Industry Overview
The hotel industry is a vital component of the tourism sector and plays a significant role in generating foreign exchange earnings. Economic reforms in India contributed to the growth of the hospitality industry by increasing business travel and boosting demand for quality hotel accommodation, particularly from foreign business visitors. As a result, many Indian hotel chains have expanded their operations to meet rising demand. Since hotel projects are capital-intensive and require long gestation periods, continued policy support can encourage capacity expansion and the development of new tourist destinations and circuits.
India's hospitality industry has demonstrated steady growth, supported by the country's cultural diversity, heritage, and increasing appeal as a destination for leisure, business, and spiritual tourism. India improved its position in the World Economic Forum's Travel and Tourism Competitiveness Index from 65th in 2013 to 34th in 2019. The hospitality and tourism sector accounted for 7.5% of the country's GDP, while initiatives to improve the ease of doing business, attract foreign investment, and develop cruise tourism infrastructure have further strengthened the industry's long-term prospects.
The industry experienced a major setback in 2020 due to travel restrictions imposed during the coronavirus pandemic, resulting in a sharp decline in foreign tourist arrivals. In response, the Government of India revised the Market Development Assistance (MDA) scheme to expand financial support and promotional activities, including online marketing, for tourism stakeholders. Recovery has been supported by an increasing number of hotel projects, improved occupancy levels, stronger average room rates (ARR), and significant growth in revenue per available room (RevPAR), indicating positive future prospects for the hospitality sector.
Cost Estimation
| Particular | Value |
|---|---|
| Plant Capacity | 48 Luxury Rooms |
| Land & Building (4 Acres) | Rs. 19.00 Cr |
| Plant & Machinery | Rs. 10.65 Cr |
| Working Capital for 3 Months | Rs. 5.70 Cr |
| Total Capital Investment | Rs. 37.93 Cr |
| Rate of Return | 23% |
| Break Even Point | 58% |
Content Index
- INTRODUCTION
- HOSPITALITY INDUSTRY IN INDIA MARKET
- GOVERNMENT INITIATIVES TO ATTRACT MORE TOURISM AND RISE IN TOURISM IS DRIVING THE MARKET
- HOSPITALITY INDUSTRY IN INDIA INDUSTRY OVERVIEW
- FACILITIES AND SERVICE REQUIRED FOR 5 START HOTEL CLASSIFICATIONS:
- GENERAL FACILITIES FOR 5 STAR HOTELS:
- GUEST ROOM FACILITIES FOR 5 STAR HOTEL
- REQUIRED BATHROOM FACILITIES FOR 5 STAR HOTEL
- PUBLIC AREA FACILITIES FOR 5 STAR HOTEL
- ROOM AND OTHER FACILITIES FOR THE DIFFERENTLY ABLED GUEST
- FOOD AND BEVERAGE FACILITIES FOR 5 STAR CLASSIFICATION
- REQUIRED KITCHEN FACILITIES FOR 5 STAR CLASSIFICATIONS
- REQUIRED STAFF QUALIFICATIONS, SKILLS AND STAFF WELFARE FOR 5 STAR CLASSIFICATION
- GUEST FACILITIES FOR 5 STAR CLASSIFICATIONS
- SAFETY AND SECURITY FACILITIES FOR 5 STAR CLASSIFICATION
- OTHER FACILITIES AND REQUIREMENTS
- CATEGORIZATION OF HOTELS IN INDIA
- HERITAGE HOTELS
