FEASIBILITY REPORT

ON

OPENING OF HOTEL IN

MANDI

SUBMITTED BY:-

Amit Patyal

BHMCT

06
ACKNOWLEDGEMENT

I, as a student of the Lovely Professional University, here by pay our very sincere thanks to the Mr. Manik
Kesar for giving me the wonderful opportunity for doing research project in my interest area as a part of my
project.

I would like to extend my sincere thanks to the Lovely Professional University for giving me the opportunity
to increase my practical knowledge in our interest of management area.

I also thank Mr. Manik Kesar who motivated me to undertake this project. He spent innumerable hours
pursuing the first draft, suggesting many constructing and valuable modifications and critiques and there
after largely contributed in editing the final draft. The contents of the report have been considerably enriched
in the process. I am also thankful to all the professors of the department for their very good support.
AIM:

To reveal the market feasibility of opening a hotel in Mandi Himachal Pradesh.

OBJECTIVES:

Some of the main objectives of the study of the project are:

• To determine the marketing feasibility & Financial Viability of a proposed hotel in Mandi, Himachal
Pradesh.
• To estimate the cost of project.
• To estimate the total expected revenue from the
Proposed project.
• Determine the profitability analysis.
• To find the break-even point and expected return on investment.

METHODOLOGY:

The information for this project has been collected through the following
Procedures:

Primary Data:

Some of the primary data, which are collected for the study of this project, were
Collected from government officials, local public, students and hospitality officials.
.

Secondary Data:

Various data were used from journals, books and various supplementary copies of news and other magazines
and from the Internet has helped us in gathering information.
 ITRODUCTION TO HOTEL

Hotel industry totally depends on the growth of the tourism as well as proper import and export growth
of the country. If there are good countries associated in the territory of the region, there will be good
scope for business transaction, hence there will be good scope for hotel industries due to the visits of
the executives of different countries. Hotel should have good and well educated staff for maintaining
the hotels and servicing the customers. The hotel industry is very glamour industry and also the
business of hotel industry is growing very fast. But these things are totally depends on the location of
hotels. Hotels should be located near about the Air ports, Highways etc. There is good scope for
establishment of new hotels in India. The hotel industry in India is going through an interesting phase.
The industry has a capacity of 110,000 rooms. According to the tourism ministry, 4.4 million tourists
visited India last year and at the current rate, the demand will soar to 10 million by 2010 – to
accommodate 350 million domestic travelers. The hotels of India have a shortage of 150,000 rooms
fueling hotel room rates across India. With tremendous pull of opportunity, India has become a
destination for hotel chains looking for growth. Due to such a huge potential available in this segment,
several global hotel chains like the Hilton, Accor, Marriott International, Cabana Hotels, Premier
Travel Inn (PTI), InterContinental Hotels group and Hampshire among others have all announced
major investment plans for the country. The Government's move to declare hotel and tourism industry
as a high priority sector with a provision for 100 per cent foreign direct investment (FDI) has also
provided a further impetus in attracting investments in to this industry. It is estimated that the
hospitality sector is likely to see US$ 11.41 billion rise in the next two years, with around 40
international hotel brands making their presence known in the country by 2011. Simultaneously,
international hotel asset management companies are also likely to enter India. Already, US-based HVS
International has firmed up plans to enter India, and industry players believe others like Ashford
Hospitality Trust and IFA Hotels & Resorts among others are likely to follow suit.

INTRODUCTION TO MANDI
Geography

Mandi has an average elevation of 750 metres (2,461 feet). It is built on the banks of the Beas
River, at the confluence of the Suketi Khad stream.

Climate

The climate of Mandi is cool.

Demographics

As of 2005 India census, Mandi had a population of 56,873. Males constitute 53% of the
population and females 47%. Mandi has an average literacy rate of 84%, higher than the national
average of 65.38%: male literacy is 86%, and female literacy is 82%. In Mandi, 10% of the
population is under 6 years of age. Mandi has a mixed population of Hindus, Sikhs, Muslims,
Buddhists and Christians.
Places of interest

• Sunken Garden (Indira Market)

• Tarna Temple, also called Shyama Kali temple
• Bhima Kali Temple
• Panchvaktra Temple
• Kangri Dhar
• Rewalsar Lake
• Prashar Lake
• Kamlah-Fort
• Vishvakarma temple

Events

Mandi is also famous for the Shivratri, an International fair held for seven days in the month of
March every year. Mandi hosts a half marathon every year.

