Presentation of Hospitality 2

7/30/2019 Presentation of Hospitality 2

1/88

CH INSTITUTE OF MANAGEMENAT AND COMMUNICATION

PRESENTATION ON

HOSPITALIYE AND TOURISM

PRESENTED BY :Umesh patel

Lahar pandeyKiran surageraghvendre shuklaJp rathoreSwati dwivedi

Sandeep pushpadShakti pratap


2/88

What is Hospitality?

The reception and entertainment of guests, visitors, or

strangers with liberality and good will.


3/88

Industry profile

It is one of the largest industries in both the global and

national contexts.

It involves cooperative relationships with multiple

organizations.

INDIA being a cheap destination for leisure tourism ,unlimitedtourism and untapped business prospects, we can expect

green pastures of growth in the year ahead


4/88

Current scenario

India has potential to become the number one tourist

destination in the world, with demand growing 10.1% per

annum.

The hospitality industry is poised to grow at a faster rate and

reach Rs.1500 billion.

The contribution in India to Gross Domestic Product is

estimated to rise from 8.6% (USD 117.9 billion) in 2010 to

9.0% (USD 330.1 billion) by 2020.


5/88

Three Main Objectives of the Hospitality

Manager

Make the guest feel welcomed

Make sure things (products & services) work for the guest

Make sure the operation continues to provide service

and make a profit


6/88

Govt. major policy initiatives

include(Tourism policy)

Liberalization in aviation sector.

Pricing policy for aviation fuel which influences international

air fare.

Rationalization in tax rates in the hospitality sector. Tourist friendly visa regime.

Immigration services.

Procedural charges in making available land for construction

of hotels. Allowing setting up a guest house


7/88

Govt. open skies policy

Permission for domestic airlines to commence international

flights.

Star-up of various low cost carriers.

100% FDI is permissible in this sector


8/88

Why People Choose to Study HospitalityManagement?

Experience

Interest

Ambition


9/88

Trends Affecting the Future of the

Hospitality Industry

Increasing competition

Emphasis on service

Customers growing value consciousness

Changes in marketing and management made possible bytechnology


10/88

Hotel industry is expected to grow from USD 16.7 bn to USD

30.7 bn at 26% CAGR between 2008-13 Indian Hospitality market size (USD bn)

TotalHospitality

22.521.5

26.5

38.8


11/88

Total Number of Hotels in India, 2010


12/88

Business and investments: Current

situation of Indias hotels

Hotel Imperial New Delhi: 99.57 % occupancy.

Hotel Trident Hilton, Gurgaon (suburban Delhi): 98.3 %occupancy.

Increase in average room rent for the entire hotel industryover the last year: 35 %.

Unmet demand for hotel rooms: 150 000 rooms. Additionaldemand this year: 15 000 rooms.

Currently Marriott has over 1,000 rooms spread across fourproperties in Mumbai and Goa.


13/88

Strong economic recovery coupled with governments numerous policies and

incentives will drive the growth in hospitality sector

GROWTH DRIVERS OF HOSPITALITY INDUSTRY IN INDIA

Regulatory Drivers External Drivers Internal drivers

Incentives by Central and the State

governments

Elimination of Customs Duty on

import of raw materials,

equipment, liquor etc

Fringe Benefit Tax exempted oncrche, employee sports, guest

house facilities

Five year income tax holiday

granted to 2-4star hotels

established in specified districts

having UNESCO-declared 'World

Heritage Sites

Exemption of Luxury Tax andSales Tax for 5-7 Years for new

projects

Governments open sky policy has

boosted number of passengers in

India

Introduction of Medical or M-

VISA to boost medical tourism

Strong economic growth

GDP growth of 9% p.a. in 2010.

Forecasted to grow at a rate of

8.7% p.a. till 2016 thereby

enabling hospitality sector

growth

Increasing FDI inflow

FDI inflow increased due to

allowance of 100% FDI and

better infrastructure availability

Increasing tourist arrivals

Hospitality sector handled 5.58

mn international tourists

arrivals(8.1% Y-o-Y growth) and740.21 mn domestic tourists in

2010 (10.7% Y-o-Y growth)

India tourism campaigns

The Incredible India and

Atithi Devo Bhavah campaigns

have improved foreign tourist

outlook for India

Hosting major sporting events

International sporting events

like Formula One race in the

National Capital Region (NCR)

in 2011 are set to boost

hospitality

Demand-supply imbalance

Ministry of Tourism estimates a

shortage of 0.15 mn hotel

rooms in 2011, of which two-

thirds are in the budget

category

Rising income and spending

Rising disposable incomes,cheaper airfares, changing

consumer lifestyle and ease of

financial transactions leading

Indian

Hospitality

sector


14/88

Hospitality industry is one of the most liberalized sectors in India with 100%

FDI allowance through automatic route and single window clearance

facilities

FDI has been permitted up to 100% under the

automatic route

Total FDI inflow in hospitality sector between 2000

-10 amounted to USD 2.17 bn

For foreign technology agreements, automatic

approval is granted if:

