C&W Hospitality Report - The Voyage

A R E S E A R C H P U B L I C AT I O N | J A N U A RY 2 0 0 9
I N D I A R E P O RT
THE VOYAGE
An exploration of key hospitality markets in India
INDIA THE VOYAGE - An exploration of key hospitality markets in India
R E P O RT
A RESEARCH PUBLICATION
CONTENTS
1 Executive Summary 22 Research Findings

2 The Journey So Far 29 Concerns & Challenges
4 Travel & Tourism Industry in India 30 State Rankings
4 Fuelling Factors 33 Results of Ranking Exercise
6 City Overviews 34 Conclusion
EXECUTIVE SUMMARY
India's cultural diversity, weather, history, natural Indian cities, along with assessment of the
offerings as well as people together contribute external drivers and potential industry factors
towards propagating the country's positive impacting the industry. The demand drivers for
brand image across the world. While the recent the industry are assessed by examining closely
uncertainty in the economy has affected the related factors like existing hotel room stock,
hospitality industry at large, India still remains availability of new hotel properties, human
one of the world's fastest growing hotel resource availability, policy administration,
markets. With an overall increase in leisure and investment for infrastructure development and
business travellers over the past few years, socio economic climate.
India's hospitality industry has attracted global
As domestic and international travellers get
attention. A buoyant domestic economy, the
more apprehensive about security in key Indian
government's open sky policy, an overall real
cities, occupancy rates and room tariffs are likely
estate boom, initiatives to liberalise foreign
to drop in the short term. This can be
investment and especially the Tourism Ministry's
substantiated by the recent official estimates
efforts together contributed to healthy demand
released by MoT stating the drop in overseas
for hospitality space in major cities across India.
visitors to the country in November 2008 by 2.1
The overall contribution of travel and tourism percent as compared to November 2007. Over
to the national economy is estimated at the next few years, occupancy rates are
approximately 5.3% annually. It is expected that expected to witness a fall in light of the current
by the year 2020, tourism related activities in economic scenario as well as the anticipated
India will contribute approximately INR 8,500 over supply situation in a select markets.
billion to the GDP. As the industry constitutes
The report analyses the performance of 20
various other related sectors, such as hotels,
states and union territories to provide a
hospitals, aviation and shipping among others, it
cumulative ranking of the top 5 states
acts as a multiplier towards overall revenue
considering four broad parameters namely
generation.
Economic Drivers, Demography, Infrastructure
This special report endeavours to understand and Tourism.
the existing and projected hospitality sector's
We hope to have been of substantial assistance
performance in three categories namely Up-
to our readers through this special report.
scale, Mid-scale and Budget hotels across 11
INDIA REPORT | JANUARY 2009 1

R E P O RT
THE JOURNEY SO FAR initiatives and increased investor interest, which

has been too evident in the last two years,
Over the last decade, the intensified rush to
across all asset classes including the hospitality
India for tapping business opportunities had a
industry, the current financial crisis has brought
ripple affect on several sectors that made hay in with it, a slow down in the industry's growth
the sunshine. It was good news for India's prospects over the short to medium term. The
hospitality and tourism industry which boasts of present economic conditions have led to
diversity in culture, weather, history, nature's adversaries such as project delays and in some
offerings as well as people. From a growth driver cases even cancellation of projects, thereby
perspective, while the current uncertainty in the impacting the upcoming hospitality supply to a
global financial market, along with the credit large extent.
crisis, in its aftermath, has adversely affected
businesses', India's inherent potential and appeal Over the years, this sector has been faced with
as a tourist, medical and heritage site remains multiple challenges, primary being the individual
Another micro unaffected. The sector is actively leveraging its city level supply-demand disequilibrium in hotel
factor affecting the rich historical background and diversified culture rooms.Yet another micro factor affecting the
industry's growth to graduate from being a relatively smaller player industry's growth rate is an overwhelming
rate is an to a higher position in the global hospitality preference for budget category hotels amongst
overwhelming arena. price sensitive corporate/customers. However,
preference for major developers have taken a different stand
budget category Quick Facts announcing plans to develop 5 star deluxe, 5 star
hotels amongst price India
l is the world's fifth most popular tourist
and 4 star category hotels primarily across Tier 1
sensitive corporate/ destination according to the World Travel and and 2 cities rather than budget hotels.
customers. Tourism Council.1 Occupancy rates for hotels Anticipation of tying up with international
in India are among the highest in the world. operators and better brand image, better
From about 8 to 9 branded hotels in 2000, India opportunity to attract funding from investors
will be home to approximately 40 hotel brands and higher prospective of an early break-even
by 20112. have initiated many developers to enter the
Average
l Room Rate (ARR) for Delhi and hospitality asset class.
Mumbai are comparable to that of global cities
such as New York, Singapore and Hong Kong. The overall tourism activity in India during 2007
ARR in India had doubled in the period between had remained healthy. Much as Low Cost
2003-07. Approximately USD 150 billion is Carriers (LCC) had revolutionised air travel in
expected to be spent over the next five years the country with no-frills services and low
on tourism related infrastructure by the airfares, budget hotels too surfaced a few years
Government3. ago with the promise to offer better, affordable,
Between
l 24,000 to 25,000 new up-scale hotel standardised and branded hotel rooms at prices
rooms are expected in major Indian cities by the matching the unorganised sector. Brands such as
year 2011 as compared to a total of nearly Lemon Tree, Indian Hotels, Ginger Hotels, ITC's
18, 000 rooms in mid-scale and budget segment. Fortune brand, Clarks Inn, Choice Hotels and
Total
l stock of hotel rooms will continue to lag Sarovar Hotels to name a few, introduced hotel
behind demand by 2011. rooms for the economy traveller. However, akin
to the budget airlines, no-frills branded hotels
Business in the hotel industry, much like any were also forced to appreciate their room rates
other sector, is cyclical in nature. Any significant on the face of escalating real estate and
change in the economy, such as the present operational costs, so much so that the tag
liquidity crisis, affects the sector resulting in 'Budget Hotel' has become a misnomer with
lower occupancy levels, delays in upcoming room tariffs crossing over INR 4,500 (USD 90)
projects and anticipated decrease in room rates. per night. In the present low-key market
Although India boasts of a fundamentally sound sentiment and the corporate sector going into a
economic system, positive infrastructure 'smart spending' mode with serious cost control

R E P O RT
measures, the travel and hospitality industry has efforts to communicate the 'Incredible India'
been adversely hit. India Inc. is now making do campaign together contributed to a robust
with tighter travel budgets, cheaper hotel stays demand for hospitality space in major cities
and shorter business tours with many across India. The 'Incredible India' campaign was
companies accommodating employees in launched in 2002 as an integrated marketing and
alternate accommodations like guesthouses and communication effort to promote India as a
serviced apartments instead of star category destination across the world and is considered
hotels. to be one of the more successful initiatives so
far. With the success of this campaign, foreign
Another recent important development has
tourist arrival increased by almost 65%, from
been the growing global concerns over security
2.38 million in 2002 to 3.92 million in 2005, while
issues in India following the recent terror
foreign exchange earnings have grown by over
attacks in Mumbai. This has resulted in
95% during the same period. In 2007 inbound
rescheduling and even cancellations of travel
tourist arrival touched 5 million, registering an
plans to India by many foreign tourists especially
annual growth of approximately 12%. Foreign
in the Tier I and II cities. This has affected not
exchange earnings from tourism for the same
only the leisure tourist segment of travellers but
period also witnessed an impressive annual
also the health and medical as well as MICE
growth of 33% from USD 9 million in 2006 to
(Meetings, Incentives, Conventions and
USD 11.96 million in 2007. In keeping with the
Exhibitions) tourists to India.
current growth rate, India's hospitality industry is
Key Statistics - India anticipated to grow at 8 per cent per annum
2008 2018 E between 2007 and 20164.
Personal Travel & Tourism 1,653 6,763
Business Travel 339 1,153 GDP Growth Vs.T&T Contribution
Government Expenditure 59 162
10%
Capital Investment 1,121 3,853
8%
Visitor Exports 552 1,743
6%
Travel & Tourism (T&T) Demand 3,890 14,680
4%
Direct Industry GDP 1,094 3,222
2%
Direct Industry Employment 13,127 16,437
0%
('000 jobs) 2003 2004 2005 2006 2007 2008 2010 P
Source: World Trade Tourism Council
GDP Growth Contribution of T&T to GDP
Despite the temporary slowdown as enunciated, Source: Indiastat

India is still one of the world's fastest growing
hotel markets. With an overall increase in leisure Over the years 'hospitality', as a service in India,
and business travellers over the past few years, has witnessed a paradigm shift with many
India's hospitality industry has attracted global international hotel chains and operators entering
attention. Hotels across all segments achieved the domestic market, enabling new business
healthy occupancy levels until end-2007. prospects for established corporate firms and
A buoyant domestic economy, the government's entrepreneurs alike. Though they operate in
open sky policy, an overall real estate boom, different domains the hospitality sector by and
initiatives to liberalise foreign investment and large shares a direct relationship with the travel
especially the Ministry of Tourism's (MoT) and tourism industry.

R E P O RT
TRAVEL & TOURISM INDUSTRY IN INDIA infrastructure, positive government initiatives on

tourism and to a larger extent India's
Tourism is an integral part of the global
emergence as an outsourcing hub.
economy and India is no exception to this rule.
This industry, by virtue of being labour According to World Travel and Trade Council
intensive, is a significant employment generator (WTTC) estimates, India's tourism demand is
and a substantial contributor towards foreign likely to grow at an average rate of 8.8% till
exchange for any nation. The Indian tourism 2013, making it the third fastest growing
industry directly contributes around 2% tourism market7 in the world. In addition, the
towards the national GDP. According to the government's move to declare hotel and
Hotel Association of India, the overall tourism industry as a high priority sector with a
contribution of travel and tourism to the provision for 100% foreign direct investment
national economy is estimated at approximately (FDI) through the automatic route has made
5
5.3% annually. this industry further lucrative for parking funds.
It is estimated that the hospitality sector could
It is expected that by 2020, tourism related
see an infusion of USD 11.41 billion8 with
activities in India will contribute approximately
around 40 international hotel brands making an
INR 8,500 billion to the GDP6. As the industry
entry into the country by 2011.
constitutes various other related sectors, such
as hotels, hospitals, aviation and shipping among
others, it acts as a multiplier towards the INDIA'S BOOMING HOSPITALITY SECTOR:
overall revenue generation. FUELLING FACTORS
Economic Factors:
Foreign Tourist Arrival Vs. Forex Earnings
Phenomenal earnings growth of 57% during 2006;
l Favourable economic and political climate
6 Positive image of the country and successful branding 14
Foreign Tourist Arrival
5 of 'incredible India 'Campaign' are the factors. 12 l Sustained GDP growth between 7.5 - 8%
10
FX Earnings
4
3
8 l Steady FDI equity inflow which crossed the
6
2 4
USD 10 billion mark in 2006-07
1 2
0
l Growth in manufacturing and services sector
0
2001
2003
1995
2005
1999
1996
2002
1998
Q1 2008
2000
2004
2006*
2007**
1997
Influencing Sector Dynamics:

