24/04/2018 · 2018-04-25 · hotels being undertaken by individual British and Indian entrepreneurs, with only a few companies owning hotels in India, such as The Taj Group--Indian

24/04/2018

IndexHistory

Overview

Classification of Hotels

Operating Model

Distribution Model

Indian Hotel Industry Performance

Top 10 Hotels in India

7 Major City for Hotel Industry

GST Implementation

Travel & Tourism Sector

Peer Comparison

Growth Driver on Hotel Industry

Before World War 2, most hotels in India were developed in locations that were frequented by the British and Indian aristocracy. This period saw the development of hotels being undertaken by individual British and Indian entrepreneurs, with only a few companies owning hotels in India, such as The Taj Group--Indian Hotel Company (owned by J. R. D. Tata) and Faletti's Hotel, East India Hotel oberoi Group.

The important hotels that were built during India's British period were:The Rugby, Matheran (1876)

The Taj Mahal Hotel, Mumbai (1900)The Grand, Calcutta (1930)

The Cecil Hotels, Shimla and Muree (1935)The Savoy, Mussoorie (1936)

After Independence in 1947, Late Pandit Jawaharlal Nehru, Then Prime Minister of India, recognized that tourism would be the help for growing the Indian economy after that decision Nehru was decided to built the hotels in India for Foreign Touristers. This lead first ever government investment in the hotel industry with the building of the Ashoka Hotel in New Delhi.

In 1967 government gave the tourism industry another boost by Miniter of Tourism, seperating form the Minitery of Transporting and Shipping. At that time Rai Bahadur M.S. Oberoi was expanding their buisiness via biult a first multi-story hotel in New Delhi which was frenchised to U.S. based Inter-Continental Hotels.

History

The tacit discouragement of foreign franchising by the government led the leading Indian hotel companies namely The Taj, the Oberoi hotels, and the Welcome Group. Their focus, however, was the 5-star and 5-star-deluxe categories of hotels. Such hotels were located in the prominent metropolitan cities and a few select resorts, leading to a concentration of franchised hotels in these areas.

Motivated by the success stories of the hotels in the metro cities, individual entrepreneurs began constructing hotels in secondary cities/resorts during the late 1970s.

Investment trends since 1996 reveal that the bulk of infrastructure investments in India are being made in the hotel industry, as compared to other infrastructure industries (see Table 1). Some experts believe that an economic recession is the best time for buying hotel properties and starting work on new hotel construction. Chain hotel companies are currently building in important secondary markets to increase their spread of hotels. It is estimated that there will be an average growth of five percent in hotel development activities in most cities.

Infrastructure investment trends in India since 1996

Rank Hotel Chain Properties Rooms

1 Indian Hotel Company 51 5823

2 India Tourism Development Corporation 33 3903

3 East India Hotel 18 2860

4 ITDC Hotels 31 2738

5 Six Continents 14 2108

6 Hotel Corporation of India 5 1310

7 Choice Hotels 19 1019

8 Haytt International 2 920

9 Le-Meridien 4 909

10 Clark Hotel 4 677

Top 10 hotel chains in India at the time of 19’s

Overview India is the seventh largest economy in the world with nominal GDP of USD 2.26 trillion and third in terms of purchasing power parity as per

2016. The Indian economy grew by 7.1% in the fiscal year 2017 as against 7.6% growth for the fiscal year 2016.

The Indian hospitality industry has emerged as one of the key industries driving the growth of the services sector and, thereby, the Indian economy. The tourism & hospitality sector’s direct contribution to GDP in 2016 was US$ 47 billion. Also, tourism in India accounts for 7.5% of the GDP & is the 3rd largest foreign exchange earner for the country.

The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country.

Tourism is also a potentially large employment generator besides being a significant source of foreign exchange for the country. India's Foreign Exchange Earnings (FEEs) increased 20.4 per cent year-on-year between January-November 2017 to US$ 24.655 billion.

