project

Marketing Feasibility and Financial Viability 07UMC07031

DECLERATION I Mohit Kumar, here by declare that the dissertation on marketing and feasibility of 3 Star Hotel is an original piece of work and has not been copied from anywhere, and has been in partial fulfilment of the course BHM degree course. This project has been completed by studying various things on the topic and taking information from the internet and various resources. It has not been presented earlier by anyone for award of any degree course.

PLACE: BANGALORE

DATE: Mohit Kumar

Army Institute of Hotel Management & Catering Technology


ACKNOWLEDGEMENT

I take this opportunity to extend my heartfelt thanks to my institute AIHM & CT for

providing me with the opportunity to complete my project. I would also like to thank

my Principal Mr. P Sen Themizhan for allowing me to work on this project.

Also i would like to extend my heartfelt gratitude to my project co-ordinator for extending

her cooperation in terms of knowledge, guidance and support at each and every stage of

the project.

Mohit Kumar



LIST OF CONTENTS

CHAPTER-1 INTRODUCTION TO TOURISM

CHAPTER-2 SCOPE, OBJECTIVE, METHODOLOGY AND LIMITATION

CHAPTER-3 PROFILE OF PLACE

MARKETING FEASIBILITY

CHAPTER-4 DEMAND QUANTIFICATION

CHAPTER-5 TECHNICAL DETAILS OF THE PROJECT

CHAPTER-6 RECOMMENDED MARKETING MIX

CHAPTER-7 CONCLUSION

FINANCIAL VIABILTY

CHAPTER-8 INTRODUCTION TO THE FINANCIAL ASPECTS OF THE PROPOSED PROJECT

CHAPTER-9 COST OF THE PROJECT

CHAPTER-10 MANPOWER REQUIREMENT AND COST

CHAPTER-11 SALES REVENUE



CHAPTER-12 OERATIONAL EXPENSES

CHAPTER-13 WORKING CAPITAL REQUIREMENT

CHAPTER-14 FINANCING THE PROJECT

CHAPTER-15 PROFITABILITY STATEMENT

CHAPTER-16 CASH FLOW STATEMENT

CHAPTER17 COST BENEFIT ANALYSIS

CHAPTER-18 BREAK EVEN ANALYSIS

CHAPTER-19 DEBT SERVICE COVERAGE RATIO

CHAPTER-20 SENSITIVITY RATIO

CHAPTER-21 CONCLUSION AND ANNEXURES



CHAPTER – 1

INTRODUCTION TO TOURISM



INTRODUCTION TO TOURISM

Travel and tourism is world’s largest industry bigger by far than steel, automobile and electronics. Tourism is directly linked with the global economic outlook. According to recent indicators, the world gross domestic product (GDP) should grow by 3.4% per year over the decade. The 3.4% are a composite of growth averaging 4.5% for developing countries and 2.5% for countries with mutual economics. A rising GDP translates into increased travel demand. However due to natural political and induced circumstances there are great disparities in the earning from tourism.Travel and journey for pleasure have been man’s favourite occupation ever since the Advent of trains, the jet aeroplane and fuel efficient cars, with all these modes available Today, the jet aeroplane has brought nations closer than ever before. Tourism has been greatly affected by the political and economic conditions of the countries. Countries like India have learned in the recent years that they are getting only a fraction of percentageof total tourist earning with increasing power available to the people. The study notes that China, Indonesia and Philippines earned 7,323 million, 4,786 million and 2090 million respectively from tourism in 1994. These three were among the top grosser among Asian countries.

The most spectacular gains are expected to be registered in the Asia-Pacific region. Where Travel and tourism is growing at almost twice the pace in comparison with the rest of the World. More than 528 million tourist arrival recorded all over during 1994 registered as 3%of increase over 1993. The report says the international tourist receipts rose to 321 billion,registering a 5.1% increase over 93.Long term prospectus for the travel and tourism market remains positive. All major travel markets and either growing or beginning to show signs of strong recovery. Tourism industryis the world’s largest economic force with a yearly turnover of 3.5 trillion.Tourism play an important role in the economy of country as it gains a lot of foreign currency through foreign guests. So every country tries to improve the tourism position in their country.



GROWTH OF TOURISMThe word tourism has come from the word “TOURS” derived from the latin word “TAURUS” Meaning (Turn Wheel). Tourism provides temporary stay for people to stay in different Countries and location for a few days or month. Tourism these days has become the second largest industry in the world. The purpose tour can be associated with business, sports, historical places, expedition, relaxation etc.

Tourism plays an important role in developing of country as it gains a lot of foreign currency through foreign guests. So every country tries to improve the tourism position in the country. India has developed a lot in tourism business. In the very known as country of saints, diseases,poverty but due to efforts of ITDC, India has developed a lot in tourism industry.Tourism is also a part of socio development as any other activity. The development and growth of tourism also develops the culture, infrastructure etc of a particular place India is known for its large number of hill stations like Shimla, Darjeeling, Manali and Ooty etc and Cave temples and historical places. The number of foreign tourist visiting India is 0.28% of the total tourist traffic.

Co-operatively India receives a less number of foreign tourists although it has a much larger dimensions and unique variety of tourist attractions, it has tremendous scope for expanding and developing tourism traffic in the region. Tourism can be a major factor in economics development of less backward regions. It also helps in generation of employment, with development of tourism people gets job in various fields like hotel industry, as tourist guides or travel agents etc.


DEVELPOMENT OF TOURISMModern Tourism: The concept of modern tourism today is relatively new, not more then 10 yrs the World has become so small that every place on earth is now known and is shown in map.The barriers of distance have been broken up during the last two centuries by the inventions of Steam engine, ships, railways, planes, motorcars and latest in the line aero plane.

Tourism has become a major economic earning industry since the World War-II. Besides promoting International understanding it helps the national economy in its development and raises the Standards of living of the people. Unlike other export industry there is comparatively little investment needs for promoting tourism.


Types of Tourism: Man is a social animal who tries to explain beauty from his childhood. DifferentPeople travel for different motives. There is an unbound inspiration in every man to travel. In earlytimes travellers was often though as if rather “Super Craft” easy to place addition lost in an environment of hotels and environment. But in 1970’s the tourists acquired a much more respectable status. Tourist are now classified into following categories.

1.Explorer: These types of tourist are very rare in numbers. They like to look for discover and involvement with local people and nature. 2.Off Beat: These types of tourist like to get away with the crowd and move into cool and peaceful areas. 3.Mass:The general package tour market heading the tourist encloses overseas. 4.Unusual:They visit with particular objectives such as physical danger.

TECHNICAL INFORMATIONPeople employed in tourism promotion services are required to be technically skilled. The spirit of pay professionalism brings friction in the smooth flow of tourism industry. GOVT. has taken measures by opening hotel and tourism management courses in order to promote tourism.

BENEFITS Tourism also results in economic and non economic benefits. The prime aim of economic benefit is to calculate return in terms of national economy, employment, foreign exchange and state of


revenue while non economic benefits are ranging offering social, cultural and other political values. It also helps in promoting international understanding.

LIMITATIONSTourism is quite important in the economy of the country. However it has some ill effects on the environment that should not be over looked. Mobilization more people has led to air and water pollution. Sophistication and furnishing causes littering surroundings with rubbish damaging the delicate balance of eco system. Commercial establishment also join the race resulting in declination of nature, which should be checked and out awareness induced.

INTRODUCTION TO GLOBAL TOURISMTourism=nature+ wildlife+ man and his activities + environment+ ecology

Tourism is directly linked with global economic outlook . According to local indicators, the world gross domestic product should grade by 3.4% per year over the next decade. The 3.4% is a composite and 2.5% for the countries with the nature economics . A rising GPD translates into increased travel demand.

Almost every country in the world is reading benefits from or looking hopefully for the potential of tourism. In addition to the direct revenues earned by the supply of basic tourism needs (Hotels, restaurants , railways , airlines etc)tourism expenditures per handicap down through money levels of economy

The study notes that china , Indonesia , Philippines have earned $7, 323 millions , $4,785 million & $2,090 million respectively from tourism in 1994 . These were among the top gainers among Asian countries.

Long term prospects for the travel and tourism market remain positive. The entire major travel markets are either growing beginning to show signs of strong recovery. Tourism industry is the world’s largest industry or economic force with yearly turnover of $3.5 million .The most spectacular gains are expected to be register in Asia.-pacific regions where travel and tourism is growing at almost twice the pace in comparison with the rest of the world.

TOURISM IN INDIATourism is one of the most important industries, which earns sizeable amount of foreign exchange from foreign tourists and huge amount of domestic tourist. India attracts a lot of tourists because of



its heritage and exclusive culture, thus promoting tourism to a large extent. To promote tourism both in foreign countries and India , it is very important to organize and for this the Indian Tourism Development Corporation was formed. It started exploring new destination in order to promote tourism. It increased the inflow of foreign tourists and gave India the foreign exchange earnings.

If we see the past of India, it is one of the oldest civilizations with a Kaleidoscope variety and rich cultural heritage. It has achieved socio-economic progress during the last 55 yrs of its independence. India’s social structure is unique blend of diverse religious cultures and racial groups.

Historically India has been a hospital land to numerous immigrants and in due from distant part of Asia and Europe. Tourist facilities in India are adequate in terms of hotels, motels and resorts, facilities like agent tour operational and auxiliary services. India is located away from the effluent tourist market in the world and is not known as a holiday country in abroad. India should give advertisement internationally about its tourist spots and tourist areas.

India should develop the tourist spots also adding to the tourist spots such as attractive gardens, well furnished bars and restaurants, discotheques, pubs i.e. extra decoration of tourist spots and areas also as to compare with the European country’s tourist spots and American country’s tourist spots.

BASIC STATISTICS OF INDIA

Land area - 32, 88,090 sq. Km

Population - 100 crores

Average annual growth - 2.1%

Literal life expectancy - 52%

Average life expectancy - 62 yrs

Agriculture (% of GNP) - 41.9%

Industry (%of GNP) - 22%

Religion - Hindu

Hindu - 83%

Muslims - 11%


Christians - 2.6%

Sikh - 1.9%

Buddhists - 0.9%

Others - 0.3%

Currency - Rupee

Language - English, Hindi & 27 state languages

Capital - New Delhi

Tourism Industry In IndiaTourism was recognized as industry in India way back in mid 80’s but it is yet to enjoy the status in terms of properties. If the manufacturing unit can avail duty free import facilities, why is tourism industry denying that opportunity?

Asks Mr. C.P Krishnan Nair, Chairman of Leela Hotels. It makes to provide investors and new entrains in the tourism infrastructure, the dept of tourism would soon be launching a tourism equity fund. State tourism secretaries from Andhra Pradesh, Rajasthan, Gujarat, Pondicherry, Mariana, Uttar Pradesh and Bihar attended the workshop with each state saving investment by during visitors with attraction package and infrastructure.

Cultural Tourism In IndiaCultural tourism has a special place in India because of its vast civilization. A survey undertaken by rent of tourism confirms that most of the tourists are interest in the culture of India for a foreigner a visit to India who profound cultural impact. Opportunities to learn about ancient history and culture India appointed UNESCO expert Dr. Auchin to study cultural tourism and more recommendatory. The report was about 54% of the tourism enjoyed their study because there was such a large beautiful creation of man building temples and churches. The monument heritage could be divided into temples and churches.

The monument heritage could be divided into:

Buddhist monuments. Hindu monuments Indo-Islam Monuments of British

The European association Dr. Allay ways tht India is a popular country with great part and great tradition. India has a tradition of civilization life. It is one of the greatest civilizations.

