Investment potential in Thai spa and hotel business in India

INVESTMENT POTENTIAL IN THAI SPA AND
HOTEL RESTAURANT BUSINESS IN INDIA
Prepared For:
Prepared By: ,
IMRB International
February 2009
INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 1
Preface
Thai-Indian business relations have improved considerably over the past decade.
Thailand and India are close to concluding a Free Trade Agreement (FTA) covering trade
in goods by 2010. The Free Trade Agreement between Thailand and India is expected to
improve trade relations between the two countries further. The FTA covering trade in
goods would lead to long term mutual benefits in trade and investment and the
partnership would be expanded further to cover technology know-how and expertise
India's primary imports from Thailand are machinery, electronic appliances, textiles,
plastic material, transport equipment, vegetable oil and latex. The major items of imports
under FTA are polycarbonate, cathode-ray tubes, color-TVs, air conditioners and
Aluminum products. Thailand‘s main imports from India are jewelry, gemstones, steel,
pharmaceuticals and ferrous metal ores.
India's trade with Thailand could touch USD 7 billion by 2010-11 propelled by a
doubling in transaction under Free Trade Agreement (FTA). The EHS was implemented
on September 1, 2004, under which tariffs on 82 items were to be phased out by
September 1, 2006 by both the sides.
The trade between Thailand and India is estimated to be US $ 7 billion by 2010-11 from
US $ 2.2 billion in 2005-06.
The total trade of 82 items under Early Harvest Scheme (EHS) of the FTA was increased
by over 140 percent to about US $ 358.63 million in 2005-06 from US $ 149 million in
2003-04. The share of these 82 items in India-Thailand trade increased from 10.34
percent in 2003-04 to 15.68 percent in 2005-06.
Thailand‘s export to India of the identified 82 EHS items was increased from US $ 84.64
million to US $ 275 million during the period from 2003 – 04 to 2005 – 06. During the
same time, India‘s export to Thailand of these items increased from US $ 64.28 million to
US $ 83.03 million during the same period.

In 2007, Thailand‘s export for these 82 items was US $ 406.31 million. Due the FTA
between two countries, Thailand is able to manage the trade surplus of US $ 598 in 2007
in bilateral trade between Thailand and India.
With significant potential for growth of business between the two countries, the Ministry
of Commerce, Thailand and Royal Thai Embassy would like to understand the
investment potential across the following identified product categories:-
1. Home Utility and Furnishing: This would broadly include three product
categories:-
a. Furniture – Largely focusing on house hold furniture e.g. Sofa-set,

Dining table, Corner / corner table etc. Also covering office furniture
e.g. office chairs, cubicles, tables etc and open-air furniture i.e. the
furniture used in the garden, near pools etc
b. Interior Decoration items – This would include: Show pieces,

Wooden handicraft, photo frames, artificial flowers.
c. Utensils – Household (kitchen), HoReCa (Hotel Restaurant Catering)

Segment, Institutional / Office
d. Plastic Products - Food containers, plastic storage boxes etc e.g.

Cello, Tupperware, Milton, Nyasa etc
2. Construction Material: This would include Bathroom Fittings,

Tiles/Floorings (including wooden), Roof Tiles (used in the costal areas),
Metal (Al, Tin etc) / Gypsum boards used for partition
3. Hospitality Services: This would be understood with the objective of tie-up

with existing hotels – spas, specialty restaurant (e.g. Thai cuisine restaurant),
health wellness services etc. The client would be interested in management
control and running the property. The stand alone spas e.g. Kaya clinic is also
covered in the purview of the study.
4. Auto parts and accessories: It would cover both types of auto parts:-

a. Essential auto parts (low volume high value items e.g. gear box,
clutch plates etc and high volume low value items like break pads etc).
These parts would be for 2-wheelers (e.g. moulding etc) and 4-
wheelers – both cars and commercial vehicles.
b. Accessories / decorative items e.g. music systems, alloy wheels etc
In order to understand the trade potential across the above categories, the Ministry of
Commerce, Thailand and Royal Thai Embassy has commissioned Business and Industrial
Research Division (BIRD) of IMRB International to avail its research based consultancy
services

Table of Contents
1 EXECUTIVE SUMMARY ................................................................................................... 8
1.1 Spa and Wellness Industry ...................................................................................................... 8
1.2 Indian Hotel Industry............................................................................................................. 14
1.3 Foreign Direct Investment and Government Policy .............................................................. 17
1.4 Attractiveness of segments and Entry Strategy ..................................................................... 18
2 GLOBAL SPA AND HOTEL INDUSTRY ....................................................................... 22

2.1 Classification of Spa and Wellness business ......................................................................... 22
2.2 Trends in Spa and Wellness Business ................................................................................... 23
2.3 Classification of Hotels ......................................................................................................... 24
2.3.1 By Star Categories ...................................................................................... 24
2.3.2 By Target Market ........................................................................................ 26
2.4 Global Hotel Industry Landscape .......................................................................................... 26
2.4.1 Contribution of Travel & Tourism to Global GDP ..................................... 31
2.4.2 Regional Performance of Global Hotel Industry – 2006 Vs 2005 .............. 31
3 INDIAN SPA AND HOTEL INDUSTRY: AN OVERVIEW ......................................... 32

3.1 Spa and Wellness Segment.................................................................................................... 32
3.1.1 Introduction ................................................................................................. 32
3.1.2 Industry Structure & Segments ................................................................... 33
3.1.3 Industry Environment: Thai Spa treatment in perspective ......................... 34
3.1.4 Industry Turnover and growth trends ......................................................... 35
3.1.5 Major Players .............................................................................................. 38
3.1.6 Demand – Supply Scenario ......................................................................... 42
3.2 Hospitality Segment .............................................................................................................. 43
3.2.1 Introduction ................................................................................................. 43
3.2.2 Industry Structure & Segments ................................................................... 45
3.2.3 Transition in Hotel Industry in India .......................................................... 46
3.2.4 Revenue Generation Models in the Hospitality Industry ............................ 47
3.2.5 Industry Turnover and growth trends ......................................................... 48
3.2.6 Major Players .............................................................................................. 50
3.2.7 Demand – Supply Scenario ......................................................................... 51
3.3 Foreign Direct Investment (FDI) flow – Spa and Hotel Segment ......................................... 52
4 NATURE OF HOTEL AND SPA INDUSTRY BUSINESS ............................................ 54

4.1 Key Operating Characteristics............................................................................................... 54
4.1.1 Cost Structure.............................................................................................. 54
4.1.2 Cost Structure Profitability ......................................................................... 55
4.2 Seasonality............................................................................................................................. 55
4.3 Operating Risks ..................................................................................................................... 56
4.4 Regulations / Standards ......................................................................................................... 57
4.4.1 Central Excise Act, 1944 ............................................................................ 58
4.4.2 Prevention of Food Adulteration Act, 1954 ................................................ 58

4.4.3 Environmental Laws, Rules & Regulations ................................................ 59
4.5 Government Policy ................................................................................................................ 60
4.5.1 Trade Measures influencing investments.................................................... 60
4.5.2 Incentives for attracting investments .......................................................... 60
5 CHANNEL INSIGHTS ....................................................................................................... 61

5.1 Major Cities and Towns for Spa and Hotel segments ........................................................... 61
5.2 Value Chain ........................................................................................................................... 63
5.3 Filling gaps in Price & Service Value Chain ........................................................................ 63
5.3.1 Service Apartments ..................................................................................... 64
5.3.2 Resort spas / Hotel Spas .............................................................................. 65
5.3.3 Budget Hotels.............................................................................................. 66
5.3.4 Spa & Wellness Centers.............................................................................. 66
6 GROWTH DRIVERS AND CHALLENGES ................................................................... 68

6.1 Spa & Wellness Segment ...................................................................................................... 68
6.1.1 Growth Drivers ........................................................................................... 68
6.1.2 Challenges ................................................................................................... 70
6.2 Hotel Segment ....................................................................................................................... 71
6.2.1 Growth Drivers ........................................................................................... 71
6.2.2 General economic and business conditions in India and other countries ... 72
6.2.3 Discovering New Niches: Case Study – Medical Tourism ........................ 72
6.2.4 Challenges ................................................................................................... 74
7 CRITICAL SUCCESS FACTORS .................................................................................... 75

7.1 Spa and Wellness Industry .................................................................................................... 75
7.2 Hotel Industry ........................................................................................................................ 76
7.2.1 Site & Location ........................................................................................... 76
7.2.2 Positioning & Guest Profile ........................................................................ 76
7.2.3 Financial Strength ....................................................................................... 76
7.2.4 Brand Recognition ...................................................................................... 77
7.2.5 Yield Management ...................................................................................... 77
7.2.6 Differential Pricing ..................................................................................... 77
8 MARKET ATTRACTIVENESS AND POSSIBLE COLLABORATION .................... 78

8.1.1 Market attractiveness for various spa segments.......................................... 78
8.1.2 Possibility of collaboration across various spa segments ........................... 79
8.2 Specialty Restaurants across Business and 3 to 4 star hotel categories ................................ 80
8.2.1 Market attractiveness for various specialty Thai cuisine restaurant ........... 80
9 CONSUMER INSIGHTS – SPA AND HOTEL INDUSTRY ......................................... 81

9.1.1 Profile of potential customers ..................................................................... 81
9.1.2 Taste and preference across regions ........................................................... 83
9.1.3 Need – gaps in current service offerings..................................................... 83

9.1.4 Brand image of Thai brands in Spa............................................................. 84
9.2 Specialty Cuisine Restaurant ................................................................................................. 85
9.2.1 Consumer Taste and Preferences ................................................................ 85
9.2.2 Case Study: Creating New Food Category: Starting an era of Chinese
cuisines 85
10 CONCLUSION AND RECOMMENDATIONS............................................................... 89

10.1 Market attractiveness and opportunity matrix in Spa and Wellness business in India ......... 89
10.2 Entry Strategy in Spa and wellness business......................................................................... 90
11 Annexure .............................................................................................................................. 93
12 List of Tables ........................................................................................................................ 95
13 List of Figures ...................................................................................................................... 96
14 References............................................................................................................................. 97

1 EXECUTIVE SUMMARY
1.1 Spa and Wellness Industry
The Indian beauty and wellness market is pegged at about $9 billion. Under the scope of
this study, spa and wellness business includes body massage therapies with traditional
ayurveda therapies as well as non-ayurveda therapies using aromatic and chemical based
oils. The spa and wellness business in India is estimated to be in the range of US $ 34 –
36 million (INR 150 – 200 crores in 2007 – 08). The spa and wellness business in India is
at early stages. Nevertheless, India has a handful of globally recognized resort spas. The
industry is being developed with a concept of ―total rejuvenation and stress-free life‖.
The growth prospects seem promising across major city clusters as the supply of these
genuine aroma therapies is limited.
―Ayurveda massage therapy is expected to grow at 15 – 20% whereas non-ayurveda

based aroma massages with different specialties can grow by as high as 50% for the
next few years. It is largely because of the expansion plans of major day spa chains.‖
- Owner of Bangalore based budding spa chain
The Indian spa and wellness experience is predominantly based on Yoga and Ayurveda
therapies used for preventive and curative ailments. The Thailand spa and wellness
concept is woven around traditional non-oil based massage that incorporates meditation
treatments, rejuvenation and relaxation.

The massage and spa therapy market in India is in the evolution phase. The same can be
segmented below:-
Segmentation of Massage & Spa Therapy Market
Spa & Wellness Market - Offerings
Ayurveda therapy & treatment Non-ayurveda massage Salon & Spa treatment Gym coupled with
& spa therapies Sauna / steam bath –
oriented towards muscle
Ayurveda Clinics with toning and fat reduction
Ayurveda Doctors Beauty Enhancement
Massage treatments treatments such as:-
such as:- - Facials – herbal and
- Javanese non-ayurvedic
Massage therapy Non-massage based - Swedish - Laser treatments
based treatments Treatments – medicines - Thai etc - Pedicure & Manicure
- Foot massage, reflexology
etc
- Salon etc
Preventive Curative
Massages / Treatments Massages / Treatments
Diseases such as
- Obesity treatment
- Arthiritis
- Relaxation / rejuvination
- Diabetes
- Modern day diseases e.g.
- Muscle or bone related
Migrane, Stress etc
pain, displacement etc
Figure 1: Segmentation of Massage and Spa therapy market
The industry environment of spa and wellness Industry in India can be assessed under the
following framework:-

Thai Spa & Massage Treatment in India : Market Analysis
Political / Legal Environment Potential Entrants Innovation shifts

- Closeness in economic cooperation & cultural Other Spa therapies such as Javanese, - Thai spa therapies now also include aroma oils suiting
exchange between two countries Swedish, Body wraps etc intruding upon non-ayurveda local skin and texture
- FDI norms allow 100% stake in specialty outlets based spa experience - Relaxation by thorough muscle ligament exercise,
- No problems with repatriation issues after paying requires experience in service offerings
taxes
Suppliers Industry Competitors Consumers

Thai therapists training Demand from aspiring price conscious
No one is providing real Thai spa
north-eastern Indian therapists. class (INR 700 – 800 per sitting) and
experience except one in
Aroma oils procured from Thailand, upper end of the society (INR 1500 &
Bangalore
Singapore etc. more per sitting). Demand expected
from both the sexes
Social / Consumer shifts

- Ayurveda massage system already popular in South
Substitutes
Ayurveda therapies using light oils. 4 – 5 pan- Economic shifts
India, gaining popularity in North India - Concentration of disposable income in top 6 – 8 cities
- Consumers willing to accept the experience from India chains. Southern cluster biggest market
- Rising spending patterns on ―pampering‖ therapies
therapies from other countries - International economic environment augurs cautious
- City clusters having progressive population, resulting approach
into modern day diseases
Figure 2: Market Analysis of Thai spa treatment offering in India

The market is changing fast both for resort / hotel spas and day spas. Almost all the new
3 star and above category hotels that are coming have spa facility for additional income.
―Before Commonwealth Youth Games 2008, Pune 13 star category hotels were
planned. All of them are provisioning spa facilities.‖
- Leading Spa Consultant based in Pune
The organized segment spa and wellness market is largely confined to top 6 – 8 cities in
addition to the presence of two major players in the Kerala state. Other than the top 3
cities i.e. Bangalore, Delhi and Mumbai, the other major cities for spa and wellness
therapy market are Hyderabad, Pune, Chennai and Kolkata. The awareness about
preventive and curative aspects of these spa therapies has been the largest impediment in
the market growth.

The growth drivers for spa and wellness are shown in the figure below:
Spa and Wellness Industry -

Growth Drivers
Overseas Exposure
Exposure to SE Asian,
EU experiences leading
to similar experience
demand
Increase in Availability &
disposable income Proximity
Service industry growth Supply creates Demand
leading to increasing - Indian consumers
incomes willing to try out these
facilities
Growth
Drivers
Education Affordability
Awareness and Services not just
education on ―health confined to super-
conscious‖ functional riches. Affordability
platform - most factor instrument in
important reason increasing demand
Figure 3: Growth drivers for Spa and wellness industry in India
There is a huge scope of association between India and Thailand. The spa and wellness
industry in Thailand is around 5 – 7 years ahead of India‘s spa and wellness industry. The
huge scope between two countries is offset by the import duty structure for spa products
and equipments.

