Case Study 1

Strictly Confidential
For Addressee Only
Case Study – Hotel Feasibility

Advisory of Proposed Luxury
Hotel in Hyderabad for
Dandamudi Estate
Report for
RICS School of Built Environment

Case Study – Hotel Feasibility Advisory of Proposed Luxury Hotel in Hyderabad for Dandamudi Estate
May 2013
TABLE OF CONTENTS
A OVERVIEW .......................................................................................................................... 2
1 Project Overview ......................................................................................................................................... 2
2 Industry Overview ....................................................................................................................................... 3
B TEACHING OBJECTIVES ........................................................................................................ 8
1 Problem Definition ...................................................................................................................................... 8
C PEDAGOGY ....................................................................................................................... 10
1 Data Analysis ............................................................................................................................................. 10
a. Market area review ................................................................................................................................... 10
b. Site Description ......................................................................................................................................... 10
c. Concept Analysis ....................................................................................................................................... 10
d. Market Outlook Summary ......................................................................................................................... 12
2 Case Analysis ............................................................................................................................................. 15
a. Site Summary: ........................................................................................................................................... 15
b. Site Map and Surrounding Developments: ............................................................................................... 17
c. Connectivity .............................................................................................................................................. 18
d. SWOT Analysis ........................................................................................................................................... 20
3 Formulation of Development Mix & Financial Model ............................................................................... 21
a. Projections of Proposed Hotel Demand and ARR...................................................................................... 22
b. Projections of Cash Flows.......................................................................................................................... 23
c. Projections of Development Cost and IRR Analysis ................................................................................... 24
4 Development Plan & Financial Feasibility ................................................................................................. 27
5 Assignment Question ................................................................................................................................ 35
Appendix 1 Instructions (Caveats & Limitations) ......................................................................................................... 36
RICS School of Built Environment Cushman & Wakefield

May 2013
Cushman & Wakefield (India) Pvt. Ltd.

14th Floor, Block C, Building No. 8
DLF Cyber City, Gurgaon, Haryana
Tel: +91 124 469 5555
Fax: +91 124 469 5566
To: RICS School of Built Environment
Subject: Case Study – Hotel Feasibility Advisory of Proposed Luxury Hotel in Hyderabad
for Dandamudi Estate
Case Study Period: 2012
A OVERVIEW
1 Project Overview
The Indian Hotel industry was in a state of paradox as Tier I cities were bordering the danger of being
over supplied with hotel rooms even as Tier II & III cities were grappling with the supply demand
imbalance. Amidst such an environment, cities like Hyderabad still had certain areas which had the
potential to grow owing to a surge of industries establishing their businesses. The larger problem
though, was to operate and efficiently manage a large inventoried hotel within the luxury upscale
space coupled with a nouvelle concept of branded residences. This study examined some of the key
elements of the feasibility study while revealing the decision to pursue the luxury hotel segment and
branded residences as the optimum utilization of the given land area. It also explored the dynamics of
the hotel industry thereby identifying the owner-management operator relationship which was highly
prominent during the period of the study. A qualitative study, it focused on presenting certain excerpts
of the actual business proposal delivered to Dandamudi Estate for their maiden hospitality venture in
Hyderabad.
Company Overview
The Dandamudi Group, energized by a dynamic leadership and committed workforce, is on the fast
track of greater growth with the firm’s composition being:
• 10 limited liability corporate
• 8 partnership firms and LLP’s
• 10 proprietary entities
RICS School of Built Environment Cushman & Wakefield 2

May 2013
Dandamudi Group in the past has:
• Promoted 30 real estate projects in 1650 acres in the state of Andhra Pradesh.
• Developed resorts and farm houses in an area of 400 acres.
• Developed Palm oil agri project in 400 acres.
• Developed Mango orchards in 600 acres in the state of Andhra Pradesh.
The land banks of Dandamudi Group have created strong and long term relationships with major realty
corporate players from India and Abroad. This resulted in the Joint development of large integrated
townships in Hyderabad to cap the growth with credit as one of the richest realtors. Dandamudi Group
is the pioneer in world class realty development with a gated community concept, a first of its kind in
Andhra Pradesh – “Dandamudi Enclave”. It is built in a lush green environment, replicating a US design
in 120 acres. It has been conferred the Best Housing Colony award by the state government.
Purpose of Feasibility Study
Dandamudi Group had extensive plans for future developments.
• Implement realty projects in pipeline for which the progress is in pace with plans to claim 6, 50,000
square feet of built up area to the credit of the Group.
• Promote Hospitality industry under a brand of international fame to build 450 5 star rated rooms.
• Be a developer in infrastructure building for Indian government and Indian corporate, with a
targeted turnover of US$ 50 Million.
• Develop an operational Biotechnology park in 450 acres.
• Develop a golfing community project in 250 acres.
In line with the above expansion plans, Dandamudi Group was exploring the development of a Luxury
hotel in Timberlake Colony (Gachibowli Main road) area in Hyderabad. The Proposed Hotel was
expected to become operational by March-April 2017. The site was approximately 11.5 Acres with a
total built up area permissible on the site being between 17, 53,290 to 20, 03,760 sqft while the FSI
allotted was between 3.5 to 4.0. The project encompassed identifying a suitable Branded Management
Operator who would operate & manage the Hotel along with the Branded Residence components.
2 Industry Overview
Indian Tourism
In a country like India, for the poor, livelihood choices – in employment and entrepreneurship – are
constrained by a wide range of interdependent obstacles, ranging from geographic segregation to

May 2013
market failures. This advocates that when we deliberate about poverty alleviation, we should think
broadly about creating economic opportunity. Tourism has a wide array of dynamic effects. The
growth of Tourism can influence the livelihood strategies of local households, the business climate for
small & medium enterprise expansion, the blueprint of growth for the local or national economy, and
the infrastructure or natural resource base of the destination.
Tourism is an intensely competitive, focused, rapidly evolving business sector. The qualitative and
quantitative characteristics of the supply of accommodation have a direct bearing on the overall
success and development of tourism. Therefore, in order to ensure that the supply of accommodation
contributes effectively to tourism development plans and objectives, it is rational that the
development of the accommodation sector should be the primary element of the overall destination
planning process. To understand the definition of the tourism industry, one may refer to The World
Tourism Organization (WTO), which defines it as “the activities of persons travelling to and staying in
places outside their usual environment for not more than one consecutive year for leisure, business
and other purposes not related to the exercise of an activity remunerated from within the place visited.
While tourism has its positive and negative impacts, it is unarguably a catalyst for the socio-economic
progress of a country. More so, for a developing nation, tourism acts as a key driver for the creation
of jobs, enterprises, infrastructure development and foreign exchange earnings. The earnings from
tourism make it one of the biggest sectors in the world. The sector’s total contribution to the
worldwide gross domestic product (GDP) is estimated to be US$5,991.9 billion or 9.1% of global GDP
in 2011.
In India, travel and tourism contributed INR 3,680.4 billion or 4.5% of the country’s GDP in 20113. In
addition to tourism’s revenue contribution, it also accounted for 7.5% of the total employment in the
country in 2011.
Envisioning the future of Indian Hotel Industry
India’s share in the global travel pie has modestly grown by a CAGR of 2.8% over the past 15 years and
today, travel to the country formulates 0.64%1 of global travel. The government of India has taken
some initiatives recently that are intended to promote international tourism to the country and
increase India’s share in the global travel market. Considering the way in which travel has grown in the
past and factoring in the government’s unassuming efforts towards growth in the sector, the World
Travel & Tourism Council (WTTC) has forecasted India’s share of the global travel pie by 2021. WTTC

May 2013
predicts that by 2021, global travel would have reached 1,362 million travelers. India, according to
WTTC, is expected to account for 0.8% of those travelers or 11.1 million international travelers.
The larger question looming now more than ever is that whether India is equipped to cater to such a
volume as the expected number of tourists travelling to India would jump from the current level of
810 million travelers to 1,747 million in 2021. India will witness an increase of 937 million travelers
over the next ten years which is actually more than what the country caters to today. To answer this
question, a recent study conducted by HVS laid down the projection while concluding that the
projected increase in the number of visitors by 2021 would lead to a requirement of about 180,000
hotel rooms in the country. The total investment required to fund this scale of development would be
in the neighborhood of USD 26 Billion.