Up to 3% of the capital cost of the project is

proposed to be paid for technical consultancy

services

Up to 3% of the net turnover is payable for

franchising and marketing/publicity fees Up to 10% of gross operating profit is payable for

management fees, including incentives fees

As of Dec 2010, government has given nod tosingle window clearance for hospitality industry

The Ministry of Tourism approves hotels at project

stage based on documentation. Project approval is

given to a 1, 2, 3, 4, 5 Star Hotels and Heritage

Basic Category

The Hotels have to apply for classification under 5Star Deluxe/ Heritage Classic/ Heritage Grand

category if they fulfill the prescribed norms within 3

months of commencing operation

Project approval will be valid for 5 years

Foreign direct investment (FDI)

Regulatoryand FDI

policies inIndian

hospitalitysector

Tax Holiday available for hotels

Approval of a hotel project

A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel in specified areas, if such hotel / convention

centre is constructed and has started operations before 31st July, 2010

A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel located in the specified district having a World

Heritage Site and has started functioning before 31st March, 2013


15/88

The unorganized and largely fragmented hotel sector in India is undergoing

a rapid change with entry of foreign players

Key hospitality players in India

INTERN

ATIONALPLAYERS

NATIONALPLA

YERS


16/88

Hence, hotel room supply is expected to grow at 15% CAGR surpassing

demand which is estimated to grow at 10.3% CAGR during 2010-13

Indian Hospitality Market : No. of Keys * (2010-13)


17/88

CONT

Room demand distribution in top 10 cities (2013E)


18/88

CONT

Upcoming room supply (2010-2013)


19/88

Increasing demand in Tier 2 and Tier 3 cities along

with rising land costs will contribute towards shaping

the future of hospitality

19

Future hospitality trends

Source: HVS Report Hotels in India- Trends and Opportunities 2010, Oct.

2010

The Indian hotel market will remain an expensive market to enter

with the exponential growth in capital land values across the

country

Green Hotels will increase operational efficiencies and bottomlines, inspite of its marginally higher construction costs

Loca -vore: Local cuisines concept that believes in maximizing

benefits to cultural heritage will be adopted in F&B

Relocation of non-revenue generating departments from hotel

premises to off hotel premises will maximize space efficiencies

Growing Importance of healthy and organic food will result in its

introduction in the menus of all day dining and multi cuisine

restaurants

Manpower retention programs will result in marked increase in

salaries across the sector

Hospitality supply in Tier II and Tier III locations will increasebased on the untapped potential of the domestic commercial and

leisure demand

Upcoming Areas

Green Hotels

Resource

Optimization

PersonnelRetention

Healthy & OrganicFoods

Local cuisines inF&B

Hospitality RealEstate


20/88

Indias hotel industry

India's htel industries Is experiencing an unprecedented boom, driven by increasing

numbers of business and tourist arrivals.But how long can the good times last?


21/88

Structure of the industry

FIVESTARDELUX

Premium& luxury

segment

FIVE STAR

Mid -Market

Segment

FOUR STAR

Mid -Market

SegmentTHREESTAR

BudgetSegment

TWO STAR

BudgetSegment

ONE STAR

Palaces &Forts

HERITAGEHOTELS

premium

& luxury

segment


22/88

Consumer segments

The business traveler.

International and national sports& game players

The leisure traveler.

Airline cabin crew.


23/88

Users of Hotel Services

B i d i t t C t


24/88

Business and investments: Current

situation of Indias hotels

Some figures

Hotel Imperial New Delhi: 99.57 % occupancy. Hotel Trident Hilton, Gurgaon (suburbanDelhi): 98.3 % occupancy.

Increase in average room rent for the entire hotel industry over the last years 35 %.

Unmet demand for hotel rooms: 150 000 rooms. Additional demand this years 15 000rooms.

The boom has attracted several global players, ranging from Starwood and Mariott toFour Seasons and ShangriLa.

Currently Marriott has over 1,000 rooms spread across four properties in Mumbai andGoa.


25/88

The engine of growth

Tourism boom

The tourism traffic has been growing between20-28 % every wear for the last four years andthis rate of growth Is expected to continue forthe next few years.

The constant boom and the resultant demand-

supply mismatch has led to sharp increases inthe average room rates and thus pushing uprevenues of industry players

expected to perform very well in futureand theindustry offers an interesting investment

opportunity for long- term investors.

Most of the five-star hotels are seeing morethan 80 % occupancy and some of the lesser-known five-star hotels are overbooked.


26/88

Incredible India

The Ministry of Tourism is pushing the great Indian story effectively with itssubtle and charming Incredible India campaign

We have spent $5 million on this campaign since December 2002 and plan to

keep it going,Amitabh Kant, the joint secretary at Indias Ministry ofTourism.

According to estimates, another 150,000 rooms will have to be added acrossthe country in the next five to Severn years to be able to meet the increaseddemand.

