development of hotel at saputara, dangs
TRANSCRIPT
RFP:
VOLUME II
PROJECT INFORMATION MEMORANDUM (PIM)
DEVELOPMENT OF 5-STAR HOTEL /
RESORT AT SAPUTARA, GUJARAT
OCTOBER, 2017
Gujarat Tourism Opportunity Limited
(A Project Development Company jointly promoted
by Government of Gujarat & IL&FS Group)
605-606, Haveli Arcade, Sector – 11,
Gandhinagar, Gujarat - 382 011
TOURISM CORPORATION OF GUJARAT LIMITED (TCGL)
(A GOVERNMENT OF GUJARAT UNDERTAKING)
Block No. 16, 4th Floor, Udyog Bhavan, Sector 11, Gandhinagar, Gujarat - 382011
Phone: +91-79-2322002, 23977200, 23222523 Fax: 91-79-23977201
Website: http://www.gujarattourism.com/tenders
Website: http://www.gujarattourism.com/tenders
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Table of Contents
Executive Summary 4 1 INTRODUCTION 6 1.1 Need for the Study 6 1.2 Objectives of the Study 6 1.3 Constraints and Limitations 6 1.4 Approach and Methodology 7 2 SECTOR PROFILE 8 2.1 An Overview of the State Gujarat 8
2.1.1 General Overview 8 2.1.2 Economic Overview 8 2.1.3 Tourism Overview 8 2.1.4 Growth of Tourism in Gujarat 10
2.2 Tourism Scenario in the State 10 2.2.1 Key Tourist Circuits of Gujarat 10 2.2.2 Trend in Tourist Arrival 11 2.2.3 SWOT Analysis of Gujarat as Tourist Destination 12
2.3 South- Gujarat Circuit 13 2.3.1 Introduction 13 2.3.2 Connectivity 13
2.4 Dang District 13 2.4.1 Demography 14 2.4.2 Economy 14 2.4.3 Tourism Resources 14
2.5 An Overview of Saputara 15 2.5.1 Introduction 15 2.5.2 Connectivity 15 2.5.3 Tourism Resources 16 2.5.4 SWOT Analysis of Saputara as Tourist Destination 17
3 HOTEL INDUSTRY – AN OVERVIEW & MARKET ANALYSIS 18 3.1 Hotel & Hotel Industry – An Introduction 18 3.2 Classification of Hotels 18
3.2.1 On the basis of Standard 18 3.2.2 On the basis of Location 18 3.2.3 By Ownership 20
3.3 Hotel Industry in India 22 3.3.1 Background 22 3.3.2 Present Scenario of Hotel Industry in India 22 3.3.3 Trends in the Industry 22
3.4 Hotel Industry in Gujarat 23 3.4.1 Challenges faced by Hotel Industry in Gujarat 23
3.5 Hotel Industry Market Analysis in Saputara 24 3.5.1 Hospitality Demand Drivers 24 3.5.2 Existing Supply 24
4 SITE ANALYSIS 29 4.1 Site Location and Description 29 4.2 Land Ownership 29 4.3 Site Topography and Vegetation 29 4.4 Site Access and Connectivity 30
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4.5 Proximity to Key Areas 30 4.6 Existing Infrastructure 31 5 DEMAND ASSESSMENT AND PROJECT CONFIGURATION 32 5.1 Tourist Arrival 32 5.2 Demand- Supply Scenario 33 5.3 Recommended Project Components 33 5.4 Site Development Options 34 5.5 Area Programme 35 5.6 Activities other than Rooms 35 5.7 Mandatory Development Obligations 36 6 FINANCIAL ANALYSIS 37 6.1 Introduction 37 6.2 Capital Cost Estimates 37
6.2.1 Offsite Infrastructure requirement 37 6.2.2 Site Preparation & Development 37 6.2.3 Building Construction 38 6.2.4 Furniture & Furnishing 38 6.2.5 Machinery & Equipment 38
6.3 Operational Cost Estimation 39 6.4 Assumptions for Financial Analysis 39
6.4.1 Construction Period 39 6.4.2 Concession / Lease Period 39 6.4.3 Phasing of Capital Cost 39 6.4.4 O & M Cost Assumptions 39 6.4.5 Financing & Taxation Assumptions 40 6.4.6 Sources of Finance 40 6.4.7 Project Revenue Assumptions 40
6.5 Results of Financial Analysis 40 6.6 Recommendations 41
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Executive Summary
Data Available
1 Site Location Land admeasuring 12,000 sq.m. is located
near the northern side of the town, on the
hilltop overlooking the valley on North side
on, as described in the PIM (Volume-II).
Saputara is about 160 kilometers (km) from
Surat and about 260 km from Mumbai. The
Maharashtra State border is 4 km from
Saputara. It is strategically located on the
road connecting Surat to Nashik. The nearest
railway station on the main Delhi-Mumbai
line is Valsad (about 125 km from Saputara).
Valsad is also a major railway station where
almost all the trains including the Shatabdi
Express stops.
2 Area of the Site About 12000 Sq. Mt
3 Land Ownership &
Current Status
TCGL is the owner of the site; and currently,
there are some dilapidated and some
underused structures on the site.
4 Tourist Arrival in
Saputara
Annual Tourist arrival is about 5.4 Lakhs, out
of which May, June and October are peak
months. In the rest of the months demand is
pre-dominantly from the weekend travelers.