May 2013
Different Players within the Hospitality Industry
To explain the interrelation of different players that co-exist within the hospitality market, the
framework highlights the respective entities and their role with respect to a hotel asset. First, the
Owner (any hotel owner who owns the hotel asset) either runs an independent hotel (unbranded) or
associates with a hotel branded operator to manage & operate their hotel. To exemplify the same, let
us take the example of the Asian Hotels (West) Ltd. which owns and operates the Hyatt Regency
Mumbai, JW Marriott DIAL, New Delhi and The Clarion, Bengaluru. Hence, as the owner AHWL is
associated with Hyatt Hotels & Marriott respectively who manage their hotels on behalf of the owners
in exchange of a management fees. The hotels are owned by AHWL and all investments as well as
employees are the owner’s prerogative. Each Branded Management Company would assign their flag
(brand name) and extend all operating and marketing services to the owner and accept relative fees
for the same from the owner.

May 2013
OWNERS
(Asian Hotels West)
BRANDED HOTEL FRANCHISOR

OPERATORS PROPERTY (Wyndham,
(Taj, Marriott, MANAGEMENT
Hyatt) Best Western)
SECOND TIER
OPERATORS
(JHM Interstate)
On the other hand, a franchisor-owner relationship involves the owner to operate its own hotel along
the brand specifications of the franchised brand. In this case, the Clarion, Bengaluru is a franchised
hotel where AHWL operates its hotel with its management team and only uses the marketing & sales
distribution network and the Clarion brand from the Choice Hotels Group. In this case, the Clarion
brand lays down brand specifications and other modules to facilitate the owners to run their hotels. A
significant difference between the two concepts is that ideally franchisor brands extend their brands
to owners who ideally have their primary business of hotels and understand the modalities of the
industry in order to safeguard the interest and image of their brands.
However, owners of different background have the flexibility and can tie-up with a management
operator to run their hotels and manage on their behalf as either they do not possess the required
management bandwidth or they simply intend to diversify their business group into hospitality. The
other entity, second-tier management companies are hotel managers who manage & operate hotels
on behalf of owners much like their branded counterparts however they do not have a brand name
and ideally tie-up with a brand under the franchise agreement. The case in point would be the Four
Points by Sheraton Pune & Jaipur, where the owners (Duet Hotels) have employed JHM Interstate a
Non-branded hotel management company and tied up with a brand Four Points by Sheraton on
franchise contract to run its hotel.

May 2013
B TEACHING OBJECTIVES
1 Problem Definition
Dandamudi Group was exploring the development of a Luxury hotel in Timberlake Colony (Gachibowli
Main road) area in Hyderabad. The Proposed Hotel is expected to become operational by March-April
2017. The site is approximately 11.5 Acres. The total built up area permissible on the site is between
17, 53,290 to 20, 03,760 sqft. with an FSI between 3.5 to 4. The subject site for the Proposed Luxury
Hotel is located in Timberlake Colony (Gachibowli Main road) area in Hyderabad. The total built up
area permissible on the site is between 17, 53,290 - 20, 03, 760 sqft depending on the FSI (3.5-4).
The site is located in the Timberlake Colony locality of Hyderabad on the banks of the Malaka Cheruvu
Lake, on the Gachibowli main road. It is in close proximity to prominent locations like Hitech city,
Financial District, Gachibowli and Madhapur. The site has a primary access from the Gachibowli main
road and a secondary access from the DPS/Lanco hills road both of which connect to the Jawaharlal
Nehru outer ring road (ORR). On one side of the proposed site is the Malaka Cheruvu Lake and the
other side faces the Wells Fargo & IBM campus. There is an AP Housing board land adjacent to the said
site. The Gachibowli main road connecting to the ORR leads to NH7 and also the airport.
The purpose of this section is to highlight the core learning objectives originating from the assignment
that Cushman & Wakefield Hospitality (CWH) undertook for the client. The assignment had a distinct
scope- to conduct a feasibility study and market analysis to examine the scope of a Luxury Hotel &
Branded Residences development at the subject site. Hence, the learning objectives have been
identified as the following:
Macro & Micro Market Area Analysis
• Detailed analysis of the city and understand growth initiatives designed for the coming years.
• Economic vitality of the market.
• Assess the real estate in various sectors i.e. commercial, residential and retail to comprehend
current potential and future growth.
• Review development proposals, trends in the subject site cities, traffic growth, to be popular
areas.
• Review tourism trends, policies/incentives available if any.
• Review the dynamics of the hospitality industry in the city and analyse the performance of hotels
against it.
• Review demand drivers for the hotel market in detail including commercial space absorption and
leisure travel.

May 2013
• Provide details of future projects planned or under implementation and estimate likely future
competition. Estimate the present and likely future demand for the proposed hotel. The long stay
segment at hotels as well as the apartment rental markets will be included.
• Estimate likely future growth in traffic, by segment for the market area. This will need to take into
account presently unsatisfied levels of demand and likely future growth.
• Investigate the options for the positioning of the Proposed Hotel.
• Meeting with major sources of hotel business / corporate houses, if required to ascertain the
extent of demand potential in the subject markets by market segment and apply the same to the
business cases of the proposed hotels.
Site Analysis, Location Analysis and Concept Development
• Understand the location & the suitability of the area for a hotel.
• Review the site area available.
• Detailed location analysis through site visit to scan the location comprising of distance from the
main generators of traffic, road access & development, other attractions in the vicinity, catchment
area identifications and quantifications.
• Conduct a detailed analysis of competitive hotels to estimate the present and likely future demand
for hotel rooms in the city, segmented by class of property.
• Finalise on the concept.

May 2013
C PEDAGOGY
1 Data Analysis
a. Market area review
The subject site for the Proposed Luxury Hotel is located in Timberlake Colony (Gachibowli Main road)
area in Hyderabad. The total built up area permissible on the site is between 17, 53,290 - 20, 03, 760 sqft
depending on the FSI (3.5-4)
The purpose of market area analysis is to survey and analyse the prevailing market conditions - the
economic order, the demographics, the rate of growth, demand and supply dynamics and trends. This data
is then correlated to understand the environment in which the hotel will be operated. Further, by
understanding the underlying market fundamentals and the existing trends variations in hotel demand
may also be anticipated so that changes, particularly from known demand sources, are appropriately
reflected in identified market segments. The future market behaviour and various financial variables are
then, forecasted.
b. Site Description
The site is located in the Timberlake Colony locality of Hyderabad on the banks of the Malaka Cheruvu
Lake, on the Gachibowli main road. It is in close proximity to prominent locations like Hitech city, Financial
District, Gachibowli and Madhapur. The site has a primary access from the Gachibowli main road and a
secondary access from the DPS/Lanco hills road both of which connect to the Jawaharlal Nehru outer ring
road (ORR). On one side of the proposed site is the Malaka Cheruvu Lake and the other side faces the Wells
Fargo & IBM campus. There is an AP Housing board land adjacent to the said site. The Gachibowli main
road connecting to the ORR leads to NH7 and also the airport.
Area Summary
HOTEL
Number of Rooms 300
Total Hotel Area 28,362 m²
Total Hotel Area (BUA) 305,177 ft2
Total Carpark Area 9,294 m²
Total Carpark Area 100,000 ft2
c. Concept Analysis
The Proposed Hotel is located in the Timberlake Colony locality of Hyderabad. It was expected to comprise
a main Reception Lobby, guest rooms & suites, an all day dining and associated Kitchens & amenities.

