Development of Hotel at Saputara, Dangs

RFP:

VOLUME II

PROJECT INFORMATION MEMORANDUM (PIM)

DEVELOPMENT OF 5-STAR HOTEL /

RESORT AT SAPUTARA, GUJARAT

OCTOBER, 2017

Gujarat Tourism Opportunity Limited

(A Project Development Company jointly promoted

by Government of Gujarat & IL&FS Group)

605-606, Haveli Arcade, Sector – 11,

Gandhinagar, Gujarat - 382 011

TOURISM CORPORATION OF GUJARAT LIMITED (TCGL)

(A GOVERNMENT OF GUJARAT UNDERTAKING)

Block No. 16, 4th Floor, Udyog Bhavan, Sector 11, Gandhinagar, Gujarat - 382011

Phone: +91-79-2322002, 23977200, 23222523 Fax: 91-79-23977201

Website: http://www.gujarattourism.com/tenders

Website: http://www.gujarattourism.com/tenders

Development of 5-Star Hotel / Resort at Saputara, Gujarat 2017

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Volume II: Project Information Memorandum

Table of Contents

Executive Summary 4 1 INTRODUCTION 6 1.1 Need for the Study 6 1.2 Objectives of the Study 6 1.3 Constraints and Limitations 6 1.4 Approach and Methodology 7 2 SECTOR PROFILE 8 2.1 An Overview of the State Gujarat 8

2.1.1 General Overview 8 2.1.2 Economic Overview 8 2.1.3 Tourism Overview 8 2.1.4 Growth of Tourism in Gujarat 10

2.2 Tourism Scenario in the State 10 2.2.1 Key Tourist Circuits of Gujarat 10 2.2.2 Trend in Tourist Arrival 11 2.2.3 SWOT Analysis of Gujarat as Tourist Destination 12

2.3 South- Gujarat Circuit 13 2.3.1 Introduction 13 2.3.2 Connectivity 13

2.4 Dang District 13 2.4.1 Demography 14 2.4.2 Economy 14 2.4.3 Tourism Resources 14

2.5 An Overview of Saputara 15 2.5.1 Introduction 15 2.5.2 Connectivity 15 2.5.3 Tourism Resources 16 2.5.4 SWOT Analysis of Saputara as Tourist Destination 17

3 HOTEL INDUSTRY – AN OVERVIEW & MARKET ANALYSIS 18 3.1 Hotel & Hotel Industry – An Introduction 18 3.2 Classification of Hotels 18

3.2.1 On the basis of Standard 18 3.2.2 On the basis of Location 18 3.2.3 By Ownership 20

3.3 Hotel Industry in India 22 3.3.1 Background 22 3.3.2 Present Scenario of Hotel Industry in India 22 3.3.3 Trends in the Industry 22

3.4 Hotel Industry in Gujarat 23 3.4.1 Challenges faced by Hotel Industry in Gujarat 23

3.5 Hotel Industry Market Analysis in Saputara 24 3.5.1 Hospitality Demand Drivers 24 3.5.2 Existing Supply 24

4 SITE ANALYSIS 29 4.1 Site Location and Description 29 4.2 Land Ownership 29 4.3 Site Topography and Vegetation 29 4.4 Site Access and Connectivity 30


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4.5 Proximity to Key Areas 30 4.6 Existing Infrastructure 31 5 DEMAND ASSESSMENT AND PROJECT CONFIGURATION 32 5.1 Tourist Arrival 32 5.2 Demand- Supply Scenario 33 5.3 Recommended Project Components 33 5.4 Site Development Options 34 5.5 Area Programme 35 5.6 Activities other than Rooms 35 5.7 Mandatory Development Obligations 36 6 FINANCIAL ANALYSIS 37 6.1 Introduction 37 6.2 Capital Cost Estimates 37

6.2.1 Offsite Infrastructure requirement 37 6.2.2 Site Preparation & Development 37 6.2.3 Building Construction 38 6.2.4 Furniture & Furnishing 38 6.2.5 Machinery & Equipment 38

6.3 Operational Cost Estimation 39 6.4 Assumptions for Financial Analysis 39

6.4.1 Construction Period 39 6.4.2 Concession / Lease Period 39 6.4.3 Phasing of Capital Cost 39 6.4.4 O & M Cost Assumptions 39 6.4.5 Financing & Taxation Assumptions 40 6.4.6 Sources of Finance 40 6.4.7 Project Revenue Assumptions 40

6.5 Results of Financial Analysis 40 6.6 Recommendations 41


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Executive Summary

Data Available

1 Site Location Land admeasuring 12,000 sq.m. is located

near the northern side of the town, on the

hilltop overlooking the valley on North side

on, as described in the PIM (Volume-II).

Saputara is about 160 kilometers (km) from

Surat and about 260 km from Mumbai. The

Maharashtra State border is 4 km from

Saputara. It is strategically located on the

road connecting Surat to Nashik. The nearest

railway station on the main Delhi-Mumbai

line is Valsad (about 125 km from Saputara).

Valsad is also a major railway station where

almost all the trains including the Shatabdi

Express stops.

2 Area of the Site About 12000 Sq. Mt

3 Land Ownership &

Current Status

TCGL is the owner of the site; and currently,

there are some dilapidated and some

underused structures on the site.

4 Tourist Arrival in

Saputara

Annual Tourist arrival is about 5.4 Lakhs, out

of which May, June and October are peak

months. In the rest of the months demand is

pre-dominantly from the weekend travelers.

Proposal & Assumptions

1 Proposed Project

Components

The selected Concessionaire shall develop

the following facilities:

1. 5 -Star category hotel / resort

2. Minimum 60 keys / rooms & 2 suites

3. Reception, Multi-cuisine restaurant

cum coffee shop

4. Provision of car parking to be made as

per TCGL/ Local Building Bye-Laws

5. All Other common / support / required

facilities such as internal roads, street

lights, water harvesting system, solid

waste disposal, storm water drainage

system, main sewer line, water supply

including storage tank(s), transformer,


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electrical substation, green areas etc. as

per applicable Building Bye-laws/ any

other relevant guidelines issued by

GoI/ GoG

2 Capital Cost Assumptions CPWD DSR 2013 rates and Quotations

3 Concession Period 35 years including Construction Period of 2

years

4 Concession Structure DBFOT

5 Occupancy Assumption Starting with 30% increasing 3% every year,

stabilize at 60%

6 Room Rent Assumption

&

O & M Cost Assumption

Rs. 5000/ Night initially, increasing at 5%

per annum

O & M Costs increase at 5% per annum

7 Rate of Interest for Debt 12%

8 Debt Equity Ratio 60:40

9 Debt Repayment 10 years- with moratorium of 3 years

Results

1 Capital Cost Rs. 36,65,00,000 (Rupees thirty six crore

sixty five lakhs only)

2 Average DSCR 1.12

3 Project IRR 13.71%

4 Equity IRR 14.38%

*The Project IRR and Equity IRR have been worked assuming Annual Premium

as Rs. 50,00,000/-.


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1 INTRODUCTION

Tourism Corporation of Gujarat Limited, Government of Gujarat is mandated to

undertake activities related to promotion of Tourism in the state of Gujarat and

to develop Tourism Infrastructure in the state.

Tourism as an economic activity is vital for any country as it does not only

provide economic opportunities to the local population of the Tourist sites, but

it also opens the market for Local Industry to sell the goods outside the

traditional catchment area; and it also helps in overall development of the

region because it enables exchange of ideas and understanding of culture.

Gujarat is thought as a leading state in utilizing the strength of the private

enterprise in Infrastructure Development and Economic Progress. The State

Government’s vision is to enhance service delivery by utilizing strength of the

private enterprise.

Tourism Corporation of Gujarat Limited (TCGL) has been established for

creation of Tourism Infrastructure in the state. TCGL, in partnership with

Infrastructure Leasing and Financial Services (IL & FS) has established Gujarat

Tourism Opportunities Limited (GUJTOP); as a specialized entity providing

advisory support for development of Tourism Infrastructure in the state,

especially on Public Private Partnership mode.

