Hotels

Summary
Hotel industry in India witnessed

Annual Review

September 2009

robust growth from 2003-04 to

2007-08. However, the global
economic slowdown resulted in
a sharp correction in ARRs and
occupancy rates from the
second half of 2008-09. Going
forward, despite an anticipated
revival in room demand by
2010-11, players will not be able

Contents

to hike ARRs significantly as the

expected additions to room
inventory will intensify
competition, compelling
hoteliers to focus on volumes to
drive growth. Ahmedabad, Pune
and Hyderabad are expected to
be among the worst-hit
destinations, as the growth in
supply is expected to far
outpace that in demand.

Part A: Demand to revive in 2010-11; but RevPAR growth to be moderate due to

intensifying competition
Executive summary
Snapshot Business and leisure destinations
Business destinations
Leisure destinations
Project economics

A-1
A-3
A-7
A-43
A-55

Part B: State of the industry

Hotel industry A snapshot
Industry structure
Industry costs
Classification of hotels
Hotel concepts
Player Profiles
Tourism in India

B-1
B-3
B-9
B-14
B-17
B-21
B-35

Part C: Industry statistics

Industry structure
Demand-supply
Regulations
City profiles
Player overview Financial performance
Players Trends in income and expenditure
International tourism

C-1
C-15
C-25
C-27
C-33
C-39
C-45

This document has been prepared by Karishma Shetty, Sudip Mukherjee and Sridhar Chandrasekhar (Head of
Research). For any queries please get in touch with our client servicing desk. (clientservicing@crisil.com.
Ph -022-66913561)

Opinion
Sections

1.0
2.0

3.0

4.0

Executive summary
Snapshot Business and leisure destinations
- Higher rates no longer sustainable, moderate pricing to prevail
Business destinations
- Ahmedabad
- Bengaluru
- Chennai
- Hyderabad
- Kolkata
- NCR
- North Mumbai, Navi Mumbai hotels
- South and Central Mumbai hotels
- Pune
Leisure destinations
- Agra
- Goa
- Jaipur
- Kerala
Project economics
- Feasibility of hotels being commissioned across key business destinations
in 2009-10
- Cost assumptions
- Hotels in North Mumbai and Delhi to generate positive returns earlier
than rest
- Hotels in North Mumbai, Delhi and Bengaluru likely to generate
higher returns

A-1
A-3
A-3
A-7
A-7
A-10
A-14
A-18
A-22
A-25
A-32
A-36
A-39
A-43
A-43
A-45
A-48
A-51
A-55
A-55
A-56
A-56
A-56

Figures
1.0
01
02
03
04
05
06

Snapshot Business and leisure destinations

ARR index
RevPAR index
Supply growth in key destinations
RevPAR outlook business destinations (A)
PAR outlook business destinations (B)
PAR outlook leisure destinations

A-3
A-3
A-4
A-4
A-5
A-5

Continued

CRISIL RESEARCH HOTELS ANNUAL REVIEW

A-i

continued

Figures
2.0
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37

Business destinations
Ahmedabad - Category wise break up of existing supply
Ahmedabad - Area wise supply
Ahmedabad hotels - ARRs and occupancy rates
Ahmedabad hotels - Room availability and demand
Bengaluru - Category wise break up of existing supply
Bengaluru - Area wise supply
Bengaluru hotels - ARR and occupancy rates
Bengaluru hotels - Room availability and demand
Chennai - Category wise break up of existing supply
Chennai - Area wise supply
Chennai hotels - ARRs and occupancy rates
Chennai hotels - Room availability and demand
Hyderabad - Category wise break up of existing supply
Hyderabad hotels - Area-wise supply
Hyderabad hotels - ARRs and occupancy rates
Hyderabad hotels - Room availability and demand
Kolkata - Category wise break up of existing supply
Kolkata hotels - Area-wise supply
Kolkata hotels - ARRs and occupancy rates
Kolkata hotels - Room availability and demand
NCR - Category wise break up of existing supply
NCR hotels - Area-wise supply
Delhi hotels - ARRs and occupancy rates
Delhi hotels - Room availability and demand
Gurgaon hotels - ARRs and occupancy rates
Gurgaon hotels - Room availability and demand
North Mumbai - Category wise break up of existing supply
North Mumbai hotels - Area-wise supply
North Mumbai hotels - ARRs and occupancy rates
North Mumbai hotels - Room availability and demand
South and Central Mumbai Category wise break up of existing supply
South and Central Mumbai - ARRs and occupancy rates
South and Central Mumbai - Room availability and demand
Pune - Category wise break up of existing supply
Pune hotels - Area-wise supply
Pune hotels - ARRs and occupancy rates
Pune hotels - Room availability and demand

