Sample Report

Market Research and Feasibility Analysis for Hotels

INDEX

Sr No CONTENTS PAGE NO1 INTRODUCTION 32 METHODOLOGY 53 AHMEDABAD MARKET

BIG FAT INDIAN WEDDING

INVESTMENTS WORTH RS 2,500 CRORE LINED UP.

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4 FINANCIAL DATA OF EXISTING HOTELS (COMPETITORS) 125 SAMPLE FEASIBILITY REPORT 196 FINANCIAL FEASIBILITY ANALYSIS 237 GENERIC MODEL

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INTRODUCTION

Feasibility Analysis consisting following details for hotel:

Location in Ahmedabad

Size and type of Hotel

Services/Facilities to be included

Finances required (in terms of Investment + Operational Expenses)

Revenue Forecasts – Next 5 Years

Sample Feasibility analysis

Support Information

I. SUPPLY SIDE:

Existing & Upcoming Hotel Projects in Ahmedabad

Number, size, Category & key features of hotels

II. DEMAND SIDE:

Current Scenario & Next 5 Years scenario :

Demand Vs Supply

Demand is high during the season (September to March) and the current supply side

is not able to fulfill the demand. This is evident from the cent percent occupancy of

the rooms and banquet halls in the existing hotels during the season.

During the off season business travelers and conference segment can be targeted by

giving incentives.

In the next 5 years about 1000 rooms in this segment are likely to be added. Similarly

it is expected that banquet / convention facility for additional 15000 to 20000 persons

will be created.

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Considering the high seasonal demand and overall growth in the Ahmedabad market,

atleast another 1000 rooms and banquet capacity of additional 25000 persons can be

accommodated and the market potential is there for the same.

Business can also be targeted from the existing party plots and stand alone banquet

halls who are also dealing in high end functions and are getting substantial business

due to major lack of availability of hotel function halls during season.

Occupancy Rates

Current ARR for Ahmedabad Hotels in this price segment is in the range of Rs.

2500/- per room at an average occupancy of 80%. ARR is estimated to increase at a

rate of 12 to 15 percent per annum.

Seasonality of demand

Banquet business is highly seasonal in nature with September to March being the

peak season. Business clientele is more or less uniform the year round.

Tariff range

It is in the range of 2000/- for a standard room going up to 3000/- for a suit room.

Rate for foreigners is about 20% higher than the rupee tariff given above.

Type & categorization of Demand (Contribution to revenue)

1. Rooms:

Business 82%

Tourist 4%

Convention Related 14%

Indian 65%

Foreign 35%

2. Conventions

Frequency 75 per year

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Duration 1 day

Number of attendees 80 persons (average)

Average Revenue per person 1200/- (exclusive of the room, the same

has been mentioned separately)

3. Weddings

Frequency 300 per year

Duration 1 day

Number of attendees 600 person (average)

Average revenue per event 5,50,000/-

4. Any other (All of the below)

Restaurant/Coffee shop

Retailing

Spa/Gym/Beauty Saloon

5. Key factors driving Demand:

Overall for Ahmedabad

The hospitality sector in Ahmedabad currently features an investment climate that is suitable

for those who aim to invest in a business model.

The prosperity of NRGs contributes hugely to the investment atmosphere.

METHODOLOGY

1. PRIMARY RESEARCH

2. SECONDARY INFORMATION SOURCES

(viz. newspaper reports, internet resource, magazine articles, etc.)

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AHMEDABAD MARKET(Based on published reports)

1. BIG FAT INDIAN WEDDING

2. INVESTMENTS WORTH RS 2,500 CRORE LINED UP.

BIG FAT INDIAN WEDDING

(Source: The Economic Times 14 th Feb 2008)

The big fat Indian wedding could not have been better. Pegged at more than Rs 700 crore, the Ahmedabad wedding industry is witnessing the rich and the mighty splurge to exemplify finesse. Wedding industry is what event planners from across India eye for throughout the year.

The Indian wedding industry generates revenues to the tune of Rs 30,000 crore annually and is growing at 25% per annum. While big cities like Mumbai and Delhi contribute nearly Rs 7,000 crore each per annum, Ahmedabad has to witness a lot more to match others. Yet, in this scenario, traders and corporates are not shying away from experimenting with new concepts and spending whopping Rs 1 to 3 crore on weddings to make the event a talking point of the city.

Weddings have become a medium for the richie rich to display their warmth and wealth to their business associates and relatives.