At 6,762 rupees, Bangalore had the highest ARR across all categories in the 30cities. New Delhi was the second highest, registering an ARR of 5,498 rupees.All India ARR increased 26.9 % over the previous year. Star categoryoccupancies ranged from 46.3 % to 72.1 %.


27/88

The future growth

Hospitality experts believe that the Indian hotel industry will witness higherthan usual growth in the coming peak season.

The lean season has been exceptionally good for us. Our room occupancyrate has been around 89 per cent and we are looking at over 95 per centoccupancy for the period September to December, says Kapil Chopra,general manager, Trident Hilton, Gurgaon.

The non-luxury segment in particular has been perking up with more and

more investors spotting the demand supply imbalance, surge in domestictravel and growth in spending among middle-class Indians.


28/88

Major players in India

HOTEL CHAINS

Indian hotels company LtdEIH Ltd

ITC Hotels LtdITDC Ltd

INTERNATIONAL HOTELCHAINS

Marriotte

StarwoodBerggruen hotels

Emaar MGFLocalized hotel companies

SMALL CHAIN

Hotel leela

Venture

Asian hotels

Bharat hotels

PUBLIC SECTORCHAINS

ITDC

HAI


29/88

The Competition

The world's leading hotel brands - joining the battle

The country has been flooded by some of the world's leading hotelbrands.

Unitech, which is setting up two hotels in Delhi, has already formeda joint venture with Marriott International to run its three newhotels in India, which are expected to Start operations by 2008.

All other majors including Marriott, Hyatt, Hilton, Accor, FourSeasons etc are briskly rein forcing their presence in India.


30/88

Indian hotel companies look overseas

The movement is not one-way Cash rich Indian hotel companies have beenacquiring properties overseas. The Tata group's Indian Hotels Comptant is inthe process of acquiring Boston based luxury hotel the Ritz-Carlton foraround $170 million dollars

With growing competition, hotels are under tremendous pressure togenerate new lines of revenue with creative approaches.

Hotels are trying every possible way to generate cash from alternativesources to achieve economies of scale. Reducing transaction costs, increasingproductivity and promoting traditional Indian values


31/88

Looking for new niche

Many business hotels in India are integrating full-fledged spas on theirpremises, originally a main stay of resort properties.

Another interesting trend in India is that of mixed-use developments.

However, in order to attract more visitors, India still needs to

dramatically increase the number of rooms available.


32/88

The challenges to face

The lack of adequate infrastructure development.

There is still need to improve air connectivity.

As competition increases, there is a definite pressure on ARR andoperating margins.

Some players are already

preparing for the difficult

times when the ARRs areexpected to fall by 30-40

percent in the next 3-4 years.


33/88

SWOT Analysis

STRENGTHS

Faster GDP growth

Industrialization.Natural heritage

India as a global player

WEAKNESS

Lake of connectivity.

Lake of publicity.Hectic rules

Influence of politicians

Marketing gap.


34/88

Cont.

OPPORTUNITIES

Health tourism.

Strong in cultural and

nature aspects.

Commercialization of

sports and games.

FDI policy.

Mismatch of supply

and demand.

THREATS

Poor domest tourism

infra structure

Political conditions

Terrorism

Increase in pollution

Entry of newcompetitors


35/88

Hospitality Pyramid is Inverted

Economical

Luxury


36/88


37/88

Importance

Impetus to other industries

Third largest net earner of foreign exchange.

Contributes to the national integration, preserves natural andcultural environments

Create substantial job opportunities

Its rapidly growing Western-style fast food joints offerunlimited opportunities for foreign food and beverageexporters,


38/88

Tourism related industries

Travel agencies,

Tour operating agencies

Units providing facilities for cultural, adventure and wild life experience totourists,

Surface, air and water transport facilities to tourists,

Leisure, entertainment amusement, sport and health units for tourists

Convention/seminar units and organizations.

Thomas Cook, Cox & Kings India Limited, Star Luxury Cruises, Queen Mary IICruise Liners etc

f i


39/88

Forms of tourism

Cultural tourism & Round Trips

Commonwealth Games 2010

Monsoon magic

Rural & village tourism

Medical tourism

Luxury tourism

Adventure tourism


40/88


41/88

Role of tourism industry in India GDP

According to the global authority for hotel real estate, LodgingEconometrics, there were 73,793 hotel rooms in the pipeline of which11,207 were due to open in 2009 and 22,522 in 2010

International tourists over 5 million visitors, while domestic market is

more than 500 million.

foreign tourists in India has increased by 12.4 percent in one year 2009 to2010

In 2006, Indian tourist industry witnessed a growth of14.3 percent, whichreached around 3.89 million in 2007

The foreign tourists arrival led to a robust growth in the foreign exchangeearnings that increased from USD 5.03 billion during January-October 2006to USD 6.32 billion during January-October 2007, which is apparently a

25.6 percent rise.