Current Tourism Scenario in IndiaThe hospitality industry in India has seen many ups and downs these days though the trend is generally upward. This is because India is growing importantly as a tourist destination and therefore there is an upward trend in room occupancy in hotels and in their profits, but at the same time, the positive fluctuation because the country does not yet have any unique selling point (USP)to attract any type of particular foreign tourists.

Another reason why India does not have a strong position in the world tourist map because the country still has poor tourist destinations. Recent years has not been good with room occupancy decreasing due to September, 11 attack. The number of foreign tourists arriving in India during the year touching 2.62 million on an increase of 5.7%.

The second half of the year was better than the first half, with tourist arrivals going up by 7.5% to reach 1.07 million. The second half of the year is always better than the first half.

The hospitality industry is the one, which has actually benefited from the depreciation of the rupee. When the rupee depreciates the holiday in India becomes cheaper for foreign tourists because they can now spend more rupees for same number of dollars or pounds etc. So more tourists are expected to come. As their own current gives them benefit s of depreciation hotels claims that 1% depreciation in the rupee increases profits.

The Oberoi group have reported a 35% increase in profit and the ITC hotels ( welcome group) reported an even more spectacular 93% growth in profits in the recent years. However the Taj group and the Hyatt group has not shown their profits because they have taken loans and raised money to refurbish and renovate and the interest on loans ate up the profit.

Globalization of tourism in IndiaIndia has an ancient tradition of tourism. It has exited as an industry in the informal section since ancient time and was indulged by all classes of the people. The maharajas or the ruling class were less free to tour than others because their natives could be politically suspicious. They generally


travelled for the purpose of attending. Durban’s of neighbouring states, attending important marriages of those belonging to the exclusive club o the ruling class on for “Firth Yare” which involved visiting to holy places for performing religious duty and propitiating the gods for condemnation of sins and asking for future benefits. The business class travelled with long caravans

of animals and ponies carrying their merchandise from place to place for selling. Trans – sub continental travels were the norm of this class of people and ancient routs for travelling were known. A recent of their travels, sales incomes and modern operandi are available in records known as basis which were account kept by these merchants are available in large number for Rajasthan, Uttar Pradesh and Bengal. The next important class of travel are sirloins and spiritual seekers who travelled from place to place. Lean search of higher knowledge and to take part in discussing and discourse on religious subject for visiting “Tirth Sthan”.

All tourism industry existed in the informal section and all facilities for the tourist were available throughout the country in the form of Dharamshalas, Sarais, Havelies, Dakbangalas available in most famous “Tirth Sthans” in the industry in general was in unorganized section. An organized industry of tourism of 20th century phenomenon came into existence for catering to foreign tourist who wanted to live in style during their visit to India. As a result of intense efforts made both in the centre and state sector we have expanded the tourism industry by way of increasing allocation for tourism through planning from Rs. 364.64 crores in the eighth plan. The tourism arrival have increased from 17000 in 1951 to 2.12 million in 1995-1996. Hotels have been increased from 16.6 in 1993 to 19766 at the end of 1998 and accommodation in terms of rooms has increased to 57,435 as on 31.03.1996. clearance have been given for the creation of 683 new hotels as a result of which 35452 more rooms will come into existence. Tourism industry has already become the 3rd biggest industry after readymade garments and gems and jewellery. It is estimated that during the year 1995-1996 foreign earning of this sector are likely to be 9186 crores. India GDP is forecasting to grade 5.6%. India could earn more than $ 10,020 million.

Some names of tourist spots are as follows:-

TAJ MAHAL (U.P.) AJMER SHARIF(U.P.) RED FORT (DELHI) GOA SEA BEACH(GOA) AJANTA ELLORA CAVE TEMPLE(MAHARASHTRA) GOLDEN TEMPLE(PUNJAB) DARJEELING(W.B.) 300 YEARS OLD CITY CALCUTTA(W.B.) DAL LAKE(J&K) HYDERABAD PALACE(A.P.) INDIA GATE(DELHI)


SHIMLA(H.P.) DALHOUSIE(H.P.) MANALI(H.P.)

OOTY(T.N.) KODAI KANAL(T.N.)

INTRODUCTION TO THE HOTEL INDUSTRYIn the past, present and perhaps the future of hospitality industry are closely linked with today boarding and restaurant industry and are the result of many centuries of social and cultural evaluation .Advances in transportation enable more people to travel great distances at less cost spreading tourism across the globe.

There are different reasons why people spend their time away from home to work for business purposes, to go to school or colleges & to go for shopping for leisure etc &many more reasons. they need accommodation or food and drinks or both .It is reasonable to assume that the provision of these needs have created industry with a common aim to supply accommodation food &drink when & where required.

ORIGIN OF HOSPITALITY INDUSTRYWhen ancient human first ventured beyond their tribal settlement .There were of course no hotels to accommodate them. Most likely these early travellers were either warrior of tenders early travellers traded merchandise ,such as ornaments, cloth &animals for lodging. Almost certainly “inn keeping” is of first service for which money was exchanged. The most famous lodging event is related in the king James version of the bible. Marry and Joseph was funned away by the Bethlehem inn keeper because “ there were no rooms at the inn”. According Biblical Scholars, the inn keepers may have meant to give birth. The stable where Marry and Joseph spent the night was probably almost as comfortable as and certainly more private than the inn itself.

In the 3rd century A.D the roman empire developed an extensive system of brick paved roads throughout the Europe and Asia minors for the constructed along the major through fares, extending from Spain and Turkey.


It was not until the industrial revolution of the 1770’s that the European travellers began to continue food and beverage service with lodging. Very little attention was given to sanitation. Bed as well as rooms still had to be shared with other travellers and rates were step. To accommodate wealthy travellers “ Luxurious travellers” structures were expected with private rooms, individual sanitation and all the comforts of a European castle.

On colonial America, inns were modelled after European tverns, with sleeping quarters shared by two or more guests. In the novel “moby dick” by Hero Men Melville, a way faring seman chicks into a 19th century. New England inns and later walks up to find himself sharing a bad with another guests. Although not every client found himself sleeping with a Melanesian warrior, sharing beds with strangers was common practice ib early American and European inns.

GROWTH OF THE HOTEL INDUSTRYThe hotel industry is one of the oldest commercial endeavours of the world. The British hotel properties act 1956 define a hotel “ as an establishment offering food and beverages and sleeping accommodation, it required any travellers who is able and willing to pay for the biling of service and facility provided”. The hoteliers must provide food and lodging to travellers on payment, has in term the right to refuse if travellers drinks disorderly and in position to pay.

DEVELOPMENT OF INNSA house of public entertainment has been maintained in all countries from early times. The first inns goes back to 6th century B.C. and where the products of the urge to travel. Spurred by invention of wheel. Therefore Greek inn were places gathered for gossip and amusement. The roman inns along with the highways were of questionable reputation landlord, predatory and robberies to travellers were very common. English inns were noted as cleanest and more attractive inns in the world. They also provided food, thirst quenchers like wine etc.

Industrial revolution in England gave fare ideas for the progress of hotel industry and the most important thing was the development of railways and steam skips which made travelling more easy and champed travelling social to business travel. It was in Europe were the birth of organised hotel industry took place. And there were small hotels which provided a number of services, patronised only by the aristocracy of the day.

Evolution of mankind, led to evolution of travel and man is directly related to it as he is a tourist. A tourist can be defined as any person outside his house for more than 24 hrs. Thus invention of wheel took place which was an important milestone in the march of tourism, and the word tour which means turn wheel.


With the industrial revolution of the late 18th century and early 1990’s , the focus of the American society stuffed from the upper class to the common citizens. E M Statler , built the first full service hotel designed to accommodate business travellers in 1908. Until the World War II the hotel chants were divided ibto two categories i.e travel and businessman who were extremely wealthy. In the late 1940s and 1950s American began taking the roads on automatic vehicles. A motel primarily of

lodging to motorist and has ample parking facilities. The internal chain operations provided individual hotels the following facilities:

1- Partnership: that shares equity and profit2- Franchise: a license is obtained to operate a hotel by investor is called the franchise that

pays a fee to the hotel company.3- Management: expertise in management. Professional techniques, mammals, systems etc.

on the basis or mgmt. Fees and shares or profits as incentive payments.

MODERN HOTEL AND CATERING INDUSTRYHotel for the traveller and catering industry, provision of hospitality, an important service whose origin may be tracked back to ancient history. The inns and taverns of ancient Rome met the needs of a wide diversity of travellers and dinners. However, the hotel and catering industry of today is vastly more diverse and more complex than that of Rome or even that of the entrepreneurs who build the savoy, ritz and the great railways hotel a century ago.

The hotel and catering industry today is essentially concerned with providing accommodation ood and drink for those who are away from home. The industry is normally defined as consisting of those businesses whose principal activity is the commercial provision of hotel and catering services. A new definition, however, emerges from the united kingdom standard industrial classification 1992 (HMSO 1992). This classification extends the definition of hotel and catering to include canteens serving factories, offices, schools and colleges as well as university dining halls and messes for members of the armed forces. The industry employs over 2 million people in the united kingdom, i.e approx 10% of the work force. A similar propoetion of the work force is employed in the industry in most developed countries of the world. The wide ranging scope of the industry includes, as


accommodation providers, hotels, motels. Guesthouses, inns, farmhouses. Holiday chalets, another self catering accommodation (such as caravan, parks and camp sites). Among food and drink providers are restaurants cafe, cafeterias and fast food outlets such as burger bars. Take away foods shops such as sandwich bars, fish and chips bars, kabab shops are included. Licensed bars/clubs of

London are also part of the industry. Catering for people at work is carried out either by specialist contractors or by people employed by the organisation requiring for service. In addition, catering services are needed by hospitals, transport systems, shops, banquets and conferences, corporate hospitality, sporting venue and social occasions such as wedding.

Catering is so much a part of modern lives that it is estimated that upto a quarter of all food is now consumed away from home or taken into the home in a form it is ready to eat. Inspite of occasional setbacks there is a steady growth in a need for hotels and cayering services in past decades. There is good evidence to indicate that this growth will continue.

The industry is becoming increasingly international in its activity with many well known brands, for e.g., Mc Donald’s and burger king in catering. Holiday inn, Hilton and intercontinental in the hotel sector. Many companies compete on an international scale and the consumer of their services are frequently international travellers, who may be business people or tourists, but may be influenced by the reorganization of a brand. Companies owned by U.K. operators are now major global providers, these includes holiday inn, Hilton and forte.

The French ACCOR owns international hotel brands such as Novotel and Sofitel with representative establishments in many counties .

Inspite of the growth of international brands, however, the typical hotel or restaurants is still likely to be owned by national or regional company or to be an independent establishment. Frequently, independents form themselves into associations or consortia for the purpose of marketing there services . They may be assisted in their marketing efforts by local and regional tourists boards and other agencies disseminating tourist information. For some establishments, consumer guides may be an important means of reaching new clients, but for most hotels it is necessary to engage in some form of advertising and promotional expenditure. The future growth of the industry will depnd upon it ability to attract consumer expenditure against competition from the goods and services supplied by other industries. A key factor in this will be the maintenance and growth of economic and efficient travel system, especially air travel. Travel and tourism , including hotels and catering, are predicted to become the world’s largest industry by the end of the century. In the united kingdom one in every seven jobs will be in travel and tourism activity. A similar pattern is predicted for other developed countries , making it certain that travel and tourism will play an even more vital role in the world’s economy n the 21st century.


HISTORY

The ancient Romans had several kinds of establishments. On highways and in the towns, inns and taverns were set up to meet the needs of travellers and local population. None of these survived the fall of he roman empire. By the 14th century inns and taverns offering lodging and food drink had become firmly established. Inns were usually small and lodgings provided with stabling for horses, was fairly rudimentary. The taverns of this period were usually confined to serving food and drink , mainly to meet local requirements. They could not be used to put up guests. Ale houses provided an alternative source of refreshments, but were mainly for beer drinking rather than dining. Laws were introduced to control prices charged by inns and taverns and to ensure reasonable quality in the service provided.

