hotel feasibility report by crazysid

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Contents
The Jain Group........................................................................................................................................ 4
   Business .............................................................................................................................................. 6
AIM:........................................................................................................................................................ 9
OBJECTIVES: ........................................................................................................................................ 9
METHODOLOGY: ................................................................................................................................ 9
LIMITATIONS: .................................................................................................................................... 10
INDUSTRY ANALYSIS...................................................................................................................... 11
   Tourism market overview ................................................................................................................. 13
   Hotel market overview ...................................................................................................................... 18
   KOLKATA ....................................................................................................................................... 26
PROFILE OF THE PROPOSED HOTEL ............................................................................................ 29
   LOCATION ...................................................................................................................................... 30
   Floor-wise Details ............................................................................................................................. 32
FINANCIAL VIABILITY .................................................................................................................... 34
   SALES REVENUE ........................................................................................................................... 34
   OPERATIONAL EXPENSES .......................................................................................................... 36
   Depreciation Statement ..................................................................................................................... 39
   Profitability Statement ...................................................................................................................... 41
   BREAK EVEN ANALYSIS............................................................................................................. 43
   RATIO ANALYSIS.......................................................................................................................... 45
   SENSITIVITY RATIO ..................................................................................................................... 46
   COST BENEFIT ANALYSIS .......................................................................................................... 47
Secondary project.................................................................................................................................. 48
CONCLUSION ..................................................................................................................................... 52
BIBLIOGRAPHY ................................................................................................................................. 53
Annexures ............................................................................................................................................. 54




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                                                              List of Figures

Figure 1 Customer profile .................................................................................................................. 13
Figure 2 T&T Contribution .................................................................................................................. 14
Figure 3 Foreign tourists arrivals .......................................................................................................... 16
Figure 4 ARR .......................................................................................................................................... 20
Figure 5 Kolkata Map ............................................................................................................................ 26
Figure 6 ARR vs Occupancy ................................................................................................................... 27
Figure 7 Upcoming supply..................................................................................................................... 28
Figure 8 Room sales .............................................................................................................................. 35
Figure 9 F&B sales ................................................................................................................................. 35
Figure 10 Total sales ............................................................................................................................. 35
Figure 11 Expenses................................................................................................................................ 36
Figure 12 Expenses................................................................................................................................ 36
Figure 13 Total Expenses ...................................................................................................................... 38
Figure 14 Depreciation value ................................................................................................................ 39
Figure 15 Total Depreciation................................................................................................................. 40
Figure 16 Operational profit ................................................................................................................. 41
Figure 17 Net cash flow ........................................................................................................................ 42
Figure 18 ROI ......................................................................................................................................... 45




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                                                               List of tables

Table 1 Key stats ................................................................................................................................... 12
Table 2 Key points ................................................................................................................................. 15
Table 3 City Study.................................................................................................................................. 21
Table 4 Floor wise details...................................................................................................................... 32
Table 5 (Cost of project)........................................................................................................................ 33
Table 6 Total sales ................................................................................................................................. 34
Table 7 Expenses ................................................................................................................................... 37
Table 8 Depreciation Statement ........................................................................................................... 39
Table 9 Profitability Statement ............................................................................................................. 41
Table 10 Fixed cost................................................................................................................................ 43
Table 11 Variable cost ........................................................................................................................... 43
Table 1 COST OF BUILDING ............................................................................................................. 54
Table 2 PLANT AND MACHINERY .................................................................................................. 54
Table 3 GUEST ROOM ........................................................................................................................ 55
Table 4 RESTAURANT ....................................................................................................................... 55
Table 5 ROOM SERVICE .................................................................................................................... 56
Table 6 BANQUET and Conference Hall ............................................................................................. 56
Table 7 STORES, PURCHASE, HOUSEKEEPING ............................................................................ 56
Table 8 ADMINISTRATION ............................................................................................................... 57
Table 9 RECEPTION AND LOBBY .................................................................................................... 57
Table 10 STAFF CAFETARIA ............................................................................................................ 57
Table 11 FOOD AND BEVERAGE OUTLETS .................................................................................. 58
Table 12 BANQUET HALL AND CONFERENCE ............................................................................ 58
Table 13 GUEST ROOM AND SUITE ROOM LINEN ...................................................................... 58
Table 14 KITCHEN STEWARDING (RESTAURANT &ROOM SERVICES) ................................. 59
Table 15 BANQUETS .......................................................................................................................... 59
Table 16 STAFF CAFETARIA ............................................................................................................ 59
Table 17 HOUSE KEEPING MISCELLANEOUS ASSETS ............................................................... 59
Table 18 PRELIMINARY AND PRE-OPERATIVE EXPENSES ...................................................... 60
Table 19 SALARY AND WAGES(Monthly) ....................................................................................... 61
Table 20 FOOD & BEVERAGE SALES ............................................................................................. 63
Table 21 RESTAURANT ..................................................................................................................... 63
Table 22 Room Service ......................................................................................................................... 63
Table 23 BANQUET & CONFERENCE HALL .................................................................................. 64
Table 24 Room Sales............................................................................................................................. 64




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                                 The Jain Group
Jain Group, one of the most dynamic and admired organizations, entered the
business world approximately half a century back when they emigrated from
Rajasthan to the Eastern part of the country. They entered the business world
with the advent of distribution of primary products like Iron and Steel, cement
and petroleum products. Besides this, they owned several best in world china
clay mines through which numerous porcelain units of crockery and insulators
are established. With years of experience and a team of dedicated professionals,
has proved its worth in various spheres of industries, and is moving towards
future with quantum growth plan. Jain Group is known for it s rock solidity
commitments, strong financial standing, and good market reputation. Client
relations are excellent and Jain Group has a name for fair dealings. Group
policies and strong principals have created such an unwritten contract, such a
loyalty that customers keep returning to them. It is not out of place to mention
that, at present cliental list consist of 70% repeated customers. With an ever
growing list of our business associate that includes MNC’S, banks and other
financial institutes, corporate, IT sectors, FIIS, government bodies and many
more. Jain Group is all set to scale new height of success.

                                Vision & Mission



With the Management philosophy of Quality First, Services First and Customer
Satisfaction First, the Jain Group targets to hold the leading position in the
fields of finance, automobile and a number of diverse industrial & business
sectors in India and abroad. To upgrade the integral enterprise value, we commit
ourselves to provide global -standard products and value-added services.



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Our mission is to understand the needs of our clients while devising effective
and innovative solutions for them. At the heart of our mission is a desire to
cultivate and sustain a successful proactive relationship with our clients.

We are committed to:

      Providing a broad spectrum of integrated solutions.

      Meeting and exceeding with customers demands and expectations.

      Adopting the latest technologies to deliver state of the art infrastructural
       developments.

      Ensuring conservation and developm ent of eco-friendly projects.

      Making continuous improvement in all areas of activity based on customer
       inputs in order to improve customer satisfaction.
      Contributing to the welfare of society.
   


                                  Values and Beliefs




Jain Group is customer oriented and is dedicated to provide a comprehensive
range of products under a single roof. We establish long term relationships with
our clientele in order to help them meet their life long personal or business
requirements. We are dedicated in providing our clien ts complete satisfaction of
quality and affordability. Through our products and professional assistance, we
commit our clients towards a successful and prosperous future.

We believe in giving our customer the synergy of 3s i.e. Service, Support and
Satisfaction all under one roof. We at Jain Group have always believed in the
phrase 'under promise and over deliver' and we always practice this philosophy
in our work.

We are an organization that our clients trust for quality, reliability and integrity,
that is because we build it right the first time. Moreover, our company provides
an environment where people want to work, stay and grow with.



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                                     Business




Jain Finance Corporation

In the year 1978 Mr. Prem Jain, CMD of Jain Group, established an auto
financing firm christening it as Jain Finance Corporation, later another
institution was created by the name of JFC Hire Purchase (P) Ltd.
JAIN FINANCE Corporation is the financial services company of the Jain
Group. The Company has a strong reputation for credibility and fairness in its
dealings with its customers and associates. The Company’s business includes the
financing of commercial vehicles, light, heavy and multi -utility, and tractors
through hire purchase and leasing. Jain Finance is predominantly an automobile
finance company however to maximize the advantage of its human asset base,
Jain Finance has diversified into other modules of financing such as project
finance, equipment finance and personal loans.




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Dream Developers

Ever enthusiastic towards expansion and uncovering new horizons, JAIN
GROUP entered the field of real estate development in the shape of Dream
Developers. Developing over a million sq.ft. of real estate in kolkata. The core
focus of the company is on creating quality living conditions and at the same
time providing the best value for investments for homebuyers. Here perfection is
a commitment and this reflects in our construction, planning, execution,
customer service, property management etc. Besides undertakin g residential and
commercial projects, Jain group is also diversifying into hotels, IT parks, malls,
farm houses and other infrastructural developments. For us the journey has just
begun. Guided by its vision, fuelled by enthusiasm, strengthened by strong work
force and loaded with advanced building technology, JAIN GROUP is committed
to give shape to future of not just Kolkata, but many more cities spread across
the country.




