Siddhant Summer Report

DREAM GATEWAY HOTELS
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 2 T&T Contribution .................................................................................................................. 14 Figure 3 Foreign tourists arrivals .......................................................................................................... 16 Figure 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 ...................................................................................................................... 38 Figure 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 ................................................................................................................................... 12 Table 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 ........................................................................................................................... 43 Table 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) ....................................................................................... 61 Table 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 Group

Jain Group, one of the most dynamic 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 primary products like Iron and Steel, cement and petroleum products. Besides this, they owned several bes t 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 towards future with quantum growth plan. Jain Group is known 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 them. 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 that includes MNCS, banks and other financial institutes, corporate, IT sectors, FIIS, government bodies and many more. Jain Group is all set to scale new height of success. Vision & Mission
With the Management philosophy of Quality 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 heart of our mission is a desire 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 prosperous future. We believe in giving our customer the synergy of 3s i.e. Service, Support and Satisfaction all under one roof. We at Jain 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, stay 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 JFC Hire Purchase (P) Ltd. JAIN FINANCE Corporation is the financial services co mpany 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 of 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 horizons, JAIN GROUP entered the field of real estate development in the 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 construction, 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 the journey has just begun. Guided by its vision, fuelled by enthusiasm, strengthened by strong work force and loaded with advanced building technology, JAIN GROUP is committed to give shape to future of not just Kolkata, but many more cities spread across the country.
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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 To do a hospitality industry analysis and determine Financial Viability of a proposed hotel in Kolkata. To estimate the cost of project. To estimate the total expected revenue from the various departments of the 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
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.
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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 ANALYSIS
The 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.
Customer Profile in FY 2008

16% 9% 37% Domestic Leisure Domestic Business International Leisure International Business 38%
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 .
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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
Corridor areas, improving identified ports to facilitate cruise tourism and evaluating publicprivate 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 Supply Supply is catching pace. Metros will witness an oversupply situation after four to five years. Largely depends on business travellers but tourist traffic is also on the rise. Demand normally spurts in the peak season between November and March. High capital costs, poor infrastructure facilities and scarcity of land especially in the metros. Limited due to higher competition, especially in the metros.
Demand
Barriers to entry Bargaining power of suppliers Bargaining power of customers
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 hotel chains.
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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 publicprivate 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
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, fourstar, 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 timeconsuming 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 five per 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 also planning 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 nonresident 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 2,300 2,500 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 India ARR 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 STAR CATEGORY DREAM GATEWAY HOTEL
4 STAR 108 PRIVATE OWNERSHIP BUSINESS CLASS SELF
NUMBER OF ROOMS TYPE CLASS -
MEANS OF FINANCE -
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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 Bed Single rooms 46 Queens Bed Double 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

Floor-wise Details
Table 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
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 systems lectern, table, and lapel microphones Exhibitions design and execution Business center Full communication facilities National and international Printing, stationary, delegate kits Video coverage and photography COST OF PROJECT
Table 5 (Cost of project)
Particulars Cost of land Cost of building Plant and machinery Furniture and fixture Miscellaneous fixed assets Margin for contingency (10% on 1-5) Preliminary POP expenses Total cost of the project
Cost in Rs. Lacs 248.88 708.56 327.8 353.9 373.35 201.249 77.5 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 a capital 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 I II III IV V