By the mid 16th century, inns had grown in importance in consequence of the growth of trade in Tudor England. Roads and water ways were still the primary means of travel, so inns developed a could take upto a 100 guests and separate rooms were available although it was quite common for travellers to share rooms with strangers . The inns would provide extensive stabling for horses and wagons , and the large courtyards might provide the scene for evening entertainments , perhaps even the performance of a play by Shakespeare or Marlowe .

By the 17th century the stagecoach had emerged as a means of reasonably rapid travel. Inns could provide both hospitality and a change of horses for he next stage. Stagecoach services were established on main routes from the capital leading to provincial cities , some of which were operate by inn keepers . in the 18th century , the stagecoach became the main means of travel , while growth in trade brought about a considerable need to get around. The standard in hospitality rose in demand from increasingly wealthy travellers.

Seaside resorts developed in the later part of the 18th century in response to a popular belief in the health giving properties of sea bathing. Some of the earliest hotels and boarding houses were built during this period in the resort. The introduction of the steam locomotive and the development of the railways i the 19th century revolutionized transport and produced phenomenal growth of sea side towns. Large resorts such as blackpool and Bournemouth scarcily existed until they were reached by the railways.

For the first time, the large working population of the industrial towns could reach the resorts easily and cheaply. Workers in the north of England could reach blackpool and south port quickly while Londoners could obtain ready to access to resorts on the south coast. Hotels and boarding houses were built in 1000s. these were often built and owned by the railway companies themselves and offered prestigious accommodation to the well healed traveller. Other entrepreneurs undertook construction of large luxury hotels in the capital, such as the savoy in 1899 and the ritz at the turn of the century. The new establishments offered fine dining, with meals prepared by French chefs available for residents and occasional diners.


The rise of the motor car as a means of transport in the 20th century caused a new wave of development which did much to restore the traditional wayside in but also provided alternative

access to the resorts and to the country sides where many hotels and guesthouses were to be found. For eg. The lake district. In the later of the20th century the motorcar and the aeroplane became dominant modes of travel. Resorts and city hotels tend now to be larger especially where they are designed to meet the needs of international travellers arrived by air. In general such hotels are designed to meet the needs of particular sections of the consumer markets. For the car traveller a great diversity of hotels is available from the luxurious country house hotel with fine restaurant to the modern budget hotel or motel with simple accommodation and service.

MORE RECENT TRENDSThe patterns of catering have changed dramatically in the last half century. Before World War II eating out for pleasure was a regular pass time only for the well off. Since 1950 there has been tremendous growth in popular restaurants with meals available at reasonable prices. Mass travel has made dining out more dramatic. Relatively cheap meals are now available in a diverse range of establishment from branded restaurants to public houses as well as ethnic and speciality restaurants. There was a remarkable boom in catering in the 1980s when the consumer choice was considerably increased in variety and new services such as home delivery of meals were successfully introduced.

Future growth in catering is highly dependent on economic growth generally, but social factors, such as female employment, also play a role. It seems likely that such factors, coupled with increased travel will drive the industry forward to provide increased variety, quality and the value for the consumer as the industry pursues expansion.

HOTEL INDUSTRY IN INDIABefore independence the travelling was very limited and mostly by the pilgrims. In many places there was dharamshalas where shelter was provided and some places with food.


There are different periods which set the evolution of hospitality industry in India. They are as follows:

Indus valley civilization Mauryan period Mughal period 20th and 21st centuries- present scenario

INDUS VALLEY CIVILIZATION

The Indus valley civilization saw shelter and food basically for travellers. The civilization should arrange houses in sequence of 9 to 12 construction of house based on vaastu shastra. They had underground drainage system, they had two course meals. They foresaw the necessity of providing exact shelter to the travellers. Usually first row of houses was given food and shelter and were allowed to keep their bullock carts.

MAURYAN PERIOD

Authentic proof is available though the historians that food shelter and reservations were available on payment under the mauryan period. This period was under administrators Vishnu gupta and kautilya . In the time of Mauryan period there were some houses, which offered different type of accommotdatio with all comforts, luxury and food. It was commonly known as ashram. It also offered wine, food and entertainment except these facilities were also was offered to chariots but a payment. Today advance reservation is also done. It is a trade for the civilized people the traveller had to come through authorized post set by the kingdom. Every traveller had to give his or her purpose of visit. The kingdom also wanted trade to improve.

MUGHAL PERIOD Sher Shah Suri foresaw the requirement of transport and shelter. It was Grant trunk Road that he built from Peshawar to Delhi. It is known as National Highway no. I. During the period of 1000 A.D the Mughals only improved and renovated it. They introduced the courier system called “dhak” .one more change had come ,the soldier started cooking food local ingredients &gave a different name “Shane”. The British also followed and used there accommodation set up during earlier times . but they introduced postal system on a large scale . T he Mughal accommodations , which were known as sarais , got converted to travellers bungalow and inspection bungalows which were called as dak bungalows but they were served only for night . The problem grew into a major problem started the earliest known commercial establishments.


THE 20TH&21ST CENTURY –PRESENT SCENARIOHotels are no more restricted to a room which provides shelter and food to travellers ,it has a wide meaning and is categorized as follows:-1.DOWN TOWN HOTELS: It is located in the heart of the city with a short distance from shoppig areas , theatres ,public building . Rates in these hotels are normally high due to their location . Normally business clients prefer such type of hotels.2.SUBURBAN HOTELS:Located in the suburban areas .It has advantage of quote surroundings, rates are generally low.3. RESORT HOTELS:These types of hotels are generally located in the hills at beaches or in the outskirts of the city.4.AIRPORT HOTELS:As the name indicates these hotels are located near the aiport and are ideal for transit passengers who have to stay only for a few hours in the city , rates are at European plan.5.MOTELS:This is derived from the phrase “motor hotels” which are located principally onto highways . They provide modest boarding and lodging to highway travellers . Rates are quoted on European plan .6.INNS:they are small hotels with modest boardings and lodging facilities. They may be located anywhere within or outside .7.HERITAGE HOTELS:The hotels which reflect the heritage and culture of a century is known as heritage hotel.8.FLOATEL:Pride of Goa as it is aptly named ,will be Indias first floating hotel by previous yera’s end.Moving through the back quarters and in land waterways in goa.9. AQUATEL: in Osaka, japan with 100 rooms and 3 outlets and completely 100 feet below water with one glass to see the roof. It is transparent to see the fishes and other marine animals.10. SHOTEL: hotel on the ship.11. RESIDENTIAL HOTEL: located in commercial areas and the guest are of long staying. Thy are provided with special facilities and rates.

ORIGIN OF HOSPITALITY IN INDIA

The origin of food and accommodation facilities could be traced back to the mohanjodaro and Harappa civilization colonies were established for the travellers only.For eg. A category of house provided for chief traveller who may have come for business dealing. The second category of travellers who have come with his family. This between 1500 B.C. to 300 B.C. the country has visualised the commercialisation of tourism. Several roads were constructed and the transportation network developed considerably during this. The houses that began to provide food and accommodation was known as ashraya under the mauryan period, ashrayas offered different types of accommodations with luxury and comfort.


With the arrival of british, India has visualised that what could be termed the foundation of modern tourism set up. They also introduced the system of carrying official documents from one place to another and set up dakghar at different contents which could be termed as the foundation at different destinations and centres greased up rapidly.

The Hotel Industry and Indian EconomyThe hotel industry is one of the major industries in any economic system, the hotel industry is the world’s second largest industry of all other industries next to oil industry. In India it has been introduced through several attitudes towards service industry. Hotel industry is most important sector in tourism infrastructure. It is a growing industry because of increase in leisure time. The standards of hotels has increased since 1958. This was done under proper and planned scheme development. We are proceeding with a second five year plan of this plan again. The hotel doesn’t play any part in this plan, it was a planning commission who took interest. It also included the ministry of tourism, it kept in view the requirements of the industry fir the next 15 yrs or so. Hotel and tourism industry represents the fastest and largest element of economist called invisible trade and its earning.

ECOTOURISM

INTRODUCTION Holiday ideas adventures trails aayurveda shalas beaches of India drive destination ecotourism heath resorts hill stations. Hindu pilgrims, metro guides, palace of wheels, palaces religion is stone the back waters of Kerela the bud shed circuit, the desert adventure, the golden triangle, the heart of heritage, the lure of jungles, the north east, the Punjab circuit, the temple trail, world cultural heritage sites. Experience Indian arts culture by rail shopping religion wedding search.

Home--------->Holiday---------->Ecotourism

Ecotourism

The united nations has designed 2002 as the “international year of ecotourism” and righly. So today only highly responsible tourism will help the world preserve and sustain its environment and cultural heritage. Fundamentally ecotourism means making a little environmental impact as possible and helping to sustain indegenious population thereby encouraging the preservation of wildlife and habitats while visiting a place.

DONT’S

Do not use pollutants such as detergents in strams on springs while washing and bathing.


Don’t use wood as fuel to cook food at the working sites. Don’t leave cigarette butts or make open fires in forests. Don’t consume aerated drinks, alcohol, drugs or any other intoxicants and do not throw

bottles in the wild.


Chapter - 2

Scope, Objective, Methodology And Limitation Of The Project


Chapter - 2

Scope, Objective, Methodology And Limitation Of The Project

1. To access the market feasibility and details in the technical outline,2. To collect the basic data pertaining to tourism location and transport facilities about

Lucknow3. To access the present status of accommodation4. To study the planning aspects of the hotel and to develop draft policy

Scope

The study carried out to access the commercial viability and to find out the feasibility of starting a three star hotel. For the market survey hotels with some star status were covered.

Methodology

The data information required for the study was obtained from two sources:

Primary Data

Secondary Data

Primary Data

This was the first hand information collected by interviewing the hotels using the questionnaire provided by the college.

Secondary Data

This is the information obtained from books, journals, newspapers, brouchers, leaflets and reports.

Limitations

Due to lack of time all the required information was not collected.


The hotel officials were not ready to reveal some strategic information.

Financial aspects are not covered.


Chapter – 3

Profile Of The Place


Lucknow (Uttar Pradesh)

Time zone IST (UTC+5:30) Area,345 km2 (905 sq mi) Elevation – 123 m(404 ft)

Population 2,800,000(2006)

Density 331/km2 (857/sq mi)

Languages – English, Hindi, Urdu

Mayor – Dinesh Sharma

District Magistrate – Chandra Bhanu

Website : lucknow.nic.in Coordinates : 26051’38’’N 80054’57’’E/26.860556, 80.915833

Luknow is the capital city of Uttar Pradesh, the most populous state of India. It had apopulation of 2,541,101 in 2006, Lucknow is also the administrative headquarters of Lucknow district and Lucknow Division.

Located in what was historically known as the Awadh(Oudh) region, Lucknow has always been a multicultural city. Courtly manners, beautiful gardens, poetry, music, and fine cuisine patronized by the Persian-loving Shia Nawabs of the city are well known amongst Indians and students of South Asian culture and history. Lucknow is popularly known as The City of Nawabs. It is also known as the Golden City of the East, Shiraz-i-Hind and The Constantinople of India.

Today Lucknow is a vibrant city that is witnessing an economic boom and is among the top 10 fastest growing non major metropolitan cities of India. It is the second largest city in Uttarpradesh. The ancient history of Lucknow is believe to begin after the Suryawanshi king lord ram ordered is younger brother Lakshman to establish a town at the present site of Lakshman tila. After 1350 AD the Lucknow and parts of Awadh region have been under the rule of the Delhi Sultanate, the Mughal Empire, the Nawabs of Awadh, the East India Company and the British Raj. Lucknow has been one of the major centers of First War of Independence, participated actively in India's Independence movement, and after Independence has emerged as an important city of North India.

