siddhant summer report

7/29/2019 Siddhant Summer Report

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DREAM GATEWAY HOTELS

Summer Project Page 1

Contents

The Jain Group........................................................................................................................................ 4

Business .............................................................................................................................................. 6

AIM:........................................................................................................................................................ 9

OBJECTIVES: ........................................................................................................................................ 9

METHODOLOGY: ................................................................................................................................ 9

LIMITATIONS:.................................................................................................................................... 10

INDUSTRY ANALYSIS...................................................................................................................... 11

Tourism market overview ................................................................................................................. 13

Hotel market overview...................................................................................................................... 18

KOLKATA ....................................................................................................................................... 26

PROFILE OF THE PROPOSED HOTEL ............................................................................................ 29

LOCATION ...................................................................................................................................... 30

Floor-wise Details............................................................................................................................. 32

FINANCIAL VIABILITY.................................................................................................................... 34

SALES REVENUE........................................................................................................................... 34

OPERATIONAL EXPENSES .......................................................................................................... 36

Depreciation Statement ..................................................................................................................... 39

Profitability Statement ...................................................................................................................... 41

BREAK EVEN ANALYSIS............................................................................................................. 43

RATIO ANALYSIS.......................................................................................................................... 45

SENSITIVITY RATIO ..................................................................................................................... 46

COST BENEFIT ANALYSIS .......................................................................................................... 47

Secondary project.................................................................................................................................. 48

CONCLUSION ..................................................................................................................................... 52

BIBLIOGRAPHY ................................................................................................................................. 53

Annexures ............................................................................................................................................. 54


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List of Figures

Figure 1 Customer profile .................................................................................................................. 13

Figure 2T&T Contribution .................................................................................................................. 14

Figure 3 Foreign tourists arrivals .......................................................................................................... 16Figure 4 ARR .......................................................................................................................................... 20

Figure 5 Kolkata Map ............................................................................................................................ 26

Figure 6 ARR vs Occupancy ................................................................................................................... 27

Figure 7 Upcoming supply..................................................................................................................... 28

Figure 8 Room sales .............................................................................................................................. 35

Figure 9 F&B sales ................................................................................................................................. 35

Figure 10 Total sales ............................................................................................................................. 35

Figure 11 Expenses................................................................................................................................ 36

Figure 12 Expenses................................................................................................................................ 36

Figure 13 Total Expenses ...................................................................................................................... 38Figure 14 Depreciation value ................................................................................................................ 39

Figure 15 Total Depreciation ................................................................................................................. 40

Figure 16 Operational profit ................................................................................................................. 41

Figure 17 Net cash flow ........................................................................................................................ 42

Figure 18 ROI ......................................................................................................................................... 45


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List of tables

Table 1 Key stats ................................................................................................................................... 12Table 2 Key points ................................................................................................................................. 15

Table 3 City Study.................................................................................................................................. 21

Table 4 Floor wise details ...................................................................................................................... 32

Table 5 (Cost of project) ........................................................................................................................ 33

Table 6 Total sales ................................................................................................................................. 34

Table 7 Expenses ................................................................................................................................... 37

Table 8 Depreciation Statement ........................................................................................................... 39

Table 9 Profitability Statement ............................................................................................................. 41

Table 10 Fixed cost ................................................................................................................................ 43

Table 11 Variable cost ........................................................................................................................... 43Table 1 COST OF BUILDING ............................................................................................................. 54

Table 2 PLANT AND MACHINERY .................................................................................................. 54

Table 3 GUEST ROOM ........................................................................................................................ 55

Table 4 RESTAURANT ....................................................................................................................... 55

Table 5 ROOM SERVICE .................................................................................................................... 56

Table 6 BANQUET and Conference Hall ............................................................................................. 56

Table 7 STORES, PURCHASE, HOUSEKEEPING ............................................................................ 56

Table 8 ADMINISTRATION ............................................................................................................... 57

Table 9 RECEPTION AND LOBBY.................................................................................................... 57

Table 10 STAFF CAFETARIA ............................................................................................................ 57

Table 11 FOOD AND BEVERAGE OUTLETS .................................................................................. 58

Table 12 BANQUET HALL AND CONFERENCE ............................................................................ 58

Table 13 GUEST ROOM AND SUITE ROOM LINEN ...................................................................... 58

Table 14 KITCHEN STEWARDING (RESTAURANT &ROOM SERVICES) ................................. 59

Table 15 BANQUETS .......................................................................................................................... 59

Table 16 STAFF CAFETARIA ............................................................................................................ 59

Table 17 HOUSE KEEPING MISCELLANEOUS ASSETS ............................................................... 59

Table 18 PRELIMINARY AND PRE-OPERATIVE EXPENSES ...................................................... 60

Table 19 SALARY AND WAGES(Monthly)....................................................................................... 61Table 20 FOOD & BEVERAGE SALES ............................................................................................. 63

Table 21 RESTAURANT ..................................................................................................................... 63

Table 22 Room Service ......................................................................................................................... 63

Table 23 BANQUET & CONFERENCE HALL .................................................................................. 64

Table 24 Room Sales............................................................................................................................. 64


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The Jain GroupJain Group, one of the most d ynamic and admired organizations, entered the

business world approximately half a century back when they emigrated from

Rajasthan to the Eastern part of the country. They entered the business world

with the advent of distribution of p rimary products like Iron and Steel, cementand petroleum products. Besides this, they owned several best in world china

clay mines through which numerous porcelain units of crockery and insulators

are established. With years of experience and a team of dedicated professionals,

has proved its worth in various spheres of industries, and is moving to wards

future with quantum growth plan. Jain Group is kn own for its rock solidity

commitments, strong financial standing, and good market reputation. Client

relations are excellent and Jain Group has a name for fair dealings. Group

policies and strong principals have created such an unwritten contract, such a

loyalty that customers keep returning to th em. It is not out of place to mention

that, at present cliental list consist of 70% repeated customers. With an ever

growing list of our business associate th at includes MNCS, banks and other

financial institutes, corporate, IT sectors, FIIS, government bodies and many

more. Jain Group is all set to s cale new height of success.

Vision & Mission

With the Management philosophy ofQuality First, Services First and Customer

Satisfaction First, the Jain Group targets to hold the leading position in the

fields of finance, automobile and a number of diverse industrial & business

sectors in India and abroad. To upgrade the integral enterprise value, we commit

ourselves to provide global-standard products and value -added services.


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Our mission is to understand the needs of our clients while devising effective

and innovative solutions for them. At the h eart of our mission is a d esire to

cultivate and sustain a successful proactive relationship with our clients.

We are committed to:

Providing a broad spectrum of integrated solutions.

Meeting and exceeding with customers demands and expectations.

Adopting the latest technologies to deliver state of the art infrastructural

developments.

Ensuring conservation and development of eco-friendly projects.

Making continuous improvement in all areas of activity based on customer

inputs in order to improve customer satisfaction.

Contributing to the welfare of society.

Values and Beliefs

Jain Group is customer oriented and is dedicated to provide a comprehensive

range of products under a single roof. We establish long term relationships with

our clientele in order to help them meet their life long personal or business

requirements. We are dedicated in providing our clients complete satisfaction of

quality and affordability. Through our products and professional assistance, we

commit our clients towards a successful and prosp erous future.

We believe in giving ou r customer the synergy of 3s i.e. Service, Support and

Satisfaction all under one roof. We at J ain Group have always believed in the

phrase 'under promise and over deliver' and we always practice this philosophy

in our work.

We are an organization that our clients trust for quality, reliability and integrity,

that is because we build it right the first time. Moreover, our company provides

an environment where people want to work, sta y and grow with.


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Business

Jain Finance Corporation

In the year 1978 Mr. Prem Jain, CMD of Jain Group, established an auto

financing firm christening it as Jain Finance Corporation, later another

institution was created by the name of J FC Hire Purchase (P) Ltd.

JAIN FINANCE Corporation is the financial services c ompan y of the Jain

Group. The Company has a strong reputation for credibility and fairness in its

dealings with its customers and associates. The Companys business includes the

financing of commercial vehicles, light, heavy and multi-utility, and tractors

through hire purchase and leasing. Jain Finance is predominantly an automobile

finance company however to maximize the advantage o f its human asset base,

Jain Finance has diversified into other modules of financing such as project

finance, equipment finance and personal loans.