Proposal & Assumptions
1 Proposed Project
Components
The selected Concessionaire shall develop
the following facilities:
1. 5 -Star category hotel / resort
2. Minimum 60 keys / rooms & 2 suites
3. Reception, Multi-cuisine restaurant
cum coffee shop
4. Provision of car parking to be made as
per TCGL/ Local Building Bye-Laws
5. All Other common / support / required
facilities such as internal roads, street
lights, water harvesting system, solid
waste disposal, storm water drainage
system, main sewer line, water supply
including storage tank(s), transformer,
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electrical substation, green areas etc. as
per applicable Building Bye-laws/ any
other relevant guidelines issued by
GoI/ GoG
2 Capital Cost Assumptions CPWD DSR 2013 rates and Quotations
3 Concession Period 35 years including Construction Period of 2
years
4 Concession Structure DBFOT
5 Occupancy Assumption Starting with 30% increasing 3% every year,
stabilize at 60%
6 Room Rent Assumption
&
O & M Cost Assumption
Rs. 5000/ Night initially, increasing at 5%
per annum
O & M Costs increase at 5% per annum
7 Rate of Interest for Debt 12%
8 Debt Equity Ratio 60:40
9 Debt Repayment 10 years- with moratorium of 3 years
Results
1 Capital Cost Rs. 36,65,00,000 (Rupees thirty six crore
sixty five lakhs only)
2 Average DSCR 1.12
3 Project IRR 13.71%
4 Equity IRR 14.38%
*The Project IRR and Equity IRR have been worked assuming Annual Premium
as Rs. 50,00,000/-.
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1 INTRODUCTION
Tourism Corporation of Gujarat Limited, Government of Gujarat is mandated to
undertake activities related to promotion of Tourism in the state of Gujarat and
to develop Tourism Infrastructure in the state.
Tourism as an economic activity is vital for any country as it does not only
provide economic opportunities to the local population of the Tourist sites, but
it also opens the market for Local Industry to sell the goods outside the
traditional catchment area; and it also helps in overall development of the
region because it enables exchange of ideas and understanding of culture.
Gujarat is thought as a leading state in utilizing the strength of the private
enterprise in Infrastructure Development and Economic Progress. The State
Government’s vision is to enhance service delivery by utilizing strength of the
private enterprise.
Tourism Corporation of Gujarat Limited (TCGL) has been established for
creation of Tourism Infrastructure in the state. TCGL, in partnership with
Infrastructure Leasing and Financial Services (IL & FS) has established Gujarat
Tourism Opportunities Limited (GUJTOP); as a specialized entity providing
advisory support for development of Tourism Infrastructure in the state,
especially on Public Private Partnership mode.
1.1 Need for the Study
TCGL is exploring options for developing the land parcel it has at Saputara for
promoting Tourism in the area. TCGL is also desirous of taking up the project
on PPP mode. This Techno-economic feasibility study is taken up to check the
Technical and Commercial Viability of the Project from the Investor’s
perspective.
1.2 Objectives of the Study
The study aims to fulfill the following objectives:
1. To understand the site context and tourism potential of the site
2. To undertake SWOT analysis of the Tourism Development on the site
3. To suggest the optimum product mix for the site based on the Demand
Assessment
4. To derive broad area allocation of the activities on the site
5. To estimate approximate cost estimation based on block cost model
6. To establish Financial Viability of the project
7. To undertake Risk Assessment and prepare Risk Allocation Matrix
1.3 Constraints and Limitations
The following are the constraints to the study:
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1. The study would rely on the secondary information on Arrival of Tourists;
at the National, State and Regional Level
2. The study would rely on the information provided by the operators on the
availability of rooms, occupancy rates and tariffs;
3. The availability of Infrastructure services to the site is taken based on the
observations of the town, and secondary data. The feasibility study would
be undertaken assuming these factors as given.
1.4 Approach and Methodology
The following methodology has been adopted to meet the above-mentioned
objectives of the study:
Based on the Demand Assessment so arrived at, the Technical and Commercial
Viability of the Project would be assessed.
Top-down Approach
Tourist Arrival Data- National, State & Regional Level
Regional Connectivity, Existing and Potential Tourism Circuits
Bottom- Up Approach
Location of the Site, Infrastructure Availability
Profiling of the existing facilities-complementing and competing activities
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2 SECTOR PROFILE
2.1 An Overview of the State Gujarat
2.1.1 General Overview
Gujarat is the seventh largest state with 1,96,024 sq. km area covering for 6 %
of the total geographical area, located on the North west coast of the country is
known for its incredible diversity due to its geographic and strategic location.
Gujarat borders with Rajasthan to the Northeast, Maharashtra and Union
Territories of Daman & Diu and Dadra & Nagar Haveli to the south, Madhya
Pradesh to the east, and 1600 km long coastline along the Arabian Sea to the
southwest and the Pakistani province of Sindh on the Northwest.
Gujarat, with a coastline of 1600 km is well connected to all the major port-
based trade routes, such as USA, Canada, Europe, Australia, China, Japan, Korea
Gulf & African countries and other major trade cities of the world by air route.
The State has a forest area of 11.05% with 4 National Parks and 21 Wild-life
Sanctuaries.
2.1.2 Economic Overview
Gujarat has a strong Economy with the SDP rising at an average growth rate of
10.1% since 2005 to 2013, more than the national average. The state achieved
an annual growth rate of 9.51% during the 11th plan (2007-2012).
Gujarat ranked 1st in India for “Economic freedom among states” Economic
freedom of the states of India 2013; and is one of the principle states to secure
the Foreign Direct Investments in the country (FDI equity inflows – USD 9.5
billion outstanding investments USD 255.4 billion).
2.1.3 Tourism Overview
Gujarat boasts of over 3,500 years of history, natural and cultural delights, fairs
and festivals, beaches, temples, holy sites coupled with the warmth of its
people. It offers wide array of activities for Tourists based on their interest.
