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1.p Due to the possible impacts on the Environment from the operations of a
hotel, there is a need to comply with Environment related regulations.

2.p Industry specific taxes Eg: bed tax

3.p Difficulties in obtaining travel visas to this region (especially by non-

European and non-US nationals) can be a deterrent to such tourists entering
this region.

4.p The current µwar on terror¶ situation may reduce non-essential leisure based
travel, which will have a negative impact on the hotel industry.

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1.p [oth hotel stays and spa treatments essentially appeal to one¶s discretionary
income, thus a growth in discretionary income would become favorable to
an organization such as Solberri.

2.p The competition for an organization such as Solberri need not necessarily
come from similar hotels/spa facilities only; it could even arise from other
sources such as other competing forms of expenditure for one¶s
discretionary income. Eg: a new suite of furniture

3.p Due to the seasonal nature of demand, revenues and room occupancy can
vary significantly during peak and non-peak periods.
4.p As hotels generally provide free food and lodging especially at the
operational level, their salaries are not that attractive compared with that of
certain other industries. This may make it difficult to attract employees for
such positions.

5.p Due to the non-essential nature of this type of service to a potential

customer, this would be one of the first areas that would be cut back at a
time of recession or economic downturn.

6.p The higher end of the hotels (Eg: µPremier¶ category at Solberri ) would
essentially target the higher end of the market which is a relatively smaller
group where high margins can be earned.
7.p The ownership models of hotels have witnessed some new realities in recent
years.( Eg: individuals/investors owning hotel rooms, sell and leaseback,
moving towards managing the hotel as opposed to owning them.

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1.p The patronizing of spas can be seen as a lifestyle change which is growing
among certain sections of the middle class as well as the upper class.

2.p As hotels benefit from holidaying the extent to which people take holidays
and their ability to get off from work for such holidays will have a direct
bearing on the demand experienced by an organization such as Solberri.

3.p As hotels consume a large amount of resources such as water, soap,

detergents as well as cause a fair amount of pollution (from water, leftover
food, use of strong detergents),there exists a fair amount of pressure to be
µgreen¶ especially by Environmental pressure groups.

4.p The supply of lower level staff is seen as being directly related to seasonal
unemployment in the region.
 5.p As traveling for a holiday is seen as non-essential travel. Some may opt not
to engage in leisure travel especially where air travel is involved.

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1.p The hotel industry is seen as utilizing an increasing amount of technology

with a view of achieving greater customer satisfaction. Eg: Ritz Carlton¶s
customer information management.(CRM)

2.p It can be seen that customers, even potential customers extensively use
online information sources including reviews and comments by previous
customers when making their own choice about holidays and places to visit.

3.p The use of technology and other advanced techniques can be useful in
managing the consumption of resources such as water and electricity which
are resources that are extensively used in this industry. Eg: Power Factor
Corrections, recycling water

4.p The increasing use of IT/IS can help in improving the information available
for management decision making which will also allow the organization to
better plan its future activities and events.

V 


 

Things have not really turned around just yet for the hotel industry as a whole. As
reality begins to set in, the industry comes face-to-face with other challenges
beyond discounting and hotel supply levels. Positive developments, however, have
already started to trickle in.

Like tourism, the hospitality industry has not taken it "easy" since the recession
started. Taxes levied solely against the lodging industry are unfair to us, said
Jonathan M. Tisch, chairman and CEO, Loews Hotels and co-chair of the board
and office of the president, Loews Corporation. Addressing the audience during the
32nd Annual NYU International Hospitality Conference held in New York last
week, Tisch added that as an industry, they have to deal with the oil spill in the
Gulf, compelling them to send a committee to assess the impact or effect on most
businesses as guests have already abandoned some destinations. He said their
analysis will have to be taken up to the congressional levels.

Furthermore, the immigration issue in Arizona has unintended consequences like

the travel boycotts, which will be felt by the lodging industry and related industries
supporting travel. ³It is important that we spread the message that they can debate
the issue, but not harm our industry. Don¶t harm the people that have worked for so
many years in travel and tourism with your boycott,´ added Tisch.

Andrew Coslett, CEO, IHG (InterContinental Hotels Group) remains "quite"

optimistic about the hotel industry¶s performance through the rest of 2010.
³Demand for us has come back. Although group business will be seen as only
preparing for the future, transient business is doing quite well,´ he said.
Understanding the potential impact of the oil slick in the Gulf, Coslett said his
chain is forging ahead regardless with their 2010 programs.

Coslett sees strong growth in Asia, especially China, in the periods ahead. ³China
is a prospect that¶s growing bigger,´ he added.