Sightseeing Highlights:
Mandi has around 300 temples, with 81 stone temples known for their intricate carvings. Most
of these temples are built for Shiva and Kali. Some of the temples to visit are Panchvaktra
Temple, Ardhnareshwar Temple and Triloknath Temple, all declared as protected
monuments by the Archaeological Survey of India. Also visit the anceint Bhootnath
Temple, dating back to the 1520s. The famous Gurudwara Gobind Singh, named after the
great Guru who is said to have blessed the town, draws thousands of pilgrims each year.
The Sunken Garden, also known as the Ghantaghar is another place you can explore.

Lakes of Mandi

• Rewalsar Lake
• Prashar Lake
• Macchial Lake
• Shiv Shambhu Lake
SWOT analysis of Mandi

Strengths:

• Pleasant weather which is ideal for the tourists to come for the annual summer holiday to
escape the scorching heat of the plains.
• Scenic beauty of the Himalayas, which draws tourists away from the crowded and
polluted towns and cities.
• Terrain is ideally suited for various adventure activities.
• Some very well known tourist hill- stations.
• It can attract tourists all throughout the year.
• Hospitable people

Weaknesses:

• Inadequacy of transport facilities

• Funds constraining the development of regions.
• Inadequacy of information channels.
• Overcrowding of popular tourist centres.
• Some places are inaccessible, especially in winter.
• Inadequacy of marketing.
• Lack of adequate infrastructural support.

Opportunities:

• The concept of holidaying is gaining popularity in India among various classes of

people.
• Increased disposable incomes of the Indian middle class.
• Adventure sports and trekking.
• Eco- tourism is gaining popularity.
• Himachal contains many unexplored regions.

Threats:
• Kashmir is being opened up and could divert a large portion of tourists to itself.
• Various other places in India are providing stiff competition.

• Environmental factors also impose a threat.

Proposed name of the hotel_MARKAND VILLA

A Hotel provides its customers with comfort, leisure activities and excellent services to make
them enjoy their business trip or vacations while still feeling at home. Nevertheless, hotel
logos are a key element for hotels to inflict an overwhelming impression on their
clientèle as it boosts their publicity and help them generate big profit.

Location of the hotel-On highway,NH-72,Near Cricket Stadium,MANDI.

Land cost-(4canal)-40lakhs (16560)sq.ft

Financial viability
The financial viability means to find out whether it is financially viable to star or three
star hotel as this project reports is based on three star hotel in simpler words financial
viability is to find out starting a three star hotel is financial successful or not.
The financial planning includes the selection of objectives and selection of policies,
programmers and procedures to achieve the objectives. The various consideration
relating. To the present capital need, requirement of investors and possibilities of
expansion resolve themselves into a present determination of:
A. The amount of capital to be raised.
B. The forms of propitiated amount of securities to be issued.
C. Policies as to administration of capital.

It is not too much to emphasize the correct estimate of the present and future needs of a
capital a sound capital structure and proper projection of capital will lead to success to
the company.

We raise funds from the private institutions like banks,..We invest 60%(me and my partner)
own and other raise the help from the private institutions like banks,etc.
FACILITIES PROVIDED BY THE PROPOSED HOTEL

Coffee shop_80 covers

Orienta l cuisine-40 covers
Bar_20 covers

 Centralized A/C
 Room Service
 Travel Desk
 Locker Facility
 Car Rental
 Free Pick Up Facility
 Secretarial / Valet Services
 Doctor On Call
 Channel Music
 Cable Network
 Foreign Currency Exchange

Departments in the Hotel

There are four major departments of the hotel.
 Front_office
 House_keeping
 F&b production
 F&b service
 There are also the departments that working in the back of the hotel.
 Engineering
 Accounts
 Kitchen stewarding
 Laundry
 Stores