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Dream Developers

Ever enthusiastic towards expansion and uncovering new ho rizons, JAIN

GROUP entered the field of real estate development in t he shape of Dream

Developers. Developing over a million sq.ft. of real estate in kolkata. The core

focus of the company is on creating quality living conditions and at the same

time providing the best value for investments for homebuyers. Here perfection is

a commitment and this reflects in our const ruction, planning, execution,

customer service, property management etc. Besides undertaking residential and

commercial projects, Jain group is also diversifying into hotels, IT parks, malls,

farm houses and other infrastructural developments. For us th e journey has just

begun. Guided by its vision, fuelled by enthusiasm, strengthened by strong work

force and loaded with advanced building te chnology, JAIN GROUP is committed

to give shape to future o f not just Kolkata, but many more cities spread across

the country.
http://www.thejaingroup.com/busi_real_dream_park.htmlhttp://www.thejaingroup.com/busi_real_dream_ap.htmlhttp://www.thejaingroup.com/busi_real_dream_resi.htmlhttp://www.thejaingroup.com/busi_real_dream_villa.htmlhttp://www.thejaingroup.com/busi_real_dream_arcedia.htmlhttp://www.thejaingroup.com/busi_real_dream_park.htmlhttp://www.thejaingroup.com/busi_real_dream_ap.htmlhttp://www.thejaingroup.com/busi_real_dream_resi.htmlhttp://www.thejaingroup.com/busi_real_dream_villa.htmlhttp://www.thejaingroup.com/busi_real_dream_arcedia.htmlhttp://www.thejaingroup.com/busi_real_dream_park.htmlhttp://www.thejaingroup.com/busi_real_dream_ap.htmlhttp://www.thejaingroup.com/busi_real_dream_resi.htmlhttp://www.thejaingroup.com/busi_real_dream_villa.htmlhttp://www.thejaingroup.com/busi_real_dream_arcedia.htmlhttp://www.thejaingroup.com/busi_real_dream_park.htmlhttp://www.thejaingroup.com/busi_real_dream_ap.htmlhttp://www.thejaingroup.com/busi_real_dream_resi.htmlhttp://www.thejaingroup.com/busi_real_dream_villa.htmlhttp://www.thejaingroup.com/busi_real_dream_arcedia.htmlhttp://www.thejaingroup.com/busi_real_dream_park.htmlhttp://www.thejaingroup.com/busi_real_dream_ap.htmlhttp://www.thejaingroup.com/busi_real_dream_resi.htmlhttp://www.thejaingroup.com/busi_real_dream_villa.htmlhttp://www.thejaingroup.com/busi_real_dream_arcedia.htmlhttp://www.thejaingroup.com/busi_real_dream_park.htmlhttp://www.thejaingroup.com/busi_real_dream_ap.htmlhttp://www.thejaingroup.com/busi_real_dream_resi.htmlhttp://www.thejaingroup.com/busi_real_dream_villa.htmlhttp://www.thejaingroup.com/busi_real_dream_arcedia.html


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Topaz Motors

The Group has to its credit a list of achievements and is recognized as an

experienced player in the field of automobile financing and dealership. Topaz

Motors came into being 1998. in 2000-2001, they bagged the best dealer award

for eastern India. Another milestone was achieved in 2002, when Topaz motors

became the dealers for SKODA AUTO INDIA, a wholly owned subsidiary of

German Auto major, Volkswagen, for their range of vehicles in Eastern India.


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AIM:

1. Primary - To do a hospitality industry analysis and determine Financial Viability of a

proposed hotel

2. Secondary - To list out potential partners for the Project

OBJECTIVES:

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

Primary

Secondary

To shortlist various potential firms who are ready to partner the project and provide

expertise.

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 Hospitality organization 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.

To do a hospitality industry analysis and determine Financial Viability of aproposed hotel in Kolkata.

To estimate the cost of project.

To estimate the total expected revenue from the various departments ofthe proposed hotel.

To calculate the profitability ratios of the proposed hotel.

Determine the profitability analysis.

To find the break-even point and expected return on investment.

Conclusions


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LIMITATIONS:

Calculation made in the project is based on assumption, approximation and subject to

change.

Getting the exact financial figures were not possible.


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INDUSTRY ANALYSISThe travel and hospitality industry continues to be the sector, which has largely profited from

the fast growing economy of India. This has largely been due to the 5.2 m tourist arrivals in

FY08 (11% growth) over the previous period. In the last five years, growth stood at 17% per

annum. The hotel industry went through a rough patch between FY00 to FY04 owing to

factors like the Asian financial crisis, Afghan war, Middle East unrest, September 11 attacks,

SARS and domestic riots.

India occupies forty-sixth position among the sixty tourist destinations in the world. A

flourishing economy helped boost demand for the industry. To encourage the tourism sector,

the government is planning to propose a conditional 10-year tax holiday for all tourism

projects in the country. Companies will enjoy full tax exemption up to 50% of profits, but

will qualify for tax benefits for the remaining amount only if they re-invest it in tourism

projects. The Centre and States are also working out a PPP (Public-Private-Partnership)

model to increase hotel capacity. Efforts to diversify tourist attractions by offering new

products such as wellness tourism, medical tourism and golf tourism are expected to have a

positive effect on both foreign tourist arrivals and domestic tourism.

The outlook for India's tourism industry is upbeat. Key factors driving the tourism boom

include India's sustained economic growth, strong foreign direct investment inflows,

increased air networks, the availability of cheaper air travel, a strong domestic market and

aggressive marketing campaigns. Challenges relating to inadequate tourism infrastructure still

remain, but are not enough to dampen the bullish outlook for the Indian hotel market.


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Table 1 Key stats

Source: World Trade Tourism Council

Encouraged by this optimistic tourism outlook, many developers, investors and international

hotel management companies are jumping onto the India hotel bandwagon. A number of the

Indian real estate players view hotels as a natural extension and synergy to their growth real

estate portfolios. The major cities that are the hub of economic and real estate development in

India are: Bangalore, Chennai, National Capital Region/Delhi (comprising the capital city

Delhi and suburbs of Noida, Gurgaon, Faridabad, Ghaziabad and Greater Noida), Hyderabad,

Kolkata, Mumbai and Pune.

India has become a favoured destination for global investors and multinational corporations

ever since it opened its economy in the early nineties.


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Tourism market overview

1. Key trends and demand drivers

India, which ranks after China (PRC) as the world's second-most populous country,has experienced a tourism boom in recent years. Bolstered by a multi-faceted tourism

product that ranges from 27 world heritage sites to religious relics, spa/mountain

resorts and wildlife parks, India has much to offer leisure travellers. Figure 1 Shows

the Customer profile that visited the hotels in the year 2008.

Figure 1 Customer profile

Source: Indiastat

The growing Indian economy will spur business travel. The strong performance of the

corporate sector and the growth in the economy has led to an unprecedented surge in

business travel. GDP grew at a robust 9.4 per cent in 2006-2007 and is expected to

grow by another 8.5 per cent in 2007-2008. Tourisms contribution to the GDP is

shown in Figure 2. Furthermore, the industrial and services sectors have recorded

double-digit growth rates. These figures will undoubtedly continue to raise the level

of business travel in the country. In keeping with the current growth rate, India's

hospitality industry is anticipated to grow at 8 per cent per annum between 2007 and

2016 .

37%

38%

9%

16%

Customer Profile in FY 2008

Domestic Leisure

Domestic Business

International Leisure

International Business


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Figure 2 T&T Contribution

Source: Indiastat

The liberalisation of the airline industry will promote increased travel by both

international and domestic travellers, further fuelling growth in the hotel sector. Open

skies policies and direct international flights to the US and Europe have increased the

country's accessibility, raising international traveller flows. In addition, increased

frequency of existing routes and the introduction of additional routes by low cost

carriers (LCC) such as Indigo, Spice Air, Jet Lite and Go Air will enhance domestic

travel flows.

Recognising the importance of the tourism industry, the government has made large

strides in marketing India internationally. Building on the success of the Incredible

India campaign in previous years, the Ministry of Tourism has launched an integrated

international media campaign to promote India as 'must-see' year-round destination,

with a focus on both generic and niche areas. "Chasing the Monsoon" is the new

theme for the west Asian market.