Testimonies

Agrees automobile dealer Shashin Shah who got Pune-based automobile designer Dilip Chhabria craft “Celebz”-the limousine for the city exclusively for those who have an eye for exclusivity. Shah tells ET: “At Rs 25,000 for 12 hours, it is not a big amount to hire the limo - just that it makes a statement and brings the city to a complete halt with its sheer style and elegance.”

Director of Ahmedabad-based Red Events India Pvt Ltd Saurabh Agarwal who has to plan about 15 weddings this season in Ahmedabad adds: “My clients are going all out to make a statement - getting an invitation card printed in Mumbai or New Delhi, dates from Dubai or performers from UK or exotic flowers and chefs from abroad - and that is churning out huge revenues for those in business.” For clients who do not shy away from spending anything between Rs 10 lakh to Rs 50 lakh, the sky is the limit to make the guests remember the wedding, he observes.

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Managing director of Moonrakers Lifestyle Ltd, Rashmi Tank, who launched her bridal collection in Ahmedabad on Wednesday amid the wedding season fervor, could not agree less. She adds: “Although we are a bit late to launch the collection considering weddings have begun since January 15 in Gujarat, it is never too late to be in this city that does not shy away from spending to get quality. Our inhouse brand “Luxuria” would meet the expectations of brides throughout the occasion - be it her engagement, sangeet, mehendi, cocktail (?) party, wedding or reception. The range priced from Rs 7,500 onwards would undoubtedly strike a cord with the brides to be.”

INVESTMENTS WORTH RS 2,500 CRORE LINED UP. (Ahmedabadnews.com)

Builders in Ahmedabad are finding hotels cozier than residences. The scarcity of hotels in the city has created enough room for local builders to forge joint ventures with leading hotel chains and join the hospitality bandwagon.

Over a dozen five-star hotels are planned in Ahmedabad and the spadework on almost half-a-dozen has already begun, estimated to draw an investment of Rs 2,500 crore.

“There are 15 five-star category hotels that will mushroom in Ahmedabad. If we take the average area of a five- star hotel to be 300,000 sft, then at an average cost of Rs 5,000 per sft the overall investment comes to about Rs 2,500 crore,” said Shekhar Patel, president of Gujarat Institute of Housing and Estate Developers (GIHED).

Many of these hotel projects will be displayed at the upcoming GIHED Property Show 2008.

Local real estate developers including JP Infrastructure, Savvy Infrastructures, Ganesh Housing, NG Group and Dharmadev Infrastructure have planned their foray in hospitality and are in talks with various hotel chains both national and international.

While JP Infrastructure is in talks with Hyatt, the NG Group is also in talks with one of the Hyatt-owned chains, sources familiar with the development said.

“We are planning to set up three five-star hotels in the city and have already zeroed in on the location,” a senior company official said. Savvy Infrastructure is setting up a 240-room hotel on the SG Highway.

“This will be the largest hotel in Gujarat and will be run by Crown Plaza. We aim to invest about Rs 160 crore in this project,” said Jaxay Shah, director of Savvy Infrastructures.

Besides, ITC is setting up a hotel in the Satellite area while the US-based Pacifica Group has

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tied-up with Marriott for a five-star hotel project. Among other hospitality projects coming up in the city include Cambay Spa & Resorts, Gulmohar Greens, and Indraprasth.

The Delhi-based Parsvnath group is in talks with various hotel chains including Le Meridien for setting up a hotel in Vejalpur, sources said. Another Delhi-based realtor Alpha G: Corp has roped in ‘Ista’, to be developed and managed by hospitality player IHHR in its 1-million sft development project at Vastrapur. DLF had in the past said that it intended to set up Hilton hotels in Ahmedabad.

“The total number of rooms announced for development over the next one year slightly exceeds 1,000. However, not all announced projects may reach actual completion, owing to the fickle dynamics in the hospitality sector. One can reasonably expect in excess of 2,000 rooms to be added to Ahmedabad’s hospitality arsenal over the next three years. This is significant, considering the fact that there was an acute shortage of quality rooms in Ahmedabad in the past,” said Anuj Puri, country head and MD of Jones Lang LaSalle Meghraj.

A minimum of seven to eight major projects have been lined up for 2008, each with an average 100-120-room capacity. In the limited case of 5-star hotels, the room count is 250 or more, he said.

“The hospitality sector in Ahmedabad currently features an investment climate that is suitable for those who aim to invest in a business model. Such a model generates cash flows rather than short-term returns, and is the favoured route for those who invest in hospitality in Europe and in the US. In other words, investing in Ahmedabad’s hospitality sector may not be lucrative for individual short-term investors with a low risk appetite, though the long-term prospects are definitely encouraging,” Puri added

More 5-star hotels, State’s all set to shine With Gujarat witnessing rapid industrialization and an increase in tourist flow, entrepreneurs from across the country and abroad are setting up as many as 12 new five-star hotels in different parts of the State. Express News Service, Ahmedabad, hotels, ahd.

