Selection of agency for development and operation of … towards west, Thotapalligudur Mandal...

BIDDING DOCUMENT

Issued on: 06.11.2016

for the

Selection of agency for development and

operation of Beach Resort at Mypadu in

Andhra Pradesh under Operate and

Maintenance Contract

Authority: Andhra Pradesh Tourism Development

Corporation

Vol II: Terms of Reference (ToR) and Project Profile

Feasibility Report for Operations & Maintenance of

APTDC Beach Resort at Mypadu

Contents of RFP

43T143T 43TTerms of Reference (ToR)43T 3

43T243T 43TScope Data Sheets 43T 8

43T1.43T 43TANNEXURE43T 14

43T1.1.43T 43TAnnexure-I: Property site/ facilities: Mypadu beach RESORT 43T 14

43T1.1.1.43T 43Tcapital expenditure43T 14



1 Terms of Reference (ToR)

1.1 About the project

The proposed property is at Mypadu in Nellore district, Andhra Pradesh. The Operator will

have to develop additional rooms, market the property and provide all services to the guests

as per the standards from a facility which is rated as 2 stars or above.

1.2 Rationale for the project

Government of Andhra Pradesh (GoAP) vision is to be amongst the top 3 States in India by

2022, the top State in India by 2029, and be the most preferred global destination by 2050.

The government is taking steps to provide an environment conducive to economic and social

growth. These steps include formulation of investment friendly policies, creating world-class

infrastructure, improving governance and taking necessary steps to attract investments into

the State. Promotion of tourism infrastructure and services at potential destinations is one

amongst the many initiatives taken up by the GoAP.

In line with the objective to make Andhra Pradesh the premier destination for tourists in the

country, Government of Andhra Pradesh has identified nine key theme areas to be developed.

The theme areas are listed below:

Religious Tourism

Recreation Tourism

Beach Tourism

Buddhist Tourism

Spiritual & Wellness Tourism

Heritage Tourism

Medical Tourism

MICE Tourism

Eco Tourism

Tourist arrival Trend

Andhra Pradesh has the distinction of being a leading tourism destination in India and is

presently, the Third most visited State in terms of domestic tourists arrivals. Following table

highlights the district wise tourist arrival in AP in FY 2015:

District

2015 Arrivals

Rank Domestic

(Million) % Rank International %

Chittoor 1 38.37 31.6% 3 9,231 3.9%

East Godavari 2 17.44 14.3% 9 507 0.2%

Krishna 3 14.41 11.9% 6 4,626 1.9%

Srikakulam 4 11.51 9.5% 8 582 0.2%

Visakhapatnam 5 11.44 9.4% 2 69,483 29.2%



Source: Ministry of Tourism, 2016

There has been steady increase in both domestic and international tourist arrivals from 2011-

12 to 2015-16.

Current Scenario and Potential for Hotel Rooms in AP

Performance of existing hotels in AP

• Statewide RevPAR performance of existing hotels was recorded at INR 2,010 in

2015-16 (15.4% growth over 2014-15)

• Following graph indicates growth of branded hotel rooms and increasing occupancy

ratio of same over 3 years.

West Godavari 6 8.29 6.8% 11 96 0.0%

Kurnool 7 5.22 4.3% 10 219 0.1%

Guntur 8 4.75 3.9% 7 1,135 0.5%

Kadapa Y.S.R 9 3.60 3.0% 13 0.0%

Vizianagarm 10 3.04 2.5% 5 5,981 2.5%

Nellore 11 2.12 1.7% 4 8,141 3.4%

Prakasam 12 0.71 0.6% 12 6 0.0%

Anantapur 13 0.69 0.6% 1 137,847 58.0%

121.59

237,854



Demand and Supply scenario of branded hotel rooms

Presently there is high demand of branded hotel rooms in AP.

Supply of Branded Rooms is only 44% of total rooms

Following graph indicates the CAGR growth in Supplyand demand of branded room from

2013-2016.