Source: Annexure
Rooms sales 1701.99 2013.04 2365.49 2766.69 3225.06
F&B Sales 60.95 80.48 110.46 132.25 173.02
Total 1762.95 2093.53 2475.95 2898.94 3398.09
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 as 60%, 65%, 70%, 75% and 80%. F&B sales include sales from the Restaurant and the Bar.
Rooms sales
350000000 300000000 250000000 Sales in Rs. 200000000 150000000 100000000 50000000 0 I II III Year
Figure 8 Room sales
Rooms sales
IV
F&B Sales
20000000 18000000 16000000 14000000 12000000 Sales in Rs. 10000000 8000000 6000000 4000000 2000000 0 I II III Year
Figure 9 F&B sales
F&B Sales
IV
Total Sales
400000000 350000000 300000000 250000000 Sales in Rs 200000000 150000000 100000000 50000000 0 1 2 3 Year
Figure 10 Total sales
Total
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OPERATIONAL EXPENSES
ESTIMATION OF EXPENSE FOR THE 1st 5 YRS (in Rs Lacs)
Expenses
70000000 60000000 50000000 40000000 Expenses in Rs. 30000000 20000000 10000000 0 I II III Year
Figure 11 Expenses
Misc expenses(5% of total sales) Salaries(Annexures) Electricity(5% of Tot. Sales) Cost of F&B(30% of F&B Sales) IV V
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
Expenses
50000000 45000000 40000000 35000000 30000000 Expenses in Rs. 25000000 20000000 15000000 10000000 5000000 0 I II III Year
Figure 12 Expenses
Insurance & Legal Charges(3% of Total Sales Publicity Administration(10% of Total Sales)
IV
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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 o o o o Brand value Management Expertise Booking 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
Insuran Cost of F&B(3 Year 0% of F&B Sales) Electr icity(5 % of Tot. Sales) Salaries (Annexu re) Administ ration(10 % of Total Sales) Public ity ce & Legal Charges (3% of Total Sales I II III IV V 18.28 24.14 33.13 39.67 51.90 88.14 104.67 123.79 144.94 169.90 182.80 201.08 221.19 243.31 267.64 176.29 209.35 247.59 289.89 339.80 15.00 15.00 15.00 20.00 20.00 52.88 62.80 74.27 86.96 10.19 88.14 104.67 123.79 144.94 169.90 621.57 721.74 838.80 969.75 1121.11 Misc expenses(5 % of total sales) Total expenses
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Total expenses
120000000 100000000 80000000 Expenses in Rs. 60000000 40000000 20000000 0 I II III Year
Figure 13 Total Expenses
Total expenses
IV
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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 II III IV V
957.44 861.69 775.52 697.97 628.17
95.74 86.16 77.55 69.79 62.81
327.8 245.85 184.38 138.29 103.71
81.95 61.46 46.09 34.57 25.92
353.9 265.42 199.06 149.30 111.97
88.47 66.35 49.76 37.32 27.99
373.35 280.01 210.00 157.50 118.13
93.33 70.00 52.50 39.37 29.53
359.50 283.99 225.91 181.07 146.27
Figure 14 Depreciation value
Depreciated value
2500 2000 Value in rs. Lacs 1500 1000 500 0 I II III Year IV V Misc F&F P&M Building
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
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Figure 15 Total Depreciation
Total Depreciation
400 Depreciation in Rs. lacs 350 300 250 200 150 100 50 0 I II III Year IV V Total Depreciation
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Profitability Statement
(in Rs Lacs)
Table 9 Profitability Statement
Profitability Statement Particulars Op. Profit Depreciation POP Expenses PBT Income tax @ 50% + 10% surcharge PAT Net Cash Flow Year I Year II Year III 1637.51 225.91 77.5 1334.1 800.46 533.64 837.05 Year IV 1929.19 181.07 77.5 1670.62 1002.37 668.24 926.81 Year V 2276.97 146.27 77.5 2053.2 1231.92 821.28 1045.05
1141.37 1371.78 359.5 77.5 704.37 422.62 281.74 718.74 283.99 77.5 1010.29 606.17 404.11 765.60
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
Op. Profit
2500 2000 Profit in Rs. Lacs 1500 1000 500 0 Year I Year II Year III Year IV Year V Op. Profit
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The net cash flow at the 1 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.
st
Figure 17 Net cash flow
Net Cash Flow

1200 1000 Cash Flow in Rs. Lacs 800 600 400 200 0 Year I Year II Year III Year IV Year V Net Cash Flow
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BREAK EVEN ANALYSIS