Key demographic aspects

Middle class population: The middle class population in India has doubled from 300 million to 600 million between 2004 and 2012, according to World Economic Forum, and is likely to overtake that of US and China by 2027. India’s urban population has increased from 27.8% of total population (per census 2001) to 31.2% of the total population.

Young population: Estimates by PwC indicate that by 2020, the average age of an Indian will be 29 years, compared with average age of 37 and 48 years, respectively, for China and Japan. This young population will help constitute a large working population, with an estimated 64% of India’s population to be in the working age population by the fiscal year 2021 (Source: Union budget and economic survey 2013). Increased income levels in the hands of individuals can reasonably be expected to create additional discretionary spending capacity for the individuals, with likely benefits to the mid-priced sector of hotels.

Hotel Supply Penetration in India as Compared to a Global PerspectiveRegion Supply of Hotel

Rooms (inmillion)

Population (in million)

Penetration (Rooms/ 1,000

people)

World 16.2 7,349 2.2

USA 5.0 321 15.7

India 0.2 1,211 0.2 Source : Lemon Tree RHP

Classification of HotelsThe Indian Hotel Industry can be broadly classified under 3 major heads:

Star Hotels:

The Ministry of Tourism classifies the hotels into 5-D, 5 star 4 star, 3 star, 2, star and 1 star and Heritage hotels. Heritage hotels include old palaces and havelis which have been converted into hotels. Heritage Basic, Heritage Grand and Heritage classic hotels also include havelis, posh residences, hunting lodges, forts and palaces built prior to 1950 and 1935 respectively. The ministry re-classifies hotels every 5 years.

Approved Hotels:

Approved hotels are the ones that have received approval from the Ministry of Tourism, but have not been classified into any star category.

Licensed Hotels:

This comprises of hotel that have acquired license from local municipal authorities to provide boarding and lodging facilities.

The other major parameters based on which hotels are classified, apart from their ratings, are as follows:

Classification of Hotels

Based Location

City/Downtown Hotels

Suburban Hotels

Motels

Airport Hotels

Resorts

Forest Hotels

Flotels

Rotels

Based on Level of Service

Upscale Hotels

Mid-Market Hotels

Economy Hotels

Based on Themes

Ecotels

Boutique Hotels

Heritage Hotels

Spa Hotels

Ownership Model

Operating Models Chart

Clas

sific

atio

n of

Cus

tom

er

Segm

ent

Business Travel

Leisure Travel

Airline Cabin Crew

Distribution Models

Distribution Model

Source : CARE Ratings

Trends in Key Operating Statistics

Composition2012-13 All India Average

2013-14 All India Average




Average Total Rooms Per Hotel:

74 74 66 81 76

Average Occupied Rooms Per Hotel:

15,990 16,126 17,424 18,543 17,396

Average Occupancy Per Hotel:

60.4% 60.4% 61.3% 62.3% 63.2%

Average Rate Per Hotel ( ):

4,507 4,729 4,789 5,128 4,507

Source : FHRAI

Occupancy & Average Rate : The average rate registered in 2016-2017 was Rs. 4,507, which witnessed a 12.1% drop over the previous year (Rs. 5,128). Hotel occupancy, too, showed a modest decline of 0.5% over the previous fiscal.

Contribution to Total Revenue: In 2016-17, Rooms Revenue contributed a notable 53.6% to the

Total Revenue, an increase over its percentage share in 2015-16, and an improvement from the declining trend exhibited in the years 2012-13 to 2014-15.

On the other hand, contribution from Food & Beverage and Banquets declined to 39.5% from 41.5% recorded in 2015-16. The contribution of the Other operating departments has remained range-bound, with a marginal increase recorded in 2016-17 over the previous fiscal.

53.6%

28.0%

11.5%

4.4%

2.5%

0.1%

Percentage of Revenue

Source : FHRAI

63.0%

35.1% 32.0%

5.0%

Departmental Expenses Decrease in Departmental Expenses: Since 2013-14, a decreasing trend of Departmental Expenses as a

percentage of Total Revenue at an All-India level has been observed.

