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Hotel Project - Westin Greater Noida-Soumonath Chatter Jee
Hotel Project - Westin Greater Noida-Soumonath Chatter Jee
Hotel Project - Westin Greater Noida-Soumonath Chatter Jee
EXECUTIVE SUMMARY
The following case study project focusses on a hotel concept being developed in India in the National Capital Region, New Delhi at the venue of the Indian Formula One Grand Prix Racing Circuit. The hotel has been identified to be located in the developing Jaypee Greens Sport City Complex, which houses the various sporting arenas, hi-rise residential apartments and proposed Central Business District. The project outlines the concept of the hotel with a description of the hotels features, which include the rooms, dining facilities, spa and health club and meetings arrangements. An attempt has been made to clearly spell the Unique Selling Proposition (USP) and the brand differentiation attributed which would generate interest and confidence in the investors mind. The design structure encompassing the space layout, floor schemes and interior dcor has been explained to make the reader understand the concept in more detail. A brief market appraisal has been presented with the site location overview and the respective accessibility of the subject hotel to other prominent locations. Details about the key demand generators have been enlisted in the section, which builds the base for further assumptions considered during the financial feasibility evaluation. Information about primary and secondary competition has been included to understand the existing competitive landscape with a note on the proposed pipeline of hotels expected in the subject region. Investor and lenders have been kept in mind while preparing the financial feasibility exercise. Rooms and F&B income summaries along with the projected room rates and occupancies over a period of 10 years have been complied with drawing up of the Proforma Profit & Loss Statement for the subject hotel and identifying the stabilised year of operation. The section also reveals the capital structure of the establishment with debt to equity ratios being realized with considering loan levels after owners contribution. To further analyse the feasibility, IRR and payback periods including the debt service have been presented to support the projects viability. The methodology of gathering data has been through secondary and limited primary research with only HVS India office and the development team at Starwood, India with regards to proposed guidelines of approaching a development project of this magnitude and presenting a realistic case study. Furthermore, the project also entails certain marketing and sales strategies that need to consider while planning for sustainable financial performance for the hotel. Similarly, discussions delve into the proposed reporting structure between the owner and operators representatives, the Hotel management contract with the Westin Brand, manpower planning and other key operational requirements. The details of all workings have been provided by the researcher in the appendix section of this report, which would help the reader to refer to the calculations and information about the subject hotel.
TABLE OF CONTENTS
EXECUTIVE SUMMARY............................................................................................................................................. 2 1. 2. PRODUCT DESCRIPTION .................................................................................................................................. 4 MARKET APPRAISAL ......................................................................................................................................... 5 2.1 Market Overview .................................................................................................................................................... 5 2.2 Site overview .......................................................................................................................................................... 5 2.2.1 Accessibility ..................................................................................................................................................... 6 2.2.2 Demand Generators.......................................................................................................................................... 6 2.3 Primary and Secondary Competitors ...................................................................................................................... 7 3. FINANCIAL FEASIBILTIY EVALUATION ......................................................................................................... 8 3.1 Project Cost Overview ............................................................................................................................................ 8 3.2 Funds Procurement ................................................................................................................................................. 8 3.3 Financial Feasibility ................................................................................................................................................ 8 4. MARKETING AND OPERATIONAL OVERVIEW ......................................................................................... 9 4.1 Marketing Overview ............................................................................................................................................... 9 4.2 Operational Strategy ............................................................................................................................................. 10 5. 6. 7. PRODUCT DIFFERENTIATION ...................................................................................................................... 11 REFERENCES ...................................................................................................................................................... 12 APPENDIX ............................................................................................................................................................ 