FX Earnings from tourism (USD Billion)
l Surge in foreign tourists at a Compound
Foreign Tourist Arrival to India (Million)
Annual Growth Rate (CAGR) of 14% over
Source: Indiastat
the past five years
In the provisional data released by the Ministry l Rising demand for good quality
of Tourism (MoT), Travel & Tourism industry accommodation due to increased growth of
recorded an annual growth of 33% during 2007 tourist arrival (domestic and foreign) for
in terms of foreign exchange earnings in a single leisure and business.
year. The number of inbound travellers also saw
an increase in this period. Although foreign Infrastructure Play:
tourist arrivals (including business and leisure l Additional inter city air connectivity
travellers) are the prime source of revenue l Up-gradation of National Highways and State
growth, complimentary sectors such as medical Highways
tourism and MICE travel also contributed
significantly towards India's GDP. Tourist arrival l Easy accessibility to various places of tourist
is expected to increase gradually in the coming importance through massive railway network
years on account of improved overall

R E P O RT
Government Initiatives: Few of the other key government initiatives:

l
l Initiatives undertaken by the MoT to w

MoT has been proactive in sanctioning
overcome accommodation shortage: funds for various tourism projects and
w Capital subsidy sanctioned for 43 budget several initiatives have been taken up to
category hotels and interest subsidy for boost the 'Incredible India' campaign to
86 hotels. give impetus to tourism sector.
w Recognition of various home owners by
classifying their facilities as 'Incredible w
Few State governments have
India Bed and Breakfast establishments' initiated/implemented/amended tourism
under 'Gold' & 'Silver' category. policies to support the initiatives of the
Central Government:
w Acquisition of land from land owning
agencies for building hotels in Public - Harayana Tourism Policy, 2008 –
Private Partnership (PPP) model on Build, implemented
Own, Transfer (BOT) basis. - Tamil Nadu Tourism Policy Note 2008-
09 was implemented
l MoT promoted several tourism driving
concepts which also led to overall growth in w
Union Budget 2008-09 policy decisions:
this sector9: - Five-year income tax holiday to two,
w Rural Tourism: Aimed at promoting rural three and four star category hotels to
India in an effort to sustain rural be established in 27 specified districts,
traditions and pristine environments, the which have been declared as "World
move has proved to be a great getaway Heritage Sites" by United Nations
option for urban tourists. Educational, Scientific and Cultural
Organization (UNESCO). However,
w Cruise Tourism: Aimed at providing
these hotels would have to become
world-class infrastructure and related
facilities at various ports and attract operational between 1st April 2008 and
foreign tourists for cruise shipping in 31st March 2013. This measure has been
India. taken in response to the significant rise
in tourist arrivals at these heritage
w Eco-Tourism: Aimed at preserving,
sites.
retaining and enriching natural and
cultural resources for environmental
protection and community development.
w Adventure Tourism: Financial assistance is
being provided to State/ Union
Territories to set up facilities for
trekking, rock climbing, mountaineering,
aero-sports, winter/ water sports, wildlife
viewing etc.
w Medical Tourism: Medical and health
facilities available across all cities in India
are being promoted on account of world
class doctors and hospitals as less
expensive treatment.

R E P O RT
CITY OVERVIEWS The sub-segments of 2 star and 1 star category

hotels, home stays and service apartments have
The objective of this study has been to
not been considered for our study. Several
understand the existing and projected
classifications for hotel categories exist, but for
hospitality supply in three categories as
our study we have undertaken the following
mentioned below for the prominent 11 Indian
assumption for our three hotel categorisations:
cities under consideration; as well as assessing
the external drivers and potential industry Up-scale Hotels : Comprises 5 star delux
factors impacting the hospitality industry in and 5 star category
these cities. Apart from this, the state ranking hotels
has been done for 20 states based on economic
Mid-scale Hotels : Comprises 4 star
drivers, tourism, demography data and existing
category hotels
infrastructure parameters. The time period of
the study extends from the current period to Budget Hotels : Comprises 3 star
2011. category hotels
Study Structure We aim at giving a true representation of 5 star

Upcoming deluxe, 5 star, 4 star and 3 star category hotels
Prominent Hotel Existing
Cities Classification (Number (Number across these eleven cities to the best of our
of Rooms) of Rooms) knowledge and with reliable data made available
Upscale 7718 4600 in the public domain. Cushman & Wakefield
Delhi (NCR) Midscale 2967 4106 Research has mapped the existing up-scale, mid-
Budget 1795 3474
Upscale 7017 2686
scale and budget hotels in the course of this
Mumbai Midscale 2624 3336 paper and we have also tried to map the
Budget 2230 600 potential areas for future development within
Upscale 3198 5866 the cities under consideration.
Bangalore Midscale 2016 3132
Budget 3604 641
Upscale 2427 2104
Chennai Midscale 2142 1310
Budget 2910 310
Upscale 1537 3554
Hyderabad Midscale 943 1937
Budget 2608 250
Upscale 1498 2002
Kolkata Midscale 432 453
Budget 422 0
Upscale 460 1984
Pune Midscale 1135 1683
Budget 739 229
Upscale 593 867
Ahmedabad Midscale 242 366
Budget 849 150
Upscale 3192 2480
Goa Midscale 1029 435
Budget 3138 0
Upscale 567 520
Cochin Midscale 468 683
Budget 1033 120
Upscale 1965 609
Jaipur Midscale 804 1016
Budget 1312 0
Note:The choice of these cities is based on the highest tourist inflows,
according to MoT data and the data for existing and upcoming hotels has
been considered in the organised sector.
Source: Cushman & Wakefield Research

R E P O RT
AHMEDABAD Ahmedabad is a transit destination to Mount

Abu in Rajasthan which is a leisure/ holiday hill
Ahmedabad is an important trade, commerce
station. The city also boasts of few very reputed
and industry base in western India as well as
educational institutions (including IIM,
Gujarat, attracting an increasing number of
Ahmedabad) that also contribute to check-ins.
business/corporate travellers, largely on account
of increased investments within the state which Hospitality Dynamics
has prompted the state government to be
l Out of the existing hospitality stock of
proactive and upgrade the city's overall
approximately 1,600-1,800 rooms,
infrastructure. Proximity to the port at Surat has
approximately 50% fall under the budget
also enabled increased business activity within
category, followed by up-scale hotels
the city. There are few key tourist attractions
accounting for 35% of all rooms under
within the city like Sabarmati Ashram and Gir
consideration.
National Park to name a few; besides this,
l C&W research study shows Ellis Bridge,
Ahmedabad City Map
Navrangpura, Khanpur and Nehru Bridge as
Gota prominent micro-markets that have emerged
Chandkheda as potential prime hospitality sub-markets for
up-scale and budget hotels.
l Occupancy Rate in the city's hotels increased
Acher marginally from 72% in 2006-07 to 76% in
Hansol 2007-08 with increased quality supply last
Chandlodia
Ranip year. Similarly the ARR in the city has also
Ghatlodia gone up substantially by approximately 31%;
to arrive at INR 5,130 in 2007-08 as against
Sola
Shahibagh INR 3,910 in the previous year.
Memnagar Naranpura
Haripura Average Room Rate Vs. Occupancy - Ahmedabad

Gurukul
University Hirawadi
Vastrapur Area AHMEDABAD
6,000 90%
Satellite Saraspura 5,000
Occupancy Rate (%)

ARR (in INR)
4,000 60%
3,000
Fatehpur 2,000 30%
Vasana
Vejalpur Paldi Kankarai 1,000
Amraiwadi
0 0
Mani Nagar 2003-04 2004-05 2005-06 2006-07 2007-08
Juhapura CTM
Vishala ARR Low ARR High Occpancy
Source: CRISIL
Ghodasar
Upcoming Room Supply - Ahmedabad
Isanpur
10%
Narol
Vatwa
31%
59%
Upscale Midscale Budget Upcoming Supply Zone Upscale Midscale Budget
Source: Cushman & Wakefield Research Source: Cushman & Wakefield Research

R E P O RT
l Market segmentation indicates that nearly approximately 1,300-1,500 rooms across

60% of the city hotel occupants are categories. Of this estimate, approximately 63%
business/corporate travellers, while nearly is likely to be in the up-scale category followed
14% of the guests represent leisure segment. by 26% in the mid-scale category. With more
commercial and retail supply expected in a
Outlook
couple of years, the hospitality industry in the
Fresh supply addition during 2008-2011 is likely city is likely to be much more active in the years
to witness a more pro up-scale shift with to come.
BANGALORE (Bengaluru)
While ARR in Bangalore (officially Bengaluru) is home to l ARR in the city increased by a minimal 1% to
Bangalore numerous public sectors undertakings, reach INR 12,310 in 2007-08 as against INR
witnessed an annual aerospace, defence establishments, biotech as 12,200 in the previous year, while occupancy
increase of 1% in well as manufacturing setups. Besides this, rate stagnated at 74% for the past two years.
2007-08, occupancy Bangalore is also one of the leading contributors
l Nearly 76% of guests staying in up-scale and
rates have remained to India's IT/ ITeS industry; which resulted in
mid-scale hotels belong to the corporate
stagnant for the increased inflow of business travellers within the
profile category and similarly in budget hotels,
past two years. city. In the past couple of years the hospitality
close to 60% of the guests visit for business
sector in the city has indirectly received the
purpose.
necessary impetus from state government; in the
form of increased investment across various
sectors coupled with suitable business friendly Average Room Rate Vs. Occupancy - Bangalore
policies. The newly-built Bengaluru International
16,000 90%
Airport (BIA) (started operations in May 2008)
helped add domestic and international sector
Occupancy Rate (%)

12,000
60%
ARR (in INR)
connectivity. Bangalore though not a major 8,000

leisure destination by itself has been a transit 30%
location for cities like Mysore, Coorg, Tirupati, 4,000
Hampi, etc. The city is also considered as an 0 0

2003-04 2004-05 2005-06 2006-07 2007-08
educational hub housing few renowned
institutions offering various professional courses ARR Low ARR High Occpancy
in engineering, medicine, management, law etc Source: CRISIL

which acts as a driving factor contributing to
demand for room nights. Bangalore is also a
Upcoming Room Supply - Bangalore
MICE destination and has gained significant
importance in the recent past due to the newly 6%
formed Bangalore International Exhibition

Centre (BIEC). 31%
63%
Hospitality Dynamics
l There is a fair distribution of existing hotels
Upscale Midscale Budget
in all categories, with budget hotels
accounting for a maximum of 43%, followed Source: Cushman & Wakefield Research
by up-scale hotels at 33%.

R E P O RT
Outlook was an equal distribution amongst all category of

hotels. Upcoming supply comprises of
Whitefield, Off CBD locations and the North
approximately 10,000 – 10,500 hotel rooms
Bangalore stretch are likely to witness the
spread across 44 hotels. ARR and occupancy rate
majority of the upcoming supply. The upcoming
are likely to witness further correction in 2009
supply from 2008-2011 has seen a shift, with
due to the influx of new supply besides the
nearly 63% supply expected in the up-scale
existing slowdown in economy and global
market, unlike the previous years when there
turmoil.
Bangalore City Map

Kumbharhalli Yelahanka
New Town Kannur
Ganigarahalli
Vidyaranya
Pura NH 7
AMCO Byappanahalli
Madanayakahalli Ramachandrapura Colony Dasarahalli Bidrahalli
Aduru
NH 4 Jalhalli
Sanjay
Hebbal HBR Layout Kalkere
Nagar
Peenya Nandini
Layout Kaval
Byrasandra
Basaveshwara Bennigana
Nagar Cleveland Halli
Anjana Town Mahadevapura
Nagar Kamakshipalya Rajaji Nagar CV Raman
Vijaya Nagar Doddanekundi
Nagarbhavi BANGALORE
Nagar Brooke
Annapurneshwari
Airport Field
Nagar
Gavipuram Gavipuram Marathahalli
Extension
Koramangala Baligeri
Kengeri Banashankari
Satellite Town Rajarajeshwari
JP Nagar HSR Layout
Nagar Sarjapur Rd
Kengeri
Singasandra
Hulimavu Begur
SH 17
Electronic
City
NH 209
Bommasandra
Hakkipikki Industrial Area
Kaglipur Colony
Upscale Midscale Budget Upcoming Supply Zone

CHENNAI physical infrastructure is good with two ports as

well as an excellent road and rail network.
Chennai, a metropolitan city, is an important
commercial and industrial hub of India. The city Average Room Rate Vs. Occupancy - Chennai
is host to various industries such as 10,000 90%
manufacturing, automobile ancillaries, IT/ ITeS,
8,000
Occupancy Rate (%)
shipping, etc. and this strong commercial and 60%

ARR (in INR)
6,000
industrial presence in the city has resulted in
large inflow of business travellers. 4,000
30%
2,000
Besides Chennai being a tourist attraction in
0 0
itself, proximity to traditional destinations like 2003-04 2004-05 2005-06 2006-07 2007-08
Pondicherry, Mahabalipuram, etc has made it a ARR Low ARR High Occpancy
favourable leisure destination too. Chennai's Source: CRISIL

R E P O RT
Hospitality Dynamics Upcoming Room Supply - Chennai
l According to C&W Research estimates, 8%
room stock Chennai constitutes of 7,400 –

7,600 hotel rooms, of which, budget hotels
35%
account for approximately 39%, followed by 57%
up-scale hotels at 33%.