The World Heritage Committee (WHC) of UNESCO, announced the Walled
City of Ahmedabad as World Heritage City, recognizing the value of the
walled city’s unique heritage. More than 600 years old, Walled City of
Ahmedabad was founded by Ahmed Shah is India’s first city to be declared
as the World Heritage City. The 5.5 km walled city area with approximate
population of four lakh living in century old wooden residences in around
600 pols or neighborhoods is regarded as living heritage and lauded the
peaceful co-existence of dominant Hindu, Islamic and Jain communities in
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the Walled City area. Besides it architectural marvels of wooden havelis, the
city was the epicenter of non-violent freedom struggle that led to country’s
independence from colonial rulers in 1947.
In terms of Architectural Heritage, the famous "Rani Ki Vav" at Patan is
an intricately constructed 11th century step well, which is a UNESCO world
heritage site. The minute and exquisite carvings on this vav is one of the
finest specimens of its kind, offering similarities with the famous Patan’s
Patola (clothing for women with exquisite weaving patterns resembling
the stone carvings). There are other beautiful places also such as ‘Adalaj ni
Vav’, ‘Sarkhej Roja’, ‘Jama Masjid’ to name a few.
The "Champaner-Pavagadh archaeological park", located in Panchmahal
District is a UNESCO World Heritage Site. The heritage site is studded with
forts with bastions starting from the hills of Pavagadh, and extending into
the city of Champaner.
Navratri, especially in Gujarat, is celebrated with a panache and fervor,
representing the rich Cultural Heritage not seen anywhere in India.
Similarly, the Kite Festival is also a one-of-its-kind festival that is
celebrated with an unparalleled passion.
The insights into Harappan Civilization can be seen in Lothal, near
Ahmedabad.
Gujarat is the land of the Mahatma and Sardar Patel, and along with them
many more freedom fighters have left their footprints on the sands of time,
infusing the qualities of tolerance, brotherhood, non-violence and
patriotism into Indians.
Gujarat has dry deciduous forests, majestic grasslands, marine ecosystems,
wetlands and rich moist deciduous forests; which may be a dream
destination for those who quest for nature and wild life.
The rare Asiatic Lions in the Gir reserve, the Wild Ass in the Rann of Kutchh,
Indian bustards in bird reserves, four horned Antelope and Black Buck are
among many animals and birds protected in the State’s four national parks
and 21 sanctuaries.
The Whale Shark breed on the coasts of Gujarat and Okha, small coastal
town in Jamnagar district is famous for not only the Krishna Temple Bet
Dwarka but for the large marine mammal dugong. This Saurashtra coast of
Okha is known for the world largest dugong recorded till date that was 4.06
meters long and weighed 1016 kgs. Another first to Gujarat is India’s first
Marine National Park at the Gulf of Kutchh
In terms of Handloom & Textiles, Gujarat boasts of Patan’s Patola,
Jamnagar’s Bandhani (Tie n Dye), Ajrakh print (Block printing practiced in
Kutch); which can be seen being made by the artisans in the villages by the
art enthusiasts.
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For Handicraft lovers, there are traditional centers where the Beadwork,
terra-cotta work, Blue-pottery, woodcarving, silverwork, etc. throughout
the state.
For the Religiously inclined, Gujarat offers ancient temples of Shiva,
Shakti and Narayan- at Somnath, Ambaji and Dwarka respectively.
Pavagarh has temples for the Jainism faith and also Mahakali temple. For
Parsi population, the sacred Iranshaw Fire Temple at Udvada is the place
of pilgrimage.
There are several fairs and festivals being celebrated round the year, like
Navratri Mahotsav, Uttrayan, Modhera sun temple festival, Kutch utsav,
Bhavnath Fair, International Kite Festival, Sharadotsav and Rann Utsav
apart from mahashivratri melas, etc.
2.1.4 Growth of Tourism in Gujarat
Number of Tourist arrivals in Gujarat is experiencing a strong growth with the
Gujarat Tourism Sector Performing better than the country average. The gross
flow during the year 2013-14 was approximately 28.79 million. The growth in
international tourist arrivals as a CAGR of 14.74% since 2005 in Gujarat can be
attributed to the growing prominence of the state as a major business hub.
Domestic Tourism Primarily led by tourists from within the state countries -
77% followed by tourist arrivals from other Indian states which stands at - 21%
2.2 Tourism Scenario in the State
2.2.1 Key Tourist Circuits of Gujarat
The Key Tourist sites of Gujarat can be divided broadly into Five Tourist
Circuits- The North Gujarat Circuit, Central Gujarat Circuit, South Gujarat
Circuit, Kutch Circuit and
Saurashtra Circuit.
Source: Google Earth Imagery
North
Kutchh
South
Saurashtra Circuit
Central Gujarat Circuit
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2.2.2 Trend in Tourist Arrival
Tourist Arrival in Gujarat over the period
Source: data collected by GITCO
As we can see from the chart above, the overall growth in number of tourists in
Gujarat has been 57%. Hence, it can be said that the share of Saputara in
Gujarat’s tourism growth is considerably high. This is also evident from the fact
that there has been some new tourist facilities that has come up in Saputara in
last five years; and it is still growing.
Tourist Arrival in Saputara
Let us look at the trend of Tourist Arrival in Saputara. The feedback from the
existing operators is that Saputara is only serving as a Weekend Destination;
and that it has a great potential to be developed as a MICE destination, which is
not fully explored yet. Saputara is a unique destination since it is the only hill
station in Gujarat, and it is well integrated with the Nashik-Shirdi tourist circuit
of Maharashtra. People from Gujarat visiting Nashik & Shirdi prefer to stay for
the night at Saputara, and descend to Nashik in the morning.