Th i f I di ' i h


42/88

The impact of India's economic growth on

tourism

Industrialization,

Education,

Higher number of qualified professionals,

Opening up of foreign markets,

Liberal trade policies and better advertising, Strategic marketing,

Strategic planning of excursion packages,

Eco-tourism,

Sports events that bring the spot-light on India,

Greater patronage by greater number of MNC'sheading to our shores,

Diversifications of the Indian open industriesnorm,


43/88

IMPACT OF RECESSION

In 2009, the country is seen rising 6.5 percent, compared tothe world output, which is seen falling 0.4 percent.

The tourism sector is expected to perform very well in future

and the industry offers an interesting investment opportunityfor long-term investors.

The Indian tourism sector is seen generating $42.8 billion by2017, a 42 percent surge from 2007, according to an industry

research note by auditing and consulting firm Deloitte

Despite the numerous problems, tourism industry was thesecond-largest foreign exchange earner for India.

CHALLENGES


44/88

CHALLENGES

successfully preserving these in their original form

and making them accessible to domestic and international

travellers.

various categories of tourism products, such as

o Adventure tourismo medical tourism

o Eco-tourism

o Rural tourism

o Cruise tourism

o Meetings

o Incentives

o Conferences

o And exhibitions (MICE) tourism etc.


45/88

THE SCENE TILL NOW

Some major international events like 9/11, US-led war against terror and SARShit the tourism industry over the past few years.

Cutting down of routes by domestic airlines and increase in airfares last year also

led to a fall in the movement of people in the country.

The Mumbai terror attacks, targeting two premium hotels, also tarnished thecountry's reputation, drastically reducing hotel occupancy levels, and affectingyear-end travel.

Expenses per night of stay for a tourist in India during the SE Asian currencycrisis was $100 whereas it was around $35-40 in the SE Asian countries. This hurtIndian tourism.

High luxury and entertainment taxes and high landing charges applicable in Indianairports.


46/88

Thank you .

Any question???????


47/88

It is one of the largest industries in both the

global and national contexts.

It involves cooperative relationships withmultiple organizations.

INDIA being a cheap destination for leisure

tourism ,unlimited tourism and untappedbusiness prospects, we can expect green

pastures of growth in the year ahead


48/88

The world travel and tourism council(WTTC) haspredicted that India has potential to become the

number one tourist destination in the world, with

demand growing 10.1% per annum.

The hospitality industry is poised to grow at a faster

rate and reach Rs.1500 billion.

The contribution of the entire travel and tourism

sector including hospitality industry in India to GrossDomestic Product is estimated to rise from 8.6%

(USD 117.9 billion) in 2010 to 9.0% (USD 330.1

billion) by 2020.


49/88

Many higher end hotels in India are realized thattheir key USP in international competition is nottheir high-tech facilities, but rather theiroutstanding staff-to-guest ratios and thelongstanding tradition of Indian hospitality asimmortalized by "Atithi Devo Bhava".

Hospitality is about serving the guests and toprovide them with a "feel-good-effect". Personalizedcomprehensive service, such as suites having theirown personal butler, gives guests that extra feel ofbeing valued by their hosts.


50/88

Three Main Objectives of the

Hospitality ManagerAs a successful manager in the hospitality industry, you must exhibit many skills

and command much specialized knowledge all directed toward achieving the

managerial objectives listed below:

Make the guest feel welcomed

Make sure things (products & services) work for

the guest

Make sure the operation continues to provide

service and make a profit

Lets explore each objective individually...


51/88

Brief Summary of Managements Role in the

Hospitality Industry

There were three main objectives of a

hospitality manager:

Make the Guests Feel Welcome

Make Sure Things Work for the Guests

Make sure the operation continues to provide

service and make a profit.

Simply stated, these objectives suggest that managers must be able to

relate successfully to employees and guests, direct the work of their

operation, and achieve operating goals within a budget - that is, to run

a productive operation within certain constraints. (Chapter 1Page 6)


52/88

PRODUCT:

High class accommodation, food and beverage and

it is a luxury product

PRICES:

Prices are very high and varies as per the season

PROMOTION:

Very effective promotion to the targeted customers

through national and international magazines.


53/88

PLACE:

located in all metros and follows its own regional

tradition and treats their guests accordingly

PROCESS:

Regular maintenance of the room, keeping the

surroundings clean and hygienic


54/88

PHYSICAL EVIDENCE:

Deep sleep is more than just the right bed. It is

about an environment that soothes all the fivesenses. Experience our rooms and know how it

feels to sleep like a baby again.

PEOPLE:Highly professional workers ,internationally

qualified chefs.


55/88

HOSPITALITY & TOURISM INDUSTRY

development goes hand by hand.

Tourism policy. Governments open skies policy.

Foreign Trade policy.

FDI in HOTEL & TOURISM INDUSTRY.

Other government initiatives.


56/88

Liberalization in aviation sector.

Pricing policy for aviation fuel which influences

international air fare. Rationalization in tax rates in the hospitality sector.