―Higher excise duties have been the impediment in importing spa oils and equipments
from Thailand. Spa products are treated as cosmetics, command 35% excise duties.
Similarly Spa tables are furniture, command 32% excise due. The landing cost of
product worth INR 500/Kg purchased in Bankok is INR 1200 - 1400/Kg in India‖
- Delhi based major Spa products and equipments importer from Thailand
The figure below outlines factors that would play critical role in the success of ―Thai‖ spa
and wellness experience.
et ,
ls s
Th xpe cto
Tr rap enc
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–
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“E fa
in e d e
a i is t e ”
e ri r
w res
rta fre ien
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cu tain yg
d –
s,
s
Type of oil used – % Ambience – Lightening,

of therapeutic content color /shades, furniture –
impacts repeat Critical theme specific
purchase and WoM Success (Differentiator)
advertising
Factors
f e ar Olfa
om c
t o os a tor
o in – cl se tou y –
P ce et ns ch
n g s
ese tar er es ing
pr to tom Courteous &
s
cu attire of staff –
theme specific
(“Thai”
experience)
Figure 4: Critical Success Factors for spa and wellness industry in India

―The consumer for these (Global) spa therapies would be people who are concerned about
their health and are doing nothing about it. These guys would be from 25 – 45 year of age
profile, earning more than INR 5 Lacs per annum.‖
- Managing Director of budding Aroma and Thai Spa Chain
The customer availing spa service can be described with the following common set of
characteristics:-
 They would be eating out quite often, i.e. more than 2 – 3 times a week
 They would be going to malls and multiplexes a lot
 Their age would typically between 25 – 40 years
 Most of these guys would be first time spa goers
1.2 Indian Hotel Industry
According to the World Travel Market‘s Global Report 2008, scope for new tourism
development could be seen notably in emerging economic giants India and China, which
are likely to remain a strategic priority as growth is predicted to be robust, albeit slow
down in global economy.
As per the table below, overall travel and tourism consumption including domestic and
foreign travel is estimated to be US $ 65.88 billion in the calendar year 2008. The
consumption figures have grown 23% and 26% in 2007 and 2008 respectively.

Travel and Tourism Industry -
India’s Turnover
Table 1: Turnover of India’s Travel and Tourism Industry till 2008

Source: WTTC
According to industry structure as shown in industry structure section of this report, the
estimated market turnover of Hotel Industry, Domestic Tour Industry and Travel Industry
is the calendar year 2010 is show in the graph below:-
Total US $ 90.1 Bn
100 Market Turnover (In US $ Bn)
11.5
Market Turnover
Total US $ 65.9 Bn
80
8.7
60
CAGR 54.2
40
Hotel Industry = 20%
40.3 Tour Industry = 16%
Travel Industry = 15%
20
16.9 24.3
0
2008 2010
Indian Hotel Industry Indian Tour Industry Indian Travel Industry
Figure 5: Turnover of India’s Travel and Tourism Industry till 2008

Source: WTTC and various industry report
The growth of hotel industry in India can be attributed to the recent growth in the service
industry and economy as a whole. The graph below shows that growth till year 2000 was
demand dominated.

Supply
Projections
Dominance
Strong
economy
th
row Global Crisis
rG
Business Transformation
cto Dominance
e se
vic Key:
er
i veS
s
Demand plo REVPAR: Revenue
Dominance Ex per available room
(Measure: REVPAR & REVPAC)
REVPAC: Revenue
per available
customer
2000 2004 2008 2012
Path of Paradigm Shift

Figure 6: Transition in the hotel industry in India
The revenue sharing models in the hospitality industry can be summarized in the
following figure:-
Revenue Sharing Models in Hotel Industry
Owner -
Operator
model
Global
Franchise Hotel Leasehold
model Industry model
Management
Contract
Figure 7: Revenue sharing models in the hotel industry

1.3 Foreign Direct Investment and Government Policy
100% Foreign Direct Investment (FDI) is allowed in the hospitality (hotel) sector and spa
and wellness industry. Though Indian Government has been actively promoting the
hospitality industry, the industry has attracted merely USD500m FDI during FY2007.
The foreign investment in the spa and wellness segment has been very low. With the
awareness about day spas and the presence of these services near their door steps, the spa
and wellness industry has promising future
―As of now day spa industry is at small with only one pan-India player (i.e. Lever-
Ayush) in true sense. With the change in the macro economic factors and the plans
laid down by regional players, more than 200 additional day spa point of presence can
be forecasted in next 3 – 4 years.‖
- Owner of the budding day spa chain in West India
The cumulative FDI inflows (excluding FDI equity inflows and reinvested earnings) into
India during 1991-2005 (up to December, 2005) were USD37.05 billion. FDI statistics
(annual statistics from 2002 to 2005) and trends are given in the table below:-
FDI 2002 2003 2004 2005

1) Inward 5,627 4,585 5,474 6,598
2) Outward 1,679 1,325 2,024 1,364
3) Net (1-2) 3,948 3,260 3,450 5,234
4) Net Growth rate % - -17.43 5.83 51.71
Note: Excluding FDI equity inflows and reinvested earnings
Table 2 : FDI flows (USDm): India 2002-2005
Source: WIR

1.4 Attractiveness of segments and Entry Strategy
As far as spa and wellness market in India is concerned, all the segments within spa and
wellness segment are poised to grow in the next 2 -3 years.
―Demand exists in all the segments. However, I can see a clear shift among resorts
and business hotels to have Spa in their property. Similarly, because of increasing
awareness, more disposable income, the day spas would have better penetration in
next 3 – 5 years‖
- One of the renowned Spa Consultant based in Delhi
The spa industry as a whole requires the training infrastructure so that experienced
professionals could be provided to the spas in all the segments.
―The trained manpower is critical to providing the experience. There isn‘t any reputed
organized global spa therapies training institute present in India. Individual spas are
forging tie-ups with foreign players.‖
-One of the renowned Spa Consultant based in Pune
The Indian market is very lucrative for Thai spa investors who want to enter India by
opening the global therapies institute and certification courses are they exist in Bankok.
Opening the training institute would establish their linkages with all the spa segments and
would ensure that their expertise reaches target audiences through word of mouth.
―Many times resorts want to focus on their key business and outsource the spa
management activities. Our spa consultancy company is managing spa in 2 – 3 star
category resorts. The staff working there are in our payrolls.‖

We, therefore, suggest entering in day spa business after fully understanding the market
dynamics in the real estate and day spa business.
Low High
Level of Attractiveness
High Training
Academy
Suitability to Thai Investors
Management
control Spas in
hotel / resorts
Destination
Day Spas
Spas
Low
Figure 8: Market Attractiveness and opportunity matrix – Spa and wellness segment
Across the spa segments where entry of Thai Spa investors is recommended, the
positioning of Thai Spa should be based on ―functional benefits‖ rather than just
―pampering, relaxation and rejuvenation‖ plank.
Sl. Spa Recommendation for How to Enter? / Reasons

No. Segments immediate entry supporting recommendation
Option 1:
1 – 2 centers company owned and
company managed in Delhi and
Mumbai. After that franchise mode.
Option 2:
1. Day Spas - Go ahead Technical tie-up with the existing
chains willing to expand. The tie-up
may / may not involve capital
investment. For technical tie up, a
register a company in India as ―Spa
Consultant‖
- Seen as close to Ayurveda
2. - Requires technical expertise and
Medi Spa - Do not enter relatively larger capital investment

- Not much data on acceptance of
Thai Medi Spas in India
Option 1: Enter as Spa Consultant
for Designing Spa on Thai concept
- Register company in India as Spa
Consultant, Spa products and
services provider.
- Contact the new hotels and the ones
For Resort / in expansion mode with previous
Hotel Spas expertise.
- Entry would provide platform to
train therapists of day spa chains
- Go ahead - Also, help in entering day spa
segment after demonstrating
3.
expertise
Option 2: Enter as Spa expert

controlling Hotel Spas
- Possible after entering as Spa
Consultant since hotels want to focus
on their primary activity. They don‘t
have expertise, they would be willing
to form alliance where in the
management control, décor‘, trained
staff is from Thai Spa Consultant
- High level understanding of leisure

Destination market
4. Spas - Do not enter - Requires huge capital investment
(as of now) even after tie-up with Indian
entrepreneurs
- Form equity partnership with Spa
consultants for opening Spa training
academy as less capital investment is
Thai Spa required.
Training - Open the company in India and
5. - Go ahead
Institute register it as Thai Spa trainer with
Ministry of Tourism, India
- Help in getting business from all
Spa segments as business in
exploding with less skilled therapists
Table 3: Recommendation for entry in various spa segments
As far as timeframe for entering in Indian market is concerned, we suggest entering in

various spa segments in the phased manner as shown in the figure below:-

Immediate Entry
Spa Consultant and
Training Academy
Horizon – Within 1 year
―Resort / Hotel Spa‖

Management Control
Horizon – 1– 2 Years
―Day Spa‖ Chain
Figure 9: Entry across various spa segments across time horizon
Thai investors should not enter into Thai specialty revenue business in 3 – 4 star category
hotels in India at this point of time because of the following reasons:-
 Preference of Thai cuisine is confined to the niche segment. The number of

travelers preferring Thai cuisine is very less.
 The volume in this business would be very low and would subject to volatility of
demand due to changing macro-economic global business landscape.

2 GLOBAL SPA AND HOTEL INDUSTRY
2.1 Classification of Spa and Wellness business
The global spa and wellness market can be classified as per the following figure:-
Spa and Wellness Market
- Resort Spa
- Positioned towards Spa-
cum-leisure holiday - Associated with
experience ―Pampering‖ image, Fashion
- Spa dominates in and Trends
bringing the tourists; leisure - Extended service offerings
travel for relaxation & luxury - Generally includes pedicure
- Hotel Spa and manicure
- Business travel Resort Spas/ - May /may not include fully
supplemented by spa facility Salon Spas body massage
- Spa cost either built into the
Business Spas
package or a-la-carte
Day Spas Medi Spas - Associated with medical

approach toward curative and
- Associated with either preventive diseases with spa
functional benefits or therapies; doctor‘s
pampering depending upon prescription essential
positioning - Generally includes various
- Includes Indian and global ayurveda massages,
massages / therapies shirodhara and post treatment
- Mostly catering to medicines. However forms
―preventive‖ and lifestyle are gaining grounds
diseases where doctor‘s - Package is given for curing
consultation is not required ailments
- ―Instant rejuvenation‖ in the
stressed lifestyle
Figure 10: Segmentation of Spa and Wellness Market
Out of the three predominantly visible segments, the resort spa segment is relatively
better organized with the involvement of major global brands. The resort spas are
positioned towards attaining rejuvenation and relaxation from the rigmaroles of daily

lifestyle that is constantly getting competitive and stressful. The resort spa segment is
high value low volume business where as day and salon spas are low value and high
volume business.
At global level, day spas are largely catering to consumers interested in colloquially
traditional spa and massage therapies across respective countries. However, there has
been increasing interest in the massage therapies of various other countries of origin,
providing beneficial results to the global consumers.
―Foreign tourists are more interested in Ayurveda therapies whereas Indian customers
are trying the aromatic oil based non-ayurveda massages.‖
- Spa Manager, One of the renowned Spa Resorts
2.2 Trends in Spa and Wellness Business
Massage is the sharing of touch – hands or body, on heads, hands or feet. Any yet
massage goes farther than skin-deep, deeper even than muscles and bones – a good,
caring massage penetrates right to the depth of your being.
- George Downing, The Book of Massage (1984)
The trends developing today in the global spa and wellness market include:-
 Comprehensive package centered around treatment of all diseases
 Increasing the hours of education;
 Expanding the scope of practice to include more modalities and better training in
the psychological aspects of the work;

 Further impact of state regulation and national certification on entry-level
education at massage schools;
 Continuing education units for practitioners; and expanding number of massage

course offered at community colleges and universities and
 A growing number of degree programs within massage institutions and advance

integration of massage into the broader scope of bodywork and allied healing arts.
―The global trend as I see is towards comprehensive packages. The spa centers have
evolved to become wellness centers….. We have started wellness section providing
dental care and all type of surgeries. You are under intensive care away from the
depressing environment of hospitals.‖
- (A) General Manager of one of the famous Spa resorts
The big trend emerging is the return to the basics. A lot of Asian treatments are going
back to ayurveda and Chinese traditions. Most of these treatments are provided throught
hands e.g. at Thailand and India.
Another big trend emerging is the interest of American and European countries coming to
Asian countries such as India and Thailand. These leisure tourists avail age old,
traditional treatments.
2.3 Classification of Hotels
2.3.1 By Star Categories

Globally, hotel industry is classified into star categories. The various categories and their
definition are as under:-

Star Category Definition
Characteristics of ultimate luxury and sophistication. First class
 accommodations. Highly personalized service. Impeccable
standard of excellence.
Upscale in all aspects. Above average level of service.
 Enhanced level of quality throughout. In house dining available
with many other services.
Multifaceted and comprehensive. Usually associated with
 business travelers. Upgraded physical attributes, service, and
comfort.
Aimed toward traveler looking for more than just the basics.
 Usually small to medium sized hotel chains. Limited food
service.
Essential accommodations. Usually food within walking
 distance. Appeal to budget minded travelers while keeping in
mind cleanliness
Figure 11: Definition of various star categories
Source: Hotels Online & MKG Consulting
Based on the purpose of visit, the guests or travelers can be classified into the following
categories:-
 Business Travelers
 Pleasure / Leisure Travelers
 Group Travelers
 International Travelers
The business travel is generally conducted for one of the following purposes:-
 Meetings
 Incentives
 Conferences
 Exhibitions

2.3.2 By Target Market
Hotel Classification
by Target Market
Hotels Targeted for Hotels Targeted for

Leisure Travelers Business Travelers
- Resort Hotels - Suite Hotels - Commercial Hotels

- Vacation Ownership and - Extended-Stay Hotels - Airport Hotels
Condominium Hotels - Conference Centers
- Bed-and-Breakfast Hotels - Convention Hotels
(B&Bs)
- Casino Hotels
- Alternative Lodging
Properties
Figure 12: Hotel classification by target market
Globally, the hotel properties are also classified based on the primary purpose of usage.
The above figure classifies the hotel by target market.
2.4 Global Hotel Industry Landscape
Spa and Wellness Industry
Despite the pressures of a slow economy, travel agents enjoyed a strong year for spa
travel bookings in 2007 and remain upbeat about the prospects for spa travel for the
remainder of 2008, according to SpaFinder's 2008 State of Spa Travel survey released
recently.
According to the 2008 study, spa travel bookings in 2007 increased for 57 per cent of
surveyed agents and remained steady for an additional 29 per cent, while only 13 per cent

reported a decline. For 2008, 58 per cent expect there to be growth in bookings over
2007, while an additional 26 per cent expect bookings to remain steady. In a shift from
2007, 51 per cent of agents from US now report that travelers aged 35-45 express the
greatest interest in booking spa travel, versus 41 per cent for the boomer 46-60 age group.
According to the survey, health and wellness is now one of the most critical
considerations for today's spa traveler, with 90 per cent of agents reporting that
health/wellness is either 'very' or 'somewhat' important to their vacationing clients.
Similar to restaurants, hotels and fitness centers, spas play a significant role in today‘s
culture worldwide. US spa market is one of the greatest as one in four American adults
has been to a spa and knows what they want from a quality spa experience. The trends are
being driven by educated spa-goers who actually see them as expectations
Global Hospitality Industry
The global hotel industry is studded with over 250 major international and domestic
players.
US
The hotel industry in the US consists of about 30,000 companies that operate 50,000
individual locations, with combined annual revenue of USD90 billion. Large US
companies include Marriott International, Starwood Hotels & Resorts, and Hilton Hotels.
The industry is moderately concentrated; the 50 largest companies hold about 45% of the
market. The majority of hotels are affiliated with a chain. A typical hotel has about
USD7m of annual revenue and 100 employees.
Europe
The total supply of hotel rooms in the EU is over 1.2m with a majority of them in the
upper categories. Hilton and Premier Travel Inn demonstrated their dynamism in 2006
but not as much as Riu, the leisure hotel brand of Touristik Union International, which
jumped up 14%. According to MKG Consulting, the boost received by Europe‘s supply
chain followed through. The supply grew by 2.3% for a positive balance of 262 hotels
and 28,661 rooms. Most of the ten leaders of Europe‘s hotel industry continued to expand

their network. The growth of the Top 10 continental groups brought the supply to 19,342
rooms, or up 2.8% and representing more than half of the growth of all the groups present
in Europe.
The global hospitality industry is dominated by major global hospitality groups. These
hospitality giants, under their hotel group have several renowned brands. The table below
shows the top ten hotel groups globally (in 2006).
RANK GROUPE HOTELS EVOL. CHAMBERS EVOL.

