.
IX. The Pharmacy Act, 1948:
The Pharmacy Act, 1948 manages the foundation of drug stores and medication
stores. A hospital needs to procure a medication permit if it sells drugs over the counter,
where only a pharmacist can be utilised for distributing medications.
The Medical Staff Organization (MSO)
Medical staff members are those licensed healthcare providers (physicians, nurses, allied
health professionals, and other healthcare workers) who are authorized by the state law and
hospital’s bylaws to provide medical care within a healthcare establishment.
In most hospitals, these healthcare professionals are organized into a medical staff
organization to promote patient safety and clinical performance accountability.
Members of medical staff organizations perform significant functions in the hospitals,
despite most being independent medical practitioners and aren’t full-time hospital
employees.
The core responsibility is to provide the best quality patient safety and care.
The members are free to act as a team to communicate with staff leaders and the governing
board regarding matters concerning the organization and the staff.
Medical Staff Leaders’ Responsibilities
Medical staff leaders are responsible for the leadership and management of a medical
organization.
To lead effectively, practice managers and leaders must:
Fully understand their roles to avoid mediocre or poor leadership. Get educated, attend
medical and leadership seminars, conferences, programs, and read relevant materials.
Be goal-oriented. Create goals that will boost excellent patient care and satisfactory patient
experience.
Take necessary actions to solve problems. A wise staff leader doesn’t wait for an issue to
go away on its own. He or she knows when and how to implement viable solutions to
address the problem.
Lead by example. Be a role model to fellow staff leaders and members.
Develop a great working relationship with fellow staff leaders and members. Motivate the
members and leaders to work together harmoniously towards healthcare success.
Stand firm on decisions concerning patient care and safety. The members of the medical
staff organization rely upon the staff leaders for their firm decision-making skills.
Healthcare leaders don’t back down on issues that are critical to achieving quality patient
care.
Promote teamwork. A wise medical staff leader does not do everything on his or her own.
He or she encourages everyone to initiate working on necessary tasks and support them
with appropriate resources.
Manage efficient and effective meetings. The objectives and outcomes of these meetings
are critical to the success of the entire organization and its journey to better patient care.
Be open to new ideas. Changes are inevitable to every organization. Be open to your staff
members’ ideas, suggestions, and concerns. Listening to their voice and implementing
necessary changes or improvements can make progressive impacts on your hospital and
medical staff organization.
Just be mindful during the decision-making and implementation processes. The plan should
be well-thought-out, achievable, and equipped with the right resources.
Here are the usual leaders of a medical staff organization.
Board members:
The Board of Trustees is the executive committee governing the medical organization.
They are responsible for the establishment and implementation of the hospital’s bylaws,
policies, medical state laws, and regulations.
The board members are expected to be ethically, financially, and legally responsible for the
overall operations of the medical establishment.
Hospital Administrator
The Hospital Administrator (also known as the Hospital Director, Executive Director,
President, or Chief Executive Officer) is responsible for the creation and up-living of the
organization’s vision and mission.
He or she oversees the day-to-day management of the hospital, ensures budget, maintains
good relations between medical staff, and reports and carries out the directives given by
the Board of Directors.
Second-level managers
The second-level managers typically include the following:
The Chief Operating Officer (COO), also known as Vice President of Operations.
Responsible for the day-to-day operations of the medical organization.
The Chief Financial Officer (CFO), also known as the Vice President of Finance.
Responsible for the management of the hospital’s finances.
The Director of Nursing (DON), often known as title Associate Director of Nursing. In-
charge of the overall supervision of patient care within the hospital.
Chief of Staff :
The Chief of Staff is the head of the medical staff. He or she is expected to have good
leadership and guidance, and promote effective communication and relationships between
the members of the medical staff organization, including the board members and hospital
administrators.
Before assuming the role, the Chief of Staff must be a dynamic member of a medical staff
organization and has enough training and experience in both medical administrative
activities and leadership.
Director of Medical Staff Services:
The medical staff services is a department that supports medical staff organization
activities. They are headed by the director of medical staff services (DMSS).
The DMSS leads, manages, and oversees operational medical staff service. He or she works
collaboratively with other medical staff leaders to plan, organize, direct, and coordinate
activities that will support the organization to attain goals and realize plans.
The director has to obtain and maintain knowledge relevant to credentialing, accreditation
requirements, etc. to ensure that the organization is following the relevant regulatory and
accreditation bodies.
Responsibilities of Medical Staff Members:
Most medical staff members are healthcare professionals who examine, diagnose, treat and
prevent injuries, illnesses, and other impairments.
There are also staff members who didn’t receive medical school education but are equipped
with knowledge and skills beneficial to a healthcare facility.
Medical staff members should be equipped with the following qualities:
Empathy
Emotional stability
Attention to detail
Communication and interpersonal skills
Team player
Problem-solving skills
Technical skill and knowledge
Motivational skills
Here are the common members of a medical staff organization:
Doctor/Physician:
Doctors are the medical staff that assesses and manage patients’ medical care. Their roles
and responsibilities vary depending on their medical specialty and level of experience:
These roles include:
Senior consultants (medical officers) – Specialist doctors who see patients and attend
meetings at specific times.
Registrars – Senior physicians who oversee residents, interns, and medical students on-
site.
Residents – Ward-based physicians who are also in training for a medical specialization
Interns – Medical students who have completed their studies and are now finishing their
final year in the hospital.
Medical students – Undergraduate students specializing in healthcare.
Nurses:
Nurses manage most of the ongoing treatment and care in a healthcare facility. Their
common responsibilities involve the assessment, planning, and administration of day-to-
day patient treatment and health management.
Patients commonly ask assistance from nurses to attend to their immediate needs,
especially when the assigned doctor isn’t around.
Similar to physicians, nurses have different roles and responsibilities based on their
experience and specialties.
These roles include:
Nurse Unit Manager who heads and runs the ward.
Associate Nurse Unit Manager who assists the nurse unit manager in running the ward and
acting as the manager when the nurse unit manager is not around.
Nurse Practitioners are the highly-skilled nurses with advanced levels of training.
Specialist Nurses, such as clinical nurse specialists, clinical nurse consultants, clinical
nurse educators, triage nurses, emergency department nurses
Registered Nurses provide quality day-to-day care and perform some minor procedures to
a patient.
Enrolled Nurses to provide basic medical care under the guidance of senior nurses.
Allied Health Professionals:
Allied health professionals are the expert practitioners who work as part of a
multidisciplinary medical staff organization. They are responsible for the assessment,
diagnosis, and treatment of conditions and work to prevent disease and disability.
