Hotel Industry


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Indian Hotel Industry

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Hotel Industry

  1. 1. May 27, 2009 Expression of Interest to work as Consultant For setting up Hotel Chain in India Indian Travel & Tourism Industry B. Aggarwal & Co.
  2. 2. Indian Tourism & Travel Industry <ul><li>Travel and Tourism is a $32 billion industry in India, 5.3% of GDP </li></ul><ul><li>3.92 million international tourist arrivals in India in 2005 rose to 4.43 million in 2006, an increase of over 13%. </li></ul><ul><li>Foreign Exchange Earnings from Tourism also showed a robust growth of 14.6 percent to touch USD 6.56 Billion from USD 5.73 Billion in 2005. </li></ul><ul><li>Domestic market grew at about 20% p.a. in the last 4-5 years </li></ul><ul><li>Only about 100,000 hotel rooms in 1,800 hotels across the country, registered in 2004*  </li></ul><ul><ul><li>Five star hotel rooms constitute 27%, four-star 7.5% and three-star 22%. </li></ul></ul><ul><li>All India industry-wide occupancy of about 70% in 2004-05  </li></ul><ul><ul><li>Scarcity of rooms in cities like Bangalore has resulted in rates of over $300 per night </li></ul></ul><ul><li>The industry is dominated by 4-5 large Indian hotel owner-managers – The Taj Group, Oberoi, ITC, Leela and Bharat Hotels </li></ul><ul><li>Most major international chains like Sheraton/Starwood, Inter Continental, Hyatt, Marriott, Hilton, Le Meridien, Carlson are represented by management or franchise contracts. Aman and Accor plan to own hotels as well. </li></ul><ul><li>Several others such as Shangri-La, Four Seasons, Ritz Carlton and Mandarin are in the process of establishing their presence in India, primarily through management contracts </li></ul><ul><li>The branded segment represents approximately 30,000 rooms or 30% of the total hotel stock </li></ul><ul><li>Compounded growth in the last 5 years, in terms of rooms added, was the strongest in the mid market segment  </li></ul><ul><ul><li>The three-star hotel segment grew at about 11%; followed by the four star segment at about 9% </li></ul></ul>* Registered with the Federation of Hotel and Restaurant Associations of India (FHRAI)
  3. 3. Key Statistics Source: WTTC Country Reports, FHRAI, HVS 100% FDI is permitted in Hotels and Tourism, through the automatic route 1,00,000 Hotel Industry – number of rooms 1,800 Hotel Industry – number of hotels 6.0 Outbound Tourism (million nos.) 28.0 Domestic Tourism Revenue ($ billion) 271 Domestic Tourism (million nos.) 4.0 Inbound Tourism Revenue ($ billion) 3.3 Inbound Tourist Arrivals (2004) million nos. 32 Travel & Tourism Revenue ($ billion) Key Statistics - India
  4. 4. Government Initiatives <ul><li>To unlock the huge potential in this sector, Government has taken various initiatives for the development of this sector. </li></ul><ul><ul><li>100% FDI is permitted in Hotels and Tourism, through the automatic route </li></ul></ul><ul><ul><li>102 rural tourism infrastructure projects have been sanctioned to spread tourism and socio economic benefits to identified rural sites having tourism potential. </li></ul></ul><ul><ul><li>Ministry of Tourism brought out guidelines for classification of Apartment Hotels, Time Share Resorts and Guest Houses. It also sanctioned capital subsidy for 43 budget category hotels and interest subsidy for 86 budget category hotels. </li></ul></ul><ul><ul><li>Recognition of spare rooms available with various house owners by classifying these facilities as &quot;Incredible India Bed and Break fast Establishments&quot;', under 'Gold' or 'Silver' category. </li></ul></ul><ul><ul><li>A new category of visa &quot;Medical Visa&quot; ('M'-Visa) has been introduced, which can be given for specific purpose to foreign tourists coming into India. </li></ul></ul><ul><ul><li>Guidelines have been formulated by Department of AYUSH prescribing minimum requirements for Ayurveda and Panchkarma Centres. </li></ul></ul><ul><ul><li>Launch of Incredible India campaign to promote tourism both in domestic and international markets. </li></ul></ul>
  5. 5. Opportunity - Outlook <ul><li>Foreign tourist arrivals are expected to grow to 5 million by 2007. Could double to 10 million by 2010-12 </li></ul><ul><li>Domestic tourism is expected to increase by 15% to 20% p.a. over the next five years </li></ul><ul><li>Rapid growth in average room rates is expected to continue until sufficient new supply comes on stream  </li></ul><ul><ul><li>Average room rates increased by 21% in 2005 over 2004, the fastest growth rate was in 4-star and 5-star segments </li></ul></ul>