13 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 Site Location Map ........................................................................................................................................... 13 Site Area Accessibility Map ........................................................................................................................... 14 Area Site Map with Nearby Establishments ................................................................................................... 14 Hotel Area Program ........................................................................................................................................ 15 Hotel Proforma Profit and Loss Statement (10 year period) ........................................................................... 16 Operating Financials ....................................................................................................................................... 17 Hotel P&L Summary with IRR and Payback ................................................................................................. 18 Project Cash Flow with Debt Service ............................................................................................................. 19 Hotel Financial Projections ............................................................................................................................. 20 Primary Demand Generators ........................................................................................................................... 21
1. PRODUCT DESCRIPTION
The concept is a five-star upscale hotel with the Westin brand associate with it. The location of the hotel, closest accommodation facility to the Buddh International Formula 1 track in the Jaypee Greens Sport City, is off great significance as it extends its theme- Formula One car racing. The interior of the hotel have a perfect blend of the Westin specifications and modernity with flaunting of high octane adrenalin. The glass and steel sharp features and finesse to the dcor have been inspired by the aerodynamics of a F1 racing car. The 306 keys establishment is a first of its kind in the country with a Formula 1 theme. The 6 Royal suites (3 bay) are designed and named after the 6 greatest legends of the game- Ayrton Senna, Nick Lauda, Emerson Fittipaldi, Alain Prost, Juan Manuel Fangio and Michael Schumacher, which would house rare pictures of their sporting careers and memorabilia across the 109 square meters of luxury space. These suites would be stylishly appointed with separate living and sleeping areas providing ample space and complete privacy. The Royal Suite bedroom features a luxurious walk-in closet and the signature Westin Heavenly Bed with the seven layers of plush bedding along with walk-in glass shower with rainforest showerhead and separate soaking bathtub filled with Bulgari bath amenities. The unparalleled view of the Buddh International F1 circuit is simply dazzling and fulfilling. Furthermore, the 21 gorgeous Executive Suites spread across 72 square meters with makes you feel at home with a separate living room housing plush contemporary couches as well as a second 42-inch LCD TV, DVD player and other gadgets. There are specially designed seven one-bedroom Renewal Suites, with their large circular sofas and additional powder rooms, are havens romantically perched on the building's corners for dramatic floor-to-ceiling, panoramic vistas of Noida and Taj Expressway. The twelve Aura rooms specially designed for the chic, modern women on-the-go. These rooms, generous in size and conveniently located by the elevators on each floor for easy access, are ideal for single female travellers visiting the city for business or leisure. Doorbells with video function as well as exclusive service by female associates ensure complete safety and security. Similar features and ergonomic designs can be experienced across the Deluxe and Premier rooms perfectly suited for the business traveller with HSIA and business- friendly technology provided. The dining options complement the accommodations arrangement with 2 world class specialty restaurantsOnly Asia with authentic assimilation of regional cuisines from Sczhewan, Canton, Vietnam, Thailand, Japan, and first of its kind offering of Burmese and Sri-Lankan specialties. The other outlet, Riva would serve exquisite Italian cuisine blending with an enviable collection of wines. The All-day-dining, Hairpin Bend named after a racing terminology stems from the location of the coffee-shop at an acute corner at the lobby. The hip and trendy lounge and bar, Octane justifies the adrenalin filled experience of sipping the worlds best martinis along with puffing a habanos cigar or cheering up to a glass of ageing scotch amidst the music and ambience. The deli at the lobby, Pit Stop is adequately named as it the small sandwich and pastries bar which also serves fresh baked items to be picked on the go. The Meeting and Conferences options are very exhaustive with the pillar-less Grand Ballroom of 1115 square meter accommodating up to 1200 guests over a cocktail function alongside 8 medium sized conference and meeting rooms capable of hosting 120-250 pax. There has been appropriate allocation of space for pre-function area which is approximately 600 square meters amounting to an impressive 2800 square meter of banquet space situated at the lower lobby, and mezzanine lobby floors. The lobby would feature two high street luxury retail stores along with the business center. Another striking feature of the hotel is the 1300 square meter Heavenly Spa with 6 treatment rooms along with a spacious Westin -Workout Health Club equipped with modern Precor fitness machines over 300 square meters. The poolside also houses a distinct area for conducting Yoga classes in the mornings for the resident guests. The hotel is a building structure built over a plot area of 4 acres, with total built up space of 39000 square meters across 2 basement floors for parking, lower lobby for banqueting with separate entrance, main lobby area with the main entrance, upper lobby mezzanine floor housing meeting rooms and 7 floors with guest rooms.