Some allied health professionals also have trained allied health assistants to support them
in their role.
Examples of allied health professionals include:
Dietitians
Occupational Therapists
Social Workers
Interpreter
Pharmacists
Physiotherapists
Radiology Technicians
Patient Care Technicians
Podiatrists
Speech Pathologists
The Procedure for Hospital Set Up in India
Registration under the clinical establishment act, 2017
This act was enacted by the central government and is being adopted by states of India. It
needs a one-time registration for a premise towards being operated as a hospital. The
registration must be done by the respective state government that has adopted this act. For
registration, hospitals should fulfill the minimum requirement under the category in which
it falls. Each state has described the procedure of registration of the hospitals that fall within
their territory.
Sewage:
Well planned sanitary measures for disposal of waste as well as drainage system which
includes tanks, pipelines, etc. and permission from the local authorities should beobtained.
Biomedical Waste:
The large hospitals must have an incinerator for disposal of bio-disposal waste, for
instance, body parts or tissues. A smaller hospital is not able to afford such cost and it needs
minimum space and additional machinery installations which are expensive for a small
hospital set up. The Municipal corporation permission would also be required for such
disposal of waste and it must not be harmful to the people living at a nearby location.
Fire and Health License:
Approval of Fire Department is required for a large hospital as well as ahealthcertificate
from the local authority after installation of all the beds and equipment within the Hospital.
A NOC from Fire the department shall also be required for small hospitals and it would be
the responsibility of the hospital management to prove that the hospital would not cause
any harm or loss of life and requires to be procured from the local municipal council.
SignBoards:
Rules for the size, contents as well as the correct place for signboards (IMC
Regulations2002)
Information that requires be displayed at the Hospital are:
1. Certificate of registration of hospital with the municipal authorities
2. IMC/SMC registration certificate (IMC Regulations, 2002)
3. Charges for consultation as well as other procedures/services (IMC Regulations 2002)
4. Clinic timings, closed days
The size of a hotel‘s sales and marketing staff can vary from one part time person
to more than a dozen full-time employees. In smaller properties, the general manager often
serves in all the sales and marketing roles. In larger hotels, the sales and marketing
responsibilities are typically divided into four functions: sales, convention services,
advertising, and public relations. The primary goal of the division is to promote the sale of
hotel products and services.
8.Engineering and Maintenance Division:
A hotel‘s engineering and maintenance division is responsible for maintaining the
property‘s structure and grounds, as well as electrical and mechanical equipment. This
division may also be charged with swimming pool sanitation, parking safety equipment
comes under this division as well. The front office must efficiently exchange information
with a representative of the engineering and maintenance division to ensure guest
satisfaction. A guest complaint about a leaky faucet, malfunctioning lamp, or sticking lock
should not rest with a front desk agent but should be written up and quickly relayed to
engineering and maintenance staff for corrective action. Conversely, front desk staff must
be informed quickly about maintenance problems that render a room unsuitable for sale.
They also must be informed when the room becomes ready for sale again.
9.Security Division:
A hotel‘s security program is strongest when employees outside the security
division participate in security efforts. For example, front desk agents play a critical part
in key control by issuing room keys to registered guests only.
10.Other Divisions:
Many hotels staff a variety of other divisions to serve the need of their guests. The
range of possibilities reflects the diversity of hotels. Retail Outlets: Lodging properties
often establish gift shops, newsstand, or other retail outlets in their lobbies or public areas.
Recreation: Some hotels – primarily resort – staff a division dedicated to providing group
and individual recreational activities for guests. Some recreation divisions also undertake
landscaping, the grounds and maintaining the pool., golf, tennis, bowling, snorkeling,
sailing, walking tours, bicycle trips, horseback riding, hikes, and other activities may be
arrange by recreation division staff. Casino: Casino will have a casino division that
operates games of chance for guest and protects the property‘s gambling interests.
Accommodation Management:What is a property or Accommodation management
system?
A property management system (PMS) is software that facilitates a hotel’s reservation
management and administrative tasks. The most important functions include front-desk
operations, reservations, channel management, housekeeping, rate and occupancy
management, and payment processing. Although PMS software mostly controls
reservation and financial transactions, it may allow you to manage housekeeping and
perform human resources management as well. In general, PMS facilitates the main
processes in a hotel related to internal and external operations.
However, technology innovations have found their way into the hospitality industry. In
2015, a report “Hotel Management Software BuyerView” by Software Advice showed that
only 34 percent of hotels used special software, while 25 percent still relied on pen and
paper only to manage their hotels, and 16 percent had no hotel management system at all.
Today, according to the Stayntouch 2022 Technology Sentiment Report, 81.7 percent of
hotels have implemented at least one type of technology during the pandemic.
Hoteliers started looking for innovative solutions such as self-service check-in, in-room
controls, mobile keys, and digital payments. Many big players have already
implemented smart technologies based on the Internet of Things infrastructure. But there
are still a lot of legacy systems in use.
Legacy PMS software may perform just one function, require additional modules, or be
too hard to integrate with other necessary hotel management software. Consequently, hotel
owners are looking for a universal, one-and-done solution to manage all the processes.
Over 80 percent of respondents to the 2022 Hotel Technology Survey reported that they
want to learn more about technology.
Currently, hotel property management systems are used by big hotel chains, small hostels,
and everything in between. With these systems, hotels can see the booking status of rooms
and control reservations. However, their functionality doesn’t end here. Via PMS, hoteliers
can manage back-office processes, food and beverage services, and track room occupancy
rates. Let’s take a closer look at the most common functions supported by PMS.
Main modules of property management systems
A modern property management system combines multiple work environments in a single
piece of software. Depending on the provider, the combination of modules and functions
can vary, and the functionality of one module can be slightly different. Additionally, some
vendors sell their systems in separate modules that can be integrated with an existing
solution used by a hotel. Here is the basic structure of a hotel PMS.
A general structure of property management system
Keep in mind that it is hard to divide the functions of PMS into more and less important
because all of them are necessary. However, regardless of a property type, hotel property
management systems must have a reservation system with a website booking engine and
front-desk operations module. Other essential modules usually include channel
management, revenue management, housekeeping, customer data management, report, and
analytics. And big hotels or resorts certainly need point-of-sale (POS) services and back-
office modules.
Reservation
For a modern hotel business, online bookings are in most cases the main sales channel. The
reservation module, which helps manage online bookings, effectively becomes
indispensable to a property management system. A central reservation system (CRS) or
any other reservation platform may be available as a separate module of PMS or
implemented as a hotel’s separate internal solution.