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Additionally other facilities will also include small meeting and events Space, Swimming Pool and a well
equipped Gym.
Summary of Facilities, Proposed Hotel
Summary of Hotel Facilities - Proposed Upscale Hotel

Approx Area Corridor / Number of Area Occupied
Guest Rooms Approx Area (sqft)
(sqm) Open Space Rooms (sqft)
Standard Rooms 388 36 20% 180 83,700
Deluxe Rooms 581 54 20% 100 69,750
Executive Suites 872 81 20% 20 20,925
Total 300 174,375
Approx Area Area Occupied

Food and Beverage Facilities Approx Area (sqft) Covers Number
(sqm) (sqft)
All Day Dining/MultiCuisine 5,000 465 200 1 5,000
Speciality Restaurant 1 3,000 279 100 1 3,000
Speciality Restaurant 2 2,400 223 80 1 2,400
Lounge / Bar 1,500 139 50 1 1,500
Total 4 11,900
Approx Area Area Occupied

Meeting and Conference Facilities Approx Area (sqft) Capacity (pax) Number
(sqm) (sqft)
Grand Ballroom (divisible by 3) 6,725 625 500 2 13,450
Meeting Rooms 404 38 30 1 404
Board rooms 269 25 20 2 538
Pre-function space 1,300 121 1 1,300
Total 6 15,692
Approx Area Corridor / Area Occupied

Other Facilities Approx Area (sqft) Number
(sqm) Open Space (sqft)
Spa 5,000 465 1 5,000
Book Shop & Florist(Health Club) 1,000 93 1 1,000
Business / Contact Centre 2,500 232 1 2,500
Total 3 8,500
Total Rooms Area 174,375

Total Other Hotel Areas 36,092
Car Park Area (FSI free) Rooms 60,000
Meeting Space 40,000
Total Carpark 100,000
Ratio for Back of House Facilities 45%

Total Back of House 94,710
Total Area (BuA) 305,177

Total Area (GBuA) 405,177
Total Area Per Room (including hotel, F&B, Conference, other facilities and back of house facilities) 1,017
Market Positioning Luxury
Source: As per information provided by Dandamudi Estates (Client)
The existing supply was reviewed which was likely to compete with the proposed hotel either directly or
indirectly and reviewed accommodation supply that may become competitive to the proposed product
from across the geographical area across of Hyderabad. We then identified them as primary and secondary
competitors weighing them on certain variables like category, inventory, location, brand and rate
positioning in the market.

May 2013
For the purpose of our analysis, we included hotels across all categories into the competitive set keeping
in mind the prevailing market dynamics. The hotels were categorized as primary, secondary and tertiary
competitors based on the brand, inventory, location attributes and impact it may have on the proposed
property.
Our analysis of accommodation demand was aimed at identifying the most likely sources and profile of
demand as evident from our research and analysis of the Hyderabad and further, in the micro market area.
Demand for transient accommodation typically originates from the following market segments:
• Business demand, including business FIT travelers and Groups
• Meetings and Conference demand, also known as Business Events; and
• Long stay demand, including guests who stay for over two weeks, generally on business travel.
• Leisure demand, including domestic and international Individual and Group and transit travelers.
We note that the above market segments are purely for the Hyderabad hotel market and therefore, the
Proposed Hotel was likely to operate within these transient accommodation market segments.
d. Market Outlook Summary
Residential Segment
The third quarter of 2012 witnessed healthy enquiries from both NRI investors as well as end-users. Due
to the overall moderate demand scenario, majority of the developers in the city resorted to stable pricing
in order to sustain sales. The capital values in both mid and high-end segments have remained stable
across most of the locations, except for locations such as Madhapur, Gachibowli, Himayathnagar, where
there was marginal appreciation in Q3 2012 over previous quarter due to a relatively higher demand. The
rental values have remained stable across most of the locations except Kukatpally and West & East
Maredpally, where rentals have increased marginally. Going forward, the capital and rental values are
expected to increase marginally during Q4 2012 on account of moderate increase in overall demand which
would be a culmination of effective policy measures taken in the recent past and the onset of the festive
season. The relaxation in the land reservation regulation will continue to positively impact the residential
markets with increased launches in the near future.
Retail Segment
Main street rentals are also expected to remain stable due to moderate demand in the short term.
Demand is likely to go up over the next three to six months as retailers have reduced their space
requirements and are actively evaluating space options in order to operate at their preferred locations.

May 2013
As a result, prime retail locations such as Jubilee Hills and Banjara Hills are likely to witness increase in
demand for small format stores. The upcoming mall supply in Kukatpally will also cater to the needs of
some high-end retailers who have been weighing their options in the market for quite some time. Despite
the addition of only a single mall of 335,000 Sqft. expected in early 2013 in Kukatpally, mall rentals are
expected to remain stable in the city. Newer markets are likely to witness increased demand on account
of shortage of retail space in prime locations. Rentals in prime locations could grow moderately owing to
the lack of supply; upcoming locations will remain stable in the short term to capitalize on enquiries.
Office Space Segment
The overall demand for office space is expected to increase moderately from next year, i.e. starting year
2013 as economic conditions improve. Fresh supply between 1 to 1.5 million Sq.ft. is expected over the
next two quarters which would be between Q4 2012 and Q1 2013. A majority of this upcoming supply is
planned as Grade A developments across suburban micro markets of Madhapur & Gachibowli. During the
same time frame, a modest increase in fresh pre-commitments is also expected as shortage of Grade A
space is likely to continue. Rentals are expected to remain stable till end of the current year.
Hospitality Segment
Although Occupancy and ARRs have shown a marginal decline in the past couple of years, business in the
city looks to grow in the future, especially in the Hitech city, Madhapur, Financial District and Gachibowli
region thanks to the major development in the residential, retail and commercial sectors. The focus of
business in the city has seen a shift from CBD to this region. Major Offices like IBM, Wells Fargo, Deloitte,
Wipro, ICICI, Infosys, Virtusa, TCS, Accenture etc either have or are setting up campuses in the vicinity.
Well known residential brands like Mantri, NCC, Divyashree and Jayabheri have projects coming up in the
area. The 500 acre EMAAR golf course is taking shape in the locality. There is also more development in
the region with major international schools, major hospitals, movie welfare association activities etc.
Hyderabad is a preferred destination in the country for conferences & conventions. It is well connected to
the rest of the country by air, rail and road and all of this has contributed to making it one of the fastest
growing cities in south India. The city is also being promoted and propagated widely by the state
government and has good infrastructure which is facilitating the development.
Hotel business in the city looks promising in the next 3-4 years as all the major developments in the
residential, retail and commercial sectors would lead to more people travelling to the city and hence
occupying hotel rooms. There are 4 SEZ’s identified and announced by the government of the state which
indicates more development. Major international brands like Hyatt, Radisson, Marriott, Accor, Carlson etc
are planning to expand their footprint in the city. Room Nights available in the city have increased by 8%
in 2012 over 2011 and the supply of hotel rooms in the luxury segment in the next 3 years is expected to

May 2013
grow at approximately 10 % year-on-year corresponding to the increasing demand for keys in the subject
market segment.
The increase in branded inventory would lead to stiff competition between the leading brands and
therefore might lead to rate-cutting. RevPAR has seen a growth in 2012 over 2011 and is expected to
remain positive in 2013. The ARRs in the city are expected to go up in the second half of 2012 and 2013.
The Occupancy rate in the city which is currently at 52% is also expected to improve.
Est. Market Mix - 2012