2012-13 2013-14 2014-15 2015-16 2016-17
Foreigners 172803 228025 244504 309265 405219
NRIs 292248 337671 388891 423358 518933
From Other states 5356248 6061418 7463192 9398975 11476287
From Gujarat 19587862 22160853 24594107 28179905 32400056
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
40000000
45000000
50000000
Tourist Arrival in Gujarat
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Source: Data collected by GITCO
As we can see from the chart above, there are about 5.4 lac tourists that visit
the hill station every year, out of which about 63% are from within the state;
and 37% are from other states. Based on the on ground interaction with the
hotel operators, the bulk of these tourists from outside the states is from
Maharashtra; as the place is very near to the Maharashtra border. There are
very few NRIs who visit Saputara and almost nil Foreign Tourists in last Five
years.
2.2.3 SWOT Analysis of Gujarat as Tourist Destination
2012-13 2013-14 2014-15 2015-16 2016-17
Foreigners 0 0 3 0 0
NRI from Abroad 600 31 223 418 735
Other Indian States 77298 104721 148612 163077 200615
Within Gujarat 221287 277780 301711 318809 342676
0
100000
200000
300000
400000
500000
600000
Tourist Arrival in Saputara
Strengths
-Long & unexplored Coast Line
-Rare Wildlife species like Asiatic Lions, Wild Ass, etc
- Rich Textile and Handicraft Culture
-Favourable Business Environment
-Efficient Road Network
Weaknesses
-Lack of Quality Tourism and Hospitality Infrastructure
-Prohibition on Liquor
-Only one International Airport; and Limited flight connectivity for Domestic Networks
-Lack of trained staff for Hospitality Industry
Opportunities
-New Tourism Policy of the state is offering several incentives for creation of Infrastructure
-Viability Gap Funding is available for Tourism Infrastructure projects
-Number of Foreign Tourists visiting India is increasing consistently, Gujarat can reposition itself as the preferred destination banking on its image as a safe and tourist friendly place
Threats
- The expectations of the domestic tourists are increasing ; and if commensurate investments are not made in Infrastructure, the number of domestic tourists may also decline
SWOT Analysis of Gujarat as Tourist
Destination
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2.3 South- Gujarat Circuit
2.3.1 Introduction
The South Gujarat is formed by
Surat, Navsari, the Dang, Valsad and
a newly formed Tapi district
(carved out from Surat in year
2007), is also known as Deccan
Gujarat or Dakshin Gujarat and is
one of the wettest region of India.
Valsad District was formed out of
Surat in 1966; and later in 1997;
Navsari district was carved out of
Valsad. Surat is the major urban
center of the region. The western
region of this division is the coastal region and the eastern parts are mostly the
hilly parts with the Saputara range in the Dang District.
2.3.2 Connectivity
Connectivity plays a major role in the growth of Tourism related activities in a
region. Gujarat as a whole is at a disadvantageous position because of having a
single International Airport. The connectivity to South Gujarat is comparatively
better than the rest of the Gujarat; however, it is lacking in the Air Connectivity,
since there is no international airport in South Gujarat. Surat has regional
connectivity with Delhi and Mumbai is a nearby Airport.
In terms of Road and Rail Transport, South Gujarat has an edge because all the
trains between Delhi and Mumbai - the Political and Financial Capitals of the
country, respectively, pass through South Gujarat Region.
2.4 Dang District
Dang district is one of the 33 districts of Gujarat. It is bound by Navsari district
to the West; Tapi district of Gujarat and Nadurbar district of Maharashtra on
North; Dhule district of Maharashtra on East; and Nashik district of
Maharashtra to the South. The district's administrative capital is Ahwa; and the
most famous tourist destination is Saputara. The district covers 1,766 square
kilometers.
Dang was known as “Dakaranya or Dandak” during the period of Ramayana,
and this is why its folksongs are filled with stories of Ram and Sita. Pandavas
are also believed to have roamed and stayed in the Dang. Even today one can
find a cave in Pandava village near Dang.
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2.4.1 Demography
As per the 2011 census, Dang district had a population of 2,26,769 persons.
Most of the population of the district is Tribal.
2.4.2 Economy
The land of the district is fertile and rocky. The color of the soil is either red or
black. Maize, Rice, Groundnuts, Nagli (raggi), Euphorbia, etc. are the major
cultivation of this land. Wheat, Black Gram, Urad, etc are also grown in this soil.
Agriculture, Animal husbandry and Forest Produce collection are the three
major economic activities here. There are about 100 small-scale units doing
Agro-processing and related activities. The average land holding per family is
about 1.5 Hectare. However, Dangs is one of the 250 poorest districts of India.
2.4.3 Tourism Resources
Dang is a high rainfall area- here the annual rainfall is more than 3000 mm. 59%
of the area is under forests.
Saputara, also known as “abode of serpents” is a hill station on a plateau of
the sahyadri range of mountains.
Near Saputara, around 60 km away is the hathgarh fort, which was built by
Maratha Warrior Shivaji Maharaj.
Purna Wildlife Sanctuary and Vansda National park are the places that offer
wildlife excursions, offering sighting of Leopards, Hyena, Jungle Cat,
Macaques and Barking Deer.
Gira Falls and Girmal Falls are the places to relax, unwind and enjoy the
beauty of the nature.