"The government has also introduced initiatives to spur growth in the hospitality sector. Tax

holidays for two, three and four-star hotels established in specified districts that have

UNESCO World Heritage Sites and convention centres with large seating capacities in the

National Capital Territory of Delhi and in the adjacent urban areas of Faridabad, Gurgaon,

Ghaziabad or Gautam Budh Nagar, have been announced to foster development prior to the

Commonwealth Games in 2010. In addition, there are proposals to improve the tourism

infrastructure that will lead to increased travel. These proposals include constructing 33,000

kms of the National Highway in the Golden Quadrilateral, North-South and East-West


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Corridor areas, improving identified ports to facilitate cruise tourism and evaluating public-

private partnerships to connect identified circuits and destinations by rail.

"Medical tourism will also result in additional demand for hotel rooms. This sector has

gained momentum in the past few years, given the cost advantage and emergence of high

quality healthcare services in India where a choice of airlines, hotels, transportation, food and

sightseeing is offered along with medical treatment in the form of packages. The country's

medical tourism industry is thriving, encouraged by the introduction of a medical visa. In

addition, the Indian government has announced plans to promote medical tourism with an

investment of Rs 260 billion for funding relevant infrastructure including affordable hospitals

and budget hotels for patients and their relatives. Due to the lack of a 'single window'

clearance system, foreign investors have faced problems investing in this sector, and the

Indian government is looking at ways to improve the system.

Table 2 Key points

Key Points

SupplySupply is catching pace. Metros will witness an oversupplysituation after four to five years.

DemandLargely depends on business travellers but tourist traffic is also onthe rise. Demand normally spurts in the peak season betweenNovember and March.

Barriers to entryHigh capital costs, poor infrastructure facilities and scarcity ofland especially in the metros.

Bargaining power of

suppliers

Limited due to higher competition, especially in the metros.

Bargaining power ofcustomers

Higher in metro cities due to increasing room supply.

Competition

Intense in metro cities, slowly picking up in secondary cities.Competition has picked up due to the entry of foreign hotelchains.


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2. International visitor arrivals

India has set a tourism target of 10 million international tourist arrivals by 2010, the

year of the Commonwealth Games in Delhi.

Preliminary statistics from the Ministry of Tourism indicate that inbound tourist

arrivals had already reached a 10-year high of approximately five million in 2007.

This represents a 13 per cent growth over the previous year and the fourth consecutive

year of positive growth in inbound foreign travellers. Compared with the 2.4 million

international arrivals in 2002, the number of foreign visitors to India has increased by

an impressive 86 per cent.

In tandem with the increase in foreign arrivals, foreign exchange earnings soared by

34 per cent over 2006 values to Rs 480 billion in 2007 shown by figure 3.

Figure 3 Foreign tourists arrivals

Source: Indiastat

Leisure travel (96.6 per cent) remains the primary reason for travel to India, followed

by business (2.8 per cent), according to statistics sourced from Ministry of Tourism.

While the overall trend is expected to remain unchanged over the next few years, the

proportion of business travellers could increase with the rise in foreign investments to

India.

3. Major international source markets


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All major source markets recorded positive growth in 2006, with the UK and the US

maintaining their positions as India's two largest foreign source markets, according to

latest available statistics from the Ministry of Tourism.

Nepal, Sri Lanka, Japan and Malaysia were the major source markets. Notably, the

number of arrivals from Nepal showed the highest year-on-year increase among top

Asian markets in 2006.

While the UK and the US are expected to remain India's two largest foreign source

markets, arrivals from Asia are expected to rise with the availability of more flights to

India.

In January 2007 India-based Jet Airways launched direct daily flights from Delhi and

Kolkata to Bangkok. The same year also saw the airline serving the New Delhi -

Toronto and Mumbai-Newark route via their European hub, Brussels.

Reflecting strong travel demand for India, Singapore Airlines now operates six flights

a week to Bangalore while Japan Airlines started daily flights between Tokyo and

New Delhi in October 2007 to meet the business demand on that route. Other cities

such as Kolkata, Hyderabad and Chennai are also served by direct international flights

from major source markets.

4. Domestic tourism

India's domestic tourism market is significant and growing. According to the Ministry

of Tourism, the number of domestic travellers has increased steadily from 140 million

in 1996 to 391 million in 2005 (latest available statistics), a year-on-year increase of

seven per cent. The growth in domestic tourism is attributable to the increasingly

affluent and growing population, strong economic indicators, expanded air networks

and the liberalisation of services.

Pending the release of official data, this growth is expected to have continued into

2006 with indicative statistics from the Ministry of Tourism suggesting that it might

have crossed the 460-million mark.


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Hotel market overview

Financial Year '08

India continued to witness cheering trends in the tourism sector in 2007 with 5.2 m

tourists visiting the country, registering a growth of 11% YoY. The Indian hospitality

sector continued to be the forerunner of India's economic growth with support from

the government. In the Budget 2007, five-year tax holidays for new star-category

hotels and convention halls coming up in the National Capital Region by 2010 were

announced. The Ministry has sanctioned 225 projects and utilised Rs.4.6 bn for

upgradation of infrastructure facilities at important tourist destinations. Even public-

private partnership is being planned to develop infrastructure projects. As a result of

the high room rates in branded hotels, unregulated, unorganised hotels and guesthouse

segments have emerged. Even the existing hotel players entered new segments like

budget hotel and service apartments.

However, in the beginning of the year, the global crisis, slowdown in corporate

earnings and rising air fares affected the hotel sector to a certain extent. Occupancy

levels at hotels catering to business travellers have dropped 5% to 10% since the end

of January. With the dip in occupancy levels and new supply coming in certain

destinations, the room rates witnessed a marginal increase, which was much slower

than what was witnessed last year. Further, with hotel rooms in India being relatively

more expensive (last year was unusual when tariffs rose by 25%), a slowdown was

inevitable. Average room rates (ARRs) in the branded hotel category in India have

increased 280% in the past three years, as per HVS International. Bangalore saw a

decline in room rates, while Mumbai and Delhi witnessed a 15% to 18% increase as

compared to more than 30% hikes witnessed in FY07. Going forward, the prices will

soften by the end of the year as the supplies would start coming in from FY09, which

would bring tariffs to a more realistic level.

The Planning Commission's High Level Group on services sector has pegged the

room shortage in the country at 150,000 rooms by 2010, out of which more than

100,000 will be in the budget category. Not only the Indian hotel majors, but even

international players have lined up huge capex plans. Investments of US$ 11 bn over


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the next 2 years are expected to be earmarked for the hotel industry in India. Further,

new segments like budget hotels, service apartments and management contracts are

witnessing increasing interest.

Existing supply

Based on the facilities and services provided, the Ministry of Tourism approves and

classifies hotels in India into eight categories, namely five-star deluxe, five-star, four-

star, three-star, two-star, one-star, heritage and classification-awaited hotels.

As at the end of 2006, India had an estimated 1,169 approved hotels accounting for

75,787 rooms. The majority of this supply was located in Delhi, Mumbai, Bengaluru,

Chennai and Hyderabad. Historically, the high land prices in many of the key cities have resulted in hotels

being developed in the upper tier categories, causing a scarcity of supply in the lower

categories. In its recent budget, the government has provided tax incentives to develop

one, two and three-star hotels in and around Delhi.

Marketing demand

Aggressive growth in revenue per available room (RevPAR) has been recorded in the

three key Indian cities of Delhi/NCR, Mumbai and Bengaluru over the past five

financial years. In FY2006-2007, the five-star deluxe and five-star hotel segment in

Delhi/NCR and Mumbai reported growth in average room rates (ARR) of about 40

per cent over the previous year, while Bengaluru reported almost 20 per cent ADR

growth over the same period. In comparison, the occupancy growth has been less

aggressive and in certain markets such as Bengaluru, occupancies have stagnated and

even declined. Demand for rooms in India particularly in the key cities (e.g. Delhi/NCR, Mumbai

and Bengaluru) is exceeding supply. This has fuelled the aggressive growth in room

rates and prompted the entry of new players. To address the huge demand-supply

imbalance, efforts will be directed towards building 150,000 hotel rooms in the next

four years, in addition to the launch of a new 'Bed and Breakfast' scheme to meet the

requirements.

The proposed known additions to supply are expected to be rapidly absorbed as they

come on line over the next two to three years. After that room rates are expected to


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adjust to more realistic levels. Markets such as Bengaluru - which generates one of

the highest ARRs in India - are expected to experience a substantial rate correction by

the end of the decade.