2006 2006 2005 HOTELS 2006 2005 CHAMBERS %
1(1) INTERCONTINENTAL HG GB 3 606 3 532 74 537 533 532 701 4 832 0,9%
2(2) CENDANT USA 6 344 6 396 -52 532 284 520 860 11 424 2,2%
3(3) MARRIOTT INTL USA 2 672 2 564 108 485 979 469 218 16 761 3,6%
4(4) ACCOR FRA 4 065 3 973 92 475 433 463 427 12 006 2,6%
5(6) HILTON CORP. USA 2 747 2 228 519 472 720 354 668 118 052 33,3%
6(5) CHOICE USA 5 132 4 987 145 417 631 403 806 13 825 3,4%
7(7) BEST WESTERN USA 4 195 4 097 98 315 875 308 131 7 744 2,5%
8(8) STARWOOD HOTELS USA 845 733 112 257 889 230 667 27 222 11,8%
9(9) CARLSON HOSPITALITY USA 922 890 32 147 129 147 093 36 0,0%
10(10) GLOBAL HYATT USA 738 355 383 144 671 111 651 33 020 29,6%
TOTAL 31 266 29 755 1 511 3787 144 3 542 222 244 922 6,9%
Table 4 : Rank of Top 10 hotels globally in 2006
These groups own various hotel brands that operate across the globe on various business
models varying from Owner operator to Management control models. In 2006, Asia,
Central and South America, Europe and the Middle East enjoyed double-digit
growth in revenue per available room (RevPAR). Carlson Hospitality, Marriot
International, Accor, Wyndham Worldwide, Inter Continental Hotels group, Best
Western, Starwood Hotel and Resorts, Choice, Hilton Corp and Global Hyatt were the
global majors in terms of revenue and hotel inventory.
The top 20 hotel brands with number of hotels and number of rooms in the world in 2006,
as per one of the travel portal are as under:-

RANK BRAND NAME GROUP HOTELS CHANGE ROOMS CHANGE
2006 2006 2005 HOTELS 2006 2005 CHAMBERS %
BEST
1(1) BEST WESTERN USA 4 195 4 097 98 315 875 308 131 7 744 2,5%
WESTERN
HOLIDAY INTERCONTINETAL
2(2) GB 1435 1 484 -49 267 816 278 787 -10 971 -3,9%
INN HG
MARRIOTT
3(4) MARRIOTT INT‘L USA 507 487 20 183 455 178 331 5 124 2,9%
HOTELS
COMFORT
4(3) INNS & CHOICE USA 2418 2 415 3 182 473 182 038 435 0,2%
SUITS
HILTON
5(16) HILTON CORP. USA 496 230 266 169 636 89 256 80 380 90,1%
HOTELS
DAYS INN OF
6(5) CENDANT USA 1844 1 872 -28 150 302 153 701 -3 399 -2.2%
AMERICA
HAMPTON
7(7) HILTON CORP. USA 1336 1 290 46 134 121 130 398 3 723 2.9%
INN
SHERATON
8(6) STARWOOD HOTELS USA 389 391 -2 134 007 134 866 -859 -0.6%
HOTELS
EXPRESS BY
INTERCONTINENTAL
9(8) HOLIDAY GB 1590 1 512 78 133 554 126 035 7 519 6,0%
HG
INN
SUPER 8
10(9) CENDANT USA 2040 2 076 -36 124 031 125 844 -1813 -1,4%
MOTELS
RAMADA
11(10) CENDANT USA 916 1 005 -89 108 937 119 991 -11 054 -9.2%
WORLDWIDE
QUALITY
12(12) CHOICE USA 1056 966 90 105 790 98 431 7 359 7,5%
INN HOTELS
13(13) COURTYARD MARRIOTT INT‘L USA 692 656 36 99 669 94 003 5 666 6,0%
CARLSON
14(11) RADISSON USA 415 434 -19 96 135 100 733 -4 598 -4,6%
HOSPITALITY
HYATT
15(14) GLOBAL HYATT USA 214 212 2 95 145 93 651 1 494 1,6%
HOTELS
16(15) MOTEL 6 ACCOR FRA 905 893 12 93 946 92 948 998 1,1%
17(17) MERCURE ACCOR FRA 738 720 18 87 233 85 352 1 881 2,2%
18(18) IBIS ACCOR FRA 720 692 28 78 780 75 602 3 178 4,2%
19(19) NOVOTEL ACCOR FRA 398 396 2 69 255 68 340 915 1,3%
CROWNE INTERCONTINENTAL
20(20) GB 235 215 20 65 404 61 627 3 777 6,1%
PLAZA HG
Table 5: Top 20 brands with number of hotels and rooms globally

The sales of major hotels in 2005–2006 and 2006-07 are shown in the table below:
Turnover (INRm) Net Profit (INRm)

Growth Growth
S.No Company 2004-05 2005-06 2004-05 2005-06
Rate % Rate %
1 Indian Hotels Co 8,476.3 10,842.6 27.92 1,058.6 1,837.8 73.61
2 EIH Ltd. 5,872.3 7,563.9 28.81 331.2 1,888.0 470.05
3 ITDC 3,413.9 3,557.9 4.23 101.21 390.34 285.67
4 Asian Hotels Ltd 2,579.0 3,284.8 27.37 254.9 567.0 122.44
5 Hotel Leela Ventures 2,566.9 3,269.5 27.37 447.6 731.7 63.47
Top Five 22,908.4 28,518.70 24.49 2,193.51 5,414.84 146.86
Indian H&R Industry 426,240 498,310 21.57 - - -
% Share of Top Five 5.37 5.72 113.54 - - -
Table 6 : Top five hotel companies in India
Source: Company Annual Report
The global hospitality industry is quite dynamic and has been consolidation mode in the
last 2 – 3 years where top groups are purchasing various hotel brands. The World Travel
& Tourism spending from 2001 till 2006 is show in the table below:-
2001 2002 2003 2004 2005 2006

Personal Consumption 1,986.55 1,993.67 2,163.72 2,357.84 2,584.13 2,755.86
Intermediate Consumption (transp. Of persons) 500.27 486.22 495.23 559.27 615.23 673.62
Non-Market Products – Individual 86.15 91.03 110.90 126.40 134.11 140.83
Exports (Visitors) Services 554.50 576.77 634.99 751.37 814.19 885.24
Travel & Tourism Consumption 3,127.47 3,147.69 3,404.84 3,794.88 4,147.66 4,455.55
Non-Market Products – Collective 117.60 127.25 137.33 149.10 160.64 171.92
Gross Capital Formation 638.84 631.42 697.39 843.57 946.29 1,049.38
Exports (Non-Visitor) Merchandise 434.98 450.00 523.81 626.66 718.12 807.89
Travel & Tourism Demand 4,321.78 4,359.24 4,766.26 5,417.10 5,975.60 6,487.63
Industry Aggregates
Gross Domestic Product 2,373.71 2,363.23 2,531.52 2,779.00 3,038.32 3,261.35
Employment (000s) 130,611 129,565 123,704 127,910 132,948 136,296
Table 7 : World Travel & Tourism spending (USDbn): 2001-06
Source: World Travel & Tourism Council

2.4.1 Contribution of Travel & Tourism to Global GDP
The contribution of Travel and tourism (T&T) to global GDP was 9.15% in 2001. In the
next two years, the contribution was below the 2001. Natural disaster (earthquakes and
rains) and human-made disasters such as terrorist attacks were the prime reason for the
decline in the T&T‘s contribution to global GDP. However, as the impact of such
disasters declined, the share of T&T in global economy picked up to 9.8% in 2006.
2001 2002 2003 2004 2005 2006

Travel & Tourism Demand 4,321.78 4,359.24 4,766.262 5,417.104 5,975.60 6,487.631
Global GDP* 47,227.38 49,473.73 52,509.87 56,781.90 61,258.71 66,228.67
% Share of T&T in Global
9.15 8.81 9.08 9.54 9.75 9.80
GDP
Table 8: World Travel & Tourism Spending (USDbn) Vs Global GDP: 2001-06
*Current GDP in USD
2.4.2 Regional Performance of Global Hotel Industry – 2006 Vs 2005

According to the Hotel Benchmark survey by Deloitte, in 2006, Asia, Central & South
America, Europe and the Middle East enjoyed double-digit growth in revenue per
available room (RevPAR).
Occupancy Average Room Rate Rev PAR

2006 Change 2006 Change 2006 Change
% % % % % %
Middle East 68.7 -1.0 142 17.8 97 16.5
US 68.6 1.63 140 10.6 92 12.4
Central & South America 64.7 0.6 122 12.3 79 13.0
Europe 69.9 3.1 146 8.7 102 8.60
Asia 71.3 0.1 122 10.9 87 11.0
Table 9 : Performance of global hotel markets – 2006 versus 2005

3 INDIAN SPA AND HOTEL INDUSTRY: AN OVERVIEW
3.1 Spa and Wellness Segment
3.1.1 Introduction
The spa and wellness business, under the purview of the scope of this study, includes
body massage therapies with traditional ayurveda therapies as well as non-ayurveda
therapies using aromatic and chemical based oils. The Spa and Wellness Industry and
Hospitality Industry have overlap in terms of resort spa offerings. The connection
between the two can be understood from the following figure:-
Spa & Wellness and Hotel Industry
Hotel Resort Spa &

Industry Spas Wellness
Figure 13: Overlap between Hotel and Spa Industry
The Indian spa and wellness industry is at nascent stage. Over the years, it has emerged
from the ayurveda based treatments. The ayurveda massage treatments are viewed as the
ancient Indian way of curing and preventing various diseases. Nevertheless, due to
increase in the disposable incomes in the urban agglomerates over the last few years and
increasing awareness of therapies from other countries, the other methods of relaxation
and rejuvenation have gained consumer acceptance in the urban clusters in India.

―Ayurveda stream is present in India from top to bottom from the past 9000 years. The
modern spa therapies command meager share of the total spa and wellness market in
India.‖
- Owner of Ayurveda based therapy center chain in Bangalore
3.1.2 Industry Structure & Segments
The wellness industry till now has been classified from the viewpoint from nutritional
drinks and cosmetic products. The spa and wellness industry has not been classified
taking only into account the massage therapies. The segmentation below is based on the
interviews conducted across various therapies existing in India.
Segmentation of Massage & Spa Therapy Market
Spa & Wellness Market - Offerings
Ayurveda therapy & treatment Non-ayurveda massage Salon & Spa treatment Gym coupled with
& spa therapies Sauna / steam bath –
oriented towards muscle
Ayurveda Clinics with toning and fat reduction
Ayurveda Doctors Beauty Enhancement
Massage treatments treatments such as:-
such as:- - Facials – herbal and
- Javanese non-ayurvedic
Massage therapy Non-massage based - Swedish - Laser treatments
based treatments Treatments – medicines - Thai etc - Pedicure & Manicure
- Foot massage, reflexology
etc
- Salon etc
Preventive Curative
Massages / Treatments Massages / Treatments
Diseases such as
- Obesity treatment
- Arthiritis
- Relaxation / rejuvination
- Diabetes
- Modern day diseases e.g.
- Muscle or bone related
Migrane, Stress etc
pain, displacement etc
Figure 14: Segmentation of Massage and Spa therapy market

3.1.3 Industry Environment: Thai Spa treatment in perspective
Thai Spa & Massage Treatment in India : Market Analysis
Political / Legal Environment Potential Entrants Innovation shifts

- Closeness in economic cooperation & cultural Other Spa therapies such as Javanese, - Thai spa therapies now also include aroma oils suiting
exchange between two countries Swedish, Body wraps etc intruding upon non-ayurveda local skin and texture
- FDI norms allow 100% stake in specialty outlets based spa experience - Relaxation by thorough muscle ligament exercise,
- No problems with repatriation issues after paying requires experience in service offerings
taxes
Suppliers Industry Competitors Consumers

Thai therapists training Demand from aspiring price conscious
No one is providing real Thai spa
north-eastern Indian therapists. class (INR 700 – 800 per sitting) and
experience except one in
Aroma oils procured from Thailand, upper end of the society (INR 1500 &
Bangalore
Singapore etc. more per sitting). Demand expected
from both the sexes
Social / Consumer shifts

- Ayurveda massage system already popular in South
Substitutes
Ayurveda therapies using light oils. 4 – 5 pan- Economic shifts
India, gaining popularity in North India - Concentration of disposable income in top 6 – 8 cities
- Consumers willing to accept the experience from India chains. Southern cluster biggest market
- Rising spending patterns on ―pampering‖ therapies
therapies from other countries - International economic environment augurs cautious
- City clusters having progressive population, resulting approach
into modern day diseases
Figure 15: Market Analysis of Thai spa treatment offering in India

3.1.4 Industry Turnover and growth trends
It is difficult to comment on the turnover and the number of hotel spas / resort spas and
day spas because of the following two reasons:-
 Market is changing very fast both for resort and hotel spas and day spas. Almost
all the new 3 star and above category hotels that are coming have spa facility for
additional income.
―Before Commonwealth Youth Games 2008, Pune 13 star category hotels were
planned. All of them are provisioning spa facilities.‖
- Leading Spa Consultant based in Pune
 There is no documented information or standards that differentiate Spa from

simply one-man/woman operated massage parlours.
Based on the several expert interviews with leading Spa chain owners and consultants,
the Spa and Wellness market would be to the tune of US $ 34 – 36 million (INR 150 –
175 crores). This includes the revenues from all segments of spas and wellness industry.
For Resort spas, accommodation, food and beverage cost is not included in the turnover
value. The following trends came in the forefront after several interviews:-
 Market is largely dominated with ayurveda based spa therapies especially in

Bangalore when compared with Mumbai and Delhi. The split between
―preventive‖ lifestyle diseases (where Global and Thai massage can be
positioned) and ―curative‖ diseases is shown as under:-

Ayurveda based treatments market
30%
70%
Preventive and lifestyle diseases

Curative Diseases (eg. Diabetes, Arthiritis etc)
Figure 16: Distribution of Ayurveda based treatment in preventive and curative diseases
 The resort and hotel spas account for 70% of the industry revenues today. The
difference in the revenues between resort and hotel spa and day spas would come
down in next 3 – 4 years due to rapid increase in the supply of day and medi spas.
Significant growth is also expected in the resort and hotel spa segment as new star
properties are coming up with Spas. In addition, existing properties are also
extending service offerings to Spa treatments
―Earlier the trend was to have swimming pool as additional facility in the resort or
hotels. Then it changed to Gym with modern equipments. Now from last 1 year the
trend is to have Spa center in leisure resorts and business hotels.‖
- Leading Pune based Spa Consultant
 It is estimated that put together there are 1200 – 1500 spa rooms currently in
India. With the expansion plans of many day spas and resort/hotel spas, the spa-
rooms figure is set to double in next 1 – 2 years.