- LUXURY HOTELS
- BUDGET HOTELS
- RESORTS
- IMPORTANT HOTEL GROUPS IN INDIA
- MARKET POSITION
- INDIA GDP FORECAST
- KEY DEMOGRAPHIC TRENDS
- KEY TRENDS IN TRAVEL AND TOURISM IN INDIA
- HOTEL INDUSTRY SUPPLY SCENARIO
- CITY WISE HOTEL SECTOR SUPPLY OVERVIEW
- ASSET PERFORMANCE THROUGH THE CYCLE
- INCREASING REVPAR ON NEW HOTELS
- INDIAN HOTEL SEGMENTATION
- MARKET PERFORMANCE OF INDIAN HOTELS
- PERFORMANCE OF SELECT GEOGRAPHICAL MARKETS IN INDIA
- MARKET WISE OCCUPANCY AND ARR
- INDIA HOTEL MARKET PERFORMANCE BY SEGMENTS
- UPSCALE
- UPPER UPSCALE
- SUMMARY OF PERFORMANCE OF DIFFERENT SEGMENTS IN THE HOTEL SECTOR
- COMPARISON OF OPERATING COSTS OF HOTELS ACROSS SEGMENTS
- THE AVERAGE DEVELOPMENT COST PER KEY ACROSS DIFFERENT HOTEL SEGMENTS IS REPRODUCED BELOW:
- BARRIERS TO ENTRY
- COMPETITIVE LANDSCAPE
- LEADING LISTED HOTEL OWNERSHIP COMPANIES WITH MORE THAN 1,000 OWNED KEYS, LISTED IN ORDER OF OWNED KEYS (AS ON JUNE 30, 2019)
- AVERAGE KEYS ADDED ANNUALLY* (AS ON JUNE 30, 2019)
- OWNED HOTELS BY LOCATION (AS ON JUNE 30, 2019)
- KEY REGULATIONS AND POLICIES IN INDIA
- FOOD RELATED LEGISLATIONS
- THE FOOD SAFETY AND STANDARDS ACT, 2006 (“FSS ACT”)
- ENVIRONMENTAL LEGISLATIONS
- OTHER APPLICABLE LAW
- STATE LAWS
- MUNICIPALITY LAWS
- SHOPS AND ESTABLISHMENTS LEGISLATIONS IN VARIOUS STATES
- AIRPORTS AUTHORITY OF INDIA ACT, 1994, AS AMENDED (“AAI ACT”)
- EXCISE LAWS
- INTELLECTUAL PROPERTY LAWS
- FOREIGN INVESTMENT REGULATIONS
- LABOUR LAW LEGISLATIONS
- MACROECONOMIC OVERVIEW OF INDIA
- KEY CHARACTERISTICS OF INDIA’S HOSPITALITY INDUSTRY
- INDUSTRY SIZE – CHAIN AFFILIATED HOTELS
- ALL-INDIA CHAIN-AFFILIATED INVENTORY AS AT SEPTEMBER 2021 IS ESTIMATED AT 157K ROOMS. INVENTORY BUILD-UP AND SEGMENTAL COMPOSITION OF SUPPLY, ARE REFLECTED IN TABLE BELOW:
- TOP 10 CHAINS – NUMBER OF HOTELS
- ROOMS SUPPLY - BY MARKETS
- CHAIN COVERAGE OF STATE CAPITALS
- CHAIN COVERAGE – STATE CAPITALS
- THE LEISURE SECTOR
- LEISURE SUPPLY – TOP 5 CHAINS
- INTERNATIONAL PRESENCE
- MAJOR DOMESTIC CHAINS - INTERNATIONAL PRESENCE AS AT SEP 21
- OPERATING STRUCTURES
- TOP 10 CHAINS – OPERATING STRUCTURES (BASED ON HOTELS SIGNED AT DATE)
- FUTURE SUPPLY
- SUPPLY (INVENTORY IN ‘000S)
- PROJECTED SUPPLY GROWTH IS REFLECTED IN THE CHART BELOW:
- EXPECTED SUPPLY – ALL INDIA, ALL SEGMENTS (INVENTORY IN 000S)
- DEMAND
- FUTURE DEMAND
- DEMAND RECOVERY/GROWTH ESTIMATES – RELATIVE TO FY19 DEMAND
- SUPPLY AND DEMAND CAGR
- OVERVIEW OF SOME KEY IMPACT FACTORS
- KEY DEMAND DRIVERS
- DEMAND FOR HOTELS ARISES FOR VARIOUS PURPOSES, PRINCIPALLY:
- MARKET PERFORMANCE ANALYSIS
- ALL INDIA AND KEY MARKETS
- QUARTERLY REVENUES – SELECT LISTED HOTEL COMPANIES
- CHART 12 – MONTHLY OCCUPANCY AND ADR – JAN-19 TO JUL-21
- PRINCIPLES OF PROJECT LAYOUT
- PLANT LOCATION FACTORS
- UTILITIES
- TOTAL MANPOWER AND PAYROLL
- PROJECT LAYOUT
- LIST OF PLANT AND EQUIPMENT SUPPLIERS/MANUFACTURERS
- CONSULTANT
- PROJECT LOCATION:
- ABOUT DISTRICT (MAHABALESHWAR)
- LIST OF DOCUMENTS REQUIRED TO GET FOR LICENSES
- OTHER LICENSES REQUIRED FOR THE SETUP:
- SWOL ANALYSIS
- IMPLEMENTATION SCHEDULE