As seen from the excellent performance of existing branded hotels and high Supply demand

gap for branded hotel rooms, AP presents a tremendous opportunity for development of

Hotels/Resorts and MICE

1.3 Applicable incentives, subsidies and benefits

The project shall be eligible for incentives, subsidies and benefits as per the Andhra Pradesh

Tourism Policy 2015-20. These include:

6.40%

11.40%

Supply Demand

S. No Incentive category Incentives

a) Complementary/Lin

kage Infrastructure

a. Access Roads

b. Water supply

point

c. Power supply

d. Sewerage

connection

Total Project Cost

< Rs 50 crores

Total Project Cost

from Rs 50-100

crores

Total Project Cost

from Rs 100 -

200 crores

Up to a maximum

of 5% of total

project cost or Rs

2 crore,

whichever is less

Up to a maximum

of 7.5% of total

project cost or Rs

5 crores,

whichever is less

Up to a maximum

of 15% of total

project cost or Rs

10 crores,

whichever is less



1.4 Mypadu, Nellore District

Mypadu Beach is located on the west coast of Bay of Bengal, at a distance of 25 km

from Nellore in Andhra Pradesh. The beach provides fishing opportunities for the local

fishermen, and access to cruises for the tourists.

Korutur (3 KM), Komarika (5 KM), Mudhivarthi (6 KM), Kudithi Palem (6 KM),

Reddipalem (6 KM) are the nearby villages to Mypadu. Mypadu is surrounded by Vidavalur

Mandal towards west, Thotapalligudur Mandal towards South, Kodavalur Mandal towards

west, Kovur Mandal towards west.

Nellore, Gudur, Kavali, Kandukur are the nearby cities to Mypadu.

b) Land Conversion

Charges

Waiver of Non-Agriculture Land Assessment (NALA) tax

or Land Use Conversion charge, as applicable

c) Registration and

Stamp duty

100% reimbursement on Registration and Stamp duty for all

Tourism Infrastructure Projects

d) VAT/CST/SGST 5% for all new Tourism Infrastructure projects from date of

commencement of operations. Necessary amendments to

relevant clause(s) in the Andhra Pradesh Value Added Tax

Act 2005 to be made.

e) Luxury Tax 100% exemption of Luxury Tax for all new Tourism

Infrastructure projects for a period of 3 years from date of

commercial operations

f) Entertainment Tax 100% exemption of Entertainment Tax for first 3 years from

date of commercial operations

g) Energy Tariffs Tariff as per the rates provided in the “H.T. Category-III:

Airports, Railway Station and Bus Stations” in the Andhra

Pradesh Electricity Regulatory Commission (APERC)

Tariffs

Nellore

https://en.wikipedia.org/wiki/Bay_of_Bengal

https://en.wikipedia.org/wiki/Nellore

https://en.wikipedia.org/wiki/Andhra_Pradesh



2 Scope Data Sheets

2.1 Scope Data Sheet for Development of the project

2.1.1 Project Information memorandum

S. No Item Details

1 Land basic value Not Applicable

2 Upset Price –Minimum Assured Annual Revenue Share

(Rs. Lakhs)

27

3 Percentage Share of Total Revenues 11%

4 Google Map Not Applicable

6 Survey no. Not Applicable

7 Village Mypadu

8 District Nellore

9 Survey map Not Applicable

10 Engineering survey Not Applicable

11 Master plan ( if any) Not Applicable

2.1.2 Connectivity

Distance of Airport Railway station Bus station

Mypadu 100 Km

Tirupati

19 Km

Padugupadu

8 Km

Mypadu

2.1.3 Proximity to various location / nearest tourist attractions

S.No Name of the place Distance from the

project site

Importance of place

1 Nelapattu Bird

Sanctuary

101 Km Important breeding site for

spot-billed pelicans. 187 bird

species can be found here



2.2 Minimum Development Obligations

APTDC proposes to place its resort property at Mypadu, under Renovation, construction and

operation and maintenance by reputed private operators. The development of additional

rooms is envisaged to be on a Public Private Partnership (PPP) basis for the Service period of

30 years. APTDC proposes to contract reputed hotel / resort operators to manage these

properties on an “as-is-where-is” basis. The hotels shall have all modern facilities, conform to

development guidelines and should apart from conforming to the minimum standards laid

down by the APTDC, also incorporate best practices and standards practiced in the industry.