1.1 Need for the Study

TCGL is exploring options for developing the land parcel it has at Saputara for

promoting Tourism in the area. TCGL is also desirous of taking up the project

on PPP mode. This Techno-economic feasibility study is taken up to check the

Technical and Commercial Viability of the Project from the Investor’s

perspective.

1.2 Objectives of the Study

The study aims to fulfill the following objectives:

1. To understand the site context and tourism potential of the site

2. To undertake SWOT analysis of the Tourism Development on the site

3. To suggest the optimum product mix for the site based on the Demand

Assessment

4. To derive broad area allocation of the activities on the site

5. To estimate approximate cost estimation based on block cost model

6. To establish Financial Viability of the project

7. To undertake Risk Assessment and prepare Risk Allocation Matrix

1.3 Constraints and Limitations

The following are the constraints to the study:


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1. The study would rely on the secondary information on Arrival of Tourists;

at the National, State and Regional Level

2. The study would rely on the information provided by the operators on the

availability of rooms, occupancy rates and tariffs;

3. The availability of Infrastructure services to the site is taken based on the

observations of the town, and secondary data. The feasibility study would

be undertaken assuming these factors as given.

1.4 Approach and Methodology

The following methodology has been adopted to meet the above-mentioned

objectives of the study:

Based on the Demand Assessment so arrived at, the Technical and Commercial

Viability of the Project would be assessed.

Top-down Approach

Tourist Arrival Data- National, State & Regional Level

Regional Connectivity, Existing and Potential Tourism Circuits

Bottom- Up Approach

Location of the Site, Infrastructure Availability

Profiling of the existing facilities-complementing and competing activities


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2 SECTOR PROFILE

2.1 An Overview of the State Gujarat

2.1.1 General Overview

Gujarat is the seventh largest state with 1,96,024 sq. km area covering for 6 %

of the total geographical area, located on the North west coast of the country is

known for its incredible diversity due to its geographic and strategic location.

Gujarat borders with Rajasthan to the Northeast, Maharashtra and Union

Territories of Daman & Diu and Dadra & Nagar Haveli to the south, Madhya

Pradesh to the east, and 1600 km long coastline along the Arabian Sea to the

southwest and the Pakistani province of Sindh on the Northwest.

Gujarat, with a coastline of 1600 km is well connected to all the major port-

based trade routes, such as USA, Canada, Europe, Australia, China, Japan, Korea

Gulf & African countries and other major trade cities of the world by air route.

The State has a forest area of 11.05% with 4 National Parks and 21 Wild-life

Sanctuaries.

2.1.2 Economic Overview

Gujarat has a strong Economy with the SDP rising at an average growth rate of

10.1% since 2005 to 2013, more than the national average. The state achieved

an annual growth rate of 9.51% during the 11th plan (2007-2012).

Gujarat ranked 1st in India for “Economic freedom among states” Economic

freedom of the states of India 2013; and is one of the principle states to secure

the Foreign Direct Investments in the country (FDI equity inflows – USD 9.5

billion outstanding investments USD 255.4 billion).

2.1.3 Tourism Overview

Gujarat boasts of over 3,500 years of history, natural and cultural delights, fairs

and festivals, beaches, temples, holy sites coupled with the warmth of its

people. It offers wide array of activities for Tourists based on their interest.

The World Heritage Committee (WHC) of UNESCO, announced the Walled

City of Ahmedabad as World Heritage City, recognizing the value of the

walled city’s unique heritage. More than 600 years old, Walled City of

Ahmedabad was founded by Ahmed Shah is India’s first city to be declared

as the World Heritage City. The 5.5 km walled city area with approximate

population of four lakh living in century old wooden residences in around

600 pols or neighborhoods is regarded as living heritage and lauded the

peaceful co-existence of dominant Hindu, Islamic and Jain communities in


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the Walled City area. Besides it architectural marvels of wooden havelis, the

city was the epicenter of non-violent freedom struggle that led to country’s

independence from colonial rulers in 1947.

In terms of Architectural Heritage, the famous "Rani Ki Vav" at Patan is

an intricately constructed 11th century step well, which is a UNESCO world

heritage site. The minute and exquisite carvings on this vav is one of the

finest specimens of its kind, offering similarities with the famous Patan’s

Patola (clothing for women with exquisite weaving patterns resembling

the stone carvings). There are other beautiful places also such as ‘Adalaj ni

Vav’, ‘Sarkhej Roja’, ‘Jama Masjid’ to name a few.

The "Champaner-Pavagadh archaeological park", located in Panchmahal

District is a UNESCO World Heritage Site. The heritage site is studded with

forts with bastions starting from the hills of Pavagadh, and extending into

the city of Champaner.

Navratri, especially in Gujarat, is celebrated with a panache and fervor,

representing the rich Cultural Heritage not seen anywhere in India.

Similarly, the Kite Festival is also a one-of-its-kind festival that is

celebrated with an unparalleled passion.

The insights into Harappan Civilization can be seen in Lothal, near

Ahmedabad.

Gujarat is the land of the Mahatma and Sardar Patel, and along with them

many more freedom fighters have left their footprints on the sands of time,

infusing the qualities of tolerance, brotherhood, non-violence and

patriotism into Indians.

Gujarat has dry deciduous forests, majestic grasslands, marine ecosystems,

wetlands and rich moist deciduous forests; which may be a dream

destination for those who quest for nature and wild life.

The rare Asiatic Lions in the Gir reserve, the Wild Ass in the Rann of Kutchh,

Indian bustards in bird reserves, four horned Antelope and Black Buck are

among many animals and birds protected in the State’s four national parks

and 21 sanctuaries.

The Whale Shark breed on the coasts of Gujarat and Okha, small coastal

town in Jamnagar district is famous for not only the Krishna Temple Bet

Dwarka but for the large marine mammal dugong. This Saurashtra coast of

Okha is known for the world largest dugong recorded till date that was 4.06

meters long and weighed 1016 kgs. Another first to Gujarat is India’s first

Marine National Park at the Gulf of Kutchh

In terms of Handloom & Textiles, Gujarat boasts of Patan’s Patola,

Jamnagar’s Bandhani (Tie n Dye), Ajrakh print (Block printing practiced in

Kutch); which can be seen being made by the artisans in the villages by the

art enthusiasts.


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For Handicraft lovers, there are traditional centers where the Beadwork,

terra-cotta work, Blue-pottery, woodcarving, silverwork, etc. throughout

the state.

For the Religiously inclined, Gujarat offers ancient temples of Shiva,

Shakti and Narayan- at Somnath, Ambaji and Dwarka respectively.

Pavagarh has temples for the Jainism faith and also Mahakali temple. For

Parsi population, the sacred Iranshaw Fire Temple at Udvada is the place

of pilgrimage.

There are several fairs and festivals being celebrated round the year, like

Navratri Mahotsav, Uttrayan, Modhera sun temple festival, Kutch utsav,

Bhavnath Fair, International Kite Festival, Sharadotsav and Rann Utsav

apart from mahashivratri melas, etc.

2.1.4 Growth of Tourism in Gujarat

Number of Tourist arrivals in Gujarat is experiencing a strong growth with the

Gujarat Tourism Sector Performing better than the country average. The gross

flow during the year 2013-14 was approximately 28.79 million. The growth in

international tourist arrivals as a CAGR of 14.74% since 2005 in Gujarat can be

attributed to the growing prominence of the state as a major business hub.

Domestic Tourism Primarily led by tourists from within the state countries -

77% followed by tourist arrivals from other Indian states which stands at - 21%

2.2 Tourism Scenario in the State

2.2.1 Key Tourist Circuits of Gujarat

The Key Tourist sites of Gujarat can be divided broadly into Five Tourist

Circuits- The North Gujarat Circuit, Central Gujarat Circuit, South Gujarat

Circuit, Kutch Circuit and

Saurashtra Circuit.