2. MARKET APPRAISAL
2.1 Market Overview
In the new era of globalized world, the gradual shift in power in the favour of the emerging economies is significantly visible. India, in the recent past has emerged as an attractive destination for doing business as the returns are considerably alluring for the foreign investor making a bee-line to the country. The existing economic framework has been able to sustain an 8-9% GDP growth in the last decade and show resilience in combatting the Global Crisis in 2008-09. Proliferation of international hospitality brands in the last 4-5 years has pushed the hotel sector to leave the limits of the metro-cities and penetrate into tier 2 and 3 cities with adequate growth. To support such a large business domain, the government has carried out re-development of the international airports, improved air connectivity within the country and also relaxed visa norms to strive for the 2020 vision of welcoming 20 million visitors to this incredible country. Commonwealth Games, ICC Cricket World Cup, Indian Formula 1 Grand Prix, Bangalore Aero Show and similar global trade shows and sporting calendar events would invariably help India gain further visibility and invariably support development for quality hotel rooms in the future across various destinations. The countrys capital city New Delhi governs the largest hotel market in the country with the inclusion of four satellite towns Gurgaon, Noida, Ghaziabad and Faridabad together being called the National Capital Region (NCR). With the existing supply of almost 13000 rooms and close to 18000 rooms in the pipeline and active development, the city region is growing at an aggressive rate. Micro-markets like Gurgaon and Noida have successfully established themselves through attracting respective business segments like Grade A offices, high-rise retail infrastructure, luxury homes and residential societies from Central and South Delhi areas. In addition, the improved Metro connectivity to these two towns along with the development of the interstate expressway to locations like Agra and Manesar respectively have added huge credibility to the commercial real estate market. Created in 1976, under the New Okhla Industrial Development Authority (NOIDA) is located across the Yamuna River has now transformed into a bustling semi-city in the last decade witnessing the maximum growth. Further development has now given birth to a new location, Greater Noida, which saw the 8th highest annual growth in rental values in the world in December 2008. It has been able to attract medium to large scale industries and recorded an annual growth of 25% in industrial rental values in 2008. The location is particularly promoted for campus development and has huge potential for future supply. Hence, luxury hotels have initiated proposals to tap into this market which is expected to grow very fast in the medium to long term horizon.
2.2.1 Accessibility
The project site is located approximately 45 kms south east of Delhi, 15 kms south of Noida & east of the Yamuna River. It will be well connected with the Yamuna Expressway along its east boundary, Eastern Expressway on its west & ring road to South east. Proposed metro link would run parallel to the Yamuna Expressway. The main railway between Delhi & Agra runs along the west boundary. 0 Point (Greater Noida) The time taken is 15 min (approx.) Noida / Greater Noida Expressway The time taken is 25 min (approx.) South Delhi The time taken is 35 42 min (approx.) The Yamuna Expressway is 165 kms long, connecting Noida to Agra. Indias Longest Access Controlled Expressway with Six Lane Concrete Pavement - slated to reduce the travel time between New Delhi and Agra to 2 hours from the present 4 hours Yamuna Expressway is poised to be Growth Engine for all round economic and industrial growth in western UP impacting a population of around 30 million. Yamuna Expressway Authority has identified ribbon development along Yamuna Expressway to promote Special Development Zones for core activities like IT, Industries, Biotechnology, Service Sectors and Commercial. Connecting National Capital Region with other parts of the state will boost economic activity, decongestion of existing roads and reduction in pollution.