Est. Occupancy Est. ARR Est. RevPAR
Meetings &
Conferenc
Leisure &
Longstay
Business (YE March) (YE March) (YE March) CAAG 2010-2012
Room Weighted
Other
Count Comp. Room RevPA
2010 2011 2012 2010 2011 2012 2010 2011 2012 Occ ARR
Competitors 2012 Level Count R
e
Taj Krishna 260 100% 260 65% 15% 20% 0% 59% 58% 64% 7,994 7,980 8,000 4,716 4,628 5,100 3.9% 0.0% 4.0%
Taj Banjara 122 25% 31 60% 15% 20% 5% 55% 54% 66% 6,200 5,378 4,484 3,410 2,904 2,959 9.5% -15.0% -6.8%
Taj Deccan 151 25% 38 60% 20% 15% 5% 60% 64% 65% 6,000 5,239 5,000 3,600 3,353 3,250 4.1% -8.7% -5.0%
ITC Kakatiya Hotel & Towers 188 100% 188 70% 20% 5% 5% 55% 57% 56% 7,058 6,966 6,204 3,882 3,971 3,474 0.9% -6.2% -5.4%
Marriott Hyderabad Hotel & Convention
297 Center
10% 30 70% 20% 5% 5% 50% 47% 51% 4,700 4,604 4,302 2,350 2,164 2,194 1.0% -4.3% -3.4%
Ista Hyderabad 166 100% 166 85% 5% 10% 0% 50% 51% 56% 6,010 5,938 5,424 3,005 3,028 3,037 5.8% -5.0% 0.5%
Novotel & HICC 288 100% 288 60% 30% 5% 5% 68% 60% 65% 7,500 7,000 7,300 5,100 4,200 4,745 -2.2% -1.3% -3.5%
Novotel Airport 69 10% 7 88% 5% 2% 5% 35% 48% 50% 4,728 4,347 4,500 1,655 2,087 2,250 19.5% -2.4% 16.6%
The Park 270 25% 68 78% 15% 5% 2% 40% 34% 27% 5,000 5,500 5,000 2,000 1,870 1,350 -17.8% 0.0% -17.8%
Westin 427 100% 427 70% 15% 10% 5% 50% 56% 62% 6,363 6,799 6,837 3,182 3,807 4,239 11.4% 3.7% 15.4%
Courtyard by Marriott 112 0% 0 75% 18% 5% 2% 40% 73% 75% 3,300 3,462 3,409 1,320 2,527 2,557 36.9% 1.6% 39.2%
Mercure Hyderabad Abids 82 0% 0 65% 10% 20% 5% 40% 50% 55% 3,200 3,500 4,000 1,280 1,750 2,200 17.3% 11.8% 31.1%
Total Competitive Supply 2432 62% 1501 68% 18% 10% 3% 56% 56% 60% 6,959 6,833 6,736 3,916 3,802 4,026 3.1% -1.6% 1.4%
Proposed Inventory Proposed Opening

Hyatt Regency 490 Oct 2012
Leela Palace Kempenski 186 Oct 2009
JW Marriott 250 Jun 2011
The Grand Hyatt 400 Oct 2012
Cumulative Hotels 2009 842 Dec 2009
Room Nights Available and Occupied, Annual Increase – 2010-2020

May 2013
RNA % RNS % ARR %
Period RNA Inc. RNS Inc. Occ % ARR Inc.
2010 500,500 281,628 56% Rs6,959
2011 547,993 9% 304,918 8% 56% Rs6,833 -2%
2012 547,993 0% 327,558 7% 60% Rs6,736 -1%
2013 596,753 9% 390,564 19% 65% Rs7,072 5%
2014 767,225 29% 474,676 22% 62% Rs7,426 5%
2015 1,043,425 36% 518,449 9% 50% Rs7,797 5%
2016 1,066,469 2% 574,863 11% 54% Rs8,187 5%
2017 1,063,555 0% 636,654 11% 60% Rs8,597 5%
2018 1,209,555 14% 778,522 22% 64% Rs9,026 5%
2019 1,209,555 0% 776,433 0% 64% Rs9,478 5%
2020 1,212,869 0% 921,175 19% 76% Rs9,952 5%
2021 1,209,555 0% 936,301 2% 77% Rs10,449 5%
2022 1,209,555 0% 1,166,398 25% 96% Rs10,972 5%
Source: Cushman & Wakefield Hospitality
2 Case Analysis
a. Site Summary:
Particulars Details
Plot area (in Acres / Sq ft) 11.5 Acres
FSI Permissible Between 3.5 to 4 per sft.
Built-up Area Permissible Between 17,53,290 to 20,03,760 sft.
Land Use (approved) Agriculture (Applied towards commercial – in progress)
Location Khajaguda, Off ORR, Hyderabad
The property has currently not been excavated. Presently there are
Property Description (in its
pathways through the property. The periphery is in the process of being
present state)
marked out. The property is lake facing.
The land is mountainous with large boulders & has not been excavated
Topography (Landscape)
yet
Current Structures There is no development on the proposed site as yet.
Primary access – Gachibowli Main rd, Secondary access – DPS/Lanco Hills

Site Access
rd.

May 2013
Particulars Details
Road Facing Access road – Gachibowli Main road(connecting to ORR)
Front – 60 mt. (Proposed to be expanded to 150 ft.)

Road Width
Side – 40 mt. (Proposed to be expanded to 150 ft.)
Proximity to surface
connectivity Good
(Good / Bad / Average)
Road Jawaharlal Nehru Outer Ring Road (ORR)
Accessibility Rail Nampally Railway Station
Air Rajiv Gandhi International Airport
Proximity to civic amenities

Good
(Good / Bad / Average)
Surrounded on one side by Malaka Cheruvu Lake, on one side by the

Neighborhood Profile Jawaharlal Nehru Outer Ring Road (ORR), on one side there is AP housing
board land and one side faces the Wells Fargo Campus.
Key Influence Area Hitech city, Financial District, Gachibowli, Lanco Hills, HICC.

May 2013
b. Site Map and Surrounding Developments:
PROPOSED SITE
Source: Google maps

May 2013
The site is located in the Timberlake Colony locality of Hyderabad on the banks of the Malaka Cheruvu Lake,
on the Gachibowli main road. It is in close proximity to prominent locations like Hitech city, Financial District,
Gachibowli and Madhapur.
The site has a primary access from the Gachibowli main road and a secondary access from the DPS/Lanco
hills road both of which connect to the Jawaharlal Nehru outer ring road (ORR).
On one side of the proposed site is the Khajaguda lake and the other side faces the Wells Fargo & IBM
campus. There is an AP Housing board land adjacent to the said site. The Gachibowli main road connecting
to the ORR leads to NH7 and also the airport.
c. Connectivity
In terms of connectivity Hyderabad is well connected with the major cities of India by air, train, and
roads. Hyderabad airport is well connected with the all the Indian cities. It is also connected with the
rest of the world with some international flights. The city has mainly two railway stations; Hyderabad
and Secunderabad.
Key Destinations Distance from Subject Site
Rajiv Gandhi International Airport ~ 20 Kilometers
Hyderabad Railway Station ~ 15Kilometers

(Nampally)
Secunderabad Railway Station ~ 20 Kilometers
Hitech City ~ 5 Kilometers
Financial District ~ 4 Kilometers
Hyderabad International Convention ~ 10 Kilometers