More 5-star hotels, State’s all set to shine

(Express News Service, Gandhinagar, February 12, 08’)

WITH Gujarat witnessing rapid industrialization and an increase in tourist flow, entrepreneurs from across the country and abroad are setting up as many as 12 new five-star hotels in different parts of the State. In fact, all the private investors setting up these luxurious hotels have already purchased land for their respective hotel projects.

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http://www.expressindia.com/about/[email protected]

Of these, at least six are likely to come up in and around Ahmedabad. The entrepreneurs had inked memoranda of understanding (MoUs) to set up five-star hotels across the State at the Vibrant Gujarat Global Investors’ Summit held at the Science City near Ahmedabad in January. At present, there are only two five-star hotels — Taj Ummed and Inder Residency — both in Ahmedabad, which have been accorded five-star status by the Centre.

Principal Secretary (Tourism) R M Patel said here on Monday that all private investors who have signed MoUs are genuine parties, and are expected to complete the projects in 2-3 years. He attributed the new five-star hotel projects coming up in the State to the “concerted marketing efforts by tourism officials and good infrastructure being created to attract the tourists.

The owners of Ahmedabad-based Crown Plaza, who signed a MoU of Rs 320 crore, are setting up a five-star hotel worth Rs 125 crore in the posh Judges’ Bungalows locality of Ahmedabad, for which they have already purchased a 10,000 sq m plot of land for Rs 70 crore from the Ahmedabad Urban Development Authority. “We have already started work on the hotel project. It is likely to be completed in three years’ time. Besides this project, we are also planning to set up luxurious hotels (not five-star ones) along the Narmada canal near Adalaj and also at Nal Sarovar, the famous bird sanctuary,” says Crown Plaza owner Hitesh Sanghvi.

Another Ahmedabad-based Srina Hotel Pvt Ltd has acquired 12,000 sq m of land to establish a five-star hotel near Kudasan on the Ahmedabad-Gandhinagar highway, with the project cost estimated at Rs 200 crore.

While Ummed Champawat of the Taj Ummed proposes to set up a Rs 70-crore five-star hotel at Amiyapur village between Koba and Sabarmati, as part of his expansion plans.

Naresh Sabu of Mohi Industries has purchased a huge plot of land near Kosad in Surat district to build a Rs 100-crore five-star hotel, while the proprietors of Mumbai-based Quality Resort and Hospitality Pvt Ltd are planning a Rs 50-crore hotel near ISKCON on the Sarkhej-Gandhinagar highway.

Yet another five-star hotel proposed at a cost of Rs 85 crore will be set up by US-based NRI Rocky Israni at Ramdevnagar Crossroads in Satellite area of Ahmedabad.

For this purpose, the investor has already bought land auctiond by the AUDA. Narendra Somani of Grand Bhagwati has completed all formalities to purchase land for a five-star hotel on Magdalla-Surat Road, with an investment of Rs 80 crore.

The C L Sharma Resort Pvt Ltd, already running a resort near Anjar in Kutch, has plans to set up a Rs 80-crore five-hotel project near Gandhidham.

Two more five-star hotels, one each in Surat and Ahmedabad, are coming up. Girish Luthra of the Gujarat Eco-Resort Hotel is all set to establish a Rs 70-crore luxurious hotel near Abhva village on Sachin-Magdalla Road in Surat, while Avinash Gupta of the West Inn Pvt

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Ltd proposes to construct a five-star hotel at the posh Panchvati Circle in Ahmedabad, with an investment of Rs 43.71 crore.

Cambay Grand, A Five Star Luxury Hotel Ahmedabad- 2008. A five star deluxe hotel at Ahmedabad is at initial construction stage. The hotel will target the booming MICE market in Ahmedabad city. It will offer 155 luxurious rooms, 30000 square feet shopping space, banquet hall with capacity upto 1500 persons, restaurants and a club with facilities such as spa, gymnasium, billiards, squash, library and swimming pool.

The Grand Ahmedabad (Bharat Hotels of Mr. Lalit Suri). This 250-room hotel and convention centre will be spread on 5.33 acres overlooking the Sabarmati river, close to new technology developments. Hotel will be operational by 2009.

Parsvnath Developers Ltd has announced the launch of its 5- star hotel and Multiplex-cum-Commercial Mall project in Vejalpur, Ahmedabad on March 16, 2007. This marks the opening of bookings for commercial space in the coveted upcoming property.