Chennai City Map
Korattur Vyasarpadi Royapuram
Korattur Eri Perambur
Villivakkam
Man Rd Old l Amongst the three major south cities,

Dairy Rd Washermanpet
Ayanavaram Chennai witnessed an increase in ARR by
Choolai
MTH Rd George 23% from INR 6,260 in 2006-07 to INR 7,690
New Avadi Rd Town
in 2007-08 owing to the improved
Sowcarpet
Periyamet
Ambattur
Thirumangalam connectivity with Association of South East
Industrial Anna Kilpauk GH Rd Asian Nations (ASEAN) countries and Middle
Estate Nagar
Poonamallee High Rd East. On the other hand influx of quality
Chetpet Chintadripet supply during the same timeframe led to a
Maduraivoyal Koyambedu
Choolaimedu
corresponding decline from 77% to 75% in
Vadapalani
CHENNAI
Triplicane occupancy rate.
Vanagaram
NSK Salai Marina
Valasaravakkam Arcot Rd
Royapettah
Beach
l Market segmentation of hotel occupants
indicate that corporate/ business travellers to
Porur Theyagaraya
Nagar
Teynampet
Mylapore
the extent of 59% stay in the up-scale & mid-
scale and 61% in budget category.
Mowlivakkam Jawaharlal
Santhome Contribution by leisure tourists is more in
Nandanam Beach
Nehru Rd favour of budget hotels accounting for 19% in
Nandambakkam Adyar River
comparison to upscale & mid-scale options
Sardar Patel Rd contributing 9%.
Besant
Adyar
St Thomas Nagar
Mt
Alandur
Guindy
Outlook
IIT Madras Tharamani Chennai is likely to witness an addition of 3,600 -
Airport
Madipakkam
3,800 room inventory over the next 3-4 years
Thiruvanmiyur
Sriperumbudur
Pallavaram
trying to match up the future demand. The IT/
Valmiki
Nagar ITeS sector remains the primary demand driver
Velachery for up-scale hotel rooms, closely followed by the
Tirusulam Kotivakkam
Puzhuthivakkam Perungudi
manufacturing sector. This expected room supply
is likely to be spread across 15 hotels with
Palavakkam
upscale category comprising 57% of the total
Pallikaranai Okkiyam upcoming supply followed by 35% in the mid
Upscale Midscale Budget Upcoming Supply Zone scale category.

R E P O RT
GOA economy with numerous leisure events like

popular flea markets and the Goan carnival
Goa is one of India's most visited tourist
celebrated here. Further, there are several
locations due to its numerous beaches, colonial
Tourism remains corporate events, meetings and conferences held
architecture and unique Indo-Portuguese
the main in the city that essentially look at the up-scale
heritage. The state attracts an average of 1.2
contributor to the segment.
million tourist population which is almost equal
state economy in
to the state's population. Almost 12% of the The Department of Tourism, Government of
Goa.
total foreign tourists arriving in India visit Goa Goa, is instrumental in planning and providing
while nearly 75% of the total direct charter the basic tourist infrastructure and other
traffic is destined for the state. Tourism in fact facilities/amenities for tourists in the state. Goa
remains the main contributor to the state has been promoted as a round-the-year tourist
destination in India and overseas through various
Goa City Map events, publicity literature, media and other
publications. Under the Goa Registration of
Chapora Bardez Virdi Tourist Trade Act, 1982, the body also exercises
River control over hotels and travel trade activities in
Quitula
Bicholim
the state.
Mapuca
(Dicoli)
Chorao Sanquelim Upcoming Room Supply - Goa

Saligao Sanctuary
15%
Panaji
NH 17
Goa Velha
Curti Tisk
85%
Marmagao Cortalim
Ponda Upscale Midscale
Sancoale
Kesarvale Source: Cushman & Wakefield Research
Verna
l The existing stock of hotel rooms in Goa is
Madgaon pegged at approximately 7,200 – 7,500 of
which up-scale and budget hotel rooms
account for nearly 43% each, followed by
mid-scale at 14%.
l During 2006-07, leisure traffic both domestic
NH 17
and foreign accounted for nearly 39% of the
total room occupants in up-scale hotel
category and 44% for mid-scale and budget
category.
l Increase in domestic and foreign tourist
inflow has resulted in increase in ARR in
2007-08 by approximately 19% since the
Chaudi NH 17
previous year and similarly the Occupancy
Upscale Midscale Budget Upcoming Supply Zone Rate has increased by 2 points to 74% in
Source: Cushman & Wakefield Research 2007-08.

R E P O RT
Outlook master plan being released proposing likely

Approximately 2,800 – 3,000 hotel rooms under changes in the land use, the future supply is likely
up-scale and mid-scale categories are to be to be impacted.
made available over the next 3 - 4 years. This
Average Room Rate Vs. Occupancy - Goa
upcoming room inventory is likely to be
available across 20 - 25 properties (including 9,000 100%
capacity addition to existing properties). 7,500
Occupancy Rate (%)

75%
6,000
ARR (in INR)

There is likely to be some impact on the leisure 4,500 50%
tourists inflow into the city in the coming 3,000
months on account of the global recession and 1,500
25%
shifting of the international airport from south 0 0

2003-04 2004-05 2005-06 2006-07 2007-08
(which is predominantly been attracting
international tourists) to north Goa. With the ARR Low ARR High Occpancy
Source: CRISIL
HYDERABAD
Historically, the economy of Hyderabad has foreign business travellers at 13% in the
been dependent on the manufacturing and categories under consideration.
services industries. Sustained growth in IT/ ITeS,
l The Average Occupancy Rate in 2006-07 was
Biotech and Pharmaceuticals sector is a key
75%, however, the subsequent year has seen a
demand driver for the hospitality sector in the
marginal decline to 72%, on account of
city with respect to business/corporate
infusion of additional room inventory.
travellers. In the recent past Hyderabad has
emerged as a medical tourism hub with opening l The ARR, however, grew by approximately
up of few reputed hospitals. Besides this, the 14% between 2006-07 and 2007-08 due to
International Convention centre has enabled the an increase in demand for rooms.
city to become a preferred MICE destination.
Average Room Rate Vs. Occupancy - Hyderabad
The State government continues to facilitate
10,500 100%
development of social and public infrastructure
9,000
such as the recently completed new 80%
Occupancy Rate (%)
7,500
ARR (in INR)
international airport at Shamshabad. 6,000 60%
4,500 40%
Hospitality Dynamics 3,000
20%
1,500
l The existing hotel room stock of
0 0
approximately 5,000 – 5,200 rooms is 2003-04 2004-05 2005-06 2006-07 2007-08
dominated by budget category accounting ARR Low ARR High Occpancy
for approximately 51% of this total stock; Source: CRISIL
spread across prime business districts of

Upcoming Room Supply - Hyderabad
Secunderabad, Sarojini Devi Road, Ameerpet,
4%
Lakdikapul, Raj Bhavan Road and Nampally.
35%
l Up-scale hotels have a presence in the prime
localities of Banjara Hills, Begumpet,
Madhapur and Gachibowli. 61%
l Domestic business travellers account for Upscale Midscale Budget

46% of the room occupancy, followed by Source: Cushman & Wakefield Research

R E P O RT
Outlook operators for new projects in anticipation of

higher returns and the goodwill attached to the
Approximately 5,600 - 5,800 additional rooms
brand. This trend is likely to continue in the
are expected to become available during 2008-
years to come. As a result, up-scale and mid-
11, spread across 25 - 30 hotels to support the
scale hotels constitute a major chunk of the
needs of increased economic activity within the
upcoming room inventory, at approximately 62%
city. Off late, many leading developers have been
and 34%, respectively.
associated with international/branded hotel
Hyderabad City Map

University of NH9
Marredpally
Hyderabad Hitech City SR Nagar
Madhapur Malkajgiri
Begumpet
Gachibowli Ameerpet Sanjeevajah Nacharam
Yousufguda Park Lalbahadur Industrial Area
Jubilee Nagar Tarnaka
Mumbai Rd Hills
Hussain Padmarao
K Brahmananda K Brahmananda Sagar Nagar
Reddy Habsiguda
Reddy Boduppal
National Park Ram Nagar
National Park Osmania Uppal
Shaikpet University
Army Area Masab Warangal Rd
Tank Nallakunta
Manikonda Mehdipatnam
Ramanthapur
Vijay Nagar Nagole Rd
Tolichowki Kachiguda Amberpet
Langar Colony Nampally
Osman Sagar Rd Koti
House Karwan HYDERABAD Uppal Kalan
Military Area
Malakpet Nagole
Rambagh Dilsukhnagar
Mrigavani Nehru
LB Nagar Rd
National Park Zoological Saidabad
Park Charminar Colony
Chintalmet
Mir Alam Lal LB Nagar Mahavir Harini
Katedhan Tank Barwaza
Industrial Area NH 9 Vanasthali
Nawab Kanchan National Park
Saheb Kunta Bagh
Musa River Vanasthalipuram
Rajendra
Hymayat Sagar Rd Nagar
Premavathi Inner Ring Rd
Pet NH 7
Himayat
Sagar Budvel Gurram
Hayat Guda

JAIPUR and leisure activities. Jaipur is also witnessing

moderate demand for IT/ITeS industry.
Jaipur, the capital of Rajasthan, has been a major
tourist destination for both international and Average Room Rate Vs. Occupancy - Jaipur
domestic tourists. The city appeals to a mix of 10,000 100%
rich cultural, historical and business interests. A
Occupancy Rate (%)
7,500 75%
major destination for traditional gems, precious
ARR (in INR)
stones, garments, handicrafts and marble, there 5,000 50%
are plenty of heritage sites in Jaipur, which has 2,500 25%

enabled it to become one of the preferred Asian
0 0
tourist destinations. The government has taken 2003-04 2004-05 2005-06 2006-07 2007-08
initiatives to promote tourism and to bridge the ARR Low ARR High Occpancy
demand-supply gap for tourist accommodation Source: CRISIL

R E P O RT
Hospitality Dynamics l Approximately 48% of the existing supply

comprises of up-scale hotels, primarily
l The existing hospitality supply in Jaipur
located along Amber Fort Road, Amer Road,
consists of 4,000 – 4,200 rooms spread
Tonk Road, Bhawani Singh Road and M.I.
across 71 hotels.
Road followed by 32% of budget hotels
located in areas such as Bani Park, S.C. Road,
Jaipur City Map
Station Road, Civil Lines and Sindhi Camp.
Vishwakarma
Industrial Area
l Impact of the US sub-prime crisis that began
in September last year and growing domestic
terrorism (blasts in Jaipur city) resulted in
occupancy rates dipping from 70% in 2006-07
to 64% in 2007-08. On the contrary, there is
an increase of approximately 6% in ARR from
Vidyadhar Jal Mahal
Nagar Talav 2006-07 to 2007-08.
l Similar to Goa, Jaipur being a leisure
Shankar
Nagar destination witnessed close to 33%
occupants in the up-scale & mid-scale
Badanpura
Bani Park category in the leisure segment.
Sindhi Pink City
Military Camp
Cantonment
Transport
Upcoming Room Supply - Jaipur
Khatipura Nagar
JAIPUR Adarsh 37%

Civil Lines
Vidyut Nagar
Nagar Rambagh
Shyam Ram Nagar Tilak Nagar
Nagar
Bais Jawahar
Godam Nagar 63%
Devi Nagar
Gandhi
Gopalpura Nagar
Tonk Upscale Midscale Budget
Arjun Phatak
Mansarovar Nagar Source: Cushman & Wakefield Research
Outlook
Jaipur is likely to witness supply of 1,600 – 1,800
rooms in the next three years, of which 63% fall
in the mid-scale category and the remaining 37%
in up-scale category. This increase in the number
Airport of rooms is attributed to increased domestic
business travel, interest from the MICE market
and a rise in international charted flights bringing
in foreign tourists.