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Topaz Motors

The Group has to its credit a list of achievements and is recognized as an
experienced player in the field of automobile financing and dealership. Topaz
Motors came into being 1998. in 2000-2001, they bagged the best dealer award
for eastern India. Another milestone was achieved in 2002, when Topaz motors
became the dealers for SKODA AUTO INDIA, a wholly owned subsidiary of
German Auto major, Volkswagen, for their range of vehicles in Eastern India.




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AIM:
1. Primary - To do a hospitality industry analysis and determine Financial Viability of a
proposed hotel

2. Secondary - To list out potential partners for the Project


OBJECTIVES:
Some of the main objectives of the study of the project are:
Primary

               • To do a hospitality industry analysis and determine Financial Viability of a
                 proposed hotel in Kolkata.
               • To estimate the cost of project.

               • To estimate the total expected revenue from the various departments of
                 the proposed hotel.
               • To calculate the profitability ratios of the proposed hotel.

               • Determine the profitability analysis.
               • To find the break-even point and expected return on investment.
               • Conclusions




Secondary
      To shortlist various potential firms who are ready to partner the project and provide
       expertise.




METHODOLOGY:
The information for this project has been collected through the following procedures:
Primary Data:
Some of the primary data, which are collected for the study of this project, were collected
from Hospitality organization officials.
Secondary Data:
Various data were used from journals, books and various supplementary copies of
news and other magazines and from the Internet has helped us in gathering information.

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LIMITATIONS:
Calculation made in the project is based on assumption, approximation and subject to
change.
Getting the exact financial figures were not possible.




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                               INDUSTRY ANALYSIS
The travel and hospitality industry continues to be the sector, which has largely profited from
the fast growing economy of India. This has largely been due to the 5.2 m tourist arrivals in
FY08 (11% growth) over the previous period. In the last five years, growth stood at 17% per
annum. The hotel industry went through a rough patch between FY00 to FY04 owing to
factors like the Asian financial crisis, Afghan war, Middle East unrest, September 11 attacks,
SARS and domestic riots.

India occupies forty-sixth position among the sixty tourist destinations in the world. A
flourishing economy helped boost demand for the industry. To encourage the tourism sector,
the government is planning to propose a conditional 10-year tax holiday for all tourism
projects in the country. Companies will enjoy full tax exemption up to 50% of profits, but
will qualify for tax benefits for the remaining amount only if they re-invest it in tourism
projects. The Centre and States are also working out a PPP (Public-Private-Partnership)
model to increase hotel capacity. Efforts to diversify tourist attractions by offering new
products such as wellness tourism, medical tourism and golf tourism are expected to have a
positive effect on both foreign tourist arrivals and domestic tourism.




The outlook for India's tourism industry is upbeat. Key factors driving the tourism boom
include India's sustained economic growth, strong foreign direct investment inflows,
increased air networks, the availability of cheaper air travel, a strong domestic market and
aggressive marketing campaigns. Challenges relating to inadequate tourism infrastructure still
remain, but are not enough to dampen the bullish outlook for the Indian hotel market.




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Table 1 Key stats




                                                                 Source: World Trade Tourism Council


Encouraged by this optimistic tourism outlook, many developers, investors and international
hotel management companies are jumping onto the India hotel bandwagon. A number of the
Indian real estate players view hotels as a natural extension and synergy to their growth real
estate portfolios. The major cities that are the hub of economic and real estate development in
India are: Bangalore, Chennai, National Capital Region/Delhi (comprising the capital city
Delhi and suburbs of Noida, Gurgaon, Faridabad, Ghaziabad and Greater Noida), Hyderabad,
Kolkata, Mumbai and Pune.




India has become a favoured destination for global investors and multinational corporations
ever since it opened its economy in the early nineties.




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Tourism market overview

1. Key trends and demand drivers

      India, which ranks after China (PRC) as the world's second-most populous country,
       has experienced a tourism boom in recent years. Bolstered by a multi-faceted tourism
       product that ranges from 27 world heritage sites to religious relics, spa/mountain
       resorts and wildlife parks, India has much to offer leisure travellers. Figure 1 Shows
       the Customer profile that visited the hotels in the year 2008.



                               Customer Profile in FY 2008

                                     16%

                                           37%                 Domestic Leisure
                          9%
                                                               Domestic Business
                                                               International Leisure
                                                               International Business

                                     38%




       Figure 1   Customer profile


       Source: Indiastat

      The growing Indian economy will spur business travel. The strong performance of the
       corporate sector and the growth in the economy has led to an unprecedented surge in
       business travel. GDP grew at a robust 9.4 per cent in 2006-2007 and is expected to
       grow by another 8.5 per cent in 2007-2008. Tourism’s contribution to the GDP is
       shown in Figure 2. Furthermore, the industrial and services sectors have recorded
       double-digit growth rates. These figures will undoubtedly continue to raise the level
       of business travel in the country. In keeping with the current growth rate, India's
       hospitality industry is anticipated to grow at 8 per cent per annum between 2007 and
       2016 .




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                                                                           Figure 2 T&T Contribution

       Source: Indiastat


      The liberalisation of the airline industry will promote increased travel by both
       international and domestic travellers, further fuelling growth in the hotel sector. Open
       skies policies and direct international flights to the US and Europe have increased the
       country's accessibility, raising international traveller flows. In addition, increased
       frequency of existing routes and the introduction of additional routes by low cost
       carriers (LCC) such as Indigo, Spice Air, Jet Lite and Go Air will enhance domestic
       travel flows.
      Recognising the importance of the tourism industry, the government has made large
       strides in marketing India internationally. Building on the success of the Incredible
       India campaign in previous years, the Ministry of Tourism has launched an integrated
       international media campaign to promote India as 'must-see' year-round destination,
       with a focus on both generic and niche areas. "Chasing the Monsoon" is the new
       theme for the west Asian market.

"The government has also introduced initiatives to spur growth in the hospitality sector. Tax
holidays for two, three and four-star hotels established in specified districts that have
UNESCO World Heritage Sites and convention centres with large seating capacities in the
National Capital Territory of Delhi and in the adjacent urban areas of Faridabad, Gurgaon,
Ghaziabad or Gautam Budh Nagar, have been announced to foster development prior to the
Commonwealth Games in 2010. In addition, there are proposals to improve the tourism
infrastructure that will lead to increased travel. These proposals include constructing 33,000
kms of the National Highway in the Golden Quadrilateral, North-South and East-West

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Corridor areas, improving identified ports to facilitate cruise tourism and evaluating public-
private partnerships to connect identified circuits and destinations by rail.

"Medical tourism will also result in additional demand for hotel rooms. This sector has
gained momentum in the past few years, given the cost advantage and emergence of high
quality healthcare services in India where a choice of airlines, hotels, transportation, food and
sightseeing is offered along with medical treatment in the form of packages. The country's
medical tourism industry is thriving, encouraged by the introduction of a medical visa. In
addition, the Indian government has announced plans to promote medical tourism with an
investment of Rs 260 billion for funding relevant infrastructure including affordable hospitals
and budget hotels for patients and their relatives. Due to the lack of a 'single window'
clearance system, foreign investors have faced problems investing in this sector, and the
Indian government is looking at ways to improve the system.

Table 2 Key points


      Key Points

                         Supply is catching pace. Metros will witness an oversupply
         Supply          situation after four to five years.
                         Largely depends on business travellers but tourist traffic is also on
        Demand           the rise. Demand normally spurts in the peak season between
                         November and March.
                         High capital costs, poor infrastructure facilities and scarcity of
  Barriers to entry      land especially in the metros.
                         Limited due to higher competition, especially in the metros.
Bargaining power of
     suppliers

                         Higher in metro cities due to increasing room supply.
Bargaining power of
    customers

                         Intense in metro cities, slowly picking up in secondary cities.
     Competition         Competition has picked up due to the entry of foreign hotel
                         chains.




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2. International visitor arrivals

         India has set a tourism target of 10 million international tourist arrivals by 2010, the
          year of the Commonwealth Games in Delhi.
         Preliminary statistics from the Ministry of Tourism indicate that inbound tourist
          arrivals had already reached a 10-year high of approximately five million in 2007.
          This represents a 13 per cent growth over the previous year and the fourth consecutive
          year of positive growth in inbound foreign travellers. Compared with the 2.4 million
          international arrivals in 2002, the number of foreign visitors to India has increased by
          an impressive 86 per cent.
         In tandem with the increase in foreign arrivals, foreign exchange earnings soared by
          34 per cent over 2006 values to Rs 480 billion in 2007 shown by figure 3.




Figure 3 Foreign tourists arrivals

          Source: Indiastat


         Leisure travel (96.6 per cent) remains the primary reason for travel to India, followed
          by business (2.8 per cent), according to statistics sourced from Ministry of Tourism.
          While the overall trend is expected to remain unchanged over the next few years, the
          proportion of business travellers could increase with the rise in foreign investments to
          India.

3. Major international source markets




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      All major source markets recorded positive growth in 2006, with the UK and the US
       maintaining their positions as India's two largest foreign source markets, according to
       latest available statistics from the Ministry of Tourism.
      Nepal, Sri Lanka, Japan and Malaysia were the major source markets. Notably, the
       number of arrivals from Nepal showed the highest year-on-year increase among top
       Asian markets in 2006.
      While the UK and the US are expected to remain India's two largest foreign source
       markets, arrivals from Asia are expected to rise with the availability of more flights to
       India.
      In January 2007 India-based Jet Airways launched direct daily flights from Delhi and
       Kolkata to Bangkok. The same year also saw the airline serving the New Delhi -
       Toronto and Mumbai-Newark route via their European hub, Brussels.
      Reflecting strong travel demand for India, Singapore Airlines now operates six flights
       a week to Bangalore while Japan Airlines started daily flights between Tokyo and
       New Delhi in October 2007 to meet the business demand on that route. Other cities
       such as Kolkata, Hyderabad and Chennai are also served by direct international flights
       from major source markets.