 As per industry thumb rule, on an average, one spa room accounts for INR 1 lacs
per month. This figure however varies as per the positioning, city and location of
spa within that city (due to variation in operational expenses).
 Between day and medi spa segment, medi spas are fewer in number as they
require technical expertise and relatively larger capital investment in set up.
Bangalore city accounts for a fifth of the total spa and wellness market today. For
Ayurveda based treatment, growth in South India is much more than it is in the North
India as awareness of functional benefits offered by Ayurveda treatment is limited in the
Northern region.
The growth rate however is slated to be much higher than the present rate due to the
emerging ayurveda and non-ayurveda day spa chains in the country. The industry expects
that spa and wellness industry would touch US $ 0.8 billion (US $ 800 million) in next 8
– 10 years.
―Bangalore is biggest ayurveda based treatment market (city). The next in line would
be Mumbai and Delhi NCR.. Kerala has greater awareness about ayurveda therapies;
it is high volume low value market.‖
- Owner of Ayurveda based therapy center chain in Bangalore
Some players in the growing market are growing at the rate of 25 – 30% because of the
increasing point of presence. The organized segment spa and wellness market is largely
confined to top 6 – 8 cities in addition to the presence of two major players in the Kerala
state.
Other than the top 3 cities, the other major cities for spa and wellness therapy market are
Hyderabad, Pune, Chennai and Kolkata. The awareness about preventive and curative
aspects of these spa therapies has been the largest impediment in the market growth. Now
with the greater mobilization of the upper income segments, they are being exposed to
these newer concepts of relaxation and rejuvenation.

Looking the market by ayurveda and non-ayurveda based treatments, ayurveda based
treatments commands more than 90% of the market. The trend of aromatic based
massage therapies could be 3 – 4 years old. Prior to this period the foreign aroma based
therapies were largely confined to luxury resorts.
As of now, around 70 per cent of the spa business is run by local brands, while the rest is
taken over by international spa firms. The Swedish massage, German body treatment and
Thai massage are the most popular therapies across all spa centres. The spa industry is
expecting a cut in customs duty on various products required for spa therapy. The same is
expected to boost the growth of this segment.
3.1.5 Major Players

Global players like MSpa International from Thailand, Aman Resorts from Singapore,
XpresSpa from the US and South America-based Acqua Hotels are all set to enter India,
either as standalone players or through tie-ups with various star hotels.
The Pune based Sahil group forged a tie-up with MSpa International of Thailand to
open Spa therapy center on Thai concept at their 5 star hotel property. The Thailand-
based firm runs centres under Anantara and Mandara brands.
In the similar manner, Uday Samudra, Kovalam resort has forged a tie-up with Thai
based spa company to provide traditional Thai massage, holistic treatments and
rejuvenation options.
The Indian realty major DLF plans to set up a chain of spa treatment centres across the
country with Aman Resorts-Singapore. DLF acquire Aman Resorts – Singapore that has
18 spa properties in the Asia Pacific region. DLF has signed an agreement with FIH
(Franchise India Holding) - the organization acting as a platform to bring franchise and
investors closer, to set up 120 ‘Spa – Siam’ brand centers across India. XpresSpa is
exploring the possibilities to set up a centre each at all the international airports in the
country. The Pune-based CMYK Health Boutique has drawn a plan to set up 300 spa
treatment centres under the brand name ―Four Fountains Spa‖ across the country.
The major day spa and wellness treatment centers across major cities in India are shown
in the table below:-
Spa Chains City Number of Business Model Growth rate /

Outlets Future Plans
Close to 50 Franchising model – More than 20%
Unilever has tie up with
Coimbatore based
Lever Ayush 6 – 8 cities
ayurveda firm for
training and procuring
oils
3 cities in Close to 10 4 company owned Growth rate 15
Kottakal Ayurveda Kerala ayurveda hospitals, – 20%
– Arya Vaidshala state, Delhi, franchise in Banglore
Bangalore operating 4 centers
6 Owning some outlets; Around 15
expansion through outlets by mid
franchise 2009; 300
Pune,
Four Fountain Spa outlets in next
Mumbai
2 – 3 years
across major
cities
Franchise Model (tie up Plans to open
Yet to open in Delhi and between realty major 120 ―Spa-siam‘
Spa Siam Banglore DLF and FIH) across major
cities
Starting with company Airports across
Xpress Spa Yet to open at major airports owned. Major focus on major cities
airport spa
Floriana – 10 - 15 Owning some outlets, Plans to grow
Delhi, growing through to major cities
Lambency Chandan
Bangalore franchising
Sparsh
6 up-market Company owned No information
4 cities in
ayurveda hospitals. Focus on
Sree Sankara Kerala,
hospitals foreign tourist interested
Ayurveda Hospital Delhi,
in alternate medicine and
Mumbai
therapies

14 in next 2 – 3 Holistic spa, skin and Major cities;
years beauty treatment centers also looking to
Yet to open
MediSpa spending around Rs 30 expand in
in Delhi
crores per center European
countries
24 (including Company owned outlets Expand more
Hyderabad,
12 in in Hyderabad, growing centers in
Bangalore,
Hyderabad and through franchising Delhi,
Ayur Care Pune,
5 in Pune) Bangalore and
Delhi,
other major
Chennai
cities
2 Company owned No expansion
Jiva Ayurveda Delhi NCR ayurveda based therapy plans yet
centers
2 Singapore based To expand to
Body Spa Delhi company; Franchise other major
model cities
Ayurveda Nature 4 centers on Company owned
various beaches ayurveda treatment day
Health Center Pvt. Goa
spas for leisure tourists
Ltd. especially foreign tourists
4 – 5 centes Ayurveda clinics with
Heathway
Bangalore doctors and massage
Ayurveda therapy rooms
3 clinics (1 in Company owned. Also Planning 2
Delhi), 1 manufacturing medicines wellness
ayurveda in Kerala treatment
treatment facilities with
Banglore,
wellness accommodation
Ayurveda Gram Delhi (1
facility with including 1 in
center)
accommodation Delhi.
near Bangalore May expand to
other major
cities.
Currently 1 – 2 Company owned centers, May expand to
Wellness Water Spa Mumbai looking to expand other major
through franchise mode cities
2 Company owned; May expand to
Delhi, company largely into more centers in
Ashtang Ayurveda Ludhiana ayurveda medicine Delhi and other
marketing cities
9 – 10 Owned by Government May expand
of Kerala, famous for only in Kerala
Oushadhi Kerala state
Ayurveda based full state
treatment

2 Pure Thai massage day May expand at
spa. Brain child of NRI other location
(Non-Resident Indian) in Bangalore.
family based in Bankok. Willing to
Sawadee Bangalore
Tie up with local expand in other
entrepreneur cities with
collaboration /
tie ups
2 Started by young Expanding to
entrepreneurs. Up- Pune and
market, non-ayurveda, Mysore with 1
aromatic oil massage on center each. Tie
The 5th Element Bangalore Thai concept. Claims to up with
employ Thai therapists Mainpal
(deeper probe identified Medical Center
North-east staff trained for expansion
by Thai therapists).
2 Positioned as day spa, Expansion
owned by foreign plans in
Spa.ces Bangalore entrepreneurs running Bangalore.
service apartments Didn‘t
comment much
Other Day Spas with 1 - 2 centers; may open up more centers with regional presence:
 LeoJuventa (Hyderabad),
 Shahnaz Spa (Hyderabad),
 Serena Spa (Mangalore),
 Oryza spa (Chennai)
 Myras – Thai massage (Mumbai)
 Rudra Spa (Mumbai)
 Antara Spa (Mumbai)
 Wellness water Spa (Mumbai)
 Chisel India (Bangalore)
 Heavenly Spa (Delhi NCR)
 Hibiscus Spa (Delhi NCR)
 Other stand alone ayurveda based therapy centers across major cities
In addition, there are some training centers providing training to spa therapists. These
are:-
 Oushadhi (Ayurveda Therapy Training, Government of Kerala)
 Spa Academy for Ayurvedic and Global massages, Jaipur (In collaboration with
Orient Spa Academy, Bankok, Thailand)
 Kottakal Ayurveda (Kerala)
 Dhanvantri Institute of Ayurveda (Mumbai)
 Core Wellness - Spa & Wellness Association of India (Mumbai)
Table 10: Major Players in Spa chains and training therapists

Resort spa / Spa in City Group / Business Positioning
4 – 5 star hotels House
Owned by Delhi based Super premium – oriented
Ananda in the entrepreneur towards elite foreigners.
Rishikesh
Himalayas Selling medium to long
packages
Owned by Mr. Sanjay 5 star luxury resort with
Khan – bollywood affordable world class
celebrity spa. Modern spa (5 story
Golden Plam Banglore separate building) with
almost all pure spa
treatment – largest in
Asia
Owned by entrepreneur; 5 star luxury resort.
Angasana Resort managed by Hilton group Positioned similar to
Banglore
spa Golden Palm; spa center
smaller than Golden palm
5 star luxury hotel with
Kaya Kalp Spa, ITC
Agra ITC Welcome Spa offerings – claimed
– Sheraton, to be biggest spa in Asia.
Major 5 star hotels across Delhi, Major Hotel Groups – Positioned towards
Bangalore, Mumbai, Around 5 – 6 Spa per city business traveler
Table 11: Major Resort and Hotel Spas in India
3.1.6 Demand – Supply Scenario

The ayurveda based sp treatment though being ancient treatment of science from India
has not grown to its full potential because of lack of awareness. The other spa and
wellness therapies e.g. Thai, Swedish, Turkish etc are at nascent stage. The growth
prospects seem promising across major city clusters as the supply of these genuine aroma
therapies is limited.
―Ayurveda massage therapy is expected to grow at 15 – 20% whereas non-ayurveda

based aroma massages with different specialties can grow by as high as 50% for the
next few years. It is largely because of the expansion plans of major day spa chains.‖
- Owner of Bangalore based budding spa chain

3.2 Hospitality Segment
3.2.1 Introduction
India's hotel industry has grown in an unprecedented manner during the last few years
because of healthy corporate and economic performance. India is one of the most
magnificent tourist destinations in the world with an assortment of experiences to
satisfy any domestic or international traveler.
Indian hotel industry is witnessing unprecedented opportunities for growth.

International hotel companies are looking at India positively. As a market, India offers
immense opportunities for hotel companies vying for a considerable share of this
emerging market.
The revenues of Hotel and Restaurant industry in India during the financial year 2006-07
was USD 12.85 billion, a growth of 21.27% over the previous year, primarily driven
by foreign tourist arrivals, which increased by 14.17%. Currently, there are some
1,980 hotels approved and classified by the Ministry of Tourism, Government of
India, with a total capacity of about 110,000 hotel rooms.
With tourism industry showing excellent performance in terms of foreign tourist

arrivals and demand outpacing supply, the hospitality industry is poised to grow at a
faster rate and reach INR 17.6 billion by 2010. It is estimated that over the next two
years, 70,000-80,000 rooms will be added across different categories throughout the
country. Though there is temporary blip in the demand in the roomnites across star
properties especially in Mumbai, Delhi and Bangalore, analysts assume this dip would
get ironed out over a period of 2 – 3 years. This sudden reduction in the demand due to
global economic meltdown and terror attacks has resulted in the correction of roomnite
rates in major cities.
The graph below shows that tourism sector would grow in tandem with arrival of foreign
tourists in India:-

Figure 17: Size of organized hospitality sector vis-à-vis growth in tourist arrivals
Source: Secondary search

3.2.2 Industry Structure & Segments
The figure below identifies the segments within tourism industry:-
Segments within Tourism Industry
Tourism & Allied

Industry
Hospitality Industry Travel Industry Agents & Tour

Operators
Lodging Operations Food & Beverage Operations
Non-star category / Approved Rooms

unapproved rooms
- Five Star Deluxe

- Five Star
- Four Star
- Three Star
- Two Star
- One Star and
- Heritage
Figure 18: Segmentation of overall tourism industry in India
The Lodging Operations in the hospitality industry can be categorized into non-star
category or unapproved rooms and Approved rooms. The Ministry of Tourism,
Government of India, grants approval to hotels at the project stage and then classifies into
one of the star categories.
In terms of numbers, unapproved segment constitutes around 25% followed by three star
(23%), approved (22%), two star (10%) four star (6%), five star deluxe (4%), five star

(4%) heritage (4%) and one star (2%) in 2006. The share of these segments is estimated
to be roughly the same as in 2005.
Figure 19: Distribution of hotel room across various categories in India

Source: HVS International
3.2.3 Transition in Hotel Industry in India
The growth of hotel industry in India can be attributed to the recent growth in the service
industry and economy as a whole. The graph below shows that growth till year 2000 was
demand dominated. There wasn‘t significant addition of star room between 2000 till
2005. Due to disproportionate growth in the demand and limited supply of star category
rooms in major metros, the roomnite rack rates peaked out in the year 2007. The early
foot prints of recent global meltdown and terror attacks are visible on the hospitality
industry. As per media reports, the demand of star category roomnites has reduced up to
40% across major metros in the recent months. A slight cooling-off effect can be
forecasted for the hospitality industry in the next couple of years. Due to strong economy
fundamentals and the presence of suitable factors for service and business growth, the
demand for hospitality industry can be expected to grow from as the global economy
stabilizes.

Supply
Projections
Dominance
Strong
economy
th
row Global Crisis
rG
Business Transformation
cto Dominance
e se
vic Key:
er
i veS
s
Demand plo REVPAR: Revenue
Dominance Ex per available room
(Measure: REVPAR & REVPAC)
REVPAC: Revenue
per available
customer
2000 2004 2008 2012
Path of Paradigm Shift

Figure 20: Transition in the hotel industry in India
3.2.4 Revenue Generation Models in the Hospitality Industry
Revenue Sharing Models in Hotel Industry
Owner -
Operator
model
Global
Franchise Hotel Leasehold
model Industry model
Management
Contract
Figure 21: Revenue sharing models in the hotel industry

As far as revenue generation business models are concerned, the hospitality industry
operates on one of the following business models:-
1. Owner operator model – In this model, the hospitality group owns and operates
the hotel property
2. Franchise model – Under this model, the global hospitality groups franchise their
brands to the local entrepreneurs. In return, the local entrepreneurs pay royalty on
the revenue generated from the hotel brand. The hospitality group also audits
various services in the comprehensive manner before providing the franchise of
their brand name to any hotel / resort property.
3. Leasehold basis – This involves long term leasing of the hotel property or the
heritage property or palace converted to the hotel property. Under this
arrangement, the lessor could either be an individual entrepreneur or the family or
Government that owns the property.
4. Management Contract – This involves managing and operating the property.

Quite often three entities are involved in the management contract operating basis
of the hotel property. These are: - the developer, the hotel brand and the party
managing and operating the property.
The value chain of Indian hotel industry has three broad components—asset ownership,
management of hotels and branding and franchising. Indian hotel industry is trying to
diversify by filling the gaps in price (for instance service apartments, budget hotels) and
service value chains (for instance health spas).
3.2.5 Industry Turnover and growth trends

As per the table below, overall travel and tourism consumption including domestic and
foreign travel is estimated to be US $ 65.88 billion in the calendar year 2008. The
consumption figures have grown 23% and 26% in 2007 and 2008 respectively.