A hotel reservation system holds all inventory data and dates, sending this information to
the front desk. The reservation system must be integrated with the website booking engine
and other distribution channels. Chain hotels usually have one central reservation system
for all properties, while independent hotels have their own reservation systems. If a hotel
or a hotel chain already uses a particular reservation software, PMS must offer integration
with the existing service.
Some property management systems also offer integration with self-service check-in
kiosks or allow checking in or out via QR code. To get a better idea of check-in automation,
have a look at how Marriott and other businesses leverage digital self-services in travel.
Room status. Using a front-desk module, the front-office manager can access room status
and up-to-date information about all reservations, both current and upcoming. With the
help of this module, room status should be updated quickly. The front-desk module
allocates rooms automatically and facilitates a room change.
Keys management. This module includes management of electronic key cards, processing
payments and issuing receipts to guests.
Daily audits. The front-office module also allows users to perform night and shift audits.
In-room controls. As hotels become smarter and more tech-driven, room management
gains more importance since this module also helps operate the in-room automated systems
(e.g., lights, HVAC, etc.) remotely to make the room ready for a guest’s arrival.
Channel management
Channel management software is a single interface to control and distribute inventories
across different channels such as GDSs, OTAs, wholesalers, direct booking platforms, etc.
A channel manager connects directly to a central reservation system that holds information
about the availability and cost of hotel rooms, sharing this information via the distribution
channels. It makes room inventory available to travelers who want to book a room or
property online, listing rooms on different sources. Also, a channel management module
facilitates booking-related transactions.
Different distribution channels expose inventory to different audiences. For example,
connection to OTAs and some airline websites allows a larger number of potential guests
to be reached, those who book flights or plan trips in advance. Metasearch sites compare
prices across different channels, letting a customer make the best decision. Connections to
GDSs assist non-leisure traveler booking as well as group reservations.
Direct distribution via booking engine
An important channel of distribution is a hotel's own website with a booking engine. An
online booking engine allows travelers to complete reservations directly via a hotel website
bypassing travel agents and OTAs.
It’s important to allow loyal guests to book directly, and website booking must be available
to those who find a hotel online. A booking engine must be synchronized with the hotel
website and its central reservation system, making it an additional sales channel. Usually,
this module processes payments via integrated payment gateways.
As studies prove, the majority of hoteliers realize the importance of revenue management.
2022 research by tech provider Duetto showed that 67.6 percent of respondents currently
use a revenue management system and 77.6 percent expect their hotel tech investments to
increase in the next three years.
The revenue management module of the PMS helps increase total room revenue using
machine learning to forecast occupancy rate and decide whether to raise or lower inventory
prices.
It also enables dynamic pricing. Using algorithms, this module helps hotels price the rooms
based on historical data about past reservations as it monitors competitors’ rates, weather
data, and local events. It improves pricing strategies, and updates prices across all
distribution channels to sell more rooms at the optimal rate. To learn more about revenue
management read our article on how machine learning redefines revenue management in
the hotel industry.
Housekeeping
A PMS housekeeping module connects housekeeping staff to the front office. A front-
office manager can make a list of tasks to assign, and housekeepers can update room status.
If this is a cloud-based PMS, housekeepers can update the status of their assignments or
rooms through a connected mobile app or tablet. Also, this module keeps the list of
maintenance tasks and reports for the users.
The main function of this module is housekeeping management and property maintenance.
Housekeeping functionality includes room status management, maid assignment for room
cleaning based on a block or floor location, and keeping lists of tasks for housekeepers.
Maintenance management keeps the record of hotel disruptions and repair activities with
the further assignment of an attendant who can eliminate a problem.
CRM and customer data management
It is critical for hoteliers to collect and organize guest data to keep in touch with current
and past customers during and after check-out. The CRM module must integrate with the
front desk and reservation system, collecting all guest information from these sources. It
helps store guest data and provides a database in an accessible format. Also, it includes
guest contact information before and after their stay. However, if a hotel already has its
own CRM system, the PMS should integrate with it.
This module can also help organize marketing activities such as promotions, measure guest
experience, and automate pre- and post-stay services. The CRM module helps owners
personalize the guest experience with membership and loyalty programs, which are
especially important for hotel chains and resorts.
Reports and analytics
To monitor current processes and understand business performance, all business owners
rely on analytics. A PMS can serve as a business intelligence tool, collecting relevant hotel
data and providing hoteliers with various types of automated reports. Depending on the
software, it can generate night audit reports, room and tax reports, shift audit reports,
departure/arrival reports, housekeeping reports, or other ongoing summaries.
Back-office management
This PMS module facilitates management of a hotel team, back-office operations, and
administrative hotel operations. Functions of a back-office management module may
include
Event management (conference and reception organization) and catering,
Spa and gym management (sometimes it’s a separate, optional module),
Staff management (human resources management in back and front office: shift
management, staff invoicing, etc.),
Consumption costs and hotel spendings analysis,
Inventory analysis,
Sales and management of promotional campaigns, and
Reviews management.
So the back-office module facilitates internal operations, helps organize staff, and often
includes accounting and other financial-related functionality.
Point-of-sale services
Most hotels have some kind of in-house restaurant, not to mention properties with gyms
and spas. So, if there are multiple payment terminals in a hotel, the point-of-sale (POS)
system is indispensable to collect and accurately handle transactions from different
sources. With a POS module in their PMS, hoteliers can include additional charges or
discounts on the final bill for each customer. Some examples of such charges are
Spa, gyms, and other activities;
Food and beverage services (restaurants, cafes, breakfasts); and
In-room services, mini-bar items, TV, or Wi-Fi.
In addition to automated payment processing, a comprehensive POS module can support
inventory management, collect information about customer purchasing patterns, generate
sales activity reports, and keep financial data in one place.
The choice of a PMS depends on the size and type of a hotel property, as different systems
have their own sets of core features and additional modules. Most players in the market
offer hotel management systems that can be customized for different types of property and
basic PMS components can be complemented with modules, required for a specific type of
business.
Many properties already have reservation platforms or CRSs of their own, or utilize other
business management software, so it is very important for the selected PMS to be integrable
with third-party products. The final choice of a property management system for a hotel is
largely shaped by the functionality required.
The 2021 Smart Decision Guide to Hotel Property Management Systems by Oracle
provides an evaluation checklist to help hoteliers make the right decision, scaling each
factor from 1 (absolutely not important) to 10 (very important). This checklist is also very
useful for comparing systems by different vendors. Regardless of hotel size and type,
consider the following:
The Evaluation Checklist. Source: The 2021 Smart Decision Guide for to Hotel
Property Management Systems
Check integration options. If there are systems already used by a hotel, or if you plan on
integrating additional software, make sure that your vendor supports all
necessary APIs and is ready to provide integration services. Otherwise, you may consider
an external technical consultant to provide integration services.