The plot is situated in the heart of the city on 100 feet-wide road. It will have a 5 Star Hotel, Commercial Mall and Multiplex. The project worth Rs 250 crores is spread over a total area of 22,365 sq metres. Mr. Mohit Gujral, the leading architect from New Delhi has conceptualized the complex that will have around 5 lakh sq.ft. built-up area. The entire complex for which the construction has commenced is expected to be completed and operational with in two and a half years.

The state-of-art project would match any internationally acclaimed mall in terms of features and amenities - a world-class construction format, landscaping, high-speed advanced lifts, escalators, huge parking facility, fire monitoring and control mechanism, CCTV surveillance, etc. The mall would have the presence of the best of brands, elaborate food-courts, acclaimed restaurants / food chains, etc.

Mr. Ashim Gandhi, Chief Operating Officer Gujarat & Strategic Planning of the Company, "The Commercial Mall would be a one-stop shop for premium segments of the society; it would house most of the renowned brands of not only India, but, from across the world. There is a tremendous potential for a large footfall considering the facilities, location and the brands expected to set up shops in the mall. The package of a 5-Star hotel, multiplex and mall would provide for an exhilarating experience for the consumer. If the response we are receiving from the top brands of the world is anything to go by, this project would mark the turning point for the region in this sector."

Already, a number of well-known retailers have booked space in the mall. Also, the Company has tied up with Movietime Cineplex Pvt Ltd who already have multiplexes in various parts of the world to manage the multiplexes. A number of international and reputed Indian Hotel chains are in talk with Parsvnath for running the 5-Star hotel

“Eastern Ahmedabad may soon have an eight-storied five-star hotel”.

The project, proposed by a local developer, at an investment of Rs 150 crore, is being planned on the eastern end of Eliis Bridge.The proposed 200-room hotel would come on the

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land, which once housed workers’ quarters of Ahmedabad’s very first composite textile mill, Bechardas Spinning and Weaving Mills Co Ltd. The mill was later renamed as Prasad Mills Co Ltd.The site is located behind the Lokmanya Tilak garden, popularly known as the Victoria garden, and faces river Sabarmati.It is spread over 8,843 square yard and is part of the total 42,733 sq yd area on which the mill was set up in 1865 by Bechardas Lashkari.The permitted floor space index (FSI) in the area at present is 1.8. This may be relaxed as the authorities are contemplating allowing FSI up to 3.6 for taller buildings in the upcoming Sabarmati Riverfront project.

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FINANCIAL DATA OF EXISTING HOTELS (COMPETITORS)

Taj Ummed

(International Airport Circle, next to Army Cantonment, Hansol, Ahmedabad – 382475.)

Rooms 91

Halls 4 (largest -145, smallest-100)

Restaurants 2

Parking 100 cars

Non Room Revenue 40%(Marriages and conferences)

Room Revenue 60%

Average Room Rate Rs. 7500/-

Average Occupancy 70% Yearly100% October to March

Average Per Cover Restaurants - 400/- Functions & Banquets – 600/-

Food Cost Restaurants – 28%Functions & Banquets – 32 %

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Cambay Resort (Gandhinagar)

(Gandhinagar, Gujarat)

Rooms 145

Halls 8

Restaurants 2

Lawn 2 (upto 400)

Parking 250 cars

Non Room Revenue 50%(Marriages and conferences)

Room Revenue 50% (almost booked by pharma and life insurance cos.)


Average Occupancy 65% Yearly40% due to residential conferences

Average Per Cover Restaurants - 160/-Functions & Banquets – 250/-

Food Cost Restaurants – 35%Functions & Banquets – 30%

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The Grand Bhagwati

(SG Highway, Ahmedabad – 380054, Gujarat)

Rooms 37

24 hr Coffee Shop 1

Restaurant 2

Halls 3

Open space 400 pax.

Parking 50 cars in basement100 cars on rented space

Non Room Revenue 78%(ODCs and conferences contribute equally)

Room Revenue 22%(Marriages and Conferences)

Average Room Rate 3200/-

Average Occupancy 80% Yearly.100% in season



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Inder Residency

(Opp. Gujarat College, Ellisbridge, Ahmedabad – 380006, State: Gujarat)

Rooms 158

Restaurants 2

Halls 4 (Largest 500, smallest 15)

Parking 45 cars

Non Room Revenue 30%(70% revenue from conferences)

Room Revenue 70% (70% FITs and 30% Conferences)


Average Occupancy 70% yearly



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Pride Hotel

(Off: SG Road, Ahmedabad – 380054, Gujarat)