This continued for 2016-17 as well, with the departmental expenses being recorded at 35.1%.

This was mainly driven by the percentage decrease in Food & Beverage and Other Expenses. However, Rooms Expenses increased to an All-India average of 32.0%, a sharp increase from the previous year.

Source : FHRAI

The following table sets forth the composition of chain-affiliated supply of hotel rooms in India:

Segments March31, 2002

March31, 2009

March31, 2016

March31, 2017

March 31, 2021 (E)

CAGR 2002to 2017 (%)

CAGR 2017to 2021 (%)

(E)

Luxury-UpperUpscale

15,052 22,253 45,151 47,331 56,968 7.9 4.7

Upscale 4,661 7.736 23,949 24,825 34,530 11.8 8.6

Upper Midscale

4,458 7,989 23,099 24,840 34,208 12.1 8.3

Midscale-Economy

1,895 7,121 24,989 28,363 44,093 19.8 11.7

Total 26,066 45,099 117,188 125,359 169,799 10.0 7.9Source : Lemon Tree RHP

Nationwide occupancy crossed the 65% mark for the first time since 2007/08, with hotels clocking an overall weighted occupancy of 65.6% in 2016/17, an increase of 3.5% over the previous fiscal. The increase in occupancy was complimented with an increase of 2.4% in weighted average rate (`5,658) during the same period. The growth in both occupancy and average rate resulted in the nationwide RevPAR rising by 6.0% over the previous fiscal to reach `3,709.

hotel occupancy across the star categories in India between 1997/98 and 2016/17. Figures show average rates and RevPAR for each of the star categories expressed in Indian rupees, respectively, followed by Figures 16 and 17 that present the corresponding data in US dollars.

Individually, each star category registered a year-on-year growth in RevPAR, with the Five-Star category displaying the highest increase of 8.5% over 2015/16. Following close behind were the Two-Star and Four-Star categories, recording RevPAR growth of 7.4% and 7.2%, respectively.

Category 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 12-MonthChange

Overall Average

59.3% 57.8% 58.4% 59.8% 63.3% 65.6% 3.5%

Five-star Deluxe

59.8% 60.1% 59.9% 61.7% 64.3% 66.5% 3.4%

Five-star 59.1% 55.4% 55.7% 57.2% 61.2% 64.6% 5.5%

Four-star 60.0% 57.9% 59.1% 61.2% 64.2% 65.6% 2.2%

Three-star 56.9% 56.8% 57.9% 59.8% 64.8% 66.5% 2.6%

Two-star 64.8% 59.0% 61.0% 57.7% 60.4% 62.7% 3.9%

KEY OPERATING CHARACTERISTICS BY HOTEL CLASSIFICATION – OCCUPANCY

Source : HVS Report


Overall Average

6,032 5,779 5,611 5,532 5,527 5,658 2.4%

Five-star Deluxe

9,189 8,982 8,727 8,815 8,881 9,098 2.4%

Five-star 6,135 5,881 5,720 5,559 5,484 5,638 2.8%

Four-star 4,905 4,691 4,474 4,361 4,424 4,639 4.9%

Three-star

3,354 3,252 3,083 3,039 3,155 3,265 3.5%

Two-star 1,714 1,849 2,063 2,063 2,122 2,194 3.4%

KEY OPERATING CHARACTERISTICS BY HOTEL CLASSIFICATION – AVERAGE RATE (Rs.)

Source : HVS Report


Overall Average

3,575 3,343 3,275 3,310 3,499 3,709 6.0%

Five-star Deluxe

5,491 5,398 5,231 5,438 5,715 6,051 5.9%

Five-star 3,626 3,257 3,185 3,178 3,355 3,640 8.5%

Four-star 2,942 2,718 2,643 2,669 2,840 3,044 7.2%

Three-star

1,909 1,848 1,786 1,817 2,044 2,170 6.2%

Two-star 1,110 1,091 1,258 1,190 1,281 1,376 7.4%

KEY OPERATING CHARACTERISTICS BY HOTEL CLASSIFICATION – RevPAR (Rs.)