Source: Google Earth Imagery

North

Kutchh

South

Saurashtra Circuit

Central Gujarat Circuit


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2.2.2 Trend in Tourist Arrival

Tourist Arrival in Gujarat over the period

Source: data collected by GITCO

As we can see from the chart above, the overall growth in number of tourists in

Gujarat has been 57%. Hence, it can be said that the share of Saputara in

Gujarat’s tourism growth is considerably high. This is also evident from the fact

that there has been some new tourist facilities that has come up in Saputara in

last five years; and it is still growing.

Tourist Arrival in Saputara

Let us look at the trend of Tourist Arrival in Saputara. The feedback from the

existing operators is that Saputara is only serving as a Weekend Destination;

and that it has a great potential to be developed as a MICE destination, which is

not fully explored yet. Saputara is a unique destination since it is the only hill

station in Gujarat, and it is well integrated with the Nashik-Shirdi tourist circuit

of Maharashtra. People from Gujarat visiting Nashik & Shirdi prefer to stay for

the night at Saputara, and descend to Nashik in the morning.

2012-13 2013-14 2014-15 2015-16 2016-17

Foreigners 172803 228025 244504 309265 405219

NRIs 292248 337671 388891 423358 518933

From Other states 5356248 6061418 7463192 9398975 11476287

From Gujarat 19587862 22160853 24594107 28179905 32400056

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

50000000

Tourist Arrival in Gujarat


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Source: Data collected by GITCO

As we can see from the chart above, there are about 5.4 lac tourists that visit

the hill station every year, out of which about 63% are from within the state;

and 37% are from other states. Based on the on ground interaction with the

hotel operators, the bulk of these tourists from outside the states is from

Maharashtra; as the place is very near to the Maharashtra border. There are

very few NRIs who visit Saputara and almost nil Foreign Tourists in last Five

years.

2.2.3 SWOT Analysis of Gujarat as Tourist Destination

2012-13 2013-14 2014-15 2015-16 2016-17

Foreigners 0 0 3 0 0

NRI from Abroad 600 31 223 418 735

Other Indian States 77298 104721 148612 163077 200615

Within Gujarat 221287 277780 301711 318809 342676

0

100000

200000

300000

400000

500000

600000

Tourist Arrival in Saputara

Strengths

-Long & unexplored Coast Line

-Rare Wildlife species like Asiatic Lions, Wild Ass, etc

- Rich Textile and Handicraft Culture

-Favourable Business Environment

-Efficient Road Network

Weaknesses

-Lack of Quality Tourism and Hospitality Infrastructure

-Prohibition on Liquor

-Only one International Airport; and Limited flight connectivity for Domestic Networks

-Lack of trained staff for Hospitality Industry

Opportunities

-New Tourism Policy of the state is offering several incentives for creation of Infrastructure

-Viability Gap Funding is available for Tourism Infrastructure projects

-Number of Foreign Tourists visiting India is increasing consistently, Gujarat can reposition itself as the preferred destination banking on its image as a safe and tourist friendly place

Threats

- The expectations of the domestic tourists are increasing ; and if commensurate investments are not made in Infrastructure, the number of domestic tourists may also decline

SWOT Analysis of Gujarat as Tourist

Destination


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2.3 South- Gujarat Circuit

2.3.1 Introduction

The South Gujarat is formed by

Surat, Navsari, the Dang, Valsad and

a newly formed Tapi district

(carved out from Surat in year

2007), is also known as Deccan

Gujarat or Dakshin Gujarat and is

one of the wettest region of India.

Valsad District was formed out of

Surat in 1966; and later in 1997;

Navsari district was carved out of

Valsad. Surat is the major urban

center of the region. The western

region of this division is the coastal region and the eastern parts are mostly the

hilly parts with the Saputara range in the Dang District.

2.3.2 Connectivity

Connectivity plays a major role in the growth of Tourism related activities in a

region. Gujarat as a whole is at a disadvantageous position because of having a

single International Airport. The connectivity to South Gujarat is comparatively

better than the rest of the Gujarat; however, it is lacking in the Air Connectivity,

since there is no international airport in South Gujarat. Surat has regional

connectivity with Delhi and Mumbai is a nearby Airport.

In terms of Road and Rail Transport, South Gujarat has an edge because all the

trains between Delhi and Mumbai - the Political and Financial Capitals of the

country, respectively, pass through South Gujarat Region.

2.4 Dang District

Dang district is one of the 33 districts of Gujarat. It is bound by Navsari district

to the West; Tapi district of Gujarat and Nadurbar district of Maharashtra on

North; Dhule district of Maharashtra on East; and Nashik district of

Maharashtra to the South. The district's administrative capital is Ahwa; and the

most famous tourist destination is Saputara. The district covers 1,766 square

kilometers.

Dang was known as “Dakaranya or Dandak” during the period of Ramayana,

and this is why its folksongs are filled with stories of Ram and Sita. Pandavas

are also believed to have roamed and stayed in the Dang. Even today one can

find a cave in Pandava village near Dang.

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

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

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

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

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

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

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


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2.4.1 Demography

As per the 2011 census, Dang district had a population of 2,26,769 persons.

Most of the population of the district is Tribal.

2.4.2 Economy

The land of the district is fertile and rocky. The color of the soil is either red or

black. Maize, Rice, Groundnuts, Nagli (raggi), Euphorbia, etc. are the major

cultivation of this land. Wheat, Black Gram, Urad, etc are also grown in this soil.

Agriculture, Animal husbandry and Forest Produce collection are the three

major economic activities here. There are about 100 small-scale units doing

Agro-processing and related activities. The average land holding per family is

about 1.5 Hectare. However, Dangs is one of the 250 poorest districts of India.

2.4.3 Tourism Resources

Dang is a high rainfall area- here the annual rainfall is more than 3000 mm. 59%

of the area is under forests.

Saputara, also known as “abode of serpents” is a hill station on a plateau of

the sahyadri range of mountains.

Near Saputara, around 60 km away is the hathgarh fort, which was built by

Maratha Warrior Shivaji Maharaj.

Purna Wildlife Sanctuary and Vansda National park are the places that offer

wildlife excursions, offering sighting of Leopards, Hyena, Jungle Cat,

Macaques and Barking Deer.

Gira Falls and Girmal Falls are the places to relax, unwind and enjoy the

beauty of the nature.

Dang Darbar is a three-day annual cultural extravaganza coinciding with

the Holi festivities. The festival is celebrated in the Dang district, located in

the Saputara Hills of India. A conspicuous festival of Dang tribe, inhabitants

of wooded region Saputara, the Dang Darbar is celebrated just few days

before Holi.

Gujarat’s beautiful hill station turns bride-like during the monsoon season.

The heartening fresh green shades make the hill look bejewelled. Forests,

hills and valleys beckon with an irresistible charm. Trekking in the

ravishing wild trails or boating in the serene lake. The invigorating

surroundings form the delightful settings for the exhibitions, interactive

games, cultural programs, competitions, fun contests, flash mobs, floating

balloons, cartoon characters, and much more activities organized as part of

the Monsoon Festival.


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2.5 An Overview of Saputara

2.5.1 Introduction

This hill station is on a plateau in the Dang forest area of Western Ghats

(Sahyadri) range at an altitude of about 1,000 meters. Saputara means the

'Abode of Serpents' and a snake image on the banks of the river Sarpagana is

worshiped by the Adivasis on Holi.

Saputara has been developed as a planned hill resort with amenities like hotels,

parks, swimming pools, boat club, theaters, ropeways and a museum. Saputara

is about 160 kilometers (km) from Surat and about 260 km from Mumbai. The

Maharashtra State border is 4 km from Saputara. It is strategically located on

the road connecting Surat to Nashik. The nearest railway station on the main

Delhi-Mumbai line is Valsad (about 125 km from Saputara). Excursions from

Saputara can be made to the wild life sanctuary in the Mahal Bardipara forest,

60 km. and to Gira Waterfalls 52 km away.