Figure 4 ARR


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Additions to supply

Table 3 City Study

Source: Cushman & Wakefield Research


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According to research, the six major markets have approximately 28,000 new rooms

planned by 2011: Bengaluru, Hyderabad and Pune will be most significantly impacted

as room supply is forecasted to increase almost 250 per cent by 2011; in Delhi/NCR,

the majority of supply is being developed in Gurgaon and nearby Noida with almost

100 per cent rooms expected to be completed by 2011, while Mumbai and Chennai

are expected to record growth rates of 35 per cent and 55 per cent respectively.

Chennai has established itself as a preferred destination for the IT/ITeS (Information

Technology/Information Technology enabled services) industry. The major brands

expected to enter into the market in 2009 such as Hilton, Hyatt and JW Marriott will

raise the standard of accommodation. Hyderabad has very few rooms compared with

Delhi and Mumbai. Most hotels are now concentrated in the central business district

(CBD) and upcoming markets of IT/ITeS. The Taj Group's hotels are expected to

commence operations in 2008.

It is difficult to get accurate information on future developments in India, including

hotels. There is an unusually long approved process which delays projects and

presents significant barriers to entry, particularly for foreigners. Land is very

expensive everywhere and quality sites for hotels are even harder to locate. In some

cases, part of this delay is caused by the amalgamation of land which is time-

consuming as it entails purchasing land from different owners.

The investment market

In November 2007 DLF announced its equal partnership with Aman Resorts to enter

into definitive agreements to acquire a controlling interest in the group. The entire

transaction, when completed, is estimated to be valued at Rs 16 billion, with an

assumed debt of approximately Rs six billion. In addition to expanding its resort

locations, Aman Resorts is developing projects in key gateway cities around the

world, the first of which is scheduled to open in New Delhi in 2008.

US hospitality major Carlson is taking a 25 per cent stake in a new venture with the

United Group to introduce the Regent Hospitality brand in India. The joint venture

will develop a luxury hotel property located at Greater Noida with an estimated

investment of Rs 4.5 billion.


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Domestic mid to economy-segment group Lemon Tree Hotels has announced that

Kotak Mahindra Realty Fund has invested Rs 320 million in the company. In a related

development, Kotak Mahindra Realty Fund is investing about Rs 20 million in Red

Fox Hotels which proposes to open limited-service economy hotels in the price range

of Rs 800-2,000 per night.

Credit Suisse, one of the world's top investment banks, launched its domestic

brokerage operations in India earlier this year and recently obtained its Indian

merchant banking licence. Credit Suisse's real estate fund will acquire 10-15 per cent

in a hotel chain in a structured deal. This is Credit Suisse's second investment in the

real estate sector, the first being its acquisition of 75 per cent of a Rs 3 billion Info

Tech park and five-star hotel project from Pune-based developer, Vascon Engineers.

The Orchid Group of Hotels is planning to invest over Rs 10 billion to set up seven

five-star properties in key centres across the country as it mulls an international foray

with properties in China (PRC) and South Africa. It is also planning to add nearly

2,000 rooms at seven locations across the country. The company has entered into

management contracts for 10 hotels set to open across the country over the next two

years.

Milan-based Domina Hotel Group announced in November 2007 that it would

develop 25 hotels through a joint venture and invest Rs 24 billion. In India, its first

hotel is already under construction and will be marketed under the new brand Vedic

Domina Hotels & Resorts. Another four are expected to be built within five years.

It was announced in December 2007 that Kamat Hotels had bought a 60 per cent stake

in Concept Hospitality for Rs 127 per share. The key hotels Concept will manage

include Seasons in Pune, Wall Street in Jaipur and Manor Floatel in Delhi. All of

these now fall under the management of Kamat Hotels. A total of 650 rooms will be

under the listed Kamat Hotels entity which currently operates about 600 rooms.

Kotak India Real Estate Fund has just acquired an approximate 11.11 per cent stake in

the Mumbai-based The Price Group of Hotels at a cost of Rs 450 million. The group,

which currently operates four five-star hotels, has announced a Rs 3.50 billion

expansion and renovation plan which includes setting up five-star hotels in Mumbai,

Goa, Bengaluru and Hyderabad in addition to a resort hotel and spa in Alibaug. The

management envisages an overall inventory of 1,150 rooms in key cities by end 2009.

Dubai Ventures, the private equity arm of Dubai Investment Group, has bought a fiveper cent stake in Delhi-based Bharat Hotels for Rs 1.6 billion - the deal values the


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company at Rs 32 billion. The hospitality chain plans to raise up to Rs 10 billion for

the expansion of six properties under construction and has recently announced an

international foray through a joint venture with the Dubai-based Nakheel Group -

Grand Fort Dubai is set to open in 2009. Other hotels that are under construction and

scheduled to open over the next two years including The Grand Jaipur, The Grand

Resort Bekal, The Grand Ahmedabad, The Grand Chandigarh and The Grand Noida.

DB Realty, a domestic real estate fund, is investing about Rs 3.2 billion in a 320-room

five-star property in Goa. Hyatt International will manage and market the property.

The project is likely to be completed by the second quarter of 2009.

Financial services giant Morgan Stanley is close to picking up a 15-20 per cent stake

in the Institute of Human Health Research Hospitality, owners of the Ananda and Ista

brands of spas and hotels, for Rs 1.4 to 1.6 billion. Morgan Stanley will have a seat on

the board of the hospitality company which is in the process of expanding its footprint

in Delhi, Hyderabad, Pune and Ahmedabad. It plans to have nine properties under the

Ista brand over the next three years.

Oberoi Hotels is fast expanding in India, Abu Dhabi, the Maldives, Cambodia and

Dubai, partly through management contracts and also through investing about Rs five

billion of its own funds. The Group has hired Kotak Mahindra to help raise Rs four

billion via debt and new equity.

India's Parsvnath Developers has signed an agreement with conglomerate ITC's

Fortune Park Hotels to manage 50 hotels comprising 4,100 rooms for Parsvnath

Hotels, a subsidiary of Parsvnath. Parsvnath Hotels is expected to invest

approximately Rs 25.4 billion to develop and own 50 hotels in India which will

comprised 20 five-star hotels, 20 four-star hotels and 10 three-star and budget hotels

between 2011 and 2013. The hotels will fall under the brands of Fortune Select, which

are likely to have at least 100 rooms each; Fortune Park, which is expected to have 75

or more rooms, and other brands such as Fortune Inn and Fortune Faith, which are

likely to have at least 50 rooms. Faith, which is likely to have at least 50 rooms.

Parsvnath plans to eventually develop 75 to 100 hotels across India, especially in the

second and third-tier cities, as well as in other major centres.

Choice Hotels India (CHI) has announced a Rs 7.6 billion franchise and management

plan to partner with various investors to develop 20 new hotels with approximately

2,000 guestrooms in India's major, tier-one and tier-two cities by 2010. CHI is alsoplanning to introduce India's first all-suite hotel, Clarion Ludhiana, in Ludhiana,


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Punjab by the end of 2008. The 120-suite Clarion Ludhiana Hotel aims to target non-

resident Indians (NRIs). In addition, CHI has also linked up with Royal Indian Raj

International Corporation which is expected to invest approximately Rs 160 billion

from 2008 to 2012 to develop15,000 budget guestrooms across India under CHI's

hotel brand such as Clarion, Comfort Inn, Quality Inn and Sleep Inn.

India's real estate fund, Yatra Capital, has entered into a joint venture with Atlas

Hospitality Company (AHPL), a subsidiary of Ruia Group, to develop a luxury hotel

and serviced apartments in Pune. Yatra is expected to hold a 20 per cent stake in the

Rs 286.4 billion venture, which also marks its entry into India's hospitality industry.

Scheduled to be completed in late 2009, the 26,900 square metre project is likely to

comprise 319 hotel rooms and 96 serviced apartments. The project is expected to cater

to business travellers in the area.

Rakeen India Operations Company (Rakindo) has announced the signing of a

Memorandum of Understanding (MoU) with Lotus Hotel Investment Fund (Lotus) to

develop business hotels in Asia, particularly in India. According to the MoU, a joint

venture company will be formed to invest in three-star and four-star hotels in Asia,

with six major cities in South India being the initial focus.