4. Domestic tourism

      India's domestic tourism market is significant and growing. According to the Ministry
       of Tourism, the number of domestic travellers has increased steadily from 140 million
       in 1996 to 391 million in 2005 (latest available statistics), a year-on-year increase of
       seven per cent. The growth in domestic tourism is attributable to the increasingly
       affluent and growing population, strong economic indicators, expanded air networks
       and the liberalisation of services.
      Pending the release of official data, this growth is expected to have continued into
       2006 with indicative statistics from the Ministry of Tourism suggesting that it might
       have crossed the 460-million mark.




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Hotel market overview

Financial Year '08

      India continued to witness cheering trends in the tourism sector in 2007 with 5.2 m
       tourists visiting the country, registering a growth of 11% YoY. The Indian hospitality
       sector continued to be the forerunner of India's economic growth with support from
       the government. In the Budget 2007, five-year tax holidays for new star-category
       hotels and convention halls coming up in the National Capital Region by 2010 were
       announced. The Ministry has sanctioned 225 projects and utilised Rs.4.6 bn for
       upgradation of infrastructure facilities at important tourist destinations. Even public-
       private partnership is being planned to develop infrastructure projects. As a result of
       the high room rates in branded hotels, unregulated, unorganised hotels and guesthouse
       segments have emerged. Even the existing hotel players entered new segments like
       budget hotel and service apartments.
      However, in the beginning of the year, the global crisis, slowdown in corporate
       earnings and rising air fares affected the hotel sector to a certain extent. Occupancy
       levels at hotels catering to business travellers have dropped 5% to 10% since the end
       of January. With the dip in occupancy levels and new supply coming in certain
       destinations, the room rates witnessed a marginal increase, which was much slower
       than what was witnessed last year. Further, with hotel rooms in India being relatively
       more expensive (last year was unusual when tariffs rose by 25%), a slowdown was
       inevitable. Average room rates (ARRs) in the branded hotel category in India have
       increased 280% in the past three years, as per HVS International. Bangalore saw a
       decline in room rates, while Mumbai and Delhi witnessed a 15% to 18% increase as
       compared to more than 30% hikes witnessed in FY07. Going forward, the prices will
       soften by the end of the year as the supplies would start coming in from FY09, which
       would bring tariffs to a more realistic level.
      The Planning Commission's High Level Group on services sector has pegged the
       room shortage in the country at 150,000 rooms by 2010, out of which more than
       100,000 will be in the budget category. Not only the Indian hotel majors, but even
       international players have lined up huge capex plans. Investments of US$ 11 bn over


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       the next 2 years are expected to be earmarked for the hotel industry in India. Further,
       new segments like budget hotels, service apartments and management contracts are
       witnessing increasing interest.

Existing supply

      Based on the facilities and services provided, the Ministry of Tourism approves and
       classifies hotels in India into eight categories, namely five-star deluxe, five-star, four-
       star, three-star, two-star, one-star, heritage and classification-awaited hotels.
      As at the end of 2006, India had an estimated 1,169 approved hotels accounting for
       75,787 rooms. The majority of this supply was located in Delhi, Mumbai, Bengaluru,
       Chennai and Hyderabad.
      Historically, the high land prices in many of the key cities have resulted in hotels
       being developed in the upper tier categories, causing a scarcity of supply in the lower
       categories. In its recent budget, the government has provided tax incentives to develop
       one, two and three-star hotels in and around Delhi.

Marketing demand

      Aggressive growth in revenue per available room (RevPAR) has been recorded in the
       three key Indian cities of Delhi/NCR, Mumbai and Bengaluru over the past five
       financial years. In FY2006-2007, the five-star deluxe and five-star hotel segment in
       Delhi/NCR and Mumbai reported growth in average room rates (ARR) of about 40
       per cent over the previous year, while Bengaluru reported almost 20 per cent ADR
       growth over the same period. In comparison, the occupancy growth has been less
       aggressive and in certain markets such as Bengaluru, occupancies have stagnated and
       even declined.
      Demand for rooms in India particularly in the key cities (e.g. Delhi/NCR, Mumbai
       and Bengaluru) is exceeding supply. This has fuelled the aggressive growth in room
       rates and prompted the entry of new players. To address the huge demand-supply
       imbalance, efforts will be directed towards building 150,000 hotel rooms in the next
       four years, in addition to the launch of a new 'Bed and Breakfast' scheme to meet the
       requirements.
      The proposed known additions to supply are expected to be rapidly absorbed as they
       come on line over the next two to three years. After that room rates are expected to

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         adjust to more realistic levels. Markets such as Bengaluru - which generates one of
         the highest ARRs in India - are expected to experience a substantial rate correction by
         the end of the decade.




Figure 4 ARR




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Additions to supply

Table 3 City Study




Source: Cushman & Wakefield Research



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      According to research, the six major markets have approximately 28,000 new rooms
       planned by 2011: Bengaluru, Hyderabad and Pune will be most significantly impacted
       as room supply is forecasted to increase almost 250 per cent by 2011; in Delhi/NCR,
       the majority of supply is being developed in Gurgaon and nearby Noida with almost
       100 per cent rooms expected to be completed by 2011, while Mumbai and Chennai
       are expected to record growth rates of 35 per cent and 55 per cent respectively.
      Chennai has established itself as a preferred destination for the IT/ITeS (Information
       Technology/Information Technology enabled services) industry. The major brands
       expected to enter into the market in 2009 such as Hilton, Hyatt and JW Marriott will
       raise the standard of accommodation. Hyderabad has very few rooms compared with
       Delhi and Mumbai. Most hotels are now concentrated in the central business district
       (CBD) and upcoming markets of IT/ITeS. The Taj Group's hotels are expected to
       commence operations in 2008.
      It is difficult to get accurate information on future developments in India, including
       hotels. There is an unusually long approved process which delays projects and
       presents significant barriers to entry, particularly for foreigners. Land is very
       expensive everywhere and quality sites for hotels are even harder to locate. In some
       cases, part of this delay is caused by the amalgamation of land which is time-
       consuming as it entails purchasing land from different owners.

The investment market

      In November 2007 DLF announced its equal partnership with Aman Resorts to enter
       into definitive agreements to acquire a controlling interest in the group. The entire
       transaction, when completed, is estimated to be valued at Rs 16 billion, with an
       assumed debt of approximately Rs six billion. In addition to expanding its resort
       locations, Aman Resorts is developing projects in key gateway cities around the
       world, the first of which is scheduled to open in New Delhi in 2008.
      US hospitality major Carlson is taking a 25 per cent stake in a new venture with the
       United Group to introduce the Regent Hospitality brand in India. The joint venture
       will develop a luxury hotel property located at Greater Noida with an estimated
       investment of Rs 4.5 billion.


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      Domestic mid to economy-segment group Lemon Tree Hotels has announced that
       Kotak Mahindra Realty Fund has invested Rs 320 million in the company. In a related
       development, Kotak Mahindra Realty Fund is investing about Rs 20 million in Red
       Fox Hotels which proposes to open limited-service economy hotels in the price range
       of Rs 800-2,000 per night.
      Credit Suisse, one of the world's top investment banks, launched its domestic
       brokerage operations in India earlier this year and recently obtained its Indian
       merchant banking licence. Credit Suisse's real estate fund will acquire 10-15 per cent
       in a hotel chain in a structured deal. This is Credit Suisse's second investment in the
       real estate sector, the first being its acquisition of 75 per cent of a Rs 3 billion Info
       Tech park and five-star hotel project from Pune-based developer, Vascon Engineers.
      The Orchid Group of Hotels is planning to invest over Rs 10 billion to set up seven
       five-star properties in key centres across the country as it mulls an international foray
       with properties in China (PRC) and South Africa. It is also planning to add nearly
       2,000 rooms at seven locations across the country. The company has entered into
       management contracts for 10 hotels set to open across the country over the next two
       years.
      Milan-based Domina Hotel Group announced in November 2007 that it would
       develop 25 hotels through a joint venture and invest Rs 24 billion. In India, its first
       hotel is already under construction and will be marketed under the new brand Vedic
       Domina Hotels & Resorts. Another four are expected to be built within five years.
      It was announced in December 2007 that Kamat Hotels had bought a 60 per cent stake
       in Concept Hospitality for Rs 127 per share. The key hotels Concept will manage
       include Seasons in Pune, Wall Street in Jaipur and Manor Floatel in Delhi. All of
       these now fall under the management of Kamat Hotels. A total of 650 rooms will be
       under the listed Kamat Hotels entity which currently operates about 600 rooms.
      Kotak India Real Estate Fund has just acquired an approximate 11.11 per cent stake in
       the Mumbai-based The Price Group of Hotels at a cost of Rs 450 million. The group,
       which currently operates four five-star hotels, has announced a Rs 3.50 billion
       expansion and renovation plan which includes setting up five-star hotels in Mumbai,
       Goa, Bengaluru and Hyderabad in addition to a resort hotel and spa in Alibaug. The
       management envisages an overall inventory of 1,150 rooms in key cities by end 2009.
      Dubai Ventures, the private equity arm of Dubai Investment Group, has bought a five
       per cent stake in Delhi-based Bharat Hotels for Rs 1.6 billion - the deal values the