Until 1719, subah of Awadh was a province of the Mughal Empire administered by a Governor appointed by the Emperor. Saadat Khan also called Burhan-ul-Mulk a Persian adventurer was appointed the Nazim of Awadh in 1722 and he established his court in Faizabad near Lucknow.

Awadh was known as the granary of India and was important strategically for the control of the Doab, the fertile plain between the Ganges and the Yamuna rivers. It was a wealthy kingdom, able to


maintain its independence against threats from the Marathas, the British and the Afghans. The third Nawab, Shuja-ud-Daula fell out with the British after aiding Mir Qasim, the fugitive Nawab of Bengal. He was comprehensively defeated in the Battle of Buxar by the East India Company, after which he was forced to pay heavy penalties and cede parts of his territory. The British appointed a resident in 1773, and over time gained control of more territory and authority in the state. They were disinclined to capture Awadh outright, because that would bring them face to face with the Marathas and the remnants of the Mughal Empire.

In 1798, the fifth Nawab Wazir Ali Khan alienated both his people and the British, and was forced to abdicate. The British then helped Saadat Ali Khan to the throne. Saadat Ali Khan was a puppet king, who in the treaty of 1801 ceded half of Awadh to the British East India Company and also agreed to disband his troops in favor of a hugely expensive, British-run army. This treaty effectively made the state of Awadh a vassal to the British East India Company, though it notionally continued to be part of the Mughal Empire in name until 1819.

The treaty of 1801 formed an arrangement that was very beneficial to the Company. They were able to use Awadh's vast treasuries, repeatedly digging into them for loans at reduced rates. In addition, the revenues from running Awadh's armed forces brought them useful revenues while it acted as a buffer state. The Nawabs were ceremonial kings, busy with pomp and show but with little influence over matters of state. By the mid-nineteenth century, however, the British had grown impatient with the arrangement and wanted direct control of Awadh.

In 1856 the East India Company first moved its troops to the border, then annexed the state, which was placed under a chief commissioner - Sir Henry Lawrence. Wajid Ali Shah, the then Nawab, was imprisoned, and then exiled by the Company to Calcutta. In the subsequent Revolt of 1857 his 14-year old son Birjis Qadra son of Begum Hazrat Mahal was crowned ruler, and Sir Henry Lawrence killed in the hostilities. Following the rebellion's defeat, Begum Hazrat Mahal and other rebel leaders obtained asylum in Nepal.

Geography and Climate

Situated in the heart of the great Gangetic plain, Lucknow city is surrounded by its rural towns and villages like the orchard town of Malihabad, historic Kakori, Mohanlal ganj, Gosainganj, Chinhat, Itaunja. On its eastern side lies Barabanki District, on the western side is Unnao District, on the southern side Raebareli District, and on the northern side the Sitapur and Hardoi districts. The Gomti River, the chief geographical feature, meanders through the city, dividing it into the Trans-Gomti and Cis-Gomti regions. Lucknow city is located in the seismic zone III.

Climate

Lucknow has a warm humid subtropical climate with cool, dry winters from December to February and dry, hot summers from April to June. The rainy season is from mid-June to mid-September, when Lucknow gets an average rainfall of 1010 mm (40 in) mostly from the south-west monsoon winds. In winter the maximum temperature is around 25 degrees Celsius and the minimum is in the


2 to 3 degrees Celsius range. Fog is quite common from late December to late January. Summers are very hot with temperatures rising to the 40 to 45 degree Celsius range.

Demographics

Currently the population of Lucknow is more than 5 million.The majority of Lucknow's population comprises people from Central and Eastern Uttar Pradesh. However, Bengalis, Punjabis and Anglo-Indians have also settled in large numbers. Hindus comprise about 71% and Muslims about 26%. There are also small groups of Sikhs, Jains, Christians and Buddhists. As per 2001 census literacy rate of Lucknow is 69.39% (61.22% for females and 76.63% for males).

Economy and Business

Lucknow is not only a major market & trading city in Northern India, but is also an emerging hub for producers of goods and services. Being the capital of Uttar Pradesh state, the Government departments and the public sector undertakings are the principal employers of the salaried middle class. Liberalization has created many more opportunities in the business and service sector and self-employed professionals are burgeoning in the city.

Lucknow also provides a good catchment area for the recruitment of quality personnel by information technology companies for the BPO hubs of nearby Noida and Gurgaon as well as for Bangalore and Hyderabad.

Large number of expatriate labour and NRIs from lucknow serve in the Gulf and middle east countries and send considerable remittances their families back home.

The city is the headquarters of both the Small Industries Development Bank of India (SIDBI) and the Pradeshiya Industrial and Investment Corporation of Uttar Pradesh (PICUP). The Regional office of the Uttar Pradesh State Industries Development Corporation (UPSIDC) is also located here.

The other business-promoting institutions that have a presence in Lucknow are the Confederation of Indian Industry (CII) and Entrepreneurship Development Institute of India (EDII).

Traditional Trade

Traditionally, Lucknow has been a mandi town for mangoes, melons, and grains grown in the surrounding areas. Sugarcane-growing plantations and sugar industries are also in close proximity. This attracted Edward Dyer to set up a unit based on molasses in the city. Dyer Breweries was incorporated in 1855 and was Asia's first commercial brewery.

Lucknow is famous for its small scale industries that are based on unique styles of embroidery, namely, Chikan and Lakhnawi Zardozi, both of which are significant foreign exchange earners. Chikan has caught the fancy of fashion designers in Bollywood and abroad. Information technology is now being introduced in the industry for increased productivity, with the help of world bank funded projects.


During the period of the Nawabs, kite-making reached a high level of artistry, and is still a small-scale industry. Lucknow has also been an industrial producer of tobacco products like 'Kivam', edible fragrances like 'attars' and handicrafts such as pottery, earthen toys, silver and gold foil work, and bone carving products.

Manufacturing and Processing

The city had a big paper mill, one of the oldest in the country. Among the bigger manufacturing units, Lucknow has Hindustan Aeronautics Limited, Tata Motors, Eveready Industries and Scooters India Limited. Processing industries include milk production, steel-rolling units and LPG bottling.

The city's small-scale and medium-scale industrial units are located in the industrial enclaves of Chinhat, Aishbagh, Talkatora and Amousi.

Emerging businesses

Lucknow, with its excellent education, commercial, banking and legal infrastructure, is witnessing rapid growth in information technology, banking, retailing, construction and other service sectors. Private coaching institutions for preparing aspirants of competitive exams and services is another business that is flourishing in Lucknow.

All the major public and private sector banks of India, Reserve Bank of India (RBI) and foreign banks like Citibank, Standard Chartered Bank, ABN-AMRO and HSBC have their presence in the city. The big oil marketing companies like Indian Oil Corporation, Hindustan Petroleum, Bharat Petroleum, and Reliance have their offices in Lucknow.

Leading IT companies like TCS and IBM are also operating in Lucknow.

Insurance companies, both public and private, as well as leading cellular phone companies are present in the city as well.

Currently, biotechnology and information technology are the two focus areas to promote economic development in and around the city. The Ministry of Science and Technology is setting up a biotech park in the city. Lucknow is also one of the selected cities for the Smart City project of STPI, under which IT is being used to promote economic development.

Transport

Auto Rickshaws

The available multiple modes of public transport in the city are taxis, city buses, cycle rickshaws, auto rickshaws and CNG Low Floor AC or Non AC Buses. CNG has been introduced recently as an auto fuel to keep the air pollution in control.The city bus service is run by Lucknow Mahanagar Parivahan Sewa a division of Uttar Pradesh State Road Transport Corporation (UPSRTC).

Inter-city/Inter-state travel.


lucknow has good road, rail and air links with the rest of the country.

Road

From Hazratganj intersection in Lucknow city, four Indian National Highways originate, viz, NH-24 to Delhi, NH-25 to Shivpuri, Jhansi (M.P. Border), NH-56 to Varanasi and NH-28 to Mokama (Bihar).

There are two bus stations. The major bus terminals is Dr. Bhimrao Ambedkar bus station at Alambagh. It has very modern facilities and is the main inter- and intrastate terminal in Lucknow. Another important bus station is at Qaiserbagh. Earlier, another bus terminal operated at Charbagh, directly in front of the main railway station, but this has now been reestablished as a City bus depot. The move was taken to remove congestion in front of the railway station. Now inter-city travel in private cars is also becoming very common.

Railways

The main railway station is Lucknow Railway Station at Charbagh. It has an imposing structure built in 1923. The main terminal belongs to Northern Railway (NR) (station code: LKO) division of Indian Railways and the second terminal is run by the North Eastern Railway (NER). Lucknow is a major junction with links to all major cities of the state and country. Lucknow has a further thirteen railway stations viz. Alamnagar, Malhaur, Utretia, Transport Nagar, Dilkhusha, Gomti Nagar, Badshahnagar, Manak Nagar, Amausi, Aishbagh junction, Lucknow City, Daliganj and Mohibullapur.The first eight stations cater for broad gauge only whereas the others have meter gaugeas well as except for Mohibullahpur which has only meter gauge. All the stations are within city limits and are well connected with each other via road networks and public road transport. Other suburban stations include Bakshi Ka Talab and Kakori, which had witnessed a famous nationalindependence act (see kakori train dacoity). The Barabanki-Lucknow-Kanpur track (101 km) is electrified. Its electrification was done in 2002-03 when Shri. Atal Bihari Vajpayee was Prime Minister of India and he was MP from Lucknow.

Air

Lucknow is directly connected by air with New Delhi , Patna, Kolkata and Mumbai and other major Indian cities. The Amausi airport at Amausi is located around 20 km from the city centre. It is an international airport and is the 13th online station for Air India. International destinations include Dubai, Jeddah, Muscat and Sharjah. Flights to London, Bangkok and Hongkong may also commence soon. During Haj special flights are also operated from Lucknow.

Oman Air and Cosmo Air are a few international airlines that are operating direct international flights from Lucknow to international destinations & vice-versa.

Language and Poetry

Both Hindi and Urdu are spoken in Lucknow, but Urdu has been the lingua franca of the city for centuries. Under the rule of Nawabs, Urdu flourished and turned into one of the most refined language. Hindu and Muslim poets like Brij Narayan Chakbast, Khwaja Haider Ali Atish, Ameer Minai,


Mirza Hadi Ruswa, Nasikh, Daya Shankar Kaul Nasim, Musahafi, Insha and the great Meer Taqi Meer took Urdu poetry to dizzy heights and established the Lakhnavi form of language.

Lucknow is one of the greatest city for Shiitte culture. Two poets, Mir Anis and Mirza Dabeer, became legendary exponents of a unique genre of Shia elegiacal poetry called Marsia centred on Imam Hussain’s supreme sacrifice in the battle of Karbala which is commemorated during the annual observance of Muhharam.

In recent years the use of Urdu has reduced significantly. Day-to-Day transactions in the city are typically performed in Hindi or English. Nevertheless Lucknowites are still known for their polite and polished way of speaking which is noticed by visitors to this charming city. The revolutionary Ram Prasad Bismil, who was hanged by british at Kakori near Lucknow, was largely influenced by poetry and wrote verses under the pen name of “Bismil”. The surrounding towns like Kakori, Daryabad, Barabanki, Rudauli and Malihabad produced many eminent poets and literaturers of Urdu like Mohsin Kakrovi, Majaz, Khumar Barabankvi and Josh Malihabadi.