Source : HVS Report

The top 10 markets in India (based on hotel inventory) have 67.7% of hotel inventory in the fiscal year 2017 and each market has at least 3,000 chain-affiliated hotel rooms.

The following table sets forth the composition of inventory based on city status for the periods indicated:

Source : Lemon Tree RHP

Supply Composition by City

Supply AnalysisThe chain-wise composition of hotel room inventory has undergone substantial change in the years since the fiscal year 2007. The following chart sets forth the chain wise inventory for the top ten hotel chains:


India's Top 10 Hotels

The top 10 chain-affiliated hotels have changed over the ten year period from the fiscal year 2007 to the fiscal year 2017, with Intercontinental Hotels Group, Accor and Lemon Tree replacing Leela, Royal Orchid and Bharat Hotels on the top 10 list.

The following table sets forth the chain-affiliated inventory across India, as at March 31, 2017:


The addition of over 88,000 rooms between the fiscal years 2007 and 2017 has predominantly been under international chain management or franchise, with Marriott, Starwood, Accor, Carlson, Hyatt, Hilton and Intercontinental Hotels Group taking about 45% of this additional inventory. In comparison, the big three Indian chains, Taj, Oberoi and ITC Hotels, added only about 12,651 rooms. International chains with a more modest presence in India, such as Wyndham, Choice and Best Western, added about 3,800 rooms in this period.

Marriott has moved to the lead position in India (after the merger of Starwood with Marriott in September 2016), overtaking the Taj group. In the absence of the merger, Marriott with 8,275 rooms and Starwood with 6,857 rooms would have ranked in the top 10 individually.

During this period, three domestic chains emerged as substantial players in the mid-priced hotels sector, Sarovar Hotels, Lemon Tree and Fortune Hotels (part of the ITC Hotels inventory). The total inventory for these three chains is 12,460 rooms, of which 2,716 rooms were operational as of March 31, 2007 and 9,744 rooms were added during the period leading up to the fiscal year 2017.

As of March 31, 2007 based on hotel rooms under ownership, comprising assets where the chain has 50% or more equity interest in a freehold or leasehold asset, Taj has clear leadership followed by ITC Hotels, Oberoi and Lemon Tree Hotels in second, third and fourth place, respectively, across India.

Chain-Affiliated Inventory Across the India

The following chart sets forth the chain-affiliated supply of rooms across all segments and across India:In

‘000

s

Total Room Supply

CAGR

11.8%

The following table sets forth the hotel chain’s summary of inventory in the mid-priced hotel sector: International hotel companies have about 50% of the total

chain-affiliated supply in India, while their share of supply in the mid-priced hotel sector is only 33.7%.

Four of the top five chains in this sector are domestic chains, ITC Hotels (Fortune hotels), Sarovar, Lemon Tree and Taj (Ginger hotels). Only Accor (Ibis, Ibis Styles, Formule One and Mercure), among the international chains, is in the top 5 position. Accor had the largest inventory growth between the fiscal year 2007 and the fiscal year 2017, followed by Lemon Tree and Sarovar both of which had similar inventory additions.

Lemon Tree is currently the leader in terms of controlling interest in owned and leased rooms, ahead of Taj (Ginger which is an economy brand with lower capital needs and revenue capacity), ITC Hotels (with a model that has limited investments in this sector) and Accor (which co-invests substantially in this sector, without having majority equity position or ownership control).

