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Presentation by Mr. Anil Bhandari

Jagran LakeCity University, Bhopal Hospitality Industry Growth. Presentation by Mr. Anil Bhandari Chairman AB Smart Concepts 9th December 2013. Tourism – An Economic Activity. Tourism is an Economic Activity

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Presentation by Mr. Anil Bhandari

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

  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.

  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)

  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)

  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

  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 48th annual convention of FHRAI

  7. Hotels in India – City-wise (2012-13 to 2017-18) • LocationExisting RoomsProposed Supply • Agra 1,299 866 • Ahmedabad 2,477 1,857 • Bangalore 8,536 10,731 • Chennai 6,086 5,331 • Delhi NCR 16,646 16,792 • Goa 4,309 2,622 • (contd.)

  8. Hotels in India – City-wise (2012-13 to 2017-18) LocationExisting RoomsProposed Supply • Hyderabad 5,322 3,433 • Jaipur 3,875 2,859 • Kolkata 2,163 3,511 • Mumbai 12,807 9,802 • Pune 5,817 3,705 • Other Cities 24,142 23,141 (Source: HVS 2013)

  9. Hotel Classification in India The Ministry of Tourism classifies hotels in the following categories: 5-Star Deluxe Heritage Grand 5-Star Heritage Classic 4-Star Heritage Basic 3-Star Motels 2-Star Service Apartments 1-Star Time Share Resorts Guest Houses Bed & Breakfast(Source: MOT)

  10. International & Domestic Hotel Brands International Domestic Starwood Taj Group Carlson ITC Welcomgroup Hyatt ITDC Ashok Group Marriott International Oberoi Group Hilton Worldwide Leela Group Accor Lalit Group InterContinental Hotels Park Hotels Group Wyndham Hotels Sarovar Hotels InterContinental Hotels Holiday Inn

  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

  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

  13. Total Investment in Hotel IndustryTo 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 roomsConsidering 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%

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

  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….

  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

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

  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

  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

  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

  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

  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….

  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

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