Tourist friendly visa regime.

Immigration services. Procedural charges in making available land for

construction of hotels.

Allowing setting up a guest house.


57/88

Permission for domestic airlines to commence

international flights.

Star-up of various low cost carriers.

FDI 100% FDI is permissible in this sector


58/88

Why People Choose to Study

Hospitality Management

They have experience in the industry and want to

continue growing and changing with the industry.

They are interested in the hospitality industry.

They have ambition and know that they can grow as

a professional in the industry.


59/88

Trends Affecting the Future of the

Hospitality Industry Increasing competition

Emphasis on service

Customers growing value consciousness

Changes in marketing and management made

possible by technology

Hotel industry is expected to grow from USD 16 7 bn


60/88

16.7 14.7 17

30.75.8 6.8

9.5

8.1

2008 2009 2010 2013

Restaurant sectorHotel sector

Hotel industry is expected to grow from USD 16.7 bnto USD 30.7 bn at 26% CAGR between 2008-13

60

Indian Hospitality market size (USD bn)

Source: Technopak Report Dissecting the Indian Hospitality Industry 2009, Ma Foi Randstad press release dated 31 March 2011,India Biz News Article dated June 13,2011, Livemint article dated May 2010

The Indian hospitality industry is one of the fastest

growing sectors of the Indian economy; except for a

short phase the during recession and the terrorist

attacks in 2008 and 2009 respectively

As of May 2011 contribution of the hospitality industry

which comprises of hotels, restaurants and allied

services to Indian GDP was 2.2%

In 2010, 30% and 16% of the Indian hotel and restaurant

sectors were in the organized sector

Hospitality industry is one of top employment

generating industries which according to executive

search and HR consulting firm Ma Foi Randstad

generated 160,300 jobs in 2010 and is expected to

generate 218,200 jobs in 2011

According to hospitality consulting firm HVS, there is a

shortage of quality branded hotel rooms in the major

Indian cities as compared to other international cities

and the shortage will be more pronounced as Indian

economy strives toward double-digit growth

Hotel Categories No. of Hotels No. of Rooms

5 Star deluxe/5 Star 165 43965

4 Star 770 13420

3 Star 505 30100

2 Star 495 22950

1 Star 260 10900

Heritage 70 4200

Uncategorized 7078 -

Total 8707 132885

Total Number of Hotels in India, 2010

26% CAGR 12% CAGR

38.8

22.5 21.526.5

Total Hospitality


61/88

Business and investments: Current situation of Indias

hotels

Some figures : Hotel Imperial New Delhi: 99.57 % occupancy. Hotel Trident Hilton,Gurgaon (suburban Delhi):98.3 % occupancy. Indian hotels are witnessing mindblowing occupancy rates.

Increase in average room rent for the entire hotel industry over the last year: 35 %.

Unmet demand for hotel rooms: 150 000 rooms. Additional demand this year: 15 000 rooms.

The boom has attracted several global players, ranging from Starwood and Mariott to FourSeasons and ShangriLa. The largest hotel company in the world,French chain Accor, hasentered India and is now devising aggressive plans for expansion in the market. Severalothers are racing to increase their presence in India, including the Marriott group.

Currently Marriott has over 1,000 rooms spread across four properties in Mumbai and Goa.

Strong economic recovery coupled with governments numerous


62/88

St o g eco o c eco e y coup ed t go e e t s u e ouspolicies and incentives will drive the growth in hospitality sector

62

GROWTH DRIVERS OF HOSPITALITY INDUSTRY IN INDIA

Source: Technopak Report Dissecting the Indian Hospitality Industry 2009, TCFI Report Hospitality in India, Oct. 2010

Indian

Hospitality

sector

Incentives by Central and the State

governments

Elimination of Customs Duty on

import of raw materials, equipment,

liquor etc

Fringe Benefit Tax exempted on

crche, employee sports, guesthouse facilities

Five year income tax holiday granted

to 2-4star hotels established in

specified districts having UNESCO-

declared 'World Heritage Sites

Exemption of Luxury Tax and Sales

Tax for 5-7 Years for new projects

Governments open sky policy hasboosted number of passengers in

India

Introduction of Medical or M-VISA to

boost medical tourism

Strong economic growth

GDP growth of 9% p.a. in 2010.

