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Labour Intensity and Skill Gap in the Hospitality Sector: A Study in South India


K. R. Suprabha
School of Management, National Institute of Technology Karnataka
Surathkal, India
Krishna Prasad
Justice K S Hegde Institute of Management
Nitte, India
School of Management, National Institute of Technology Karnataka
Surathkal, India
Received January 2017; Revised May 2017; Accepted June 2017


Private Equity (PE) has been hailed as one of the most significant sources of capital for enterprises (private in particular) in order to expand business activities both in terms of scale of operations and scope of activities. Unlike Venture Capital (VC) funds, PE funds focus more predominantly on middle-sized businesses that demonstrate enormous potential for growth and expansion. As the major shareholders of PE funds seek to earn attractive rates of return on their investment, it becomes imperative for these funds to be very selective in picking most suitable candidates for investment. The business model of a typical PE fund revolves around taking a strategic stake in the target firm, which is complemented with a representation in the board in the form of a directorial position. PE funds envisage bringing about operational and structural changes in the target firm with an ultimate eye on enhancing the value of the firm. Typical investment horizons for PE funds vary between 5 to 10 years with popular modes of exit being: Public floatation of stock (as in IPOs), Management buyouts, and Acquisitions. In this paper, we seek to delineate on the three significant aspects pertinent to PE funds with specific reference to their operational strategies in emerging market economies like India. Most significantly, the novelty of contribution lies in the fact that the paper makes a seminal attempt towards capturing the underlying financial rationale behind the operation of some of the most successful PE firms. This has been underscored by laying out a practical demonstration of the two of the most popular computational mechanics adopted by a majority of the PE firms – IRR and CAPM IRR approaches. The same have been analysed critically from a practitioner’s perspective in order to further invigorate a debate among academics and practitioners about the suitability of valuation approaches as seen from the prism of PE firms.


Hospitality, tourism, skill gap.

Reference to this paper should be made as follows: Suprabha, K. R., Prasad, K., and Shridev. (2017). Labour Intensity and Skill Gap in Hospitality Sector: A Study in South India. Public Enterprise, 23(1), 84-110.