To arrive at Break Even 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%) 2.) Salary (80%) 3.) Insurance and license 4.) Administration and management expenses Total 49.51 176.95 2.00 247.59 476.06
Variable cost
Table 11 Variable cost
Rupees in lacs 1.) Power (60%) 34.36 2.) Salary (20%) 21.36 3.) Expense towards publicity 4.) Cost of Food & Beverages Total 74.27873644 44.239536 10 18.28 146.7982724
1. Contribution
= = =
Income - Variable Cost Rs. 2475.95 Rs. 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.P Assumed 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 II 33.41 Year III 36.53 Year IV 40.45 Year V 45.61
Year ROI (in %age)
Year I 31.36
Figure 18 ROI
ROI
50 45 40 35 30 25 20 15 10 5 0 Year I Year II Year III Year IV Year V
%age ROI
ROI
Average ROI
= =
31.36+33.41+36.53+40.45+45.61 5 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.
SENSITIVITY RATIO
Sensitivity change = Change in income Change in expenses = = 35.37/11.98 2.95
Sensitivity to income change
Total income Occupancy
= = Sensitivity to Expenses change =
2475.95/70 35.37 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 = = B = = Total cost of project Rs. 2465.85 (amount in lacs) total revenue total 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 proposed project.
HOTEL LIST
1. IQ international 2. Intercontinental hotel 3. ITC Fortune Hotels 4. Star Woods Sheraton 5. Trident Hotels 6. Wyndham Group- Ramada 7. Emmar Mgf 8. Marriott 9. Moven Picks 10. Royal orchid 11. Ten Hotels 12. Accor India 13. Bird Group 14. Leela Kempski 15. Langhan Hotels International 16. Aman Hotels 17. Corinth Hotel Resort- Pune 18. Westcourt Hospitality 19. Lemon Tree 20. Park plaza 21. Sarovar 22. Concept hospitality 23. Berggruen holding - Keys 24. Raddison The measurement and criterion for short listing the hotel brands were: Number of properties Should have presence in at least 5 cities Room inventory average rooms in each property should be above 50 Number of rooms sold across all properties should have an average yearly occupancy of at least 50% Gross operating profit should be a profit making organization Guest facilities should 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 Hotels They offer full service properties all over India, including smaller 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 the Indian 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 global leader 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 and experts 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
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 8700 room 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 hotel brands, 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 leisure destinations, 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 with strategic 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 (Delhi NCR), 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.
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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.aspx 5. 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
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Annexures
Annexure 1
COST OF BUILDING
Table 12 COST OF BUILDING
Particulars Total built up area Rate per sq. ft Cost 15% of Electrical work 12% of Plumbing and Drainage 10% On Consultant TOTAL
Rs. 64650 800 51720000 7758000 6206400 5172000 70856400
Annexure 2
Table 13 PLANT AND MACHINERY
Items Central a/c Lift Generator Transformer Bore well Boiler EPBAX Instrument Exhaust/ vent CCTV Kitchen equipment Water cooler Fire fitting Computer /Software Telex TOTAL
Amount in Rs. Lacs 100 30 25 20 2 10 15 5 2 12 20 3 3 80 0.8 327.8
Annexure 3