These terms and conditions will be specified in the Service Agreement between APTDC and

the Successful Bidder. The scope of work for the selected bidder/bidders shall include O&M

of existing facility and inter alia construction of additional rooms, interior decoration or

renovation, marketing, operations and management of the hotel Projects in accordance with

the provisions of the RFP comprising of Terms & Conditions, Scope of work and Service

Agreement.

The service provider will have to market the property and provide all services to the guests as

per the standards from a facility which is rated as 2 stars or above. It will include all room

services cleaning, cleaning and maintenance services, food and beverage services, banquet

and related services. It will also include transport and logistics required, travel desks, any

health club / spa services if required. The Operator will be entitled to fix the prices of these

services and change the rates thereof whenever it deems it. The service provider will have to

provide rate lists to APTDC and certified revenue statements every month (at the end of the

month within 7 days) with detailed break up various heads revenues.

Transaction structure: Following are the details of budget allocated and expected

infrastructure to be developed:

S. No Particulars Mypadu

1 Existing number of

rooms 16

2

Number of

rooms/cottages to be

added

19

3 APTDC will provide Existing operational property with 16 rooms and restaurant.

4 Operator will be

required to do

Construct minimum 19 additional rooms/accommodation

Upgrade existing rooms

Internal furnishing of all the rooms

Landscaping of the property

Interior furnishings and all movable equipment required for

running the hotel

All furniture, updation and replacement of air conditioning

systems in the entire premises

Upgradation of restaurant



Improvement to landscaping provided by APTDC

All moveable equipment (for kitchens, rooms, ancillary services

etc.)

Construction of Swimming pool if viable

5 Operational

Requirement Operate as 2-star or above

6. Costing All activities to undertaken by the operator at their own

expenses after the handing over of the property by APTDC

2.2.1 Feasibility of the project

The list of finishing works to be undertaken by the operator is listed at section 4 of

Transaction structure part of this volume. The estimated cost of the works is about INR 421

lakh.

2.2.2 Project Operations

The facility will conform to the standards of a 2 star or higher category. The project is

assumed to be operational 365 days a year, with average occupancy for the rooms is expected

to be 25% for first year of operation, 50% for 2nd and 3rd year, 55% for 4th and 5th year, and

60% there onwards till service year. It can be noted that the occupancy numbers are quite

conservative.

2.2.3 Revenues from the Project

The project is expected to have the following revenue streams

1 Revenue from room tariff

2 Revenue from food and beverages

2.2.4 Revenue from Rooms Tariff

The room tariff assumed based on inputs from department of tourism, Andhra Pradesh and

are as follows

Particular

Type of facility Double occupancy rooms

Nos. 35

Room Tariff (starting) INR 2000

2.2.5 Revenue from Food and beverages

Food and Beverages revenue, a significant contributor to the profits of a hotel, is assumed to

be INR 600 per occupied single room/tented rooms.

All average spending figures for restaurant will increase by 5% YoY basis.

2.2.6 Profitability of the facility

The profits for the project would be the following



— Profitability from of rooms: The profitability has been assumed to be about 35% for all

the years.

— Profitability on Food & Beverage and bar services: The profitability has been assumed to

be 45% for all the years.

— Room tariff is assumed to be escalated at 5% per annum, to account for inflation in

operation and maintenance (O&M) expenses

— The service period of 30 years commences after the moratorium period, which is

maximum of 5 months from the date of signing of SA for property.

— The Project IRR is estimated to be 18.7% for the investment of the operator even after

paying 11% of gross revenues to APTDC. This indicates a profitable investment.