A-7
A-8
A-8
A-8
A-10
A-11
A-12
A-12
A-14
A-15
A-16
A-16
A-18
A-19
A-20
A-20
A-22
A-22
A-23
A-23
A-25
A-25
A-27
A-27
A-28
A-28
A-32
A-32
A-34
A-34
A-36
A-37
A-37
A-39
A-40
A-41
A-41
continued

A-ii

CRISIL RESEARCH HOTELS ANNUAL REVIEW

continued

Figures
3.0
01
02
03
04
05
06
07
08
09
10
11
12

Leisure destinations
Agra - Area wise supply
Agra hotels - ARRs and occupancy rates
Agra hotels - Room availability and demand
Goa hotels - Area-wise supply
Goa hotels - ARRs and occupancy rates
Goa hotels - Room availability and demand
Jaipur - Area wise supply
Jaipur hotels - ARRs and occupancy rates
Jaipur hotels - Room availability and demand
Kerala - Area wise supply
Kerala hotels - ARRs and occupancy rates
Kerala hotels - Room availability and demand

A-43
A-44
A-44
A-45
A-46
A-46
A-48
A-49
A-49
A-51
A-52
A-52

4.0
01
02

Project economics
Net margins
Interest coverage ratio

A-56
A-57

2.0
01
02
03
04
05
06
07
08
09
10
11

Business destinations
Ahmedabad - Premium segment: Supply projections
Bengaluru - Premium segment: Supply projections
Chennai - Premium segment: Supply projections
Hyderabad - Premium segment: Supply projections
Kolkata - Premium segment: Supply projections
NCR - Premium segment: Supply projections
Gurgaon - Premium segment: Supply projections
Noida - Premium segment: Supply projections
North Mumbai - Premium segment: Supply projections
South and Central Mumbai - Premium segment: Supply projections
Pune - Premium segment: Supply projections

A-9
A-13
A-17
A-21
A-24
A-29
A-31
A-31
A-35
A-38
A-42

3.0
01
02
03
04

Leisure destinations
Agra hotels - Premium segment: Supply projections
Goa - Premium segment: Supply projections
Jaipur - Premium segment: Supply projections
Kerala - Premium segment: Supply projections

A-44
A-47
A-50
A-53

4.0
01

Project economics
Project IRR across destinations

A-57

Tables

CRISIL RESEARCH HOTELS ANNUAL REVIEW

A-iii

State of the industry

Sections
1.0
2.0
3.0
4.0
5.0
6.0
7.0

Hotel industry A snapshot

Industry structure
Industry characteristics
Distribution channels
Industry costs
Operating costs
Employee costs
F&B costs
Capital costs
Segment-wise contribution margin
Classification of hotels
Classification by segment
Classification based on the number of properties operated
Hotel concepts
Ecotel
Resorts
Motels
Floatels
Boutique hotels
Timesharing industry
Service apartments
Player Profiles
Asian Hotels Ltd
Key developments
Bharat Hotels
EIH Ltd
Hotel Leelaventure Ltd
ITC Ltd
Indian Hotels Company Ltd
Tourism in India

2.0
01

Industry structure
Value chain: Players in the hospitality industry

3.0
01
02
03

Industry costs
Classification of hotels
Classification by segment
Premium segment (5-D/ 5-star)

B-1
B-3
B-3
B-6
B-9
B-9
B-9
B-10
B-10
B-10
B-14
B-14
B-14
B-17
B-17
B-17
B-17
B-17
B-18
B-18
B-19
B-21
B-21
B-22
B-22
B-23
B-26
B-28
B-30
B-35

Charts

B-4

B-13
B-14
B-15
Continued

CRISIL RESEARCH HOTELS ANNUAL REVIEW

B-i

continued

Figures
1.0
01

Hotel industry A snapshot

Hotels Market size

B-1

2.0
01
02

Industry structure
ARR and occupancy rates
Month wise occupancy rates (2007-08)

B-3
B-3

6.0
01
02

Player Profiles
Room inventory mix (2008-09)
Room inventory mix (2008-09)

B-25
B-27

7.0
01
02
03
04

Tourism in India
Indias travel and tourism industry between 2002 and 2008 (Rs billion)
Domestic tourists 2001-02 to 2007-08
Foreign tourist arrivals
Foreign exchange earnings

B-35
B-36
B-37
B-37

1.0
01

Hotel industry A snapshot

Number of hotel rooms by category

B-1

2.0
01

Industry structure
Revenue break-up (%)

B-4

3.0
01

Industry costs
Hotels: Indicative cost of construction

B-10

6.0
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15

Player Profiles
Asian hotels - Key financial indicators
City-wise properties of Asian Hotels
Bharat hotels: Key financial indicators
City-wise properties of Bharat Hotels Ltd
Upcoming properties
EIH Ltd - Key financial indicators
EIH properties (including associate companies)
Planned addition of properties
Hotel Leelaventure - Key financial indicators
Planned addition of properties
ITC Properties
Indian Hotels Co. Ltd (Standalone): Key financial indicators
Room inventory break-up
Planned addition and expansion of properties
Indian Hotels Company properties