2.2.2 Demand Generators
The full potential of the location can be realized in 3-4 years with all the simultaneous infrastructural developments taking complete shape, in a way by the time the hotel gets operational by 2016. The following factors have been identified to be the most significant demand generators. The location will definitely have a more pronounced position and image on the global map with the aforementioned calendar events. The Formula 1 Indian Grand Prix would take place during the last week of October with hotels being booked for 3 weeks in advance till the race day. On an average each of the 20 racing teams require close to 100 rooms to accommodate the entire team of engineers, technical crew, drivers, security, managers etc. The event is of such grand scale that all the hotels would get sold out in the vicinity well in advance and drives the room rates through the roof during that period making it extremely viable for hotels. The ICC standard Cricket Stadium would be second in the that region after the Feroz Shah Kotla, with huge support being garnered from the UP State Cricket Board helping it turn into a money spinner, with getting more international matches and all important Indian Premier League (IPL) tournament which is a calendar event spread over 2 months. The venue could easily bag 2-3 One Day matches along with 10-15 IPL T-20 matches across the off-season months of April and May. Other sporting events could be of significant opportunity to generate demand for hotel rooms in that region. The commercial zoning of the Central Business District would boost the demand from the corporate segment with key activities from Industrial, Information Technology (IT)/ (ITES), Bio-Tech, Institutional, Recreational and Service Industry. The Honda-SIEL factory, along with Samsungs production unit and NIITs office on the other side of the Taj Expressway would be generating a great deal of demand within a radius of 5 kms. The IT/ ITES offices have a lion share in the grade A office of up to 27 %, with considerable demand coming from the Technical universities and the biggest Gautam Buddha University contributing equally. The location of the mega hospitals in the area would be also generating strong demand and may also help build medical tourism in this zone. The MICE market has been consistently building up over the past few years and given a couple of more years would attain critical mass to generate volume demand for hotel facilities. A significant contributor is the India Exposition Mart which is built over 28000 square meters and can accommodate up to 8000 conventioneers under the same roof. Over the last few years, IEM has been able to market the destination and bag some key global trade shows and are hosting the IC&TM in August 2012. The hotel is positioned in a sweet spot to benefit from all the key activities taking place during the year.
The 2 hour drive to Agra would definitely make the international leisure segment want to stay at this spot and slip into the city of Taj Mahal creating a strong demand for transient leisure segment in this area and vice-versa for people travelling back from Agra could avoid staying in New Delhi and rather putting up at Greater Noida and flying out. The overall demand framework for the subject property would definitely be a corporate heavy hotel with almost 40%, followed by MICE being 30%, Calendar events being up to 20% and the rest 10% being transient.
Interest @ 12.5%. 1 year Moratorium plus 3 years construction period Capital disbursed in 3 tranches 9 Equal Annual instalments over period of construction Y 1 : INR 3,095 Lakhs Total Terms 13 Y 2 : INR 3,004 Lakhs Y 3 : INR 3,004 Lakhs
5. PRODUCT DIFFERENTIATION
The subject hotel derives its differential from three aspects- location, concept and design and the brand. The hotel has a tremendous value proposition by virtue of being at the epicentre of all the events. It would be the closest hotel to the Race Track and the unrivalled view from the room would be worth every single penny spent by the guest. The hotel is located at the heart of the Jaypee Greens Sports City, which would be a selfsustaining town structure with all market segments in close proximity ready to be tapped into as a captive market. The hotel has the potential for becoming a preferred location for visitors to this part of the city with different purposes. The accessibility to all leading venues and industrial and business offices gives the hotel a significant advantage over its competitors, who are located on the other side of the Expressway, Noida and Mayur Vihar, regions that cater to this market. The most critical differentiation the hotel would have is that of the image of Formula One concept hotel just gravels away from the Buddh International racing track. The ambience with sharp LED lights, inspiring music, refreshing dcor of the hotel extending a pulsating feel and aerodynamically shaped structures would provide the guests with an innovative experience. The 6 Royal Suites would capture a racing enthusiasts imagination with invaluable memorabilia collected across generations of racing legends. In addition, the Octane lounge and bar would feature and celebrate the entire Formula One calendar with race days combined with events to make it the trendiest bar in town. The bar would also have favourite cocktails of famous international drivers and serve them with a quick fact coaster stand of the driver as a small take away. To further complement the concept, the ADD Hairpin Bend would incorporate special menus across the grand prix locations of the world and have special table fixtures and amenities that resemble the sport. This would be clearly the hotels Unique Selling Proposition. The Westin brand also adds to the differentiation as it brings with it the muscle and spread of the Starwood Hotels chains global sales and marketing infrastructure. The Westin brand has been a pioneer in every hospitality term with innovating every aspect of guests services and products throughout its existence. The brand also provides enough ways to connect with the guests through the diverse programs carefully tailored for the Westiners. The biggest impact is the level of loyalty a hotel witnesses by being part of the SPG programme and with renewed investments from the parent brand; it is definitely the biggest differentiating factor for hotels to get unconditional support and trust from its loyal guests over and over again. These were the reasons for selecting Westin as an upscale brand for the site location of the subject hotel. With almost 40 Westin hotels being opened across Asia, the hotel would further benefit from the enhanced image of the brand and more so from the collection of existing Westin properties in India.