Rooms 110

24 hr coffee shop 1

Restaurants 3


Parking 100 cars

Non Room Revenue 40%(60% revenue from Convention, out of which 80% is from marriages and 20% from conferences))

Room Revenue 60%(FITs and conferences)


Average Occupancy 85% Yearly



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Fortune Landmark

(Usmanpura, Char Rasta, Ashram Road, Ahmedabad – 380013, State: Gujarat)

Rooms 128


Restaurants 3

Parking 50 cars

Non Room Revenue 30%

Room Revenue 70%


Average Occupancy 88%



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Le Meridien

(Near Nehru Bridge, Ahmedabad – 380001, State: Gujarat)

Rooms 63

Halls 1 (Maximum 75)

Restaurants 1

Parking 35 cars

Non Room Revenue 25%

Room Revenue 75%


Average Occupancy 80%

Average Per Cover Restaurants – 300/- Functions & Banquets – 350/-


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Sample Feasibility Report

Ahmedabad, primarily has a market potential for three types of hotel projects.

Business hotels Convention Hotels Health Resorts.

The existing hotels in and around Ahmedabad of the above three types which may be considered as competitors for a project of this kind are listed as below.

Business Hotels Convention and banquet Hotels

Health resorts

Marriot Pride Hotel Cambay Spa ResortTaj Residency, Ummed The Grand Bhagwati AlooahillsLe Meridien Quality Inn Riviera Sterling Greenwood ResortsFortune LandmarkCama HotelInder ResidencyComfort Inn, Sunnset

Relevant details about most of the hotels given above and their comparative analysis is given in a subsequent chapter.

Based on the market study done by the consultants, it is suggested that a hotel of following type may prove to be a successful model:

Type of Hotel: A convention-cum-banquet hotel with facilities for business travelers as well.

Going for a pure business hotel may not be a good idea because of the following factors:

Business hotels get adversely affected by the recession in economy and the external environmental factors which are not in hotel’s control.

An out and out business hotel has to be located in the heart of the city where high reality rates may make the model financially unfeasible.

It is difficult to find the required space in the developed areas of the city which results in compromise on the quality and also may result in parking area related problems.

It may be observed that hotels which were dealing primarily in business clientele also shifted to convention and banquet business after observing the high business potential

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in these sectors. As these hotels were primarily modeled as those meant only for the accommodation for business travelers so they are finding it difficult to adapt to the requirements of convention business given their constraints in physical infrastructure.

Similarly, an exclusive convention-cum-banquet hotel has following disadvantages:

Business is seasonal in nature. It is difficult to sustain the high fixed costs which are year round.

There is high degree of competition from non- hotel sources such as clubs in the city, Party plots, Farm houses, stand alone banquet halls etc. Due to limited fixed costs they are often in a position to provide more competitive rates.

Relatively large space is required for this type of hotel including more of parking area.

Most of the banquets are for dinner and Lunch time is usually low on activity.

A convention-cum-banquet hotel along with rooms and facilities for business travelers off- sets most of the threats listed above and provides a more safe business proposition where business is year round and there is a fall back position if one segment is hit by recession.

SAMPLE PROJECTIONS

Location : NR.Nova VillageOpp:AUDA garden,Bh:ISCON Mall,Off SG Road,Ahmedabad

The location has following advantages :

: Developing area: Shift of highway to an alternate road and therefore development of this road as a commercial hub: Development of Ahmedabad city as a whole is towards the west and the area is likely to see high activity in future as well. : High visibility: Good accessibility : Relatively easy transportation from airport with less of traffic congestion: Upcoming area with lot of high end residential development in the form of Independent Bungalows.: Arrival of I T companies and malls.: Proximity from ISKON circle which is an activity hub.: Proximity to Farm houses which helps to get wedding related business as farm houses are generally an integral part of wedding functions.

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Type of product : Budget Hotel providing boarding and lodging facilitiesAlong with conference and banquet facilities

Area : 90000 sq.ft

Target Market : Corporate clients and budget conscious FIT’s

Reach ability : By Road -12 kms from Ahmedabad ST Stand andBy Train-14 kms from Ahmedabad rly station.By Air- 17 kms from Ahmedabad Airport

Transport facilities : Cabs available and also hotel shall provide pick up and drop facility

Facilities: It is proposed that the target market should be mid-end and the facilities should be developed in accordance with the requirements of a three star hotel.

Based on the market study a broad outline of the facilities to be planned is as below:No. of rooms : 50 ( 44 standard rooms , 2 deluxe suites , 4 executive suites.)