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                                                                          DREAM GATEWAY HOTELS
       company at Rs 32 billion. The hospitality chain plans to raise up to Rs 10 billion for
       the expansion of six properties under construction and has recently announced an
       international foray through a joint venture with the Dubai-based Nakheel Group -
       Grand Fort Dubai is set to open in 2009. Other hotels that are under construction and
       scheduled to open over the next two years including The Grand Jaipur, The Grand
       Resort Bekal, The Grand Ahmedabad, The Grand Chandigarh and The Grand Noida.
      DB Realty, a domestic real estate fund, is investing about Rs 3.2 billion in a 320-room
       five-star property in Goa. Hyatt International will manage and market the property.
       The project is likely to be completed by the second quarter of 2009.
      Financial services giant Morgan Stanley is close to picking up a 15-20 per cent stake
       in the Institute of Human Health Research Hospitality, owners of the Ananda and Ista
       brands of spas and hotels, for Rs 1.4 to 1.6 billion. Morgan Stanley will have a seat on
       the board of the hospitality company which is in the process of expanding its footprint
       in Delhi, Hyderabad, Pune and Ahmedabad. It plans to have nine properties under the
       Ista brand over the next three years.
      Oberoi Hotels is fast expanding in India, Abu Dhabi, the Maldives, Cambodia and
       Dubai, partly through management contracts and also through investing about Rs five
       billion of its own funds. The Group has hired Kotak Mahindra to help raise Rs four
       billion via debt and new equity.
      India's Parsvnath Developers has signed an agreement with conglomerate ITC's
       Fortune Park Hotels to manage 50 hotels comprising 4,100 rooms for Parsvnath
       Hotels, a subsidiary of Parsvnath. Parsvnath Hotels is expected to invest
       approximately Rs 25.4 billion to develop and own 50 hotels in India which will
       comprised 20 five-star hotels, 20 four-star hotels and 10 three-star and budget hotels
       between 2011 and 2013. The hotels will fall under the brands of Fortune Select, which
       are likely to have at least 100 rooms each; Fortune Park, which is expected to have 75
       or more rooms, and other brands such as Fortune Inn and Fortune Faith, which are
       likely to have at least 50 rooms. Faith, which is likely to have at least 50 rooms.
       Parsvnath plans to eventually develop 75 to 100 hotels across India, especially in the
       second and third-tier cities, as well as in other major centres.
      Choice Hotels India (CHI) has announced a Rs 7.6 billion franchise and management
       plan to partner with various investors to develop 20 new hotels with approximately
       2,000 guestrooms in India's major, tier-one and tier-two cities by 2010. CHI is also
       planning to introduce India's first all-suite hotel, Clarion Ludhiana, in Ludhiana,

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                                                                       DREAM GATEWAY HOTELS
       Punjab by the end of 2008. The 120-suite Clarion Ludhiana Hotel aims to target non-
       resident Indians (NRIs). In addition, CHI has also linked up with Royal Indian Raj
       International Corporation which is expected to invest approximately Rs 160 billion
       from 2008 to 2012 to develop15,000 budget guestrooms across India under CHI's
       hotel brand such as Clarion, Comfort Inn, Quality Inn and Sleep Inn.
      India's real estate fund, Yatra Capital, has entered into a joint venture with Atlas
       Hospitality Company (AHPL), a subsidiary of Ruia Group, to develop a luxury hotel
       and serviced apartments in Pune. Yatra is expected to hold a 20 per cent stake in the
       Rs 286.4 billion venture, which also marks its entry into India's hospitality industry.
       Scheduled to be completed in late 2009, the 26,900 square metre project is likely to
       comprise 319 hotel rooms and 96 serviced apartments. The project is expected to cater
       to business travellers in the area.
      Rakeen India Operations Company (Rakindo) has announced the signing of a
       Memorandum of Understanding (MoU) with Lotus Hotel Investment Fund (Lotus) to
       develop business hotels in Asia, particularly in India. According to the MoU, a joint
       venture company will be formed to invest in three-star and four-star hotels in Asia,
       with six major cities in South India being the initial focus.
      Real estate developer, Royal Palms India (RPI), has announced its plans to invest Rs
       15.3 billion in the next three years to develop a 8 million square feet development in
       suburban Goregaon. The development is expected to comprise three-star to five-star
       hotels, IT offices, residences, villas and a retail mall.
      ITC has announced that through its subsidiary, Fortune Park Hotels, plans are
       underway to add 100 hotels in rural India to leverage the growing corporate demand
       as well as reach out to approximately 792 million (72 per cent of the 1.1 billion
       population) people living in the rural areas. Fortune Park Hotels is expected to expand
       hotels and inns with as few as 200 rooms each in the smaller towns of India by 2012,
       adding 3,000 rooms under its brand.
      Indian real estate developer DLF will open a Four Seasons Hotels in Gurgaon at a
       cost of Rs 5.9 billion. Part of DLF's ambition to become India's largest hotel group,
       the 250-room hotel will be developed on a 10-acre site at DLF Golf Link and is
       expected to open before the Commonwealth Games in 2010. The developer has also
       secured links with Hilton Hotels to construct over 25,000 hotel rooms on 40 parcels of
       land in 71 cities in the country by 2010. The cities include Delhi, Mumbai, Chennai,
       Kolkata, Bengaluru, Hyderabad, Pune, Chhattisgarh, Amritsar and Ludhiana.

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                                                                      DREAM GATEWAY HOTELS



      KOLKATA
      Kolkata, the capital of West Bengal, is the commercial capital of the north-eastern
      region. Most companies have their regional offices in the city which acts as a major
      demand driver for the hospitality sector. Kolkata is also a major commercial and
      military port, being the only city in the region to have an international airport besides
      having good port infrastructure. It is also the headquarters of Indian corporations like
      ITC Ltd, Birla Corporation, RPG Ltd, Peerless Industries, etc. Many global and
      domestic software companies have set foot in the city and the gradually growing IT/
      ITeS sector is expected to drive the development of the hospitality sector in the city.
      Constructions of various flyovers, up-gradation of the international airport and
      extension of METRO have been a few of the initiatives taken to improve
      infrastructure and to keep pace with all the development activities. Kolkata has also
      gained significance as a MICE destination with large number of conferences held at
      the city.




      Figure 5 Kolkata Map

       Source: Cushman & Wakefield Research

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                                                                      DREAM GATEWAY HOTELS




       Hospitality Dynamics
              The existing room inventory consists of 2,300 – 2,500 rooms spread across
               23 hotels.
              Approximately 64% of this room inventory consists of up-scale hotels,
               primarily located along Salt Lake City, Park Street, Jawaharlal Nehru
               Road and AJC Bose Road.
              The remaining existing room inventory is divided into mid-scale and
               budget hotels each constituting approximately 18%.
      Kolkata City Map




       Figure 6 ARR vs Occupancy

      Source: CRISILAverage   Room Rate Vs. Occupancy -
      REPORT
      THE VOYAGE - An exploration of key hospitality markets in India
       ARR increased by 25% from INR 5,500 in 2006-07 to INR 6,860 in 2007-08 due to
       increasing demand for room nights in areas like Salt Lake, Rajarhat, Kariadanga,
       Dankuni etc. Similarly the occupancy rate witnessed a marginal increase from 75% in
       2006-07 to 76% in 2007-08.
       Similar to other metros, Kolkata is no exception to the business/ corporate travellers
       being the major occupants (63%) in the hotels under consideration.




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                                                                   DREAM GATEWAY HOTELS
      Outlook




      Figure 7 Upcoming supply

       Source: CRISIL

      New supply of approximately 2,400 - 2,600 rooms is expected to come up in the city
      over the next three years, spread across 11 new hotel developments. Majority of these
      rooms will be in up-scale category constituting approximately 82% of the total
      expected room supply, with the remaining 18% in the mid-scale category. Additional
      supply is expected to be concentrated along the EM Bypass, Salt Lake Sector V and
      New Town.




