Introduction

In recent years, the service sector in India has witnessed rapid and substantial growth, presenting hotels with many enticing marketing prospects. This sector is widely acknowledged as driving the country's rapid economic expansion. Tourism and hospitality stand out as India's second most robust industry within the service sector, contributing over 13.5% to the overall service sector. It is projected to achieve an impressive compound annual growth rate (CAGR) of 16.1%, reaching a staggering 2796.9 thousand crore (INR) by 2022 (Nasir, 2017).

With its diverse range of niche tourism products and its reputation as a spiritual and medical destination, India has emerged as a vibrant service market for travel and tourism. The Indian hotel industry has thrived in recent years, propelled by a substantial influx of foreign visitors and a nationwide surge in domestic tourist activity (Nasir, 2017).

Service quality has assumed paramount importance within the service industry, as it is intricately linked to customer satisfaction, loyalty, and profitability. Exceptional service quality yields many benefits, including heightened customer satisfaction, enhanced customer retention, increased market share, improved return on investment (ROI), augmented profitability, and a sustainable competitive advantage. The service trades, particularly the hotel industry, have long recognized the significance of service quality in driving economic performance. Recognizing the pivotal role of hotel development in India's broader tourism growth strategy, the government has accorded it high priority (Nasir, 2017).

Furthermore, several factors have contributed to the growth of the Indian hotel industry, including an expanding middle-class population, improved connectivity, increased youth mobilization, and government initiatives promoting tourism. Challenges, however, persist, including issues related to language proficiency, communication skills, property maintenance, transportation facilities, marketing efforts, reservation systems, security concerns, and sanitation standards. Additionally, cultural and socio-economic disparities among Indians have led to variations in the expectations of service quality and the actual services provided by service providers (Nasir, 2017).

Past researchers have proposed various monitoring and evaluation measures to enhance hotel management and elevate service quality to international standards. Applying these measures underscores service personnel's commitment to deliver outstanding services to tourists consistently. Although numerous studies have attempted to gauge service quality across different industries, research on budget hotels in India has largely been overlooked (Nasir, 2017). Consequently, this research seeks to address this gap by assessing the applicability of the original SERVPERF scale and examining its dimensionality, item structure, and psychometric properties within the Indian context.

Literature Review

Emerging Trends in India's Hospitality Market

Increase in Hotel Projects Fueling the Market

The growth of India's hospitality sector is primarily attributed to the surge in hotel projects. In recent years, the industry witnessed a substantial rise in occupancy rates, reaching a range of 59-61 percent, marking a remarkable increase of 15-17 percentage points compared to the previous year. Notably, the average rates (ARR) have fully rebounded during this period, registering a significant 37-39 percent uptick from the levels seen in the preceding year. Consequently, the Revenue Per Available Room (RevPAR) experienced a noteworthy surge, surging by 89-91 percent compared to the previous year (MI, 2023).

Driven by a robust resurgence in demand, hotel companies have expedited their expansion plans in recent years. This acceleration has translated into a remarkable 33 percent growth in brand signings by keys compared to the prior year. The industry welcomed the addition of 166 new hotels boasting 14,885 rooms, alongside the rebranding of 90 hotels comprising 5,702 rooms. Hoteliers have strategically extended their portfolios to encompass leisure destinations in Tier-3 and Tier-4 cities, recognizing the immense untapped potential within these regions (MI, 2023).

Additionally, India is set to host over 200 G20 meetings across 55 diverse destinations throughout its G20 presidency until November 2023. This development presents a significant opportunity for the Indian hotel sector, as it anticipates substantial incremental demand for accommodations in the cities chosen to host these meetings (MI, 2023).

In April 2023, three prominent international hotel chains unveiled plans to introduce their luxury brands to the Indian market. Hilton's Waldorf Astoria and Minor Hotels' Anantara brands are poised to debut in Jaipur, while Radisson has selected Hyderabad as the launch destination for its Radisson Collection brand. Fairmont Hotels & Resorts has also confirmed its intention to open a property in Agra by 2025.