Cityscan

Roomi Gate: view from Asafi Imambara

The Asafi Imambara ( popularly known as Bara Imambara), the Chhota Imambara, Residency and Shah Najaf are monuments of architectural importance at lucknow. Some other places of interest are the Picture Gallery, Chattar Manjil, State Museum/ Lucknow zoo, Shaheed Smarak, Dilkusha, Ambedkar memorial, Planetarium and Ram Krishna Math.

Lucknow Zoo

The British-built architectural sites in Lucknow include the Vidhan Sabha(State legislative Assembly), the clock tower and the Charbagh Railway Statiob, with its distinctive domes, arches and pillars.

Husainbad Clock Tower

Some of the oldest schools in India are also situated in Lucknow.La Martiniere Lucknow, St. Francis’ College and the Colvin Taluqdar’s college.

Ambedkar memorial

Lucknow has severalwell kept parks that attract the citizenry in large numbers on evenings, holidays and weekends. The bigger parks are Ambedkar Memorial and Lohiaa park in Gomtinagar, swarn Jayanti Park and Aurobindo park in Indiranagar. The sprawling National Botanical Garden at Sikandarbagh on the banks of Gomti river is also worth visiting.

Shopping

Sahara ganj mall


Aminabad, a quaint bazaar like Delhi’s Chandni Chowk, is situated in the heart of the city. It is a large shopping centre that caters a wide variety of consumers.

Chowk and Nakkhas are markets in the old lucknow area where you can get a feel of traditional Lucknow. Some other important shopping centres are Alambagh, Kapoorthala, Indiranagar, Mahanagar and Nishatganj.

The Hajratganj area is an upscale shopping market with colonial style buildings interestingly a populae passtime among the locals is window- shopping in the Hajratganj market. The Janpath market, lovers lane, Mayfair building, kwality, and the universal book stores are some popular landmarks of the area.

REAL ESTATE

Real estate is one of the many booming sectors of the economy. There are several malls, residential complexes and business complexes throughout the city. Real estate giants like Prashvanath, DLF, Sahara, Unitech. API are here.

Lucknow is one of the few Indian cities that follows vertical outgrowth plan like Delhi, Mumbai, Surat and Ghajiabad. The city boasts handsome skyline in Gomti nagar, Hajratganj and Kapoorthala. The highest under construction building is Sahara hospital which will have 35 floors followed by Metro city (30 floors) and Omaxe heights (23 floors). Presently the highest buildings are Shakti bhawan (21 floors) and OCR (20 floors). The city boasts a high property expansion rate. It is expectedthat city will have $2.5 billion organised real estate by 2010.

Tube (Metro) Train

After Delhi and Kolkata, Metro trains are planned to be included in city transportation. The fesibility study of this project is going on and metro trains will beruning in Lucknow by 2012.

Cuisine

When it comes to the dining, Lucknow is a culinary delight as the Awadh region has its own distinct Nawabi style cuisine with various kinds of biryanis, kababs and breads like sheermal/ roomali oti all very popular delicacies.

Seekh kababs

Lucknow has also pioneered the slow- fore cooking called Dum-Pukht. The world famous chef Imtiaz Quereshi hails from Lucknow.

With several bakeries in town, the sweet toothed are never go unsatisfied. The delicious cakes, pasteries and the traditional Keiser-pista are sure to make you comeback for more.

The city has a wide range of fine restaurants catering to all tastes and budgets.


The chaat in Lucknow is on par with the best you will get anywhere in the country. There are quite a few places serving outstanding chaat like Shukla Chaat in Ganeshganj, Moti Mahal. Radhey lal in Aliganj Chappan bhog in Sadar and Mahesh sweets in Nirala nagar.

Localities

The urban area is spread equally on both sides of the gomti river. The commercial and residential areas on cis-gomti are Hahratganj, Alambagh, Charbagh, Aminaabad, Husainganj, Lal Bagh, Golaganj, Wazirganj, Rajendra Nagar, Malviya Nagar, Sarojini Nagar, Aishbagh, Rajajipuram, Haiderganj, THAKURGANJ, Chowk and Saadatganj.

The residential settlements in the Trans-Gomti area are Nirala Nagar, Aliganj, Daliganj, Mahanagar, Old and new Hyderabad, Nishatganj, Indira nagar, Gomtinagar, Nilmattha cantt, Vikas nagar and Janakipuram.

Culture

Lucknow is bravely struggling to retain its old world charm while at the same time acquiring a modern lifestyle. Regarded as one of the finest cities of India, Lucknow represents a culture that combines emotional warmth, a high degree of sophistication, courtesy and a love for gracious living. The pehle-aap(after you) culture. Popularised as a tagline for the society of Lucknow as waning. The sublime cultural richness famous as Lakhnawi tehzeeb blends the culture of two communities living side by side for centuries, sharing similar interests and speaking a common language.

Many of the cultural traits and custom peculiar to Luvknow have become living legends today. The credit for this goes to the secular and syncreis traditions of the nawbas of Awadh, who took a keen interest in every walk of life, and encouraged the traditions to attain a rare degree of sophistication.

Dance and Music

Kathak, the classical Indian dance from south took shape here. Wajid Ali Shah. The last nawzb of Awadh, was a great patron and passionate champion of kathak. Lachhu Maharaj and Birju Maharaj have kept this tradition alive.

Lucknow is also the city of eminent Ghajal singer Begum Akhtar. She was a pioneer in Ghazal singing and took this aspect of music to great heights. “Ae mohabbat tere anjaam pe rona aaya” is one of the best musical renditions of all times.

The Bhatkhande music University at Lucknow is named after the great musician Pandit Vishnu Narayan Bhatkhande.

Lucknow has given music legends like Naushad Ali, Talat Mehmood,mAnup Jalota and Baba Sehgal to the entertainment industry. It also incidentally the birthplace of British pop legend sir Cliff Richard.


PRESENT STATUS OF HOTEL INDUSTREY IN LUCKNOW


PRESENT STATUS OF HOTEL INDUSTRY IN LUCKNOW

HOTELS

Five Star

:The Piccadily, sector B Bara Birwa, Kanpur Road

: The Taj Residency,Gomti Nagar

: Hotel Clarks Avadh,8 Mahatma Gandhi Road

Four Star

: Hotel Sagar International, 14-A ,Jopling Road

: Hotel Gemini Continental, 10, Rani Laxmi Bai Marg

: Hotel Deep Palace , Cantt Road


CHAPTER 5

TECHNICAL ASPECTS OF THE “ BLUE LOTUS”


Chapter - 5

Technical Aspects Of The Blue Lotus

It is clear from the demand analysis that a hotel with 100 rooms is feasible in Gomti

Nagar in Lucknow Technical details of the Htel BLUE LOTUS are discussed in this chapter. As the cost involved for the contribution of single room is more or less equal to that of double rooms. Nowadays only double rooms are constructed.

BREAK-UP OF THE ROOM

TYPES OF ROOMS NO OF ROOMSDOUBLE 90SUITE 10TOTAL 100

SIZE OF THE ROOM

a. Double Room => 15 X 14 =210 sq.ft. Total area of double rooms = 16800 sq.ft. b. Suite => 20 X 16 = 320 sq.ft. Total area of Suite room = 3520 sq.ft. Therefore Total area of room = Area of Double Room + Area of Suite Room =16800 + 3520 =2000 sq.ft.


HOTEL BUILDING

Basement

Basement Layout Square FeetAccounts Department 340Personal Department 300Time Office 200Receiving Area 300House keeping 100Fire escape 2000Passage and corridors 500Laundry 500Staff cafeteria 400Locker(male) 400Locker(female) 400Stores 400Purchase department 200Uniform exchange room 200Linen exchange room 2000General manager office 200Engineering and maintenance department 230Centralized A/C 700Service lift 100Security office 200T.V. channel music 170Total 800 sq. Ft


GROUND FLOOR

Ground floor Square feetReception 700Reservation 200Telephone 200Back office 300Bell desk 200Cashier 200Lobby 1000Travel desk 330Flourists 100Guest stairs 60Guest lift 70Service lift 100Service stairs 60Shos\business center 600Kitchen and room service cabin 1000House keeping pantry 80Setback corridors 100Fire escape 80Bar cum restaurant 1000Banquet hall 1250Coffee shop 750Guest toilet 160Guest safety locker 60Health club 640TOTAL AREA 7480

First floor

First floor Square feetService lift 100Fire escape 80Guest stairs 60Service stairs 60Guest lift 70Set back area and corridors 600House keeping pantry 150Double room (15*14)25 5240Speciality restaurant 1200Room service 140TOTAL AREA 7710 sq. Ft


Second Floor

SECOND FLOOR SQUARE FEETService lift 100Fire escape 90Guest stairs 150Service stairs 60Guest lifts 70Set back areas corridors 1700House keeping pantry 200Double room(20) 4200Suites(3) 640Room service pantry 190TOTAL AREA 7400sq. Ft

Third floor

THIRD FLOOR SQUARE FEETService lift 100Fire escape 80Guest stairs 60Service stairs 60Guest lifts 70Set back areas corridors 1500House keeping pantry 200Double room(20) 4200Suites(3) 960Room service pantry 170TOTAL AREA 7400

Fourth floor

FOURTH FLOOR SQUARE FEETService lift 100Fire escape 80Guest stairs 60Service stairs 60Guest lifts 70Set back areas corridors 1910House keeping pantry 200Double room(25) 3150Suites(5) 1600Room service pantry 170TOTAL AREA 7400sq. Ft


Therefore

Land area required is =65,000sq. Ft.

Total build up area =45,390sq. Ft.

Covered land =7,800sq. Ft.

Open area(garden and parking) =5,200sq. Ft.

1. By place we mean that selection of best location for the hotel. The location is considered as one of the most important decision. Considering various barometers. Connected with choosing of the location, a suitable site was finalised. The site for the construction of the proposed hotel is in gomtinagar lucknow.

Distance From Important Places

Airport - 18 km Bus stand – 12 km Railway Station – 17 km Main market - 10 km

The place selected , for the proposal project is also very calm nad not very densely populated, so it gives privacy and peace to the guest

Hospitality Products Offered

a. Proposed hotel will recruit professional managers and skilled professionalsb. Shall invite the culture of excellent service in the proposed hotelc. Shall provide guest with many cuisins like continental, Chinese ,awadhaid. Shopping arcade :this is attached toreeption counter. It consist of

>Travel desk >Handicraft soft >Chemist >Banking facilities >Beauty parlour

These are the basic needs and should be provided because for these ,guest may find it difficult to ut of the hotl every now and then.the travel desk does the looking for the guest travel through railways or nav. Other passenger carrieage system. They conduct tourswithin and out side the city.banking facility is a necessaty for the tourist to exchange their deposits , cheque or currency.at the parlour attached to the health club will provide all facilities, which the guest needs.the chemist will wok rond the clock as an emergency can arrive anytime .


e. Business center

The hotel provides facilities for :

i.fax ii.Telex iii.E-mail service iv.Internet v.Xerox

These facilities provide efficient secretarial and other service which can increase the no of business clients.

f. Lockers: this is to help the gest who are carring valuable like jewelley,currency or very doc. Etc.,to safe guard abd prevent theft

g. Car park : this is provided at the side of te hotel.about 35-45 cars and 15 wheelers can be arked here .