B-21
B-21
B-22
B-22
B-23
B-23
B-24
B-26
B-26
B-27
B-28
B-30
B-31
B-32
B-33

7.0
01
02

Tourism in India
Top 10 states attracting domestic tourists
domestic destinations attracting foreign tourists

B-36
B-37

Tables

B-ii

CRISIL RESEARCH HOTELS ANNUAL REVIEW

Industry statistics
Sections
1.0
2.0
3.0
4.0
5.0
6.0
7.0

Industry structure
Demand-supply
Regulations
City profiles
Player overview
Players
International

C-1
C-15
C-25
C-27
C-33
C-39
C-45

1.0
01
02

Industry structure
Apartment Hotels - Star classification criteria
Hotels - Classification criteria for heritage categories

2.0
01
02
03

Demand-supply
Hotels - Factors infuencing room demand
Hotels: Factors infuencing room demand from leisure tourists
Hotels: Factors infuencing room demand from business travellers

C-15
C-16
C-16

3.0
01
02

Regulations
Foreign investment and collaboration - Norms for automatic approval
Hotels - Regulatory authorities

C-25
C-26

2.0
01

Demand-supply
Tourist arrivals (nos.)

C-15

1.0
01
02
03
04
05
06
07

Industry structure
Hotels - Statutory size of rooms
Hotels - Star classification criteria
Hotels - State-wise distribution of hotels and rooms (2007)
Distribution of hotels and rooms in key tourist locations (2007)
Global Distribution System (GDS) providers
Hotels - Brands
Apartment hotels in India

C-1
C-1
C-5
C-7
C-8
C-10
C-13

Charts

C-2
C-4

Figures

Tables

Continued

CRISIL RESEARCH HOTELS ANNUAL REVIEW

C-i

continued

Tables
2.0
01
02
03
04
05
06

Demand-supply
Foreign tourist arrivals - By metro
Classification of tourists according to purpose of visit - 1991 to 2007
Proportion of tourists according to purpose of visit - 1991 to 2007
Tourist arrivals - By nationality
Tourist arrivals - By purpose of visit and nationality
Tourist arrivals - By state

C-15
C-17
C-17
C-18
C-18
C-19

3.0
01
02
03

Regulations
Tourism sector - Fund allocation
Central taxes
Taxes - State-wise luxury tax

C-25
C-26
C-26

4.0
01
02
03
04
05
06
07
08
09
10
11

City profiles
Agra - Market segmentation of premium hotels
Bengaluru - Market segmentation of premium hotels
Chennai - Market segmentation of premium hotels
Delhi - Market segmentation of premium hotels
Goa - Market segmentation of premium hotels
Jaipur - Market segmentation of premium hotels
Kolkata - Market segmentation of premium hotels
Mumbai - Market segmentation of premium hotels
Hyderabad - Market segmentation of premium hotels
Pune - Market segmentation of premium hotels
Performance of key hotels across cities

C-27
C-27
C-27
C-28
C-28
C-28
C-29
C-29
C-29
C-30
C-31

5.0
01
02
03

Player overview
Companies - Financial performance
Hotels - Industry average of key constituents of income and expenditure
Hotels - Key constituents of income and expenditure in 2008-09

C-33
C-37
C-38

6.0
01
02
03
04
05
06
07

Players
EIH - Trends in income and expenditure
EIH - Trends in key constituents of expenditure
EIH - Trends in key constituents of income
EIH - Trends in forex earnings and expenditure
Hotel Leelaventure - Trends in income and expenditure
Hotel Leelaventure - Trends in key constituents of expenditure
Hotel Leelaventure - Trends in key constituents of income

C-39
C-39
C-40
C-40
C-41
C-41
C-42
continued

C-ii

CRISIL RESEARCH HOTELS ANNUAL REVIEW

continued

Tables
6.0
08
09
10
11
12

Players
Hotel Leelaventure - Trends in forex earnings and expenditure
Indian Hotels - Trends in income and expenditure
Indian Hotels - Trends in key constituents of expenditure
Indian Hotels - Trends in key constituents of income
Indian Hotels - Trends in forex earnings and expenditure

C-42
C-43
C-43
C-44
C-44

7.0
01
02
03
04
05
06
07
08
09

International
World - International tourist arrivals (inbound tourism)
Travel & tourism demand (2008-2017)
World - International tourism receipts
Outbound tourism by generating regions
International tourism top spenders
Hotels - Ranking (2000 to 2007)
World - Top tourist destinations
World estimates and forecasts
Travel and tourism industry employment

C-45
C-45
C-46
C-46
C-47
C-47
C-50
C-50
C-50

CRISIL RESEARCH HOTELS ANNUAL REVIEW

C-iii