Restaurants : one coffee shop of about 80 covers, one 40 cover specialty roof top restaurant of North- west frontier cuisine

Banquet and conference facility: 3 Halls 1 large hall with a capacity of 500 to 700 and can be divided in to two with capacity of 250 to 350 each, 1 hall with a capacity of 100-200 and 1 small hall with a capacity of about 50. The large hall to be planned in such a way that the entry is from outside without having to pass through the hotel’s lobby area. This hall is primarily to be used for wedding banquets and the halls for which the entry is via lobby to be used for conventions. However, this arrangement may not be water tight all the time and flexibility is possible)

1 Board Room: Capacity of 30 people

Lawn: To accommodate a banquet of about 2000-2500 pax.

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Kitchen : One centralized kitchen to cater to the banquets , Coffee shop and room service. A satellite kitchen for NWF specialty restaurant. and a separate kitchen for the lawn parties.

Health club : State of the art health club with gymnasium equipments, Massage , Sauna , Jaccuzi ,etc.

Swimming Pool: (optional)2000 sq ft +500 sq ft cabana(changing room)

Beauty Parlor cum Salon: Separate sections for ladies and Gentleman

Wi-fi internet connectivity

Parking area : To accommodate about 500 cars at a given point of time. Valet parking facility to be offered .

Travel desk

Shopping arcade: 2 SHOPs to rent out.

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Financial Feasibility Analysis:

Project cost

Project cost excludes the cost of land as it is variable depending upon the exact location and area chosen.

Approximate cost of the project, excluding land is likely to be as below.

Total floor area for the hotel is likely to be as below

1.Rooms : 50 nos.Per room average space 240 sq feet. (including bathroom) Total space = 12000 sq feet.

2.Banquet/conference halls: total capacity of approximately 1000 pax.Giving an approximate allocation of 12 square feet per person.Total space = 12000 sq feet.

3.Restaurants: 100 pax. x 18 sq feet = 1800 sq feet

No additional floor space is allocated for the specialty restaurant as it is proposed to be located on the ROOF TOP.

Kitchen:Central kitchen; 1500 sq feet.

Roof top kitchen: 400 sq feet Lawn kitchen : 600 sq feet Total kitchen area:2500 sq feetLobby : with cafe’ lounge, travel desk, shops, front office operational sections,

seating arrangements, etc..Area: 4000 sq feet

Guest areas: Health club: 800 sq feetBeauty parlour cum saloon: 300 sq feetShops: 200 sq feet x 2shops = 400 sq feet Total = 1500 sq feet

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Non guest areas:

House keeping : 1000 sq feet

Admin offices: (GMs office, marketing office, HR office, accounts division, Banquet office, HODs cabins etc...)200+150+150+400+200+400 = 1500 sq feet

Receiving and stores: 1000 sq feet

Maintenance : (basement) 1000 sq feet

Floor pantries : 100x2= 200 sq feet (1 pantry for every 25 rooms, std assumption)

House keeping dep : 1000 sq feet

Corridors : (13 rooms x 15 ft room width x 7 feet width) = 1365 (1500 sq feet)

Area between lift and staircases: (Assuming 2 floors other than lobby floor)400sq feet x 2 = 800 sq feet(For seating arrangement, center table, flower decoration, ashtray, news stand, etc.)

Left luggage room: 300 sq feet

Back office (FO): (reservation, E.P.B.X., FO record room, other communication tools, etc.) = 100+50+250=400 sq feet)

Cloak Room : 500 sq feet(Gents: 300 sq feet, Ladies: 200 sq feet)

Stairs : (6 feet wide stair case) 12x15x2 floors = 360 sq feet

Elevators :

(Guest Elevators (2) = 25 sq feet x 2 x 3 floors = 150 sq feetService Elevators (1) = 20 sq feet x 1 x 3 floors = 60 sq feet)

Total = 210 sq feetBoard room : 450 sq feet

Business centre: 200 sq feet

Garbage Disposal : 200 sq feet

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Staff areas :

Staff Lockers (including bathrooms, toilets, wash basin, lockers and rest area)Male: 750 sq feetFemale: 250 sq feetTotal: 1000 sq feet

(Assuming 100 total staff, exe M10, Exe F 5, Non exe M65 , non exe F 20 ) Staff Cafeteria: (common for exe and non exe staff)

Seating: 500 sq feet (to accommodate 40 staff at one time)Service area: 100 sq feet

Total: 600 sq ft

Time office: 200 sq feet

Swimming pool(optional) : 2000 sq feet + 500 sq feet Cabana (For wash and Change)Total 2500 sq feet (Construction cost not to be calculated for the swimming pool)

Parking space: For 500 cars with optional valet. Lawn Space:

THEREFORE THE TOTAL FLOOR AREA 46220 SQ FEET, WHICH CAN BE ASSUMED AS 50000 SQ FEET FOR CALCULATION PURPOSE, CONSIDERING 5 % ADDITIONAL MISCELLANEOUS SPACE.