Mark Hoplamazian, president and CEO, Hyatt Hotels Corporation, stays bullish in
the market for 2010. Hyatt has expanded with 459 hotels last year despite a soft
economy. ³Demand has definitely come back. Year 2011 will catch up with
demand,´ he said adding that they will soon see double-digit growth.

Outside the US, China, [razil, and a number of countries in Europe have shown
positive results for the Hyatt brand in terms of investments.

David Kong, CEO, [est Western International expects a positive summer season
ahead. He believes the economy is improving. ³There will be room nights
improvement and increase in occupancy,´ he said adding that their focus will be on
Asia, India, Europe, and South America, especially [razil, in the months ahead.

³The industry has come back. [ut while there are fabulous facilities out there, the
ones that are hurting the most are the ones that cannot drive rates,´ said Arne
Sorenson, president and CEO, Marriott International Inc., adding Asia is
"incremental" for his flag currently. Room business is now setting the pricing for
the future. ³Group business will come back, however, transient is doing well,´ he
said.

According to Mark Lomanno, president, Smith Travel Research, ADR (average

daily rate) has seen some growth. His actual forecast for 2010 sees supply growth
growing only 2 percent versus demand growth rising at 5.7 percent. He said that in
2009, occupancy saw a very low 54 percent across the country. With this
occupancy level, it was obviously difficult to raise rates. ³However, the global
hotel industry is recovering; demand is definitely back but pricing isn¶t,´ said
Lomanno.

Transaction volumes will be low this year, but will pick up significantly in 2011
and 2012. ³We are still indeed at the bottom of the cycle; supply growth will be
limited over the next 4 years. Don¶t sell now ± ride the wave of recovery. 2012 is
the best time to sell,´ said Steve Rushmore, president and founder, HVS Global
Hospitality Services. Expect a lot of buyer competition from all the "cash on the
sidelines." Rushmore said, ³Now is the best time to buy. Today is the best buying
opportunity since 1991."

Advised Rushmore, ³Look to buy in high-volatility markets where values will

increase significantly over the next 5 years.´ Such cities are New York, Miami,
Los Angeles, Las Vegas, Anaheim, Omaha, Austin, San Jose, San Diego, and
Washington DC.

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SOURCE OF FINANCE:

The source of finance available to a hotel development is similar to those available

to real estate developers of others kind of project.
The following are usual method of rising finance for the hotel Industries:-
1. Share capital
2. Preference share capital
3. Equity share capital
4. [orrowed capital
5. Debenture
6. Mortgage
7. Loan from commercial bank
8. Loan from financial institution
9. Trade debt- credit guaranteed by supplier
10. Intercompany loans
11. Provision for taxation
12. Public fixed deposit
13. IPO

FUND ALLOCATION FOR THE PROJECT:

Hotel industries displays an investment characteristic with Distinguishes it for
other industries. The industry can be classified as one among those which are
highly capital intensive. Most of the Hotel represented by land, building, furniture
furnishing and Equipment. A study of the balance sheet of the leading hotel
companies shows that bulk capital is 90%.

A hotel project requires money under the following heads:

1. Cost of land and building
2. Cost of civil works
3. Cost of electrics installation and fixtures
4. Cost of sanitary work and fixtures
5. Cost of furniture fixture and fitting
6. Cost of carpet
7. Cost of providing facilities like air-conditioning, boilers, water treatment plant,
filtration plant, water pump, drainage system.
8. Cost of providing swimming pool, land scaping, land development,
9. Shopping arcade.
10. Cost of kitchen ware.
11. Cost of manpower
12. Misllinious cost

Economies of Scale:

The hotel industry enjoys the economies of scale based on the occupancy rate.
When the occupancy rate is high the hotels enjoy the economies of labor and fixed
cost is distributed over large number of rooms effecting in the increase of the
revenue and the various other costs like maintenance will remain same what ever
the occupancy, if the occupancy is high the expenses are distributed occupied
rooms resulting in the increase of revenue.

Other than the savings in cost many hotels charge 24hours rent on rooms used for
night halts (i.e. is for 8 to 10 hours) thus enjoying the chance to rent same room to
other customers for 24 hours.