Real estate developer, Royal Palms India (RPI), has announced its plans to invest Rs

15.3 billion in the next three years to develop a 8 million square feet development in

suburban Goregaon. The development is expected to comprise three-star to five-star

hotels, IT offices, residences, villas and a retail mall.

ITC has announced that through its subsidiary, Fortune Park Hotels, plans are

underway to add 100 hotels in rural India to leverage the growing corporate demand

as well as reach out to approximately 792 million (72 per cent of the 1.1 billion

population) people living in the rural areas. Fortune Park Hotels is expected to expand

hotels and inns with as few as 200 rooms each in the smaller towns of India by 2012,

adding 3,000 rooms under its brand.

Indian real estate developer DLF will open a Four Seasons Hotels in Gurgaon at a

cost of Rs 5.9 billion. Part of DLF's ambition to become India's largest hotel group,

the 250-room hotel will be developed on a 10-acre site at DLF Golf Link and is

expected to open before the Commonwealth Games in 2010. The developer has also

secured links with Hilton Hotels to construct over 25,000 hotel rooms on 40 parcels of

land in 71 cities in the country by 2010. The cities include Delhi, Mumbai, Chennai,Kolkata, Bengaluru, Hyderabad, Pune, Chhattisgarh, Amritsar and Ludhiana.


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KOLKATA

Kolkata, the capital of West Bengal, is the commercial capital of the north-eastern

region. Most companies have their regional offices in the city which acts as a major

demand driver for the hospitality sector. Kolkata is also a major commercial and

military port, being the only city in the region to have an international airport besides

having good port infrastructure. It is also the headquarters of Indian corporations like

ITC Ltd, Birla Corporation, RPG Ltd, Peerless Industries, etc. Many global and

domestic software companies have set foot in the city and the gradually growing IT/

ITeS sector is expected to drive the development of the hospitality sector in the city.

Constructions of various flyovers, up-gradation of the international airport and

extension of METRO have been a few of the initiatives taken to improve

infrastructure and to keep pace with all the development activities. Kolkata has also

gained significance as a MICE destination with large number of conferences held at

the city.

Figure 5 Kolkata Map

Source: Cushman & Wakefield Research


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Hospitality Dynamics

The existing room inventory consists of 2,3002,500 rooms spread across

23 hotels.

Approximately 64% of this room inventory consists of up-scale hotels,

primarily located along Salt Lake City, Park Street, Jawaharlal Nehru

Road and AJC Bose Road.

The remaining existing room inventory is divided into mid-scale and

budget hotels each constituting approximately 18%.

Kolkata City Map

Figure 6 ARR vs Occupancy

Source: CRISILAverage Room Rate Vs. Occupancy -

REPORT

THE VOYAGE - An exploration of key hospitality markets in IndiaARR increased by 25% from INR 5,500 in 2006-07 to INR 6,860 in 2007-08 due to

increasing demand for room nights in areas like Salt Lake, Rajarhat, Kariadanga,

Dankuni etc. Similarly the occupancy rate witnessed a marginal increase from 75% in

2006-07 to 76% in 2007-08.

Similar to other metros, Kolkata is no exception to the business/ corporate travellers

being the major occupants (63%) in the hotels under consideration.


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Outlook

Figure 7 Upcoming supply

Source: CRISIL

New supply of approximately 2,400 - 2,600 rooms is expected to come up in the city

over the next three years, spread across 11 new hotel developments. Majority of these

rooms will be in up-scale category constituting approximately 82% of the total

expected room supply, with the remaining 18% in the mid-scale category. Additional

supply is expected to be concentrated along the EM Bypass, Salt Lake Sector V and

New Town.


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PROFILE OF THE PROPOSED HOTEL

NAME - DREAM GATEWAY HOTEL

STAR CATEGORY - 4 STAR

NUMBER OF ROOMS - 108

TYPE - PRIVATE OWNERSHIP

CLASS - BUSINESS CLASS

MEANS OF FINANCE - SELF


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LOCATION

Proposed Site - Atghara, Newtown Rajarhat, Kolkata

1 Km from AIRPORT


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The DREAM GATEWAY Hotel has 108 ROOMS.

The Main features of the hotel are:

46 Queens BedSingle rooms

46 Queens BedDouble rooms,

12 Kings Bed Double rooms

4 Presidential suites

Presidential Suite Amenities:

Poster Bed with pillowtop mattress, 310-thread-count linen sheets, and king size

down pillows (Foam pillows are also available)

Large Flat Screen Television with a DVD player with On Command Movie and

internet service offered at an additional charge

Wetbar with microwave, full size refrigerator and coffee maker

Luxurious jade marble bathroom with bidet

Desk with complimentary wireless and wired high-speed Internet Access

Oversized bathtub and separate shower with massage shower head

Baby Grand Piano

His and Her Closets

Dual-line speakerphones

Iron and ironing board

Laptop-sized in-room safe

Individual climate control

Hairdryer and timed heat lamp

Magnified shaving mirror

Aromatherapy Spa bath amenities

Plush bathrobe and slippers

13 LCD televisions in the bathroom

Oversized bath sheets

Pull out sofas

1 multi cuisine restaurant

1 Bar Lounge

1 Banquet Hall, Conference Hall & Board Room


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Floor-wise DetailsTable 4 Floor wise details

Floors Area (Built up

Area) in sqft.

Services Rooms

Basement 9552 Car Park, Service Area -

Ground 8924 Lounge, Cafeteria, Service Area, -

Store, Back Office

1st 9328 Store, Service Area, Conference

Area,

-

Prefunction Lobby

2nd 9281 Rooms & Toilet 28

3rd 9235 Rooms & Toilet 28

4th 9188 Rooms & Toilet 26

5th 9142 Rooms & Toilet 26

AMENITIES

Air conditioned room

Airport transfers

Audio visual equipped

Baby care

Banquet facilities

Bar

Business centre

Cable TV


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Car parking

Doctor on call

Fax service

Fire safeguards

Laundry facilities

Money changer

Parking

Photocopy services

Power back-up

Restaurant

Safe deposit

Travel desk

BANQUET FACILITIES

OHP presentations

Public address systemslectern, table, and lapel microphones

Exhibitionsdesign and execution

Business center

Full communication facilitiesNational and international

Printing, stationary, delegate kits

Video coverage and photography

COST OF PROJECT

Table 5 (Cost of project)

Particulars Cost in Rs. Lacs

Cost of land 248.88

Cost of building 708.56

Plant and machinery 327.8

Furniture and fixture 353.9

Miscellaneous fixed assets 373.35

Margin for contingency (10% on 1-5) 201.249

Preliminary POP expenses 77.5

Total cost of the project 2291.239


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FINANCIAL VIABILITY

INTRODUCTION TO FINANCIAL ASPECTS OF THE

PROPOSED PROJECT

The financial viability means to find out whether it is financially viable to star or 4 star hotel.

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. Policies as to administration of capital.

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

company.

SALES REVENUE

ESTIMATION OF INCOME OF 1st 5 YRS ( in Rs Lacs)

Table 6 Total sales

Total Sales

Year Rooms sales F&B Sales Total

I 1701.99 60.95 1762.95

II 2013.04 80.48 2093.53

III 2365.49 110.46 2475.95

IV 2766.69 132.25 2898.94

V 3225.06 173.02 3398.09

Source: Annexure

Here the room sales include revenues from room services, booking of Banquet

halls/Conference halls and various kinds of rooms. The price per room has been taken as the

current ARR of the Kolkata hospitality market and then it has been multiplied by the

estimated occupancy. The occupancy forecasted for a period of 5 consecutive years from

commencement of operations is taken into account as60%, 65%, 70%, 75% and 80%. F&Bsales include sales from the Restaurant and the Bar.


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Figure 8 Room sales

Figure 9 F&B sales

Figure 10 Total sales

0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

I II III IV V

Sales in Rs.

Year

Rooms sales

Rooms sales

0

20000004000000

6000000

8000000

10000000

12000000

14000000

16000000

18000000

20000000

I II III IV V

Sales in Rs.

Year

F&B Sales

F&B Sales

0

50000000

100000000

150000000

200000000

250000000

300000000

350000000400000000

1 2 3 4 5

Sales in Rs

Year

Total Sales

Total


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OPERATIONAL EXPENSES

ESTIMATION OF EXPENSE FOR THE 1st 5 YRS (in Rs Lacs)

Figure 11 Expenses

Cost of F&B has been estimated as 30% of the F&B sales.