Forecasted to grow at a rate of

8.7% p.a. till 2016 thereby enabling

hospitality sector growth

Increasing FDI inflow

FDI inflow increased due toallowance of 100% FDI and better

infrastructure availability

Increasing tourist arrivals

Hospitality sector handled 5.58 mn

international tourists arrivals(8.1%

Y-o-Y growth) and 740.21 mn

domestic tourists in 2010 (10.7% Y-

o-Y growth) India tourism campaigns

The Incredible India and Atithi

Devo Bhavah campaigns have

improved foreign tourist outlook

for India

Hosting major sporting events

International sporting events like

Formula One race in the National

Capital Region (NCR) in 2011 are

set to boost hospitality

Demand-supply imbalance

Ministry of Tourism estimates ashortage of 0.15 mn hotel rooms

in 2011, of which two-thirds are

in the budget category

Rising income and spending

Rising disposable incomes,

cheaper airfares, changing

consumer lifestyle and ease of

financial transactions leading

Regulatory Drivers External Drivers Internal drivers

Hospitality industry is one of the most liberalized sectors in India


63/88

63

with 100% FDI allowance through automatic route and single

window clearance facilities

FDI has been permitted up to 100% under the

automatic route

Total FDI inflow in hospitality sector between

2000 -10 amounted to USD 2.17 bn

For foreign technology agreements, automatic

approval is granted if:

Up to 3% of the capital cost of the project is

proposed to be paid for technical consultancy

services Up to 3% of the net turnover is payable for

franchising and marketing/publicity fees

Up to 10% of gross operating profit is payable for

management fees, including incentives fees

As of Dec 2010, government has given nod to single

window clearance for hospitality industry

The Ministry of Tourism approves hotels at project

stage based on documentation. Project approval is

given to a 1, 2, 3, 4, 5 Star Hotels and Heritage Basic

Category

The Hotels have to apply for classification under 5

Star Deluxe/ Heritage Classic/ Heritage Grand

category if they fulfill the prescribed norms within 3months of commencing operation

Project approval will be valid for 5 years

Foreign direct investment (FDI)

Regulatory

and FDI

policies in

Indian

hospitality

sector

Tax Holiday available for hotels

Approval of a hotel project

A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel in specified areas, if such hotel / convention

centre is constructed and has started operations before 31st July, 2010

A tax rebate equal to 100% of the profit and gain for the first 5 consecutive years to an hotel located in the specified district having a

World Heritage Site and has started functioning before 31st March, 2013

Finance Bill 2009, which has proposed to abolish Fringe Benefit Tax with effect from 1st April 2009 has become major advantage to the

Hospitality industry

Source: India Law Offices article in 2009

The unorganized and largely fragmented hotel sector in India isd i id h ith t f f i l


64/88

undergoing a rapid change with entry of foreign players

64

PlayersSegment

Presence Brands Future Expansion Plans

InterContinental

Luxury, mid-

segment and

business

InterContinental

Crowne Plaza

Holiday Inn

Holiday Inn Express

Hotel Indigo

Staybridge Suites

Candlewood Suites

Plans to operate 45 new hotels by

2015

Carlson Luxury, business,

economy and

cruises

Radisson Hotels and Resorts Park Plaza

Country Inns & Suites

Park Inn

Plans to increase its presence in India

to 78 hotels by 2012, from 28 in

2009

Indian Hotels Luxury, mid-

segment and

budget

Taj, Gateway

Vivanta

Ginger

Plans to construct 50 budget hotels

under the Ginger brand over the next

four years

ITC Welcome group

Luxury, budget

and heritage

ITC Hotel Luxury Collection

Welcome Hotel Sheraton

Fortune

Welcome Heritage

To invest USD 2,000 mn over next

few years

EIHBusiness , leisure

and cruises

Oberoi

Trident

Plans to develop 750 additional hotel

rooms under the Trident brand over

the next 2.5 years

The LeelaLuxury and

heritage

Leela penta

Leela palace

Expected to add 349 more rooms in

2012

Key hospitality players in India

Source: TCFI Report Hospitality in India, Oct. 2010

INTERN

ATIONALPLAYERS

NATIONALPLAYERS

Hence hotel room supply is expected to grow at 15% CAGR surpassing


65/88

65

Hence, hotel room supply is expected to grow at 15% CAGR surpassing

demand which is estimated to grow at 10.3% CAGR during 2010-13

65

The Indian government through Budget 2011-12 has proposed

several measures that will increase investment into hospitality

sector and accelerate the process of development

The huge influx of incremental rooms will result in the occupancylevels of hotels for most of the cities falling considerably except

Mumbai and Goa during 2010-13

Despite a similar quantum of room demand in Mumbai and the

NCR in 2013, the size of Mumbai market, at USD 930 mn, will be

substantially greater than the NCR market size of USD 620 mn5,714

9,625

5,5653,307

1,835

2,363

3,231

1,280

543

1,087

684

743

2010 2011F 2012F 2013F

Economy

Midscale

Upscale

Upcoming room supply (2010-2013)

Source: Knight Frank Report Indian Hotel Market Dec 2010

Indian Hospitality Market : No. of Keys * (2010-13)

(*) Note: Number of keys :The number of guest rooms in a hotel

20102011 F

2012 F 2013 F

32,66035,503

38,789 43,828

53,412 66,487 75,967 81,296

Demand Supply

5,330

8,092

13,075

9,480

24%

24%

6%3%

7%

8%

4%

9%

3%

11%Mumbai

NCR

Pune

Ahmedabad

Goa

Chennai

Jaipur

BengaluruKolkata

Hyderabad

Room demand distribution in top 10 cities (2013E)