- PROJECT IMPLEMENTATION WILL TAKE A PERIOD OF 18 MONTHS
Appendix
- 01. PLANT ECONOMICS
- 02. LAND & BUILDING
- 03. PLANT AND MACHINERY
- 04. OTHER FIXED ASSESTS
- 05. FIXED CAPITAL
- 06. RAW MATERIAL
- 07. SALARY AND WAGES
- 08. UTILITIES AND OVERHEADS
- 09. TOTAL WORKING CAPITAL
- 10. TOTAL CAPITAL INVESTMENT
- 11. COST OF PRODUCTION
- 12. TURN OVER/ANNUM
- 13. BREAK EVEN POINT
- 14. RESOURCES FOR FINANCE
- 15. INSTALMENT PAYABLE IN 5 YEARS
- 16. DEPRECIATION CHART FOR 5 YEARS
- 17. PROFIT ANALYSIS FOR 5 YEARS
- 18. PROJECTED BALANCE SHEET FOR (5 YEARS)
Frequently Asked Questions
The report provides a comprehensive feasibility and planning framework for establishing a luxury hotel project. It covers industry analysis, hotel classifications, market trends, project planning, regulatory requirements, utilities, manpower, implementation, and financial estimates. The document serves as a reference for entrepreneurs, investors, consultants, and financial institutions evaluating the viability of a hotel development project.
The hospitality industry contributes significantly to tourism, employment, and foreign exchange earnings. India's cultural heritage, spiritual destinations, business travel, and government initiatives continue to support long-term sector growth. Investments in tourism infrastructure and hotel development further strengthen the industry's role in economic development while creating opportunities across accommodation, food services, transportation, and retail.
Successful hotel planning requires selecting an appropriate location, ensuring access to utilities, transportation, skilled manpower, regulatory approvals, and adequate infrastructure. Developers should also evaluate market demand, project layout, environmental considerations, operating costs, safety requirements, and future expansion potential to improve long-term operational performance.
Five-star hotels are expected to provide premium guest rooms, quality food and beverage services, well-equipped kitchens, accessible facilities, public amenities, high safety standards, and professionally trained staff. These features are designed to deliver superior guest experiences while complying with applicable hospitality classification standards.
Hotel projects generally require compliance with food safety regulations, environmental laws, labour legislation, municipal rules, taxation requirements, intellectual property provisions, and other applicable state and central regulations. Depending on the project location and services offered, additional approvals and operational licenses may also be necessary before commencing operations.
The report offers structured information that supports investment decisions and project planning. It combines market analysis, operational requirements, implementation planning, utility considerations, and project economics into a single reference document. This enables stakeholders to understand project requirements, evaluate feasibility, and prepare for financing and execution without altering the original financial assumptions.
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