Economies of Scope:

Opportunities for the Indian hotel sector continue to be in the budget and mid-
market segment. Anticipation for huge growth and expansion, in the next year or
two. The luxury segment is set to perform extremely well over the next few years
until the supply- demand gap is bridged. New opportunities lie in the extended stay
segment, which many potential developers are currently shying away from. . Agra,
while having seen highest improvement, has still a long way to go (citywide
occupancy 47%). There also some unfinished hotel projects in Agra, which will
continue to put pressure on the city¶s performance. As regards Jaipur, the recent
announcement by a major IT company to set up a base outside Jaipur, as well as
the state government¶s initiative to promote IT-related activity in the city, means
that Jaipur can look forward to some additional room night demand from the
business segment. These developments in the leisure segment including the strong
performance in Goa leads to believe that the leisure segment is clearly benefiting
from the increase in foreign tourist arrivals and growth in domestic travel.
Hotels in metro cities, with an average rate of Rs 2,600-3,000, and hotels in non-
metro cities, with an average rate of Rs 1,800-2,400, are likely to experience rapid
growth in demand in the next year or two. Cities to watch out for, in terms of
development opportunity, are Pune, Goa, and certain pockets in major cities like
Delhi (west) and Mumbai (mill lands).

Labor:

Department of Hotels that are available for guest 24 X 7:

2p Hotel Industry Kitchen/ Food Production: Kitchen & food production is a

department of hotel that responsible for food. Even hotels having Coffee
Shop provides 24 hour services to the guest.
2p Hotel Industry Engineering: If any problems come in room, bulb fuse, A/C
not working , then need to contact Hotel Engineers, they are also available
24 hours.
2p Hotel Industry Front desk: Front desk is 1st impression on guest, if guest
like this section then only he will go for other option like restaurant, laundry,
etc. Front desk consists of young and energetic staff who is always (24 x 7)
be there to help guest, they are also responsible for [usiness Centre, Internet
Access. Front office desk responsible for making C-Form for Foreigner
Clients, providing safety lockers to the guest. Taking Reservation by
Telephone, E-Mails, and Fax from the guest. Also providing guest Money
Exchange Services.
2p Hotel Industry Housekeeping: Housekeeping are available 24 X 7 for guest,
making their bedroom, bathroom, etc. Providing guest Laundry services also
do day to day room cleaning for guests.
 2p Hotel Industry Food & [everage Service: They include providing guest the
services whether in rooms, Restaurants or [anquets, or in Conference
rooms.
2p Hotel Industry Travel Desk: They are responsible for arranging day to day
travels for the guest. They also do the ticket confirmation work, and also
provide the information for sightseeing to the guests.
2p Gym/ Health Club/ Sports: Medium and large hotels are providing Gyms,
Swimming Pool, Health Club, [eauty Parlor, Saloon, games like [illiards,
Pool, etc facilities to their guests. Most of the Hotels are providing these
facilities complimentary with the rooms.
2p Parking/ Shops: Few Star hotels providing big parking space, shops in the
restaurant itself for the guest conveyance, so that they can get the things in
Hotel itself.

VÔV

Service Innovation Hotel industry is continuously using the concept of technology

to develop its image and occupancy ratio. Though the hotel industry is a service
industry it is continuously innovating the way the services are provided. Many
hotels have a category of rooms which are different in the space and facilities
each one having their own specialties and range of price. Hoteliers are now
running their business according to the taste and preferences of the customers
continuous feed back from the customers are helping the management to innovate
in the services provided by the. Few hotels are providing an services in their
unique way to get into moonlight. Offering special services respecting the
customer¶s traditions and customs and providing the service in their way is new
innovation to attract the customers.

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The advent of the Internet has opened up many avenues for the hotel industry, most
importantly the ability to book clients. Most if not all of the hotel chains offer
some sort of online reservation enabling the hotel management and staff to focus
their efforts in a variety of different places. It is reported that 25 percent of all
reservations are made online making it a key tool in room occupancy fulfillment.
In addition to room booking, most hotel chains today utilize the Internet by
offering online deals and major advertising campaigns. Electronic advertisement
accompanied with the ability to make reservations online has made the Internet
tremendously valuable. Adapting to ecommerce transitions such as the
implementation multi-purpose computer software are necessary to cater to the
clientele of the next generation. A higher understanding of market needs will
ensure a larger portion of it.

Information processing management is another key element that has contributed to

hotel industry success. Understanding and acting on the needs of clientele will lure
travelers away from competitors. Again, most if not all hotel chains today are
utilizing some sort of customer pattern tracking. Complete client pleasure is
dependent upon what you can offer differently from the other guy. The color of the
sheets, the position of an ice machine, the softness of toilet paper; targeting the
 very core needs of clientele means they will return to what they are comfortable
with.

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2p ITDC hotels
2p Hotel Corporation of India

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2p ITC Hotels
2p Indian Hotels Company Ltd.(The Taj Hotels Resorts & Palaces)
2p Oberoi Hotels(East India Hotels)
2p Hotel Leela Venture
2p Asian Hotels Ltd.
2p Radisson hotels & Resorts