  6. 6. Opportunity - Potential <ul><li>Favourable demographics and rapid economic growth point to a long term secular uptrend in the domestic demand for hotels – for business and leisure </li></ul><ul><li>International inbound traffic is expected to grow rapidly with increasing investment and trade activity   </li></ul><ul><li>India’s rich heritage and natural beauty are just beginning to be marketed to international leisure travellers. </li></ul><ul><li>The growth momentum in domestic and international travel is expected to receive a further boost with more budget airlines/lower air-fares, open sky policies and expected improvements in travel infrastructure (roads, airports, railways) </li></ul><ul><li>There are opportunities in all price and value chain segments due to the shortage of hotel stock - over 100,000 hotel rooms need to be added over the next five years  </li></ul><ul><li>Hotel-asset construction and ownership   </li></ul><ul><li>Low penetration of brands (about 30%) provides opportunities for management contracts and franchising with local hotel owners/ developers  </li></ul><ul><li>Serviced apartments in major cities – no chain operating in all cities, very little stock </li></ul><ul><li>Investment opportunity of about $8-10 billion in the next 5 years </li></ul>
  7. 7. Key Players in India Bharat Hotels Bass Plc 11 Sarovar Park Hotels and Resorts Park Inn/ Park Plaza 10 Asian Hotels Hyatt International 9 ITC Hotels Starwood H & R (Sheraton) 8 Indian Hotels Hilton 7 NONE Shangri-La 6 NONE Radisson 5 NONE Le Meridian 4 NONE Orient Express Hotels 3 NONE Marriott International 2 NONE Four Seasons 1 Main Indian Collaborator International Player No.
  8. 8. New Room Supply – by 2011 Source: HVS International 16% 32% 30% 23% In per cent 53693 8440 16997 15924 12332 Total New Supply 2770 721 720 1005 324 Jaipur 1065 330 335 400 0 Cochin 2632 485 675 1147 325 Goa 4618 927 1454 1767 470 Pune 7408 1395 1579 2549 1885 Hyderabad 7794 1108 2883 1300 2503 Bangalore 4407 480 1017 1675 1235 Chennai 2465 240 1225 725 275 Kolkata 9318 1270 2485 2697 2866 Mumbai 11216 1484 4624 2659 2449 Delhi/NCR Total Budget Mid Market First Class Luxury Particulars
  9. 9. Economic Indicators & Tourism Statistics Source: HVS International 46.2 44.5 44.9 46 Exchange rate US$1.00: INR 2.90% 3.10% 3.30% 3.70% Total arrivals to Kolkata 10% 9.90% 10.30% 10.50% Total arrivals to Chennai 25.00% 24.90% 25.10% 24.10% Total arrivals to Mumbai 32.10% 32.00% 32.20% 30.80% Total arrivals to New Delhi $1,508 $1,463 $1,412 $1,321 Foreign exchange earnings ($ per visitor) 6.7 5.73 4.81 3.6 Foreign exchange earnings ($billions) 4,443,893 3,915,324 3,406,623 2,726,000 Number of arrivals 2006 2005 2004 2003 Particulars
  10. 10. Our Services <ul><li>Stage I : Project Preparation </li></ul><ul><ul><li>– Locating a Site for Hotel </li></ul></ul><ul><ul><li>– Hotel formal / informal approvals </li></ul></ul><ul><ul><li>– Hotel notification </li></ul></ul><ul><ul><li>– State support assistance </li></ul></ul><ul><ul><li>– Other regulatory & statutory approvals </li></ul></ul><ul><ul><li>– Proposal for government grants (if any) </li></ul></ul><ul><li>Stage II: Project Development </li></ul><ul><ul><li>– Carrying out feasibility study </li></ul></ul><ul><ul><li>– Site connectivity </li></ul></ul><ul><ul><li>– Business plan & financial modelling </li></ul></ul><ul><ul><li>– Risk management framework </li></ul></ul><ul><ul><li>– Strategy for co-developers/ partners </li></ul></ul><ul><li>Stage III: Project implementation </li></ul><ul><ul><li>– Project bundling/ unbundling </li></ul></ul><ul><ul><li>– Project execution and O&M arrangements </li></ul></ul><ul><ul><li>– Financial structuring </li></ul></ul><ul><ul><li>– Development of detailed term sheet </li></ul></ul><ul><ul><li>– Legal assistance, marketing/ organization </li></ul></ul><ul><ul><li>structure/ strategy </li></ul></ul><ul><li>Stage IV: Project financing </li></ul><ul><ul><li>– Arranging Financial closure </li></ul></ul><ul><li>Stage V: Project Execution </li></ul><ul><ul><li>– Engineering & procurement </li></ul></ul><ul><ul><li>– Project management & supervision </li></ul></ul>
  11. 11. New Delhi Kapil Aggarwal [email_address] cell: +919810046045 Offices: Thank you for your interest . Thank You B. Aggarwal & Co.