Table 14 GUEST
ROOM
a. GUEST ROOM Price in Nos Total(Rs.) Item Rs 20000 60 1200000 Twin bed 25000 60 1500000 Double bed 1000 120 120000 Side table 800 120 96000 Chair 1200 120 144000 Coffee table 5000 120 600000 Cupboard 2000 120 240000 Luggage rack 4000 120 480000 T.V stand 2500 120 300000 Dressing Table 150 36846 5526900 Carpets 500 120 60000 Mirrors 50000 120 6000000 Toilet Accesories 1500 120 180000 W/C 1000 120 120000 Upholstery 7500 120 900000 Safe 4000 120 480000 Fridge 25000 60 1500000 Minibar 35000 120 4200000 Television 75000 120 9000000 Others 100000 4 400000 Aromatherapy Spa bath amenities 100000 120 12000000 Fixtures 25000 4 100000 Pull out sofas 45146900 TOTAL Table 15 RESTAURANT b. RESTAURANT: (60Pax) Price No Total(Rs.) Item 3000 17 51000 Tables 1200 65 78000 Chairs 6000 2 12000 Side station 800000 1 800000 Dcor and upholstery 150 1800 270000 Carpets 250000 1 250000 Fixtures 75000 1 75000 Bar counter 100000 1 100000 Others 1636000 TOTAL
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Table 16 ROOM
SERVICE
c. ROOM SERVICE :( 108Rooms) Price Number Total(Rs.) Item 300 30 9000 B/f Trays 400 30 12000 Tea Trays 300 20 6000 12 Salvers 300 20 6000 9 Salvers 2000 10 20000 Trolleys 500 10 5000 Racks 7000 1 7000 O.T cabin 8000 1 8000 Desk 10000 1 10000 Miscellaneous 83000 TOTAL
Table 17 BANQUET
and Conference Hall
d. BANQUET and Conference Hall Price Number Total(Rs.) Item 1200 425 510000 Chairs 4000 60 240000 Tables 150 4200 630000 Carpets 3000 4 12000 Podium 100000 2 200000 Music system 300 30 9000 12 salver 250000 2 500000 Fixtures 2101000 Total
Table 18 STORES,
PURCHASE, HOUSEKEEPING
e. STORES, PURCHASE, HOUSEKEEPING Total(Rs.) Item 75000 Cupboards 40000 Shelves 40000 Racks 10000 Bins 65000 Fixtures 230000 Total
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Table 19 ADMINISTRATION
Item Tables Chairs Fixtures Total
f.ADMINISTRATION Total(Rs.) 75000 50000 50000 175000
Table 20 RECEPTION
AND LOBBY
g. RECEPTION AND LOBBY Total(Rs.) Item 80000 Counter 10000 Stationery 10000 Pigeon hole 20000 Cupboard 50000 Safe deposit 500000 Sofa set 800000 Fixtures 235000 Luggage carrier 100000 Miscellaneous 1805000 Total
Table 21 STAFF
CAFETARIA
Item Tables Chairs Fixtures Total Total
h. STAFF CAFETARIA Total(Rs.) 12500 25000 50000 87500 51264400
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Annexure 4
Table 22 FOOD
AND BEVERAGE OUTLETS
a.FOOD AND BEVERAGE OUTLETS Price Number Total(Rs.) Item 200 80 16000 Table cloth 30 300 9000 Napkins 25000 Par stock(*3) 75000 Total cost
Table 23 BANQUET
HALL AND CONFERENCE
b. BANQUET HALL AND CONFERENCE Price Number Total(Rs.) Item 800 100 80000 Frills 200 75 15000 Table cloth 40 800 32000 Napkins 127000 Par stock (*3) 381000 Total
Table 24 GUEST
ROOM AND SUITE ROOM LINEN
c.GUEST ROOM AND SUITE ROOM LINEN Price Number Total(Rs.) Item 500 60 30000 Single bed sheet 800 60 48000 Double bed sheet 900 120 108000 Blankets 250 120 30000 Blanket cover 1500 120 180000 Mattress 300 120 36000 Mattress protector 500 60 30000 (single) 800 60 48000 (double) 60 200 12000 Hand towel 250 200 50000 Bath towel 300 100 30000 Bath mat 200 200 40000 Pillows 642000 Par stock (*4) 2568000 Total
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Table 25 KITCHEN
STEWARDING (RESTAURANT &ROOM SERVICES)
d. KITCHEN STEWARDING (RESTAURANT &ROOM SERVICES) Price (Rs) Number Total(Rs.) Item 50 1200 60000 Glasses 40 1200 48000 Chinaware 40 1200 48000 Flatware 50 1200 60000 Cutlery 25000 Miscellaneous 241000 Total
Table 26 BANQUETS
Item Glassware Chinaware Flatware Cutlery Total
e. BANQUETS Price (Rs) Number Total(Rs.) 75 1200 90000 40 1200 48000 40 1200 48000 50 1200 60000 246000
Table 27 STAFF
CAFETARIA
