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Presentation by Mr. Anil Bhandari Chairman AB Smart Concepts

9th December 2013

Jagran LakeCity University, Bhopal

Hospitality Industry Growth

Tourism – An Economic Activity Tourism is an Economic Activity

Its potential is not being fully tapped

Centre & State Governments need to focus more on capacity building by Destination Development

• GDP growth (2012) 6.6%

• Foreign exchange earnings US$ 17.7 bn.

• Employment (direct) 25 mn.

(indirect) 39 mn.

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Indian Tourism – Global Ranking

• India ranked 11th in the Asia Pacific region

• 62nd as world's attractive destinations

• 14th best tourist destination for its natural resources

• 24th for cultural resources & rich fauna

• 37th for its air transport network

• Expected to be second largest employer by 2019 (Source: WTTC)

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Tourism – Inbound, Outbound & Domestic

Inbound

• Foreign Tourist Arrivals 6.6 mn.

• Annual growth rate 5.4%

Outbound

• Indian Nationals departures 14.9 mn.

• Annual growth rate 6.7%

Domestic Domestic Tourism Movement 1036 mn.• Annual growth rate 19.8% (Source: MOT 2012-13)

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Hotel Industry Development in India

• 1900s: Among the first hotels to come up were The Cecil in Shimla, Grand of Kolkata, Taj Mahal in Mumbai & Maidens in Delhi. Later on came the Oberoi and Ashok Hotels

• 1966: ITDC was set up to work as a catalyst and encourage private sector investment in hotels. ITDC built 36 Ashok Group of hotels in 3, 4 and 5-star categories and was a pioneer in building palace hotels, beach resorts and convention hotels

• 1982: The Asian Games spurred the growth of the hotel industry

• 1990s: Liberalisation brought more international hotel brands into the marketplace

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Number of Hotels in India

“India presently has over 200,000 rooms in hotels and guest house categories.

With an estimated 8% growth in ForeignTourist Arrivals by 2020 there is the needto build additional 100,000 hotel rooms.” - Union Tourism Minister K . Chiranjeevi

at 48th annual convention of FHRAI

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Hotels in India – City-wise (2012-13 to 2017-18)

Location Existing Rooms Proposed Supply

• Agra 1,299 866

• Ahmedabad 2,477 1,857

• Bangalore 8,536 10,731

• Chennai 6,086 5,331

• Delhi NCR 16,646 16,792

• Goa 4,309 2,622

(contd.)

Hotels in India – City-wise (2012-13 to 2017-18)

Location Existing Rooms Proposed Supply

Hyderabad 5,322 3,433Jaipur 3,875 2,859Kolkata 2,163 3,511Mumbai 12,807 9,802Pune 5,817 3,705Other Cities 24,142 23,141

(Source: HVS 2013)

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Hotel Classification in India

The Ministry of Tourism classifies hotels in thefollowing categories:

5-Star Deluxe Heritage Grand5-Star Heritage Classic 4-Star Heritage Basic3-Star Motels2-Star Service Apartments1-Star Time Share ResortsGuest Houses Bed & Breakfast

(Source: MOT)

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International & Domestic Hotel Brands

International DomesticStarwood Taj GroupCarlson ITC WelcomgroupHyatt ITDC Ashok GroupMarriott International Oberoi GroupHilton Worldwide Leela GroupAccor Lalit GroupInterContinental Hotels Park Hotels

GroupWyndham Hotels Sarovar HotelsInterContinental HotelsHoliday Inn

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Hotel Development Procedure

Conduct FeasibilityPrepare a ConceptStudy Financial viabilityFinalise hotel BrandObtain all permissions from Concerned

AuthoritiesSelection of Architect, Interior Decorator,

Contractor, Consultant and Project Management Company

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Hotel Construction Tenure• Luxury segment approx. 39 months, Upscale &

Mid-market 30 months • Actual time taken depends on getting licenses,

permissions• Full-service hotel requires between 40 to 120

licenses from state, central agencies

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Total Investment in Hotel Industry

To accomplish the Ministry of Tourism's vision of doubling Foreign Tourist Arrivals during the 12th Plan period (2012-17)… Hotel industry will need an additional 180,000 classified rooms

Considering present trends in development costs an additional investment of approx. Rs. 125,000 crore will be required

Hotel Occupancy & ADR, RevPAR

H1-2012 H1 - 2013 Variation

Occupancy 58.8% 58.2% -0.6 pt

Average Daily Rs. 6,267 Rs. 6,040 -3.6%Rate

RevPAR Rs. 3,687 Rs. 3,514 -4.7%

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Hotel Industry Trends

• Green Environment

• Health is Wealth – Hygiene

• Technology – Digitalisation

• Attention – Excellence in Service

• Price – Value for Money

• Location

• Safety & Security

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Industry Expectations from Government

• Create conducive, healthy work environment in order to maximize profit and develop business

• Hoteliers would like to build hotels

• Simplify issuances of licenses, create system of

single-window clearance in states

• Uniformity of luxury tax / sales tax etc.

• Increase FSI in states as done in case of Delhi • Hotels to be given Industry status and lower

rate of interest on loans by banks (TFCI)

contd….

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Industry Expectations from Government

• Create infrastructure for Tourism development

• Destination Development & Creation of Tourism Parks

• Manpower Development for Hotels and Culinary Institutes

• Aggressively Markets & Promotes Tourism

• Take steps for Safety, Security of tourists

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Clientele Expectations from Hotel Industry

• Good Price - Value for Money

• Good Quality Service

• Entertainment

• Connectivity

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Issues Concerning Development of Hotels

• Lack of availability of land

• High cost of land

• Restrictive building norms/bye-laws

• Long procedures & multiple clearances

• Lack of basic infrastructure

• High taxes

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Create Tourism Parks

• Hotels – 5, 4, 3-star categories• Convention Centers & Amphitheatres• Recreational Activities like Amusement

Parks• Shopping Malls & Handicraft Bazaars• Restaurants• State Tourism Offices & Information Centres• Medical Services• Airline, Railway & Road Transport agencies• Travel Agents & Tour Operators offices• Tourist Police offices

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Tourism Parks - Procedures

• State Governments to identify areas with high

tourism potential• Identify carrying capacity of destinations• Acquire land and develop a Master Plan• Develop land through Local Area Development

authorities such as DDA, MMRDA etc.• Lay down basic infrastructure of roads,

electricity, sewerage lines, water supply, telecom, etc.• The area be controlled through a given set of

regulatory conditions

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Tourism Parks - Incentives

• Lease land to private sector at reasonable rates

• Offer fiscal incentives like tax exemptions, exemptions from State/local levies, duty free import of capital equipment required for Hotels

• Give incentives for early completion of projects

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Tourism Parks - Benefits

Benefits To Tourists

• Availability of integrated facilities at one place• Greater choice to tourists through a basket of

services• Safety & Security: Area free from

touts/beggars• Competitive Price – Value for money • Clean & regulated environment

contd….

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Benefit To States

• Higher inflow of investments• Increased employment opportunities • Easier to regulate the environment • Focused tourism development

Benefits To Investors

• Single-window clearance• Environmental controls • Fiscal benefits• Lower Investment

THANK YOU

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