FOOD AND BEVERAGES OUTLETS OF THE HOTEL

MOKSHA 24 HOURS COFFEE SHOPDAWAT E KHAS Awadhi cuisine specislity restaurant

11 am – 3 pm7 pm – 11.30 pm

MINGS GARDEN CHINESE SPECIALITYRESTAURANT11 am – 3 pm7 pm – 11.30 pm

ROOM SERVICE 24 HOURSBALL ROOM BANQUET HALL(UP TO 97 PAX)GUFTAGOO BANQUET HALL(UP TO 500 PAX)MEHFIL – BAR 11 am- 11.30 pm

FACILITIES IN THE ROOM

All rooms will have wall-to-wall carpeting. The minimum furniture will be abed, wardrobe, suit case rack, writing desk,chair, sofa set and refrigerator .the suit will have an attached living room with the required furniture provided with refrigerator provided with wine and bar. All rooms wil have channel music ,colour t.v. ,a.c. and a telephone . all rooms will have attached bathrooms with 24 hr hot and cold water supply. The bathroom will also have the required toiletries such as soap, shampoo, toothbrush, paste, shaving kit, hairbrush, powder, towels etc.


Guest stationary and a sewing kit will be provided with special room service menu card , house keeping cards and telephone directory

: In order to ensure price for the products the hoel sells, is has to follow a method of fixin the price .the two methods are

a. Follow the leads methodsb. Market penetration method

In this case market penetration method is used by keeping the price slightly lower than the competition

TYPES OF ROOMS NO OF ROOMSDouble rooms 90Suite rooms 10

TARIFF

Type of rooms Single occupancy (in Rs.) Double occupancy (in Rs.)Double rooms 2500 2750Suite rooms 3700 3950

The pricing of the speciality restaurant and coffee shop will e finalized after construction of the hotel and after studying the pricing policy of other in lucknow

4. PROMOTIONa. Before Inauguration : some of the methods that will be adopted in the promotion of the hotel. before inauguration arei. Advertising : the advertising of the hotel will begin when the project is nearing completion. The different that will be adopted are through local media , national media, bill board and banners. By the appointments of sale executives , VIPs company officials and head of institute can be contacted aong with leaflets and folders.ii. Data Base : this is sending personalised letter to executives of certain selected companies all over India .iii. Travel agent : the travel agent operating i the local market and those who passes necessary license to represent the important domestic carries such as Airlines, Railways and road transport are informed to promote the guest into the hotelb.After Inauguration : after the inauguration of the hotel the promotion of the hotel can be done byi. Food Festivals : food festivals should be held with wide publicity from time to time ii.Discounts.: certain discount will be given to selected groups like : -Children below the age of 5 - regular guest -Educational tour groups - VVIPS


A complimentary fruit basket and cookies canbe provided for teh residential guest. Special service are provided for VIPs and VVIPs

ROOM SERVICE

The room service will operate 24 hours. They will have a slightly concise form of the coffee shop menu.

BUSINESS CENTER

A well equipped business centre will be incorporated to provide services to all machine, OHP, etc.

FRONT OFFICE

As front office is a critical department in a hotel in view of its revenue generating capacity and influencing hotel image. This department will contain a reception, cashier, telephones, bell desk and reservation office.

LOBBY

The lobby will be aesthetically decorated. It will be furnished with sitting arrangement. There will be two elevators in the lobby.

FOOD AND BEVERAGES PRODUCTION

This department will handle the production of all F & B items. The food will be nutritionally prepared and aesthetically presented.

HOUSE KEEPING

The housekeeping office will be situated in the basement area. This department is very important to upkeep the hotel the hotel. The laundry comes under this department.

PERSONNEL DEPARTMENT

This department controls the staff in the hotel and also controls the administration of the hotel. Its office is located in the basement.

ENGINEERING AND MAINTENANCE

This department is responsible for the maintenance of furniture, fixture and for rectifying faults in electric equipments, etc. This department will be situated in basement.

ACCOUNTS DEPARTMENT


This department handles all different accounts of all departments in the hotel and settles them accordingly. This department will be situated in the basement area.


CHAPTER 6

RECOMMENDED MARKET MIX


Chapter – 6Recommended Market Mix

The data collected in Lucknow helps to show that a 100 room 3 star hotel is commercially feasible, located in Gomti Nagar Lucknow

To endure a successful promotional strategy, it is essential to implement the 7 P’s of marketing in the most efficient names the main purpose of strategy option is to create and maintain demand for the facilities in the proposed hotel.

The 7 P’s are

PRODUCT

PRICE

PLACE

PROMOTION

PEOPLE

PROCESS

PHYSICAL EVIDENCE

PRODUCT

The hotel will be well equipped with all the necessary items.All the rooms will have necessary items and few rooms will also offer extra services.Hotel will have a coffee shop and a specialty restaurant.

PROPOSED HOTEL

Land area required :65,000 sq. Ft.

Total built-up area :45,390 sq. Ft.

Expected clients tourists, business & holidays

Types of room Double rooms-90

Suite Rooms-10

Total-100


The balance requirement of manpower is adjusted by appointing trainees from various hotel management institutes of lucknow and other states. In marketing planning , we use market information to access situation.We have to select specific marketing target for each segment on sub division of the market. We formulate a combination of marketing programming to reach a particular target on maket segment .The combination of these marketing methods on devices is known as the marketing mix , as well as a target market for whom the market mix is prepared. The basic elements on

Variables that make up a marketing mix are as follows :

1. Place

2.Product

3. Price

4.Promotion

These four p’s of Marketing are closely interrelated. Another way the marketing mix to the blending of these four ingredients.

1.PLACE: By place we mean that selection of the best location for the hotel. The location is considered as one of the most important decision . Considering various barometers connected with choosing of the location a suitable suite was finalized . The site for the construction of the proposed hotel is located in Gomti nagar , Lucknow .

Distance From Important Location

Airport -18km

Bus stand-12km

Railway station -12km

Main market -10km

The place selected for the proposed project is also very calm and not very densely populated, so it gives privacy and peace to the guest .

PRICE: The pricing of a room may play an important role and with so much of competition already existing . One has to be very carefull without letting the hotel image suffer , initially the rates should be kept lower to attract customers who are economy minded and tourist.

PLACE:By place we mean the best location for the hotel. The location decision is considered to be one of the most important decision which can make or break a hotel. In the hospitality business therefore location decision have a prime place . Keeping this in mind the prime location for the hotel is Lucknow which is near to ISBT and AIRPORT.


PEOPLE: The staff employed will act as an image builder of the hotel . Therefore there are required to have an impressive personality . A well dressed , articulate, efficient staff reflects the food standard of a hotel . The sales person of the hotel are ones , who market the hotel . Therefore it is necessary to recruit well trained staff for managerial position. Person with suitable qualification should be recruited.

PROMOTION: Under the promotion category following are considered :

1.Advertisement

2.Personal Selling

3.Sales Promotion

4.Publicity and Public relations

In todays world advertising is very important to have business. This can be done through media . Media can be of different types:

a)The personal selling efforts can be achieved by appointing sales executives and guest relation executives. They can contact companies , VIP’S , officials or heads of institutions , along with coloured brochures , leaflets, etc of hotel property.

b)The sales promotion effort can be advocated through incentives like food , package towns , transport with discount .

As regarding publicity it is recommended that once the decision is taken there should be a grand foundation laying ceremony when the hotel is ready for operation.

PROCESS: Marketing has to follow a set procedure associated with the operation of the hotel. They have to be very systematic for efficient and effective service.

PHYSCAL EVIDENCE: This deals with creating a congenial environment for both guest and staff. This will include the layout , working condition, architecture , proper space utilisation with locality , type of hotel, etc.


CHAPTER 7

CONCLUSION


CHAPTER 7

CONCLUSION

Tourism is one of the fastest growing and the largest industry in the world. It had tremendous potential for earning foreign exchange. Yielding tax revenue, providing employment and promoting the growth of backward region. The objectives of this report are to find out whether a 3 star hotel will be feasible in Lucknow or not. This was done by survey to find out the potential demand of 3-star hotels as well as the study on the already existing supply.

So this project is undertaken to find out the feasibility of the proposed hotel. According to the survey on the demand analysis it has been noted that a 122 room hotel is feasible. Hence a hotel with 100 rooms has been proposed. This proposed hotel will be having the best facilities, which are up to the best standards provided in the industry.


FINANCIAL VIABILITY OF THE PROJECT


CHAPTER 8

INTRODUCTION TO THE FINANCIAL ASPECTS OF THE PROPOSED PROJECT


CHAPTER – 8INTRODUCTION TO THE FINANCIAL ASPECT OF THE PROPOSED PROJECT

Name of the industry : 3 Star Business Hotel

Location : Gomti Nagar Lucknow

Name of Hotel project : The BLUE LOTUS

Room statement : Total no. Of rooms - 100

1st floor : Double Rooms - 30

2nd floor : Double Rooms - 25

: Suites - 02

3rd floor : Double Rooms - 20

: Suites - 03

4th floor : Double Rooms - 15

: Suites - 04

TARIFF STRUCTURE

TYPE OF ROOM SINGLE OCCUPANCY DOUBLE OCCUPANCYDOUBLE 2500 2750SUITES 3700 3700

Note : 1) Service charges of 6% on food and beverage 2) 15 % luxury tax on room

All Public Area : Ground Floor

All Guest Rooms : 1st , 2nd , 3rd and 4th FloorFACILITIES PROVIDED


Restaurant – DA WATE KHAS (Awadhi Cuisine) AND MINGS GARDEN (Chinese Speciality)

Coffee Shop – MOKSHA

Bar - MEHFIL

Banquet Hall - BALL ROOM, GUFTAGOO

Channel Music System

Centralized AC

Shopping Arcade

Travel Desk

Bank

Locker

Health Club

24 Hours Room Service

Cable TV

Parking

Laundry

Double Rooms and Suite Rooms

Capsule Elevator

Managing finance is essential for the firms or business concerns , because finance occupies a very important role in any business enterprise. As an entrepreneur he has to have the capacity and efficiency in managing different kinds of finance. A complete study of financial management determines the financial viability of an industry with the help of concepts of financial management and the organizer takes the decision for the industry. The decision can be investment decision, financial decision and dividend decision. So far investment decision has been converted to indulge long term and short term investment within the industry. It also includes different types of cost and expenditure.

The financial decision includes the decision pertaining to management of capital during the long run and short run. Thus anytime an industry needs two types of finances :

1) Long term finance2) Short term finance


Long term finances includes borrowing from financial, using funds from share, etc. The short term includes the management of working capital. Analysis has to be made with majority long term finance and short term finance. With regards to this certain management concepts have been used in this project to arrive at the financial viability pertaining to the proposed hotel. The concept used all debt equity ratio, revenue and expenditure, operating profit, return on investment, net cash flow chart determining through making provision for depreciation, taxes, interest on loans, break even analysis, break even percentage to analyze whether the entrepreneur can survive in the business or not.

It is not only enough if the entrepreneur manages long term finances but he also has to manage day-today expenditure in his firm. This has to be studied under the concept of working capital management which includes the statement called funds flow statement comprising of sources and application of funds. Apart from this, the financial management satisfies the entrepreneur in achieving his target not only in short term but also over a period of time.

With the above said information I would like to determine financial viability of a 3 star hotel in lucknow called BLUE LOTUS.Any firm or industry needs to be studied under the condition of the financial surroundings ,financial management plays a very important role in the financial viability of this project. This is possible with reference to the performance of the industry in the revenue earning,expenditure incurring , working , capital , etc.

Financial managementIs manly concerned with the procuring funds in the most economic and productive manner deploying the funds in the most profitable way in the given situation , planning, future operation, and controlling current and future performance and development through different tools . the key bjective of financial management is to maximise the value of the copany regarding the investment, dividend and current assets

Financial decision The decision whether the entire capital should be raised from the equity capital or a part of it is to be raised from loans

Investment decision

It is concerned with how much the company should invest in what project

Current asset management

It is necessary for maintenance a balance between current assets and current liabilities.


Dividend decision

it is basically a financial decision . this is so because profit is source of fund. The dividend decision is a comprehensive decision between paying reasonable dividend and rating balance profit in revise.