Consider a cloud solution with mobile access. Cloud solutions are generally less
expensive than on-premises software, and an owner doesn`t need to pay maintenance fees.
Users of cloud software pay a subscription fee depending on the number of rooms in a hotel
and modules they need. Also, cloud software is better at integrating with third-party
systems like OTAs and GDSs.
On top of that, cloud-based systems can be constantly and seamlessly updated, and usually
have a mobile version. Mobile access facilitates communication across departments (front-
office, management, housekeeping, etc.) which helps improve customer service.
Mobile interface of a hotel PMS. Source: eZee Absolute
Prioritize the ease of use. The system’s UX will impact your employees’ learning curve.
The more complex and unintuitive the interface is, the more time you have to invest in staff
training and transitioning.
Assess customer support. Anything can happen to software, but it mustn’t affect the hotel
service. Hoteliers need 24/7 access to technical support. When choosing a PMS, look for
customer support reviews from fellow hoteliers or negotiate all support terms with your
vendor in detail to ensure that any software outages won’t have a dramatic impact on your
operations.
Calculate ROI and spendings. Whether you want to update an existing property
management system, build a custom one, or buy an off-the-shelf solution, you need to
decide how much you’re ready to spend on it. To make sure that the PMS will pay off,
consider these key factors:
time currently spent and how it will be reduced as a result of automation;
how distribution and revenue will change; and
cost of system integration and maintenance.
There are plenty of vendors who sell off-the-shelf PMSs and those who provide
customization services. Trying to reach a broader audience, big vendors supplement and
customize the basic PMSs so that they can be used by as many types of properties as
possible. Let’s have a look at the solutions across different categories.
Please note that most systems already have channel management, reservation, and front-
office functionality, so these modules are not represented in some of the comparison tables
below. Also note that the categorization we offer is not absolutely precise since most
platforms today are becoming more and more universal.
We’ve explored some of the popular PMS products but since we can’t describe all of them
in detail in this post, we’ve compiled comparison tables and discussed several solutions to
give you the idea of what to expect.
Property management systems for hotel chains and resorts
Larger properties require solutions with a wide range of modules other than the basic
reservation, front office, and housekeeping. Their PMS must facilitate group bookings as
well as have POS services, a multi-property management system, back-office management,
revenue management, sales, and marketing functionality.
Vendors cater to the needs of large properties, adding special modules like golf and spa
management. Hotels that host MICE can choose a solution that has event management and
catering functionality included. Also, owners of big properties should consider PMSs with
capabilities that automate check-in and checkout and offer other self-service tools.
Please note that most products are highly customizable and modular. So, when purchasing
such a solution, you can choose the components you need and pay only for what you
selected.
Maestro PMS is available both as a Windows app and a web browser application. It also
has mobile apps for guests and hotel staff. Here’s a brief description of Maestro’s key
functionality modules.
Front desk operations and CRM. This module connects reservation, housekeeping, spa,
activities, sales, and guest relations management functionality in a single environment.
Sales and catering. This component supports group and event management offering
multiroom operation and guest management capabilities. It facilitates sales and helps keep
track of all aspects of event management, conference planning, and scheduling.
Revenue management. Maestro PMS has the Analytics & Business Intelligence data
mining module for budgeting, forecasting, marketing, and reporting.
Spa and activities. This PMS has several modules for managing resorts, including Spa
Management and Activities & Facilities Management that offer mobile solutions for
guests, allowing them to schedule services.
Like Maestro PMS, this software focuses on guest experience, offers group-booking
opportunities, and provides a customizable guest app that facilitates check-ins/outs. IQpms
also has the Package Management module for all-inclusive resorts or business trips.
Reservation management. Beside group management capabilities, this module offers the
allotment feature that blocks the rooms for companies, airlines, tour operators, and travel
agents. Also, IQpms calculates travel agent commissions automatically.
Revenue management. The revenue management module of IQpms has 5 levels of yield
control. There’s also a rate management functionality that helps get the most yield out of
occupancy levels, days, seasons, and events.
The optional modules that can expand the IQware PMS’s functionality are Activity
Booking, Guest Loyalty Program, and Work Order Billing.
Modules for other property types include Timeshare Management, Vacation Club
Management, Condo-Hotel Management, and Marina Management. They expand a
standard list of features with functions like activities booking or a customized maintenance
management module.
CRM and reputation management. The CRM system included in the PMS allows for
sending automatic pre-arrival, in-house, and post-departure emails, and manages email
marketing campaigns. In addition, eZee Technosys has introduced a sentiment analysis-
based Online Reputation Management system that gathers all the guest reviews from
different sources like OTAs, TripAdvisor, and other travel websites, making it more
convenient to respond to them in real time.
Modules for other property types. eZee Absolute allows users to customize the system
for certain types of properties such as resorts, vacation rentals, chains of properties,
serviced apartments, etc. For example, the resort software offers the “Pay at Hotel” feature
when an online payment link is sent to guests that they can use to make a payment of any
amount.
Protel
Protel PMS is a solution that works for both multi-property management of big chains and
independent hotels and comes preintegrated with over 1,000 partners. This provider puts a
big focus on data security and is fully compliant with the General Data Protection
Regulations (GDPR). Protel also boasts their partnership with Amazon AWS making its
product reliable, scalable, and secure.
Some of the PMSs we discussed above provide vacation rental customizations. However,
the hospitality technology market offers specialized products designed for alternative
accommodation types. Typically, they have a user-friendly interface for easy, intuitive
operation on the go through a mobile app. Let’s look at some of them.
Hostaway offers a number of focused automation tools to streamline repetitive tasks related
to payments, messaging, or reviews. There are also website building, payment processing,
and other handy features included.
It comes pre-integrated with 100+ distribution channels and over 3,000 more integrations
are available through Zapier. Users also reported great customer support.
Vreasy
Vreasy has a very intuitive design and a well-developed back-office module with the
feature of task delegations to all staff members, from the front office to housekeeping It
also offers its own communication platform.
Vreasy PMS has an owner portal with a data management module that has access to
multiple travel data sources and generates reports. This PMS has its own payment gateway
– VreasyPay – that accepts credit card payments in 130+ currencies.
Direct APIs from this PMS connect a property to major booking portals, including Airbnb,
Booking.com, HomeAway, and TripAdvisor. An inbuilt channel manager helps to
efficiently control distribution. Also, Vreasy offers the following features: marketing,
activity booking, automated guest mailing, and others.