Item 60000 Plates 20000 Spoons 20000 Forks 100000 Total Table 28 HOUSE KEEPING MISCELLANEOUS ASSETS g. HOUSE KEEPING MISCELLANEOUS ASSETS Price Number Total(Rs.) Item 5000 8 40000 Vacuum cleaner 40 50 2000 Cleaner mug 50 40 2000 Mops 40 45 1800 Brooms 30 30 900 Squeezer 8 100 800 Duster 100 500 50000 Waiters cloth 25000 Miscellaneous 122500 Total 3733500 TOTAL
F .STAFF CAFETARIA Total(Rs.)
Annexure 5
Table 29 PRELIMINARY
AND PRE-OPERATIVE EXPENSES
6. PRELIMINARY AND PREOPERATIVE EXPENSES Item
Rs. In Lakhs 20 2 2.5 2 15 10 5 5 3 3 10 77.5
1.) Salary and wages 2.) Loan procurement and application 3.) Project fees 4.) Registration and establishment fees 5.) Insurance 6.) Advertisement and publicity 7.)Deposits a.) Electricity b.) Telephone c.) Water supply d.) NSC 8.) Miscellaneous expenses POP Total
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Annexure 6
Table 30 SALARY
AND WAGES(Monthly)
Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
7. SALARY AND WAGES(Monthly) DESIGNATION No. Of persons SALARY(in TOTAL Rs) General manager 1 75000 75000 Front office manager 1 20000 20000 Lobby manager 1 20000 20000 GRE 1 10000 10000 Front office assistant 4 10000 40000 Travel desk operator 1 10000 10000 Bellboys 5 4000 20000 Telephone operator 2 5000 10000 Bell captain 2 5000 10000 Night auditor 1 7500 7500 F & B Manager 1 25000 25000 Banquet manager 1 20000 20000 Restaurant manager 1 20000 20000 Barman 1 8000 8000 Captains 2 8000 16000 Senior Captain 2 10000 20000 Stewards 35 4500 157500 Executive chef 1 35000 35000 Souse Chef 2 20000 40000 Commis 8 8000 64000 Chef de partie 3 9000 27000 Steward supervisor 1 10000 10000 Dish / pot washer 5 4000 20000 Executive house keeper 1 18000 18000 House keeping supervisor 2 10000 20000 Floor supervisor 5 8000 40000 Room attendant/house man 15 5000 75000 Personal manager 1 15000 15000 Sales & marketing manager 1 15000 15000 Sales & marketing executive 1 10000 10000 Accountant 1 10000 10000 Chief accountant 1 20000 20000 Cashier 2 15000 30000 B.Sales executive 2 8000 16000 Bakery chef 1 25000 25000 Desk control supervisor 2 6000 12000 Linen attendants 2 4000 8000
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38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62
Laundry attender Flower. Assistant Carpenter Plumber Hostess R.S.OT Training manager Training assistant G.M secretary Pest controller Laundry manager Personnel office asst. Driver Doorman Apprentices Life guard Security manager Security Supervisor Security guard Chief engineering Supervisor Technicians Purchase officer Purchase manager Stores keeper Total Benefits of 20% Monthly Total Yearly Total
2 1 1 2 2 2 1 1 1 2 1 2 4 3 5 2 1 2 4 1 2 2 1 1 2 167
4000 4000 3500 3000 4000 4500 12000 5000 10000 3000 12000 5000 7500 5000 3000 3000 15000 6000 4000 15000 5000 4500 10000 15000 4500
8000 4000 3500 6000 8000 9000 12000 5000 10000 6000 12000 10000 30000 15000 15000 6000 15000 12000 16000 15000 10000 9000 10000 15000 9000 1269500 253900 1523400 18280800
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Annexure 7
Table 31 FOOD
& BEVERAGE SALES
FOOD & BEVERAGE SALES F & B SALES=No: of Pax x Average Cover Charge x 365 BAR (30 Pax) Year No. of covers sold/day 8 12 18 22 30 Average cover charges 400 420 441 463.05 486.2025 No. of days 365 365 365 Total
I II III IV V
1168000 1839600 2897370
365 3718291.5 365 5323917.4
Table 32 RESTAURANT
RESTAURANT (50 Pax) Year
No. of covers sold/day 30 36 45 50 60
Average cover charges 450 472.5 496.125 520.93125 546.97781
No. of days
Total
I II III IV V
365 4927500 365 6208650 365 8148853.1 365 9506995.3 365 11978814
Table 33 Room
Service
No. of covers sold/day 70 76 80 84 90 Average cover charges 250 262.5 275.625 289.40625 303.87656 No. of days Total
Room Service (108 rooms)