Center
Banjara Hills ~ 10 Kilometers

May 2013

May 2013
d. SWOT Analysis
• Strategic Location: located right in the • No main road access

middle of Gachibowli (new/developing (Primary/Secondary)
Hyderabad).
• Current supply in the market is
• 20 kilometers (20 minutes from the Rajiv high across all brand categories
Gandhi International Airport) which could lead to lower ARRs
• Bang next to major commercial and rate cutting.
catchment (Major IT/ITeS companies in

close proximity)
• No similar product in the area
WEAKNESSES
STRENGTHS
• Lake front site
• Opposite to upcoming AP SEZ
• Primary access to 8 lane Gachibowli Main
Road
• One of a kind product in the market • Adjacent to AP government land
• Good commercial, retail & residential • Sizeable amount of upcoming

infrastructure in proximity to the said branded hotel inventory especially
location towards Hitech city
• Good connectivity to ORR, Hence good

OPPORTUNITIES
potential to capture business from ORR
• Both access roads are slated to be made

THREATS
150 feet wide in the near future
• Proximity to HICC, Hitech City, Banjara
Hills & Financial District

May 2013
3 Formulation of Development Mix & Financial Model
In this section, we assess the opportunity for the development of an upscale luxury transient
accommodation facility. We also make recommendations with regard to the configuration, service
and facility considerations for the proposed hotel, based on our research findings and conclusions as
previously described in this report.
From an identified product gap perspective we conclude an opportunity exists to establish a branded
upscale luxury hotel to cater to three major segments and aimed at capturing demand from transient
international and domestic business tourists travelling to and around Hyderabad. The different
segments that hotels of Hyderabad cater to are:
• Business Travellers
• Conference Markets
• Long Stayers & Expatriates
• Leisure Travellers
In evaluating the proposed concept and considering the recommended size and market positioning
that would enable the Proposed Hotel to best penetrate the competitive market we have identified
several opportunities and we note certain issues for consideration.
Estimated Annual Growth Rates, 2010 - 2021 – Proposed Hotel
Estimated Annual Growth Rates

Demand Segments 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Business 10% 13% 8.0% 10.0% 12.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0%
Meetings & Conference 2% -7% 4.0% 5.0% 6.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
Longstay 8% 6% 3.0% 4.0% 5.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%
Leisure & Other 15% 14% 3.0% 4.0% 5.0% 6.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
Total Growth 8% 7% 6.6% 8.4% 10.2% 12.0% 12.1% 12.2% 12.3% 12.4% 12.5% 12.6%

May 2013
a. Projections of Proposed Hotel Demand and ARR
Based on the preceding analysis, the Proposed Hotel’s occupancy and ARR are summarised as follows:
Forecast ARR, 2018 - 2022 – Proposed Hotel
Average Room Rate Projections (YE March)

ARR 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Competitive Market $ 7,072.5 $ 7,426.1 $ 7,797.4 $ 8,187.2 $ 8,596.6 $ 9,026.4 $ 9,477.8 $ 9,951.7 $ 10,449.2 $ 10,971.7
% Change n/a 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Proposed MGM - - - - $ - $ 11,102.5 $ 12,321.1 $ 13,932.3 $ 15,673.9 $ 16,457.5
% Change n/a n/a n/a n/a n/a #DIV/0! 11.0% 13.1% 12.5% 5.0%
Rate Penetration n/a n/a n/a n/a 0% 123% 130% 140% 150% 150%
Forecast Occupancy, 2018 - 2023 – Proposed Hotel
Occupancy Projections
2018 2019 2020 2021 2022 2023
Number Of keys 300 300 300 300 300 300
Room Nights Available 109500 109500 109500 109500 109500 109500
Fair Share Penetration 73% 78% 83% 85% 86% 86%
Estimated Occupancy 47% 52.02% 63% 66% 83% 83%
% change n/a 3% 13% 3% 17% 0%

May 2013
b. Projections of Cash Flows
The following projection of income and expense is intended to reflect our judgement of how a typical operator would project the Proposed Hotel’s operating
results.
Proposed MGM - TEN YEAR FORECAST OF CASH FLOW
Period 1 2 3 4 5 6 7 8 9 10
Year Ending 31/March/2018 31/March/2019 31/March/2020 31/March/2021 31/March/2022 31/March/2023 31/March/2024 31/March/2025 31/March/2026 31/March/2027
Currency INR INR INR INR INR INR INR INR INR INR
Days Open 365 365 366 365 365 365 366 365 365 365
Available Rooms (Daily) 300 300 300 300 300 300 300 300 300 300.0
Available Rooms (p.a.) 109,500 109,500 109,800 109,500 109,500 109,500 109,800 109,500 109,500 109,500
Occupancy Percentage 47.0% 50.2% 63.0% 66.1% 82.7% 82.7% 82.7% 82.7% 82.7% 82.7%
Occupied Rooms 51,516 54,973 69,198 72,433 90,514 90,514 90,762 90,514 90,514 90,514
Average Room Rate 11,103 12,321 13,932 15,674 16,458 17,280 18,144 19,052 20,004 21,004
RevPAR 5,223 6,186 8,780 10,368 13,604 14,284 14,998 15,748 16,536 17,363
Amount Amount Amount Amount Amount Amount Amount Amount Amount Amount
(000) (000) (000) (000) (000) (000) (000) (000) (000) (000)
REVENUES
Rooms 571,952 677,331 964,094 1,135,300 1,489,638 1,564,120 1,646,825 1,724,442 1,810,664 1,901,197
Food & Beverage 469,775 514,144 630,043 683,078 843,625 885,806 932,007 976,601 1,025,431 1,076,703
Other Operated Depts. 92,757 102,864 131,588 143,856 184,157 193,365 203,479 213,185 223,844 235,037
Total Revenues 1,134,484 1,294,339 1,725,725 1,962,234 2,517,420 2,643,291 2,782,311 2,914,228 3,059,939 3,212,936
DEPARTMENTAL EXPENSES
Rooms 85,880 92,910 106,566 116,277 132,694 139,329 146,455 153,610 161,290 169,355
Food & Beverage 237,251 252,872 281,750 299,714 337,450 354,322 372,383 390,640 410,172 430,681
Other Operated Depts. 48,915 51,743 55,981 59,179 64,455 67,678 71,093 74,615 78,346 82,263
Total Departmental Expenses 372,046 397,525 444,298 475,169 534,599 561,329 589,931 618,865 649,808 682,299
TOTAL DEPARTMENTAL INCOME 762,439 896,814 1,281,427 1,487,065 1,982,821 2,081,962 2,192,380 2,295,363 2,410,131 2,530,638
UNDISTRIBUTED OPERATING EXPENSES
Administrative & General 165,324 175,911 192,957 205,984 226,568 237,896 249,945 262,281 275,395 289,164
Sales & Marketing 74,309 80,141 91,324 99,169 112,764 118,402 124,452 130,538 137,065 143,918
Property Operation & Maintenance 110,216 117,274 128,638 137,323 151,045 158,597 166,630 174,854 183,596 192,776
Utility Costs 183,694 195,457 214,396 228,872 251,742 264,329 277,717 291,423 305,994 321,294
Total Undistributed Exp. 533,543 568,783 627,314 671,348 742,119 779,225 818,744 859,095 902,050 947,152
GROSS OPERATING PROFIT (GOP) 228,895 328,032 654,113 815,717 1,240,702 1,302,737 1,373,636 1,436,268 1,508,081 1,583,486
MANAGEMENT FEES 52,346 65,073 104,101 124,124 174,779 183,518 193,360 202,328 212,445 223,067
- Base Fee 34,035 38,830 51,772 58,867 75,523 79,299 83,469 87,427 91,798 96,388
- Incentive Fee 18,312 26,243 52,329 65,257 99,256 104,219 109,891 114,901 120,646 126,679
INCOME BEFORE FIXED CHARGES 176,549 262,959 550,012 691,593 1,065,923 1,119,219 1,180,276 1,233,940 1,295,637 1,360,419
FIXED CHARGES
Property Taxes 16,406 16,570 16,735 16,903 17,072 17,925 18,822 19,763 20,751 21,788
Insurance on Building & Contents 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Total Fixed Charges 18,406 18,570 18,735 18,903 19,072 19,925 20,822 21,763 22,751 23,788
NET OPERATING INCOME (NOI) 158,144 244,389 531,277 672,690 1,046,851 1,099,294 1,159,454 1,212,177 1,272,886 1,336,630
Less: REPLACEMENT RESERVE 22,690 38,830 69,029 98,112 125,871 132,165 139,116 145,711 152,997 160,647
PROFIT BEFORE DEBT SERVICE 135,454 205,559 462,248 574,578 920,980 967,130 1,020,339 1,066,466 1,119,889 1,175,984