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                                         DREAM GATEWAY HOTELS




PROFILE OF THE PROPOSED HOTEL

NAME             -   DREAM GATEWAY HOTEL

STAR CATEGORY    -   4 STAR
NUMBER OF ROOMS -    108

TYPE             -   PRIVATE OWNERSHIP

CLASS            -   BUSINESS CLASS

MEANS OF FINANCE -   SELF




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                                                 DREAM GATEWAY HOTELS
LOCATION
Proposed Site    -   Atghara, Newtown Rajarhat, Kolkata

                     1 Km from AIRPORT




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                                                                   DREAM GATEWAY HOTELS
The DREAM GATEWAY Hotel has 108 ROOMS.
The Main features of the hotel are:
46 Queen’s Bed Single rooms
46 Queen’s Bed Double rooms,
12 King’s Bed Double rooms
4 Presidential suites
Presidential Suite Amenities:

        Poster Bed with pillowtop mattress, 310-thread-count linen sheets, and king size
           down pillows (Foam pillows are also available)
        Large Flat Screen Television with a DVD player with “On Command” Movie and
           internet service offered at an additional charge
        Wetbar with microwave, full size refrigerator and coffee maker
        Luxurious jade marble bathroom with bidet
        Desk with complimentary wireless and wired high-speed Internet Access
        Oversized bathtub and separate shower with massage shower head
        Baby Grand Piano
        His and Her Closets
        Dual-line speakerphones
        Iron and ironing board
        Laptop-sized in-room safe
        Individual climate control
        Hairdryer and timed heat lamp
        Magnified shaving mirror
        Aromatherapy Spa bath amenities
        Plush bathrobe and slippers
        13” LCD televisions in the bathroom
        Oversized bath sheets
        Pull out sofas

1 multi cuisine restaurant
1 Bar Lounge

1 Banquet Hall, Conference Hall & Board Room

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                                                                   DREAM GATEWAY HOTELS
Floor-wise Details
Table 4 Floor wise details


   Floors              Area (Built up                  Services               Rooms

                        Area) in sqft.

Basement                     9552        Car Park, Service Area                  -



Ground                       8924        Lounge, Cafeteria, Service Area,        -

                                         Store, Back Office

1st                          9328        Store, Service Area, Conference         -

                                         Area,

                                         Prefunction Lobby

2nd                          9281        Rooms & Toilet                         28



3rd                          9235        Rooms & Toilet                         28



4th                          9188        Rooms & Toilet                         26



5th                          9142        Rooms & Toilet                         26




AMENITIES
Air conditioned room
Airport transfers
Audio visual equipped
Baby care
Banquet facilities
Bar
Business centre
Cable TV


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                                                                    DREAM GATEWAY HOTELS
Car parking
Doctor on call
Fax service
Fire safeguards
Laundry facilities
Money changer
Parking
Photocopy services
Power back-up
Restaurant
Safe deposit
Travel desk
BANQUET FACILITIES
OHP presentations
Public address systems – lectern, table, and lapel microphones
Exhibitions – design and execution
Business center
Full communication facilities – National and international
Printing, stationary, delegate kits
Video coverage and photography

                                        COST OF PROJECT

Table 5 (Cost of project)

Particulars                                                Cost in Rs. Lacs
Cost of land                                                         248.88
Cost of building                                                     708.56
Plant and machinery                                                   327.8
Furniture and fixture                                                 353.9
Miscellaneous fixed assets                                           373.35
Margin for contingency (10% on 1-5)                                 201.249
Preliminary POP expenses                                               77.5
Total cost of the project                                         2291.239




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                                                                         DREAM GATEWAY HOTELS
                                     FINANCIAL VIABILITY
INTRODUCTION TO FINANCIAL ASPECTS OF THE
PROPOSED PROJECT
The financial viability means to find out whether it is financially viable to star or 4 star hotel.
The financial planning includes the selection of objectives and selection of policies,
programmers and procedures to achieve the objectives. The various consideration relating to
the present capital need, requirement of investors and possibilities of expansion resolve
themselves into a present determination of:
A. The amount of capital to be raised.
B. Policies as to administration of capital.
It is not too much to emphasize the correct estimate of the present and future needs of a
capital a sound capital structure and proper projection of capital will lead to success to the
company.



                                     SALES REVENUE
ESTIMATION OF INCOME OF 1st 5 YRS ( in Rs Lacs)

Table 6 Total sales

                              Total Sales
     Year             Rooms sales    F&B Sales    Total
        I              1701.99         60.95     1762.95
       II              2013.04         80.48     2093.53
       III             2365.49         110.46    2475.95
       IV              2766.69         132.25    2898.94
       V               3225.06         173.02    3398.09
Source: Annexure


Here the room sales include revenues from room services, booking of Banquet
halls/Conference halls and various kinds of rooms. The price per room has been taken as the
current ARR of the Kolkata hospitality market and then it has been multiplied by the
estimated occupancy. The occupancy forecasted for a period of 5 consecutive years from
commencement of operations is taken into account as – 60%, 65%, 70%, 75% and 80%. F&B
sales include sales from the Restaurant and the Bar.

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                                                                                            DREAM GATEWAY HOTELS

                                      Rooms sales
                   350000000
                   300000000
                   250000000
                   200000000
   Sales in Rs.
                   150000000
                   100000000                                                          Rooms sales

                    50000000
                              0
                                      I       II       III       IV       V
                                                      Year
                                                                                                     Figure 8 Room sales



                                          F&B Sales
               20000000
               18000000
               16000000
               14000000
               12000000
  Sales in Rs. 10000000
                8000000
                6000000                                                                F&B Sales
                4000000
                2000000
                      0
                                  I          II        III       IV           V
                                                      Year
                                                                                                    Figure 9 F&B sales




                                          Total Sales
                  400000000
                  350000000
                  300000000
                  250000000
  Sales in Rs 200000000
              150000000
                                                                                           Total
                  100000000
                   50000000
                          0
                                      1           2          3        4           5
                                                         Year
                                                                                                    Figure 10 Total sales

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                                                                            DREAM GATEWAY HOTELS



                         OPERATIONAL EXPENSES
ESTIMATION OF EXPENSE FOR THE 1st 5 YRS (in Rs Lacs)

                                             Expenses
                     70000000
                     60000000
                     50000000                                            Misc expenses(5% of total
                                                                         sales)
                     40000000
   Expenses in Rs.                                                       Salaries(Annexures)
                     30000000
                     20000000                                            Electricity(5% of Tot. Sales)
                     10000000
                                                                         Cost of F&B(30% of F&B
                            0
                                                                         Sales)
                                 I      II     III   IV    V
                                              Year


Figure 11 Expenses

        Cost of F&B has been estimated as 30% of the F&B sales.
        Electricity cost has been estimated as 5% of the total sales.
        Salaries have been estimated for various employees as in the annexure
        Miscellaneous expenses are estimated to be around 5% of gross sales


                                             Expenses
                     50000000
                     45000000
                     40000000
                     35000000
                     30000000                                            Insurance & Legal Charges(3%
   Expenses in Rs. 25000000                                              of Total Sales
                     20000000                                            Publicity
                     15000000
                     10000000                                            Administration(10% of Total
                                                                         Sales)
                      5000000
                            0
                                 I     II      III   IV   V
                                              Year


Figure 12 Expenses

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          Administration will be given to the partner, who have expertise in the Hospitality
           industry. Currently talks are on with various firms. They will offer services like:
               o   Brand value
               o   Management
               o   Expertise
               o   Booking
               o   Marketing

           In return they are charging around 10% of the gross sales.

          Publicity budget has been set to be Rs. 15 lacs for the 1st three years and Rs. 20 lacs for the
           next two years.
          The Legal charges have been estimated as 3% of gross sales.

Table 7 Expenses

                                                Total Expenses
                                                                        Insuran
            Cost of    Electr                 Administ                   ce &
                                                                                        Misc
            F&B(3      icity(5    Salaries    ration(10                  Legal
                                                            Public                  expenses(5           Total
Year        0% of       % of     (Annexu         % of                  Charges
                                                               ity                   % of total        expenses
             F&B        Tot.         re)         Total                  (3% of
                                                                                       sales)
            Sales)     Sales)                   Sales)                   Total
                                                                         Sales
   I         18.28      88.14      182.80       176.29       15.00       52.88          88.14           621.57
  II         24.14     104.67      201.08       209.35       15.00       62.80         104.67           721.74
  III        33.13     123.79      221.19       247.59       15.00       74.27         123.79           838.80
  IV         39.67     144.94      243.31       289.89       20.00       86.96         144.94           969.75
  V          51.90     169.90      267.64       339.80       20.00       10.19         169.90           1121.11




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                                                               DREAM GATEWAY HOTELS

                                      Total expenses
                      120000000

                      100000000

                           80000000

    Expenses in Rs.        60000000

                           40000000                             Total expenses

                           20000000

                                  0
                                      I   II    III   IV   V
                                               Year


Figure 13 Total Expenses




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                                                                                            DREAM GATEWAY HOTELS
                                                      Depreciation Statement
(in Rs Lacs)
Table 8 Depreciation Statement

Year                        Building       Dep(10%)    P&M     Dep(25%)    F&F     Dep(25%)       Misc   Dep(25%)      Total
                                                                                                                    Depreciation
  I                         957.44          95.74     327.8     81.95     353.9     88.47     373.35      93.33        359.50
  II                        861.69          86.16     245.85    61.46     265.42    66.35     280.01      70.00        283.99
  III                       775.52          77.55     184.38    46.09     199.06    49.76     210.00      52.50        225.91
  IV                        697.97          69.79     138.29    34.57     149.30    37.32     157.50      39.37        181.07
  V                         628.17          62.81     103.71    25.92     111.97    27.99     118.13      29.53        146.27


Figure 14 Depreciation value



                                              Depreciated value
                           2500

                           2000
       Value in rs. Lacs




                           1500
                                                                                       Misc
                           1000                                                        F&F
                                                                                       P&M
                           500
                                                                                       Building
                              0
                                       I         II      III      IV       V
                                                        Year