THE COST OF A PROJECT OF THIS NATURE, COMES TO RS. 3000 PER SQ FEET INCLUSIVE OF CONSTRUCTION, INTERIOR, FURNISHING, AND EQUIPMENTS and EXCLUDING THE LAND. THIS IS BASED ON INDUSTRY AVERAGES AND INFORMATION PROVIDED BY ‘GUJARAT INSTITUTE OF HOUSING AND ESTATE DEVELOPERS’ (GIHED).

HENCE THE TOTAL PROJECT COST COMES TO..

50000 SQ FEET x Rs. 3000 = Rs. 15,00,00,000 /-

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Fixed Operating Cost = 3.645 CRORES

Breakup:

PAYROLL: (For 125 staff at an avg. salary of Rs. 7000/- pm CTC) 125x7000x12months = 1.05 crores

= 1.05 crores approx. PA

ELECTRICITY: 6 lac pm, 72 lac PA

MAINTENANCE: 10 lac PA

DEPRECIATION: 1.5 crore PA

INSURANCE: 2,50,000/- PA(.25 % of construction cost)

MARKETING: 15 lac PAMISCELLANEOUS: 10 lac PA

Variable Cost

20% for rooms (electricity, amenities, laundry)

24% in banquets (Marriages, Conferences, etc.)

32% at hotel F&B POS (Restaurants, Room Service, etc.)

Total variable cost

Ratio of the Room, Banquet and Non Banquet F&B sale is calculated as = 59:36:05

This is based on the sales projection which is explained later.

Overall Variable cost for the hotel therefore is = 20.52% (11.8: 8.64: 0.8)

Breakeven Analysis

The BEP is calculated on the formula

BEP = fixed cost / (1-Variable cost)

= 3,64,50,000 / [1- (20.52/100)]

= 364,50,000 / 0.7948

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= 4,58,60,594

Sales projection:

[TAXES ARE IN ADDITION TO THE REVENUE PROJECTION AND ARE PAYABLE BY THE GUEST]

Sales projection for the hotel is given as below.

Rooms @ 80% average occupancy at an average room rate of Rs. 2,000/- (on continental plan inclusive of buffet breakfast)

Therefore the total ROOM REVENUE for the year IS EXPECTED TO BE

80 x 2000 x 365 = 5.84 crores (rounded off)

Banquet @ 300 pax per day at an average rate of Rs. 400/- per person.

Therefore the total Banquet revenue for the year is expected to be


Food & Beverage Revenue (other than the Banquets)

120 covers per day @ Rs . 300/- per cover


Total sales=5.84+4.38+1.32=11.54 crores

The B.E.P 4,58,60,594

Total sale 11,54,00,000

Gross profit 5,52,69,920/- + 23,00,000/-* = 5,75,69,920/-

Other Revenue sources* = Rs. 23 lacs.(PROFIT)From the other revenue sources the INCOME per year is expected to be Rentals = 12 lacsHealth Club = 2 lacsBeauty parlour = 1 lakhLaundry = 3 lacs Miscellaneous = 5 lacs (includes travel desk, business centre, telephone, internet etc.)Total PROFIT (Other Revenue Sources) = 23 lacs.

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The Gross Profit of 5,75,69,920/- is without calculating the income tax and interest cost if applicable. (Rs. 1.5 crore is given as depreciation under the head fixed cost which is only a book value and can be used for future renovations and replacements.)

Profit and Loss statement

P&L for next 5 years

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ASSUMPTIONS

PAYROLL 10500000 11550000 12705000 13975500 15373050 10 %incr/yrELECTRICITY 7200000 7560000 7938000 8334900 8751645 5 %incr/yrMAINTENANCE 1000000 1100000 1210000 1331000 1464100 10 %incr/yrMARKETING 1500000 1650000 1815000 1996500 2196150 10 %incr/yrMISCELLANEOUS 1000000 1100000 1210000 1331000 1464100 10 %incr/yrDEPRECIATION 15000000 13500000 12150000 10935000 9841500 10 %decr/yrINSURANCE 250000 237500 225625 214344 203627 5 %decr/yrFIXED COST(FC) 36450000 36697500 37253625 38118244 39294172 VARIABLE COST(VC) % 20.52 20.52 20.52 20.52 20.52 BEP 45860594 46171993 46871697 47959542 49439068 TOTAL SALES 115400000 126940000 115400001 126940001.1 115400002 10 %incr/yrTOTAL VARIABLE COST(VC) 23680080 26048088 23680080 26048088 23680080 TOTAL COST(FC +VC) 60130080 62745588 60933705 64166332 62974252 GROSS PROFIT 55269920 64194412 54466296 62773669 52425750 OTHER REVENUE (PROFIT) 2300000 2530000 2783000 3061300 3367430 10 %incr/yrTOTAL GROSS PROFIT 57569920 66724412 57249296 65834969 55793180

The Gross Profit is without calculating the income tax and interest cost if applicable.

