1. 1 Presentation by Mr. Anil Bhandari Chairman AB Smart Concepts 9th December 2013 Jagran LakeCity University, Bhopal Hospitality Industry Growth

2. Tourism – An Economic Activity Tourism is an Economic Activity Its potential is not being fully tapped Centre & State Governments need to focus more on capacity building by Destination Development GDP growth (2012) 6.6% Foreign exchange earnings US$ 17.7 bn. Employment (direct)25 mn. (indirect) 39 mn. 2

3. Indian Tourism – Global Ranking India ranked 11th in the Asia Pacific region 62nd as world's attractive destinations 14th best tourist destination for its natural resources 24th for cultural resources & rich fauna 37th for its air transport network Expected to be second largest employer by 2019 (Source: WTTC) 3

4. Tourism – Inbound, Outbound & Domestic Inbound Foreign Tourist Arrivals 6.6 mn. Annual growth rate 5.4% Outbound Indian Nationals departures 14.9 mn. Annual growth rate 6.7% Domestic Domestic Tourism Movement 1036 mn. Annual growth rate 19.8% ( Source: MOT 2012-13) 4

5. Hotel Industry Development in India 1900s: Among the first hotels to come up were The Cecil in Shimla, Grand of Kolkata, Taj Mahal in Mumbai & Maidens in Delhi. Later on came the Oberoi and Ashok Hotels 1966: ITDC was set up to work as a catalyst and encourage private sector investment in hotels. ITDC built 36 Ashok Group of hotels in 3, 4 and 5- star categories and was a pioneer in building palace hotels, beach resorts and convention hotels 1982: The Asian Games spurred the growth of the hotel industry 1990s: Liberalisation brought more international hotel brands into the marketplace 5

6. 6 Number of Hotels in India “India presently has over 200,000 rooms in hotels and guest house categories. With an estimated 8% growth in Foreign Tourist Arrivals by 2020 there is the need to build additional 100,000 hotel rooms.” - Union Tourism Minister K. Chiranjeevi at 48 th annual convention of FHRAI

7. 7 Hotels in India – City-wise (2012-13 to 2017-18) Location Existing Rooms Proposed Supply Agra1,299 866 Ahmedabad2,477 1,857 Bangalore8,536 10,731 Chennai6,086 5,331 Delhi NCR 16,646 16,792 Goa4,309 2,622 (contd.)

8. Hotels in India – City-wise (2012-13 to 2017-18) Location Existing Rooms Proposed Supply Hyderabad5,322 3,433 Jaipur3,875 2,859 Kolkata2,163 3,511 Mumbai 12,807 9,802 Pune5,817 3,705 Other Cities 24,142 23,141 (Source: HVS 2013) 8

9. Hotel Classification in India The Ministry of Tourism classifies hotels in the following categories: 5-Star DeluxeHeritage Grand 5-StarHeritage Classic 4-StarHeritage Basic 3-StarMotels 2-StarService Apartments 1-StarTime Share Resorts Guest HousesBed & Breakfast (Source: MOT) 9

10. International & Domestic Hotel Brands InternationalDomestic StarwoodTaj Group CarlsonITC Welcomgroup HyattITDC Ashok Group Marriott International Oberoi Group Hilton WorldwideLeela Group AccorLalit Group InterContinental HotelsPark Hotels Group Wyndham HotelsSarovar Hotels InterContinental Hotels Holiday Inn 10

11. Hotel Development Procedure Conduct Feasibility Prepare a Concept Study Financial viability Finalise hotel Brand Obtain all permissions from Concerned Authorities Selection of Architect, Interior Decorator, Contractor, Consultant and Project Management Company 11

12. Hotel Construction Tenure Luxury segment approx. 39 months, Upscale & Mid- market 30 months Actual time taken depends on getting licenses, permissions Full-service hotel requires between 40 to 120 licenses from state, central agencies 12

13. 13 Total Investment in Hotel Industry To accomplish the Ministry of Tourism's vision of doubling Foreign Tourist Arrivals during the 12th Plan period (2012-17)… Hotel industry will need an additional 180,000 classified rooms Considering present trends in development costs an additional investment of approx. Rs. 125,000 crore will be required

14. Hotel Occupancy & ADR, RevPAR H1-2012 H1 - 2013 Variation Occupancy 58.8% 58.2% -0.6 pt Average Daily Rs. 6,267 Rs. 6,040 -3.6% Rate RevPAR Rs. 3,687 Rs. 3,514 -4.7% 14

15. Hotel Industry Trends Green Environment Health is Wealth – Hygiene Technology – Digitalisation Attention – Excellence in Service Price – Value for Money Location Safety & Security 15

16. Industry Expectations from Government Create conducive, healthy work environment in order to maximize profit and develop business Hoteliers would like to build hotels Simplify issuances of licenses, create system of single-window clearance in states Uniformity of luxury tax / sales tax etc. Increase FSI in states as done in case of Delhi Hotels to be given Industry status and lower rate of interest on loans by banks (TFCI) contd…. 16

17. Industry Expectations from Government Create infrastructure for Tourism development Destination Development & Creation of Tourism Parks Manpower Development for Hotels and Culinary Institutes Aggressively Markets & Promotes Tourism Take steps for Safety, Security of tourists 17

18. Clientele Expectations from Hotel Industry Good Price - Value for Money Good Quality Service Entertainment Connectivity 18

19. Issues Concerning Development of Hotels Lack of availability of land High cost of land Restrictive building norms/bye-laws Long procedures & multiple clearances Lack of basic infrastructure High taxes 19

20. Create Tourism Parks Hotels – 5, 4, 3-star categories Convention Centers & Amphitheatres Recreational Activities like Amusement Parks Shopping Malls & Handicraft Bazaars Restaurants State Tourism Offices & Information Centres Medical Services Airline, Railway & Road Transport agencies Travel Agents & Tour Operators offices Tourist Police offices 20

21. Tourism Parks - Procedures State Governments to identify areas with high tourism potential Identify carrying capacity of destinations Acquire land and develop a Master Plan Develop land through Local Area Development authorities such as DDA, MMRDA etc. Lay down basic infrastructure of roads, electricity, sewerage lines, water supply, telecom, etc. The area be controlled through a given set of regulatory conditions 21

22. Tourism Parks - Incentives Lease land to private sector at reasonable rates Offer fiscal incentives like tax exemptions, exemptions from State/local levies, duty free import of capital equipment required for Hotels Give incentives for early completion of projects 22

23. Tourism Parks - Benefits Benefits To Tourists Availability of integrated facilities at one place Greater choice to tourists through a basket of services Safety & Security: Area free from touts/beggars Competitive Price – Value for money Clean & regulated environment contd…. 23

24. 24 Benefit To States Higher inflow of investments Increased employment opportunities Easier to regulate the environment Focused tourism development Benefits To Investors Single-window clearance Environmental controls Fiscal benefits Lower Investment

25. THANK YOU 25