R E P O RT
KOCHI Hospitality Dynamics
The growing upper- Kochi, the economic capital of Kerala by volume l Budget hotels in the city account for nearly
middle income of trade, in the recent past has emerged as one 50% of the total existing supply of
population coupled of the fastest-growing tier-III cities in India. The approximately 2,000 – 2,200 rooms. In this
with the key economic drivers here are the fishing category, the profile of guests comprises 43%
development of industry, textile retailing, seafood and spice corporate and 30% of leisure travellers.
physical export, tourism, ITES etc.
l ARR in Kochi has increased by 12% in 2007-
infrastructure
The State Government is proactive in promoting 08 over the previous year largely on account
(airports, roads etc)
itself as an attractive global tourist destination. of the overall increase in tourism related
has created a better
With the tourism department having fruitfully activities.
platform for the
promoted cities such as Kochi and Alapuzha, the
hospitality sector in l Occupancy rate recorded a marginal decline
total number of domestic and foreign tourists
smaller Tier III cities to touch 64% in 2007 -08 as against 67% in
visiting the state has increased considerably.
like Kochi. 2006 – 07.
With good size of upper-middle income
population coupled with development of Outlook
physical infrastructure (airports, roads etc) has
created a better platform for the hospitality Kochi is expected to witness an additional supply
sector in smaller Tier III cities like Kochi. of approximately 1,200 – 1,400 hotels rooms in
the next three years. This supply will be
Kochi City Map
concentrated towards up-scale (39%) and mid-
Vaduthala
scale (52%) categories essentially owing to the
gradual increase in foreign and domestic tourists
Edappally
Elamakkara to the city. In the years to come, the profiles of
Palarivattom
guests are likely to remain concentrated towards
leisure tourism because of the aggressive
Kaloor tourism promotion initiatives undertaken by the
state government.
Average Room Rate Vs. Occupancy - Kochi

Ayyappankavu
Kathrikadavu 5,000 100%
75% Occupancy Rate (%)

NH 47
ARR (in INR)
2,500 50%
Vembanad
MG Road Kadavanthara
Lake
25%
0 0
2003-04 2004-05 2005-06 2006-07 2007-08
Ravipuram Vytilla ARR Low ARR High Occpancy
Chelavannur Source: CRISIL

Kappalandimukku
Thevera Upcoming Room Supply - Kochi
9%
Konthuruthy
Airport Maradu 39%
Thopumpady
COCHIN
52%
Upscale Midscale Budget Upcoming Supply Zone Upscale Midscale Budget
Source: Cushman & Wakefield Research Source: Cushman & Wakefield Research

R E P O RT
KOLKATA Hospitality Dynamics

Kolkata, the capital of West Bengal, is the l The existing room inventory consists of
commercial capital of the north-eastern region. 2,300 – 2,500 rooms spread across 23 hotels.
Most companies have their regional offices in
l Approximately 64% of this room inventory
the city which acts as a major demand driver for
consists of up-scale hotels, primarily located
the hospitality sector. Kolkata is also a major
along Salt Lake City, Park Street, Jawaharlal
commercial and military port, being the only city
Nehru Road and AJC Bose Road.
in the region to have an international airport
besides having good port infrastructure. It is also l The remaining existing room inventory is
the headquarters of Indian corporations like ITC divided into mid-scale and budget hotels each
Ltd, Birla Corporation, RPG Ltd, Peerless constituting approximately 18%.
Industries, etc. Many global and domestic
software companies have set foot in the city and Average Room Rate Vs. Occupancy - Kolkata
the gradually growing IT/ ITeS sector is expected
8,000 80%
to drive the development of the hospitality
Occupancy Rate (%)

sector in the city. Constructions of various 6,000 60%
flyovers, up-gradation of the international ARR (in INR)
4,000 40%
airport and extension of METRO have been a
2,000 20%
few of the initiatives taken to improve
infrastructure and to keep pace with all the 0 0
2003-04 2004-05 2005-06 2006-07 2007-08
development activities. Kolkata has also gained
ARR Low ARR High Occpancy
significance as a MICE destination with large
number of conferences held at the city. Source: CRISIL
Kolkata City Map

Liluah Paikpara South
Dum Dum
Krishnapur
Shalkiya
Mail Beniatola Ultadanga
Panchghara
Salt Lake
Narkeldanga
Shibpur Kankurgachi
KOLKATA
Bow Beleghata
Bazaar
Kulia
Hooghly Shalimar
River Tangra
Gobra
Garden
Reach Dhapa
Bhawanipur Topsia
Ballygunge
Mominpur Alipore Tiljala
Rajarhat Nature Park
Gopalpur
Kalighat Kasba
Taratala
Garfa Haltu
Behala
Tollygunge
Santoshpur
Royal Calcutta
Golf Club Bijoygarh
Paschim Purba Kazipara Baishnabghata

Darisha Darisha Naktala Patuli Township


R E P O RT
l ARR increased by 25% from INR 5,500 in l Similar to other metros, Kolkata is no
2006-07 to INR 6,860 in 2007-08 due to exception to the business/ corporate
increasing demand for room nights in areas travellers being the major occupants (63%) in
like Salt Lake, Rajarhat, Kariadanga, Dankuni the hotels under consideration.
etc. Similarly the occupancy rate witnessed a
Outlook
marginal increase from 75% in 2006-07 to
76% in 2007-08. New supply of approximately 2,400 - 2,600
rooms is expected to come up in the city over
Upcoming Room Supply - Kolkata
the next three years, spread across 11 new hotel
18% developments. Majority of these rooms will be in
up-scale category constituting approximately
82% of the total expected room supply, with the
remaining 18% in the mid-scale category.
Additional supply is expected to be
82% concentrated along the EM Bypass, Salt Lake
Upscale Midscale Sector V and New Town.
MUMBAI
In a knee-jerk Mumbai, the commercial and entertainment Excellent rail network, improved airport
reaction to the capital of India, houses important financial infrastructure, additional international and
recent Mumbai institutions such as the Reserve Bank of India, domestic air routes, sea and harbour links in the
terror attacks, a Bombay Stock Exchange and National Stock city are few critical factors providing impetus to
drop in occupancy Exchange of India etc. There are plenty of the hospitality sector. Another noticeable trend
rates has been in the city is the large number of upscale
Banking Financial Service and Insurance (BFSI)
noticed in the city,
companies operating from this city besides the projects located in close proximity to the
thereby forcing
hoteliers to discount IT/ ITeS firms; these two sectors are key airport. The State Government is launching/
rack rates in a demand drivers for the hospitality sector. The promoting medical tourism in the city to attract
measure to maintain city has improved connectivity to various leisure visitors from other states. Of the total travellers
minimal occupancy and commercial hubs like Pune, Goa, Thane, that visit the city, approximately 80% constitute
levels and market Nashik, Powai, Daman & Diu etc. Mumbai is also business travellers and the rest represent the
share. a transit city for foreign tourists travelling to leisure category.
other cities within the country and also houses
several corporate headquarters.
l Of the total existing inventory of
Average Room Rate Vs. Occupancy - Mumbai approximately 11,800 – 12,000 rooms, up-
12,500 90%
scale hotels account for the majority at 59%
75% demand which is largely from business
Occupancy Rate (%)
10,000
travellers.
ARR (in INR)
60%
7,500
45%
5,000
30%
l Being the commercial and financial hub of the
2,500 15%
country, hotels in Mumbai witnessed healthy
0 0 occupancy of approximately 76% from 2006
2003-04 2004-05 2005-06 2006-07 2007-08
till 2008. While ARR closed at high of INR
ARR Low ARR High Occpancy 11,300 in 2007-08. In a knee-jerk reaction to
Source: CRISIL the recent Mumbai terror attacks, a drop in

R E P O RT
occupancy rates has been noticed in the city, Upcoming Room Supply - Mumbai
thereby forcing hoteliers to discount rack
9%
rates in a measure to maintain minimal
occupancy levels and market share.
44%
l During 2006-07, foreign business travellers
accounted for approximately 30% of the 47%
total room occupancy in up-scale hotels,

followed by domestic business travellers and Upscale Midscale Budget
meeting participants. However, in the mid- Source: Cushman & Wakefield Research
scale and budget hotels domestic business
travellers accounted for approximately 46% Mahim and Powai. Mid-scale hotel rooms are
of occupancy in 2006-07, followed by foreign expected to account for 48% of this supply,
business travellers. closely followed by up-scale hotels at 43%. There
is likely to be short term impact due to the
Outlook
terror attacks, while the economic slowdown in
Mumbai is expected to witness an addition of general is likely to adversely impact hotel
approximately 6,500 - 6,800 rooms over the performance and profitability in the medium
next three years primarily in locations such as term.
Bandra Kurla Complex, Andheri, Worli, Malad,
Mumbai City Map

Vasai Creek
Bhiwandi
Kalyan Ambivli
Bhiwandi
Borivli Sanjay Gandhi Dombivli Ulhasnagar

National Park
Malad Thane
Ambarnath
Goregaon
Bhandup
Badlapur
Jogeshwari
Andheri
Ville Parle
Thane NAVI
Santacruz (E) Kurla (W) Creek MUMBAI
Khar (E)
Bandra (E) Vashi
Mahim
MUMBAI Belapur
Parel
Shedung Chinchavli
Kolkhe
Village
Village
Nariman
Point
Colaba