2.2.7 Licenses and approvals

All construction, operation and related licenses will be the responsibility of the successful

bidder(s)

The developer is responsible for obtaining all the facility related licenses. The developer shall

obtain all licenses from relevant authorities for the operation of their corresponding hotel

Project. The APTDC shall assist the Successful Bidder (s) on a best effort basis for the same.

i. After APTDC handing over the site to the Operator, the Operator will complete the

obligations and make the Project operational. If the Operator fails to make the project

operational within the time specified by section for the specific project, the Minimum

Assured Annual Revenue Share will still become payable.

ii. In the case the operator is unable to make the property operational even after the lapse of the

specified period, APTDC may at its discretion extend the period without prejudice to the

rights to receive payments as above. In case, if the project is not completed even then, it will

be treated as an event of default and will be dealt with in accordance to the Service

Agreement.

2.2.8 Minimum Service Obligations

i. After APTDC handing over the site to the Operator, the Operator will complete the

obligations defined in the above table and make the Project operational. If the Operator fails

to make the project operational within the time specified by section for the specific project,

the Minimum Assured Annual Revenue Share will still become payable.

ii. In case hotel becomes operational earlier than the specified period (as per section 4), the

revenue share will become payable from the date of the hotel becoming operational.

iii. In the case the operator is unable to make the property operational even after the lapse of the

specified period; APTDC may at its discretion extend the period without prejudice to the

rights to receive payments as above.

iv. In case, if the project is not completed even then, it will be treated as an event of default and

will be dealt with in accordance to the Service Agreement.



The Operator shall at its own cost and expense:

a. The Operator has to run the APTDC property at the awarded site as a two star or higher

rating hotel facility

b. Operator is entitled at set the tariff terms for all facilities and services it provides at the

property and also entitled to change such rate whenever it deems fit. However at the end

of each quarter the operator will provide a detailed breakup of the revenue at the end of

each quarter.

c. Investigate, study, operate and maintain the Project Assets/Project Facility in accordance

with the provisions of this Agreement, Good Industry Practice and Applicable Laws;

d. Obtain all Applicable Permits in conformity with the Applicable Laws and be in

compliance with thereof at all times during the Service Period;

e. Procure and maintain in full force and effect, as necessary, appropriate proprietary rights,

licenses, agreements and permissions for materials, methods, processes and systems used

in or incorporated into the Project;

f. Ensure that each Project Agreement contains provisions that would entitle APTDC or a

nominee of APTDC to step into such agreement at APTDC’s discretion, in place and

substitution of the Operator in the event of Termination pursuant to the provisions of this

Agreement; provide all assistance to the APTDC as they may reasonably require for the

performance of their duties and services under this Agreement;

g. Provide, to the APTDC Officials, reports on a regular basis during the Operations Period

in accordance with the provisions of this Agreement;

h. Appoint, supervise, monitor and control the activities of Contractors / Staff or any other

service provider under their respective Project Agreements as may be necessary;

i. Develop, implement and administer a surveillance and safety program for the

Project/Project Facility and the users thereof and the personnel engaged in the provision

of any services under any of the Project Agreements including correction of safety

violations and deficiencies, and taking of all other actions necessary to provide a safe

environment in accordance with Applicable Laws and Good Industry Practice;

j. Take all reasonable precautions for the prevention of accidents on or about the Project

Site/Project Facility and provide all reasonable assistance and emergency medical aid to

accident victims;

k. Not to place or create nor to permit any contractor or vendor or service provider or any

other person claiming through or under the Operator to create or place any Encumbrance

over all or any part of the Project Assets, or on any rights of the Operator therein, save

and except as expressly set forth in this Agreement;

l. Be responsible for safety, soundness and durability of the Project Facility including all

structures forming part thereof and their compliance with the Specifications and

Standards;

m. Ensure that the Project Site remains free from all encroachments and take all steps

necessary to remove encroachments, if any;

n. Operate and maintain the Project at all times during the Operations Period in conformity

with this Agreement including but not limited to the Specifications and Standards, the