Vreasy’s Guest experience platform features Guidal, a smart concierge app (check our post
dedicated to the hotel concierge software and how it can be beneficial for your hotel). This
application unites the functionality of the e-concierge, booking info app, property manual,
and a city guide. Guidal has a partnership with tour operators.
Stays PMS
Stays PMS is a Brazilian product that features a channel management system with
connection to more than 300 distribution channels, including Airbnb, Booking.com,
Expedia, and HomeAway.
Stays PMS has a website management tool that includes integration with Facebook and
makes a content management function possible. It has a guest reviews tool, commission
management, sales and marketing, and a payment processing tool. Depending on the
number of accommodations (from 10 to 1000+), a customer can choose a suitable
subscription plan.
Solutions for small hotels, hostels, inns, B&Bs
Such types of hotel properties usually don’t require too many additional modules, like POS
services or golf management, due to their size and internal structure. The main components
these PMSs should have are an online booking tool, a front-desk solution, and integration
to a hotel’s existing reservation platform. Because small hotels may need slightly different
functions, the PMS should offer a high level of customization.
The PMS is powered by SiteMinder and integrates with this reservation platform.
However, it also allows third-party integrations. Little Hotelier combines all necessary
modules for a hotel in one PMS:
Front desk management,
Reservation management,
Channel manager with online booking engine,
Payment processing, and
Reporting and insights.
Also, Little Hotelier is available in a fully functional mobile version and has a website
builder.
This PMS allows for creating not only online reservations, but also reservations by phone
or walk-ins that can be made via the front office. The channel manager of Little Hotelier
distributes properties to more than 450 booking channels including connection to Airbnb
and provides a channel analysis report. The reporting module has convenient dashboards
to monitor a hotel’s performance and financials.
Little Hotelier offers a 30-day free trial if you want to test it before subscribing.
Hotelogix
Another PMS for small properties is Hotelogix. It’s also suitable for hotels, serviced
apartments, and resorts. It has a strong channel management module with GDS
connections, offers third-party integrations with diverse reservation platforms, and enables
customization. For example, if you run a hostel, you can select a bed-based reservation
management system instead of a room-based one.
Hotelogix PMS offers a Facebook online engine and mobile access from the app for the
convenience of a hotel`s team. One more interesting feature of Hotelogix is online
reputation management, created in cooperation with TripAdvisor. This tool allows for
automating guest feedback collection, so that managers can see the reviews and reply
faster.
To test the system, you can sign up for a 15 day free trial.
Localization is also important so interfaces of both Little Hotelier and Hotelogix are
available in various languages, and they can process transactions in different currencies.
What’s the future of the hotel PMS?
Technologies in the hospitality industry are constantly developing, offering new functions
and modules to optimize daily operations – and meet the newly emerging requirements
related to global digitization. So what’s going on with them now?
AI-powered solutions. The hospitality industry has been adopting AI and Data Science –
you can find out more about it in our dedicated article. Hotel property management systems
are no exception, especially if we talk about business intelligence, revenue management,
and guest service (chatbots and e-concierges).
Internet of Things. We’ve already mentioned the increasing adoption of smart
technologies (like in-room controls, facial recognition, etc.). Most of them are based on
IoT connections and involve implementation of sensors and other smart devices all of
which must be connected to the hotel’s main operation center – the PMS.
Challenges or Problems in Hotel Industry and Their Solutions:
Over the years, many hoteliers shared many pain points with us. So, in this section, we
address a few global issues and challenges in the hospitality industry and their solutions.
1. Hiring and retaining the staff
Challenge
Hiring and retaining staff has always been one of the most common problems in the
hospitality industry.
Every hotel requires quality staff on all fronts; be it administration, maintenance, kitchen,
housekeeping, or frontdesk. Lack of skill in the educated youths graduating from education
houses is also proving to be a major challenge in the hotel industry.
Solution
Training the new workforce on a regular basis is the only remedy available. Retaining a
qualified staff requires you to employ a few tactics. For example, cultivating a feeling of
belongingness (culture) and value for the team members will make them attached to their
jobs and instill a sense of responsibility in their minds.
2. Change in marketing trends and dynamics
Challenge
Marketing is one of the most common challenges faced by the hotel industry.
Changes in the advertising and marketing trend often create problems for hoteliers. Also,
traditional marketing methods aren’t that effective now. So, for those who have always
stuck to the old-school ways, getting the strategy right is one of the biggest challenges of
the hospitality industry.
Online marketing is a surefire method, though it would take years for hotel owners to
establish their strength. Online deals are booked by genuine guests and major transactions
are paid in advance.
Solution
Engaging your guests on social media, messaging apps, and other online sources can work
wonders and give you results in a few months. Implementing effective digital marketing
strategies is a strong solution to such issues in the hospitality industry. Be consistent and
patient with whatever tactics you apply. It is inevitable that with the right strategies.
3. Operational issues
Challenge
There are countless operational challenges in the hotel industry. Ranging from reservations
management, attending to guests, performing all front office operations, maintaining
cleanliness in hotel rooms and premises, and more. However, hotel departments often fail
to perform all tasks in sync which leads to chaos and customer dissatisfaction.
Solution
Besides operations, front office problems and solutions are connected to an integrated hotel
PMS system. The faster you adopt it, the better it is for your property. Your operations are
automated and departmental functions are synced with a PMS because it simplifies
communications to a large extent.
4. Rising cost of daily consumables
Challenge
Price inflation of daily use products, eatables, and other supplies has risen steeply in the
last few years. While that has affected all industries, it takes a huge portion of the issues
and challenges faced by the tourism and hospitality industry.
Solution
A visible solution to this would be to keep a constant check on the inventory, control stock,
and reduce wastage as much as possible. Consider implementing useful cost-saving
strategies at your property, which would help you manage the rising costs.
5. Housekeeping issues
Challenge
Cleanliness is a basic requirement of every guest. In fact, you’d also ask for a clean and
tidy hotel room when you are traveling. A majority of hotel guests would prefer a clean
room over complimentary amenities, any day.
Also, if you think about it, an unclean and messy room is also a common guest complaint.
But there are times when it becomes a little difficult for hotels to stay true to this. After all,
there are various housekeeping challenges involved and strategies are needed to be made
to cope with them.
Solution
Housekeeping challenges in hotels need to be managed well with effective strategies and
thought processes. The housekeeping process needs to be aware of the clean and dirty
rooms and constantly maintain common areas. Do highlight these measures on your
website and social media handles to gain your guests’ trust.