Debt service coverage ratioIt is the ratio whih shows whether the revenue covered every year after statutory deduction are efficient to service the debt. In other words , if the break even point is not attained its an indication of profitability in the business , such as a situation will have o be maintained for the future year to come.

OPERATIONAL DEFINATIONS

Cash flow and fund flow statement

It refers to the rearrangement of the various financial data as to clearly indicate the various sources from which there is inflow of cash and fungs and the purpose for which they are applied.

Ratios

A ratio is a numerical value which exposedin the form of co-efficient percentage or as proposition.

Returns on investments

It refers t the ratio which indicates the profit that will be earned every year when compared to the investment in the project


CHAPTER-9

COST OF PROJECT


CHAPTER-9

COST OF PROJECT

ANALYSIS AND INTERPRETATION

The current chapter deals with the analysis and interpretation of the collection data . financial tools such as ratio analysis, the funds flow statement, the breake even analysis suchsimilar analytical tools have been made to arrive at a clear and accurate understanding . facts are observed from the analysis, interrelated descriptively for the understanding of the project concepts The analytical asprects of the project study begins with the cost of the project and means of financial and proceed on with the estimation of revenue and expenditure for six years into the future while also providing a fair understanding of the working capital requirements , to understand the depreciation of fixed assets , the statement of profitability and return on invest and the likes

ESTIMATED COST OF PROJECT

PARICULARS Rs. in lakhs Cost of land 1484.00Building and civil work 395.15Plant and machinery 140.85Furniture and fixtures 45.02Miscellaneous fixed assts 14.25Margin for contingency 91.82Preliminary and pre-operation expenses 41.38TOTAL COST OF THE PROJECT 2213


CHAPTER-10

MANPOWER REQUIREMENT


MANPOWER REQUIREMENTS

The success of any service department depends to a large extent on the manpower and the productive of its, work force. Success is personal management might be attached only with good planning.

The shift time for the personal hotel will be :

Morning shift : 7am to 4pm

Afternoon shift : 3pm to 12am

Night shift : 11pm to 8am

The manpower of the hotel will be disturbed as below

ADMINISTRATIVE

General manger -1

Assistant manager-1

PA to General manager -1

Total- 3

FRONT OFFICEFront office manager 1Lobby manager 1Bell captain 1Bell boys 4Telephone operators 2Telephone supervisor 1Front office assistant 2Total 12


FOOD AND BEVERAGE (PRODUCTION)

Executive chef 1Sous chef 2Chef de partie 5Commis 20Total 28

FOOD AND BEVERAGE (SERVICE)F&B manager 1Restaurant manager 2Banquet manger 2Captains 4Stewards 16Barmen 3Total 25

ROOM SERVICE

Room service manager 1Rom service order taker 3Steward 6Total 10

HOUSE KEEPINGExecutive housekeeping 1Assistant house keeper 1Floor supervisor 4Linen room supervisor 2Uniform room supervisor 2Housekeeping stores 1House men 15Gardeners 2Total 28


KITCHEN STEWARDING

Kitchen stewarding supervisor 1Assistant kitchen stewarding 1Dish and pot washers 4Total 6

ENGINEERING AND MAINTENANCE

Chief engineer 1Technicians 5Total 6

SECURITY

Chief security manager 1Security personal 4Door man 2Total 7

SALES AND MARKETING

Sales and marketing manager 1Executive 2Assistant 2Total 5

PERSONAL DEPARTMENT

personal manager 1Assistant personal manager 1Assistant 2Total 4


ACCOUNTS DEPARTMENT

Accounts manager 1Cashier 2Clerks 2Total 5

PURCHASE DEPARTMENT

Manager 1Assistant 2Total 3

TOTAL NO. OF EMPLOYEES = 144


CHAPTER-11

SALES REVENUE


CHAPTER-11

SALES REVENUEESTIMATED SALES REVENUE FOR SIX YEARS

The fooling illustrated table shows the estimation from different sources for the six years of operation under varied occupancy. The revenue generating areas of the hotel are the rooms which gives the maximum sales followed by revenue generating areas are the travel desk , book shop, laundry, florist, etc.

70% of the revenue is expected from the rooms ,25% from the F&B outlets and rest 5% from the other revenue generating areas . majority of the revenue apprx. 65% comes from the standard rooms and 35% from the suite rooms

SALES REVENUE (IN LAKHS)

Years I II III IV V VIOccupancy % 60 65 70 75 80 90Double room 486 522 567 603 648 729Single room 534 574 623 663 712 801Suite room 79 86 93 99 106 119Total (a) 1099 1182 1283 1365 1466 1649Coffee shop 146.89 150.32 152.50 159.54 164.93 170Speciality restaurant 144.75 159.62 161.8 165 169.43 171.28Bar 187.71 199.83 219.17 280.34 338.92 392.86Banquets 96.61 108.14 132.17 176.18 265.19 315.23Room service 63.58 87.24 105.83 169.13 239.28 296.45Total (b) 347.9 395.21 457 645.45 842.39 1004.54Laundry 39.74 49.97 59.05 63.6 65.83 68.24Health club 15 16.9 17.93 18 18.47 19.04Car rental 14.485 18.17 21.47 23.12 23.97 24.78Shopping arcade 13.75 14.21 14.98 15.64 16 16.96Business centre 18.06 22.17 26.84 28.91 29.9 30.97Travel desk 13.75 14.21 14.98 15.64 16 16.97Others 15 16.9 17.93 18 18.47 19.04Total (a+b+c) 1518 1668 1847 2125 2428 2778


CHAPTER-12

OPERATIONAL EXPENSES


CHAPTER-12

OPERATIONAL EXPENSES

ESTIMATED OPERTAING EXPENDITURE FOR SIX YEARS

The table illustrate different levels of expenditure for the first six years of the operation. The cost revenue ratio is estimated from figures available from the industry. It can be noted that the cost percentage are based on the fourth and sixth year. This is due to the maintenance and refurbishment cost which is expected to occur at the end of this year

However , the bank overdraft brings an additional in expenditure for the firm as interest which is payable per annum

INTERPRETATION

The above table shows the statement of expenditure for six years. This calculation is used to calculate the net expenditure during the year.A certain percentage of sales is taken to calculate the expenditure like fuel, water, telephone , F&B cost , maintenance cost, various taxes , etc.,The total of all expenditure is taken and later subtracted with the revenue to get the profitable statement.

YEAR I II III IV V VIOccupancy 55% 65% 70% 80% 85% 90%ITEMFuel 25.29 39.97 55.83 64.75 69.46 70.01Water 11.38 17.99 25.12 29.14 31.25 33.45F&B cost 45.53 71.96 100.56 116.56 125.03 133.81Telephone 12.64 19.99 27.91 32.37 34.73 37.17Electricity 13.91 21.98 30.71 35.61 38.20 40.88Maintenance 17.70 27.98 39.08 45.33 48.62 52.03Wages 25.29 39.97 55.83 63.75 69.46 74.34Admn/marketing 26.59 29.84 48.56 59.00 64.58 72.34Replacement 35.41 55.96 78.17 90.66 97.25 104.07Repairs 15.71 23.98 33.50 38.85 41.67 44.60Corporation/Tax 18.71 29.98 41.87 48.56 52.09 55.75Misc expenses 6.32 9.99 13.95 16.18 17.36 18.58

Total 252.96 399.78 558.37 647.58 694.66 743.40


CHAPTER-13

WORKING CAPITAL REQUIREMENT


CHAPTER- 13

WORKING CAPITAL REQUIREMENTWORKING CAPITAL REQUIRED FOR SIX YEARS

The working capital funds are planned to be met partly by banks as overdraft and partly by promoters. A months capital requirement for raw material is estimated to be 15% and F&B cost at the corresponding year

Half of this is planned to be the raised as bank overdraft and half to be met by promoters.

Corresponding year and to be borne at 50% overdraft and 50% promoters funds 20% of teh months

revenue is expected to be from the credit sales and thus shares between bank and promoters ta a

proportion of 4:1

The salaries and wages expenditure has o be met by the promoters itself. The liquid cash portion,

which is 1 lakh also has to be raised by the promoters fund.


Year Bank

Owner

Ratio

Raw

Material

Bills

Receivable

& Wages

Salaries Cash

Flow

Rs. in Lakh

1:1 4:1 0:1 0:1

1st year Bank

11.66

Owner

8.84

Total

2.7

2.7

5.4

8.96

2.24

11.20

3.78

3.78

0.12

0.12

11.66

8.84

20.50

2nd year Bank

Owner

3.29

3.29

10.32

2.58 3.78 0.13

13.61

9.78

3rd year Bank

Owner

Total

3.91

3.91

7.82

2.95

2.95

14.76

3.78

3.78

3.78

0.14

0.14

0.14

10.78

10.78

26.50

4th year Bank

Owner

Total

4.59

4.59

9.17

13.85

3.46

17.31

4.16

4.16

0.15

0.15

18.44

12.36

30.79

5th year Bank

Owner

Total

5.29

5.29

10.58

16.02

4.00

20.02

4.16

4.16

0.16

0.16

21.31

13.61

34.92

6th year Bank

Owner

Total

6.52

6.52

13.04

17.25

4.47

22.57

5.01

22.57

0.17

0.17

22.83

14.50

37.84


CHAPTER 14

FINANCING THE PROJECT


CHAPTER 14

FINANCING THE PROJECT

MEANS OF FINANCE

ICICI@ 16% pa - 1438.45 lakhs

SHARE CAPITAL - 221.3 lakhs

PROMOTORS - 331.95 lakhs

Government subsidy - 221.3 lakhs

DEBT= Rs. 1438.45 Lakh (term loan from ICICI)

Equity= (Subsidy+ Unsecured loan+ Promoters Capital)

=(221.3+221.3+331.95) = 774.55

a) Debt Equity Ratio (D.E.R) : 1438.45: 774.55= 1.85: 1b) Break Even Point (B.E.P) : 24%

ESTIMATION OF INCOME

Items 1st year 2nd year 3rd year 4th year 5th yearOperating levels

65.00% 70.00% 75.00% 80.00% 85.00%

Room Sales 1099 1182 1283 1365 1466F & B Sales 323.93 394.28 469.02 550.08 634.91General Stationery

2.40 2.40 2.50 2.70 2.76

In-house service

38.32 43.21 49.64 56.65 63.80

Health Club 29.20 35.51 43.80 53.33 60.22Total In Lakhs 1492.8 1657.2 1848 2027.76 2227.6


CHAPTER 15

PROFITABILITY STATEMENT


CHAPTER 15

PROFITABILITY STATEMENT

STATEMENT OF PROFIT PROFITABILITY AND CASH FLOW

This table illustrates the profits and also the cash position at the end of the year.

Depreciation in all fixed assets is calculated by diminishing the value method ( W D V-

Written Down Value Method). This is written off at the rate of 15% per annum on building

and structures, 33.3% per annum on miscellaneous fixed assets.

The term loan and unsecured loans are to be paid back in 7 years after starting the

operations, owing to fluctuating occupancy rates and expenditure levels, by which time the

business is expected to have stabilized.

The balance amount would be paid back in the following years by which time the business

would be stabilized.

The income tax payable is 40% on profit before tax with 8% surcharge on tax.

The preliminary and pre-operative expenses made during construction period is to be

written off in the first 10 years of operation.

A higher degree of depreciation and interest rates cause a project loss in revenue and due to

this, income tax and profit before tax are the loss in the first year.

On the other hand the depreciation that is accounted does not affect the fund position. All

this results in a higher level of net cash flowing in the first year.