R E P O RT
NATIONAL CAPITAL REGION (NCR) 800,000 international tourists and nearly 3.6
million domestic10 tourists.
India's capital, New Delhi, is a city of historic
importance, a diplomatic hub (represented by Hospitality Dynamics
embassies of 160 countries with large expatriate
l The total room inventory in the NCR (Delhi,
population) making it an attractive global tourist
Gurgaon and Noida) is approximately 12,300
destination. Development of business districts
- 12,500 rooms, spread across 113 hotels.
While ARR in NCR and IT/ ITeS clusters in Gurgaon, Greater Noida
Most of theses are skewed towards the up-
witnessed annual and other parts of National Capital Region
scale category constituting 62% of the total
increase of 15% in (NCR) has contributed to the growth of
rooms and are concentrated primarily in
2007-08, occupancy business travellers in this region. Delhi also acts
Connaught Place, Dhaula Kuan, Chanakya
rates dropped from as a major transit point for leisure destinations
Puri and National Highway 8, followed by
80% to 74%. along the northern zone, such as Jaipur, Agra,
24% in the mid-scale category in locations
Shimla-Musoorie, Haridwar-Rishikesh, Kullu-
such as Connaught Place and National
Manali, etc. In the recent past the city has also
Highway 8.
been able to attract domestic and international
tourists as a MICE destination. Government l ARR in the NCR grew by approximately 15%
initiatives to develop heritage hotels, steps taken from INR 9,950 in 2006-07 to INR 11,480 in
to promote tourism, improved connectivity, 2007-08 because of increased demand owing
along with airport modernisation projects to the economic developments in Gurgaon
indicate a healthy growth for the hospitality and Noida. While the occupancy rates have
sector in the region. With the upcoming declined from 80% to 74% in 2007-08 with
Commonwealth Games in 2010, NCR is addition of new supply in 2008.
expected to witness an inflow of around
Delhi (NCR) City Map

Bhagat
Singh Park
Libaspur Roop Nagar
St. Nagar
Jahangirpuri Raj Nagar
Rohini
Shalimar Majlis Karawal
Inder Enclave Bagh Park Nagar Amar
Pitampura GHAZIABAD
Prem Nagar Mangolpuri Colony
Shakurpur Ashok Vihar
NH 10 Prem Nagar II Dilshad Garden
Paschim Vihar Colony
NH 10
Daya Basti Shahdara
Tagore Garden Sahibabad
Kirti Nagar Dharam Rajgarh
Industrial Area
Pura Colony
Vishnu Garden Nirman
Vikaspuri Old Rajender Nagar
Mohan Vihar
Garden Hari Nagar
Janak Puri Pusa Hill Yamuna
NEW DELHI Mayur Vihar
Najafgarh Forest River Mayur Vihar
Uttam Nagar Sagarpur
Sector - 16B Phase I
Delhi NH 8
Dwarka Cantonment NH 2 NOIDA
Defence Friends
RamaKrishna Lajpat
Sector 23 Palam Colony Colony
Puram Nagar Aghapur
Nangal Safdarganj Jasola Vihar
Dewat Mahiapalpur Kalkaji
Development
Area Govindpuri Okhla Hazipur
Sector 7 Village
Vasant Kunj
Rajokri Vishwakarma
Udyog Vihar Khanpur Sangam Vihar Colony
Pulpehladpur
Sector 5
GURGAON DLF Industrial
Sushant Lok Area
Sector 9 DLF Green Fields
Phase 5 Colony
Sector 10B Sector 39
Sector 34 Dera Spring Field Colony
Sector 35 Sector 19
NH 8 Sector 16


R E P O RT
l Being the capital city, NCR has high inflow of Average Room Rate Vs. Occupancy - NCR
corporate/ business travellers and they 15,000 90%
account for nearly 44% and 52% of 12,000
Occupancy Rate (%)

occupants in the up-scale, mid-scale & budget 60%
ARR (in INR)

9,000
category respectively. Leisure occupants are
6,000
high in the mid-scale & budget category to 30%
the tune of 22%. 3,000
0 0
Outlook 2003-04 2004-05 2005-06 2006-07 2007-08

Approximately 12,000 - 12,400 additional rooms
are expected in NCR by 2011, of which nearly Source: CRISIL
38% is expected to be available in the up-scale

category, followed by 34% in the mid-scale and Upcoming Room Supply - NCR
the remaining in the budget category. Majority of 29%
this upcoming supply is likely to be concentrated 37%
in the business areas of Gurgaon and Noida.
With a growing corporate demand for
extended-stay (more than two weeks), service
apartments are becoming a popular option in 34%
the city. NCR is expected to remain a robust Upscale Midscale Budget
market due to its importance as a commercial Source: Cushman & Wakefield

hub as well as the international exposure the
city is likely to witness in light of the upcoming
Commonwealth Games.
PUNE
educational hub with plenty of reputed
Pune is one of the fastest growing tier-II cities in
colleges/universities thereby attracting large
India being an important industrial and
floating population. The State Government has
automobile hub. Pimpri-Chinchwad is known as
been proactive and provided the necessary
the industrial hub of Pune housing sectors such
impetus for the above mentioned sectors to
as IT, biotechnology, automobiles and heavy
grow within the city. Good connectivity to
engineering. These factors have collectively
Mumbai has also enabled commuters to access
created demand for quality accommodation for
Pune via Mumbai.
the business travellers. Pune is also an
Average Room Rate Vs. Occupancy - Pune
l Of the existing room inventory of
10,000 90% approximately 2,300 – 2,500 rooms, majority
8,000 of the budget hotels are located in the CBD
Occupancy Rate (%)
60%
areas of Bund Garden Road, Dhole Patil
ARR (in INR)
6,000
4,000
Road, Tadiwala Road and the suburban
30%
2,000
Kalyani Nagar; while most up-scale hotels are
located along Koregaon Park, Shivaji Nagar
0 0
2003-04 2004-05 2005-06 2006-07 2007-08 and the Airport.
l Of the existing total room inventory, mid-
Source: CRISIL scale hotels comprise approximately 49%,

R E P O RT
followed by budget hotels accounting for Upcoming Room Supply - Pune

approximately 32%.
6%
l In 2006-07 foreign business travellers

accounted for approximately 46% of the
total room utilisation in up-scale hotel
category, followed by domestic business 51%
43%
travellers at 35%.
l ARR increased sharply by 21% from INR
7,260 in 2006-07 to INR 8,770 in 2006-07
on account of limited supply to cater to the
in areas such as Hinjewadi, Nagar Road and
business travellers. On the contrary the
Koregaon Park. Approximately 51% of this
occupancy rates dropped by 3 points to 78%
supply would fall in the upscale category
in 2007-08.
followed by 43% in the midscale category.
Outlook Infrastructure improvement initiatives by the
state government coupled with comparatively
Pune is expected to witness supply of
lower real estate costs, are expected to
approximately 3,700 – 3,900 hotel rooms in the
encourage the development of additional rooms
span of next 3 - 4 years. This supply is expected
in the near future to tap demand.
to be available across 21 hotels located primarily
Pune City Map


R E P O RT
RESEARCH FINDINGS under consideration. The top four cities in the

upscale hotel room inventory are NCR, Mumbai,
According to Cushman & Wakefield (C&W)
Bangalore and Goa. NCR and Mumbai are hugely
Research estimates, the organised hotel industry
dependent on business travellers, both foreign
constitutes approximately 72% based on the
and Indian corporations. NCR also has the
hotel categories considered for our study (5
maximum number of rooms in mid-scale
star deluxe, 5 star, 4 star and 3 star). This
category and is closely followed by Mumbai and
translates to approximately 46,839 rooms as
Chennai. The availability of budget rooms is
organised of the total inventory of 65,174
11 highest in Bangalore as the city is a frequented
rooms across the eleven major cities
destination by both domestic business travellers
considered for the study. Of the organised room
and MICE tourists and also due to influx of new
inventory, approximately 64% is controlled by
budget category hotels this year. Bangalore is
large hotel operators such as the Taj Group, the
followed by Goa and Chennai in budget room
Oberoi Group, the ITC Group, Leela Hotels and
inventory.
Bharat Hotels, etc. Major international chains
(also part of the organised section) such as the Supply, Occupancy and ARR
Hilton Group, the InterContinental Group,
With the growing importance of India in the
Hyatt International Hotels and Resorts, Marriott
global economic arena and the corresponding
Hotels and Resorts, Le Meridien Hotels &
growth in in-bound and domestic travellers,
Resorts, etc., are all represented by management
many developers viewed hospitality sector as a
or franchise contracts in India. Several others
lucrative asset class. To strengthen their position
such as the US-based Four Seasons Hotels and
further, most have also associated with reputed
Resorts, Hampton Inn Hotels & Suites, Amanda
hotel management chains in order to
Hotels and Berggruen Hotels, etc., are all in the
substantially boost their operations and increase
process of making an entry into India over the
their profitability. During 2008-11, additional
next few years, primarily through management
52,200 hotel rooms are expected to be available
contracts.
across the 11 cities considered for this study. Of
NCR, Mumbai, Bangalore and Chennai together this, approximately 28,012 rooms, representing
account for approximately 62% of the existing around 54% of the total room supply of the
rooms under the organised section. At present, study, belong to the up-scale category. However,
however, a shortfall of rooms has caused the due to sky rocketing land costs and rise in
average ARR to settle at approximately USD 200 construction costs in recent times, only up-scale
per night, which is not far beyond ARR in Paris hotels are likely to provide substantial returns
(USD 280) and Dubai (USD 290)12. Demand for and reduce break-even period. Bangalore tops
rooms across various cities can be ascertained this list with the highest number of up-scale
in connection with other closely related factors rooms (6,356), followed by NCR (4,600) and
mentioned below besides the supply data: Hyderabad (3,554).
l Existing Room Inventory/ Stock
l Supply, Occupancy and ARR Existing Vs. Upcoming Room Supply
l Human Resource Availability 35,000
l Central Government Policies/ Local 30,500
Number of rooms
25,000
Administration
20,000
l Investment for Infrastructure Development 15,000
l Socio-Economic Climate 10,000
5,000
Existing Room Inventory 0
Existing Rooms till September 2008 Upcoming Rooms till 2001
The existing room inventory table indicates the
supply of eleven cities across the star categories Source: Cushman & Wakefield Research

R E P O RT
Based on our research, the demand for 2008 -2011. It can also be noticed that supply
hospitality industry in the organised sector for growth is phenomenal in Tier I & II cities like
the categories under consideration, is likely to Pune, Bangalore, Hyderabad, Kolkata, NCR, and
grow in the range of 8-20% per annum from Ahmedabad. While the current occupancy rate
2008 to 2011, facilitated by supply growth of in Chennai is 75%, the significant addition of
approximately 12 – 39%per annum over the supply in the coming years is likely to result in a
same period for the sample cities. NCR (20%), decelerating demand by 3% Y-o-Y for the next
Mumbai (15%) and Bangalore (14%) are three years, thereby directly impacting the
expected to witness a considerable occupancy rates.
compounded annual growth in demand from
City Performance Indicator

Hospitality Parameters Ahmedabad Bangalore Chennai Goa Hyderabad Jaipur Kochi Kolkata NCR Mumbai Pune
ARR
Occupancy Rate
CAGR in room supply

22% 30% 14% 12% 29% 12% 18% 27% 26% 16% 39%
from 2008 - 20011
CAGR in room demand