Electricity cost has been estimated as 5% of the total sales.

Salaries have been estimated for various employees as in the annexure

Miscellaneous expenses are estimated to be around 5% of gross sales

Figure 12 Expenses

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

I II III IV V

Expenses in Rs.

Year

Expenses

Misc expenses(5% of total

sales)

Salaries(Annexures)

Electricity(5% of Tot. Sales)

Cost of F&B(30% of F&B

Sales)

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

50000000

I II III IV V

Expenses in Rs.

Year

Expenses

Insurance & Legal Charges(3%

of Total Sales

Publicity

Administration(10% of Total

Sales)


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Administration will be given to the partner, who have expertise in the Hospitality

industry. Currently talks are on with various firms. They will offer services like:

o Brand value

o Management

o Expertise

o Booking

o Marketing

In return they are charging around 10% of the gross sales.

Publicity budget has been set to be Rs. 15 lacs for the 1st three years and Rs. 20 lacs for the

next two years.

The Legal charges have been estimated as 3% of gross sales.

Table 7 Expenses

Total Expenses

Year

Cost of

F&B(3

0% of

F&BSales)

Electr

icity(5

% of

Tot.Sales)

Salaries

(Annexu

re)

Administ

ration(10

% of

TotalSales)

Public

ity

Insuran

ce &

Legal

Charges

(3% ofTotal

Sales

Misc

expenses(5

% of total

sales)

Total

expenses

I 18.28 88.14 182.80 176.29 15.00 52.88 88.14 621.57

II 24.14 104.67 201.08 209.35 15.00 62.80 104.67 721.74

III 33.13 123.79 221.19 247.59 15.00 74.27 123.79 838.80

IV 39.67 144.94 243.31 289.89 20.00 86.96 144.94 969.75

V 51.90 169.90 267.64 339.80 20.00 10.19 169.90 1121.11


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Figure 13 Total Expenses

0

20000000

40000000

60000000

80000000

100000000

120000000

I II III IV V

Expenses in Rs.

Year

Total expenses

Total expenses


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Depreciation Statement

(in Rs Lacs)

Table 8 Depreciation Statement

Year Building Dep(10%) P&M Dep(25%) F&F Dep(25%) Misc Dep(25%) Total

Depreciation

I 957.44 95.74 327.8 81.95 353.9 88.47 373.35 93.33 359.50

II 861.69 86.16 245.85 61.46 265.42 66.35 280.01 70.00 283.99

III 775.52 77.55 184.38 46.09 199.06 49.76 210.00 52.50 225.91

IV 697.97 69.79 138.29 34.57 149.30 37.32 157.50 39.37 181.07

V 628.17 62.81 103.71 25.92 111.97 27.99 118.13 29.53 146.27

Figure 14 Depreciation value

For building - the Depreciation has been taken as 10% per year For Plant and Machinery - the Depreciation has been taken as 25% per year

For Furniture and Fixture - the Depreciation has been taken as 25% per year

For Miscellaneous items - the Depreciation has been taken as 25% per year

0

500

1000

1500

2000

2500

I II III IV V

Valuein

rs.Lacs

Year

Depreciated value

Misc

F&F

P&M

Building


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Figure 15 Total Depreciation

0

50

100

150

200

250

300

350

400

I II III IV V

Depreciationin

Rs.

lacs

Year

Total Depreciation

Total Depreciation


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Profitability Statement

(in Rs Lacs)

Table 9 Profitability Statement

Profitability Statement

Particulars Year I Year II Year III Year IV Year V

Op. Profit 1141.37 1371.78 1637.51 1929.19 2276.97

Depreciation 359.5 283.99 225.91 181.07 146.27

POP Expenses 77.5 77.5 77.5 77.5 77.5

PBT 704.37 1010.29 1334.1 1670.62 2053.2

Income tax @ 50% + 10% surcharge 422.62 606.17 800.46 1002.37 1231.92

PAT 281.74 404.11 533.64 668.24 821.28

Net Cash Flow 718.74 765.60 837.05 926.81 1045.05

The operating profit at the 1st year of operation is estimated as Rs.1141.37 lacs. There on it is

estimated to grow at an average rate of 18.84% percent per annum.

Figure 16 Operational profit

0

500

1000

1500

2000

2500

Year I Year II Year III Year IV Year V

P

rofitinRs.Lacs

Op. Profit

Op. Profit


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The net cash flow at the 1st year of operation is estimated as Rs.718.74 lacs. There on it is

estimated to grow at an average rate of 9.83% percent per annum as shown in the figure.

Figure 17 Net cash flow

0

200

400

600

800

1000

1200


CashFlow

inRs.Lacs

Net Cash Flow

Net Cash Flow


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BREAK EVEN ANALYSIS

To arrive at BreakEven Point for a specific year occupancy.

Revenue: - III year Rs.2475.95 Lacs Occupancy: - 70%(all figures in Rs Lacs)

Fixed Cost

Table 10 Fixed cost

Rupees in

lacs

1.) Power (40%) 49.51

2.) Salary (80%) 176.95

3.) Insurance and license 2.00

4.) Administration and management expenses 247.59

Total 476.06

Variable cost

Table 11 Variable cost

Rupees in lacs

1.) Power (60%) 34.36 74.27873644

2.) Salary (20%) 21.36 44.239536

3.) Expense towards publicity 10

4.) Cost of Food & Beverages 18.28

Total 146.7982724

1. Contribution = Income - Variable Cost

= Rs. 2475.95Rs. 146.79

= Rs. 2329.16

2. Break Even Point = Fixed cost

Contribution


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= 476.06/2329.16

= .204 or 20%

3. BE Turnover = Total Revenue x B.E.PAssumed occupancy

= 2475.95 x 20%70%

= 707.41

The contribution amounts to Rs.2329.16 lacs. This gives us the break-even point of 20% for

the project. Thus a minimum turnover of Rs 707.41 has to be maintained by the hotel to

achieve break-even.


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RATIO ANALYSIS

R.O.I (RETURN ON INVESTMENT)

Return on investment = Net cash flow x 100

Equity share capital

Year Year I Year II Year III Year IV Year V

ROI (in %age) 31.36 33.41 36.53 40.45 45.61

Figure 18 ROI

Average ROI = 31.36+33.41+36.53+40.45+45.615

= 37.47%

The average ROI is coming to 37.47% which is good for hotel to start with. This will

help the company in recovering all it cost soon and maintain good relations with the

partner. A boost in the ROI can also lead to future expansion of the project in other

cities.

Payback Period = 100/ROI

= 2.67 yrs

The company will recover its costs within 3 yrs of operations if everything runs as per

plan and estimations.

0

5

10

15

20

25

30

35

40

45

50


%ageROI

ROI

ROI


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SENSITIVITY RATIO

Sensitivity change = Change in income

Change in expenses

= 35.37/11.98

= 2.95

Sensitivity to income change = Total income

Occupancy

= 2475.95/70

= 35.37

Sensitivity to Expenses change = Total Expenses

Occupancy

= 838.88/70

= 11.98

III year sensitivity ratio = 2.95

The sensitivity for the third year is very high, which shows that a change is expenses can

result in higher change in the income of the company.


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COST BENEFIT ANALYSIS

A = Total cost of project

= Rs. 2465.85 (amount in lacs)

B = total revenuetotal expenses

= Rs. 8356.47

Capital intensity = B/A

= 8356.47/2465.85

= 3.38

This shows that the business is capital intensive.


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Secondary project

To list out potential partners for the project

Hotels having their presence in India were found at first and then shortlisted according to

different criteria. These were the hotels belonging to the strategy group of the proposedproject.

HOTEL LIST

1. IQ international2. Intercontinental hotel3. ITC Fortune Hotels4. Star WoodsSheraton5. Trident Hotels6. Wyndham Group- Ramada7. Emmar Mgf8. Marriott9. Moven Picks10.Royal orchid11.Ten Hotels12.Accor India13.Bird Group14.Leela Kempski15.Langhan Hotels International16.Aman Hotels17.Corinth Hotel Resort- Pune18.Westcourt Hospitality19.Lemon Tree20.Park plaza21.Sarovar22.Concept hospitality23.Berggruen holding - Keys24.Raddison

The measurement and criterion for short listing the hotel brands were:

Number of propertiesShould have presence in at least 5 cities

Room inventoryaverage rooms in each property should be above 50

Number of rooms sold across all propertiesshould have an average yearly

occupancy of at least 50%

Gross operating profitshould be a profit making organization

Guest facilitiesshould provide all the facilities required for a 4 star hotel

Image Should be a recognised brand


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Based on the above criterion the following hotels were chosen.