2.5.2 Connectivity

Saputara is strategically located on the road connecting Surat to Nashik. The

nearest railway station on the main Delhi-Mumbai line is Valsad. Valsad is also

a major railway station where almost all the trains including the Shatabdi

Express stop.


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2.5.3 Tourism Resources

Saputara is a small and quiet town. There are sunset and sunrise points on

different plateaus; which can be assessed in a vehicle or on foot also.

On one of the plateaus has a ropeway connection to the Sunset Point.

There is a small place called Artist Village, which has several paintings and

tribal artifacts on display and for sale.

One can go to the Vansda National Park, with prior permission from the

Chief Wildlife Warden or Divisional Forest Officer (DFO).

Purna Wildlife Sanctuary is situated at Mahal, 77 km north of Saputara.

Boating facility is available on the Saputara Lake; and is one of the principle

tourist attractions of Saputara.

Gira Falls is an excursion option 52 km from Saputara, which can be visited

during and after monsoon season.

There are three gardens in Saputara- namely the Rose Garden, Step Garden

and the Lake Garden.

There are certain shops that sell the Tribal Artifacts.

The mountains have the potential for development of trekking sites; which

is not discovered yet.

Entry to Saputara Hill Station Valley view from the Site

C Type Quarters on the site Water Supply Connection and Motor

on site


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Overhead Water tank in one of the

dilapidated structures on site

Dilapidated structures on the site

D type structures on site D type structures on site

2.5.4 SWOT Analysis of Saputara as Tourist Destination

Strengths

-Location on Surat- Nashik road

-Only Hill station of Gujarat

-Beautiful Valley view, Sunrise and Sunsets

Weaknesses

-Prohibition on Liquor; and competition from Khandala, Lonawala and Mahabaleshwar

-Lack of Activities for tourists

-Haphazard growth of Hotels

Opportunities

-The destination has potential for development of MICE tourism from corporates of Surat, Mumbai, etc

-The tribal culture has lots to offer to the tourists, which can be further developed

Threats

-If the local population is not gainfully employed in Tourism related activities, it can turn hostile to Tourism related activities

SWOT analysis of Saputara as a

Tourist Destination


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3 HOTEL INDUSTRY – AN OVERVIEW & MARKET ANALYSIS

3.1 Hotel & Hotel Industry – An Introduction

Hotels are an important component of the tourism product. They contribute in

the overall tourism experience through the standards of facilities and services

offered by them.

3.2 Classification of Hotels

3.2.1 On the basis of Standard

The Ministry of Tourism has constituted a committee called “Hotels and

Restaurants Approval and Classification Committee (HRACC)”. According to

the standards prescribed, there are two broad types of Hotels. The Star

Category Hotels and the Heritage Category Hotels. Both the categories can be

further classified as follows:

Star Category:

One star

Two star

Three star

Four star

Five star and

Five star deluxe

Heritage Category:

Heritage Grand

Heritage Classic and

Heritage Basic

3.2.2 On the basis of Location

On the basis of their location, the Hotels can be classified in the following

categories:

1. CITY/DOWNTOWN/COMMERCIAL HOTEL: These hotels are located in the

heart of the city. These hotels are more expensive than the suburban hotels.

Businessmen and high-income tourists patronize these hotels. These hotels

are centrally located and at a convenient distance from markets, railway

station, airport, etc.

2. SUBURBAN HOTELS: These hotels are located in the suburb of cities,

moderately priced and are of mostly medium, large or small size. Normally

low budget tourists patronize these hotels. The tourists, who do not want

to stay in the heart of city, as they want to be away from hustle and bustle

of city, prefer these hotels. Usually writers, poets, low budget tourists etc

prefer to stay at suburban hotels.


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3. AIRPORT HOTELS: These are Hotels located near the Airports, especially

international airports. Airport Hotels are popular because of their

proximity to major travel centers. Airport Hotels vary widely in size and

level of services. Typical target market includes business clientele, airline

passengers with overnight travel layovers or canceled flights and airline

personnel. Hotel owned courtesy vans often transport guests between the

hotel and the airport.

4. MOTELS: Motels are also called Motor Hotels or transit hotel and are

located alongside the highways. Motels are normally economical and they

provide comfortable bedrooms that motorists prefer to stay on their way

for a night rest. Motels have facilities of proper motor garage to service a

car and a filling station to refill vehicles, parking area for motor vehicles

etc. They also have road maps, dormitory for drivers. These days Motels

also provide various indoor and outdoor facilities like Video parlor,

Billiards, Table tennis, Cyber café, Library etc.

5. RESORT HOTELS: A resort located in the tourist interest places like hills,

forests, beaches, on an island, or in some other exotic location away from

crowded residential areas. The recreational facilities and breathtaking

scenery typical of most resorts. Most resort hotels provide extensive food

and beverage, valet and room services, sightseeing to vacationers. Many

resorts also provide special activities, indoor and outdoor games for guests

such as dancing, golf, tennis, horse riding, nature hikes, skiing and

swimming, health club, steam sauna bath, spas etc. A more leisurely,

relaxed atmosphere distinguishes most resort hotels from other types of

hotels.

6. ROTELS: The hotels that rotate on wheels are called rotels. It is also called

motel on wheels. Best example of rotel in India is Palace on wheels. It is a

luxurious train, fully air-conditioned, well-furnished with attached

restaurant and bar. The fare is inclusive of train ticket, food, alcoholic

beverages and sightseeing. The train starts from Delhi and covers the

tourist interest places of Rajasthan and Uttar Pradesh including Taj Mahal,

Agra, Mathura. In Japan Rotels are parked in the parking slot in the late

evening and during day the rotel is towed away.

7. FLOATELS: The hotels that float on water are called floatels. The best

examples of floatels in India are Houseboats in Kashmir Dal Lake. These are

luxurious suites consisting of drawing room, dining room, bedroom, sitting

room, balcony, kitchen, bathroom etc. These days’ luxury ships are

becoming popular for travelling. The guests are offered cabins to stay.

These float on seawater and these have all facilities of five star hotels.

8. BOATELS: These are luxury boats/yachts, which can ferry people from one

place to another. The best example of yachts are in Mediterranean or


TCGL Page20


Caribbean, they can ferry guest through canal-based narrow boat or Broad-

based cabin cruiser.

3.2.3 By Ownership

The Hotels can also be classified on the basis of ownership.

1. TIME SHARE: This is a new concept in India but is picking up very fast. This

is also known as ‘Vacation Ownership’ or ‘Holiday Ownership’ concept.

These properties are in resort areas like hills, beaches, forests etc. Time-

share involves individuals who purchase the ownership of accommodation

for a specific week or weeks. The price of the property will depend on the

week one tends to buy. The guest can choose a peak season, semi peak

season or a lean season.

2. The owner pays a fixed price for certain number of years say 20 to 30 years

and has a right to stay at the hotel during rented week. The guest is also

required to pay an annual contribution towards the maintenance of

apartment and public areas, electricity, gas, water, safety, insurance etc.

The owner can also rent out the unit through management. The owner can

also exchange their resort with any other resort either directly owned by

the company or through contract signed with any other

company/management by paying a nominal fee. Best examples of

Timeshare Hotels in India are Mahindra Holidays, Country Club Holidays,

Sterling Holiday Resorts, etc.

3. CONDOMINIUM HOTELS: These are quite similar to Time-share. These

units are developed on joint ownership basis. Each owner purchases and

has full right of an unit he has purchased and shares the cost common to

the complex, such as taxes, insurance, maintenance and upkeep of public

areas including swimming pool, health club, parking, security, air

conditioning, heating, cable, broad band etc. Each owner can occupy or sell

his unit independently but is required to follow the rules and regulations

laid by the management.