10% 14% -3% 9% 8% 12% 13% 12% 20% 15% 11%
from 2008 - 20011
Legend
Market Rising Market Falling Market Stagnant, Market Stagnant, Market Stagnant
likely to Strengthen likely to Weaken
Source: CRISIL; Cushman & Wakefield Research
Human Resource Availability this study, C&W Research has emphasised on

both talent availability and manpower demand
The hotel industry requires skilled personnel
for the cities under consideration. The
The hospitality and insists on their staff possessing basic
Government recognises organisations, such as
sector in India is certification in operation areas like
the Institute of Hotel Management (IHM) with
likely to be one of housekeeping, front office, stores and accounts,
its branches at Hyderabad, Delhi, Lucknow,
the highest F&B services, kitchen, engineering and
Chennai, Mumbai, Jaipur and Ahmedabad, to
employment management to name a few. Like any other
name a few, that offer diploma and post
generators in service industry, the hospitality industry too
graduation courses. Further, graduation courses
2009-10. banks on trained talent pool to offer flawless
in Hotel Management & Catering Technology
service to its guests. However, the availability
(BHMCT) recognised by the All-India Council of
and retention of this talent pool has become a
Technical Education (AICTE) also churn out over
prime agenda for the organised sector today. In
thousand graduates each year.Various State
Annual Enrollment at Institute of Universities and private colleges across India also
Hotel Management (IHM) augment the overall enrolment into hospitality
B.Sc in Hospitality and Hotel Administration seems to be the preffered courses.
curriculum by the Industry
Pune Among the cities under consideration, Mumbai,

Mumbai followed by Bangalore, Chennai, Kolkata,
Jaipur
Hyderabad and Delhi, emerge as the front
runners offering supply of skilled human
Goa
resource pool. Naturally these cities are likely to
Chennai
absorb the maximum trained manpower in their
Ahmedabad
upcoming hotels. According to C&W Research,
0 20 40 60 80 100 120 140 160 180
PG Diploma M. SC B.SC Diploma Craftsmanship
the ratio of additional room inventory to
manpower requirement is 4:7 for up-scale hotels,
Source: AICTE; Cushman & Wakefield Research

R E P O RT
while the same for mid-scale and budget hotels sanction of INR 447 million13. Maharashtra
is 5:6. Thus the manpower requirement by 2011, followed with close to 13 approved tourism
based on the estimated room supply for the projects with sanctions totalling approximately
period under consideration would be INR 284 million. In addition to the amount
approximately 77,000 – 79,000 jobs for the 11 sanctioned for the enhancement of tourism
cities and star categories under consideration. development, state-wise tourism/hotel policies
NCR followed by Bangalore, Mumbai and also play a crucial role in the development of
Hyderabad are likely to be future destinations new hotels by expediting processes such as land
for potential employment creation in the allotment, tax rebates and others.
hospitality industry. As per Ma Foi Management
Amongst the states considered in our study, the
Consultants, the hospitality sector in India is
hotel policies framed by the Government of
likely to be one of the highest employment
Rajasthan and the Government of Uttar Pradesh
generators in 2009-10.
were found to be most inclined towards
fostering new hotel development in the
Manpower: Demand Composition by 2011
categories under consideration. Presence of
Jaipur
3%
Kolkata industry bodies such as Federation of Hotel &
Hyderabad 5%
11% Mumbai Restaurants Association of India (FHRAI) and the
13%
Cochin overall political stability across all 11 cities also
2%
Pune
factor in the critical mass formation in the hotel
Goa 7% industry.
6%
Ahmedabad
Chennai 3% E. Investment for Infrastructure
7% Development
Bangalore Delhi (NCR) (I) Foreign Direct Investment (FDI) Inflow

20% 22%
Rapid growth in the hospitality sector may also
be attributed to the increasing FDI inflow across
Indian cities over the past few years. This has
Government Policies
been a major contribution towards the
Hospitality industry has received the necessary development of the realty sector (commercial,
impetus largely based on participation from the residential, and retail segments) in the last one
government in terms of approval of tourism year. India's hospitality sector is expected to
projects and allocation of the necessary funds. witness an investment to the extent of
This is likely to provide a positive impact on the approximately USD 111 billion14 in the next two
tourist inflow. To gauge the government years. Marriott International, Hilton,
participation Cushman & Wakefield Research InterContinental, Accor, Berggruen and
considered the average amount sanctioned per Hampshire are a few global brands that have
project state-wise as well as the total number of announced major plans of investing in India.
projects sanctioned, during 2006-07 for the 11
For the regions under consideration, the states
cities under consideration. Based on the total
of Maharashtra & Union Territory of Dadra and
number of projects sanctioned and the total
Nagar Haveli have witnessed maximum
amount sanctioned the average amount
cumulative FDI inflow across all sectors to the
sanctioned per project was arrived at; Andhra
extent of approximately USD 2.43 billion during
Pradesh tops all states (INR 514 million)
April 2000 to September 2008. The southern
followed by Delhi (INR 480 million) and close
states of Karnataka, Andhra Pradesh and Tamil
behind was Uttar Pradesh (INR 476 million).
Nadu, as well as the western state of Gujarat
Kerala received the maximum number (18) of
have seen a cumulative FDI inflow in the range of
tourism projects in 2006-07, with a total
USD 1.6 -1.8 billion for the same period. This is

R E P O RT
followed by Delhi, parts of UP as well as these investments are through joint ventures
Haryana; predominantly the NCR shows a between the developer/ investor and the
cumulative FDI inflow to the extent of USD 1.25 hospitality group. The capital required for such
billion in the same timeframe15. projects is also raised through private equity
funding. The table provided below captures few
Various developers/ investors have invested in
of the major investment deals in the hospitality
the hospitality sector this year and there are
sector in 2008.
several projects planned across India. Most of
Major Hospitality SPV Deals

Investor/ Hospitality Group/ Deal Type Planned/ Investment Project Type City
Developer Entity Invested Quantum (USD)
Vipul Ltd Sarovar Hotels & Tie-up Planned 58 million 4 star hotel Mohali, Amritsar,
Resorts Ludhiana, Siliguri
and Bhubaneshwar
Jaypee Group Six Sense Spa, Thailand JV Planned 35 million Resort Greater Noida
E.C.C. Carlson Hotels Tie-up Not Available Not Available Not Available Zirakpur
Infrastructure Worldwide (Chandigarh)
Pte Ltd
Parsvanath Hotels Bangalore based Royal JV Planned 116 million 3, 4 & 5 star hotels Across India
Ltd Orchid Hotels and serviced
apartments
Royal Orchid US based Wyndham Tie-up Not Available Not Available 4 star hotel Across India
Hotels Ltd (ROHL) Hotel Group
Yatra Capital Platinum Hospitality PE Invested 15 million Hotel and serviced Bangalore
Limited Services apartments
Uppal group Marriott International Tie-up Invested 116 million 5 star hotels Gurgaon and
Chandigarh
Clearwater Capital SPV formed by BSEL PE Invested 49% stake in Business Hotel Pune
Partners Infrastructure Realty Ltd, SPV
Unity Realty and
Developers Ltd and
Kamat Hotels (India) Ltd
City Group Nitesh Estates PE Invested 100 million Business Hotel Bangalore
Property Ventures
Yatra Capital Jalan Intercontinental PE Invested 7 million Business Hotel Kolkata
Limited Hotels Pvt Ltd
Japan's Shinsei Bank Lemon Tree Hotels PE Invested 30 million Business Hotel Not Available
Limited and Kotak
Realty Fund joint
investment

Exchange Rate: 1 USD = INR 50
(II) Infrastructure Factors

Road Connectivity: According to 'Indian States at within the state are closely associated with the
a Glance 2006-07, Performance, Facts and spread of development in the state.
Figures'16; physical infrastructure such as road
The NCR has the maximum number of National
connectivity is an important determinant of
Highways passing through the region, followed by
economic growth. As per the Economic Survey
Bangalore and Ahmedabad. Similarly in case of
2003-04, roads carry 85% of passenger traffic
distance covered, the National Highways passing
and 70% of freight traffic in the country. Density
through NCR ranks first followed by Bangalore
of roads has been considered in each state (for
and Chennai. As per the state-wise data
the cities we have undertaken for our study) to
pertaining to density of roads (road length/1,000
understand the links that have been established
sq km of area) in the year 2002, Delhi (NCR) is
throughout the area. The network of roads
way beyond other states in this respect.

R E P O RT
Rail Connectivity : Rail routes help connect the state having a well-diversified industrial sector is
state with other parts of the country as it is one likely to show more growth prospects over a
of the most commonly used transport services period of time than others. State governments
in India. As per rail routes for each 1,000 sq.km have taken several initiatives to attract
within the regions considered by Cushman & investments from within the country as well as
Wakefield Research, NCR heads all the other foreign funds/companies to stimulate the state
states, followed by West Bengal. In terms of economy. Maharashtra and Gujarat are two
inter-connectivity amongst all the 11 cities taken states that have witnessed significant growth in
for the study, the number of sub-stations in each the manufacturing sector in recent past.
of these cities was another crucial factor.
The services sector is witnessing a robust
Mumbai, followed by the NCR, came up as the
growth across all regions with more than half of
highest ranking cities for these parameters.
Commercial office the country's GDP coming from this sector.
space demand is Air Connectivity : Privatisation in the aviation Transportation, storage and communication,
expected to be industry, coupled with the entry of private trade, hotels and restaurants, finance, banking
approximately 180 players (mostly budget airlines) and an open sky and insurance, real estate as well as public
million sq.ft. over the policy has enabled domestic airlines to fly on administration are the activities included in the
next three years international sectors. All these factors combined service sector. Trade, hotels and restaurants
which is likely to have led to a stupendous increase in air travel contribute approximately 30% share to the
have a positive within the country. Besides Delhi and Mumbai sector. Maharashtra has seen the highest growth
impact on hospitality (accounting for nearly 49% of all passenger in the service sector amongst the centres
demand as well. boarding and originations in the domestic sector considered for this study followed by West
and almost 65% of all international travel in Bengal.
India), Hyderabad and Chennai are other tier-II
(III) Commercial Induced Business Demand
cities17 with good air connectivity among all the
11 cities considered for the study. Keeping in Commercial induced business demand is one of
mind the need for such infrastructure, the the critical demand drivers for the hospitality
government has initiated the development of 47 sector. To asses this factor we have taken into
airports, including 40 brownfield and 7 greenfield consideration the office supply as well as
projects across tier-I, II and III cities of India. absorption for the year 2008. It can be noticed
that for the past 4-5 years the commercial office
Socio-Economic Climate
sector has been dominated by the exponential
(I) Gross State Domestic Product (GSDP) growth of the IT/ ITeS sector, across all
prominent as well as Tier I and II cities in India.
According to 'India States at a Glance 2006-07'
NCR (14 million sq.ft.), Bangalore (11 million
the GSDP is the aggregate of the economic
sq.ft.) and Chennai (10 million sq.ft.) have
value of all goods and services produced within
witnessed a good quantum of commercial office
the geographical boundaries of the state during
space development during 2008. Absorption in
the financial year. It is a good indicator of the
the commercial office space was largely
level of economic activity as it measures the
accounted by IT/ITeS, BFSI and telecom sector
total income generated within the state.
across the major Tier I & II cities with Bangalore
Maharashtra (represented by Mumbai & Pune)
witnessing the maximum absorption followed by
ranks first on GSDP measured during 2005-06.
NCR and Mumbai. Cushman & Wakefield
This is followed by West Bengal (represented by
Research estimates commercial office space
Kolkata) amongst all the cities considered for
demand to be approximately 180 million sq.ft.
our study.
over the next three years which is likely to have
(II) GSDP for Manufacturing and Services Sector a positive impact on hospitality demand as well.
Manufacturing is no doubt one of the important

economic activities for any state. Generally, a

R E P O RT
External Drivers and Industry Potential Analysis
High South 0; North 0; West 1; East 1 South 3; North 1; West 1; East 0
1
Tier-I and tier-II Mumbai
cities including NCR
Mumbai, NCR, Bangalore
Hyderabad
Bangalore, Pune
Hyderabad and 2 Kolkata

Chennai offer the Chennai
best macro-level
External Drivers Scoring
environment for
hotel industry
development in
3
India, as they are Cochin Jaipur Goa
supported by high Ahmedabad
industry growth and

are best positioned
to benefit from
external growth 4
drivers.
Low South 1; North 1; West 1; East 0 South 0; North 0; West 1; East 0
Industry Potential Scoring

Low High
5 4 3 2 1
Note:
Industry potential is assessed by considering existing room inventory and upcoming room supply by 2011 across up-scale, mid-scale and
budget category.
External drivers is assessed by considering factors such as skilled Human resource availability in the hospitality sector, Government
policies/ regulations related to hotel development, Investment for infrastructure development, and Socio-economic parameters as
applicable in each of the cities.