For example; You can track both – arrival and departure list of guests through the hotel
software and can update the housekeeper to clean the room of all the guests who will check-
out from the hotel. Moreover, whenever any guest check-in and ask for a room, you can
easily check whether a housekeeper has cleaned the room or not with the help of the
system.
This is the best way to manage tasks, and keep track of the arriving and departing guests,
and you can prepare yourself well in advance. This way, you can easily avoid challenges
in housekeeping operations.
6. Change in guest expectations
Challenge
Changes in guest expectations are one of the biggest hurdles in the hotel industry. You’ve
witnessed that nowadays guests demand a lot more from a hotel. Be it free WiFi,
entertainment system, unique stay experience, or swift check-in check-out services.
And lately, people have also started expecting contactless hotel services to ensure a safe
stay and eliminate their dependency on hotel staff. Certainly, it’s quite difficult to abide by
these demands because of resource or capital bandwidth, but it will be imperative to do it.
Solution
So, contactless hotel services can be provided with the right technology. Consider
deploying a self-service guest portal that will facilitate quick check-in and check-out
services, share the location of your property, and even let guests request pick-up and drop-
off services. Keep yourself updated with the latest hotel industry trends. Doing that will
help you meet the changing guest expectations in a better way.
Check out the video below, to get an idea of how to provide a contactless guest journey at
your property.
7. Irregular cash inflows
Challenge
One of the major challenges in the hotel industry is the credit menace. Dealing with parties
who pay after 30, 60, and 90 days or even later. While these types of dealings are bigger,
they don’t help much during a cash crunch. On top of that, many payments are delayed or
go into bad debt.
Solution
Consider changing vendors and suppliers following a long payment term. Or strike a deal
with them to collect their due payments in installments rather than in one go. This will keep
your boat sailing for a longer duration. On top of that, you can launch an online marketing
campaign to attract bookings, since these strategies provide a quick ROI.
8. Data security challenges
Challenge
The question of security is not a new one. While our data security methods have advanced
considerably, so have the possibilities of data leaks and virus attacks. Threats of digital
data theft and confidential data leaks are a matter of concern for hoteliers globally.
Solution
The first step to take toward secure data is to ensure proper data storage. Stop dealing with
excel sheets and registers. Incorporate a secure hotel technology that prevents your data
leaks. Technology today is PCI-DSS compliant as well as HTTPS secure, leading to better
data encryption. This way you build your hotel’s credibility to bring in more guests.
9. Maintaining the online reputation
Challenge
Today, internet-savvy visitors look for the brand reputation first before booking a hotel
room. But, maintaining an online reputation is another big challenge that hotels often face.
However, this has not been a current issue in the hospitality industry. Reviews and
reputation have been neglected across all industries since the beginning. Little do they
know, that an unmanaged reputation leads to poor brand image.
Solution
According to a survey, 93% of travelers check hotel reviews before booking a room and
33% of guests do not prefer to book a hotel with no reviews. Moreover, it is always crucial
to track what guests are saying about your brand and the services you provide. Review
management systems help you monitor, manage and respond to your online reviews –
regardless of the platform and language.
I also have something to assist you in responding to reviews.
10. Losing loyal customers
Challenge
Since various hotels are constantly pouring in attractive offers, guests tend not to be limited
to a single brand. Rather, they’re open to options; especially if you fail to connect and
engage with them personally, and deliver a memorable guest experience.
Solution
Running loyalty programs is the MOST practical way to increase your loyal customer base.
These include offering amenities, discounts, and reward points to guests against their
membership. So, even if they’ve stopped using the services, you can approach your guests
and offer them deals or packages. At the same time, do not forget to consider implementing
ways to increase repeat guests at your hotel.
11. Change in technology
Challenge
The advancements in technology are altering every aspect of our daily lives. Gone are the
days when guests used to wait for hours or a day to receive answers to any query. Today,
customers are expecting a fast response and services from hotels. Such constant changes
are extremely arduous to adapt to, which poses a challenge.
Solution
Hotels have begun tailoring guest experiences with chatbots. Chatbots allow hotels to
respond to visitors at once, answer every query instantly, and more. This further increases
hotel bookings, and revenue.
12. Hotels are not data-driven
Challenge
You are well aware that some hotels do not rely on any surefire data for business decisions.
And because of the decisions based on assumptions, many hotels are forced to close down
in a short span.
For instance, business decisions to spend for promotions on OTAs, interiors, room rates,
and room types aren’t decided on the basis of actual statistical reports.
Solution
In order to fight one of the prominent challenges in the hotel industry, you are required to
use software that‘ll give you all the business insights. It can help you in making informed
business decisions and save on extravagant spending. Using the complete data analysis
tool, you can even apply proper revenue management strategies to earn higher revenue.
13. The growth of local hospitality hosts and rising competition
Challenge
These days, more and more property owners are renting out their rooms or property
occasionally. Homestays and vacation rentals promise an authentic local experience
besides being convenient. Owing to this, travelers prefer to choose those homestays over
hotels and resorts. Other than that, new hotels are entering the market every day. This
growing number of homestays and competition is one of the challenges in the hospitality
industry of 2022.
Solution
First and foremost, solid competition analysis is needed. You need to know how your
competitors are doing, monitor their strategies, and then devise better plans for your
property. On top of that, you need to offer something significant to attract your guests.
Constant innovations and personalized services are eventually the only way to beat the
competition.
14. Restoring business post natural calamities and crisis
Challenge
So, I think this is a recently faced challenge (or rather, ISSUE) in the hospitality industry.
The whole world shut down traveling during the COVID-19 outbreak, because of which
the hotel industry also had to shut down its operations. Canceled reservations, indefinite
lockdowns, and shutdown hotels; this was probably the worst hit times for the tourism and
hospitality industry.
While it is a challenge to survive these times, it is an even bigger challenge to come out of
these times as a winner. And the hardest to restore the business in these uncertain times.
Solution
To be honest, none of us would have imagined a situation like this, where we would be
fighting for our survival. But it is entirely up to us how we see these challenges, learn from
them and come out even more potent than we were.
Flexible
Cancellation Benefit Risk for Hotel
Aspect
5. Keep it personal:
Customers are smart, and they know when they're getting bespoke service. Having the right
technology can help you use customer data to build profiles of specific audiences to share
marketing messages that are the most relevant to them. You can provide personalised
messages through email marketing by segmenting customers according to what they buy
or engage with or by their spending power. This data can create tailored offers for your
customers.