4. In some cases the management can help the owner in renting out the

property. They take the full responsibility of the owner’s unit’s safety and

also pay to the owner a major portion of the rent earned from renting out.

The management earns a major portion by renting out conference hall and

from catering. Usually the management requests the owner to rent out in

case of major conferences.

5. CHAIN HOTELS: A chain is usually classified as operating under a

management contract or as a franchise or referral group. Chains usually

make certain rules regarding standards, rules, policies, procedures of

affiliation etc. In general, the more centralized the organization the

stronger the control over the individual property. Some chains own

affiliated properties, but many do not. Some chains have strong control


TCGL Page21


over the architecture, management and standards of affiliated properties.

Other chains only concentrate on advertising, marketing, purchasing.

6. INDEPENDENT HOTELS: Independent hotels do not have ownership or

management affiliation with other properties. They have no relationship to

other hotels regarding policies, procedures, financial obligations,

management, accounting etc. These may be registered as sole proprietor-

ship or a private limited company. The owner may decide the standard,

type of clientele, the tariff etc. He may tie up with travel agencies to sell his

property against commission.

7. MANAGEMENT CONTRACT: Management companies are organizations

that operate properties owned by others. Individual persons, partnerships

or private limited companies may own those other hotels. The individual

hotel, under construction, may contract with a professional hotel

management company to operate the proposed property. These contracts

are normally on a long-term basis. Some management companies, when

feel that they must have a hotel in a particular location then they approach

prospective individuals to build a hotel and operate under their

managements contract.

8. The management contract can even be signed before the construction

starts. After paying the management fees, operating expenses, the owners

keep the balance cash for paying their debts, taxes etc. and the balance is

their net profit. The Management companies only take over the

management of the company, whereas the franchising companies provide

the financial assistance, advertising, central reservation facilities,

marketing etc.

9. FRANCHISE: Franchise is a system in which the franchise owner grants

another the right or privilege to merchandise a product or service for a

specified return. Franchise Agreement is an agreement under which the

owner operates as a member of the chain, utilizing the brand image, name,

goodwill and obtaining for a certain fee some services of marketing and

operating nature support from resources of a large organization,

advertising, sales promotion, technical and financial help etc. The best-

known franchising companies are Holiday Inn, Choice International,

Quality Hotels & Inns etc.

10. REFERRAL GROUPS: referral Groups consists of independent hotels, which

have grouped together for some common purpose. Though the properties

in the referral group may be different from each other but there is sufficient

consistency in the quality of service to satisfy guest expectations. The

member hotels recommend guests to other member hotels. Best Western

International, one of the largest hotel chains is the best example of referral

groups. The referral groups also extend benefit of more extensive

reservation and expanded advertising through pooled resources.


TCGL Page22


3.3 Hotel Industry in India

3.3.1 Background

Hospitality in India is a complex sector. There are several types of options

available for a visitor for accommodation.

In religious places there is large number of Dharmshalas (Religious type

Guest House) that offers cheap accommodation with minimal pricing. The

standards are typically very low, but are improving.

Near transportation hubs you have budget hotels, which provide cheap

accommodation to traders and small businessmen.

In tourist places, there are large numbers of small facilities, which are

usually organized by co-operatives that control the pricing strategies.

Indian weddings are always a family affair, where large numbers of people

gather at a place; and these weddings are a big driver for hospitality.

3.3.2 Present Scenario of Hotel Industry in India

The Indian hospitality industry has emerged as one of the key industries driving

growth of the services sector in India. The fortunes of the hospitality industry

have always been linked to the prospects of the tourism industry and tourism

is the foremost demand driver of the industry. The Indian hospitality industry

has recorded healthy growth fueled by robust inflow of foreign tourists as well

as increased tourist movement within the country and it has become one of the

leading players in the global industry.

3.3.3 Trends in the Industry

The Indian hotel industry is highly fragmented with a large number of small

and unorganized players accounting for a lion's share. The major players in the

organized segment include Indian Hotels Company Ltd, Hotel Leela Venture

Ltd, EIH Ltd, ITC Hotels and ITDC. However, the times are changing, and there

are some clear trends with regard to Hotel Industry.

1. Budget Hotels / No frills Hotels are emerging as the next trigger for

development. Examples of Budget Hotels are Ginger, Lemon Tree, Red Fox

Hotels, etc. These Hotels offer smart basic services at an affordable price.

2. Apps for Web and Mobile Based Booking: As with all other sectors the

online and mobile based booking is emerging in Hotels also. There are

multiple aggregators who may be useful in providing booking to a hotel

operator- such as Make My Trip, Yatra, Cleartrip, Goibibo, Ixigo, OYO

Rooms etc. Many of these sites also make bulk deal with the hotel to take

or pay bulk of the rooms to get discounted pricing which they offer to the

customers, in an effort to strengthen the brand loyalty from the customers.


TCGL Page23


3. Aggregators: There are other sites that compare the results from all these

sites to provide cheapest booking options to the customers- these are sites

like Trivago, etc. Google has emerged as the main search engine for any

need of the customer; also provides booking options. The Hotels focusing

on the middle class travelers may gain by providing booking based on these

platforms.

3.4 Hotel Industry in Gujarat

The Tourism Infrastructure in the state is on a developing mode. It is a very

recent trend that the Tourists have started visiting lesser-known destinations

in Gujarat; and presumably, a principle reason for this growth is the sustained

marketing by Tourism Department through the ‘Khushboo Gujarat Ki’

campaign and the Vibrant Gujarat summits, which brings lot of international

guests to Gujarat. According to a recent study by an apex industry body,

Associated Chambers of Commerce and Industry of India (Assocham); the state

"has emerged on top with a lion's share of about 29 per cent amid 20 major

states attracting combined investments worth over Rs one lakh crore in the

sector as of financial year 2012-13"1. Of the over Rs 1 lakh crore that India's

tourism and hotel sector attracted in 2012-13, Gujarat alone fetched

outstanding investments worth over Rs 34,800 crore.

3.4.1 Challenges faced by Hotel Industry in Gujarat

One of the principle issues with the Hotel Industry in Gujarat is that of

Manpower. The skilled Manpower for manning the hotels is rare; and the

culture of customer service has not been imbibed yet.

Further, compared to other states, Gujarat is at a disadvantageous position

because of prohibition of liquor in the state. The small tourism centers like

Mount Abu, Diu and Daman are the thriving because of this reason.

Almost one third of the trips are social trips; where the accommodation is

at the place of relatives, friends, etc. Further, a large population of Gujarat

is following one sect or the other; and when they travel, the

accommodation is usually at the special facilities, which is often run on

non-commercial basis. For example, the Swaminarayan Sect and Jainism

have temples all around Gujarat; and usually they have lodging and

boarding facilities where the guests are entertained.

1 ‘India Tourism Industry: The way forward’ by Assocham


TCGL Page24


3.5 Hotel Industry Market Analysis in Saputara

The Government of Gujarat’s tourism

promotion activities like Monsoon Festival

are highly successful; and in recent times

the middle class population of Gujarat have

started exploring Saputara. The Hotel

Industry in Saputara is also on a rise.

3.5.1 Hospitality Demand Drivers

The hospitality demand of Saputara can be attributed to the following:

Tourists visiting Nashik and Shirdi prefer to have a night-stay at Saputara

on the way, especially if they are passing through at evening time.

Saputara is also emerging as an attractive destination-wedding site in

South Gujarat, especially with the affluent class of Surat.

The Monsoon festival at Saputara is drawing crowds to Saputara

For people from Nashik, Surat, Mumbai etc, Saputara is an exciting

weekend getaway, which is accessible and affordable at once.

Recently, many of the corporates have started conducting the Conferences

and Seminars at Saputara.

3.5.2 Existing Supply

A site visit to the hotels in the Hill Station revealed that there are about 800

rooms available with major accommodation service providers. There could be

other corporate or other group specific facilities available, which were difficult

to cover in the survey because of their relative obscure information. Details of

the same are provide below:


TCGL Page25


Details of major Hotels at Saputara:

Sr.