                          For building - the Depreciation has been taken as 10% per year
                          For Plant and Machinery - the Depreciation has been taken as 25% per year
                          For Furniture and Fixture - the Depreciation has been taken as 25% per year
                          For Miscellaneous items - the Depreciation has been taken as 25% per year




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                                                                            DREAM GATEWAY HOTELS
Figure 15 Total Depreciation



                                          Total Depreciation
                               400
                               350
    Depreciation in Rs. lacs




                               300
                               250
                               200
                               150
                                                               Total Depreciation
                               100
                                50
                                 0
                                     I   II    III   IV   V
                                              Year




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                                                                                              DREAM GATEWAY HOTELS
                                                     Profitability Statement
(in Rs Lacs)
Table 9 Profitability Statement

                                                           Profitability Statement
                                 Particulars                        Year I     Year II   Year III     Year IV   Year V

                                  Op. Profit                       1141.37 1371.78       1637.51      1929.19   2276.97
                                Depreciation                        359.5       283.99   225.91       181.07     146.27
                                POP Expenses                         77.5        77.5      77.5        77.5       77.5
                                     PBT                            704.37     1010.29   1334.1       1670.62    2053.2
  Income tax @ 50% + 10% surcharge                                  422.62      606.17   800.46       1002.37   1231.92
                                     PAT                            281.74      404.11   533.64       668.24     821.28
                                Net Cash Flow                       718.74      765.60   837.05       926.81    1045.05


The operating profit at the 1st year of operation is estimated as Rs.1141.37 lacs. There on it is
estimated to grow at an average rate of 18.84% percent per annum.


Figure 16 Operational profit



                                                     Op. Profit
                         2500

                         2000
    Profit in Rs. Lacs




                         1500

                         1000                                                            Op. Profit


                         500

                            0
                                  Year I   Year II    Year III   Year IV    Year V




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                                                                                            DREAM GATEWAY HOTELS
                                                st
The net cash flow at the 1 year of operation is estimated as Rs.718.74 lacs. There on it is
estimated to grow at an average rate of 9.83% percent per annum as shown in the figure.



Figure 17 Net cash flow



                                                 Net Cash Flow
                            1200

                            1000
    Cash Flow in Rs. Lacs




                            800

                            600
                                                                                    Net Cash Flow
                            400

                            200

                               0
                                   Year I   Year II   Year III   Year IV   Year V




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                                                                      DREAM GATEWAY HOTELS
                                BREAK EVEN ANALYSIS

To arrive at Break Even Point for a specific year occupancy.
Revenue: - III year Rs.2475.95 Lacs Occupancy: - 70%
(all figures in Rs Lacs)
Fixed Cost
Table 10 Fixed cost

                                                   Rupees in
                                                   lacs
1.) Power (40%)                                              49.51
2.) Salary (80%)                                            176.95
3.) Insurance and license                                      2.00
4.) Administration and management expenses                  247.59
Total                                                       476.06


Variable cost
Table 11 Variable cost

                                                   Rupees in lacs
1.) Power (60%) 34.36                               74.27873644
2.) Salary (20%) 21.36                                    44.239536
3.) Expense towards publicity                                   10
4.) Cost of Food & Beverages                                  18.28
Total                                               146.7982724



1. Contribution                 =   Income - Variable Cost
                                =   Rs. 2475.95 – Rs. 146.79
                                =   Rs. 2329.16




2. Break Even Point             =   Fixed cost
                                    Contribution


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                                                                   DREAM GATEWAY HOTELS
                             =       476.06/2329.16
                             =      .204 or 20%


3. BE Turnover               =       Total Revenue x B.E.P
                                     Assumed occupancy

                             =      2475.95 x 20%
                                          70%
                             =      707.41
The contribution amounts to Rs.2329.16 lacs. This gives us the break-even point of 20% for
the project. Thus a minimum turnover of Rs 707.41 has to be maintained by the hotel to
achieve break-even.




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                                                                                          DREAM GATEWAY HOTELS
                                         RATIO ANALYSIS
R.O.I (RETURN ON INVESTMENT)
Return on investment                     =         Net cash flow x 100
                                                   Equity share capital

               Year             Year I           Year II       Year III         Year IV     Year V
   ROI (in %age)                 31.36             33.41         36.53           40.45          45.61


Figure 18 ROI



                                              ROI
               50
               45
               40
               35
    %age ROI




               30
               25
               20                                                                         ROI
               15
               10
                5
                0
                      Year I   Year II       Year III      Year IV     Year V




Average ROI                                       =         31.36+33.41+36.53+40.45+45.61
                                                                         5
                                                  =         37.47%
The average ROI is coming to 37.47% which is good for hotel to start with. This will
help the company in recovering all it cost soon and maintain good relations with the
partner. A boost in the ROI can also lead to future expansion of the project in other
cities.


Payback Period                                    =         100/ROI
                                                  =         2.67 yrs


The company will recover its costs within 3 yrs of operations if everything runs as per
plan and estimations.


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                                                                  DREAM GATEWAY HOTELS
                            SENSITIVITY RATIO

Sensitivity change          =      Change in income
                                   Change in expenses
                            =      35.37/11.98
                            =      2.95


Sensitivity to income change       =       Total income
                                           Occupancy
                                   =       2475.95/70
                                   =       35.37
Sensitivity to Expenses change =           Total Expenses
                                           Occupancy
                                   =       838.88/70
                                   =       11.98


III year sensitivity ratio = 2.95
The sensitivity for the third year is very high, which shows that a change is expenses can
result in higher change in the income of the company.




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                                                            DREAM GATEWAY HOTELS
                    COST BENEFIT ANALYSIS

A                   =            Total cost of project
                    =            Rs. 2465.85 (amount in lacs)
B                   =            total revenue – total expenses
                    =            Rs. 8356.47




Capital intensity   =            B/A
                    =            8356.47/2465.85
                    =            3.38


This shows that the business is capital intensive.




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                                                                         DREAM GATEWAY HOTELS
                               Secondary project
To list out potential partners for the project
Hotels having their presence in India were found at first and then shortlisted according to
different criteria. These were the hotels belonging to the strategy group of the proposed
project.

HOTEL LIST
   1. IQ international
   2. Intercontinental hotel
   3. ITC Fortune Hotels
   4. Star Woods – Sheraton
   5. Trident Hotels
   6. Wyndham Group- Ramada
   7. Emmar Mgf
   8. Marriott
   9. Moven Picks
   10. Royal orchid
   11. Ten Hotels
   12. Accor India
   13. Bird Group
   14. Leela Kempski
   15. Langhan Hotels International
   16. Aman Hotels
   17. Corinth Hotel Resort- Pune
   18. Westcourt Hospitality
   19. Lemon Tree
   20. Park plaza
   21. Sarovar
   22. Concept hospitality
   23. Berggruen holding - Keys
   24. Raddison

The measurement and criterion for short listing the hotel brands were:
      Number of properties – Should have presence in at least 5 cities
      Room inventory – average rooms in each property should be above 50
      Number of rooms sold across all properties – should have an average yearly
       occupancy of at least 50%
      Gross operating profit – should be a profit making organization
      Guest facilities – should provide all the facilities required for a 4 star hotel
      Image – Should be a recognised brand

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                                                                       DREAM GATEWAY HOTELS
Based on the above criterion the following hotels were chosen.

   1. ITC Fortune Hotels – They offer full service properties all over India, including
       smaller towns and cities, ideal for the budget traveller. Fortune Hotels have a strong
       presence in Ahmedabad, Thiruvananthapuram, Calicut, Darjeeling, Jamshedpur, Vapi,
       Hyderabad, Gurgaon, Indore, Ootacamund, Madurai, Jodhpur, Vijaywada, Chennai,
       Visakhapatnam, Mahabalipuram, Kolkata, Bengaluru, Navi Mumbai, Tirupati and
       Port Blair, while several more hotels are expected to be commissioned soon in other
       key locations in India.




   2. Sarovar Hotels & Resorts pioneered in venturing into the mid-market segment in the
       Indian hospitality landscape. The Company over a period of 11 years has successfully
       churned the demand in this segment, and is now the fourth largest chain in India, with
       36 hotels across the country and overseas. It has a diverse portfolio encompassing
       hotels, resorts, restaurants and corporate hospitality. The properties vary by type, size
       and the market niche they serve. It provides a consummate and unmatched
       international hospitality experience at competitive price offerings.
       The company is affiliated with Carlson Hospitality Worldwide. Carlson is a global
       leader in hospitality services, comprising more than 1,570 hotels, resorts restaurants,
       and cruise ship operations in 81 countries. The association with Carlson Hospitality
       makes Sarovar Hotels the master franchisor for the Park Plaza and the Park Inn hotel
       brands in India. The Company has also launched the domestic brands: Sarovar
       Premiere, Sarovar Portico and Hometel.




   3. Concept hospitality - (CHL) is a conception of a team of hotel consultants and
       experts formulated in July 1996 in Mumbai, India's Commercial Capital. CHL sets up
       and operates Restaurants, Hotels, Clubs and Resorts for different owners.
       This submission outlines the strength of CHL's Management System, incorporating
       the decentralized profit orientated management philosophy which has consistently
       produced the best possible returns to hotel owners and the highest levels of guest
       satisfaction. It details CHL's sales and marketing network, and the "state of the art"
       teamwork - which is the ability to work together towards a common vision. It


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                                                                     DREAM GATEWAY HOTELS
      illustrates how CHL has earned a reputation as an industry leader in setting up and
      helping to certifying environmentally friendly hotels, with a full range of training
      programs, each of which has been adapted for the various cultures and environment,
      within which it operates the hotels.