ACCOMMODATION
The property comprises of 40 Rooms including

Deluxe Suite 02

Junior Suite……………………………… 15

It also offers the following choices of rooms:

Twin bedded rooms 10

Single bedded rooms 05

Interconnected room 02

Smoking room 04

Room for physically challenged 02

All rooms are equipped with Telephones/Telefax with STD/ISD, WIFI, Minibar, tea/coffee
maker, 42” Plasma TV with multiple channels.
RECOMMENDED MARKETING MIX

Marketing is the process of planning and executing the conception, pricing,

promotion and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational objectives. The marketing mix refers to the appointment of
the effort, the combination, the design and integration of elements of marketing in to a
program, which is on the basis of an appraisals of the marketing forces, will vest achieve
the objective of an enterprise of a given time.

MARKETING MIX:

In common parlance, marketing is the process of selling something at a shop or

market place. A market is regarded as a single or an aggregated or relationship between
consumers and producers who are separated by place and time and have a potential to
strike an exchange of goods and services. Marketing is concerned with business and the
functions, product planning, pricing, selling and advertising.
When the functions mentioned above are interlocked in a planned and systematic
manner to attain a given objective. They merge their identity in what is called the
marketing mix in short; it just means the mixing of marketing ingredients, which are also
popularly known as the four P’s viz.

Adequate advertising, sales, promotion and personnel selling to create interest and
design for the product among customers for the proposed hotel can be based upon the
concept of the customer segment aimed at promote the market strategy.

The four basic aspect of marketing are:

· Place

· Product
· Price
· Promotion
An optional marketing mix, hence involves from a creative blinding of ingredients
or elements, so that the product or services is offered to the market under the conditions
most favorable to the attainment of marketing objectives.

PLACE:
The place can define as “The aggregate of forces or conditions within which
buyers and sellers make decision that result in the transfer of goods can be segmented
geographically into:
· Region or place
· Climate

In the geographic base, regional differences in terms of topography, climate,

population and its density, from the base for market segmentation and differentiated
marketing effort.
Choosing the right location is an important and vital decision for any hospitality business.
Certain factors have to be taken into account to decide the right place. Some of the
factors that decided the selection of proposed hotel place are:
• Railway station and bus stand are 5Kms respectively.
• Main City is just 2 km from the proposed site.
• Easy accessibility to town area.

PRODUCT:
A product is a bundle of utilities and accompanying services. The proposed three star
hotel would be a three-floor building with the following facilities.
• Car Parking
• Banquet Facilities
• Telephone in all Rooms
• TV with Channels in all Rooms
• Central Air Conditioning system
 • Multi- Cuisine Restaurant
• Bar
• 24 Hours Room Service

The important features of the hotel are that it will have 20Single Rooms, 20 Double
rooms , 5 Suite rooms The hotel will have a Multi-cuisine restaurant with 50 covers, and
a bar with 30 covers. The hotel and staff will be at their best services to their customers.

PROMOTION:
To make the product and price known and acceptable to the target customers, it is
essential to communicate, persuade and motivate them. Promotion can be effected
through,
• Personal Selling
• Advertisement
• Sales Promotion
• Public Relation

PERSONAL SELLING:
The hotels sales persons, who are on its customers so as to make an offer of sale,
motivate them to positively respond to it and finally clinch the ideal.

ADVERTISING:-

The proposed hotel prompted through advertisements, by giving complementary

to the guest and also by suggesting other 3* and 4* hotels by suggesting the name of the
hotel if the guest has his company here, so that it is easily accessible in the same way the
proposed hotel also in return will help. Advertisement could be referred to as the use of
mass communication media to influence existing or potential through newspaper, T V
ads. Etc.
Advertisements will have positive effects such as:
• It will help to raise awareness about the company.
• To increase safer for the company.
• To create favorable image and confidence of company.

The various elements of advertising are joint media,

RADIO ADVERTISING AND OUT DOOR ADVERTISERS PRINT

MEDIA:

Newspaper and magazine have a great effect on influencing the people. An

alternative advertisement given in the newspaper or magazine will influence the
people. Such advertisements are already targeted at particular market segment; there
is a large reading audience.

