April 11, 2023

Expression of Interest to work as ConsultantFor setting up Hotel Chain in IndiaIndian Travel & Tourism Industry

B. Aggarwal & Co.

B. Aggarwal & Co.

Indian Tourism & Travel Industry

• Travel and Tourism is a $32 billion industry in India, 5.3% of GDP • 3.92 million international tourist arrivals in India in 2005 rose to 4.43 million in 2006, an increase of over 13%. • Foreign Exchange Earnings from Tourism also showed a robust growth of 14.6 percent to touch USD 6.56

Billion from USD 5.73 Billion in 2005.• Domestic market grew at about 20% p.a. in the last 4-5 years • Only about 100,000 hotel rooms in 1,800 hotels across the country, registered in 2004*

– Five star hotel rooms constitute 27%, four-star 7.5% and three-star 22%. • All India industry-wide occupancy of about 70% in 2004-05

– Scarcity of rooms in cities like Bangalore has resulted in rates of over $300 per night• The industry is dominated by 4-5 large Indian hotel owner-managers – The Taj Group, Oberoi, ITC, Leela and

Bharat Hotels • Most major international chains like Sheraton/Starwood, Inter Continental, Hyatt, Marriott, Hilton, Le

Meridien, Carlson are represented by management or franchise contracts. Aman and Accor plan to own hotels as well.

• Several others such as Shangri-La, Four Seasons, Ritz Carlton and Mandarin are in the process of establishing their presence in India, primarily through management contracts

• The branded segment represents approximately 30,000 rooms or 30% of the total hotel stock • Compounded growth in the last 5 years, in terms of rooms added, was the strongest in the mid market

segment – The three-star hotel segment grew at about 11%; followed by the four star segment at about 9%

* Registered with the Federation of Hotel and Restaurant Associations of India (FHRAI)

B. Aggarwal & Co.

Key Statistics

Key Statistics - India

Travel & Tourism Revenue ($ billion) 32

Inbound Tourist Arrivals (2004) million nos.

3.3

Inbound Tourism Revenue ($ billion) 4.0

Domestic Tourism (million nos.) 271

Domestic Tourism Revenue ($ billion) 28.0

Outbound Tourism (million nos.) 6.0

Hotel Industry – number of hotels 1,800

Hotel Industry – number of rooms 1,00,000

Source: WTTC Country Reports, FHRAI, HVS

100% FDI is permitted in Hotels and Tourism, through the automatic route

B. Aggarwal & Co.

Government Initiatives

• To unlock the huge potential in this sector, Government has taken various initiatives for the development of this sector.

• 100% FDI is permitted in Hotels and Tourism, through the automatic route

• 102 rural tourism infrastructure projects have been sanctioned to spread tourism and socio economic benefits to identified rural sites having tourism potential.

• Ministry of Tourism brought out guidelines for classification of Apartment Hotels, Time Share Resorts and Guest Houses. It also sanctioned capital subsidy for 43 budget category hotels and interest subsidy for 86 budget category hotels.

• Recognition of spare rooms available with various house owners by classifying these facilities as "Incredible India Bed and Break fast Establishments"', under 'Gold' or 'Silver' category.

• A new category of visa "Medical Visa" ('M'-Visa) has been introduced, which can be given for specific purpose to foreign tourists coming into India.

• Guidelines have been formulated by Department of AYUSH prescribing minimum requirements for Ayurveda and Panchkarma Centres.

• Launch of Incredible India campaign to promote tourism both in domestic and international markets.

B. Aggarwal & Co.

Opportunity - Outlook

• Foreign tourist arrivals are expected to grow to 5 million by 2007. Could double to 10 million by 2010-12

• Domestic tourism is expected to increase by 15% to 20% p.a. over the next five years

• Rapid growth in average room rates is expected to continue until sufficient new supply comes on stream

• Average room rates increased by 21% in 2005 over 2004, the fastest growth rate was in 4-star and 5-star segments

B. Aggarwal & Co.

Opportunity - Potential

• Favourable demographics and rapid economic growth point to a long term secular uptrend in the domestic demand for hotels – for business and leisure

• International inbound traffic is expected to grow rapidly with increasing investment and trade activity

• India’s rich heritage and natural beauty are just beginning to be marketed to international leisure travellers.