6. REFERENCES
MARKET REPORTS 1. MarketBeat Report, NCR New Delhi Region, Cushman & Wakefield Sector Research, Q3-4, 2010 2. Trends & Opportunities 2011, Indian Hospitality Report, HVS India, 2011 3. FHRAI HVS Report on Indian Hospitality Report, HVS India, 2011 4. Hotel Valuation Index Report 2011, HVS India, 2011
7. APPENDIX
7.1 Site Location Map
7.2
7.3
7.4
7.5
7.6
Operating Financials
7.7
7.8
7.9
HOSPITALS
Kailash Hospital, Near Pari chowk
COLLEGES
Sharda University(Private State University),Sharda Group United College of Engineering & Research[28] IIMT College of Enggineering
Buddh International Circuit Graduate School of Business & Administration(GSBA)[6] Ishan Institute of Management & Technology[7]
GNIT and management, greater noida Priyadarshini College of Computer Sciences,Greater Noida IILM Aademy Of Higher Learning
Unitech Verve[12]
Videocon d2h
Videocon d2h
RETAIL ALPHA COMMERCIAL BELT The Grand Venezia[47] (1.2 km NIIT from Pari-Chowk near Golf Course) Omaxe Connaught Cetpa Infotech Pvt. Ltd. Place[48] (5 km north of Pari-Chowk)
Kasana Tower (Alpha Commercial Belt) Parsvanath Bibhab Plaza (Alpha Commercial Belt) S.L.Tower (Alpha Commercial belt) SNZ Plaza, (Near Galgotia Institute, Expressway) Ansal Plaza (Near Pari Chowk) Omaxe NRI City Centre (Near Pari Chowk) Central Market (Rampur Jagir Sector Beta-1) Jagat Farm Market (Amritpuram,Sector Gamma-1) Bouginvilia Shopping Complex (Sector Gamma-2) DUCAT India
Unitech Cascade[13]
NIIT
Unitech Habitat[14]
Yamaha Motors
American Express
Dronacharya group of institutions[29] Skyline Institute of Engineering & Technology (SIET)[30] Greater Noida Institute of Technology(GNIT)[31] Priyadarshini College of Computer Sciences.[32] College of Engineering and Technology-Institute of Integrated LearningITS college of engineering
LIC of India
iHOMZ Noida
Wipro Technologies
HDFC
Sahdev Hospital, Near Sector P-3 Bakson Homoeopathic Medical college and Hospital, Tugalpur, Near Pari Chowk Yatharth Wellness Hospital & Trauma Center, Sector OMEGA, Near Senior Citizens Astha Hospital, Block- I, Sector- Alpha-II
ICICI
Daewoo Motors
HCL Technologies
WIPRO
LG Electronics
Axis bank
Moser Baer
G L Bajaj Institute of Technology Army Institute of Management and Technology Greater NOIDA
Alstom
Samsung Electronics
Navin Hospital, BlockF, Sector- Alpha-II National homoeopathic centre, main markit, tugalpur, Near Pari Chowk
Accurate Institute of Management & Technology[34] Galgotias Collage of Engineering & Technology
IEC College of Engineering
Franciscan Solutions[20]
Sharda University
Asian Paints
STMicroelectronics
Delphi automotive
ST-Ericsson