The following chart sets forth the chain-affiliated supply of rooms across India across the mid-priced segment:

The following chart sets forth the expected future supply of hotel rooms in the mid-priced hotel sector across India:

Room Supply’s (in ‘000s)

CAGR

17.00%

CAGR

10.1%

The following chart sets forth the expected future supply of hotel rooms across India:Ro

om S

uppl

y’s (

in ‘0

00s)

CAGR

7.9%

Indian Hotel Industry – Facility Analysis

Typical Room Profile and Average Hotel :

Source : FHRAI

Indian Hotel Industry – Staffing

Average Number of Employees Per Hotel (Permanent/ Contract/ Full Time/ Part Time) :

Source : FHRAI

Category Five-StarDeluxe

Five-Star Four-Star Three-Star Two-Star One-Star Heritage

Average Total Rooms Per Hotel:

225 148 114 57 43 29 42

Average Occupied Rooms Per Hotel:

58,094 35,397 28,351 12,091 9,423 5,605 5,944

Average Occupancy Per Hotel:

64.7% 61.1% 64.8% 66.3% 60.2% 60.0% 38.3 %

Average Rate Per Hotel ( ):

8,638 5,799 4,186 3,049 2,356 1,512 6,109


Five-Star Four-Star Three-Star

Two-Star One-Star Heritage

Rooms 55.8 52.0 60.0 49.6 46.8 45.7 46.6

Food & Beverages 23.1 27.1 26.3 35.4 24.6 33.3 37.1

Banquets & Conferences

14.3 13.4 8.6 8.7 12.7 17.3 11.4

Telephone & Others

0.2 0.1 0.1 0.1 0.1 0.1 0.0

Rental & Other Income

2.9 4.2 2.8 4.8 15.2 3.5 4.0

Financial Report: Percentage of Revenue (2016-17)




Rooms 2,234,138 1,389,171 1,040,137 644,981 511,679 295,291 868,968

Food & Beverages 927,114 724,065 455,692 460,294 269,243 215,457 691,920


571,779 359,030 148,277 113,025 139,034 112,039 212,884

Telephone & Others

5,927 2,656 2,032 1,028 1,038 496 819


116,032 112,258 47,896 62,536 166,372 22,397 75,149

Financial Report: Amount Per Available Room (2016-17)




Rooms 8,638 5,799 4,186 3,049 2,356 1,512 6,109

Food & Beverages 3,584 3,023 1,834 2,176 1,239 1,103 4,864


2,211 1,499 597 534 640 574 1,497

Telephone & Others

23 11 8 5 5 3 6


449 469 193 296 766 115 528

Financial Report: Amount Per Occupied Room (2016-17)

Bengaluru is the fourth largest technological cluster in the world after Silicon Valley, Boston and London, with 80% of global IT companies having based their India operation in the city. Bengaluru’s current office stock spans approximately 118.3m sq. ft. , with further 24.4m sq. ft. currently under development and expected to be operationally 2020.

Business travellers account for about 80% of the total room demand in the city.

Bengaluru ended the year 2016-17 with a market-wide occupancy of 65.9% at an ADR of Rs. 5916. Despite a 9.2% CAGR is a supply over the last five year, occupancy has steadily increased during this period, pointed to the growing a demand for room night in the city. Over the last five year, approximately 4400 rooms are proposed to open in the city, with 72% of this total inventory under active development. As per FHRAI research, 55% of the upcoming hotel inventory will augment room night supply in the peripheral micro-markets like Whitefield, North ORR, Hebbal and Electronic City.

Bengaluru

Chennai 85% of the room demand comes from business travellers.

Chennai is a major commercial hub in South India, is an important centre for automobile manufacturing and its ancillary industries, for the manufacturing activities, and for the service sector including IT/ITeS and financial institution.

The year 2016-17 saw the city witness an increase in both occupancy and average rate for the time in over a decade. However, the micro market is likely to experience supply pressure in the short-to-medium term with over 800 of the proposed 1,000 rooms commencing operations in 2017-18 with the remaining inventory likely to start operations by 2022.

GoaLeading leisure destination in the country, Goa maintain its top performing position as one of the top-performing destinations in the country and best-performing leisure destination in India. Despite a decline demand from international market (in both FIT & group segment, including charters), and additional supply entering the market, Goa’s performance in 2016-17 has been praiseworthy. Domestic FIT and Group demand has been the most prominent driving force behind the improved performance in Goa in the last few years.

Kolkata About 75% of room demand for premium segment comes from business travellers.