1. ITC Fortune HotelsThey offer full service properties all over India, includingsmaller towns and cities, ideal for the budget traveller. Fortune Hotels have a strong

presence in Ahmedabad, Thiruvananthapuram, Calicut, Darjeeling, Jamshedpur, Vapi,

Hyderabad, Gurgaon, Indore, Ootacamund, Madurai, Jodhpur, Vijaywada, Chennai,

Visakhapatnam, Mahabalipuram, Kolkata, Bengaluru, Navi Mumbai, Tirupati and

Port Blair, while several more hotels are expected to be commissioned soon in other

key locations in India.

2. Sarovar Hotels & Resorts pioneered in venturing into the mid-market segment in theIndian hospitality landscape. The Company over a period of 11 years has successfully

churned the demand in this segment, and is now the fourth largest chain in India, with

36 hotels across the country and overseas. It has a diverse portfolio encompassing

hotels, resorts, restaurants and corporate hospitality. The properties vary by type, size

and the market niche they serve. It provides a consummate and unmatched

international hospitality experience at competitive price offerings.

The company is affiliated with Carlson Hospitality Worldwide. Carlson is a globalleader in hospitality services, comprising more than 1,570 hotels, resorts restaurants,

and cruise ship operations in 81 countries. The association with Carlson Hospitality

makes Sarovar Hotels the master franchisor for the Park Plaza and the Park Inn hotel

brands in India. The Company has also launched the domestic brands: Sarovar

Premiere, Sarovar Portico and Hometel.

3. Concept hospitality - (CHL) is a conception of a team of hotel consultants andexperts formulated in July 1996 in Mumbai, India's Commercial Capital. CHL sets up

and operates Restaurants, Hotels, Clubs and Resorts for different owners.

This submission outlines the strength of CHL's Management System, incorporating

the decentralized profit orientated management philosophy which has consistently

produced the best possible returns to hotel owners and the highest levels of guest

satisfaction. It details CHL's sales and marketing network, and the "state of the art"

teamwork - which is the ability to work together towards a common vision. It


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illustrates how CHL has earned a reputation as an industry leader in setting up and

helping to certifying environmentally friendly hotels, with a full range of training

programs, each of which has been adapted for the various cultures and environment,

within which it operates the hotels.

CHL has had a presence in India for over 10 years and so understands and has adapted

its systems and management to the values and culture of India. CHL does not believe

in the total imposition of western systems and management concepts, but an

integration of these with the prevailing culture to maximize both employee

productivity and guest satisfaction to achieve the highest possible returns for the

property owner.

4. Accor India - Accor Hospitality plans to launch 42 hotels in 13 cities for a total 8700room inventory by 2012. The 42 hotels will comprise different Accor brands

including Sofitel, pullman, Novotel, Mercure, ibis and Hotel Formule 1. Accor's mode

of operations in India is through the following partnerships: firstly with InterGlobe

Hotels, which is joint venture with InterGlobe Enterprises for the development of ibis

hotels; next comes a JV between EMAAR MGF and Accor for Hotel Formule 1

development and lastly, another collaboration with InterGlobe Hotels has formed a

hotel management company called AAPC India Hotel Management, which will cover

all Accor hotel brands. According to international categories, Hotel Formule 1 is the

budget brand, ibis hotel is the economy brand, Mercure is a midscale brand, Novotel

is the upper midscale brand, pullman is an upper upscale brand and Sofitel is a luxury

brand.

5. Raddison - Radisson Hotels & Resorts, one of the worlds leading, full-service hotelbrands, offers vibrant, contemporary and engaging hospitality that is defined by its

distinctive Yes I Can! service philosophy. Radisson includes more than 400

locations in 68 countries. It is part of Carlson Hotels Worldwide, a leading global

hotel company with more than 1,030 locations in 72 countries under the brands of

Regent Hotels & Resorts; Radisson Hotels & Resorts; Park Plaza Hotels &

Resorts; Country Inns & Suites By CarlsonSM

; and Park Inn.


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Radisson continues to expand its presence in key markets in the Americas, Asia

Pacific and Europe, the Middle East and Africa, reaching new markets and customers.

The foundation for expansion; focusing on total guest satisfaction, leading loyalty

programs and extensive customer relationship programs.

6. Wyndham Group- Ramada - Located at the worlds top business and leisuredestinations, Ramada Plaza features restaurants, lounges, room service, fitness

centers, concierge service, meeting and banquet facilities. It is located at six locations

in india and look to futher expand in the east.

7. Royal orchid - They have a presence in most major Tier I & Tier II cities withstrategic plans to expand into international markets in the immediate future. With this

in mind, they have started our international foray in Tanzania this year. With multiple

hotel brands they have successfully captured the attention of the most discerning and

demanding clientele in terms of luxury, comfort and value for money. They strongly

believe in exceeding expectations with unparalleled levels of professionalism and

making certain they enjoy a memorable experience, always.

8. Trident Hotels - Located at Agra, Bhubaneswar, Chennai, Cochin, Gurgaon (DelhiNCR), Jaipur, Mumbai and Udaipur, Trident Hotels offer business as well as exotic

holiday locations across India. They make the best of a business meeting or event by

their award winning facilities.
http://www.tridenthotels.com/agra/index.asphttp://www.tridenthotels.com/bhubaneswar/index.asphttp://www.tridenthotels.com/chennai/index.asphttp://www.tridenthotels.com/cochin/index.asphttp://www.tridenthotels.com/gurgaon/index.asphttp://www.tridenthotels.com/gurgaon/index.asphttp://www.tridenthotels.com/jaipur/index.asphttp://www.tridenthotels.com/mumbai_nariman_point/index.asphttp://www.tridenthotels.com/udaipur/index.asphttp://www.tridenthotels.com/udaipur/index.asphttp://www.tridenthotels.com/mumbai_nariman_point/index.asphttp://www.tridenthotels.com/jaipur/index.asphttp://www.tridenthotels.com/gurgaon/index.asphttp://www.tridenthotels.com/gurgaon/index.asphttp://www.tridenthotels.com/cochin/index.asphttp://www.tridenthotels.com/chennai/index.asphttp://www.tridenthotels.com/bhubaneswar/index.asphttp://www.tridenthotels.com/agra/index.asp


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CONCLUSION

The project on financial viability was completed in Kolkata, the city of Joy. A market survey

conducted before the commencement of the project shows that there is great demand for the

products of hospitality industry in Kolkata, which is the capital of West Bengal. Hence the

proposed project has been considered and it was decided to construct the hotel near the

airport and the Newtown Rajarhat, Kolkata.

Total cost of project is Rs 2465.85 lacs and has 108 rooms. The occupancy forecasted for a

period of 5 consecutive years from commencement of operations is taken into account as

60%, 65%, 70%, 75% and 80%.

Statistical data of the project may be summed as follows

Average return on investment: 37.47

Break-even point: 327.36.

Capital Intensity: 3.38

After studying the above aspect and estimation of profitably statement and other financial

status, it has been concluded that 4 star hotel with 108 rooms in Kolkata is financially viable.


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BIBLIOGRAPHY

1. Perspectives on Indian hotel industry by Pushpinder S.Gill

2. Hotel Economics by P.M. Mathew

3. Hospitality Management by T. Philip

4. All India Travel Companion by Asia Publishing Companion

5. Project Analysis - G. Phyler

6. Hotel Accountancy - T. Ryder

7. The Voyage - Cushman & Wakefield Research

8. The Hospitality Industry by Crisil Ltd.

9. Jones Lang LaSalle Hotels India Digest 2008: Part I

WEBSITES

1. http://www.accor.com/en/hotels.html

2. www.hyatt.com

3. http://www.hoteliq.com/

4. http://www.lemontreehotels.com/our-hotels.aspx5. http://www.marriott.com/hotels/travel/bomjw-jw-marriott-hotel-mumbai/

6. http://www.royalorchidhotels.com/

7. www.sarovarhotels.com

8. http://www.tridenthotels.com/

9. www.indiastats.com
http://www.accor.com/en/hotels.htmlhttp://www.hyatt.com/http://www.hoteliq.com/http://www.lemontreehotels.com/our-hotels.aspxhttp://www.marriott.com/hotels/travel/bomjw-jw-marriott-hotel-mumbai/http://www.royalorchidhotels.com/http://www.tridenthotels.com/http://www.india/http://www.india/http://www.tridenthotels.com/http://www.royalorchidhotels.com/http://www.marriott.com/hotels/travel/bomjw-jw-marriott-hotel-mumbai/http://www.lemontreehotels.com/our-hotels.aspxhttp://www.hoteliq.com/http://www.hyatt.com/http://www.accor.com/en/hotels.html


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Annexures

Annexure 1

COST OF BUILDING

Table 12 COST OF BUILDING

Particulars Rs.