Travel and Tourism Industry -
India’s Turnover
Table 12: Turnover of India’s Travel and Tourism Industry till 2008
Source: WTTC
According to industry structure as shown in industry structure section of this report, the
estimated market turnover of Hotel Industry, Domestic Tour Industry and Travel Industry
is the calendar year 2010 is show in the graph below:-
Total US $ 90.1 Bn
100 Market Turnover (In US $ Bn)
11.5
Market Turnover
Total US $ 65.9 Bn
80
8.7
60
CAGR 54.2
40
Hotel Industry = 20%
40.3 Tour Industry = 16%
Travel Industry = 15%
20
16.9 24.3
0
2008 2010
Indian Hotel Industry Indian Tour Industry Indian Travel Industry
Figure 22: Turnover of India’s Travel and Tourism Industry till 2008
Source: WTTC and various industry report
Room revenues as a percentage of the total operating income of the Indian hotel
industry constituted 57.3% in 2005-06 as against 55% in 2001-02. The increase in the

room revenues of the industry as a percentage of the operating income can be
attributed to the increase in the Average Room Rates. The Average Room Rate in the
Indian hotel industry was INR 3,227 in FY2006 compared with INR 2,400 in FY2003.
The rise in the room revenues was also mainly due to increasing demand and
increasing operating costs, which were passed on to the consumer. The net operating
margins for players in the industry have been in the range of 21–42%, with higher
net margins for high-end hotels.
3.2.6 Major Players

The table below provides a list of top five listed hotels based on their turnover in the FY
2005-06.
Turnover (INRm) Net Profit (INRm)

Growth Growth
S.No Company 2004-05 2005-06 2004-05 2005-06
Rate % Rate %
1 Indian Hotels Co 8,476.3 10,842.6 27.92 1,058.6 1,837.8 73.61
2 EIH Ltd. 5,872.3 7,563.9 28.81 331.2 1,888.0 470.05
3 ITDC 3,413.9 3,557.9 4.23 101.21 390.34 285.67
4 Asian Hotels Ltd 2,579.0 3,284.8 27.37 254.9 567.0 122.44
5 Hotel Leela Ventures 2,566.9 3,269.5 27.37 447.6 731.7 63.47
Top Five 22,908.4 28,518.70 24.49 2,193.51 5,414.84 146.86
Indian H&R Industry 426,240 498,310 21.57 - - -
% Share of Top Five 5.37 5.72 113.54 - - -
Table 13: Turnover of major players in Indian hotel industry
Indian hotel industry is currently dominated by the above players including Indian
Hotels Company Ltd, the largest with 20% market share, India Tourism Development
Corporation (15% market share) and East India Hotels (12% market share). Other
players include ITC Hotels (linked with the Sheraton chain), Hotel Leela Venture,
Asian Hotels and Jaypee Hotels. The foreign hotel giants like Accor, Marriott
International, InterContinental Hotels, Starwood Hotels, and Hilton Hotels and
Shangri-La etc along with the industry leader Indian Hotels are planning to build 100
economy hotels over next three to five years. A few years ago, India was a seven-eight
brand hotel market. By 2010, it will be metamorphosed into 40-brand hotel market,
redefining both the personality and structure of the hospitality industry as it stands today.
3.2.7 Demand – Supply Scenario
Demand-supply mismatch will continue to drive growth in India's hospitality sector,
which sees a major boost from inbound tourists. While we expect demand for premium
rooms to rise at 8.8% CAGR over 2008-2010, according to World Travel and Tourism
Council (WTTC), India will continue to be the fastest growing tourist destination
registering 9.4% growth over the next 10 years (vs 4% growth globally). Although
oversupply concerns in the industry persist, incumbent players will benefit in the
medium-term from a supply shortfall, more so on account of expected delays in the
announced projects. We gather while the estimated number of required hotel rooms is
around 250,000, the current availability is just about 110,000, leaving a shortfall of
140,000 rooms to be provided. According to joint study of FHRAI, hospitality
association of India, and HVS International, global hospitality consultants, only 58% of
the announced 102,000 rooms are under active development and are expected to be
completed over the next five years.
The domestic guests continue to be the most important segment for the Indian hotel
industry, accounting for 69.7% of all guests in 2006-07, though this has been steadily
declining from 76.9% in 2002-03.
By 2010 when the Commonwealth Games are scheduled to happen in India, the demand
of classified rooms in India can be estimated to be around 2,50,000. It would increase to
3,00,000 rooms by 2012.
Out of approximately 110,000 rooms only 35,000 are branded; ie fewer rooms than most
major global cities. While Singapore has 70,000 higher-end hotel rooms, India only has
around 12,000. When compared with India, China has ten times as many and the United
States has 40 times as many. Growth rate of foreign tourists‘ visit to India is very high
compared to the growth in availability of hotels where these foreign guests can stay.
Due to the supply – demand mismatch, not only have domestic hotel chains announced
new hotels, but international chains entering India have also tied up with domestic real
estate players so as to manage hotels in India. After assessing this evident supply –
demand mismatch, more than 50 international budget hotel chains are moving into India.

This demand-supply mismatch has led to Indian cities posting unusual growth in Average
Room Rates (ARRs). In recent times, key Indian markets like Mumbai, Delhi &
Bangalore have featured among the top 10 of various compilations by global consulting
firms. The overall hospitality industry in India has seen 11.9% growth in average room
rates in 2007-2008 as opposed to 30.0% growth in the previous year. The ARRs will
skyrocket in 2010, when Delhi hosts the Commonwealth Games.
Almost 62–68% of the operating costs of a hotel are fixed in nature, thus requiring a high
level of revenues to break-even. However, the cost structures of different hotel
companies are a function of guest profiles, business strategies, management quality
and property characteristics and would vary from company to company.
3.3 Foreign Direct Investment (FDI) flow – Spa and Hotel Segment
100% Foreign Direct Investment (FDI) is allowed in the hospitality (hotel) sector and spa
and wellness industry. Though Indian Government has been actively promoting the
hospitality industry, the industry has attracted merely USD500m FDI during FY2007.
The foreign investment in the spa and wellness segment has been very low. With the
awareness about day spas and the presence of these services near their door steps, the spa
and wellness industry has promising future

The cumulative FDI inflows (excluding FDI equity inflows and reinvested earnings) into
India during 1991-2005 (up to December, 2005) were USD37.05 billion. FDI statistics
(annual statistics from 2002 to 2005) and trends are given in the table below:-
FDI 2002 2003 2004 2005

1) Inward 5,627 4,585 5,474 6,598
2) Outward 1,679 1,325 2,024 1,364
3) Net (1-2) 3,948 3,260 3,450 5,234
4) Net Growth rate % - -17.43 5.83 51.71
Note: Excluding FDI equity inflows and reinvested earnings
Table 14 : FDI flows (USDm): India 2002-2005
Source: WIR

4 NATURE OF HOTEL AND SPA INDUSTRY BUSINESS
4.1 Key Operating Characteristics
There is strong correlation between F&B revenue and room revenue and even with rising
RevPAR, the overall F&B contribution to total revenue has remained at consistent levels
due to price increase in the F&B outlets.
The room revenues as a percentage of the total operating income of the Indian Hotel
Industry constituted 57.3% in the year 2005-06 as against 55% in the year 2001-02. The
increase in the room revenues of the industry as a percentage of the operating income
can be attributed to the increase in the Average Room Rates. The Average Room Rate
in the Indian hotel industry rose from INR2,400 in the year 2002-03 and to INR3,227 in
FY2006. The rise in the room revenues was also mainly due to increasing demand and
increasing operating costs, which were passed on to the consumer. The table given below
presents aggregate financials for the Indian hotel industry FY2003 through FY2007.
4.1.1 Cost Structure
The treatment cost across resort and day spas vary according to their positioning, point of
presence (locality) especially for day spas. In the 5 star resort spas, average per 60
minutes sitting prices vary from INR 2,000 to INR 4,000. For day spas, the price
variation is more and it depends upon the variety of factor such as positioning of spas,
offerings, uniqueness of offering etc. The treatment cost for various therapies varies
between INR 700 to INR 3,000. The cost structure of one of the upcoming Thai day-spa
in Bangalore is shown in the annexure of this report.
Hotel Industry
Around 62–68% of the operating costs of a hotel are fixed in nature, thus requiring a high
level of sales to break even. Again, the cost structures of different hotel companies are a

function of guest profiles, business strategies, and management quality and property
characteristics and would vary from company to company. However, the following trends
are break up of common:
 General Administrative & Operating Cost is the largest cost head for players in
the hotel industry in India, accounting for up to 25% of operating cost.
 Employee costs account for 15–20% of the operating cost.
 Power and fuel costs range 6–10% of operating cost and are on the higher side
due to high consumption of power as well as due to the required power back-
up facilities in the light of erratic and unreliable power availability in the
country.
 Repair and Maintenance accounts for 5–10% of the operating cost for the industry
(renovation is a major cost head under this classification).
 Marketing and selling expenses account for about 5% of operating cost for the
industry
4.1.2 Cost Structure Profitability
The occupancy rates and average room realisations, primarily, drive profitability in the
hotel sector. The hotel companies function at a very high operating leverage. Thus, any
incremental changes in occupancy rates affect the bottom-line significantly. Net margins
for players in the industry have been in the range of 21–42%, with higher net margins for
high-end hotels. The players in this industry have historically enjoyed very high
operating margins in the range of 30–45%.
4.2 Seasonality
Spa and Wellenss Industry
In a calendar year, the seasonality influence can be gauged in the rainy season when the
demand is relatively less than rest of the seasons. It is especially true in the Western
region clusters like Mumbai and Pune. Another seasonality impact comes during the
weekends i.e. during Saturdays and Sundays when the service class has ample time for
Spa and Wellness therapies. Due to this excess weekend demand, some day spa chains
offer discounts for the treatments during week-days i.e. from Monday till Friday. In some
residential clusters in Pune, the weekend demand for these therapies is more than two
times the average week day demand.
Hotel Industry
The hotel business is cyclical and sensitive to changes in the economy in general. The
sector may be unfavorably affected by such factors as changes in the global and
domestic economies, changes in local market conditions, excess hotel supply or
reduced demand for hotel rooms and associated services, competition in the industry,
changes in interest rates, the availability of finance and other natural and social
factors. Since demand for hotels is affected by economic growth in India as well as
world over, a global or domestic recession could lead to a downturn in the hotel
industry. Such adverse developments in the hotel industry in India or in the cities
where the hotels are located would have a negative impact on the profitability and
financial condition.
4.3 Operating Risks

Revenues are generally higher during the second half (October to March) of each a
fiscal year compared to the first half (April to September). Any disturbances /
disruptions during this period may lead to reduction in the revenues and can have a
material adverse impact on the financial performance. As a result of this, the quarter to
quarter comparison of historical results may not be accurate or a meaningful
indicator of future performance. Financial results are affected by occupancy and
room rate achieved by a hotel. Management‘s ability to control cost of developing
and running additional rooms, the success of their food/beverage and catering
operations, have a significant impact on the financials. Further, the operating margins
would be adversely affected by increase in electricity, insurance and environmental

compliance expenses. Moreover, hotels would have to be renovated periodically to keep
up with the changing trends and such renovation may involve significant development
and maintenance costs. The inability to manage the above operating risk would have a
negative impact on the profitability and financial position of a hotel group.
4.4 Regulations / Standards
There aren‘t any specific regulations or standards controlling the quality standards of
service. However, there are laws and regulations governing relationships with employees
in such areas as minimum wage and maximum working hours, overtime, working
conditions, hiring and terminating of employees and work permits.
Hotel Industry
The hotel industry is subject to numerous laws and regulations, including those
relating to the preparation and sale of food and beverages, such as health and liquor
licensing laws. The hoteliers‘ properties are also subject to laws and regulations
governing relationships with employees in such areas as minimum wage and maximum
working hours, overtime, working conditions, hiring and terminating of employees and
work permits.
Furthermore, in order to expand its existing properties, acquire new properties or to open
newly-constructed properties receipt of all required licenses, permits and authorizations
including local land use permits, building and zoning permits, environmental, health
and safety permits and liquor licenses. The changes or concessions required by regulatory
authorities could also involve significant costs and delay or prevent completion of the
construction or opening of a project or could result in the loss of an existing license.

Project approval and Star Classification of hotels from the Department of Tourism,
Government of India
Under the Tourism Policy of the Government of India, any project seeking to
establish a hotel in India has an option to seek the classification of the proposed hotel in
a star category. The classification in category is issued based on an application made
to the Department of Tourism, Government of India. The Hotel & Restaurant Approval
& Classification Committee (HRACC) inspects and assesses the hotel based on the
facilities and services offered against a fixed marks sheet, including the assessment
of quality of facilities provided. Upon the hotel obtaining a qualifying mark prescribed
for the particular status of star classification, and based on a recommendation of the
HRACC, the hotel is conferred the status of a Star hotel by the Department of Tourism,
Government of India. The Government of India, Department of Tourism approves
projects of two types:
(i) approvals for starting a Star hotel without apartment facilities and
(ii) approval for starting a Star Apartment Hotel.
Both these types of approvals involve the same procedure in the following 2 stages:
(i) the approval of the Project Report and
(ii) the classification of the hotel as a star hotel
4.4.1 Central Excise Act, 1944
The Central Excise Act, 1944 provides that a person who is engaged in production or any
process of production of any specified goods including liquor shall get himself registered
with the proper officer as per the procedure / documentation laid down.
4.4.2 Prevention of Food Adulteration Act, 1954
The Prevention of Food Adulteration Act is a Central legislation and provides provisions
for the prevention of adulteration of food. The Gujarat State Government has adopted the

Central Act, which requires any person/ entity manufacturing / storing / selling food
articles to be registered under the provisions of the Act.
4.4.3 Environmental Laws, Rules & Regulations
The three major statutes in India that seek to regulate and protect the environment
against pollution-related activities in India are the Environment Protection Act, 1986,
the Water (Prevention and Control of Pollution) Act 1974 and the Air (Prevention and
Control of Pollution) Act, 1981. The basic purpose of these statutes is to control, abate
and prevent pollution. In order to achieve these objectives, Pollution Control Boards, or
PCBs, which are vested with diverse powers to deal with water and air pollution, have
been set up in each state. The PCBs are responsible for setting the standards for
maintenance of clean air and water, directing the installation of pollution control devices
in industries and undertaking investigations to ensure that industries are functioning in
compliance with the standards prescribed. These authorities also have the power of
search, seizure and investigation if the authorities are aware of or suspect pollution. All
industries and factories are required to obtain consent orders from the PCBs, which are
indicative of the fact that the factory or industry in question is functioning in compliance
with the pollution control norms laid down. These are required to be renewed annually.
The issue of management, storage and disposal of hazardous waste is regulated by the
Hazardous Waste Management Rules, 1989 made under the Environment Protection Act.
Under these rules, the PCBs are empowered to grant authorisation for collection,
treatment, storage and disposal of hazardous waste, either to the occupier or the operator
of the facility. In addition, the Ministry of Environment and Forests looks into
Environment Impact Assessment (EIA). The Ministry receives proposals for expansion,
modernisation and setting up of projects and the impact which such projects would have
on the environment is assessed by the Ministry before granting clearances for the
proposed projects.