Kolkata India’s gateway to the East, is a centre for commercial activity, events and tourism. The city’s development and expansion has led two micro markets : the CBD (Chowringhee, Park Street and Dalhousie) & E.M. Bypass, and Salt Lake City & Rajarhat. The CBD houses the headquarter of notable PSUs, PSBs and Corporate offices. Salt Lake City and Rajarhat are largely driven by IT/IteS companies.

In 2016-17, the room night demand increased marginally due to the rise demand from meetings and conference and annul spots event. Commercial, Extendend-Stay and Leisure demand also witnessed marginal improvement owing to commercial/industrial development and tourism initiatives taken by government in Kolkata. However, the city witnessed a growth in RevPAR due to the increase in average room rate.

Mumbai

Business travellers account for about 80% of the total room demand in the city. Mumbai’s hotel market continued to achieve the highest occupancy and average rates, resulting in the highest RevPAR amongst all major

markets across the country. Majority of the demand is driven by strong growth in corporate travel and promising MICE and Extended–Stay segment.

Over the next few year, FHRAI expects approximately 3,680 keys to enter the hotel market. Of the new inventory, only 37% is actively under development, has a mid-market positioning and is planned within the North-Mumbai micro markets.

New Delhi Business travellers account for about 70% of the demand while the balance comes from the leisure travel demand.

New Delhi continued to see a surge in demand, primarily on the back of growing MICE, Corporate and Transient demand. The city witnessed a noteworthy growth in occupancy, crossing the 70% mark for the first time in nine years. Growth in occupancy was complemented by the marginal growth in average rates. Central Delhi hotels, on the other hand, recorded a 7.2% gain in occupancy, the highest amongst the micro markets.

FHRAI anticipates the Capital too see a supply addition of approximately 1,715 rooms over the next five years, with a majority of the supply spread across the mid markets and budget category.

Pune Demand from business travellers account for about 90-95% of

overall demand in the city for premium hotels.

Known as the India’s leading educational centres, Pune, which has developed into an eminent manufacturing and IT/ITeS hub In the country, is also fast growing into an attractive MICE destination.

After two consecutive years of positive occupancy growths, the city also saw ADRs begin to claim in 2015-16.

The addition of nearly 380 rooms in 2016 saw occupancies marginally dip but rates continued stay strong in 2016-17.

City Room Supply as

on 2016-17

OR(%) Average Room Rate

Bengaluru 11,995 65.9% 5,596

Chennai 8,332 65.4% 4,785

Goa 6,400 72.3% 7,534

Kolkata 3,199 70.2% 5,818

Mumbai 13,494 74.2% 7,693

New Delhi 14,296 70.3% 6,332

Pune 6,445 65.2% 4,147

Major City Wise Current Scenario of Room Supply, Occupancy Rate & Average Room Rate.

Upcoming Room Supply Proposed Branded Hotel Rooms across Major Cities and Categories (FY16 – FY21**)

Source : HVS Report

Under GST Indian hospitality industry stands to benefit from homogeneous and uniform taxes, in addition to easy utilization of Input Tax Credit (ITC).

In the past, the taxes that were applied on inputs, such as raw materials, food, cleaning supplies, and amenities, could not be adjusted against the output without multiple complications. This will now be much easier under the GST regime.

Other advantages of the new taxation include administrative ease and clarity for end consumers.

The GST at 28% for rooms averaging is the highest in the region, the overall impact of this indirect tax on the Indian hotel sector is likely to be favorable.

GST Implementation on Room Category

Average Room Rate (Rs.) GST

Below 1,000 Not applicable

1,000 – 2,500 12%

2,500 – 7,500 22%

Above 7,500 28%

Travel & Tourism Sector IndiaThe Direct contribution of Travel & Tourism to GDP in 2016 was INR4,809.80 crore (3.3% of GDP) and is expected to grow by 6.8% pa to INR9,948.50 crore (3.5% of GDP) by 2027.