Maintenance Programme and Good Industry Practice;

o. Remove promptly according to Good Industry Practice, from the Project Site, all surplus

construction machinery and materials, waste materials (including, without limitation,

hazardous materials and waste water), rubbish and other debris (including without

limitation accident debris) and keep the Project Site in a neat and clean condition and in

conformity with the Applicable Laws and Applicable Permits.



p. Provide to APTDC at the end of each quarter/month as agreed in the SA audited profit

and loss statement within 7 days of the end of the quarter / month

q. Provide access to the auditors and inspectors of APTDC whenever APTDC chooses to

conduct such audit or assessment.

r. All necessary clearances and permits required from the relevant authorities should be

obtained by the Successful Bidder and the Successful Bidder shall adhere to all relevant

guidelines/ recommendations / standards/ requirements prescribed by statutory bodies,

Central/ State Government and its ministries / agencies, professional bodies and

associations as applicable including adherence to labor laws to Employee State Insurance,

Provident Fund, etc.

s. The successful bidder may be further permitted to construct additional rooms/facilities as

may be required to make the property more attractive to tourists. All such addition can be

either permanent/ semi-permanent constructions after obtaining all requisite permissions

and clearances from the competent authorities.

2.2.9 Insurance

The Operator shall, at its cost and expense, purchase and maintain during the Operations

Period insurance to cover against:

(a) loss, damage or destruction of the Project Facility, at replacement value;

(b) the Operator’s general liability arising out of the Service;

(c) liability to third parties; and

(d) any other insurance that may be necessary to protect the Operator and its

employees, including all Force Majeure Events that are insurable and not

otherwise covered in items (a) to (c).

The Operator shall pay the premium payable on such insurance policy (ies) so as to keep

the policy(ies) in force and valid throughout the Service Period and furnish copies of the

same to APTDC. Each insurance policy shall provide that the same shall not be cancelled

or terminated unless 10 Days' clear notice of cancellation is provided to APTDC in

writing. If at any time the Operator fails to purchase and maintain in full force and effect

any and all of the insurances required under this Agreement, APTDC may at its option

purchase and maintain such insurance and all sums incurred by the APTDC therefor shall

be reimbursed by the Operator forthwith on demand, failing which the same shall be

recovered by the APTDC by exercising right of set off or otherwise.

2.2.10 Conclusion

The resort facilities at Mypadu will enable leisure tourists visiting here to stay for 2-3

nights and could offer exciting packages and desired services to all kind of tourists.

Apart from regular bookings the operator can also market this property to large

companies having presence in Mypadu to organize offsite parties and annual meet.

Also, it will contribute to the vision of the Government of Andhra Pradesh in catalyzing

tourism growth in the State, and leverage its unexplored natural assets for increasing

tourism inflow and creation of infrastructure.

Feasibility Report for Operations & Maintenance of APTDC Beach Resort at Mypadu

1. ANNEXURE

1.1. ANNEXURE-I: PROPERTY SITE/ FACILITIES: MYPADU BEACH RESORT

1.1.1. CAPITAL EXPENDITURE

Capital Expenditure

Calculation For expenses on Tents

Assumption

year 1 year 2 year 3

Per room expenses 3 Lakh INR Room 19 0

No of rooms 16

Price (Lakh INR) 14.5 5

Total Expenses directly on rooms 48 Lakh INR

Furnishings 3

Restaurant 25 Lakh INR

Total 332.5 0

Other Plant & Machinery 15 Lakh INR

Total direct expenses on cottages 332.5 TOTAL CAPITAL EXPENDITURE 420.5

Feasibility Report for Operations & Maintenance of APTDC Beach Resort at

Mypadu

Feasibility Report for Operations & Maintenance of APTDC Beach Resort at Mypadu

Selection of agency for development and operation of … towards west, Thotapalligudur Mandal...

Documents

Transcript of Selection of agency for development and operation of … towards west, Thotapalligudur Mandal...