May 2013
c. Projections of Development Cost and IRR Analysis
The Proposed Hotel is to be located on Gachibowli Road, Hyderabad. The development cost reflects
the proposed hotel’s upscale luxury facilities and services as detailed in this report.
Development Cost - Hotel
Key Assumptions - Development Cost
Inflation 5%
Escalation in Building Costs 5%
Escalation in Carparking Costs 5%
Escalation in FF&E Costs 5%
Escalation in Pre-opening Costs 5%
Key Financial Assumptions
Debt 66%
Equity 34%
Cost of Debt 13%
Cost of Equity 25%
Discount Rate (WACC) Pre tax 17.0%
Discount Rate (WACC) Post tax 14.5%
Capitalisation Rate 11.0%
Transaction Cost 1%
Development Cost Phasing - Hotel
Development Cost Phasing

2013 2014 2015 2016 Total
Land Cost 100% 0% 0% 0% 100%
Building Cost ( Rs2400 per sqft) 50% 50% 0% 0% 100%
Carpark Building Cost ( Rs1,300 per sqft) 60% 40% 0% 0% 100%
Furniture, Fixtures & Equipment ( 60 L per room) 0% 20% 40% 40% 100%
Professional Fees (Say 10%) 0% 0% 0% 100% 100%
Contingency (Say 10%) 0% 0% 0% 100% 100%
Pre-Opening Cost ( 10 L per room) 0% 0% 0% 100% 100%
Total Phasing 25% 22% 20% 33% 67%
Development Cost Phasing

2013 2014 2015 2016 Total
Land Cost 450,000,000 - - - 450,000,000
Building Cost ( Rs2400 per sqft) 370,985,000 370,985,000 - - 741,970,000
Carpark Building Cost ( Rs1,300 per sqft) 79,569,090 53,046,060 - - 132,615,150
Furniture, Fixtures & Equipment ( 60 L per room) - 364,691,663 729,383,325 729,383,325 1,823,458,313
Professional Fees (Say 10%) - - - 87,458,515 87,458,515
Contingency (Say 10%) - - - 87,458,515 87,458,515
Pre-Opening Cost ( 10 L per room) - - - 298,384,088 298,384,088
Total Phasing 900,554,090 788,722,723 729,383,325 1,202,684,443 3,621,344,580
Total Phasing (excl IDC) 900,554,090 788,722,723 729,383,325 1,202,684,443 3,621,344,580

May 2013
Development Cost Per Room
Component (assuming 3 year development phasing) Total Cost Per Room Per m² % Total
Land Cost 450,000,000 1,500,000 16,000 12%
Building Cost ( Rs2400 per sqft) 741,970,000 2,473,000 26,000 20%
Carpark Building Cost ( Rs1,300 per sqft) 132,615,150 442,000 14,000 4%
Furniture, Fixtures & Equipment ( 60 L per room) 1,823,458,313 6,078,000 64,000 50%
Professional Fees (Say 10%) 87,458,515 292,000 2,000 2%
Contingency (Say 10%) 87,458,515 292,000 2,000 2%
Pre-Opening Cost ( 10 L per room) 298,384,088 995,000 11,000 8%
Estimated Development Cost 3,171,345,000 10,571,000 112,000 88%
Estimated Development Cost (excl land) 3,621,345,000 12,071,000 128,000 100%
Summary of Hotel Facilities - Proposed Luxury Branded Residences
Corridor / Open Number of

Residential Villas Approx Area (sqft) Approx Area (sqm) Area Occupied (sqft)
Space Rooms
Two Bedroom 3,000 279 25% 70 262,500

Three Bedroom 3,900 362 25% 30 146,250
Four Bedroom 5,070 471 25% 20 126,750
Total 120 535,500
Health Club & Spa 10,760 1,000 1 10,760
Retail - Shopping Arcade 1,615 150 0 1,615

Total 1 12,375
Total Rooms Area 0
Total Other Hotel Areas 12,375
Open Air Car Park Area (FSI free) (1 carpark for every room and villa) 42,000
Open Air Car Park Area (FSI free) ( 1 carpark for every 5 pax) Rooms and MICE 4,214
Total Carpark 46,214
Ratio for Back of House 50%
Total Back of House 6,187
Total Area (GBA) 18,562
Total Area Per Room (including hotel, F&B, Conference, other facilities and back of house facilities) 155
Total Employee Area and guest accompanying persons
Total Residential Villas' Area 535,500
Total GBA (including carparking)
Market Positioning Luxury Hotel - MGM
The proposed hospitality development is estimated to be ready for occupation by April 2017 and hence
the support retail format is also expected to be available by the same timeframe.

May 2013
The land required for development of retail space is as follows:
Hence, we recommend the support retail to be between 19,000 to 20,000 sft which can be
accommodated over a land area of 0.22 acres.

May 2013
4 Development Plan & Financial Feasibility
Project Timelines
Property Development key dates
Land Area and Land Development Rate
As per the information shared by the client land cost is taken at INR 15 crore per acre
Debt to Equity Structure
Debt to equity proportion is taken as 60:40. WACC is arrived at 14.60% based on debt rate of 13% and
equity expectation of 17%

May 2013
Development Matrix
Based on demand estimation built up area between 19,000 sq ft and 20,000 sq ft is envisaged for the
subject support retail development.
Support Retail Development Assumptions
Rentals are considered as INR 35/ sft/ month which are based on market prevailing rentals. While the
construction cost for development is taken as INR 1,500 per sq ft.

May 2013
Revenue Phasing
Revenue Phasing 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Lease Space Availability % 100% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Lease Space Availability Sqft 20,250 20,250 - - - - - - - - -
Cumulative Lease Space Availability % 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250
Occupancy % 50.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cumulative Lease Space Absorption Sqft 10,125 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250
Lease Rate INR/ Sqft/ Month 35.00 35.00 35.00 40.25 40.25 40.25 46.29 46.29 46.29 53.23
Revenue (lease model) INR Million 92 - 7.44 8.51 9.78 9.78 9.78 11.25 11.25 11.25 12.94
Interest on Security Deposit INR Million 3 - 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34 0.34
Gross Revenue INR Million 95 - 7.78 8.85 10.12 10.12 10.12 11.59 11.59 11.59 13.28
Construction Phasing
Construction and other costs 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Construction Spread (area development) % 100% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Construction Sqft 20,250 20,250 - - - - - - - - -
Construction Rate (area development) INR/ Sqft 1,500.00 1,560.00 1,622.40 1,687.30 1,754.79 1,824.98 1,897.98 1,973.90 2,052.85 2,134.97
Construction Cost (area development) INR Million 30 30.38 - - - - - - - - -
Construction Spread (car parking) % 100% 30.0% 40.0% 30.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Brokerage INR Million 1 0.71 0.71 - - - - - - - -
Interest during construction INR Million 1 1.23 - - - - - - - - -
Total INR Million 33 32.32 0.71 - - - - - - - -
Total Expenditure
Total expenditure is calculated based on land cost, land development cost and construction cost.
Total Expenditure 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Initial Outlay INR Million - 0
Land Cost INR Million 33 33.21 - - - - - - - - -
Add: Land Development Cost INR Million - - - - - - - - - - -
Add: Construction Cost INR Million 32 31.61 - - - - - - - - -
Total INR Million 65 64.81 - - - - - - - - -