4.5 Government Policy
4.5.1 Trade Measures influencing investments
The role of the Central and state governments in the Indian economy with reference to
producers, consumers and regulators has remained significant over the years. Since 1991,
the Government of India has pursued policies of economic liberalisation, including
significantly relaxing restrictions on the private sector. The Congress-led UPA
Government, which was formed in May 2004, has continued the policies and initiatives
that support the economic liberalisation policies pursued by the previous governments.
However, one cannot be confident that these liberalisation policies will continue in the
future. The protests against privatisation could slow down the pace of liberalisation and
deregulation. The rate of economic liberalisation could change, and specific laws and
policies affecting hotels, foreign investment, currency exchange rates and other matters
affecting investment in a hotel company‘s securities could change as well. A significant
change in India‘s economic liberalisation and deregulation policies could disrupt business
and economic conditions in India and thereby affect its business.
4.5.2 Incentives for attracting investments
Due to eminent gap between the supply and demand in the star category rooms in Delhi
NCR that might result in the shortage of star category rooms during the Commonwealth
Games 2010, the Government of India has provided incentive to entrepreneurs / hotel
groups for creating the supply in and around New Delhi. The long-term tax holiday for
two-star, three-star and four-star hotels and convention centres to be built in and around
New Delhi from April 1, 2007, to March 31, 2010, to boost capacity for the 2010
Commonwealth Games. The Central Sales Tax reduction of 100 basis points from 4% to
3% would be provided to entrepreneurs. In addition, there has been an increase in
allocation towards development of tourism infrastructure from INR4.23 billion to INR5.2
billion, rise of 23%.

5 CHANNEL INSIGHTS
5.1 Major Cities and Towns for Spa and Hotel segments
Spa and Wellness segment
The spa and wellness segment has promising future across Bangalore and Delhi NCR
region followed by Mumbai, Pune and Hyderabad. The other cities where demand for spa
and wellness segment would be present are Chennai and Kolkata.
Hospitality segment
The industry performance is indicated by average occupancy and average room rate. The
Indian hotel industry‘s performance across major tourist destinations is given in the
following table:-

Indian Hotel Industry Performance
(Average Occupany in percentage)
Table 15: Average room occupancy of Indian hotels across various cities
Source: IBEF
The table above shows the average occupancy rate for all the registered hotels. However,
considering the occupancy rates for 5 star category rooms, the major Indian cities are
Bangalore, Delhi and Mumbai.

5.2 Value Chain
The value chain has three broad components in the hotel industry. First is ownership of
hotels, second is management and the third s branding and franchising. In highly
developed markets like the US, some players who operate only in one component of the
value chain, whereas others operate across the value chain. Linkages between value chain
segments vary internationally. In the luxury segment, the linkage between branding and
management is very strong. Thus, luxury hotels don‘t distinguish between these
components and insist on a strong management role along with the brand.
From the Indian perspective, the companies are moving up the value chain from asset
owning to branding and distribution. For example, Indian Hotels Company Limited as a
part of its Asset Light Strategy is partnering with PIEM Hotels, Oriental Hotels and Taj
GVK Hotels domestically. Internationally, the company partners with Taj Asia, which
owns hotels in Sri Lanka and Maldives. The companies operating in the Indian hotel
industry are also going in for co-branding exercises with international hotel chains
in order increase their visibility and revenues. For example, EIH Limited that owns the
Trident and Oberoi brands has entered into a co-branding pact with Hilton for its nine
existing ―Trident‖ h otels at Agra, Kochi, Chennai, Bhubaneshwar, Jaipur, Udaipur and
proposed hotels at Gurgaon and North Mumbai. With this, the existing Trident hotels in
the above-mentioned cities will be re-branded as Trident Hilton.
5.3 Filling gaps in Price & Service Value Chain
The Indian hotel industry is trying to diversify by filling the gaps in price (for instance
service apartments, budget hotels).
In the spa and wellness segment, a lot more refinement in service offering and awareness
about spa therapies as a mode of relaxation and rejuvenation is required. The day spas
expected to come up would fill the gap between the luxury resort spa and unhygienic and
unscientific home massage.

5.3.1 Service Apartments
The service apartments are fully furnished and well equipped apartments specifically
designed for experts with short stays in the country to give them and their family the
comforts and the privacy of home. The ITeS and software business boom have a
catalytic effect on the growth of all hues of accommodation business along with
serviced apartments. The services offered combine luxury and comfort:
 Air-conditioned and furnished flat
 Attach bath
 Fully-equipped kitchen
 Colour TV, fridge, washing machine, locker
 Telephone connection, net connectivity
 100% power back-up
 24-hours security
 Fire safety
 Private parking
Service Apartments - Market scenario

The concept is relatively new in India, but considering the increasing disposable
incomes, new job market dynamics and changing lifestyle, it won‘t take long before it
becomes a common phenomenon. The prices of real estate have grown by about 40% in
certain parts of the country and the growth is expected to continue in the coming years.
However, the size of the extended stay industry is quite limited at present because service
apartments have only been offered in a few cities of India. Indian cities can be compared
to other major markets around Asia. Major cities like Los Angeles, Singapore, and
Bangkok support 3,000-5,000 serviced flats. The secondary cities support several
hundred apartments. The service apartment sector is quite unregulated, with no industry

association, operating norms or standards. The rents for service apartments vary from
INR 7,000 a month for a small studio apartment to over INR 0.1m a month for a plush
three bedroom apartment.
With demand strongly emerging, this may be the right time and opportunity to enter the
extended stay segment in India, and fill in the void for quality branded accommodation in
India. Currently, serviced apartments are coming up in cities like Gurgaon and Noida in
the National Capital Region (NCR) due to availability of large land and active demand
from multinationals. Along with Gurgaon and Noida,
The Bangalore and Hyderabad cities have served as major markets for serviced
apartments.
5.3.2 Resort spas / Hotel Spas
The hotels in India are concentrating on spa segment as a tool of de-risking towards new
revenue sources in an effort to have greater stability. The spas are making a splash in
hotels after being tested in leisure destinations as major corporates send their overworked
executives to such centres so that they feel revitalized and cope with the stress of building
profit centres and creating brands in a madly competitive market. While the hotel
industry seems confident of its success, growing competition in the spa business may
have the hotel companies getting stressed out. The players are waking up to this
opportunity, and hotels and resorts in the South, especially in Kerala and some in UP,
have been cashing in on the trend. The luxury hotel chains in India like the Taj, Oberoi,
The Renaissance and the JWT Marriott are setting up spa centres that offer the latest
world-class facilities.
While specialized treatments at the different spas are aimed at retaining the guests in its
leisure hotels, the spas in these hotels aim to tap the local crowds besides the hotel guests.
For example, The Taj Group of Hotels is setting up 15 exclusive spas across its dominant
hotels in over two years. Just like income from food and beverage is a major contributor
to the total revenues, the revenues from the spa business are likely to be equally large
over the next five years. The concepts like medical tourism and spas are still at a nascent
stage in India. The capital expenditure involved is substantial and the players are yet to

see them making money. With life becoming more and more unmanageable due to
workplace stress, successes and failures, ups and downs, emotionally draining
relationships and the sheer will to survive, luxury rejuvenation centres and spas seem to
serve a definite purpose today.
5.3.3 Budget Hotels
Budget hotels in India witnessed tremendous growth due to strong domestic travel and
positive economic and investment environment. Strong GDP growth and continued
efforts towards infrastructure provided impetus to hotel industry, reflected in both
occupancy rates and average rate. The booming economy of India inviting business
traveler‘s everyday has resulted in shortage of room with room rates sharply rising,
giving birth to new range of budget hotels in India.
Definition
The minimum expectation of any budget traveler is a clean and comfortable room (air-
conditioned) with a refrigerator, a 17-inch flat-screen television, tea and coffee makers at
the bedside, in-house gym, cyber café, ATM machine, 24-hour automatic check-in kiosk
and wi-fi facilities. This is the new definition that budget hotels have given to the hotel
industry by satisfying the value for money concept.
5.3.4 Spa & Wellness Centers
As the industry is growing, new niches is the Spa & Wellness Industry are emerging e.g.
for Medi Spa market is small now but it has promising future. Medi Spa and medical
tourism would emerge as new niche areas in the next few years. In a few years, medical
tourism will become a multibillion-dollar industry fueled by hundreds of millions of
European and American patients streaming to such exotic locals as China, India, and
Thailand in search of affordable quality health care. Medical tourism is growing rapidly,
triggered by lower costs of air transport and the use of the Internet facilitating relations
between patients and physicians (anywhere in the world).
The need for solitude, space and peace to recharge has been instrumental in mushrooming
of spas in the country. A spa offers relaxation and rejuvenation to its clients. They are

designed to be sanctuaries for the inner self, to refresh and rejuvenate one‘s spirit as well
as physical being. The luxuries at these spas include facials, baths, body therapies ranging
from international procedures to Thai or Indian classics, customized packages to deal
with specific problems, beauty advice and therapies and immaculately planned diets.
Indian market for luxury spas is at nascent stage but is growing at a phenomenal speed.

6 GROWTH DRIVERS AND CHALLENGES
6.1 Spa & Wellness Segment
6.1.1 Growth Drivers
The growth drivers for spa and wellness are shown in the figure below:
Spa and Wellness Industry -

Growth Drivers
Overseas Exposure
Exposure to SE Asian,
EU experiences leading
to similar experience
demand
Increase in Availability &
disposable income Proximity
Service industry growth Supply creates Demand
leading to increasing - Indian consumers
incomes willing to try out these
facilities
Growth
Drivers
Education Affordability
Awareness and Services not just
education on ―health confined to super-
conscious‖ functional riches. Affordability
platform - most factor instrument in
important reason increasing demand
Figure 23: Growth drivers for Spa and wellness industry in India

The other trends that are visible in the spa and wellness industry, according to industry
players are:-
 Consumers want results. Whether they are looking for stress reduction, relief
from chronic pain or want to look younger, people continue to embrace the
spa lifestyle because they are aware of, and expect to see, the benefits that spa
treatments bring.
 Spa visits are seen as necessary and an entitlement. This is particularly true
among baby boomers. They feel entitled to spa experiences rather than
viewing them as a treat or only reserved for special occasions.
 The evolution of men as spa-goers is boosting demand for products and

services designed with men in mind.
 Spa-goers want experiences that are customized to their personal needs and
desires.
 Real estate developers are adding residential spas to the gated communities
and high-end condominiums they are building.
 The medical industry in general and the plastic surgery sector in particular, are
beginning to incorporate spa treatments such as naturotherapy and
acupuncture into their service structure.
 ‗Team‘ or synchronized treatments that use two or more therapists are seen as
being on the rise.
 Spa-going moms desire products and experiences designed for them and their
babies.‖
There is huge opportunity for new Spas as there is very less penetration of these
rejuvenation therapies. As more people are becoming aware of such therapies, the
number of people availing Spa services is increasing every day. More Indians are availing

spa experiences as overseas travel is increasing due to increasing business opportunities.
It is resulting in these people looking for similar experience back home. Many
International Spa operators are incorporating Ayurvedic treatments in the Spas they are
operating, creating greater scope for the Therapists & the Practitioners.
6.1.2 Challenges
There is a huge scope of association between India and Thailand. The spa and wellness
industry in Thailand is around 5 – 7 years ahead of India‘s spa and wellness industry. The
huge scope between two countries is offset by the import duty structure for spa products
and equipments.
―Higher excise duties have been the impediment in importing spa oils and equipments
from Thailand. Spa products are treated as cosmetics, command 35% excise duties.
Similarly Spa tables are furniture, command 32% excise due. The landing cost of
product worth INR 500/Kg purchased in Bankok is INR 1200 - 1400/Kg in India‖
- Delhi based major Spa products and equipments importer from Thailand
The main problems spa and wellness industry is facing are:
 Lack of Standards – there are no organizations currently
 Lack of Accredited Training Institutes
 Lack of Accredited Spa‘s
 Lack of Uniformity in Traditional Treatments - Every Spa one visits in India

do the Traditional Treatments differently, simple therapy like Ayurvedic
Massage is done in different manner in different places, for example,
Shirodhara is done at any time of the day, where as it is strictly contra
indicated in the afternoons.

 No Association to Address Issues & Grievances of the Industry.
 Lack of Government support in promotion of industry except in few cases
 Lack of Awareness in all strata‘s of the society
 Shady places working under the name of Massage joints giving a bad name to
the profession & Industry.
 People not choosing the Spa Industry as a profession as they would choose
any other off course due to the bad name acquired by the Industry due to
wrong doings by few.
 Non-sharing, discreet & Orthodox attitude of some Ayurvedic Practitioners

not wanting Ayurveda to be used in Spa Industry.
 Many Practitioners looking at Ayurveda as a Therapeutic Modality rather than

Lifestyle Management Modality.
 Non Standardized products
 Spa word being misused for any thing & every thing from a changing Room
with just a Showers, Steam & a Whirlpool / Plunge pool in a Gym to a small
salon with a Massage Facility in a small cramped room
6.2 Hotel Segment
6.2.1 Growth Drivers
The hotel industry has profited from the fast growing economy of India. This has been
possible owing to the ever increasing tourist arrivals (domestic and foreign). The
compounded growth in tourist inflow over the past ten years (FY1996–FY2005) has been
8.2%, while in the past five years, growth stands at 9.1% per annum.
 Major growth drivers for the hotel industry include:

 General economic and business conditions in India and other countries;
 Geo-political stability within India and in other countries;
 Changes in laws and regulations that apply to hotel, tourism and hospitality
industry; Discovering/expanding new/niche markets; and
 Effectiveness of distribution channels.
6.2.2 General economic and business conditions in India and other countries
The general security, economic and business conditions have a significant impact on the
number of tourists visiting the country/traveling within the country for business purposes.
The vulnerability of hospitality industry to general security conditions was recently
exposed during the Mumbai terror attacks (26/11 attacks). All the major conferences,
delegates and group visits scheduled to happen in the coming 2 months are now cancelled
leading the hospitality industry into a temporary jittery situation.
The foreign business tourists‘ inflow to India depends on the state of civil aviation
industry. The open skies policy has spurred demand by increasing the number of
commercial flights coming into and out of India. The entry of low-cost airlines has
provided a fillip to tourism.
6.2.3 Discovering New Niches: Case Study – Medical Tourism
Medical Tourism India or Health Tourism India is a new concept in which people from
across the world are visiting India for their medical and relaxation needs. Most common
treatments include heart surgery, knee transplant, cosmetic surgery and dental care.
India is a favourable destination since it is at par with the developed countries in terms of
infrastructure and technology. India has some of the best hospitals and treatment centres
in the world with the latest facilities. Moreover, India enjoys the advantage of a skilled
and international standard medical workforce fluent in English. All medical procedures
including hospitalisation and recovery costs in India are much less as compared to
that in the USA and Europe. Indian hospitals adhere to global quality standards for
treatment and surgery.

Treatment: Cost benefits
A dental implant will cost at least 75% less in India as compared to that in the USA. An
MRI will cost about USD60 in India as compared to USD700 in the USA. An open-heart
surgery that costs USD18,000 in the USA will cost just USD4,500 in India. The crano-
facial surgery or a hip replacement costs about USD4,300 in an Indian hospital,
while it may cost more than USD13,000 in America.
The treatment cost for various surgeries is economical in India when compared with
Thailand. The table below indicates the cost comparison between Thailand and India:-
Surgery Thailand India

Bone marrow transplant 62,500 30,000
Liver transplant 75,000 40,000
Open heart surgery (CABG) 14,250 4,400
Hip transplant 6,900 4,500
Knee surgery 7,000 4,500
Hysterectomy 2,012 511
Gall bladder removal 1,755 555
Table 16 : Cost comparison with Thailand (USD)
Source: IBE;, E&Y
The graph below shows medical expenses for the same surgeries in the western countries
far exceed the Indian medical expenses:-
Figure 24: Medical cost comparison of India with US and UK

6.2.4 Challenges
The hotel industry globally is engulfed with largely the same issues that local hotel
industry and hospitality industry is facing.
Challenges faced by Indian Hospitality Segment
The structure of ownership /

management results in
under-investment
Performance is heavily Under-investment in poor
dependent on uncontrollable, technical infrastructure and
· Hotel ownership, management and
macroeconomic factors CRM capabilities
brand may belong to different
parties resulting in complex
· Demand is highly correlated relationships · Less attention to using technology in
by internal environment, GDP · Management companies must hospitality sector is limiting growth
& consumer confidence offer capabilities for 100% of · Despite access to the customer, chains
· Supply is rigid, driven by real managed Hotels, but only control have limited marketing and CRM
interest rates, past demand small fraction of revenue resulting capability
and GDP forecasts in under-investment · Few chains have a guest database, a
· Profitability forecasting · fraction have it integrated with an
models are very unreliable executive information system. A
fraction have significantly automated
the loyalty program
Changing labour
conditions and shortage Hospitality Fragmented industry supply
chain and inefficient e-
of qualified labour
Segment commerce utilization
· 3 levels of purchasing ( e.g.