      CHL has had a presence in India for over 10 years and so understands and has adapted
      its systems and management to the values and culture of India. CHL does not believe
      in the total imposition of western systems and management concepts, but an
      integration of these with the prevailing culture to maximize both employee
      productivity and guest satisfaction to achieve the highest possible returns for the
      property owner.


   4. Accor India - Accor Hospitality plans to launch 42 hotels in 13 cities for a total 8700
      room inventory by 2012. The 42 hotels will comprise different Accor brands
      including Sofitel, pullman, Novotel, Mercure, ibis and Hotel Formule 1. Accor's mode
      of operations in India is through the following partnerships: firstly with InterGlobe
      Hotels, which is joint venture with InterGlobe Enterprises for the development of ibis
      hotels; next comes a JV between EMAAR MGF and Accor for Hotel Formule 1
      development and lastly, another collaboration with InterGlobe Hotels has formed a
      hotel management company called AAPC India Hotel Management, which will cover
      all Accor hotel brands. According to international categories, Hotel Formule 1 is the
      budget brand, ibis hotel is the economy brand, Mercure is a midscale brand, Novotel
      is the upper midscale brand, pullman is an upper upscale brand and Sofitel is a luxury
      brand.




   5. Raddison - Radisson Hotels & Resorts, one of the world’s leading, full-service hotel
      brands, offers vibrant, contemporary and engaging hospitality that is defined by its
      distinctive “Yes I Can!” service philosophy. Radisson includes more than 400
      locations in 68 countries. It is part of Carlson Hotels Worldwide, a leading global
      hotel company with more than 1,030 locations in 72 countries under the brands of
      Regent® Hotels & Resorts; Radisson® Hotels & Resorts; Park Plaza® Hotels &
      Resorts; Country Inns & Suites By CarlsonSM; and Park Inn®.


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                                                                      DREAM GATEWAY HOTELS
      Radisson continues to expand its presence in key markets in the Americas, Asia
      Pacific and Europe, the Middle East and Africa, reaching new markets and customers.
      The foundation for expansion; focusing on total guest satisfaction, leading loyalty
      programs and extensive customer relationship programs.
   6. Wyndham Group- Ramada - Located at the world’s top business and leisure
      destinations, Ramada Plaza features restaurants, lounges, room service, fitness
      centers, concierge service, meeting and banquet facilities. It is located at six locations
      in india and look to futher expand in the east.


   7. Royal orchid - They have a presence in most major Tier I & Tier II cities with
      strategic plans to expand into international markets in the immediate future. With this
      in mind, they have started our international foray in Tanzania this year. With multiple
      hotel brands they have successfully captured the attention of the most discerning and
      demanding clientele in terms of luxury, comfort and value for money. They strongly
      believe in exceeding expectations with unparalleled levels of professionalism and
      making certain they enjoy a memorable experience, always.




   8. Trident Hotels - Located at Agra, Bhubaneswar, Chennai, Cochin, Gurgaon (Delhi
      NCR), Jaipur, Mumbai and Udaipur, Trident Hotels offer business as well as exotic
      holiday locations across India. They make the best of a business meeting or event by
      their award winning facilities.




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                                                                       DREAM GATEWAY HOTELS
                              CONCLUSION
The project on financial viability was completed in Kolkata, the city of Joy. A market survey
conducted before the commencement of the project shows that there is great demand for the
products of hospitality industry in Kolkata, which is the capital of West Bengal. Hence the
proposed project has been considered and it was decided to construct the hotel near the
airport and the Newtown Rajarhat, Kolkata.
Total cost of project is Rs 2465.85 lacs and has 108 rooms. The occupancy forecasted for a
period of 5 consecutive years from commencement of operations is taken into account as –
60%, 65%, 70%, 75% and 80%.


Statistical data of the project may be summed as follows
Average return on investment: 37.47
Break-even point: 327.36.
Capital Intensity: 3.38


After studying the above aspect and estimation of profitably statement and other financial
status, it has been concluded that 4 star hotel with 108 rooms in Kolkata is financially viable.




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                                                                DREAM GATEWAY HOTELS
                              BIBLIOGRAPHY

1. Perspectives on Indian hotel industry by Pushpinder S.Gill
2. Hotel Economics by P.M. Mathew
3. Hospitality Management by T. Philip
4. All India Travel Companion by Asia Publishing Companion
5. Project Analysis - G. Phyler
6. Hotel Accountancy - T. Ryder
7. The Voyage - Cushman & Wakefield Research
8. The Hospitality Industry by Crisil Ltd.
9. Jones Lang LaSalle Hotels India Digest 2008: Part I



WEBSITES

   1. http://www.accor.com/en/hotels.html
   2. www.hyatt.com
   3. http://www.hoteliq.com/
   4. http://www.lemontreehotels.com/our-hotels.aspx
   5. http://www.marriott.com/hotels/travel/bomjw-jw-marriott-hotel-mumbai/
   6. http://www.royalorchidhotels.com/
   7. www.sarovarhotels.com
   8. http://www.tridenthotels.com/
   9. www.indiastats.com




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                                              DREAM GATEWAY HOTELS
                                  Annexures
Annexure 1
COST OF BUILDING

Table 12 COST OF BUILDING

Particulars                 Rs.
Total built up area            64650
Rate per sq. ft                  800
Cost                        51720000
15% of Electrical work       7758000
12% of Plumbing and          6206400
Drainage
10% On Consultant            5172000
TOTAL                       70856400


Annexure 2
Table 13 PLANT AND MACHINERY

Items                    Amount in Rs.
                         Lacs
Central a/c                           100
Lift                                    30
Generator                               25
Transformer                             20
Bore well                                2
Boiler                                  10
EPBAX                                   15
Instrument                               5
Exhaust/ vent                            2
CCTV                                    12
Kitchen equipment                       20
Water cooler                             3
Fire fitting                             3
Computer /Software                      80
Telex                                  0.8
TOTAL                               327.8




Annexure 3


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                                                        DREAM GATEWAY HOTELS
Table 14 GUEST   ROOM

                   a. GUEST ROOM
Item                         Price in No’s Total(Rs.)
                             Rs
Twin bed                        20000    60 1200000
Double bed                      25000    60 1500000
Side table                       1000   120   120000
Chair                             800   120    96000
Coffee table                     1200   120   144000
Cupboard                         5000   120   600000
Luggage rack                     2000   120   240000
T.V stand                        4000   120   480000
Dressing Table                   2500   120   300000
Carpets                           150 36846 5526900
Mirrors                           500   120    60000
Toilet Accesories               50000   120 6000000
W/C                              1500   120   180000
Upholstery                       1000   120   120000
Safe                             7500   120   900000
Fridge                           4000   120   480000
Minibar                         25000    60 1500000
Television                      35000   120 4200000
Others                          75000   120 9000000
Aromatherapy Spa bath         100000      4   400000
amenities
Fixtures                      100000    120 12000000
Pull out sofas                  25000     4   100000
TOTAL                                       45146900
Table 15 RESTAURANT

              b. RESTAURANT: (60Pax)
Item                     Price     No    Total(Rs.)
Tables                       3000     17      51000
Chairs                       1200     65      78000
Side station                 6000      2      12000
Décor and upholstery       800000      1    800000
Carpets                        150 1800     270000
Fixtures                   250000      1    250000
Bar counter                 75000      1      75000
Others                     100000      1    100000
TOTAL                                      1636000




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Table 16 ROOM   SERVICE

            c. ROOM SERVICE :( 108Rooms)
Item                 Price     Number     Total(Rs.)
B/f Trays                  300        30       9000
Tea Trays                  400        30     12000
12” Salvers                300        20       6000
9” Salvers                 300        20       6000
Trolleys                  2000        10     20000
Racks                      500        10       5000
O.T cabin                 7000          1      7000
Desk                      8000          1      8000
Miscellaneous           10000           1    10000
TOTAL                                        83000


Table 17 BANQUET    and Conference Hall

           d. BANQUET and Conference Hall
Item              Price      Number      Total(Rs.)
Chairs                  1200        425       510000
Tables                  4000         60       240000
Carpets                  150      4200        630000
Podium                  3000          4        12000
Music system         100000           2       200000
12” salver               300         30         9000
Fixtures             250000           2       500000
Total                                        2101000


Table 18 STORES,   PURCHASE, HOUSEKEEPING

        e. STORES, PURCHASE,
            HOUSEKEEPING
Item                  Total(Rs.)
Cupboards                        75000
Shelves                          40000
Racks                            40000
Bins                             10000
Fixtures                         65000
Total                          230000




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                                           DREAM GATEWAY HOTELS
Table 19 ADMINISTRATION

           f.ADMINISTRATION
Item                 Total(Rs.)
Tables                             75000
Chairs                             50000
Fixtures                           50000
Total                             175000


Table 20 RECEPTION   AND LOBBY

     g. RECEPTION AND LOBBY
Item                  Total(Rs.)
Counter                       80000
Stationery                    10000
Pigeon hole                   10000
Cupboard                      20000
Safe deposit                  50000
Sofa set                     500000
Fixtures                     800000
Luggage carrier              235000
Miscellaneous                100000
Total                       1805000