R E P O RT
Estimated Supply of Hotels by 2011

Rank # City New Hotel Key Features of Development
Development
by 2011
(Million sq ft)
1 NCR 12.9 Highest number of mid-scale and budget rooms by 2011 amongst the 11 cities
2 Bangalore 11.8 Highest number of up-scale rooms by 2011amongst the 11 cities
3 Mumbai 7.9 Second highest number of mid-scale rooms by 2011 amongst the 11 cities after NCR
4 Hyderabad 6.8 Third highest in number of up-scale rooms by 2011 after Bangalore and NCR
5 Pune 4.6 Moderate number of up-scale and budget rooms by 2011
6 Chennai 4.3 Moderate number of upcoming up-scale and budget rooms by 2011
7 Goa 3.5 No budget rooms under development by 2011
8 Kolkata 3.0 No budget rooms under development by 2011
9 Jaipur 2.0 No budget rooms under development by 2011
10 Ahmedabad 1.6 Minimal development of up-scale and budget rooms by 2011
11 Kochi 1.5 Minimal development of up-scale and budget rooms by 2011
TOTAL 59.9
The study indicates that tier-I and tier-II cities drivers etc. in order to boost its hospitality
including Mumbai, NCR, Bangalore, Hyderabad sector. Industry potential is a dynamic factor
and Chennai offer the best macro-level susceptible to change and upcoming room
environment for hotel industry development in supply is a major component in it. It can also
India, as they are supported by high industry be inferred that the external drivers (a
growth and are best positioned to benefit from combination of various socio-economic and
external growth drivers. Pune and Kolkata are political factors) are less susceptible to
also benefited by the external drivers but their changes than the industry potential factors
strength as per industrial potential is (which are restricted purely to the respective
comparatively lower than that of the cities industry dynamics). However it is also
placed in the high quadrant based on the two true that prevailing economic situation,
parameters. Leisure tourism continued to be government policies (subject to the hospitality
the core driver for Goa while the city has sector) and infrastructure initiatives will
not received much impetus from other definitely have a bearing on the industry
sources like Government policies/regulation, potential factors.
infrastructure development, economic

R E P O RT
CONCERNS & CHALLENGES crucial for new overseas investors to operate

with a local partner (preferably with a portfolio
The main roadblocks besieging the hospitality
of strategic sites) to handle various approvals for
sector in India are procedural delays, inadequate
the project development. Exit becomes
infrastructure and shortage of quality manpower.
cumbersome for those developers who haven't
A typical hospitality project requires numerous
entered a joint venture or have purchased land
regulatory approvals, through imperious
at a higher rate.
bureaucratic layers and multiple window
clearances, with each approval stage consuming Another major challenge faced by this sector in
enormous amount of time. Aspects such as land India is shortage of experienced managers and
acquisition and title conversions can take up skilled staff, especially for premium projects. The
time ranging from a few months to years. demand for skilled manpower in the hospitality
Besides land acquisition, getting suitable land sector is ever increasing and with the sector
parcels of adequate area at prominent locations already suffering considerable attrition, this is an
at affordable rate and with clear titles is a area that requires special attention. An increase
challenge in itself. Further, variations in in Aviation Turbine Fuel (ATF) prices leading to
regulations across the different states make hike in air fares may also discourage tourist flow
entry of new players into the hospitality sector, to a certain extent, impacting hotel room
especially foreign giants a challenge. This makes it demand.

R E P O RT
STATE RANKINGS parameters. Top 3 states under each

head parameter that have demonstrated
In this exercise we have reviewed 20 states
consistent performance are expected to
and union territories across India and have
directly and indirectly aid growth of the
ranked them considering four broad
hospitality industry over the long term in that
parameters which are: 'Economic Drivers';
region. Four different ranks have been followed
'Demography'; 'Infrastructure' and 'Tourism'.
in this exercise namely 'BEST'; 'BETTER';
The 20 states have been judged on various
'GOOD' and 'AVERAGE'.
sub-parameters as applicable under the head
(A) Economic Drivers

States GSDP - GSDP GSDP Economic Estimated Total FDI Inflow
Current Prices Services - Manufacturing - driver for number of Expenditure from 04/00 -
(2005-06) Current Prices Current Prices hospitality households in 05/08 (in
(2004-05) (2004-05) (Services/ 2005-06 (in crore)
Industrial/ 00's)
Tourism)
Andhra Pradesh v v v v v v v
Bihar v v v v v v v
Chandigarh v v v v v v v
Delhi v v v v v v v
Goa v v v v v v v
Gujarat v v v v v v v
Himachal Pradesh v v v v v v v
Karnataka v v v v v v v
Kerala v v v v v v v
Madhya Pradesh v v v v v v v
Maharashtra v v v v v v v
Orissa v v v v v v v
Pondicherry v v v v v v v
Punjab v v v v v v v
Rajasthan v v v v v v v
Sikkim v v v v v v v
Tamil Nadu v v v v v v v
Uttar Pradesh v v v v v v v
Uttaranchal v v v v v v v
West Bengal v v v v v v v
GSDP – Gross State Domestic Product
Legend: v Better v Best v Good v Average

R E P O RT
(B) Demography
States Population (in Area (Sq.Km) Per Capita Income Number of Employment in
000's) at current prices Meeting & Non-agricultural
(2005-06) Convention sector - Urban
centre as of 2008 area 2005( in 000
000's)
Andhra Pradesh v v v v v
Bihar v v v NA v
Chandigarh v v v v NA
Delhi v v v v v
Goa v v v v NA
Gujarat v v v v v
Himachal Pradesh v v v NA NA
Karnataka v v v v v
Kerala v v v v v
Madhya Pradesh v v v NA v
Maharashtra v v v v v
Orissa v v v v v
Pondicherry v v v NA NA
Punjab v v v v v
Rajasthan v v v v v
Sikkim v v v NA NA
Tamil Nadu v v v v v
Uttar Pradesh v v v v v
Uttaranchal v v v v NA
West Bengal v v v v v
NA – Not Applicable
(C) Infrastructure
States Number of Number of Length of New Airports Modernisation Modernisation Air traffic Air traffic
NH'S (Kms) SH's (Kms) railway lines Planned of city- side by of air side by passenger- passenger -
(Kms) - private players AAI international: domestic:
2003-04 April 07 - April 07 -
Mar 08 Mar 08
(In 000 000's) (In 000 000's)
Andhra Pradesh v v v v NA NA v v
Bihar v v v NA NA v NA v
Chandigarh v NA v NA NA v NA NA
Delhi v NA v v NA NA v v
Goa v v v NA NA v NA v
Gujarat v v v v v NA v v
Himachal Pradesh v v v NA NA NA NA
Karnataka v v v v v NA v v
Kerala v v v v v NA v v
Madhya Pradesh v v v v NA NA v
Maharashtra v v v v v v v v
Orissa v v v v v NA NA v
Pondicherry v v v NA NA NA NA NA
Punjab v v v NA v NA v NA
Rajasthan v v v NA v NA NA v
Sikkim v v NA v NA NA NA NA
Tamil Nadu v v v v v v v v
Uttar Pradesh v v v NA v v NA v
Uttaranchal v v v v v NA NA v
West Bengal v v v v NA NA v v
NH – National Highways; SH – State Highways; AAI – Airport Authority of India; NA – Not Applicable

R E P O RT
(D) Tourism
States Number of foreign Number of Number of tourist Average Amount UNESCO
tourists - 2006 domestic tourists destinations in the Sanctioned per declared heritage
- 2006 state tourism project sites 2008
(INR in '00000)
Andhra Pradesh v v v v v
Bihar v v v v v
Chandigarh v v v v NA
Delhi v v v v v
Goa v v v NA v
Gujarat v v v v v
Himachal Pradesh v v v v NA
Karnataka v v v v v
Kerala v v v v NA
Madhya Pradesh v v v v v
Maharashtra v v v v v
Orissa v v v v v
Pondicherry v v NA v NA
Punjab v v v v NA
Rajasthan v v v v v
Sikkim v v v v NA
Tamil Nadu v v v v v
Uttar Pradesh v v v v v
Uttaranchal v v v v v
West Bengal v v v v v
NA – Not Applicable
UNESCO - United Nations Educational, Scientific and Cultural Organization

R E P O RT
RESULTS OF RANKING EXERCISE infrastructure amongst the other states followed

by Uttar Pradesh and Tamil Nadu. However,
Maharashtra tops the list on all the four
Uttar Pradesh has the highest number of
parameters. It holds the highest position under
national and state highways passing through the
Economic Drivers, taking the highest rank
state as well as the longest railway lines.
among other states in areas such as GSDP at
Maharashtra tops the list in terms of tourism
current prices, GSDP- Services/ GSDP-
activities recording the highest air traffic
Manufacturing at current prices, estimated
passenger – international and domestic, number
number of households and FDI Inflow. The other
of foreign tourists, number of tourist
states to follow under Economic Drivers are
destinations and the number of UNESCO
Tamil Nadu and Karnataka respectively.
declared heritage sites. Delhi and Karnataka
On the demographic front Maharashtra ranks hold second and third ranks respectively. To
the highest in terms of area, population, number conclude, states which have been ranked
of convention centres etc. and is followed by consistently well on the broad categories are
Tamil Nadu and Andhra Pradesh. Maharashtra more likely to support developments in the
holds the highest position in terms of hospitality industry.
Cumulative Ranking of Top 5 States

Rank # Economic Rank Demography Rank Infrastructure Rank Tourism
Drivers
1 Maharashtra 1 Maharashtra 1 Maharashtra 1 Maharashtra
2 Tamil Nadu 2 Tamil Nadu 2 Uttar Pradesh 2 Delhi
3 Karnataka 3 Andhra Pradesh 3 Tamil Nadu 3 Karnataka
4 Gujarat 4 Uttar Pradesh 4 Gujarat 4 Tamil Nadu
5 Andhra Pradesh/ 5 Delhi/ Rajasthan 5 Karnataka 5 West Bengal
West Bengal