Dang Darbar is a three-day annual cultural extravaganza coinciding with
the Holi festivities. The festival is celebrated in the Dang district, located in
the Saputara Hills of India. A conspicuous festival of Dang tribe, inhabitants
of wooded region Saputara, the Dang Darbar is celebrated just few days
before Holi.
Gujarat’s beautiful hill station turns bride-like during the monsoon season.
The heartening fresh green shades make the hill look bejewelled. Forests,
hills and valleys beckon with an irresistible charm. Trekking in the
ravishing wild trails or boating in the serene lake. The invigorating
surroundings form the delightful settings for the exhibitions, interactive
games, cultural programs, competitions, fun contests, flash mobs, floating
balloons, cartoon characters, and much more activities organized as part of
the Monsoon Festival.
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2.5 An Overview of Saputara
2.5.1 Introduction
This hill station is on a plateau in the Dang forest area of Western Ghats
(Sahyadri) range at an altitude of about 1,000 meters. Saputara means the
'Abode of Serpents' and a snake image on the banks of the river Sarpagana is
worshiped by the Adivasis on Holi.
Saputara has been developed as a planned hill resort with amenities like hotels,
parks, swimming pools, boat club, theaters, ropeways and a museum. Saputara
is about 160 kilometers (km) from Surat and about 260 km from Mumbai. The
Maharashtra State border is 4 km from Saputara. It is strategically located on
the road connecting Surat to Nashik. The nearest railway station on the main
Delhi-Mumbai line is Valsad (about 125 km from Saputara). Excursions from
Saputara can be made to the wild life sanctuary in the Mahal Bardipara forest,
60 km. and to Gira Waterfalls 52 km away.
2.5.2 Connectivity
Saputara is strategically located on the road connecting Surat to Nashik. The
nearest railway station on the main Delhi-Mumbai line is Valsad. Valsad is also
a major railway station where almost all the trains including the Shatabdi
Express stop.
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2.5.3 Tourism Resources
Saputara is a small and quiet town. There are sunset and sunrise points on
different plateaus; which can be assessed in a vehicle or on foot also.
On one of the plateaus has a ropeway connection to the Sunset Point.
There is a small place called Artist Village, which has several paintings and
tribal artifacts on display and for sale.
One can go to the Vansda National Park, with prior permission from the
Chief Wildlife Warden or Divisional Forest Officer (DFO).
Purna Wildlife Sanctuary is situated at Mahal, 77 km north of Saputara.
Boating facility is available on the Saputara Lake; and is one of the principle
tourist attractions of Saputara.
Gira Falls is an excursion option 52 km from Saputara, which can be visited
during and after monsoon season.
There are three gardens in Saputara- namely the Rose Garden, Step Garden
and the Lake Garden.
There are certain shops that sell the Tribal Artifacts.
The mountains have the potential for development of trekking sites; which
is not discovered yet.
Entry to Saputara Hill Station Valley view from the Site
C Type Quarters on the site Water Supply Connection and Motor
on site
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Overhead Water tank in one of the
dilapidated structures on site
Dilapidated structures on the site
D type structures on site D type structures on site
2.5.4 SWOT Analysis of Saputara as Tourist Destination
Strengths
-Location on Surat- Nashik road
-Only Hill station of Gujarat
-Beautiful Valley view, Sunrise and Sunsets
Weaknesses
-Prohibition on Liquor; and competition from Khandala, Lonawala and Mahabaleshwar
-Lack of Activities for tourists
-Haphazard growth of Hotels
Opportunities
-The destination has potential for development of MICE tourism from corporates of Surat, Mumbai, etc
-The tribal culture has lots to offer to the tourists, which can be further developed
Threats
-If the local population is not gainfully employed in Tourism related activities, it can turn hostile to Tourism related activities
SWOT analysis of Saputara as a
Tourist Destination
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3 HOTEL INDUSTRY – AN OVERVIEW & MARKET ANALYSIS
3.1 Hotel & Hotel Industry – An Introduction
Hotels are an important component of the tourism product. They contribute in
the overall tourism experience through the standards of facilities and services
offered by them.
3.2 Classification of Hotels
3.2.1 On the basis of Standard
The Ministry of Tourism has constituted a committee called “Hotels and
Restaurants Approval and Classification Committee (HRACC)”. According to
the standards prescribed, there are two broad types of Hotels. The Star
Category Hotels and the Heritage Category Hotels. Both the categories can be
further classified as follows:
Star Category:
One star
Two star
Three star
Four star
Five star and
Five star deluxe
Heritage Category:
Heritage Grand
Heritage Classic and
Heritage Basic
3.2.2 On the basis of Location
On the basis of their location, the Hotels can be classified in the following
categories:
1. CITY/DOWNTOWN/COMMERCIAL HOTEL: These hotels are located in the
heart of the city. These hotels are more expensive than the suburban hotels.
Businessmen and high-income tourists patronize these hotels. These hotels
are centrally located and at a convenient distance from markets, railway
station, airport, etc.
2. SUBURBAN HOTELS: These hotels are located in the suburb of cities,
moderately priced and are of mostly medium, large or small size. Normally
low budget tourists patronize these hotels. The tourists, who do not want
to stay in the heart of city, as they want to be away from hustle and bustle
of city, prefer these hotels. Usually writers, poets, low budget tourists etc
prefer to stay at suburban hotels.
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3. AIRPORT HOTELS: These are Hotels located near the Airports, especially
international airports. Airport Hotels are popular because of their
proximity to major travel centers. Airport Hotels vary widely in size and
level of services. Typical target market includes business clientele, airline
passengers with overnight travel layovers or canceled flights and airline
personnel. Hotel owned courtesy vans often transport guests between the
hotel and the airport.