May 2013
Financing
Financing 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Equity INR Million 46 45.85 - - - - - - - - -
Debt INR Million 19 18.96 - - - - - - - - -
Total INR Million 65 64.81 - - - - - - - - -
Book Depreciation
Book Depreciation 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Opening Balance INR Million - 64.81 61.57 58.49 55.57 52.79 50.15 47.64 45.26 43.00
Capital Addition (for the portion to be leased) INR Million 65 64.81 - - - - - - - - -
Depreciation (for the portion to be leased) INR Million 24 - 3.24 3.08 2.92 2.78 2.64 2.51 2.38 2.26 2.15
Closing balance INR Million 64.81 61.57 58.49 55.57 52.79 50.15 47.64 45.26 43.00 40.85
Tax Depreciation
Tax Depreciation 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Opening Balance INR Million - 64.81 58.33 52.50 47.25 42.52 38.27 34.44 31.00 27.90
Capital Addition (for the portion to be leased) INR Million 65 64.81 - - - - - - - - -
Depreciation (for the portion to be leased) INR Million 40 - 6.48 5.83 5.25 4.72 4.25 3.83 3.44 3.10 2.79
Closing balance INR Million 64.81 58.33 52.50 47.25 42.52 38.27 34.44 31.00 27.90 25.11
Debt Repayment Schedule
Debt Repayment Schedule 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Opening Balance INR Million 76 - 18.96 18.96 15.17 11.38 7.59 3.79 - - -
Draw dow n INR Million 19 18.96 - - - - - - - - -
Repayment INR Million 19 - - 4 4 4 4 4 - - -
Closing balance INR Million 76 18.96 18.96 15.17 11.38 7.59 3.79 - - - -
Interest INR Million 9 - 2.47 2.22 1.73 1.23 0.74 0.25 - - -
Interest during construction INR Million 1 1.23 - - - - - - - - -
Total 18.96 19 - - 3.79 3.79 3.79 3.79 3.79 - - -

May 2013
Terminal Value
Terminal Value 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Terminal Value Occupied space INR Million - - - - - - - - - 132.75
Terminal Value Vacant stock space INR Million - - - - - - - - - -
Capital Gain tax INR Million - - - - - - - - - -
Post Tax Terminal value INR Million - - - - - - - - - 132.75
Free Cash Flow to Firm
Free Cash Flow to Firm 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
PAT INR Million 61 (0.71) 1.37 3.55 5.47 6.11 6.74 8.83 9.21 9.33 11.13
Add: Interest expense after tax INR Million 10 1.23 2.47 2.22 1.73 1.23 0.74 0.25 - - -
Add: Depreciation INR Million 24 - 3.24 3.08 2.92 2.78 2.64 2.51 2.38 2.26 2.15
0.52 7.07 8.85 10.12 10.12 10.12 11.59 11.59 11.59 13.28
Less: Increase in non-cash w orking capital INR Million - - - - - - - - - - -
Less: Capital Expenditure INR Million 65 64.81 - - - - - - - - -
Add: Terminal Value INR Million 133 - - - - - - - - - 132.75
Free Cash Flow to Firm INR Million (64.29) 7.07 8.85 10.12 10.12 10.12 11.59 11.59 11.59 146.03
Based on the free cash flow to firm the Project IRR is arrived at 20.20% and Project NPV at INR 19.75 Million.
Free Cash Flow to Equity
Free Cash Flow to Equity 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
PAT INR Million 61 (1) 1 4 5 6 7 9 9 9 11
Add: Depreciation INR Million 24 - 3 3 3 3 3 3 2 2 2
Add: New Debt Issue INR Million 19 19 - - - - - - - - -
Less: Loan Repayment INR Million 19 - - 4 4 4 4 4 - - -
18 5 3 5 5 6 8 12 12 13
Less: Increase in non-cash w orking capital INR Million - - - - - - - - - - -
Less: Capital Expenditure INR Million 65 65 - - - - - - - - -
Add: Terminal Value INR Million 133 - - - - - - - - - 133
Free Cash Flow to Equity INR Million (47) 5 3 5 5 6 8 12 12 146

May 2013
Based on the free cash flow to Equity the Equity IRR is arrived at 21.21%

May 2013
Balance Sheet
BALANCE SHEET 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
Sources of Funds
Debt INR Million 19 19 15 11 8 4 - - - -
Equity INR Million 45 47 50 56 62 68 77 86 96 107
Total Liabilities 64 65 65 67 69 72 77 86 96 107
Application of Funds
Cash INR Million (1) 4 7 11 16 22 30 41 53 66.02
Other Current Assets (Net) INR Million - - - - - - - - - -
Fixed Assets INR Million 65 62 58 56 53 50 48 45 43 40.85
Total Assets 64 65 65 67 69 72 77 86 96 106.87
Debt Service Coverage Ratio
Particulars 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
PAT (0.71) 1.37 3.55 5.47 6.11 6.74 8.83 9.21 9.33 11.13
Depreciation - 3.24 3.08 2.92 2.78 2.64 2.51 2.38 2.26 2.15
Interest - 2.47 2.22 1.73 1.23 0.74 0.25 - - -
Repayment - - 4 4 4 4 4 - - -
Inflow (0.71) 7.07 8.85 10.12 10.12 10.12 11.59 11.59 11.59 13.28
Outflow - 2.47 6.01 5.52 5.03 4.53 4.04 - - -
DSCR 1.47 1.83 2.01 2.23 2.87 - - -
Average DSCR 2.08
Interest Coverage Ratio
Particulars 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26
EBIT (0.71) 3.83 5.77 7.20 7.34 7.48 9.08 9.21 9.33 11.13
Interest - 2.47 2.22 1.73 1.23 0.74 0.25 - - -
Interest
Average Coverage 1.55 2.60 4.17 5.96 10.12 36.83
Interest
Coverage Rato 10.20

May 2013
Security Coverage Ratio
Based on the total project cost of INR 64.81 million and total debt of INR 18.96 million, the security cover ratio is estimated to be 3.41
Sensitivity Analysis
Sensitivity analysis for internal rate of return is conducted based on rentals and construction cost.

May 2013
5 Assignment Question
1) Basis the data provided on Residential segment in Hyderabad it is feasible to develop a Branded
Residential segment?
2) Would you rather suggest instead that Dandamudi Estate Company build either Commercial or Retail
space within the space?
3) Given the global economic scenario and Indian hospitality industry overview would it be wise to build
a mid-market or economy segment hotel instead of a luxury property?
4) Given the role of a C&W consulting associate, what different approach would you have taken to this
feasibility in consulting the owners?