Table 21 STAFF   CAFETARIA

           h. STAFF CAFETARIA
Item                Total(Rs.)
Tables                           12500
Chairs                           25000
Fixtures                         50000
Total                            87500
Total                         51264400




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                                                        DREAM GATEWAY HOTELS
Annexure 4
Table 22 FOOD   AND BEVERAGE OUTLETS

            a.FOOD AND BEVERAGE OUTLETS
Item                  Price    Number     Total(Rs.)
Table cloth                200         80      16000
Napkins                     30        300       9000
Par stock(*3)                                  25000
Total cost                                     75000


Table 23 BANQUET   HALL AND CONFERENCE

          b. BANQUET HALL AND CONFERENCE
Item                  Price    Number     Total(Rs.)
Frills                    800         100       80000
Table cloth               200          75       15000
Napkins                     40        800       32000
Par stock (*3)                                 127000
Total                                          381000


Table 24 GUEST   ROOM AND SUITE ROOM LINEN

         c.GUEST ROOM AND SUITE ROOM LINEN
Item                    Price Number    Total(Rs.)
Single bed sheet           500       60       30000
Double bed sheet           800       60       48000
Blankets                   900      120      108000
Blanket cover              250      120       30000
Mattress                 1500       120      180000
Mattress protector         300      120       36000
(single)                   500       60       30000
(double)                   800       60       48000
Hand towel                  60      200       12000
Bath towel                 250      200       50000
Bath mat                   300      100       30000
Pillows                    200      200       40000
Par stock (*4)                               642000
Total                                      2568000




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                                                            DREAM GATEWAY HOTELS
Table 25 KITCHEN   STEWARDING (RESTAURANT &ROOM SERVICES)

   d. KITCHEN STEWARDING (RESTAURANT &ROOM
                    SERVICES)
Item              Price (Rs)    Number    Total(Rs.)
Glasses                      50      1200      60000
Chinaware                    40      1200      48000
Flatware                     40      1200      48000
Cutlery                      50      1200      60000
Miscellaneous                                  25000
Total                                        241000


Table 26 BANQUETS

                         e. BANQUETS
Item                Price (Rs)    Number      Total(Rs.)
Glassware                      75        1200       90000
Chinaware                      40        1200       48000
Flatware                       40        1200       48000
Cutlery                        50        1200       60000
Total                                              246000


Table 27 STAFF   CAFETARIA

          F .STAFF CAFETARIA
Item                Total(Rs.)
Plates                         60000
Spoons                         20000
Forks                          20000
Total                         100000
Table 28 HOUSE KEEPING MISCELLANEOUS ASSETS

      g. HOUSE KEEPING MISCELLANEOUS ASSETS
Item                  Price   Number     Total(Rs.)
Vacuum cleaner          5000           8        40000
Cleaner mug                40         50         2000
Mops                       50         40         2000
Brooms                     40         45         1800
Squeezer                   30         30           900
Duster                      8        100           800
Waiters cloth             100        500        50000
Miscellaneous                                   25000
Total                                          122500
TOTAL                                         3733500

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                                                         DREAM GATEWAY HOTELS
Annexure 5
Table 29 PRELIMINARY    AND PRE-OPERATIVE EXPENSES

6. PRELIMINARY AND PRE-
OPERATIVE EXPENSES
Item                                      Rs. In
                                          Lakhs

1.) Salary and wages                                20
2.) Loan procurement and application                 2
3.) Project fees                                   2.5
4.) Registration and establishment fees              2
5.) Insurance                                       15
6.) Advertisement and publicity                     10
7.)Deposits
a.) Electricity                                   5
b.) Telephone                                     5
c.) Water supply                                  3
d.) NSC                                           3
8.) Miscellaneous expenses                       10
POP Total                                      77.5




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                                                            DREAM GATEWAY HOTELS
Annexure 6
Table 30 SALARY   AND WAGES(Monthly)

                               7. SALARY AND WAGES(Monthly)
Sl.        DESIGNATION                      No. Of persons   SALARY(in   TOTAL
No.                                                          Rs)
       1   General manager                                 1       75000    75000
       2   Front office manager                            1       20000    20000
       3   Lobby manager                                   1       20000    20000
       4   GRE                                             1       10000    10000
       5   Front office assistant                          4       10000    40000
       6   Travel desk operator                            1       10000    10000
       7   Bellboys                                        5        4000    20000
       8   Telephone operator                              2        5000    10000
       9   Bell captain                                    2        5000    10000
      10   Night auditor                                   1        7500     7500
      11   F & B Manager                                   1       25000    25000
      12   Banquet manager                                 1       20000    20000
      13   Restaurant manager                              1       20000    20000
      14   Barman                                          1        8000     8000
      15   Captains                                        2        8000    16000
      16   Senior Captain                                  2       10000    20000
      17   Stewards                                       35        4500   157500
      18   Executive chef                                  1       35000    35000
      19   Souse Chef                                      2       20000    40000
      20   Commis                                          8        8000    64000
      21   Chef de partie                                  3        9000    27000
      22   Steward supervisor                              1       10000    10000
      23   Dish / pot washer                               5        4000    20000
      24   Executive house keeper                          1       18000    18000
      25   House keeping supervisor                        2       10000    20000
      26   Floor supervisor                                5        8000    40000
      27   Room attendant/house man                       15        5000    75000
      28   Personal manager                                1       15000    15000
      29   Sales & marketing manager                       1       15000    15000
      30   Sales & marketing executive                     1       10000    10000
      31   Accountant                                      1       10000    10000
      32   Chief accountant                                1       20000    20000
      33   Cashier                                         2       15000    30000
      34   B.Sales executive                               2        8000    16000
      35   Bakery chef                                     1       25000    25000
      36   Desk control supervisor                         2        6000    12000
      37   Linen attendants                                2        4000     8000

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                                       DREAM GATEWAY HOTELS
   38   Laundry attender           2        4000       8000
   39   Flower. Assistant          1        4000       4000
   40   Carpenter                  1        3500       3500
   41   Plumber                    2        3000       6000
   42   Hostess                    2        4000       8000
   43   R.S.OT                     2        4500       9000
   44   Training manager           1       12000      12000
   45   Training assistant         1        5000       5000
   46   G.M secretary              1       10000      10000
   47   Pest controller            2        3000       6000
   48   Laundry manager            1       12000      12000
   49   Personnel office asst.     2        5000      10000
   50   Driver                     4        7500      30000
   51   Doorman                    3        5000      15000
   52   Apprentices                5        3000      15000
   53   Life guard                 2        3000       6000
   54   Security manager           1       15000      15000
   55   Security Supervisor        2        6000      12000
   56   Security guard             4        4000      16000
   57   Chief engineering          1       15000      15000
   58   Supervisor                 2        5000      10000
   59   Technicians                2        4500       9000
   60   Purchase officer           1       10000      10000
   61   Purchase manager           1       15000      15000
   62   Stores keeper              2        4500       9000
        Total                    167                1269500
        Benefits of 20%                              253900
        Monthly Total                               1523400
        Yearly Total                               18280800




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                                                               DREAM GATEWAY HOTELS
Annexure 7
Table 31 FOOD   & BEVERAGE SALES

FOOD & BEVERAGE SALES
F & B SALES=No: of Pax x
Average Cover Charge x 365
BAR (30 Pax)
Year                          No. of          Average         No. of   Total
                              covers          cover           days
                              sold/day        charges
I                                         8             400      365     1168000
II                                       12             420      365     1839600
III                                      18             441      365     2897370
IV                                       22        463.05        365 3718291.5
V                                        30      486.2025        365 5323917.4


Table 32 RESTAURANT

RESTAURANT (50 Pax)
Year                          No. of          Average         No. of   Total
                              covers          cover           days
                              sold/day        charges
I                                        30           450        365   4927500
II                                       36         472.5        365   6208650
III                                      45      496.125         365 8148853.1
IV                                       50    520.93125         365 9506995.3
V                                        60    546.97781         365 11978814


Table 33 Room   Service
Room Service (108 rooms)
Year                          No. of          Average         No. of   Total
                              covers          cover           days
                              sold/day        charges
I                                        70            250       365   6387500
II                                       76          262.5       365   7281750
III                                      80       275.625        365   8048250
IV                                       84     289.40625        365 8873195.6
V                                        90     303.87656        365 9982345.1




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                                                                 DREAM GATEWAY HOTELS
Table 34 BANQUET        & CONFERENCE HALL

BANQUET & CONFERENCE
HALL
Year                              No. of           Average      No. of   Total
                                  covers           cover        days
                                  sold/day         charges
I                                            120          500      365   21900000
II                                           130          525      365   24911250
III                                          140       551.25      365   28168875
IV                                           150     578.8125      365   31689984
V                                            160    607.75313      365   35492783


Table 35 Room   Sales

Room
Sales
Year Average          ARR                              No.    No. of Total
      occupancy(in                                     of     Rooms
      %age)                                            days
I                  60                           6000      365   108   141912000
II                 65                           6600      365   108   169111800
III                70                           7260      365   108   200332440
IV                 75                           7986      365   108   236106090
V                  80                         8784.6      365   108 277031145.6




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