No.

Name of the

Facility

Number

of Rooms

Capacity (No of

Persons in a

room)

AC / Non-

AC

Tariff Occupancy

1 Hotel Aakar Lords

Inn

60 2 AC 6000-7000 (All

meal Package)

30-40% in Off Season

2 Shilpi Hill resort 7 2 Non-AC 1800 45%

72 2 AC 4560 45%

3 Hotel lake view 55 2 AC 4800 10 Rooms in Weekdays, Full in

Weekends

4 Hotel purohit 32 2 Non-AC 1500 in season,

800 in non-

season

1-2 Rooms in weekdays. 12-15 rooms

max in weekends

5 Star Holiday Home 2 2 AC 1500 3 Rooms blocked for bank of India

6 2 Non-AC 1200

6 Hotel Vaishali 10 2 AC 1200 (off

season)

18 2 Non-AC 800 (off season)

7 Hotel Hill Top 24 2 Non-AC 400 1-2 rooms in weekdays, full in

weekend 8 4 Non-AC 500

6 5 Non-AC 600

8 Jain Dharmshala 13 4 AC 1500

14 4 Non-AC 1000

2 40 Dormitory 5000


TCGL Page26


Sr.

No.

Name of the

Facility

Number

of Rooms

Capacity (No of

Persons in a

room)

AC / Non-

AC

Tariff Occupancy

27 4 Non-AC 500

9 Sid Archie Hotel 18 2 AC 1600 (off)- 3000

(peak)

Rarely gets full

12 2 Non AC 1200 (off)- 2500

(peak)

10 Hill View Hotel 11 2 AC 1500 (off)-

3500-5000

(peak)

15 2 Non-AC 1000 (off)-

2000-2500

(peak)

11 Hotel Gokul 21 2 Non-AC 500

12 White Feather

Toran Resort

46 2 AC -not decided yet New property

13 Hotel Sejal Inn 29 2 AC 4000 –w/o food

5300- with food

30-40% in weekdays, full in weekends

14 Hotel Amantran 8 4 AC 1000

6 4 Non-AC 800

2 15 Non-AC 100/Person Full in Weekends & Diwali

15 Hotel Patang

Lords

43 2 AC 5000

(weekdays)

50%


TCGL Page27


Sr.

No.

Name of the

Facility

Number

of Rooms

Capacity (No of

Persons in a

room)

AC / Non-

AC

Tariff Occupancy

6-7000

(weekends)

16 Vaity Resort 10 2 AC 4090/4990 5-7 rooms in Weekdays; Full in

Weekends 30 2 Non-AC 3590/4490

17 Hotel Chitrakoot 28 2 AC 4000

20 2 Non-AC 3600 900 Rs for child

18 Hotel Hare

Krishna

10 2 Non-AC

19 Hotel Anando 14 2 AC 3600 5-10 rooms in weekdays, full in

Weekend 8 2 Non-AC 3200

20

Hotel Shavshanti

25 2 AC 2700 + tax (off)

3500 + tax

(season)

70-80%

Full on Saturday

17 2 Non-AC 1500 + tax (off)

2000 + tax

(season)

21 Hotel Patang

Lords

- - - - Under Construction

22 Hotel Toran 12 2 AC 900/1500

12 2 Non-AC 1300/1700

C type 4 3 Non-AC 1500/1800

Surya Cottage 2 3 AC 1800/2500


TCGL Page28


Sr.

No.

Name of the

Facility

Number

of Rooms

Capacity (No of

Persons in a

room)

AC / Non-

AC

Tariff Occupancy

Surya Cottage 2 2 AC 1300/1700

Sahyadri Cottage

DLX

1 2 900/1000

Sahyadri Cottage

ORD

8 2 800/900

Executive Deluxe

Room

21 2 AC 2500

Family Deluxe

Room

3 2 AC 4000

Suit Room 2 2 AC 5500

Conference Room 8 Hr. 5000 per day

Extra bed 750


TCGL Page29


4 SITE ANALYSIS

4.1 Site Location and Description

The site is located on the north side of Saputara, overlooking the valley. The site

would be visible from the road when one approaches Saputara from Gujarat

side.

The total area of the site is approximately 12,000 Sq. Mt. There are existing

cottages of Gujarat Tourism on the site; and some of the dilapidated structures

are also present on the site. The site has approach road on the southern side,

and the site is at a lower level than the Road.

4.2 Land Ownership

The land is within ownership and possession of Tourism Corporation of Gujarat

Limited.

4.3 Site Topography and Vegetation

Approximate gradient is 30 degrees. The altitude of the site ranges from 890

meters at Road level to 872 meters at valley level. Beyond the site, the slope of

the valley is very steep (43-47%).

Proposed Site


TCGL Page30


4.4 Site Access and Connectivity

The table below describes the site surroundings.

Site Surroundings

North The site overlooks the valley on North side, and the mountain slope

beyond the site is about 45%, which goes up to the Road below (Main

Road leading to Saputara).

East On the Northeastern side, there is a guesthouse belonging to GNFC.

South The approach road to the site is on the south side; and beyond the

road on the top of mountain is the Toran Hotel and Circuit House.

West On the Western side, there do exist D type cottages of Gujarat

Tourism.

The site offers beautiful view of the valley; and it also has a number of big trees

on the periphery.

4.5 Proximity to Key Areas

The site is hardly within 500 meters from the Saputara circle on the entry point

to Saputara. The other Toran facilities are also in the vicinity.


TCGL Page31


4.6 Existing Infrastructure

The bidder will be required to apply for required capacity/ load of water /

power connection based on the proposed project. The site being within city

there is no apparent difficulty in obtaining water and power connections. The

bidders are free to demolished the existing buildings within site, if the need

arise, before commencement of any kind of development on site.


TCGL Page32


5 DEMAND ASSESSMENT AND PROJECT CONFIGURATION

In this chapter we shall compare the demand for tourism facilities versus the

supply at present in Saputara; and based on the understanding of the place, site

and overall tourism scenario we shall propose the project configuration for the

proposed site.

5.1 Tourist Arrival

As we have seen in the earlier section, about 5.4 lakhs tourists visit Saputara

every year. In absence of any seasonal data of tourist arrival at the location, the

yearly data has been interpolated based on the number of visitors to Toran

property (Gujarat tourism’s property) at Saputara for the last year. We can

assume that the flow of tourists to Saputara follows the same pattern.

As it can be seen from the above chart, the peak tourist season is month of May,

followed by month of October. The fact could be easily explained since most of

the Tourists are domestic tourists. In the month of May, the schools are closed

because of summer vacation; and around Diwali the schools are closed for

Diwali vacation.

Further, the peak tourist flow is about 12%. Hence, a 15% of the annual tourist

arrival can be taken as the total demand for rooms. Most of the Domestic

Tourists in this region choose to travel with family; i.e. the group size is usually

3 to 4. Hence to arrive at number of rooms required, the peak tourist’s number

can be divided by 3; and then by 8 (weekend days) to arrive at demand for

number of rooms.

April2014

May2014

June2014

July2014

August

2014

Septemb

er2014

October

2014

Novembe

r2014

Decembe

r2014

January

2015

February2015

March

2015

No of Tourists 1632 2670 2374 1878 1706 1654 2182 2027 1679 1601 1245 1249

Percentage 7.45%12.19 10.848.58%7.79%7.55%9.96%9.26%7.67%7.31%5.69%5.70%

0

500

1000

1500

2000

2500

3000

Month Wise Tourist Arrival at Toran saputara


TCGL Page33


So, in case of Saputara, since 4.5 lac tourists visit every year, and 15% is the

peak traffic, 67,500 people in a month may be the peak demand. Divide it by

group size of 3; then we get 22500 rooms in a month. In the peak season too, if

we assume that 80% of the tourists visit in weekend (Saturday and Sunday);

and 20% during weekdays; then we get 18000 rooms in weekend. Divide this

by 8 to get the demand for rooms in a weekend day. Hence, the total demand is

2,250 rooms.