· Increase in employee wages in
the last decade has increased corporate, regional, property) with
the operating costs little visibility and control over
· With the service industry
10,000 skus
Land cost, consumer Growing customer · In general chains have inadequate
growing faster, shortage of proximity constraints and
employees with specific skill expectations eCommerce strategies and their
accurate positioning capabilities fall far behind other
sets
· Average number of people
industries
· Consumer expectations increasing · Little attempt to target groups and
servicing an Indian hotel room · Limited space availability near with India emerging as tours
is 2:1 compared to 0.5:1 airports, city centers, office destination on global travel map.
overseas clusters leading to high demand of · True differentiation, unique and
property customized experience leads to
· Positioning of the hotel according loyalty and repeat purchase
to the target guest segment e.g.
hotel positioned to business
visitors have distinct facilities
compared with leisure travelers
Figure 25: Challenges faced by Indian hotel industry

7 CRITICAL SUCCESS FACTORS
The spa and wellness industry being ―niche‖ in nature, subtle aspects of services may
matter when it comes to providing unmatched experience to the customers. The
differentiating experience results in ―Word of Mouth‖ advertising of the brand, especially
for luxury products like Thai massages. The figure below outlines factors that would play
critical role in the success of ―Thai‖ spa and wellness experience. It is based on the
synthesis of the information collected from primary interviews with the owners of non-
ayurvedic aroma spa and ayurvedic treatment centers across major cities.
et ,
ls s
Th xpe cto
Tr rap enc
al se
–
c
“E fa
in e d e
ai ist e”
e ri r
w res
rta fre ien
ne s
cu tain yg
d –
s,
s
Type of oil used – % Ambience – Lightening,

of therapeutic content color /shades, furniture –
impacts repeat Critical theme specific
purchase and WoM Success (Differentiator)
advertising
Factors
f e ar Olfa
om c
t o clos a tor
in
Po ce – et se tou y –
ns ch
en rg rs es ing
es to ta me
pr st
o Courteous &
cu attire of staff –
theme specific
(“Thai”
experience)
Figure 26: Critical Success Factors for spa and wellness industry in India

7.2 Hotel Industry
According to the opinion of the industry experts, hospitality service providers need to
follow these critical success factors in order to survive and grow:
7.2.1 Site & Location
This can be considered the most critical factor in determining the success of a hotel
property. In addition to identifying a city, the site location within the city also assumes
significance and issues like distance from the Central Business District (for metro hotels)
and connectivity (access to roads, proximity to airports) assume vast importance.
7.2.2 Positioning & Guest Profile
Equally important is the positioning of the hotel according to the target guest segment.
For example, business hotels set up to cater to the high-yielding corporate clientele in
metro cities would have a distinct competitive advantage over facilities targeted towards
leisure travellers in the same city.
7.2.3 Financial Strength
Development of hotels is a highly capital intensive activity and new hotel properties,
typically, have a high break-even point. Moreover, existing players in any location enjoy
an early mover advantage over newer properties and are able to adjust their tariffs in the
wake of increasing competition in order to maintain occupancies. Thus, newer properties
tend to command relatively low occupancies in their early years of operation. Hence, it is
imperative for a hotel company to have sufficient financial muscle to sustain such losses
during the early years of operation.

7.2.4 Brand Recognition
A well-established brand name assumes great significance, especially when a hotel is

targeting high-yielding business or foreign clientele. Some of the companies in the Indian
hotel industry are planning to enter key gateway cities like Shanghai, London, New York
etc in order to increase their visibility globally.
7.2.5 Yield Management
This is a very important tool used in industries dealing with perishable assets and hotel
industry is one among them. Yield management is used in maximizing profits from the
sale of perishable assets, such as hotel rooms, by controlling prices, inventory and
improving services. Yield management in hotel industry is a combination of information,
historical and current with policy supports, procedural support and statistical models to
enhance a hotel's ability to carry out a number of common business practices and thereby
increase both its revenues and its customer service capabilities. Thus, companies
operating in this industry need to have proper yield management practices to enhance
their revenues and profitability.
7.2.6 Differential Pricing
Hotels in India typically offer discounts on published room tariffs to many clients. As a
result, though the occupancy rate of these hotels increases, the ARR does not increase
proportionally. However, the magnitude of discounts varies depending on the nature of
the client location and size of the hotel. Furthermore, in the dual tariff rate system, there
is a domestic currency rate for local travelers and a dollar rate applying to foreign
travelers. Hence, there is need for a common yardstick for tariff rates.

8 MARKET ATTRACTIVENESS AND POSSIBLE
COLLABORATION
8.1.1 Market attractiveness for various spa segments
―Demand exists in all the segments. However, I can see a clear shift among resorts
and business hotels to have Spa in their property. Similarly, because of increasing
awareness, more disposable income, the day spas would have better penetration in
next 3 – 5 years‖
- One of the renowned Spa Consultant based in Delhi
Based on various interviews, certain segments could be classified as more attractive than
the other as far as Thai investors in the spa segment is concerned. The spa industry as a
whole requires the training infrastructure so that experienced professionals could be
provided to the spas in all the segments. The trained manpower is required to popularize
the concept. The repeat customer base that is critical to the success of day spas, is
possible if the customers see the tangible benefits and feel the experience of aroma
therapies and other global therapies on themselves.
―The trained manpower is critical to providing the experience. There isn‘t any reputed
organized global spa therapies training institute present in India. Individual spas are
forging tie-ups with foreign players.‖
The Indian market is very lucrative for Thai spa investors who want to enter India by
opening the global therapies institute and certification courses are they exist in Bankok.
Opening the training institute would establish their linkages with all the spa segments and

would ensure that their expertise reaches target audiences through word of mouth. The
second most attractive option after establishing Spa training academy would be
contacting various upcoming resorts / hotels and the ones in the expansion mode. The
opportunity exists in managing the spa businesses of these resorts.
―Many times resorts want to focus on their key business and outsource the spa
management activities. Our spa consultancy company is managing spa in 2 – 3 star
category resorts. The staff working there are in our payrolls.‖
Thirdly, the opportunity also exists in day spa chains that have expansion plans as most
of these chains are started with small to medium entrepreneurs having regional presence.
8.1.2 Possibility of collaboration across various spa segments
Though possibility of collaboration exists across all the segments of spa offerings and
training the manpower, it is suggested the Thai investors should open the academy for
training global aroma therapies all alone as it requires less investment and more technical
skills. Secondly, collaboration can be formed with the Indian spa consultants who are into
designing the spas, providing training based on Indian therapies such as Panchkarma etc.
―Indian spa consultants would be willing to gain from Thailand‘s expertise in spa
therapies….. we already have tie up with Oriental Spa academy for certification
courses in the Spa training school we have come up in Jaipur.‖

8.2 Specialty Restaurants across Business and 3 to 4 star hotel
categories
8.2.1 Market attractiveness for various specialty Thai cuisine restaurant
There has been an increasing awareness about Thai cuisine among Indian consumers. As
per the hotel industry, it will take some time before Thai specialty restaurant could gain
popularity in the 3 - 4 star and business hotel categories.
―Minimum customer base is essential for profitability of specialty restaurant. Indians have
cultivated the taste of ―indigenous Chinese‖ cuisine because of the push from FMCG
companies in the last 20 years. It will take sometime before any mid segment (3 – 4 star
and business class) property would come up with specialty Thai restaurant, on the lines of
Chinese restaurant.‖
- Marketing head of one of the Delhi based hotel chain
It came out quite clearly that business model for any possible collaboration for Thai
specialty restaurants with 3 and 4 star restaurants would not be a feasible as Thai food is
considered as ―niche‖ category with few taker as far as 3 and 4 star hotels are concerned.
Secondly, there has been sudden blip in the business because of terrorism and global
meltdown issues. The hoteliers are planning to ensure the sustainability of their profits by
providing value added offerings such as Spas that can be targeted to larger set of target
audiences.
―I don‘t think the hotel industry is prepared to open Thai specialty restaurant as of now.
Though there is an increasing awareness about Thai cuisine, it hasn‘t reached the critical
mass where specialty restaurant can work profitably in 3 and 4 star hotels.‖
- One of the Executive Directors of Mumbai based hotel chain

9 CONSUMER INSIGHTS – SPA AND HOTEL INDUSTRY
9.1.1 Profile of potential customers
―The consumer for these (Global) spa therapies would be people who are concerned about
their health and are doing nothing about it. These guys would be from 25 – 45 year of age
profile, earning more than INR 5 Lacs per annum.‖
- Managing Director of budding Aroma and Thai Spa Chain
The customer availing spa service can be described with the following common set of
characteristics:-
 They would be eating out quite often, i.e. more than 2 – 3 times a week
 They would be going to malls and multiplexes a lot
 Their age would typically between 25 – 40 years
 Most of these guys would be first time spa goers
Based on the interviews across various segments in the spa and wellness industry,
patterns could be identified with respect to typical location and target customers for
various Spa and Wellness therapies. The same has been summarized in the table below:-

Spa and Wellness Typical Location Target Customers
Segments
Top 10 – 12 cities. Both Male and Females,
proportion of male little higher
Next to customers preferred, (55-60%);
could do well even if located
at market locations. Age profile: 30 to 60 years age;
Ayurveda based Positioned towards alternate 60+ age
treatment centers stream of medicine where
massage therapies play a part Mostly elderly profile but with
role awareness young crowd is also
interested
Both Business and Service class

Acceptable to both Male and
Female, female little higher
(60%);
Preferably up-market
localities across major metros.
Age Profile: Below 25 - 40
years availing these facilities
However, day spa may also
Non-ayurveda more
find acceptance in the malls
aroma spa centers and city centers.
Service class working in MNCs
esp. in service industry
(relatively stressful
environment); Business class –
largely females; Housewives
Similar to aroma spa centers. Young professionals working in

Thai spa MNCs, Traveling abroad,
Close to elite profile / newly Educated People. Both male
customers
come-up posh localities with and female
(Sawadee, educated elite young
Bangalore customers Age Profile: Below 40 years
Customers) availing these services more
Largely ―aware‖ class people.
Largely female, Relative young
In city centers; may do well at population
city centers, shopping malls Age: 16 – 30 years availing
Saloon Spa etc; these services more
Focus on very young profile
customers Elite business / service class
background,
Table 17: Profile of Potential Spa customers

9.1.2 Taste and preference across regions
―As one goes from South towards North, the awareness of ayurveda treatment reduces that
makes the North and West Indian markets attractive for aroma and Thai therapies.‖
- Franchise of the budding Spa chain in Delhi
In South India, Ayurveda based massages have biggest market. In Western region
(Mumbai and Pune), ayurveda based therapies have better presence than they are in Delhi
NCR. The reason can be attributed to organized efforts put for awareness in the North
and West Indian markets.
As per our estimates the biggest potential for Thai Spa therapies exists in Delhi closely
followed by Mumbai. The other high potential markets are Bangalore, Pune and
Hyderabad. The third level of attractive markets for Thai concept based spa therapies
would be Chennai and Ahmedabad. In general there is less scope of Thai Spa or any Spa
business in Kolkata and eastern region in general. In smaller cities, the salon spas or
beauty parlour extensions end up catering spa requirements. These tier 2 markets would
be considered after successfully tying up in top 6 – 8 bigger cities.
9.1.3 Need – gaps in current service offerings
The following need-gaps were observed across the spa treatment service offerings in the
Indian market:-
 Limited supply of well trained therapist with proper communication skills
―Industry is in shortage of well-trained therapist. The customers want real spa experience.
Secondly, they (therapist) should have sound English and Hindi communication skills.‖
- Franchise of the budding Spa chain in Delhi

 There is no spa chain providing aroma and other therapies across major cities. The
consumers expect the credibility of the spa outlet that is very much fulfilled by the
spa chain offering standard experience across all its outlets.
 There is a lack of awareness about the health benefits from Spa therapies. The
customer needs to be educated about these therapies. Hence, there is a need to
focus marketing activities on education platform.
9.1.4 Brand image of Thai brands in Spa
Thai Spa and Wellness experience carry positive experience among the spa owners and
spa consultant who are aware of Thai and other global therapies. All have rated Thai spa
industry much higher than it is in India today. The main reasons for positive brand image
of Thai spa industry against Indian spa are as under:-
 There is clear demarcation between spa and wellness industry and entertainment
industry in Thailand where as in India, massages therapy carry bad name among
middle and upper middle profile customers.
 Thai spa industry has well documented spa standards that are lacking in Indian
―Out of 10 marks, if would give Thai Spa Industry 9 marks, I would give Indian Spa
Industry 6 marks.‖
- Leading Pune based Spa Consultant

9.2 Specialty Cuisine Restaurant
9.2.1 Consumer Taste and Preferences
The elite class segment aware of the health and nutritional benefits of Thai cuisine has
cultivated the taste for Thai cuisine. The number of travelers preferring Thai cuisine is
very less. These customers are willing to pay average INR 2000 or more per person per
meal. That‘s the reason that some Thai specialty restaurants are present in 5 star and
luxury resorts. These travelers are relatively non-existent in the mid segment hotels.
It can be safely assumed that Thai cuisine needs to take the same route as Chinese cuisine
has taken. The Chinese cuisine became popular because of the marketing efforts and
successful product launches of ―Chinese noodles‖ and later on soups by FMCG
companies in India. The case study below explains the introduction of ―Maggi Noodles‖
by Nestle India Limited.
9.2.2 Case Study: Creating New Food Category: Starting an era of Chinese
cuisines
Nestle India Limited (NIL) introduced the Maggi brand to Indian consumers when it
launched Maggi 2 Minute Noodles, an instant food product, in 1982. At that time, Indian
consumers were rather conservative in their food habits, preferring to eat traditional
Indian dishes rather than canned or packaged food. In fact, NIL was trying to create an
entirely new food category, instant noodles, in India. Initially, the company targeted
working women on the premise that Maggi noodles were fast to cook and hence offered
convenience.
However, this approach failed as was evident from the fact that the sales of Maggi
noodles were not picking up despite heavy media advertising. To get to the root of the
problem, NIL conducted a research, which revealed that it was children who liked the
taste of Maggi noodles and who were the largest consumers of the product. After this,
NIL shifted its focus from working women and targeted children and their mothers
through its marketing. NIL's promotions positioned the noodles as a 'convenience

