SUMMER TRAINING PROG.

PRESENTATION
ON
Project Finance: Hospitality Industry

Presented By:
Parth Sharma
MBA(B&F)
3rd Semester

CONTENTS
Project

finance meaning
Company profile
Industry overview
Objectives
Research methodology
Data analysis
Observations
Recommendation
Conclusion

Project Finance: Meaning

The financing of long-term infrastructure,

industrial projects and public services
based upon a non-recourse or limited
recourse financial structure where project
debt and equity used to finance the project
are paid back from the cashflow generated
by the project.

Company Profile
SREI Infrastructure Finance Limited 24-years-old
Kolkata-based NBFC which is engaged in leasing and
hire-purchase/hypothecation financing of heavy
construction
equipment
and
financing
of
infrastructure related projects. Pursuant to forming a
50:50 joint venture (JV) with BNP Paribas Lease
Group (BPLG) a 100% subsidiary of BNP Paribas,
SIFL divested major part of its equipment financing
and leasing business alongwith the assets & liabilities
as on January 1, 2008, in the JV company Srei
Equipment Finance Pvt. Ltd. (SEFPL).
The promoters, Mr Hemant Kanoria (CMD) and his
brother Mr Sunil Kanoria (Vice Chairman) have
over three decades of business experience in the
financial sector.

Indian Hospitality Sector Overview

India, a country blessed with diversity, both in
terms of culture and geography, India has always
been a fascinating nation to tourist. Owing to its
diversity it attracts tourists from all over the
world.
The depreciation in INR, Outbound travels are
now become far more expensive which will give
boast to Domestic and Inbound travel.
As per WTTC, India ranks 11th in the Asia
Pacific region and 65th in World Travel and
Tourism Competiveness Index, 2013 compare to
68th in 2011.

Continued
The total contribution of T&T to GDP, in 2012, was `
6.385.1 billion (6.6% of GDP) and is forecast to rise
by 7.9% p.a. from 2013-2023 to `14,722.3 billion.
Travel & Tourism directly and indirectly supported
39,512,000 jobs (7.7% of total employment). This is
expected to rise by 2.1% p.a. to 48,592,000 jobs
(8.0% of total employment) in 2013.
As per the World Travel & Tourism Council, the
tourism industry in India is likely to generate US
$121.4 bn of economic activity by 2015, and the
hospitality sector has the potential to earn US $24 bn
in foreign exchange by 2015.

** Data source: WTTC Reports, HVS Report etc.

Objectives
To

study and analyzing the hospitality sector of

the country as a whole through reports issued by
various firms such as HVS consultancy firm,
tourism & hospitality reports published during the
year, newspapers, journals etc..
Analyzing the financials of leading Hospitality
Groups in India so, that an opinion can be form
on the governance of hotel industry in India.
Analyzing the Delhi-NCR hotel sector as a prime
responsibility so, that an opinion can be framed
whether or not the SREI should finance the hotel
projects that are coming in their way.

Research Methodology
Nature of Research:
Descriptive
Explorative
My Research was descriptive in nature, with
secondary data as a main source for conducting
my job during internship.
Secondary Data: It consists of information that
already exists somewhere and has been collected
for some specific purpose in the study. The
secondary data for this study is collected from
various sources like, Books, Website, Newspaper,
Financial Magazine (weekly, business world etc).

A.
B.

ANALYSIS & INTERPRETATION

Five parameters for hotel analysis

Supply:
Demand
Occupancy Rate.
Average Daily Rate (ADR)
Revenue per available room (RevPAR)

Indian
Hotels
(Taj group)

Company

Ltd.

Incorporated in 1903, IHCL is promoted by the Tata

Sons Limited. It has long-standing operations
spanning over 100 years and operates the largest chain
of hotels in South Asia. IHCL, its subsidiaries and
associates are widely recognised under the umbrella
brand name Taj Hotels Resorts and Palaces, which
has 119 hotels with a room inventory of 14,423 rooms
as on May 31, 2013.
IHCL has presence across luxury, upper upscale,
upscale and value segments of the market through its
various brands i.e. Taj, Vivanta, Gateway and Ginger
respectively. The group also has presence in air
catering, spas, wildlife lodges and service apartments.

Taj group analysis cont

IHCLs occupancy levels for FY13 dropped by 2%

and stood at 63% due to oversupply of room
inventory in the domestic market coupled with
challenging economic environment.
The overall room supply for Indian market in FY13
increased by 24% while the room demand grew by
21%.
The company has seen the satisfactory RevPAR of
Rs. 6000 as compared to the industrys overall
RevPAR of Rs. 3625.
Company has enjoyed amazing ARR of Rs. 9,503.
IHCL relatively better placed due to strong brand and
diversified presence.
** Data source: WTTC Reports, HVS Report etc.

Asian Hotels (North) Ltd. (Hyatt

Regency)
Asian Hotel (North) Limited (AHNL) is engaged
in the business of operating a hotel property under
the brand of Hyatt Regency in New Delhi since
1983. AHNL was promoted by the Gupta, Jatia
and Saraf families in 1980 and the company
started operations with the commencement of
Hyatt Regency hotel in Delhi in 1983. Currently,
the promoter shareholding is with the Jatia family
only.
AHNL operates Hyatt Regency, New Delhi, a
five-star hotel, with 520 rooms and five
restaurants located at Bhikaji Cama Place, New
Delhi.