4. MOTELS: Motels are also called Motor Hotels or transit hotel and are
located alongside the highways. Motels are normally economical and they
provide comfortable bedrooms that motorists prefer to stay on their way
for a night rest. Motels have facilities of proper motor garage to service a
car and a filling station to refill vehicles, parking area for motor vehicles
etc. They also have road maps, dormitory for drivers. These days Motels
also provide various indoor and outdoor facilities like Video parlor,
Billiards, Table tennis, Cyber café, Library etc.
5. RESORT HOTELS: A resort located in the tourist interest places like hills,
forests, beaches, on an island, or in some other exotic location away from
crowded residential areas. The recreational facilities and breathtaking
scenery typical of most resorts. Most resort hotels provide extensive food
and beverage, valet and room services, sightseeing to vacationers. Many
resorts also provide special activities, indoor and outdoor games for guests
such as dancing, golf, tennis, horse riding, nature hikes, skiing and
swimming, health club, steam sauna bath, spas etc. A more leisurely,
relaxed atmosphere distinguishes most resort hotels from other types of
hotels.
6. ROTELS: The hotels that rotate on wheels are called rotels. It is also called
motel on wheels. Best example of rotel in India is Palace on wheels. It is a
luxurious train, fully air-conditioned, well-furnished with attached
restaurant and bar. The fare is inclusive of train ticket, food, alcoholic
beverages and sightseeing. The train starts from Delhi and covers the
tourist interest places of Rajasthan and Uttar Pradesh including Taj Mahal,
Agra, Mathura. In Japan Rotels are parked in the parking slot in the late
evening and during day the rotel is towed away.
7. FLOATELS: The hotels that float on water are called floatels. The best
examples of floatels in India are Houseboats in Kashmir Dal Lake. These are
luxurious suites consisting of drawing room, dining room, bedroom, sitting
room, balcony, kitchen, bathroom etc. These days’ luxury ships are
becoming popular for travelling. The guests are offered cabins to stay.
These float on seawater and these have all facilities of five star hotels.
8. BOATELS: These are luxury boats/yachts, which can ferry people from one
place to another. The best example of yachts are in Mediterranean or
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Caribbean, they can ferry guest through canal-based narrow boat or Broad-
based cabin cruiser.
3.2.3 By Ownership
The Hotels can also be classified on the basis of ownership.
1. TIME SHARE: This is a new concept in India but is picking up very fast. This
is also known as ‘Vacation Ownership’ or ‘Holiday Ownership’ concept.
These properties are in resort areas like hills, beaches, forests etc. Time-
share involves individuals who purchase the ownership of accommodation
for a specific week or weeks. The price of the property will depend on the
week one tends to buy. The guest can choose a peak season, semi peak
season or a lean season.
2. The owner pays a fixed price for certain number of years say 20 to 30 years
and has a right to stay at the hotel during rented week. The guest is also
required to pay an annual contribution towards the maintenance of
apartment and public areas, electricity, gas, water, safety, insurance etc.
The owner can also rent out the unit through management. The owner can
also exchange their resort with any other resort either directly owned by
the company or through contract signed with any other
company/management by paying a nominal fee. Best examples of
Timeshare Hotels in India are Mahindra Holidays, Country Club Holidays,
Sterling Holiday Resorts, etc.
3. CONDOMINIUM HOTELS: These are quite similar to Time-share. These
units are developed on joint ownership basis. Each owner purchases and
has full right of an unit he has purchased and shares the cost common to
the complex, such as taxes, insurance, maintenance and upkeep of public
areas including swimming pool, health club, parking, security, air
conditioning, heating, cable, broad band etc. Each owner can occupy or sell
his unit independently but is required to follow the rules and regulations
laid by the management.
4. In some cases the management can help the owner in renting out the
property. They take the full responsibility of the owner’s unit’s safety and
also pay to the owner a major portion of the rent earned from renting out.
The management earns a major portion by renting out conference hall and
from catering. Usually the management requests the owner to rent out in
case of major conferences.
5. CHAIN HOTELS: A chain is usually classified as operating under a
management contract or as a franchise or referral group. Chains usually
make certain rules regarding standards, rules, policies, procedures of
affiliation etc. In general, the more centralized the organization the
stronger the control over the individual property. Some chains own
affiliated properties, but many do not. Some chains have strong control
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over the architecture, management and standards of affiliated properties.
Other chains only concentrate on advertising, marketing, purchasing.
6. INDEPENDENT HOTELS: Independent hotels do not have ownership or
management affiliation with other properties. They have no relationship to
other hotels regarding policies, procedures, financial obligations,
management, accounting etc. These may be registered as sole proprietor-
ship or a private limited company. The owner may decide the standard,
type of clientele, the tariff etc. He may tie up with travel agencies to sell his
property against commission.
7. MANAGEMENT CONTRACT: Management companies are organizations
that operate properties owned by others. Individual persons, partnerships
or private limited companies may own those other hotels. The individual
hotel, under construction, may contract with a professional hotel
management company to operate the proposed property. These contracts
are normally on a long-term basis. Some management companies, when
feel that they must have a hotel in a particular location then they approach
prospective individuals to build a hotel and operate under their
managements contract.
8. The management contract can even be signed before the construction
starts. After paying the management fees, operating expenses, the owners
keep the balance cash for paying their debts, taxes etc. and the balance is
their net profit. The Management companies only take over the
management of the company, whereas the franchising companies provide
the financial assistance, advertising, central reservation facilities,
marketing etc.
