HOTEL INDUSTRY IN INDIA

Presented by Dynanesh Rajeshirke Vishal Patil Rahul Sambhavit Pradeep Mhaskar

INDIA¶S HOTEL INDUSTRY
India's hotel industry is experiencing an unprecedented boom, driven by increasing numbers of business and tourist arrivals. arrivals.

Hotel Trident Hilton. Unmet demand for hotel rooms: 150 000 rooms. including the Marriott group. Additional demand this year: 15 000 rooms.French chain Accor.3 % occupancy. The largest hotel company in the world. Indian hotels are witnessing mindblowing occupancy rates.57 % occupancy.Business and investments: Current situation of India s hotels Some figures :  Hotel Imperial New Delhi: 99. ranging from Starwood and Mariott to Four Seasons and ShangriLa.Gurgaon (suburban Delhi): 98. The boom has attracted several global players. has entered India and is now devising aggressive plans for expansion in the market.  Increase in average room rent for the entire hotel industry over the last year: 35 %.   . Several others are racing to increase their presence in India.

Mariott.A booming market The established hotel chains  A number of global players are already well established in India.2 million. Sheraton. Radisson. for $ 60. Meridien. These include Hilton. Berggruen Holdings India. even the investment firms and private equity companies are beginning to get excited about India. Investments   Now besides hotel companies. Private equity firm Warburg Pincus has picked up around 27 % stake in Delhi-based mid-price hotel chain. a subsidiary of New York-based investment company Berggruen Holdings. Holiday Inn. InterContinental and Crowne Plaza. Hyatt. .Lemon Tree.has announced that it is seed-funding a non-luxury hotel chain in India. Shangri-La.

shipping lines.The engine of growth Tourist boom  The tourism traffic has been growing between 20-28 % every year for the last four years and this rate of growth is expected to continue for the next few years. airlines.    . tour operators. The constant boom and the resultant demand-supply mismatch has led to sharp increases in the average room rates and thus pushing up revenues of industry players (hotels. Most of the five-star hotels are seeing more than 80 % occupancy and some of the lesserknown five-star hotels are overbooked. etc) The tourism sector is expected to perform very well in futureand the industry offers an interesting investment opportunity for longterm investors.

According to estimates. Star category occupancies ranged from 46. registering an ARR of 5.000 rooms will have to be added across the country in the next five to seven years to be able to meet the increased demand.Incredible India  The Ministry of Tourism is pushing the great Indian story effectively with its subtle and charming Incredible India campaign We have spent $5 million on this campaign since December 2002 and plan to keep it going. All India ARR increased 26.9 % over the previous year. At 6. Bangalore had the highest ARR across all categories in the 30 cities. the joint secretary at India s Ministry of Tourism.    . New Delhi was the second highest.1 %. Amitabh Kant.762 rupees.498 rupees.3 % to 72. another 150.

There was an increase of 15 % in the number of international tourist arrivals in India and 14 % in the foreign exchange earnings in the first quarter of 2006 as compared to the same period last year. Gurgaon. The lean season has been exceptionally good for us.The future growth  Hospitality experts believe that the Indian hotel industry will witness higher than usual growth in the coming peak season. surge in domestic travel and growth in spending among middle-class Indians. Trident Hilton.    . general manager. Our room occupancy rate has been around 89 per cent and we are looking at over 95 per cent occupancy for the period September to December. says Kapil Chopra. The non-luxury segment in particular has been perking up with more and more investors spotting the demand supply imbalance. with top-end hotels experiencing high room occupancy rates even in the lean season. The good times for the Indian hospitality industry are here to stay.

which are expected to start operations by 2008. Unitech. Hampton Inns.has already formed a joint venture with Marriott International to run its three new hotels in India. The three new hotels will be located in Kolkata. New brands such as Amanda. Satinwoods.The Competition The world's leading hotel brands joining the battle  The country has been flooded by some of the world's leading hotel brands. All other majors including Marriott. Gurgaon and Noida. We are investing around 700 crore rupees to set up these hotels. Banana Tree. which is setting up two hotels in Delhi. Hyatt.   . says Unitech managing director Sanjay Chandra. Scandium By Hilt and Mandarin Oriental are planning to enter the Indian hospitality industry in joint ventures with domestic hotel majors. Four Seasons etc are briskly reinforcing their presence in India. Hilton. Accor.

Looking for new niche  Many business hotels in India are integrating full-fledged spas on their premises. Another interesting trend in India is that of mixed-use developments. originally a main stay of resort properties. However. While the concept has proved to be successful abroad. it is still at the embryonic stage in India. in order to attract more visitors.   . the real estate would typically include an apartment block or a commercial block (retail or office) along with a hotel. India still needs to dramatically increase the number of rooms available. In this type of development.

there is a definite pressure on ARR and operating margins. The result of the industry's success. As competition increases.The challenges to face  The lack of adequate infrastructure development.    . their prices. There is still need to improve air connectivity. rail and road connections as well as general infrastructure like power and water. of course. New privately owned international airports are expected to be commissioned at Hyderabad (2008) and Bangalore (2009). which will give a large boost to the economic growth of these areas. The airports at the primary gateway cities of Delhi and Mumbai have been privatised. The industry market will definitely shift from being demand-driven to supply-driven and that the hotel companies will need to revisit their strategies and. Some players are already preparing for the difficult times when the ARRs are expected to fall by 30-40 percent in the next 3-4 years and then the distinguishing factor for the hotels will be the offer in its entirety rather than just the price or the facilities that the hotels offer. and work has commenced on modernisation.

Lesson Objectives    Define what is a Hotel Feasibility Study Describe the two phases of a Hotel Feasibility Study Describe the three major components of a Hotel Feasibility Study .

What is a Feasibility Study?  Investigates the need for the proposed hotel must be investigated. estimated. . so that the client can be assured that the proposal is justified. documented and supported.

.Feasibility Studies  (1) (2) (3) Hotel feasibility entails three major components Preparation of a market feasibility study for the project Estimation of costs for all elements of the project and Determination of sources of financing.

Two Phases of a Hotel Feasibility Study   Market Feasibility Economic Feasibility .

Highways. Accessibility  Site Specific  . Key Attractions. Visibility. Population Backup Size. Zoning Laws. height restrictions and parking requirements. Shopping Centers. Traffic Levels.Site Selection  Proximity  Business and Trade Centers.

Why Location & Size are important .

Projected Demand Breakdown .

Projected Market Support .

700(Cr) RS 1.600(Cr) Estimated Total Project Cost RS 8.600(Cr) RS 850(Cr) RS 1.750(Cr) .COST OF PROJECT Total Building Cost Total Non-building Costs NonTotal Soft Costs Land Cost RS 4.

It is a luxury brand of great fame and reflects the inherent Le Meridien touch of elegance and class through all its properties in India. total cost and fee structure to be clear.Project 2 Franchise  The project is a franchise. The Le Meridien Group of Hotels has played an instrumental role in playing the perfect host to the millions of tourists and guests coming here. It is no wonder one of the exclusive hotel chains of India.  .

BLUE PRINT OF HOTEL .

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