OUT DOOR ADVERTISEMENT:

This type of advertisements covers large number of people with low experiences.
The sales can also be promoted by giving discounts to the regular customer. As the
proposed hotel is mostly targeting on air travelers, it is suggested to have a airport
facilitator to guide to gust and even canvas people for the hotel. The hotel will provide pick up
and drop to guest from the airport, and also will have tips with air lines for the
staff and customers in cause of stop over and delay of flight etc.
l will be offering its facilities at nominal rates. The off-heard saying “5 star
facilities at 3 star rates” would be a reality as far as The Destiny would be concerned.
vThe pricing strategy will naturally depend on what the proposed hotel offering,
the facilities available in the hotel etc. Another factor to be considered when pricing of
rooms and out lets are low is to compare it with the competitions. It should be less that of
the competitions.

AT YOUR SERVICE

…………………….

At Your Service provides and facilitates impeccable Guest Services to all resident guests by
being the centre of single point of guest contact. A unique proposition of the hotel. where in the
guest does not need to dial anywhere else. just..dail “0” and all the request are taken care

1. Receiving Guest Requests/Complaints and coordinating to the concerned departments on the

pagers.
2. Follow up with concerned departments regarding the Guest requests / Complaints and giving
Guest feedback accordingly.
3. Take Food & beverage. in room dining orders
4. To receive & send Guest Messages to the Guest rooms and as SMS (Short Text Messages)
from the Fidelio option of Messages to the Guest Mobile.
5. Taking Table Reservation for Restaurants in or out of the hotel.
6. Handling Restaurant Reservation post lunch & before Dinner
7. Arrange for car hire, Tele check-in Guest in coordination with Travel Desk.
8. Assist Guest with all kinds of City Information.
9. Arrange for sight seeing and Tours for the Guest.
10. Arrange for Doctor & medicines for Guest who is unwell.
11. Assist Guest with Wake up calls
12. Assist Guest with Fitness Centre & Beauty Parlor appointments
13. Assist Guest with any hotel information.
14. Daily Tracking of Guest Complaints and feeding the same in The Complaint Management
System.
15. To proactively solve any problem the Guest is having
16. Daily Tracking & Documenting guest preferences and feedback and handling over the same
to Guest Relations for updating Guest profiles.
17. Facilitating Swift Check Out Process by performing Group Paging.
18. Carrying out courtesy calls to guests during their stay & following up accordingly.

Terms and conditions to get 5-Star Categorization

• Hotels are an important component of the tourism product. They contribute in the overall
tourism experience through the standards of facilities and services offered by them. With the
aim of providing contemporary standards of facilities and services available in the hotels, the
Ministry of Tourism has formulated a voluntary scheme for classification of operational
hotels which will be applicable to the following categories:
• Star Category Hotels: 5 Star Deluxe, 5 Star, 4 Star, 3 Star, 2 Star & 1 Star
• Heritage Category Hotels: Heritage Grand, Heritage Classic & Heritage Basic
• 2. The Hotel & Restaurant Approval & Classification Committee (HRACC) inspects and
assesses the hotels based on the facilities and services offered.

• Hotel Projects are approved at implementation stage .

• Operational Hotels are classified under various categories

• 3. Details of the criteria for Project Approval / Classification along with the documents
required for this purpose are given in this document.
• Applications for project approvals under the category of Heritage, 4 star and 5 star as
well as applications for Classification of operational hotels in the category of 4 star, 5 Star
and 5 star Deluxe as well as Heritage (Basic, Classic & Grand) categories along with the
requisite fee (paid vide Demand Draft) may be sent to:

6. The Ministry of Tourism reserves the right to modify the Guidelines / Terms and Conditions from
time to time.
1. The Ministry of Tourism will approve hotels at project stage based on documentation. Project
approval is given to 1, 2, 3, 4, 5 Star and Heritage (Basic) categories. Hotel projects approved
under 5 Star and Heritage category after becoming operational may seek classification under 5
Star Deluxe / Heritage Classic / Heritage Grand category if they fulfill the prescribed norms.
2. Project approvals will be valid for 5 years. The Project Approval would cease 3 months before
the date of expiry of project approval or from the date the hotel becomes operational, even if all
its rooms are not ready. The hotel must apply for Classification within 3 months of commencing
operations. The application for Project Approval will be submitted complete in all respect as per
details given below.
Incomplete applications will not be accepted.
3. Application Form should have the following details:
i. Proposed name of the Hotel :
ii. Name of the promoters with a note on the business antecedents in not more than 60 words
iii. Complete postal address of the promoter with Telephone, Fax and Email address
iv. Status of the owner/promoter:

a) If Public/private limited company with copies of Memorandum and Articles of Association

b) If Partnership, a copy of Partnership Deed and Certificate of Registration

c) If proprietary concern, name and address of proprietor/certificate of registration

vi. Location of hotel site with postal address

vi. Details of the site:

a) Area (in sq. meters)

b) Title – owned / leased with copies of sale / lease deed

c) Copy of Land Use Permit to construct Hotel from local authorities

d) Distance (in Kms) from (a) Railway station (b) airport (c) main shopping center

c) Number of rooms (with attached bathrooms) and size for each type of room (in sq.ft.)

g) Eco-friendly Practices (a) Sewage Treatment Plant (b) rain water harvesting (c) waste
management (d) pollution control method for air, water and light (e) introduction of non CFC
equipment for refrigeration and air conditioning. h) Energy / water conservation (use of CFL
lamps, solar energy, water saving devices / taps)

5. Local approvals by :

i. Municipal Authority

ii. Concerned Police Authority

iii. Any other local authority as maybe applicable / required (viz. Pollution Control Board /
Ministry of Environment & Forests etc.)
iv. Approval / NOC from Airport Authority of India for projects located near the Airport

7. Proposed capital structure:

a) Total project cost

b) Equity component with details of paid up capital

c) Debt – with current and proposed sources of funding

8. Submission of „Undertaking‟ for observance of regulatory conditions / terms & conditions to

be furnished by the applicant.
9. The application should indicate whether a few rooms or all rooms are to be let out on a Time
Share basis. Hotels which propose to let out part of or all its rooms on time-share basis will not
be eligible for Classification under this scheme.
10. Application fee in the form of a Demand Draft payable to “Pay & Accounts Officer,
Department of Tourism, New Delhi” (further details are given at point No. 14)
11. In the event of any change in the project plan, the applicant should apply afresh for approval
under the desired category
12. Authorised officers of the Ministry of Tourism should be allowed free access to inspect the
premises from time to time without prior notice

Hotel License

A hotel licence authorises the sale of liquor for consumption on and off the licensed premises
under Section 32 of the Liquor Licensing Act 1997.

The licensee is also permitted to sell liquor:

14. The fee payable for the project approval and subsequent extension, if required is as under.
The Demand Draft may be payable to “Pay & Accounts Officer, Department of Tourism,
New Delhi”.
Star Category Amount in Rs.
5- star 15,000
4-star 12,000
3-star 8,000
2-star 6,000
1-star 5,000
Heritage category 12,000

PROJECT IDEA

_ Total land Area = 16560 sq.ft

_ Total Built up Area = 13870 sq.ft
_ Type of hotel = Business Hotel
_ Location = Near Cricket stadium Mandi, Himachal Pradesh
Name of the hotel = MARKAND VILLA
_ No – of guest room = 40 Rooms
_ Room tariff _
Single Room: 2500/-
Double Room: 3500/-
Suite Room: 4000/-

COST OF PROJECT
 Amount in lakhs

Cost of land 40 lakhs

Cost of building 95 lakh

Plant and machinery 30 lakh

Furniture and fixture 20 lakh

Miscellaneous fixed assets 5 lakh

Preliminary POP expenses 30 lakh

Total cost of the project 220 crore

 MEANS OF FINANCE

1) Term loan (40% of project) : 88

2) Owners capital (60% of project) : (30% me and 30% my partner)_ 132

DER (DEBT EQUITY RATIO)

Debt equity = Term loan / equity

DER = 88 / 132
= 0.66