Items 1st year 2nd year 3rd year 4th year 5th year 6th year

Operating

profit

1265.04 1268.22 1288.63 1477.42 1733.34 2034.6

Interest on

long term

loan

230.18 191.68 153.38 115.02 76.67 38.2

Depreiciation

chap- XII

77.66 58 45.65 36.14 29.68 25.04

Preoperative

&

preliminary

expenses

written off

41.38 41.38 41.38 41.38 41.38 41.38

Interest on

Unsecured

Loan

44.26 35.4 28.32 22.56 18.14 14.5

Profit before

tax

868.94 938.7 958.48 1280.74 1562.68 1910.41

Tax 40% 347.58 375.48 383.29 512.29 625.07 764.16

Surcharge

(8%)

27.8 30.03 30.67 40.98 50 61.13

Profitable tax 549.16 593.25 605.86 809.43 987.61 1207.38

Depriciation 77.66 58 45.65 36.14 29.68 25.04

Preoperative

&

preliminary

expenses

41.38 41.38 41.38 41.38 41.38 41.38

Available

surplus

668.2 692.63 693.1 886.95 1058.67 1273.8

Long term

loan

instalment

230.18 191.68 153.37 115.02 76.67 38.2

Unsecured 44.26 35.4 28.32 22.56 18.14 14.5

loan

Net cash

flow

393.76 465.55 511.41 749.37 963.86 1221.1


CHAPTER 16

CASH FLOW STATEMENT


CHAPTER 16

CASH FLOW STATEMENT

Source of

find

Construction

(3 year

period)

1st year 2nd year 3rd year 4th year 5th year

Promoters

contribution

331.95

Long term

loan

1438.45

Share capital 221.3

Govt subsidy 221.3

Gross profit 393.76 465.55 511.41 749.37 963.86

Depreciation 77.66 58 45.65 36.14 29.68

Preoperative

&

preliminary

exp.

41.38 41.38 41.38 41.38 41.38

Total in

Lakhs

2213 512.8 564.93 598.44 826.89 1034.92


CHAPTER 17

COST BENEFIT ANALYSIS


CHAPTER 17

COST BENEFIT ANALYSIS

Cost benefit analysis

a) Total fixed assets Rs. 2079.27

Add :- total working capital Rs. 1233.64

TOTAL (A) Rs. 3312.12

Total sales for 6 years= Rs. 12364 lac

Less:- a) Cost of F & B expenses (for 6 years) Rs. 5173.04

b) Cost of fuel (for 6 years) Rs. 345.18

c) Cost of power (for 6 years) Rs. 431.5 Rs. 5949.72

TOTAL(B)= Sales – (a+b+c)= 6414.28

C. Capital intensity of a project

C= B/A

= 6414.28/3312.12= 1.94

MORE THAN 1 IS BENEFICIAL FOR THE ECONOMY

LESS THAN 1 IS NOT BENEFICIAL FOR THE ECONOMY


CHAPTER 18

BREAKEVEN ANALYSIS


CHAPTER 18

BREAKEVEN ANALYSIS

BREAK EVEN ANALYSIS

It is a study of cost revenue and sales. It finds out the volume of sales required by the firm cost and

revenue to be equal. The break even point is the point when the net incomes zero. It is a situation of

no profit and no loss.

The Break even analysis explains to us the relationship between cost revenue and output that helps

a firm sell to its full competence. This analysis forms an important bridge between the plans of the

firm and business behaviour.

LIMITATIONS OF BREAK EVEN ANALYSIS

This analysis has a number of limitations as the data collected is not on the cost and revenue

functions. The limitations are as follows:-

If in static, everything is sold at constant selling price but in reality larger volumes may not

be sold at same price.

The way future is projected with the part is not correct.

Factors like technological changes, improved management have been overlooked.

The cost revenue output relation is linear which is true for a small volume of

output.Assumed for the 3rd year operation occupancy= 75%

Sr. No. Particulars Rs. in lakhs1. Estimated revenue 18482. Fixed costs (fixed overheads)

a. Power 40%b. Salaries and wagesc. Interest on long term

loand. Insurance and legal

exp.

17.7145.28153.38

1.77

e. Depreciationf. Advertisement and

publicityg. Administration &

general expenses

45.6588.54

17.71

TOTAL 370.043. Variable cost

a. Raw materialb. Electricity and power

60%c. Repairs and

maintenanced. Interest on working

capitale. Misc expenditure

187.6028.40

10.00

3.54

50TOTAL 279.54

4. CONTRIBUTION TOWARDS OVERHEADS

= Income- Variable Cost

=1848-279.54= 1568.5

5. BREAKEVEN POINT

= [ Fixed overheads/Contribution] x 100

=[ 370.04/1568.5] x 100

=24 %

6. ABSOLUTE BREAKEVEN POINT

= [ Breakeven point x % of occupancy] / 100

= 18


7. BREAKEVEN TURNOVER

=[ estimated revenue x absolute breakeven] / 75

= 443.52 ( Rs. in lakhs)


CHAPTER 1 DEBT SERVICE COVERAGE RATIO


CHAPTER 19

DEBT SERVICE COVERAGE RATIO

DEBT SERVICE COVERAGE RATIO ( DSCR) for the year is calculated by dividing the total coverage including tax, depreciation, preliminary and pre-operative expenses by the total debt from first year to sixth year. The average DSCR is calculated by dividing the total of all debt ratios by six. Thus average DSCR comes out to be

Coverage-A 1st year 2nd year 3rd year 4th year 5th year 6th yearProfit before tax

549.16 593.25 605.86 809.43 987.61 1207.38

Depriciation 77.66 58 45.65 36.14 29.68 25.04Interest on long term loan

230.18 191.68 153.38 115.02 76.67 38.2

Preliminary and preoperative expenses

41.38 41.38 41.38 41.38 41.38 41.38

Total 898.38 884.31 846.27 1001.97 1135.34 1312

Coverage -B 1st year 2nd year 3rd year 4th year 5th year 6th yearInterest on long term loan

230.18 191.68 153.38 115.02 76.67 38.2

Instalment on long term

239.7 239.7 239.7 239.7 239.7 239.7

Total 469.88 431.38 393.08 354.72 316.37 277.9

Average DSCR= Coverage A- Coverage b

= 6078.27/ 2243.33= 2.7

It is more than one so it is beneficial.


CHAPTER 20

SENSITIVITY RATIO


CHAPTER 20

SENSITIVITY RATIO

Sensitivity Ratio

A. Change in income for 1% change in occupancy= income (3rd year)/ occupancy (3rd year)= 1847.0/ 70= 26.38

B. Change in cost for 1% change in occupancy= variable cost (3rd year)/ Occupancy (3rd year)=558.37/ 70=7.97

C. Sensitivity in income for 1% change in occupancy=A/ B= 26.38/ 7.9= 3.3


CHAPTER 21

CONCLUSION


CHAPTER 21

CONCLUSION

Conclusion

Lucknow is a heritage city which is developing at a very fast rate and provides an immense potential for growth an all sectors specially in hospitality.

The proposed hotel is to be constructed in Gomti nagar. The total cost of the project is estimated at Rs. 2213 lakhs. There are 100 rooms out of which 90 are double rooms and 10 are suite rooms. The hotel also provides facilities like coffee shop, conference hall, speciality restaurant, bar, travel desk, business centre etc.

The estimated income and expenditure have been arrived by keeping in view the economic cost in which service can be offered to the prospective customer. The debt equity ratio is 1:85:1 a well combination of debt and equity finance. The ratio of depreciation of assets and preliminary and preoperative expenses has been kept down fairly reasonable limit, which should prove to be satisfactory.


ANNEXURES


ANNEXURE 1

Land and site development

1) Total land area = 65000 sq fta) Cost/ sq ft = Rs. 2200b) Levelling, gardening,

fencing, gates etc. (6% of land cost) = Rs. 1337837.9 c) Registration & conversion charges = Rs. 4136148.8

(17% 0f land cost)

TOTAL = Rs. 148473986.7


ANNEXURE 2

Building & other civil works

1) Cost of construction, electrification, =super built up area x cost/ sq ftDrainage, plumbing etc = 38974 x 1000 =Rs. 38974000

2) GardenTotal garden area x Rs. 30 = 1710 x 30= Rs. 41300

3) Tanks = Rs. 500000

TOTAL = Rs. 39515000

.


ANNEXURE 3

Furniture and Fixture Rs(in lakh)

1 Double Room =22.40

2 Suites =5.69

3 Restaurant =3.09

4 Bar cum Restaurant =1.70

5 coffe shop =2.19

6 room service =0.42

7 banquet bar =2.84

8 stores, purchasing&H/k =0.99

9 Administration Office =1.18

10 Reception and lobby =2.69

11 reception and lobby =1.52

12 staff cafeteria =0.35

Total =45.020


ANNEXURE 4

Plant and Machinery Rs

1. Lifts (2no.) @6,00,000 =12000002. Lifts (1 no.) @10,00,000 =10000003. Generators 1no =1000004. Transformers =1000005. Stand by generators =500006. Stand by transformers =500007. Borewell and pumps =1000008. Transportation and vehicles =15000009. Boilers 2 no @1.5 lakh =15000010. Deeps , exhaust and coolers =50000011. AC centeralised =200000012. CCTV and music =50000013. Fire fighting equipment =10000014. Administrative and p &m =150000015. Kitchen equipment =5385000

Total =1,40,85,000


ANNEXURE 5

Miscellaneous Fixed Assets (FA) Rs. (in lakhs)

1 Restaurant = 0.662 Bar = 0.503 Coffee Shop = 0.33 4 Banquets = 0.815 Double Room = 6.326 Suite Rooms = 2.927 Kitchen Stewarding = 1.848 Staff Cafeteria = 0.069 Housekeeping = 0.8110 Machinery = 0.8011 Staff uniform = 1.84

TOTAL = 14.25


ANNEXURE 6

Margin of Contingencies Rs.

1. Cost of Land and Site development = 275,00,0002. Building & other civil works = 395,15,000 3. Furniture and fixture = 45,02,0004. Plant and machinery ( P & M) = 140,85,000 5. Miscellaneous fixed assets (FA) = 14,25,000

TOTAL = 918,20,00010% of FA = 91,82,000


ANNEXURE 7

Preliminary and preoperative expenses (PL & PO) Rs. ( in lakhs)

1. Salaries and wages = 11.322. Loan possessing and application fees = 1.253. Project and report fees = 1.004. Registration and establishment fees = 1.505. Insurance adds 1.45% = 8.426. Advt. & publicity deposit = 2.507. Electricity board = 1.008. Telephone = 0.959. Water supply board = 1.8510. National saving certificate = 1.2511. Misc. Expenses = 1.5012. Margin for working capital = 8.84 TOTAL = 41.38


ANNEXURE 8

Repayment of long term loans

Term loan from ICICI @ 16% p.aTotal loan amount = 1438.65/6

Instalment/ year = 239.7 lakhs

Year Loan amount Instalment Interest @ 16%1st 1438.65 239.7 230.182nd 1198 239.7 191.683rd 958.6 239.7 153.374th 718.9 239.7 115.025th 479.2 239.7 76.676th 239.5 239.7 38.2


ANNEXURE 9

Statement of depreciation for 6 years

Description 1 2 3 4 5 6Building & other civil works (5%)

430 375.25 356.49 338.69 321.76 305.68

F & B(15%) 45.02 38.29 32.55 27.67 23.52 20P & M(33%) 140.85 94.37 63.23 42.37 28.39 19.03Misc FA(33%)

630.12 517.46 458.67 412.02 375.88 346.2


ANNEXURE 10

Details of unsecured loan repayment Unsecured loan amount = 221.3/6

Installment/year = 36.83

Year Loan amount Installment Interest(20%)1 221.3 36.83 44.262 177 36.83 35.43 141.6 36.83 28.324 113.28 36.83 22.565 90.72 36.83 18.146 72.58 36.83 14.5

Documents

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