6. Experiment with virtual reality tours:
Virtual reality technology is one of the latest marketing trends in tourism. It's especially
engaging because it allows customers to experience something completely new from their
homes. Hotels are using virtual reality to provide walk-through simulations of different
areas of the hotel facilities or guest rooms to help customers decide which one they want
to book. Other uses of virtual reality in tourism include airport lounges where guests can
see what's inside or restaurants to choose their preferred seating area.
Tourism Pricing:
Price
Price is the value of the goods or services. According to Kotler, "Price is the amount of
money charged for a good or service. More broadly, the price is the sum of the values
having or using the product or service." It includes their sacrifice, effort or money. Price
determines profit and loss. A pricing mistake can lead to a business failure, eve when all
other elements of the business are sound.
Price is the perceived value that is exchanged for goods or services. The perceived value
is expressed in terms of money such as dollar, pound or rupees,etc. Price can be anything
with perceived value not just money. Price has various names and meanings:
Interest - Paid for the use of money such as Bank charge
Tarif - Price paid to receive service such as import tariff, hotel tariff, air tariff, etc. It is
also related to government tax.
Rent - Paid for the use of facility, equipment such as house rent, furniture rent, land and
building, etc.
Commision - Price discount paid for serice such as sales commission, broker's
commission etc.
Fare - Cost of transportation such as airfare, rail fare, bus fare, etc.
Wage and Salary - Paid for services of workers
Taxes - Price paid for the privilege such as income tax, import tax
Fee - Paid for the services of professionals tuition fee, consultancy fees etc.
Pricing in Tourism:
Pricing in tourism is very complicated subjects to deal with as tourism is managed at a
different level by different organizations with different organizations. Government fixes
the price of visa, national park entrance fee, conservation fee. Their pricing policy is
more demand based, and is government policy.
Tourism business organizations fix their prices by different names, such as rate, tariff,
service charge, etc. Some business organization follows pricing policy as:
Single Price Policy:
One price is charged to all customers. The price is not variable according to quantity,
season, purchasing power, etc. This season is very simple to administer and to change
customer but this system ignores demand, costs, and competition.
Tourism is made of economic and non-economic elements so tourism price includes non-
economic and immeasurable factors also.
All the other cost plus luxury and status are included in the tourism product price.
Travellers view tourism products as bundles of benefits and choose those that give them
the best bundle for their money.
Tourism product has time value and $ value. Time value is the time it takes to arrive at
the points of service. and time, duration to consume the service. Price complaints and
price bargain are most frequent in tourism industry.
PricingStrategy:
1.Value-based pricing:
Value-based pricing is a strategy that involves setting your prices according to the
perceived value and benefits that your offer provides to your target market. This means
that you need to understand what your customers are looking for, what they are willing to
pay, and how they compare your offer to your competitors. Value-based pricing can help
you differentiate your offer, increase customer satisfaction, and justify higher prices.
However, you also need to be careful not to overprice your offer, as this can lead to
customer dissatisfaction and negative word-of-mouth.
Value-based pricing in tourism is also a great way to curate the flow of potential customers.
Pricing low for your experiences perceived value will drive people to come in droves if
you need a cash injection, and spiking the price will dull the flow of visitors to allow you
to offer a more bespoke experience as well as meet the demand with your current
resources/staffing.
2.Dynamic pricing:
Dynamic pricing is a strategy that involves adjusting your prices according to the changes
in demand, supply, and market conditions. This means that you can charge higher prices
when the demand is high, such as during peak seasons, holidays, or special events, and
lower prices when the demand is low, such as during off-peak seasons, weekdays, or low
seasons. Dynamic pricing can help you optimize your revenue, attract more customers, and
respond to market fluctuations. However, you also need to be transparent and consistent
with your pricing, as this can affect your reputation and customer loyalty.
3.Discounting and bundling:
Discounting and bundling are two strategies that involve offering lower prices or adding
value to your offer to encourage customers to buy more or to buy sooner. Discounting
involves reducing your prices temporarily or permanently, such as by offering coupons,
vouchers, or loyalty programs. Bundling involves combining your products or services
with other complementary or related offers, such as by offering packages, deals, or
upgrades. Discounting and bundling can help you increase your sales volume, clear your
inventory, and attract new customers. However, you also need to be careful not to devalue
your offer, erode your profit margin, or cannibalize your sales.
4.Psychological pricing:
Psychological pricing is a strategy that involves using the psychological effects of numbers,
words, and symbols to influence the perception and behavior of your customers. This
means that you can use various techniques, such as charm pricing, prestige pricing, or
anchoring, to make your prices seem more appealing, attractive, or reasonable.
Psychological pricing can help you increase your conversion rate, enhance your image, and
communicate your value proposition. However, you also need to be ethical and honest with
your pricing, as this can affect your trustworthiness and credibility.
5.Competitive pricing:
Competitive pricing is a strategy that involves setting your prices according to the prices
of your competitors. This means that you need to monitor and analyze the prices of your
direct and indirect competitors, and decide whether to match, undercut, or exceed their
prices. Competitive pricing can help you stay relevant, competitive, and profitable in your
market. However, you also need to consider your costs, value, and differentiation, as this
can affect your sustainability and positioning.
Pricing is a powerful tool that can help you achieve your tourism marketing goals, but it
also requires careful planning, research, and testing. By using these pricing strategies, you
can attract and retain tourists in a competitive market, and create a win-win situation for
both you and your customers.
Tourism promotion:
Tourism promotion means activities and expenditures designed to increase tourism,
including but not limited to advertising, publicizing, or otherwise distributing information
for the purpose of attracting and welcoming tourists; developing strategies to expand
tourism; operating tourism promotion agencies; and funding marketing of special events
and festivals designed to attract tourists.
1. Utilize local listings:
The simplest promotion you can do is registering your business with Google My
Business(opens in a new tab)– it is the new Yellow Pages. The vast majority of people use
Google to find everything. If your business doesn’t show up in all those searches- you are
missing out! A Google listing is basically free advertising for you. The setup process is
quite simple, and then you have complete control to update your listing, add new photos,
or update hours if they change. Follow these steps(opens in a new tab), and include as much
information as possible.
2. Using email newsletters:
Using email newsletters(opens in a new tab) and a customer relationship management
(CRM) program is an easy yet effective strategy for interacting with clients. There are
classic avenues to invite people to sign up for your newsletter, such as built into your
website or Facebook page. Also get creative how and where you ask for subscribers. For
example, find a fun way to circulate a paper sign up sheet during a tour. And be very
thoughtful of the wording you choose. Offer the user the option to subscribe to the
newsletter in order to ‘regularly receive information about current offers’ or ‘hear about
our seasonal tours’. Offer a newsletter that is relevant and interesting to your prospective
customer. Prospective customers have different interests compared to people who already
know how great your tours are.