Hyatt Regency Analysis Cont

AHNLs occupancy levels for FY13
stood at the rate of 68% as compared to
that of the industrys rate around 58%
which can be considered fine.
Average Room Rate (ARR) of Hyatt
Regency dropped by 8% as compared to
the last years ARR. The ARR stood at
Rs. 8253 which is outstanding according
to the industry norms with industrys
overall ARR of Rs. 4214.

** Data source: WTTC Reports, HVS Report etc.

Delhi-NCR Synopsis of Hospitality

Sector
The NCR is fast becoming a force to reckon with.
Around 32,000 rooms are available in Delhi because of which
five-star tariff of up to Rs 25,000 a night during peak season
will fall by almost half in the future, which will ensure that
foreigners no longer flock to Bangkok, Singapore or Hong
Kong as they are cheaper holiday destinations than the
Capital.
Delhi NCR which includes Gurgaon, Noida, Greater Noida,
Manesar etc. has some amazing future as far as hotel industry
is concerned although currently there is some pressure on the
whole sector but in future it will boom according to the
indicators. Also in this study AGRA has also been added as it
is one of the most prime places in the northern region of India
and most of the tourists visits this place via Delhi-HaryanaUP etc.

Delhi-NCR Analysis
Delhi: Almost all hotels located in Delhi have witnessed a
decline in RevPAR and this trend is likely to continue in the
immediate short term. Overall market demand growth
actually grew by 4.7% in 2012/13. Delhi's supply is expected
to see an addition of approximately 5,200 new hotel rooms
over the next five years that are now under active
development. Aerocity is expected to become a unique
destination for conventions and events in the country. Our
long term outlook for Delhi, therefore, remains bullish.
Gurgaon (Including Manesar): The city, currently features
approximately 4,500 hotel rooms and over the last four years
has witnessed a CAGR of 31.2% in hotel room supply,
resulting in both occupancy and average rate dropping by
5.3% and 10.1%, respectively. Demand in Gurgaon continues
to be strong, growing by 12% in 2012/13. Outlook for
Gurgaon remains positive.

** Data source: WTTC Reports, HVS Report etc.

Contd
Noida: Hotel market witnessed a steep decline in
RevPAR (27.5%) in 2012/13 over 2011/12, mainly
because of two reasons, one increase in supply and the
other decline in demand. We expect market wide
occupancy and average rate to remain under pressure.
Agra: Agra exhibited the highest increase in
RevPAR (10.3%) amongst all the cities supported by
growth in both average rate (7.1%) and occupancy
(3.0%). The commissioning of the Yamuna
Expressway that connects Greater NOIDA to Agra (in
August 2012) reducing the travel time by half (from
four to two plus hours) has fuelled growth in demand
for the city's hotels. Proposed supply is expected to be
88.5% in the upcoming years.

Observations

The nationwide RevPAR recorded a 5.2% drop in 2012/13

over the previous year with the five-star segment registering
the maximum decline (8.7%), followed by the three-star
segment (4.0%).
The newly introduced two-star category registered the highest
RevPAR growth (10.4%).
Fiscal year 2012/13 saw the addition of around 9,000 branded
rooms resulting in a nationwide existing supply of 93,479
rooms, an increase of around 11% over the previous year.
NOIDA (including Greater NOIDA) shows the highest
increase in supply in 2012/13 over the previous year (58.6%).
Jaipur witnessed the largest growth in supply of branded
rooms in 2012/13, followed by Ahmedabad and Chennai.
Mumbai (including Navi Mumbai) maintained its top position
with the highest existing supply of branded rooms in the
country, followed closely by Delhi.

Recommendations
Mumbai International Airport Limited (MIAL) of
Mumbai & Aero-city in Delhi has been remarkably well for
the industry as a whole.
What India needs is more such developments in major
metropolitan cities.
Another untapped opportunity lies in the country's 7,500 km
coastline. Today, the only Indian beach destination to make a
mark on the world map is Goa. While there are a few nascent
markets developing in Kerala, Andaman & Nicobar Islands,
Pondicherry and Daman, they still have a long way to go in
attaining the recognition and popularity Goa has achieved.
Studio Rooms Culture: There is huge potential in this
segment; and we are hoping that more operators and
developers tap this opportunity going forward so that benefit
to the whole industry can be grabbed.

Conclusion

The tourism industry in India is thriving due to an increase in

foreign tourist arrivals (FTA) and a greater number of Indians
travelling to domestic destinations than before. The revenue from
domestic tourism is likely to grow by 8.2 per cent in 2014.
The Indian hospitality sector has been growing at a cumulative
annual growth rate of 14 per cent every year adding significant
amount of foreign exchange to the economy.
In the long term, the demand-supply gap in India is very real and
that there is need for more hotels in most cities. The shortage is
especially true within the budget and the mid market segment.
There is an urgent need for budget and mid market hotels in the
country as travelers look for safe and affordable accommodation.
In 2013, the travel and tourism industry contributed Rs 2.17 trillion
(US$ 36 billion) or 2 per cent to the country's gross domestic
product (GDP). This is expected to rise to Rs 4.35 trillion (US$
72.17 billion) in 2024.

Contd

Major cities depicted a decline in ARR and

Occupancy, mainly on account of weak
business sentiment coupled with curtailment
on travel. From Rs.8, 900 in June 2012, ARR
decline to Rs.8, 781 in June 2013, with
occupancy declining by 2% to 61% during
same period.
Although India has made some headway
in the recent past, it still has a long way to
go in order to establish itself as a protourism nation.
** Data source: WTTC Reports, HVS Report etc.