Total built up area 64650

Rate per sq. ft 800

Cost 51720000

15% of Electrical work 7758000

12% of Plumbing and

Drainage

6206400

10% On Consultant 5172000

TOTAL 70856400

Annexure 2

Table 13 PLANT AND MACHINERY

Items Amount in Rs.

Lacs

Central a/c 100

Lift 30Generator 25

Transformer 20

Bore well 2

Boiler 10

EPBAX 15

Instrument 5

Exhaust/ vent 2

CCTV 12

Kitchen equipment 20Water cooler 3

Fire fitting 3

Computer /Software 80

Telex 0.8

TOTAL 327.8

Annexure 3


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Table 14 GUEST ROOM

a. GUEST ROOM

Item Price inRs

Nos Total(Rs.)

Twin bed 20000 60 1200000Double bed 25000 60 1500000

Side table 1000 120 120000

Chair 800 120 96000

Coffee table 1200 120 144000

Cupboard 5000 120 600000

Luggage rack 2000 120 240000

T.V stand 4000 120 480000

Dressing Table 2500 120 300000

Carpets 150 36846 5526900Mirrors 500 120 60000

Toilet Accesories 50000 120 6000000

W/C 1500 120 180000

Upholstery 1000 120 120000

Safe 7500 120 900000

Fridge 4000 120 480000

Minibar 25000 60 1500000

Television 35000 120 4200000

Others 75000 120 9000000

Aromatherapy Spa bath

amenities

100000 4 400000

Fixtures 100000 120 12000000

Pull out sofas 25000 4 100000

TOTAL 45146900

Table 15 RESTAURANT

b. RESTAURANT: (60Pax)

Item Price No Total(Rs.)

Tables 3000 17 51000

Chairs 1200 65 78000

Side station 6000 2 12000

Dcor and upholstery 800000 1 800000

Carpets 150 1800 270000

Fixtures 250000 1 250000

Bar counter 75000 1 75000

Others 100000 1 100000

TOTAL 1636000


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Table 16 ROOM SERVICE

c. ROOM SERVICE :( 108Rooms)

Item Price Number Total(Rs.)

B/f Trays 300 30 9000

Tea Trays 400 30 12000

12 Salvers 300 20 6000

9 Salvers 300 20 6000

Trolleys 2000 10 20000

Racks 500 10 5000

O.T cabin 7000 1 7000

Desk 8000 1 8000

Miscellaneous 10000 1 10000

TOTAL 83000

Table 17 BANQUET and Conference Hall

d. BANQUET and Conference Hall


Chairs 1200 425 510000

Tables 4000 60 240000

Carpets 150 4200 630000

Podium 3000 4 12000

Music system 100000 2 20000012 salver 300 30 9000

Fixtures 250000 2 500000

Total 2101000

Table 18 STORES, PURCHASE, HOUSEKEEPING

e. STORES, PURCHASE,

HOUSEKEEPING

Item Total(Rs.)

Cupboards 75000

Shelves 40000

Racks 40000

Bins 10000

Fixtures 65000

Total 230000


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Table 19 ADMINISTRATION

f.ADMINISTRATION

Item Total(Rs.)

Tables 75000

Chairs 50000

Fixtures 50000

Total 175000

Table 20 RECEPTION AND LOBBY

g. RECEPTION AND LOBBY

Item Total(Rs.)

Counter 80000

Stationery 10000Pigeon hole 10000

Cupboard 20000

Safe deposit 50000

Sofa set 500000

Fixtures 800000

Luggage carrier 235000

Miscellaneous 100000

Total 1805000

Table 21 STAFF CAFETARIA

h. STAFF CAFETARIA

Item Total(Rs.)

Tables 12500

Chairs 25000

Fixtures 50000

Total 87500

Total 51264400


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Annexure 4

Table 22 FOOD AND BEVERAGE OUTLETS

a.FOOD AND BEVERAGE OUTLETS

Item Price Number Total(Rs.)Table cloth 200 80 16000

Napkins 30 300 9000

Par stock(*3) 25000

Total cost 75000

Table 23 BANQUET HALL AND CONFERENCE

b. BANQUET HALL AND CONFERENCE

Item Price Number Total(Rs.)Frills 800 100 80000

Table cloth 200 75 15000

Napkins 40 800 32000

Par stock (*3) 127000

Total 381000

Table 24 GUEST ROOM AND SUITE ROOM LINEN

c.GUEST ROOM AND SUITE ROOM LINENItem Price Number Total(Rs.)

Single bed sheet 500 60 30000

Double bed sheet 800 60 48000

Blankets 900 120 108000

Blanket cover 250 120 30000

Mattress 1500 120 180000

Mattress protector 300 120 36000

(single) 500 60 30000

(double) 800 60 48000

Hand towel 60 200 12000

Bath towel 250 200 50000

Bath mat 300 100 30000

Pillows 200 200 40000

Par stock (*4) 642000

Total 2568000


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Table 25 KITCHEN STEWARDING (RESTAURANT &ROOM SERVICES)

d. KITCHEN STEWARDING (RESTAURANT &ROOM

SERVICES)

Item Price (Rs) Number Total(Rs.)

Glasses 50 1200 60000

Chinaware 40 1200 48000

Flatware 40 1200 48000

Cutlery 50 1200 60000

Miscellaneous 25000

Total 241000

Table 26 BANQUETS

e. BANQUETSItem Price (Rs) Number Total(Rs.)

Glassware 75 1200 90000

Chinaware 40 1200 48000

Flatware 40 1200 48000

Cutlery 50 1200 60000

Total 246000

Table 27 STAFF CAFETARIA

F .STAFF CAFETARIA

Item Total(Rs.)

Plates 60000

Spoons 20000

Forks 20000

Total 100000

Table 28 HOUSE KEEPING MISCELLANEOUS ASSETS

g. HOUSE KEEPING MISCELLANEOUS ASSETS


Vacuum cleaner 5000 8 40000

Cleaner mug 40 50 2000

Mops 50 40 2000

Brooms 40 45 1800

Squeezer 30 30 900

Duster 8 100 800

Waiters cloth 100 500 50000

Miscellaneous 25000

Total 122500TOTAL 3733500


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Annexure 5

Table 29 PRELIMINARY AND PRE-OPERATIVE EXPENSES

6. PRELIMINARY AND PRE-

OPERATIVE EXPENSESItem Rs. In

Lakhs

1.) Salary and wages 20

2.) Loan procurement and application 2

3.) Project fees 2.5

4.) Registration and establishment fees 2

5.) Insurance 15

6.) Advertisement and publicity 10

7.)Deposits

a.) Electricity 5

b.) Telephone 5

c.) Water supply 3

d.) NSC 3

8.) Miscellaneous expenses 10

POP Total 77.5


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Annexure 6

Table 30 SALARY AND WAGES(Monthly)

7. SALARY AND WAGES(Monthly)

Sl.No.

DESIGNATION No. Of persons SALARY(inRs)

TOTAL

1 General manager 1 75000 75000

2 Front office manager 1 20000 20000

3 Lobby manager 1 20000 20000

4 GRE 1 10000 10000

5 Front office assistant 4 10000 40000

6 Travel desk operator 1 10000 10000

7 Bellboys 5 4000 20000

8 Telephone operator 2 5000 10000

9 Bell captain 2 5000 10000

10 Night auditor 1 7500 7500

11 F & B Manager 1 25000 25000

12 Banquet manager 1 20000 20000

13 Restaurant manager 1 20000 20000

14 Barman 1 8000 8000

15 Capta

siddhant summer report

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