In 2016, India generated INR1,529.30 crore in visitor exports*. By 2027, international tourist arrivals are forecasted to total 17,284,000, generating expenditure of INR2, 901.70 crore, an increase of 6.1% pa.

Leisure travel spending (inbound and domestic) generated 94.6% of direct Travel & Tourism GDP in 2016 (INR12,07,900 crore) compared with 5.4% for business travel spending (INR689.0bn).

Domestic travel spending generated 88.0% of direct Travel & Tourism GDP in 2016 compared with 12.0% for visitor exports (ie foreign visitor spending or international tourism receipts).

Components as on 2016-17

Leisure travel spending is expected to grow by7.0% pa to INR25,391.10 crore in 2027. Business travel spending is expected to grow by 7.2% pa to INR1,453.50 crore in 2027.

Domestic travel spending is expected to grow by 7.1% pa to INR23,942.90 crore in 2027. Visitor exports are expected to grow 6.1% pa to INR2,901.70 crore in 2027.

Forecasted by 2027

Demand Drivers

Domestic Tourist Foreign Tourist

Domestic Tourist Domestic tourist arrivals (DTA) are the tourists within India who travel to different places both for business and leisure purposes. The domestic

tourist arrivals grew by 12.7% from 1,432 million in 2015 to 1,614 million in 2016.

The high growth in the domestic tourist arrivals can be attributed to the, rising disposable income, popularizing weekend culture, the eagerness to spend amongst the youth, government campaigns, introduction of low-cost airline services, increased trade and booming service sector.

The travel to religious places like Vaishno Devi and Tirupati amongst many and travel to leisure destinations like Goa, Shimla, Kerala, Jaipur etc. also are the key growth drivers for hotels in the upscale category. Coupled with this, marriage at traditional locations amongst the rich and the royal families is also a key growth driver for the upscale and heritage hotels in India, especially in Jaipur, Jodhpur and Udaipur.

Foreign TouristForeign tourist arrivals (FTA) are the tourists that come and stay in India for a period exceeding 24 hours. Tourists from USA and UK accounted for approximately 47% of the total foreign tourists flowing into India in CY16. Punjab has seen the highest growth in FTA arrivals followed by Sikkim, Andhra Pradesh and Chhattisgarh. Tamil Nadu witnessed highest FTA arrivals, although y-o-y growth was only 1% due to high base effect followed by Maharashtra where the y-o-y growth was about 6%.

Source : Ministry of Tourism

Foreign Tourist Arrivals (FTAs) Trend (in millions)

Source : Ministry of Tourism

The number of FTA in India during 2016 increase to 8.8m to 8.03m in 2015. the growth rate in FTAs during 2016 over 2015 was 9.7% as compared to 4.5% during 2015 over 2014.

About 84.1% of the FTAs entered India through air routes followed by 15% by land routes and 0.9% by sea routes. Delhi and Mumbai airports accounted for about 46.9% of the total FTAs in India.

The top 15 source markets for FTAs in India in 2016 were Bangladesh followed by US, UK, Canada, Malaysia, Sri Lanka, Australia, Germani, China, France, Russia, Japan, Singapore, Nepal and Afghanistan. Top 15 countries accounted for about 73.49% of total FTAs in India in 2016.

Tourism continues to play at important role as a FEE for the country. In 2016, FEEs from Tourism were US$22.92 billion as compared to US$21.07 billion in 2015, registering a grfowth of 8.8%.

Peer Analysis

The Indian Hotels Company Limited (IHCL), branded as Taj Hotels Palaces Resorts Safaris, is an international chain of hotels and resorts headquartered at Express Towers, Nariman Point in Mumbai. Incorporated by the founder of the Tata Group, Jamsetji Tata, in 1903, the company is a part of the Tata Group, one of India's largest business conglomerates. The company employed over 13,000 people in the year 2010.

As of 2017, the company operates a total of 99 hotels and hotel-resorts, with 83 across India and 16 in other countries, including Bhutan, Malaysia, Maldives, Nepal, South Africa, Sri Lanka, UAE, UK, USA and Zambia

About Company

Category

Market Cap 17,470 Cr.