Total Rooms

Increasing demand in Tier 2 and Tier 3 cities along with rising land costs


66/88

g g gwill contribute towards shaping the future of hospitality

66

Future hospitality trends

Source: HVS Report Hotels in India- Trends and Opportunities 2010, Oct. 2010

The Indian hotel market will remain an expensive market to

enter with the exponential growth in capital land values

across the country

Green Hotels will increase operational efficiencies and bottom

lines, inspite of its marginally higher construction costs

Loca -vore: Local cuisines concept that believes in maximizing

benefits to cultural heritage will be adopted in F&B

Relocation of non-revenue generating departments from hotel

premises to off hotel premises will maximize space efficiencies

Growing Importance of healthy and organic food will result in

its introduction in the menus of all day dining and multi

cuisine restaurants

Manpower retention programs will result in marked

increase in salaries across the sector

Hospitality supply in Tier II and Tier III locations will increasebased on the untapped potential of the domestic commercial

and leisure demand

Upcoming Areas

Green Hotels

Resource

Optimization

Personnel

Retention

Healthy & Organic

Foods

Local cuisines in

F&B

Hospitality Real

Estate


67/88

INDIAS HOTEL INDUSTRY


68/88

INDIA S HOTEL INDUSTRY

India's htel industries Is experiencing an unprecedented boom, driven by increasing

numbers of business and tourist arrivals.

But how long can the good times last?


69/88

FIVESTARDELUX

Premium& luxurysegment

FIVE STAR

Mid -MarketSegment

FOUR STAR

Mid -MarketSegment

THREESTAR

BudgetSegment

TWO STAR

BudgetSegment

ONE STAR

Palaces &Forts

HERITAGEHOTELS

premium &

luxury

segment


70/88

The business traveler.

International and national sports& game players

The leisure traveler.

Airline cabin crew.


71/88

d f d


72/88

Business and investments: Current situation of Indias

hotels

Some figures : Hotel Imperial New Delhi: 99.57 % occupancy. Hotel Trident Hilton,Gurgaon (suburban Delhi):98.3 % occupancy. Indian hotels are witnessing mindblowing occupancy rates.

Increase in average room rent for the entire hotel industry over the last year: 35 %.

Unmet demand for hotel rooms: 150 000 rooms. Additional demand this year: 15 000 rooms.

The boom has attracted several global players, ranging from Starwood and Mariott to FourSeasons and ShangriLa. The largest hotel company in the world,French chain Accor, hasentered India and is now devising aggressive plans for expansion in the market. Severalothers are racing to increase their presence in India, including the Marriott group.

Currently Marriott has over 1,000 rooms spread across four properties in Mumbai and Goa.

A b i k


73/88

A booming marketThe established hotel chains

A number of global players are already wellestablished in India. These include Hilton,

Shangri-La, Radisson, Mariott, Meridien,Sheraton, Hyatt, Holiday Inn,InterContinental and Crowne Plaza.

Investments

Now besides hotel companies, even theinvestment firms and private equitycompanies are beginning to get excited

about India. Berggruen Holdings India, asubsidiary of New York-based investmentcompany Berggruen Holdings,hasannounced that it is seed-funding a non-luxury hotel chain in India.

Private equity firm Warburg Pincus haspicked up around 27 % stake in Delhi-basedmid-price hotel chain,Lemon Tree, for $60.2 million.



74/88


Tourist boom

The tourism traffic has been growing between

20-28 % every wear for the last four years andthis rate of growth Is expected to continue forthe next few years.

The constant boom and the resultant demand-supply mismatch has led to sharp increases inthe average room rates and thus pushing uprevenues of industry players (hotels, touroperators, airlines, shipping lines, etc)

The tourism sector is expected to perform verywell in futureand the industry offers aninteresting investment opportunity for long-term investors.

Most of the five-star hotels are seeing morethan 80 % occupancy and some of the lesser-known five-star hotels are overbooked.


75/88

Incredible India

The Ministry of Tourism is pushing the greatIndian story effectively with its subtle and

charming Incredible India campaign

We have spent $5 million on this campaignsince December 2002 and plan to keep itgoing,Amitabh Kant, the joint secretary atIndias Ministry of Tourism.

According to estimates, another 150,000rooms will have to be added across thecountry in the next five to seven years to beable to meet the increased demand.

At 6,762 rupees, Bangalore had the highestARR across all categories in the 30 cities. NewDelhi was the second highest, registering an

ARR of5,498 rupees. All India ARR increased26.9 % over the previous year. Star categoryoccupancies ranged from 46.3 % to 72.1 %.

The future growth


76/88

g

Hospitality experts believe that the Indian hotel industry will witness higher than usual growth inthe coming peak season. The good times for the Indian hospitality industry are here to stay, withtop-end hotels experiencing high room occupancy rates even in the lean season.