5.2 Demand- Supply Scenario

Based on the earlier sections, we know that Saputara has about 800 rooms and

the peak demand may be 2250 rooms. So, the demand is higher than the supply.

However, the feedback from the Hotel Operators is that the demand is only for

the weekend only through-out the year; while during the vacations, it is for the

entire month; and that the efforts should be made to make it a year round

tourist destination. To make this happen, there would be additional

components required which can add to the kind of activities that the tourists

can undertake- activities such as MICE; which can provide occupancy during

weekdays also.

5.3 Recommended Project Components

Based on the visit to the site, survey of the hotels in the area, and from the

interaction with locals, it is understood that the following issues are important

from the Tourism perspective for Saputara:

There is very low demand during weekdays; and MICE tourism needs to be

promoted at Saputara

Adventure sites needs to be increased - such as trekking sites, bungee

jumping, etc.

The site available has a very unique view and half of the site is already being

used as tourist cottages. Further, the patch of land available is not very large;

and it is on the edge of the valley; hence it would not be possible to develop a

large facility here. However, at the same time, the cottages that exist are

outdated and they are not fully utilizing the potential of the site.

It is therefore, proposed that the site may be re-developed as a high end Tourist

resort/ hotel with 5 star facilities.


TCGL Page34


5.4 Site Development Options

Since this is a hilly and undulating site, there could be different ways of

developing the site:

Option 1: Cut & Fill to make a Flat

site

This option would involve making

the site flat by way of retaining wall

and cutting and filling; and

constructing a Compact Building.

This option has higher costs of

cutting & filling and creating

retaining walls, and would alter the

landscape.

Option 2: Building on Stilts

This option would entail raising the

Building on Stilts, leaving the

ground below as it is, with only

little landscaping to make the

sitting areas beneath the Building.

This option is cost effective and

doesn’t disturb the landscape as

well. The maintenance of Building

is also easier because the

possibility of moisture and pests creeping into Building also reduces

considerably.

Options 3: Dispersed Cottages

This option would involve leave the site as it is with Dispersed Building

Structures with connecting corridors. Currently, the structures are in the

similar fashion, but the kind of building design and finishes are outdated. The

number of lettable rooms is also very less in this type of design. It is advisable

that modern structures with very high rentals are erected, so as to serve the

premium customers. The cottages should also be connected through corridors

so as to protect from the very high rainfall that Saputara witnesses.

The kind of revenue would be different based on the type of design selected, the

furnishing of Rooms, and activities provided for the Guests.

Option 1: Cut & Fill to get a Flat site

Option 2: Build on Stilts

Option 3: Dispersed Cottages


TCGL Page35


5.5 Area Programme

Site Area 12,000 Sq. Mt

FSI 1.0

Maximum Ground Coverage (@40%) 4800 Sq. Mt

Number of Floors 2.5 (Stilts + 2 Floors, with

reception and some activities on

Ground Floor)

Total Built-up Area 4800 Sq. Mt

Area under the rooms for guests

(about 50%)

2400 Sq. Mt

Approximate area under one room 38 Sq. Mt

Approximate number of rooms 60

Parking Space (@28 Sq. Mt/ECS for

100 ECS)

2300 Sq. Mt

5.6 Activities other than Rooms

The following activities would be added to the Built-up Area apart from the

Rooms:

i. Multi Cuisine Restaurant (accessible from outside also)

ii. Lounge

iii. Reception

iv. Kitchen

v. Business Centre (accessible from outside also)

vi. Gym

vii. Staff Rooms

viii. Rest rooms for staff (separate for male & female with bunk beds)

ix. Travel desk

x. Laundry Room

xi. Stores

xii. Left Luggage Room

xiii. Reception

xiv. Space for Room Service Trolleys

xv. Mechanic Room

xvi. Linen Room

xvii. Book Shop (accessible from outside also)

Note:

The areas for Guests and Staff would be separately marked.

The Building would be a double storied structure; while the space beneath

(stilt area) would be used as sitting area, landscaping and Reception and

Lounge.


TCGL Page36


The terrace would be used to fit the solar water heaters, solar panels for

electricity back up, for drying the washed linen & clothes.

5.7 Mandatory Development Obligations

1. 5 -Star category hotel / resort

2. Minimum 60 keys / rooms & 2 suites

3. Reception, Multi-cuisine restaurant cum coffee shop

4. Provision of car parking to be made as per TCGL/ Local Building Bye-Laws

5. All Other common / support / required facilities such as internal roads,

street lights, water harvesting system, solid waste disposal, storm water

drainage system, main sewer line, water supply including storage tank(s),

transformer, electrical substation, green areas etc. as per applicable

Building Bye-laws/ any other relevant guidelines issued by GoI/ GoG


TCGL Page37


6 FINANCIAL ANALYSIS

6.1 Introduction

It is proposed that the development may be undertaken on PPP mode. Hence,

in this section we will consider all the costs and revenues and their phasing

from the Private Developer’s perspective. These inputs will be utilized for the

preparation of Financial Model to understand the financial viability of the

project.

6.2 Capital Cost Estimates

Entire Lifecycle cost shall be estimated so as to simulate the correct picture of

the project’s financial viability.

6.2.1 Offsite Infrastructure requirement

Road Development

The access road to the site is operational; hence there is no requirement for

road up-gradation.

Water Supply Connection

The bidder will be required to apply for water connection of required capacity

based on the proposed project. The site being within city there is no apparent

difficulty in obtaining water connection.

Power Connection

The bidder will be required to apply for power connection of required capacity

based on the proposed project. The site being within city there is no apparent

difficulty in obtaining water connection. However, to ensure reliability of power

supply a generator would be required to be installed at the site, during and after

construction. The capacity of the generator has been worked out in the

Machinery and Equipment section.

6.2.2 Site Preparation & Development

Site Preparation

The site is sloping down from the road level towards the valley in the north.

The average slope of the site is about 30-35 degrees up to 45-50 mt from

the road line. Thereafter the slope is about 45-50 degrees.

Firstly, the access to the site would need to be leveled. At present also, the

access to the site is about 2-3 meters lower than the Road. The Access Road

and Open Parking would be accommodated at this level.

The side of the Road would need to be strengthened by a retaining wall,

about 200 meters in length and 3 meter in height. Average thickness of the

walls may be taken as 0.5 Mt.


TCGL Page38


The CPWD schedule of rates for retaining wall shuttering is Rs. 335/Sq. Mt;

and that for concrete in retaining wall is Rs. 7531/Cu Mt. with a 5% per

annum escalation, these costs would become 370 Rs/Sq. Mt and 8300

Rs./Cu Mt. If the average width is taken as 0.5 Mt, then the total volume of

retaining wall would be 300 Cu Mt; and shuttering required would be 200

Sq. Mt.

Removal of Existing Structures

There are existing buildings on the site, some of which are lying in a

dilapidated condition; and some are in operational condition. The bidders

are free to demolished the existing buildings within site, if the need arise,

before commencement of any kind of development on site.

From the reconnaissance survey and the Google imagery, we know that the

approximate built-up area of the dilapidated structures is about 500 Sq. Mt.

The Cost of demolition and removal of debris for RCC in CPWD manual

2013 rates is Rs. 1176.40/Cu M and that for brick masonry in cement

mortar is Rs. 681/Cu M. Hence for RCC slab and Cement Mortar brick wall,

the rate may be taken as Rs. 900/ Cu M. Further, since the slab, walls, and

plinth also needs to be removed, the volume may be taken as 1.5 Cu M for

every 1 Sq. M area.

Landscaping

The area beneath and around the building would need to be landscaped. The

cost of landscaping is assumed to be about Rs. 1000/Sq. Mt. This would be for

about 6000 Sq. Mt of area.