• The growth momentum in domestic and international travel is expected to receive a further boost with more budget airlines/lower air-fares, open sky policies and expected improvements in travel infrastructure (roads, airports, railways)

• There are opportunities in all price and value chain segments due to the shortage of hotel stock - over 100,000 hotel rooms need to be added over the next five years

• Hotel-asset construction and ownership

• Low penetration of brands (about 30%) provides opportunities for management contracts and franchising with local hotel owners/ developers

• Serviced apartments in major cities – no chain operating in all cities, very little stock

Investment opportunity of about $8-10 billion in the next 5 years

B. Aggarwal & Co.

Key Players in India

No. International Player Main Indian Collaborator

1 Four Seasons NONE

2 Marriott International NONE

3 Orient Express Hotels NONE

4 Le Meridian NONE

5 Radisson NONE

6 Shangri-La NONE

7 Hilton Indian Hotels

8 Starwood H & R (Sheraton) ITC Hotels

9 Hyatt International Asian Hotels

10 Park Inn/ Park Plaza Sarovar Park Hotels and Resorts

11 Bass Plc Bharat Hotels

B. Aggarwal & Co.

New Room Supply – by 2011

Particulars Luxury First Class Mid Market Budget Total

Delhi/NCR 2449 2659 4624 1484 11216

Mumbai 2866 2697 2485 1270 9318

Kolkata 275 725 1225 240 2465

Chennai 1235 1675 1017 480 4407

Bangalore 2503 1300 2883 1108 7794

Hyderabad 1885 2549 1579 1395 7408

Pune 470 1767 1454 927 4618

Goa 325 1147 675 485 2632

Cochin 0 400 335 330 1065

Jaipur 324 1005 720 721 2770

Total New Supply 12332 15924 16997 8440 53693

In per cent 23% 30% 32% 16%

Source: HVS International

B. Aggarwal & Co.

Economic Indicators & Tourism Statistics

Particulars 2003 2004 2005 2006

Number of arrivals 2,726,000 3,406,623 3,915,324 4,443,893

Foreign exchange earnings ($billions) 3.6 4.81 5.73 6.7

Foreign exchange earnings ($ per visitor) $1,321 $1,412 $1,463 $1,508

Total arrivals to New Delhi 30.80% 32.20% 32.00% 32.10%

Total arrivals to Mumbai 24.10% 25.10% 24.90% 25.00%

Total arrivals to Chennai 10.50% 10.30% 9.90% 10%

Total arrivals to Kolkata 3.70% 3.30% 3.10% 2.90%

Exchange rate US$1.00: INR 46 44.9 44.5 46.2

Source: HVS International

B. Aggarwal & Co.

Our Services

Stage I : Project Preparation

– Locating a Site for Hotel

– Hotel formal / informal approvals

– Hotel notification

– State support assistance

– Other regulatory & statutory approvals

– Proposal for government grants (if any) Stage II: Project Development

– Carrying out feasibility study

– Site connectivity

– Business plan & financial modelling

– Risk management framework

– Strategy for co-developers/ partners

Stage III: Project implementation

– Project bundling/ unbundling

– Project execution and O&M arrangements

– Financial structuring

– Development of detailed term sheet

– Legal assistance, marketing/ organization structure/ strategy

Stage IV: Project financing

– Arranging Financial closure Stage V: Project Execution

– Engineering & procurement

– Project management & supervision

New Delhi

Kapil Aggarwalkapil@aggarwalindia.org cell: +919810046045

Offices:

Thank you for your interest.

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