Fixed Cost is estimated to rise at 10% PA while depreciation will reduce. Insurance premium is taken against actual

The percentage growth in total revenue for hotels as per the market trend is estimated at ---------??

However as a conservative estimate, the revenue increase is give at the rate of 10% PA

QUESTIONNAIRE (FORMATS):

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1. TO HOTEL MANAGERS

Name of the Hotel/Function Hall:

Address:

Name of the Manager:

Information pertaining to the function area

Number Size Max capacity

1. Function Hall

2. Kitchen Area (for functions)

3. Washing

4. Store ( Kitchen )

5. Store ( F & B )

6. Toilets ( Guests)

7. Toilets ( Staff )

8. Staff Locker

9. Rooms

10. Parking

11. Lawn Area

12. Restaurant

13. Kitchen ( for restaurant )

1. Average Number of functions per annum- Marriage Parties

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- Other Social Functions- Business Gatherings

2. Average strength of these functions (per function)- Marriage Parties- Social Functions - Business

3. Break up of functions as per the meals provided(%):- Snack Parties- Lunch - Dinner- Any two of the above

4. What are the facilities you provide and charges for the same.(Elaborate where possible)

- Hall- Rooms- Lawn- Food- Decoration/Theme- Health Club- Swimming Pool- Beauty Parlor/ Salon- Business Centre- Valet Parking- Miscellaneous

5. Segmentation of Room business (%)

- Business- Functions and convention linked- Leisure and Tourism- Visiting Friends and relatives

6. Source of business (%)

- Sales offices and CRS- Travel Agents- Direct- Corporate- Event Managers

7. Elaborate upon the concept of seasonality in function business.

8. Financial Details :

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- Total Hotel revenue in last three years (Year-wise break up) - % Break up of revenue from different sources - ARR - Occupancy % - APC in Restaurant - APC in functions and banquets - Food cost in restaurant - Food cost in Functions/ banquets - Fixed cost per annum (excluding interest)

2 . QUESTIONNAIRE FOR FACILITY USERS

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NAME :(Preferably, head of the family)

ADDRESS :

OCCUPATION :

ANNUAL INCOME :

NUMBER OF PERSONS IN THE FAMILY:

MARRIAGE BUSINESS PARTY/ SOCIAL CONFERENCE PARTY

1. Place for organizing the Function (Hotel, Function Hall, Home)

2. Size of the gathering

Function 1

Function 2

Main Function

Post Event

3. Frequency of organizing a Function(Twice a year, Once ayear, Once in 2 yearsor any other)

4. Average spending/Persons/ Head(Less than Rs. 200, betweenRs. 200-Rs. 400, more thanRs. 400)

5. Duration of the function(In days)

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6. Whether distance is a criterion or not, while organizing a function:

Yes ( ) No ( )

7. If No then how far will you prefer,

( ) Less than 5kms, ( ) Upto 10 kms,( ) Upto 15 kms, ( ) More than 15 kms.

8. If no, then what are the other criterions?

( ) The package of the facility( ) Location, ( ) Any other

9. What are the facilities you expect under one window while organizing a function:(Multiple option)

( ) Hall, ( ) Rooms, ( ) Catering,( ) Decoration, ( ) Conveyance, ( ) Marriage Ceremony Preparations.

10. Preference of Location: (Multiple option in order of preference as 1, 2, 3…..etc.)

Shahibaug : ________, C. G. Road : _________,Satellite Road : ________, Ambavadi : _________,Vastrapur : ________, Riverfront : _________,Navrangpura : ________, Vadaj : _________,SG Highway : ________, Maninagar : _________.

11. Type of cuisine preferred: (Please indicate the order of preference as 1st, 2nd, 3rd, and 4th)

Punjabi : _________, Rajasthani : _________,Gujarati : _________, Multi-Cuisine : _________.

REMARKS:

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GENERIC MODEL

Please Refer Excel Sheet

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Sample Report

Documents

Transcript of Sample Report