The lean season has been exceptionally good for us. Our room occupancy rate has been around89 per cent and we are looking at over 95 per cent occupancy for the period September toDecember,says Kapil Chopra, general manager, Trident Hilton, Gurgaon.

There was an increase of15 % in the number of international tourist arrivals in India and 14 % inthe foreign exchange earnings in the first quarter of 2006 as compared to the same period lastyear.

The non-luxury segment in particular has been perking up with more and more investorsspotting the demand supply imbalance, surge in domestic travel and growth in spending amongmiddle-class Indians.


77/88

HOTEL CHAINS

INDIAN HOTELS

COMPANY LTD EIH LIMITED

ITC HOTELS LTD

ITDC LTD

SMALL CHAINS

HOTEL LEELA VENTURE

ASIAN HOTELSBHARAT HOTELS


78/88

PUBLIC SECTOR CHAINS

ITDC

HAIINTERNATIONAL HOTEL

CHAINS

MARRIOTTE

STARWOOD

BERGGRUEN HOTELS

EMAAR MGF

LOCALIZED HOTEL

COMPANIES

The Competition


79/88

The world's leading hotel brands - joiningthe battle

The country has been flooded by some of theworld's leading hotel brands. New brands such asAmanda, Satinwoods, Banana Tree, HamptonInns, Scandium By Hilt and Mandarin Oriental areplanning to enter the Indian hospitality industryin joint ventures with domestic hotel majors.

Unitech, which is setting up two hotels in

Delhi,has already formed a joint venture withMarriott International to run its three new hotelsin India, which are expected to start operationsby 2008. The three new hotels will be located inKolkata, Gurgaon and Noida. We are investingaround 700 crore rupees to set up these hotels,says Unitech managing director Sanjay Chandra.

All other majors including Marriott, Hyatt, Hilton,Accor, Four Seasons etc are briskly reinforcingtheir presence in India.

Indian hotel companies look overseas


80/88

The movement is not one-way. Cash-rich Indian hotelcompanies have been acquiring properties overseas. TheTata group's Indian Hotels Company is in the process ofacquiring Boston-based luxury hotel the Ritz-Carlton foraround $170 million dollars (around 765 crore rupees). Duediligence is likely to be completed soon. The hotel will beacquired through the companys New York-basedsubsidiary, says RK Krishna Kumar, vice chairman of IndianHotels.

Indian Hotels is looking to strengthen its presence in theUnited States with this acquisition. It has also set upproperties in the Middle East, the United Kingdom andAfrica. Its fierce rival, Oberoi group, has also been active

overseas with properties in Saudi Arabia, Mauritius, Egypt,Australia and Indonesia, and elsewhere.

With growing competition, hotels are under tremendouspressure to generate new lines of revenue with creativeapproaches. With newer players poised to enter the marketone of the key factors that will drive future demand isalternate revenue streams.

Hotels are trying every possible way to generate cash fromalternative sources to achieve economies of scale. Reducingtransaction costs, increasing productivity and promotingtraditional Indian values


81/88

Looking for new niche Many business hotels in India are

integrating full-fledged spas on theirpremises, originally a main stay of resortproperties.

Another interesting trend in India is thatof mixed-use developments. While theconcept has proved to be successfulabroad, it is still at the embryonic stage inIndia. In this type of development, the realestate would typically include anapartment block or a commercial block(retail or office) along with a hotel.

However, in order to attract more visitors,India still needs to dramatically increasethe number of rooms available.

The challenges to face


82/88

The lack of adequate infrastructure development. Theairports at the primary gateway cities of Delhi andMumbai have been privatised, and work hascommenced on modernisation. New privately owned

international airports are expected to be commissionedat Hyderabad (2008) and Bangalore (2009), which willgive a large boost to the economic growth of theseareas.

There is still need to improve air connectivity; rail androad connections as well as general infrastructure likepower and water.

The result of the industry's success. As competitionincreases, there is a definite pressure on ARR andoperating margins. The industry market will definitelyshift from being demand-driven to supply-driven andthat the hotel companies will need to revisit theirstrategies and, of course, their prices.

Some players are already preparing for the difficulttimes when the ARRs are expected to fall by 30-40percent in the next 3-4 yearsand then thedistinguishing factor for the hotels will be the offer in itsentirety rather than just the price or the facilities thatthe hotels offer.


83/88

STRENGTHS

Faster GDP growth

Industrialization. Natural heritage

India as a global player

WEAKNESS

lake of connectivity.

Lake of publicity. Hectic rules

Influence of politicians

Marketing gap.


84/88

OPPORTUNITIES

Health tourism.

Strong in cultural andnature aspects.

Commercialization of

sports and games.

FDI policy. Mismatch of supply and

demand.

THREATS

Poor domestic tourism

infra structure

Political conditions

Terrorism

Increase in pollution

Entry of new competitors


85/88


86/88

Hospitality

Tourism

Infrastructure

Industrialization

Education

Thankyou


87/88

Thankyou .

Any question???????


88/88

Documents

Presentation of Hospitality 2