9. FRANCHISE: Franchise is a system in which the franchise owner grants
another the right or privilege to merchandise a product or service for a
specified return. Franchise Agreement is an agreement under which the
owner operates as a member of the chain, utilizing the brand image, name,
goodwill and obtaining for a certain fee some services of marketing and
operating nature support from resources of a large organization,
advertising, sales promotion, technical and financial help etc. The best-
known franchising companies are Holiday Inn, Choice International,
Quality Hotels & Inns etc.
10. REFERRAL GROUPS: referral Groups consists of independent hotels, which
have grouped together for some common purpose. Though the properties
in the referral group may be different from each other but there is sufficient
consistency in the quality of service to satisfy guest expectations. The
member hotels recommend guests to other member hotels. Best Western
International, one of the largest hotel chains is the best example of referral
groups. The referral groups also extend benefit of more extensive
reservation and expanded advertising through pooled resources.
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3.3 Hotel Industry in India
3.3.1 Background
Hospitality in India is a complex sector. There are several types of options
available for a visitor for accommodation.
In religious places there is large number of Dharmshalas (Religious type
Guest House) that offers cheap accommodation with minimal pricing. The
standards are typically very low, but are improving.
Near transportation hubs you have budget hotels, which provide cheap
accommodation to traders and small businessmen.
In tourist places, there are large numbers of small facilities, which are
usually organized by co-operatives that control the pricing strategies.
Indian weddings are always a family affair, where large numbers of people
gather at a place; and these weddings are a big driver for hospitality.
3.3.2 Present Scenario of Hotel Industry in India
The Indian hospitality industry has emerged as one of the key industries driving
growth of the services sector in India. The fortunes of the hospitality industry
have always been linked to the prospects of the tourism industry and tourism
is the foremost demand driver of the industry. The Indian hospitality industry
has recorded healthy growth fueled by robust inflow of foreign tourists as well
as increased tourist movement within the country and it has become one of the
leading players in the global industry.
3.3.3 Trends in the Industry
The Indian hotel industry is highly fragmented with a large number of small
and unorganized players accounting for a lion's share. The major players in the
organized segment include Indian Hotels Company Ltd, Hotel Leela Venture
Ltd, EIH Ltd, ITC Hotels and ITDC. However, the times are changing, and there
are some clear trends with regard to Hotel Industry.
1. Budget Hotels / No frills Hotels are emerging as the next trigger for
development. Examples of Budget Hotels are Ginger, Lemon Tree, Red Fox
Hotels, etc. These Hotels offer smart basic services at an affordable price.
2. Apps for Web and Mobile Based Booking: As with all other sectors the
online and mobile based booking is emerging in Hotels also. There are
multiple aggregators who may be useful in providing booking to a hotel
operator- such as Make My Trip, Yatra, Cleartrip, Goibibo, Ixigo, OYO
Rooms etc. Many of these sites also make bulk deal with the hotel to take
or pay bulk of the rooms to get discounted pricing which they offer to the
customers, in an effort to strengthen the brand loyalty from the customers.
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3. Aggregators: There are other sites that compare the results from all these
sites to provide cheapest booking options to the customers- these are sites
like Trivago, etc. Google has emerged as the main search engine for any
need of the customer; also provides booking options. The Hotels focusing
on the middle class travelers may gain by providing booking based on these
platforms.
3.4 Hotel Industry in Gujarat
The Tourism Infrastructure in the state is on a developing mode. It is a very
recent trend that the Tourists have started visiting lesser-known destinations
in Gujarat; and presumably, a principle reason for this growth is the sustained
marketing by Tourism Department through the ‘Khushboo Gujarat Ki’
campaign and the Vibrant Gujarat summits, which brings lot of international
guests to Gujarat. According to a recent study by an apex industry body,
Associated Chambers of Commerce and Industry of India (Assocham); the state
"has emerged on top with a lion's share of about 29 per cent amid 20 major
states attracting combined investments worth over Rs one lakh crore in the
sector as of financial year 2012-13"1. Of the over Rs 1 lakh crore that India's
tourism and hotel sector attracted in 2012-13, Gujarat alone fetched
outstanding investments worth over Rs 34,800 crore.
3.4.1 Challenges faced by Hotel Industry in Gujarat
One of the principle issues with the Hotel Industry in Gujarat is that of
Manpower. The skilled Manpower for manning the hotels is rare; and the
culture of customer service has not been imbibed yet.
Further, compared to other states, Gujarat is at a disadvantageous position
because of prohibition of liquor in the state. The small tourism centers like
Mount Abu, Diu and Daman are the thriving because of this reason.
Almost one third of the trips are social trips; where the accommodation is
at the place of relatives, friends, etc. Further, a large population of Gujarat
is following one sect or the other; and when they travel, the
accommodation is usually at the special facilities, which is often run on
non-commercial basis. For example, the Swaminarayan Sect and Jainism
have temples all around Gujarat; and usually they have lodging and
boarding facilities where the guests are entertained.
1 ‘India Tourism Industry: The way forward’ by Assocham
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3.5 Hotel Industry Market Analysis in Saputara
The Government of Gujarat’s tourism
promotion activities like Monsoon Festival
are highly successful; and in recent times
the middle class population of Gujarat have
started exploring Saputara. The Hotel
Industry in Saputara is also on a rise.
3.5.1 Hospitality Demand Drivers
The hospitality demand of Saputara can be attributed to the following:
Tourists visiting Nashik and Shirdi prefer to have a night-stay at Saputara
on the way, especially if they are passing through at evening time.
Saputara is also emerging as an attractive destination-wedding site in
South Gujarat, especially with the affluent class of Surat.
The Monsoon festival at Saputara is drawing crowds to Saputara
For people from Nashik, Surat, Mumbai etc, Saputara is an exciting
weekend getaway, which is accessible and affordable at once.