product', for mothers and as a 'fun' product for children. The noodles' tagline, 'Fast to
Cook Good to Eat' was also in keeping with this positioning.
NIL aggressively promoted Maggi noodles through several schemes like distributing free
samples, giving gifts on the return of empty packs, etc. NIL's advertising too played a
great role in communicating the benefits of the product to target consumers.
Through its ads, NIL positioned Maggi as a 'fun' food for kids which mothers could
prepare easily. Taglines like 'Mummy, bhookh lagi hai' (Mom, I'm hungry), 'Bas 2-
Minute,' (Only 2 minutes) and 'Fast to Cook Good to Eat' effectively communicated the
product's benefits to target consumers.
Advertisement Strategy - Nestle started to advertise Maggi 2-minute Noodles during the
‗Hum Log‘ broadcasts on Doordarshan. In 1984-85 ‗Hum Log‘ reached 60 million TV
viewers. Nestle‘s plan paid off and soon enough the volume of demand for Maggi
Noodles increased from none in 1982 to 1,600 tons in 1983. It would go on to become
15,000 tons in 1998.
These ads had become so popular that the tagline 'Bas 2-Minute' immediately reminded
Indian consumers of Maggi noodles even several years after the ads were taken off the
TV. Maggi's first product extension was Maggi instant soups launched in 1988. With the
launch of Maggi soups, NIL had become a pioneer in the organized packaged soup
market in India...
During the 1990s, the sales of Maggi noodles declined, and this was attributed partly to
the growing popularity of Top Ramen , another instant noodles product. In order to
improve sales and attract more consumers, NIL changed the formulation of Maggi

noodles in 1997. However, this proved to be a mistake, as consumers did not like the
taste of the new noodles. In March 1999, NIL reintroduced the old formulation of the
noodles, after which the sales revived. Over the years, NIL also introduced several other
products like soups and cooking aids under the Maggi brand.
However, these products were not as successful as the instant noodles. In the early 2000s,
Maggi was the leader in the branded instant noodles segment, and the company faced
little serious competition in this segment. In the early 2000s, NIL started introducing new
'healthy' products in accordance with the Nestlé Group's global strategy to transform
itself into a health and wellness company. In July 2001, Maggi replaced Nescafé (NIL's
coffee products brand) as the company's core brand. Nescafé had been NIL's core brand
since 1998.
Commenting on the shift, Carlo Donati (Donati), chairman and managing director, NIL,
said, "The focused approach on Nescafé, which was the company's flagship brand over
the last few years, has yielded rich dividends and we plan to replicate the same in case of
Maggi as well." According to Donati, the new focus for the Maggi brand was to provide
'the much needed impetus' for the culinary segment as it had been lagging behind some of
NIL's other product segments like milk and milk products and coffee products.
In the early 2000s, the Nestlé Group had been taking measures to transform itself into a
'health and wellness' company. The company had also set up new research and
development facilities with a view to improving the attributes of the existing Nestlé
products to make them healthier, and to develop new health and wellness products. Since
the early 2000s, the Nestlé Group had been introducing 'health and wellness' products all
over the world. In India, NIL introduced new 'healthier' weaning and milk products in
2004.
In March 2005, the Maggi brand too took to the health route with the launch of Vegetable
Atta Noodles. NIL made use of the group's extensive research and development facilities
in developing this new 'healthy' product. According to NIL, Vegetable Atta Noodles were
healthier as they were made of whole wheat flour instead of maida (refined wheat) and
also because they contained real vegetables. The Dal Atta Noodles were another variant

of Maggi's healthy instant noodles proved to be a mistake, as consumers did not like the
taste of the new noodles. According to the FICCI (Federation of Indian Chambers and
Commerce Industry) 'Food and Beverage Survey' published in February 2006, health
foods, health food supplements, convenience foods and branded foods were the 'rapidly
rising' segments of the food and beverage industry. The survey also revealed that the
market for branded food products was growing at a healthy rate of around 15 percent in
the early 2000s. The changing lifestyles and eating habits of Indian consumers and the
increasing purchasing power of the growing middle income group were thought to be the
reasons behind this growth.
Even though the demand for convenience food was increasing in India in the early 2000s,
analysts said that most of the Indian consumers were still conservative in their food
habits, and gave importance to the perceived health benefits of traditional food.
Therefore, it remained to be seen whether products like Maggi Atta Noodles, despite their
'health' focus, would prevail in the long run.

10 CONCLUSION AND RECOMMENDATIONS
10.1 Market attractiveness and opportunity matrix in Spa and
Wellness business in India
Based on the analysis of investment requirements across various spa segments, the core
competence of Thai investors in the spa and wellness segments, we suggest that Thai
investors like Orient Spa and MSpa International should start building credibility by
entering into Global and Thai Spa training institute. They would have immediate
customers from Resort / Hotel spas and day spa chains. After building rapport with Hotel
and Spa chains in India, they can expose them with the idea of Spa centers positioned at
Business and Leisure travelers, as the case may be.
We expect that in order to forge partnership in the day spa chain, more investment would
be required to operate 2 – 3 company owned spa chains at higher rental places i.e. city
centers across Delhi and Mumbai. We, therefore, suggest entering in day spa business
after fully understanding the market dynamics in the real estate and day spa business.
Low High
Level of Attractiveness
High Training
Academy
Suitability to Thai Investors
Management
control Spas in
hotel / resorts
Destination
Day Spas
Spas
Low
Figure 27: Market Attractiveness and opportunity matrix – Spa and wellness segment

10.2 Entry Strategy in Spa and wellness business
Across the spa segments where entry of Thai Spa investors is recommended, the
positioning of Thai Spa should be based on ―functional benefits‖ rather than just
―pampering, relaxation and rejuvenation‖ plank.
Sl. Spa Recommendation for How to Enter? / Reasons

No. Segments immediate entry supporting recommendation
Option 1:
1 – 2 centers company owned and
company managed in Delhi and
Mumbai. After that franchise mode.
Option 2:
1. Day Spas - Go ahead Technical tie-up with the existing
chains willing to expand. The tie-up
may / may not involve capital
investment. For technical tie up, a
register a company in India as ―Spa
Consultant‖
- Seen as close to Ayurveda
- Requires technical expertise and
2. Medi Spa - Do not enter relatively larger capital investment
- Not much data on acceptance of
Thai Medi Spas in India
Option 1: Enter as Spa Consultant
for Designing Spa on Thai concept
- Register company in India as Spa
Consultant, Spa products and
services provider.
- Contact the new hotels and the ones
For Resort / in expansion mode with previous
Hotel Spas expertise.
- Entry would provide platform to
3. train therapists of day spa chains
- Go ahead - Also, help in entering day spa
segment after demonstrating
expertise
Option 2: Enter as Spa expert

controlling Hotel Spas
- Possible after entering as Spa
Consultant since hotels want to focus
on their primary activity. They don‘t

have expertise, they would be willing
to form alliance where in the
management control, décor‘, trained
staff is from Thai Spa Consultant
- High level understanding of leisure

Destination market
4. Spas - Do not enter - Requires huge capital investment
(as of now) even after tie-up with Indian
entrepreneurs
- Form equity partnership with Spa
consultants for opening Spa training
academy as less capital investment is
Thai Spa required.
Training - Open the company in India and
5. - Go ahead
Institute register it as Thai Spa trainer with
Ministry of Tourism, India
- Help in getting business from all
Spa segments as business in
exploding with less skilled therapists
Table 18: Recommendation for entry in various spa segments
We propose that the Thai investors from Spa industry should enter in India as spa
consultants. They can start training academy for training therapist in Thai and aroma
treatments. Their presence would also provide a base for importing Spa furniture and
other products from Thailand. Within 1 year of their entry, while they have established
themselves as ―Spa Management Gurus‖, major hotels would be will to provide them
management control for running the spa based on Thai and aroma therapies in their resort
and hotels. In the 1 – 2 years time when they have understood the dynamics of Indian spa
industry, they can plan to launch 1- 2 company owned day spas in Delhi and Mumbai and
can offer the franchises across other cities on revenue sharing basis.

Immediate Entry
Spa Consultant and
Training Academy
Horizon – Within 1 year
―Resort / Hotel Spa‖

Management Control
Horizon – 1– 2 Years
―Day Spa‖ Chain
Figure 28: Entry across various spa segments across time horizon
The figure above pictorially shows the entry for Thai investors from spa and wellness
industry across various spa segments over the period of time.
*****

11 Annexure
Spa menu for newly opened Thai Spa with 2 centers in the Bangalore city

Brochure showing positioning of Ayurveda based Spa chain in Bangalore

12 List of Tables
Table 1: Turnover of India‘s Travel and Tourism Industry till 2008 ............................... 15
Table 2 : FDI flows (USDm): India 2002-2005................................................................ 17
Table 3: Recommendation for entry in various spa segments .......................................... 20
Table 4 : Rank of Top 10 hotels globally in 2006 ............................................................ 28
Table 5: Top 20 brands with number of hotels and rooms globally ................................. 29
Table 6 : Top five hotel companies in India .................................................................... 30
Table 7 : World Travel & Tourism spending (USDbn): 2001-06 ................................... 30
Table 8: World Travel & Tourism Spending (USDbn) Vs Global GDP: 2001-06 ......... 31
Table 9 : Performance of global hotel markets – 2006 versus 2005 ................................. 31
Table 10: Major Players in Spa chains and training therapists ......................................... 41
Table 11: Major Resort and Hotel Spas in India............................................................... 42
Table 12: Turnover of India‘s Travel and Tourism Industry till 2008 ............................. 49
Table 13: Turnover of major players in Indian hotel industry .......................................... 50
Table 14 : FDI flows (USDm): India 2002-2005.............................................................. 53
Table 15: Average room occupancy of Indian hotels across various cities ...................... 62
Table 16 : Cost comparison with Thailand (USD) ........................................................... 73
Table 17: Profile of Potential Spa customers .................................................................... 82
Table 18: Recommendation for entry in various spa segments ........................................ 91

13 List of Figures
Figure 1: Segmentation of Massage and Spa therapy market ............................................. 9
Figure 2: Market Analysis of Thai spa treatment offering in India .................................. 10
Figure 3: Growth drivers for Spa and wellness industry in India ..................................... 12
Figure 4: Critical Success Factors for spa and wellness industry in India........................ 13
Figure 5: Turnover of India‘s Travel and Tourism Industry till 2008 .............................. 15
Figure 6: Transition in the hotel industry in India ........................................................... 16
Figure 7: Revenue sharing models in the hotel industry................................................... 16
Figure 8: Market Attractiveness and opportunity matrix – Spa and wellness segment .... 19
Figure 9: Entry across various spa segments across time horizon .................................... 21
Figure 10: Segmentation of Spa and Wellness Market ..................................................... 22
Figure 11: Definition of various star categories ............................................................... 25
Figure 12: Hotel classification by target market ............................................................... 26
Figure 13: Overlap between Hotel and Spa Industry ........................................................ 32
Figure 14: Segmentation of Massage and Spa therapy market ......................................... 33
Figure 15: Market Analysis of Thai spa treatment offering in India ................................ 34
Figure 16: Distribution of Ayurveda based treatment in preventive and curative diseases
........................................................................................................................................... 36
Figure 17: Size of organized hospitality sector vis-à-vis growth in tourist arrivals ......... 44
Figure 18: Segmentation of overall tourism industry in India .......................................... 45
Figure 19: Distribution of hotel room across various categories in India......................... 46
Figure 20: Transition in the hotel industry in India ......................................................... 47
Figure 21: Revenue sharing models in the hotel industry................................................. 47
Figure 22: Turnover of India‘s Travel and Tourism Industry till 2008 ............................ 49
Figure 23: Growth drivers for Spa and wellness industry in India ................................... 68
Figure 24: Medical cost comparison of India with US and UK ....................................... 73
Figure 25: Challenges faced by Indian hotel industry ...................................................... 74
Figure 26: Critical Success Factors for spa and wellness industry in India...................... 75
Figure 27: Market Attractiveness and opportunity matrix – Spa and wellness segment .. 89
Figure 28: Entry across various spa segments across time horizon .................................. 92

14 References
Primary Research – Expert Interviews
The expert interviews were conducted with the following organizations. More than one
interview per organization was conducted to gauge the holistic view of information
collectibles.
Spa Consultants
Spa Consultants, Pune
Spa Consultants, Delhi
Spa Equipment Importers and Suppliers
Radhey Mohan International, Delhi
Steam and Sauna Paradise, Delhi
Kranzler, Pune
Spa Resorts
Golden Palms Hotels and Spa, Bangaluru
Angasana Resort & Spa, Bangaluru
Day and Destination Spas
VLCC Spa, Delhi
Ayush Center, Delhi
Lambency Chandan Sparsh, Delhi
The Four Fountains, Pune
Body Mind Soul, Mumbai

Ayush Center, Bangaluru
Sawadee – Thai Refexology Spa, Bangaluru
Healthway, Bangaluru
The 5th Element, Bangaluru
Chisel India, Bangaluru
Arya Vaidsala Agency, Bangaluru
Ayurveda Gram, Bangaluru
Hotel Groups
Lemon Tree Hotels, Delhi
Prestige Hotels, Mumbai
Secondary Research Sources / Databases
ISI Emerging Markets Datatbase: Compilation of news articles, news snippets and
various secondary data reports
Internet Search for validation of various data points

Investment potential in Thai spa and hotel business in India

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INVESTMENT POTENTIAL IN THAI SPA AND

HOTEL RESTAURANT BUSINESS IN INDIA

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 2

a. Furniture – Largely focusing on house hold furniture e.g. Sofa-set,

b. Interior Decoration items – This would include: Show pieces,

c. Utensils – Household (kitchen), HoReCa (Hotel Restaurant Catering)

d. Plastic Products - Food containers, plastic storage boxes etc e.g.

2. Construction Material: This would include Bathroom Fittings,

3. Hospitality Services: This would be understood with the objective of tie-up

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 3

b. Accessories / decorative items e.g. music systems, alloy wheels etc

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 4

2 GLOBAL SPA AND HOTEL INDUSTRY ....................................................................... 22

3 INDIAN SPA AND HOTEL INDUSTRY: AN OVERVIEW ......................................... 32

4 NATURE OF HOTEL AND SPA INDUSTRY BUSINESS ............................................ 54

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 5

5 CHANNEL INSIGHTS ....................................................................................................... 61

6 GROWTH DRIVERS AND CHALLENGES ................................................................... 68

7 CRITICAL SUCCESS FACTORS .................................................................................... 75

8 MARKET ATTRACTIVENESS AND POSSIBLE COLLABORATION .................... 78

9 CONSUMER INSIGHTS – SPA AND HOTEL INDUSTRY ......................................... 81

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 6

10 CONCLUSION AND RECOMMENDATIONS............................................................... 89

12 List of Tables ........................................................................................................................ 95

13 List of Figures ...................................................................................................................... 96

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 7

―Ayurveda massage therapy is expected to grow at 15 – 20% whereas non-ayurveda

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 8

Segmentation of Massage & Spa Therapy Market

Spa & Wellness Market - Offerings

Figure 1: Segmentation of Massage and Spa therapy market

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 9

Political / Legal Environment Potential Entrants Innovation shifts

Suppliers Industry Competitors Consumers

Social / Consumer shifts

Figure 2: Market Analysis of Thai spa treatment offering in India

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 10

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 11

Spa and Wellness Industry -

Figure 3: Growth drivers for Spa and wellness industry in India

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 12

Type of oil used – % Ambience – Lightening,

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 13

 They would be going to malls and multiplexes a lot

 Their age would typically between 25 – 40 years

 Most of these guys would be first time spa goers

1.2 Indian Hotel Industry

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 14

Table 1: Turnover of India’s Travel and Tourism Industry till 2008

Indian Hotel Industry Indian Tour Industry Indian Travel Industry

Figure 5: Turnover of India’s Travel and Tourism Industry till 2008

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 15

2000 2004 2008 2012

Path of Paradigm Shift

Revenue Sharing Models in Hotel Industry

Figure 7: Revenue sharing models in the hotel industry

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 16

FDI 2002 2003 2004 2005

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 17

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 18

Sl. Spa Recommendation for How to Enter? / Reasons

INVESTMENT POTENTIAL IN SPA AND HOTEL BUSINESS IN INDIA 19