May 2013
Appendix 1 Instructions (Caveats & Limitations)
1. The Feasibility Report (hereafter referred to as “Report”) will not be based on comprehensive market
research of the overall market for all possible situations. Cushman & Wakefield India (hereafter referred to
as “C&WI”) will cover specific markets and situations, which will be highlighted in the Report. C&WI will
not be carrying out comprehensive field research based analysis of the market and the industry given the
limited nature of the scope of the assignment. In this connection, C&WI will rely solely on the information
supplied to C&WI and update it by reworking the crucial assumptions underlying such information as well as
incorporating published or otherwise available information.
2. In conducting this assignment, C&WI will carry out analysis and assessments of the level of interest envisaged
for the property(ies) under consideration and the demand-supply for the each of the asset class; sector in
general. C&WI will also obtain other available information and documents that are additionally considered
relevant for carrying out the exercise. The opinions expressed in the Report will be subject to the limitations
expressed below.
a. C&WI endeavors to develop forecasts on demand, supply and pricing on assumptions that has
been considered relevant and reasonable at that point of time. All of these forecasts is in the
nature of likely or possible events/occurrences and the Report will not constitute a
recommendation to RICS School of Built Environment. (hereafter referred to as the “Client”) or its
affiliates and subsidiaries or its customers or any other party to adopt a particular course of action.
The use of the Report at a later date may invalidate the assumptions and bases on which forecasts
have been generated and is not recommended as an input to a financial decision.
b. Changes in socio-economic and political conditions could result in a substantially different
situation than those presented at the stated effective date. C&WI assumes no responsibility for
changes in such external conditions.
c. In the absence of a detailed field survey of the market and industry (as and where applicable),
C&WI has relied upon secondary sources of information for a macro-level analysis. Hence, no
direct link is sought to be established between the macro-level understandings on the market with
the assumptions estimated for the analysis.
d. The services provided is limited to development feasibility and will not constitute an audit, a due
diligence, tax related services or an independent validation of the projections. Accordingly, C&WI
will not express any opinion on the financial information of the business of any party, including
the Client and its affiliates and subsidiaries. The Report is prepared solely for the purpose stated,
and F not be used for any other purpose.
e. While the information included in the Report is believed to be accurate and reliable, no
representations or warranties, expressed or implied, as to the accuracy or completeness of such
information is being made. C&WI will not undertake any obligation to update, correct or
supplement any information contained in the Report.
f. In the preparation of the Report, C&WI has relied on the following information:
i. Information provided to us by the Client and its affiliates and subsidiaries and third
parties;
ii. Recent data on the industry segments and market projections;
iii. Other relevant information provided to us by the Client and its affiliates and
subsidiaries at C&WI's request;
iv. Other relevant information available to C&WI; and
v. Other publicly available information and reports.

May 2013
3. The Report will reflect matters as they currently exist. Changes may materially affect the information
contained in the Report.
4. All assumptions made in the feasibility study is based on information or opinions as current. In the course
of the analysis, C&WI has relied on information or opinions, both written and verbal, as current obtained
from the Clients as well as from third parties provided with, including limited information on the market,
financial and operating data, which would be accepted as accurate in bona-fide belief. No responsibility is
assumed for technical information furnished by the third party organizations and this is bona-fidely believed
to be reliable.
5. No investigation of the title of the assets will be been made and owners' claims to the assets will be assumed
to be valid. No consideration will be given to liens or encumbrances, which may be against the assets.
Therefore, no responsibility is assumed for matters of a legal nature.
6. C&WI's total aggregate liability to the Client including that of any third party claims, in contract, tort including
negligence or breach of statutory duty, misrepresentation, restitution or otherwise, arising in connection
with the performance or contemplated performance of the services is limited to an aggregate sum not
exceeding the total fees paid for each instructions accepted. C&WI shall not be liable for any pure economic
loss, loss of profit, loss of business, depletion of goodwill, in each case whether direct or indirect or
consequential or any claims for consequential loss compensation whatsoever which, arise out of or in
connection with services provided under this engagement.
7. C&WI endeavours to provide services to the best of ability and in bona-fide good faith. The proposed
services and/or work product of C&WI shall be only for the use of the Client. If the Client allows any third
party to use or rely thereon the work product of C&WI, it shall be at the sole risk of the Client and there
shall be no liability on C&WI (including its Directors, and employees) towards any third party claim for
damages, economic loss or damage suffered arising out of or in connection with the services proposed to be
rendered, direct or indirect due to whatsoever reasons and however the loss or damage is caused. The
Client shall assist and cooperate with C&WI to defend any third party claim before any court of law or
authorities, and indemnify C&WI of the cost of such proceedings.
8. The Client including its agents, affiliates and employees, must not use, reproduce or divulge to any third party
any information it receives from C&WI for any purpose without prior written consent from C&WI and
should take all reasonable precautions to protect such information from any sort of disclosure. The
information or data, whether oral or in written form (including any negotiations, discussion, information or
data) forwarded by C&WI to the Client may comprise confidential information and the Client undertakes to
keep such information strictly confidential at all times unless prior written consent from C&WI has been
obtained.
9. In the event of any party wants to disclose any information it shall take prior written consent of C&WI and
shall make only such disclosures as allowed by the C&WI. However, the non-disclosure condition shall not
apply to any information that is already in the public domain or required by any court of law or authorities
under any law. In such an event the disclosing party shall intimate the other party before making such
disclosure.

May 2013
10. This engagement shall be governed by and construed in accordance with Indian laws and any dispute arising
out of or in connection with the engagement, including the interpretation thereof, shall be submitted to the
exclusive jurisdiction of courts in New Delhi.

Case Study 1

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Case Study – Hotel Feasibility

RICS School of Built Environment

RICS School of Built Environment Cushman & Wakefield

Cushman & Wakefield (India) Pvt. Ltd.

To: RICS School of Built Environment

Case Study Period: 2012

• 10 limited liability corporate

• 8 partnership firms and LLP’s

RICS School of Built Environment Cushman & Wakefield 2

• Developed resorts and farm houses in an area of 400 acres.

• Developed Palm oil agri project in 400 acres.

• Developed Mango orchards in 600 acres in the state of Andhra Pradesh.

Purpose of Feasibility Study

Dandamudi Group had extensive plans for future developments.

• Develop an operational Biotechnology park in 450 acres.

• Develop a golfing community project in 250 acres.

RICS School of Built Environment Cushman & Wakefield 3

Envisioning the future of Indian Hotel Industry

RICS School of Built Environment Cushman & Wakefield 4

RICS School of Built Environment Cushman & Wakefield 5

Different Players within the Hospitality Industry

RICS School of Built Environment Cushman & Wakefield 6

BRANDED HOTEL FRANCHISOR

RICS School of Built Environment Cushman & Wakefield 7

Macro & Micro Market Area Analysis

• Economic vitality of the market.

• Review tourism trends, policies/incentives available if any.

RICS School of Built Environment Cushman & Wakefield 8

• Investigate the options for the positioning of the Proposed Hotel.

Site Analysis, Location Analysis and Concept Development

• Review the site area available.

• Finalise on the concept.

RICS School of Built Environment Cushman & Wakefield 9

a. Market area review

RICS School of Built Environment Cushman & Wakefield 10

Summary of Facilities, Proposed Hotel

Summary of Hotel Facilities - Proposed Upscale Hotel

Approx Area Area Occupied

Approx Area Area Occupied

Approx Area Corridor / Area Occupied

Total Rooms Area 174,375

Ratio for Back of House Facilities 45%

Total Area (BuA) 305,177

Market Positioning Luxury

Source: As per information provided by Dandamudi Estates (Client)

RICS School of Built Environment Cushman & Wakefield 11

• Business demand, including business FIT travelers and Groups

• Meetings and Conference demand, also known as Business Events; and

d. Market Outlook Summary

RICS School of Built Environment Cushman & Wakefield 12

Office Space Segment

RICS School of Built Environment Cushman & Wakefield 13

Est. Market Mix - 2012

Proposed Inventory Proposed Opening

Room Nights Available and Occupied, Annual Increase – 2010-2020

RICS School of Built Environment Cushman & Wakefield 14

Source: Cushman & Wakefield Hospitality

Plot area (in Acres / Sq ft) 11.5 Acres

FSI Permissible Between 3.5 to 4 per sft.

Built-up Area Permissible Between 17,53,290 to 20,03,760 sft.