CMP 146

FV 1

Dividend Yield 0.20%

EIH Ltd, the flagship company of Oberoi group is one of the largest chains of hotels in India. The company is in the business of luxury hotels, restaurant, management contracts and travel and tours. Their services include airline catering, management of restaurants and airport bars, travel and tour services, car rentals, project management and corporate air charters. They operate hotels under the brand name Oberoi and Trident.

About Company

Category


CMP 193

FV 2


Royal Orchid (ROHL) is a mid-sized hotel company and operates five star, four star, serviced apartments, resorts and convention/MICE and budget hotels. The company has 14 subsidiaries (13 domestic, 1 international), 4 Joint Ventures, 49 hotels in 35 locations with an inventory of 3,300+ rooms. It operates under flagship brands – Royal Orchid, Royal Orchid Central, Royal Orchid Suites, Regenta Hotels & Regenta Inn. Currently, it’s the 11th largest hotel company in terms of number of rooms in the country.

Category

Market Cap 574 Cr.

CMP 210

FV 10


About Company

TAJGVK Hotels & Resorts Limited (TAJGVK) is a joint venture, formed through a Strategic Alliance, between the Indian Hotels Company Limited (IHCL) and the Hyderabad based GVK Group in the year 1999/00. GVK Group is a Hyderabad based multi product and multi-location business conglomerate with several integrated companies in India and abroad. IHCL is a TATA enterprise with a chain of hotels owning the Taj Group of Hotels and manages and operates various hotels across the country and abroad. The Company owns & operates three five star hotels in Hyderabad and one five star hotel each in the cities of Chennai and Chandigarh.

About Company

Category


CMP 232

FV 2


Category Taj GVK Hotels & Resorts Ltd.

The Indian Hotels Company Ltd. EIH Ltd. Royal Orchid Hotels Ltd.

Net Sales 264.49 4010.26 1526.79 91.31

Total Expenditure 206.58 3400.64 1265.74 79.27

EBITDA 63.19 664.56 350.69 20.28

PAT 10.38 -83.16 109.46 9.91

Free Cash flow 10.64 -243.05 -47.41 12.87

Debt to Equity 0.7 1.34 0.14 0.21

Current Ratio 0.5 0.5 1.32 0.87

ROCE 7.68 5.45 6.38 6.67

ROE 2.9 -3.26 4.29 5.01

EBITDAM(%) 23.89 16.57 22.94 22.22

PATM(%) 3.92 -2.07 7.16 10.85Occupancy Ratio 60% 66% (Approx) 70% 75%

Peer Analysis

Infrastructure More than half of the Ministry of Tourism’s Plan budget is channelized for funding the development of destinations, circuits, mega projects as well as rural tourism infrastructure projects.

Growing Demand Domestic expenditure on tourism is expected to rise due to the growing income of households. A number of niche offerings such as medical tourism & eco tourism are expected to create more demand.

Rising FDI Hotel & Tourism sector has received cumulative FDI inflows of INR69,000 crore from April 2000 to September 2017. International hotel brands are targeting India .e.g. Carlson group is aiming to increase the number of its hotels in India to 170 by 2020. Hospitality majors are entering into tie ups to penetrate deeper into the market, such as Taj & Shangri-La entered into a strategic alliance to

improve their reach & market share by launching loyalty programme aimed at integrating rewarded customers of both hotels.

Medical Tourism

Growth Drivers for Hotel Industry

The presence of world-class hospitals & skilled medical professionals makes India a preferred destination for medical tourism. 201 thousand medical tourists arrived in India in the 2016 as compared to 134 thousand in 2015. India’s earnings from medical tourism could exceed INR 59,000 crore by 2020.

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Source : HVS ReportCare RatingFHRAI ReportMinistry of Tourism

Documents

24/04/2018 · 2018-04-25 · hotels being undertaken by individual British and Indian entrepreneurs, with only a few companies owning hotels in India, such as The Taj Group--Indian