Year
I II III IV V
365 6387500 365 7281750 365 8048250 365 8873195.6 365 9982345.1
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Table 34 BANQUET
& CONFERENCE HALL
BANQUET & CONFERENCE HALL Year
No. of covers sold/day 120 130 140 150 160
Average cover charges 500 525 551.25 578.8125 607.75313
No. of days 365 365 365 365 365
Total
I II III IV V
21900000 24911250 28168875 31689984 35492783
Table 35 Room
Sales
Room Sales ARR Year Average occupancy(in %age) 60 I 65 II 70 III 75 IV 80 V
6000 6600 7260 7986 8784.6
No. No. of Total of Rooms days 365 108 141912000 365 108 169111800 365 108 200332440 365 108 236106090 365 108 277031145.6
Summer Project
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DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

The Jain Group

DREAM GATEWAY HOTELS

Contributing to the welfare of society.

Values and Beliefs

DREAM GATEWAY HOTELS

Jain Finance Corporation

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

Source: World Trade Tourism Council

DREAM GATEWAY HOTELS

Tourism market overview

Customer Profile in FY 2008

DREAM GATEWAY HOTELS

Figure 2 T&T Contribution

DREAM GATEWAY HOTELS

Barriers to entry Bargaining power of suppliers Bargaining power of customers

Higher in metro cities due to increasing room supply.

DREAM GATEWAY HOTELS

2. International visitor arrivals

Figure 3 Foreign tourists arrivals

3. Major international source markets

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

Hotel market overview

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

Source: Cushman & Wakefield Research

DREAM GATEWAY HOTELS

The investment market

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

DREAM GATEWAY HOTELS

Figure 5 Kolkata Map Source: Cushman & Wakefield Research

DREAM GATEWAY HOTELS

Kolkata City Map

Figure 6 ARR vs Occupancy Source: CRISILAverage

Room Rate Vs. Occupancy -

DREAM GATEWAY HOTELS

Figure 7 Upcoming supply

DREAM GATEWAY HOTELS

PROFILE OF THE PROPOSED HOTEL

4 STAR 108 PRIVATE OWNERSHIP BUSINESS CLASS SELF

NUMBER OF ROOMS TYPE CLASS -

DREAM GATEWAY HOTELS

LOCATION Proposed Site

Atghara, Newtown Rajarhat, Kolkata 1 Km from AIRPORT

DREAM GATEWAY HOTELS

1 Banquet Hall, Conference Hall & Board Room

DREAM GATEWAY HOTELS

Area (Built up Area) in sqft.

Car Park, Service Area

Lounge, Cafeteria, Service Area, Store, Back Office

Store, Service Area, Conference Area, Prefunction Lobby

Rooms & Toilet