6.2.3 Building Construction

The Building proposed is about 4800 Sq. Mt of structure with stilts. The cost of

building structure has been taken as Rs. 2500/Sq. Ft. (Rs. 26900/Sq. Mt)

6.2.4 Furniture & Furnishing

The basic furniture and furnishing cost has been taken as Rs. 2000/Sq. Ft (Rs.

21520/Sq. Mt) for overall building area- 4800 Sq. Mt.

6.2.5 Machinery & Equipment

The indicative type of equipment and their estimated costing is provided in this

section.

The Cost of Electrical Works is assumed to be 12.5% of the Building Cost.

Fire Fighting Costs is assumed to be Rs. 1000/Sq. Mt

Plumbing Cost is assumed to be 4% of the Building Cost.

The HVAC costs area assumed to be Rs. 8000/Sq. Mt


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The Costs of External Service Connection is assumed to be 5% of the

Building Construction Cost.

The CCTV cost is assumed to be Rs. 300/Sq. Mt for the public areas of the

Hotel; which would be roughly 2000 Sq. Mt

The cost of Telecom and Internet is assumed to be 1% of the Building Cost

One 1010 KVA Diesel generator, price Rs. 1.5 Crore

6.3 Operational Cost Estimation

Manpower Cost

Front Office Staff- 6 (3 shifts, 2 persons per shift) @25000 per month

Manager-1 @100000 per month

Accountant-1 @40000 per month

Cook and his support staff- 10 @20000 per month each

Service Staff- 30 (1 for every two rooms) @10000 per month each

Supervisors- 25 @20000 per month each

Security Guards- 3 @10000 per month each

Maintenance Personnel- 5 @15000 per month each

Electricity Cost

The power consumption is assumed to be 100 KwH per occupied room per day.

Diesel Cost

The Genset would consume about 2.2 Liter Diesel per hour when it runs on 50%

load.

6.4 Assumptions for Financial Analysis

The following are the assumptions taken in the Financial Analysis:

6.4.1 Construction Period

It is assumed that the construction would be completed in two years.

6.4.2 Concession / Lease Period

The concession period shall be 35 years.

6.4.3 Phasing of Capital Cost

60% of the capital cost shall be consumed in the first year, remaining 40% in

second year.

6.4.4 O & M Cost Assumptions

Operational costs are estimated in section 6.3. The maintenance cost is taken as

1% of the capital cost to be incurred every year.


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6.4.5 Financing & Taxation Assumptions

The Interest rate is assumed as 12% per annum.

The corporate income tax would be at 33% and the MAT is assumed to be 20%.

6.4.6 Sources of Finance

It is assumed that 30% of the expenses would be from the developer’s own

source; while the rest 70% could be taken as a bank loan. In case the project is

not viable, up to 20% of the project cost can be taken as Viability Gap Funding.

6.4.7 Project Revenue Assumptions

Number of Visitor to Saputara Annually: 4,50,000

Monthly average number of visitors: ~37500

80% Tourists visit on weekends, 20% during weekdays

Visitors on Weekends: 30000

Visitors on Weekdays: 7500

Number of visitors on a weekend day: 3750

Number of visitors on a weekday: 375

If the average group size were 3, then number of groups on a weekend day

would be 1250; while total number of Rooms in Saputara is about 800. Hence,

there is a strong likely hood, that the Hotel would be fully occupied during

weekends (100%)

During the weekdays, the occupancy would be 10-12%

Average Occupancy works out to be around 45%

Multi Cuisine Restaurant & Bar

The revenue from Restaurant and bar is assumed to be 5% of revenue from the

Hotel.

Conference Room

The revenue from the Conference Room is assumed to be 5% of revenue from

the Hotel.

6.5 Results of Financial Analysis

Based on the above-mentioned assumptions, the Financial Model was

prepared; and the Viability Analysis was carried out.


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The sensitivity analysis was done using concession period and annual premium

as variable components.

The most recommended option emerged from sensitivity analysis is as follows:

Summary Base Construction Cost (Rs. Lakh) 3662.48

Net Construction Cost (Rs. Lakh) 3662.48

Pre-operative Expenses (Rs. Lakh) 234.01

Interest During Construction (Rs. Lakh) 69.85

Landed Project Cost 3965.85

Annual Premium (Rs. Lakh) 50.00

Debt (Rs. Lakh) 1940.31

Equity (Rs. Lakh) 1293.54

Construction Period (Years) 2

Concession Period 35

Room Rent at 2016 prices (Rupees per night) 7500

Revenue from Conference Hall (% of room rent revenue) 5%

Revenue from Multi-cuisine Restaurant (% of room rent revenue) 5%

Project IRR 13.71%

Equity IRR 14.38%

Average DSCR 1.12

6.6 Recommendations

It is recommended that the Project may be taken up on PPP mode; while

keeping Concession Period as 35 years.


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Annexure: Financial Analysis

Space and Cost Estimates for different components

S. No

Component Units

(Sq Mt) Per Unit Cost

(Rs.) Total Cost Remarks

1 Removal of Structures 500 1,350 6,75,000 900 Rs./Sq Mt; 1.5 Cu Mt in 1 Sq Mt area

2 Retaining Walls- Shuttering 200 8,300 16,60,000

3 Retaining Walls- Concrete 300 370 1,11,000

4 Landscaping 6,000 1,000 60,00,000 100 Rs./Sq Ft

6 Building Construction 4,800 32,280 15,49,44,000 Base for the other % based costs

7 Furniture & Furnishing 4,800 21,520 10,32,96,000

Total Building Cost 26,66,86,000

Electrical Works 12.50% 15,49,44,000 1,93,68,000 12.5% of Building Cost

Fire Fighting Works 4,800 1,000 48,00,000 Rs. 1000/Sq Mt

Plumbing Costs 4% 15,49,44,000 61,97,760 4% of Building Cost

HVAC Costs 4,800 8,000 3,84,00,000 Rs. 8000/Sq Mt

External Service Connections 5% 15,49,44,000 77,47,200 5% of Building Cost

CCTV Costs 2,000 300 6,00,000 Rs. 300/Sq Mt

Telecom & Internet 1% 15,49,44,000 15,49,440 1% of Building Cost

1010 KVA Diesel Generator 1 1,50,00,000 1,50,00,000 Lump Sum

X ray scanner 1 13,00,000 13,00,000 Lump Sum based on quotation

Gym Equipments 1 5,00,000 5,00,000


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S. No

Component Units

(Sq Mt) Per Unit Cost

(Rs.) Total Cost Remarks

TV sets, Set top boxes, Computer, printer, Refrigerator, Coffee Maker, Iron, hair dryer, hand dryer, air fresheners, lighting, Telephone systems, etc. 1 41,00,000 41,00,000

60 Rooms (@50k each), 4 Toilets (@25k each), 10 Computers@70 k each, 3 printers/scanners/ high performance machine @total of 3 lakhs

Total for Machinery & Equipments 9,95,62,400

TOTAL 36,62,48,400

Monthly expenditure

S. No Source of expenditure

(per month) No. of units Charge per unit Total Remarks

1 Front Office Staff 6 25,000 1,50,000

2 Manager 1 1,00,000 1,00,000

3 Accountant 1 40,000 40,000

4 Kitchen Staff 10 20,000 2,00,000

5 Service Staff 30 10,000 3,00,000

6 Security Guards 3 10,000 30,000

7 Maintenance Personnel 5 15,000 75,000

8 Supervisors 15 25,000 3,75,000

9 Power Cost (KwH) 81000 5 4,05,000 100 KwH/Occupied Room/day

10 Diesel Cost 4276.8 50 2,13,840

2.2 liter/Hour, 10% of the

Operating time

11 Maintenance expenditure 1% 15,49,44,000 1,54,944 1% of Building Cost per annum

Net Expenditure 20,43,784

Development of Hotel at Saputara, Dangs

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