3. Showing online banners:
Considering internet marketing tools(opens in a new tab) for the tourism industry is
crucial. One of the most effective promotional ideas tourism businesses can employ is to
invest in online advertising. Placing ad banners on certain websites, where users will be
able to see your current promotions and offers, is a great idea to get more exposure. The
websites you advertise on should be the types of sites your target audience visit. Be careful
that you’re placing your ads where your ideal customer is visiting, otherwise you could be
marketing to the wrong audience and your efforts will be in vain. You can use different
sources and sites to place banners, just use top keywords in your Google search, like ‘top
hotels’, ‘travel’, ‘top destinations’, etc.
4. Paid social media marketing:
You can use SMM(opens in a new tab) (social media marketing) tools and targeted
advertising to get in front of your ideal audience on social networks, such as Facebook and
Instagram. Paid advertising on Facebook is extremely easy to set up(opens in a new
tab) and monitor. Moreover, targeting a specific audience has been perfected by Facebook,
so even a novice will be able to see results with their paid FB ad campaigns. Or, consider
reaching out to SMM specialists who know how to promote your travel channels, it is the
most effective way to advertise your tours.
5. Applying offline promo:
Good ol’ fashioned business cards are crucial, especially for travel and tourism businesses.
They are extremely useful and cost-effective. With help (in the form of
developing multiple marketing strategies, not relying on one), they can really improve the
reputation of your brand, increasing the likelihood of interest from travelers and tourists.
Classic postcards are a great direct marketing tool for tourism marketing and travel agents.
By sending a colorful postcard with a wonderful landscape of a tourist destination and a
small message to potential customers, you will definitely convince them to contact you. I
can imagine the star eyes now, when a person longing for a vacation finds a pretty postcard
in their mail.
There is no better way to present a brief and interesting overview of the services offered
by your travel business than high-quality flyers and brochures. With brand-oriented design,
your travel brochures will resonate with your audience and generate interest in your brand.
6. Checking the contextual advertising and SEO:
Contextual advertising (advertising on a page that is relevant to your business) and SEO
optimization are types of promotional activities that are aimed at end-users who use search
engines such as Google to be able to select their desired tour.
Ok, so contextual advertising is basically placing an advertisement in a location that is
relevant. For example, a promotional ad for a gym membership with an athletic clothing
company. Consider what type of person books your tours, how they learn about your
company, and put your paid advertisements in locations relevant to this audience. Learning
more about this type of advertising will improve your techniques, and also help inform
your marketing strategies as you grow your business
SEO optimization is a hot topic! It is also dynamic and constantly evolving, which can
make it an intimidating area to become familiar with.
7. Using tourist promo videos:
The popularity of video content is constantly growing. It is also easier than ever to make a
high quality video. These trends are important for the tourism industry to capitalize on. If
you are trying to boost sales and grow your business… showing people all the fun they can
have on your tours is obviously the way to go! Using positive testimonials, as well as
photos and videos of your clients enjoying themselves on your tour is the best way to
demonstrate the value in what you offer. It is easy to hire a freelance videographer to make
a short promo video highlighting your fun tours.
Government Administrative System:
Administration-I is a key Division of the Ministry responsible for handling all
establishment matters, allocation of work among various Divisions of the Ministry and
transfer/ postings of officials of the Ministry within India and abroad. It deals with
appointment, recruitment and promotion of the officials involving reference to and from
the Union Public Service Commission (UPSC), The Appointments Committee of the
Cabinet (ACC), The Department of Personnel & Training and Staff Selection Commission
(SSC). It is entrusted with framing Recruitment Rules for various posts of the Ministry. It
deals with retirement of officials, verification and grant of terminal benefits.
In addition to the functions cited supra, it deals with misc. Establishment matters of the
Ministry viz. grant of Leave, Leave Travel Concession, encashment of leave, verification
of character and antecedents, forwarding application of officials for working on deputation
to other departments, maintenance of service records, Grant of MACP, fixation of pay,
verification of service, training, disciplinary proceedings, review of officials under FR
56(j) etc.
Ministry of Tourism, India – Important Facts
The Ministry of Tourism in India is the nodal agency for promoting tourism in India. The
Ministry of Tourism makes programmes, formulates national policies, and coordinates the
activities of various central government agencies, state governments, union territories, and
private agencies for the promotion of tourism in India.
The Ministry of Tourism in India is headed by the Union Minister for Tourism and
Ministers of State.
Currently, the Minister of Tourism is G Kishan Reddy.
The Ministers of State for Tourism are Ajay Bhatt and Shripad Yesso Naik.
The Secretary of Tourism is the administrative head of the Ministry of Tourism.
India Tourism Development Corporation Limited (ITDC) is a public sector undertaking
under the Ministry of Tourism.
Ministry of Tourism, India – Roles and Functions
Infrastructure Development
More than fifty per cent of the Ministry of Tourism’s expenditure on plan schemes is
incurred for the development of quality tourism infrastructure at various tourist destinations
and circuits in the States/ UTs. The roles and responsibilities of the Ministry of Tourism,
India, under infrastructure development are given below:
Conventions and conferences
Hospitality programmes
Field publicity, marketing, and promotions
Tourist information and facilitation
Release of incentives
Coordinating the Activities of Field Offices and Their Supervision, Regulation:
Approval of tourist transport operators, inbound tour operators, travel agents, etc.
Approval and classification of restaurants and hotels.
International Co-operation and External Assistance
Foreign technical collaboration
External assistance
Bilateral agreements
International bodies
All Policy Matters
Investment facilitation
Promotion and marketing
Manpower development
Development policies
Top 10 Source Countries for Foreign Tourist Arrivals (FTAs) in India in 2020
The below given top 10 countries constitute around 66% of the total foreign tourist arrivals
in India.
1. Bangladesh
2. United States of America
3. United Kingdom
4. Canada
5. Russia
6. Australia
7. France
8. Germany
9. Malaysia
10. Sri Lanka
Top 8 International Check Posts for Foreign Tourist Arrivals (FTAs) in India in 2020
1. Delhi
2. Mumbai
3. Chennai
4. Haridaspur
5. Bengaluru
6. Kolkata
7. Hyderabad
8. Cochin
United Nations World Tourism Adopt a Heritage Scheme (Ministry of
Organization (UNWTO) – UPSC Notes for Tourism) – Definition, Advantages &
International Relations Action Plan