R E P O RT
CONCLUSION However, over the past couple of years the Indian

hospitality sector has stepped up its growth
The current global economic scenario, together momentum and has turned proactive in minimising
with the slowdown in the US economy and the segment's supply-demand mismatch. WTTC is
volatility in our stock markets, is likely to impact working along with MoT in international marketing
investment opportunities across emerging and improving the brand image of the country with
countries like India and China. Other related respect to tourism and hospitality sector. UNDP
factors like a skyrocketing inflation rate (that (United Nation Development Programme) in
touched a 13-year high of nearly 12% in August collaboration with the Indian Government has
2008), multiple fluctuations in RBI's CRR and Repo decided to provide assistance for capacity building
rates, stock market turning volatile, etc. are of local communities of 36 rural tourist sites in
affecting the Indian economy in recent times. It is India.
then little surprising that the realty market too has
This is the time been affected to a large extent as is evident from As domestic and international travellers get more
when major rising construction costs, delays in project apprehensive about security in key Indian cities,
completion schedules and developers adopting a occupancy rates and room tariffs are likely to drop
hospitality players
cautious approach. These factors have resulted in in the short term. This can be substantiated by the
might decide to
staggered supply across commercial, residential, recent official estimates released by MoT stating
hold or fold their retail and hospitality projects alike. the drop in overseas visitors to the country in
rates. November 2008 by 2.1 percent as compared to
The hotel industry in general continued to witness November 2007. Over the next few years,
a rise in room rates, albeit at a much slower rate in occupancy rates are expected to witness a fall in
comparison to the corresponding period in 2007. light of the current economic scenario as well as
As the market softens, hotels may be expected to the anticipated over supply situation in a select
adopt more sensible pricing strategies to maintain markets. To tide over the current drop in business,
current occupancy levels. In light of the current few of the star category hotels have taken to
economic climate, almost all companies are looking offering 10 to 30% discounts in the room tariffs so
at means to control travel expenditure and are as to attract domestic and international tourists;
increasingly travelling 'smarter' -- completing one this trend could well continue in the coming
day meetings, accommodating employees at months if the need be.
company guest houses etc. At the same time
trends indicate that clients who traditionally The upcoming hotel rooms are likely to witness
booked five star hotel rooms, are now re- tremendous growth during 2008-11 especially in
considering their travel policies and moving to four the mid-segment sector, for the 11 cites considered
star hotels in order to maximize savings. for the study. Up-scale hotels are expected to
continue to dominate among the three categories
Occupancy rates across most tier-I, II and III cities chosen for the study. Domestic and international
have fallen or stabilised in 2007-08 with Jaipur and hotel brands are entering markets with new
NCR witnessing a drop of 9% and 8% respectively creative ideas and are adopting new business
due to the current prevailing economic situation models and ownership structures for the
(domestic and global) and the blasts across the development of fresh properties. In the coming
country. On the other hand cities like Goa, years, more hotels utilising mixed-use development
Ahmedabad and Kolkata have managed to have formats are likely to be developed in order to
positive growth in occupancy rates in 2007-08. capitalise the demand for commercial asset classes,
The overall tourism and hospitality industry in such as office and retail.
India is likely to be largely influenced with rising While there can be no control over the projected
domestic travel. This can be one of the triggers to supply for any market, the ARR's can certainly be
support further hotel development across the moulded to maintain or capture demand. This is the
country. In 2007, the proportion of domestic time when major hospitality players might decide
tourist inflow in comparison to international to hold or fold their rates. With the delivery of the
tourists stood in the ratio of 91:9. Domestic planned supply, an over supply situation would be
tourists are also likely to continue to account for certain and Darwin's theory of survival, very
the major proportion of tourist inflows in the applicable.
coming years.

R E P O RT
Content Sources
1 Source: Press Information Bureau, Government of India
2 Source: Ministry of Tourism and Culture
3 Source: Property Report Asia
4 Source: WTTC
5 Source: http://www.itftgroup.com/travel.php#inindia
Source: Pre-budget Memorandum of Hotel Industry 2007-08
6 Source: http://www.itftgroup.com/travel.php#gdp
7 Source:http://www.ibef.org/artdispview.aspx?in =74&art_id=19777&cat_id=120&page=1
8 Source: Ma Foi Management Consultants
9 Source: Ministry of Tourism, Annual Report 2007-08
10 Source: indiastreet.com
11 We have assumed that all the 5 star & 5 star deluxe hotels, 40% of the 3 star hotels, 60% of the 4 star hotels belong to the
organised sector.
12 Source: www.asiatraveltrips.com/news08/1411-DubailVistorArrivals.shtml
13 Source: India Tourism Statistics, 2006
14 Source: Ma Foi Management Consultants
15 Source: http://dipp.nic.in/fdi_statistics/india_fdi_index.htm
16 Source: Indian States at a Glance 2006-07, Performance, Facts and Figures
17 Source: Tier I cities – Bangalore, Delhi and Mumbai
Tier II cities – Kolkata, Chennai, Pune, Hyderabad and Ahmedabad
Tier III cities – Bhopal, Chandigarh, Amritssar, Lucknow, Agra, Jammu,Varanasi, Patna, Indore, Jaipur, Udaipur, Bhubaneswar,
Coimbatore, Panjim, Gulberga/ Shimoga,Vishakhapatnam, Mangalore. Hassan, Kochi, Rajkot,Vadodara, Gantok, Guwahati,
Kohima, Dimapur, Imphal, Agartala, Raipur, Khajuraho, Ranchi, Trichy, Madurai, Agatti (Lakswadweep Islands), Trivandrum, Port
Blair, Halwara and Dehradun
Other Sources
FH&RA India – Indian Hotel Industry Survey 2006-07
HVS - Hotels in India - Trends and Opportunities 2008

R E P O RT
ABOUT CUSHMAN & WAKEFIELD For more information on Cushman &

HOSPITALITY Wakefield Hospitality contact:
Cushman & Wakefield Hospitality provides a wide range

of consulting services for hotels, resorts, serviced Akshay Kulkarni
apartments and mixed-use developments. We specialise Director – South Asia
in operations analysis, market research, demand analysis Cushman & Wakefield Hospitality
and have developed a detailed understanding of the +(91 22) 2281 3317/ 19/ 20
dynamics of the accommodation industry. This allows us akshay.kulkarni@ap.cushwake.com
to complete comprehensive market demand forecasts,
which form the base for market and business
assessments, financial projections and valuation services.
We also advise on the development of new hotels, Authors of the report:
working with developers, architects and other
development team members to conceptualise the
optimal product for a particular site. Through the Shaila Vivek
integration of consulting and valuation services with Research & Business Analytics Group
design management and project direction services, we shaila.vivek@ap.cushwake.com
can provide our clients with a full suite of services from
site analysis and project conception, through market Digbijay Das
Research & Business Analytics Group
analysis and financial evaluation, to construction
digbijay.das@ap.cushwake.com
administration and project delivery.
Kanika Vaid
Our services include: Market Studies, Valuation Services, Research & Business Analytics Group
Property Development, Revenue Management, Sales & kanika.vaid@ap.cushwake.com
Marketing, Asset Management, Technology Solutions
as well as Shared Ownership Solutions.
About Research & Business Analytics Group Cushman & Wakefield is the world's largest For more information on
Cushman & Wakefield is committed to collation of high privately held commercial real estate services firm. Cushman & Wakefield, contact :
quality base data and assembling detailed statistics for Founded in 1917, it has 227 offices in 59 countries Anurag Mathur
the major India markets on a regular basis. This and more than 15,000 employees. The firm
commitment to quality research provides a strong Managing Director, India
represents a diverse customer base ranging from +(91 80) 4046 5555
foundation for all of our services. Customized,
small businesses to Fortune 500 companies. anurag.mathur@ap.cushwake.com
analytical reports are also developed to meet the
specific research needs of owners, occupiers, and It offers a complete range of services within four
investors. primary disciplines: Transaction Services, including
tenant and landlord representation in office,
Through the delivery of timely, accurate, high quality
industrial and retail real estate; Capital Markets,
research reports on the leading trends, markets and
business issues of the day, we aim to assist our clients in including property sales, investment management,
©2009 Cushman & Wakefield
making pertinent and competitive property decisions. valuation services, investment banking, debt and
All Rights Reserved
In addition to producing regular reports such as global equity financing; Client Solutions, including
rankings and local quarterly updates available on a integrated real estate strategies for large
regular basis, Cushman & Wakefield also provides corporations and property owners; and Consulting
customized studies to meet specific information needs Services, including business and real estate
of owners, occupiers and investors. consulting.
For more information, contact: A recognised leader in global real estate research,
Tanuja Rai Pradhan the firm publishes a broad array of proprietary
Associate Director - India reports available on its online Knowledge Center
Research & Business Analytics Group at cushmanwakefield.com/knowledge.
+(91 124) 469 5555
tanuja.pradhan@ap.cushwake.com
Disclaimer
This report has been prepared solely for information purposes. It does not purport to be a complete description of the markets or developments contained in this material. The
information on which this report is based has been obtained from sources we believe to be reliable, but we have not independently verified such information and we do not
guarantee that the information is accurate or complete.

www.cushmanwakefield.com
©2009 Cushman & Wakefield

All Rights Reserved

C&amp;W Hospitality Report - The Voyage

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

C&amp;W Hospitality Report - The Voyage

Uploaded by

Copyright:

Available Formats

A R E S E A R C H P U B L I C AT I O N | J A N U A RY 2 0 0 9

1 Executive Summary 22 Research Findings

INDIA REPORT | JANUARY 2009 1

THE JOURNEY SO FAR initiatives and increased investor interest, which

INDIA REPORT | JANUARY 2009 2

Despite the temporary slowdown as enunciated, Source: Indiastat

INDIA REPORT | JANUARY 2009 3

TRAVEL & TOURISM INDUSTRY IN INDIA infrastructure, positive government initiatives on

Influencing Sector Dynamics:

INDIA REPORT | JANUARY 2009 4

Government Initiatives: Few of the other key government initiatives:

l Initiatives undertaken by the MoT to w

INDIA REPORT | JANUARY 2009 5

CITY OVERVIEWS The sub-segments of 2 star and 1 star category

Study Structure We aim at giving a true representation of 5 star

INDIA REPORT | JANUARY 2009 6

AHMEDABAD Ahmedabad is a transit destination to Mount

Haripura Average Room Rate Vs. Occupancy - Ahmedabad

Occupancy Rate (%)

Upscale Midscale Budget Upcoming Supply Zone Upscale Midscale Budget

INDIA REPORT | JANUARY 2009 7

l Market segmentation indicates that nearly approximately 1,300-1,500 rooms across

Occupancy Rate (%)

connectivity. Bangalore though not a major 8,000

Hampi, etc. The city is also considered as an 0 0

in engineering, medicine, management, law etc Source: CRISIL

formed Bangalore International Exhibition

INDIA REPORT | JANUARY 2009 8

Outlook was an equal distribution amongst all category of

Bangalore City Map

Upscale Midscale Budget Upcoming Supply Zone

CHENNAI physical infrastructure is good with two ports as

shipping, etc. and this strong commercial and 60%

favourable leisure destination too. Chennai's Source: CRISIL

INDIA REPORT | JANUARY 2009 9

Hospitality Dynamics Upcoming Room Supply - Chennai

l According to C&W Research estimates, 8%

room stock Chennai constitutes of 7,400 –

Upscale Midscale Budget

Man Rd Old l Amongst the three major south cities,

INDIA REPORT | JANUARY 2009 10

GOA economy with numerous leisure events like

Chorao Sanquelim Upcoming Room Supply - Goa

INDIA REPORT | JANUARY 2009 11

Outlook master plan being released proposing likely

capacity addition to existing properties). 7,500

Occupancy Rate (%)

ARR (in INR)

shifting of the international airport from south 0 0

international airport at Shamshabad. 6,000 60%

dominated by budget category accounting ARR Low ARR High Occpancy

for approximately 51% of this total stock; Source: CRISIL

spread across prime business districts of

l Domestic business travellers account for Upscale Midscale Budget

INDIA REPORT | JANUARY 2009 12

Outlook operators for new projects in anticipation of

Hyderabad City Map

Upscale Midscale Budget Upcoming Supply Zone

JAIPUR and leisure activities. Jaipur is also witnessing

stones, garments, handicrafts and marble, there 5,000 50%

are plenty of heritage sites in Jaipur, which has 2,500 25%

INDIA REPORT | JANUARY 2009 13

Hospitality Dynamics l Approximately 48% of the existing supply

C&W Hospitality Report - The Voyage

C&W Hospitality Report - The Voyage