Government Efforts to Attract Tourism and Bolstering Tourism Industry Growth

The Indian hospitality industry's momentum is predominantly steered by robust domestic demand, a resurgence in inbound tourism, and the government's renewed commitment to bolstering the tourism sector's expansion. This sector is poised to make a substantial contribution of USD 250 billion to India's GDP by 2030, reflecting its growing significance as a generator of employment opportunities. The government has recognized the pivotal role of the tourism sector. It promotes it through a mission-oriented approach, fostering collaboration among all stakeholders, including public-private partnerships. The government's strategic initiatives include reviving 50 airports, heliports, and water aerodromes to enhance regional air connectivity.

Additionally, the comprehensive development of fifty tourism destinations tailored to domestic and international travelers underscores the government's commitment to the sector. Furthermore, the government's persistent focus on infrastructure development, highlighted by substantial investments in railways and last-mile connectivity, greatly augments the industry's growth trajectory. Moreover, reducing personal income tax rates is expected to augment disposable income, fueling increased demand within the tourism and hospitality sectors (MI, 2023).

The travel and tourism industry is undergoing a surge in activity, as indicated by the recent Indian Tourism Statistics report. In the past year, India welcomed an impressive 677.63 million domestic tourist visits, reflecting a substantial 11.05% increase compared to the preceding year's figure of 610.22 million. Uttar Pradesh, Tamil Nadu, Andhra Pradesh, and Karnataka led domestic visits. Moreover, the Indian tourism sector has witnessed the initial stages of recovery,...

…issue, Bharwani and Mathews (2016) present findings from a comprehensive study aimed at delineating a typology that sheds light on the functional and experiential innovations the Indian hospitality industry has adopted and continues to embrace in recent years.

Elevating the Revenue Management Process

Revenue management entails systematic actions orchestrated by strategic, tactical, and operational managers. This multifaceted revenue management domain assumes pivotal significance, necessitating innovative deliberation and evolution. This imperative arises from the intricate web of challenges encompassing hotel operation facets, including risk management, cost control, and property management (Sanjeev and Jauhari, 2012). Within hotel revenue management, many metrics come to the forefront, illuminating avenues for revenue enhancement. Effective revenue management hinges on meticulous data aggregation, encompassing the hotel's internal operations, micro-environment (comprising customers, competitors, and distributors), and macro-environment, thus providing the bedrock for judicious decision-making (Ivanov, 2014). Pioneers implementing sophisticated revenue management approaches within the hotel industry include renowned names such as Hilton, InterContinental, Marriot, Sheraton, and Starwood (Jiang, 2014).

While implementing best practices in revenue management strategy undeniably holds sway over the overarching management of hotel operations, there remains ample room for further development and innovation. Exploring innovative avenues to harness revenue optimization emerges as a pressing question: What novel approaches can be deployed to leverage revenue optimization? How might innovative price promotions leave a lasting impression on customers? To what extent does innovation in energy-conserving products contribute to profit maximization? These questions beckon the industry to forge new frontiers in revenue management (Sanjeev and Jauhari, 2012).

Conclusion

In conclusion, the unique characteristics of Indian hospitality can be attributed to several factors that have driven its rapid growth and evolution. India's service sector, tourism and hospitality, plays a pivotal role in the country's economic expansion, contributing over 13.5% to the overall service sector, and it is projected to achieve a remarkable CAGR of 16.1%. India's diverse tourism offerings and reputation as a spiritual and medical destination have attracted a substantial influx of overseas visitors and a heave in domestic tourism activity, fostering the thriving Indian hotel industry.

Service quality is paramount in this industry, as it is strongly connected to customer loyalty, satisfaction, and corporate profitability. The government's recognition of the significance of hotel development in India's broader tourism growth strategy underscores the importance of service quality.

While the Indian hospitality industry faces challenges, including language proficiency, communication skills, and cultural disparities, it has shown resilience and adaptability. Moreover, the government's initiatives to promote tourism and infrastructure development have further fueled the industry's growth.

Innovation is a key driver of India's hospitality sector, with opportunities for advancements in financial management, technology integration, cost competitiveness, and revenue management. These innovations enhance the overall guest experience and contribute to the uniqueness of Indian hospitality.

In summary, Indian hospitality is unique due to its dynamic growth, diverse tourism offerings, commitment to service quality, government support, and…