Recently, many of the corporates have started conducting the Conferences
and Seminars at Saputara.
3.5.2 Existing Supply
A site visit to the hotels in the Hill Station revealed that there are about 800
rooms available with major accommodation service providers. There could be
other corporate or other group specific facilities available, which were difficult
to cover in the survey because of their relative obscure information. Details of
the same are provide below:
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Details of major Hotels at Saputara:
Sr.
No.
Name of the
Facility
Number
of Rooms
Capacity (No of
Persons in a
room)
AC / Non-
AC
Tariff Occupancy
1 Hotel Aakar Lords
Inn
60 2 AC 6000-7000 (All
meal Package)
30-40% in Off Season
2 Shilpi Hill resort 7 2 Non-AC 1800 45%
72 2 AC 4560 45%
3 Hotel lake view 55 2 AC 4800 10 Rooms in Weekdays, Full in
Weekends
4 Hotel purohit 32 2 Non-AC 1500 in season,
800 in non-
season
1-2 Rooms in weekdays. 12-15 rooms
max in weekends
5 Star Holiday Home 2 2 AC 1500 3 Rooms blocked for bank of India
6 2 Non-AC 1200
6 Hotel Vaishali 10 2 AC 1200 (off
season)
18 2 Non-AC 800 (off season)
7 Hotel Hill Top 24 2 Non-AC 400 1-2 rooms in weekdays, full in
weekend 8 4 Non-AC 500
6 5 Non-AC 600
8 Jain Dharmshala 13 4 AC 1500
14 4 Non-AC 1000
2 40 Dormitory 5000
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Sr.
No.
Name of the
Facility
Number
of Rooms
Capacity (No of
Persons in a
room)
AC / Non-
AC
Tariff Occupancy
27 4 Non-AC 500
9 Sid Archie Hotel 18 2 AC 1600 (off)- 3000
(peak)
Rarely gets full
12 2 Non AC 1200 (off)- 2500
(peak)
10 Hill View Hotel 11 2 AC 1500 (off)-
3500-5000
(peak)
15 2 Non-AC 1000 (off)-
2000-2500
(peak)
11 Hotel Gokul 21 2 Non-AC 500
12 White Feather
Toran Resort
46 2 AC -not decided yet New property
13 Hotel Sejal Inn 29 2 AC 4000 –w/o food
5300- with food
30-40% in weekdays, full in weekends
14 Hotel Amantran 8 4 AC 1000
6 4 Non-AC 800
2 15 Non-AC 100/Person Full in Weekends & Diwali
15 Hotel Patang
Lords
43 2 AC 5000
(weekdays)
50%
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Sr.
No.
Name of the
Facility
Number
of Rooms
Capacity (No of
Persons in a
room)
AC / Non-
AC
Tariff Occupancy
6-7000
(weekends)
16 Vaity Resort 10 2 AC 4090/4990 5-7 rooms in Weekdays; Full in
Weekends 30 2 Non-AC 3590/4490
17 Hotel Chitrakoot 28 2 AC 4000
20 2 Non-AC 3600 900 Rs for child
18 Hotel Hare
Krishna
10 2 Non-AC
19 Hotel Anando 14 2 AC 3600 5-10 rooms in weekdays, full in
Weekend 8 2 Non-AC 3200
20
Hotel Shavshanti
25 2 AC 2700 + tax (off)
3500 + tax
(season)
70-80%
Full on Saturday
17 2 Non-AC 1500 + tax (off)
2000 + tax
(season)
21 Hotel Patang
Lords
- - - - Under Construction
22 Hotel Toran 12 2 AC 900/1500
12 2 Non-AC 1300/1700
C type 4 3 Non-AC 1500/1800
Surya Cottage 2 3 AC 1800/2500
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Sr.
No.
Name of the
Facility
Number
of Rooms
Capacity (No of
Persons in a
room)
AC / Non-
AC
Tariff Occupancy
Surya Cottage 2 2 AC 1300/1700
Sahyadri Cottage
DLX
1 2 900/1000
Sahyadri Cottage
ORD
8 2 800/900
Executive Deluxe
Room
21 2 AC 2500
Family Deluxe
Room
3 2 AC 4000
Suit Room 2 2 AC 5500
Conference Room 8 Hr. 5000 per day
Extra bed 750
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4 SITE ANALYSIS
4.1 Site Location and Description
The site is located on the north side of Saputara, overlooking the valley. The site
would be visible from the road when one approaches Saputara from Gujarat
side.
The total area of the site is approximately 12,000 Sq. Mt. There are existing
cottages of Gujarat Tourism on the site; and some of the dilapidated structures
are also present on the site. The site has approach road on the southern side,
and the site is at a lower level than the Road.
4.2 Land Ownership
The land is within ownership and possession of Tourism Corporation of Gujarat
Limited.
4.3 Site Topography and Vegetation
Approximate gradient is 30 degrees. The altitude of the site ranges from 890
meters at Road level to 872 meters at valley level. Beyond the site, the slope of
the valley is very steep (43-47%).
Proposed Site
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4.4 Site Access and Connectivity
The table below describes the site surroundings.
Site Surroundings
North The site overlooks the valley on North side, and the mountain slope
beyond the site is about 45%, which goes up to the Road below (Main
Road leading to Saputara).
East On the Northeastern side, there is a guesthouse belonging to GNFC.
South The approach road to the site is on the south side; and beyond the
road on the top of mountain is the Toran Hotel and Circuit House.
West On the Western side, there do exist D type cottages of Gujarat
Tourism.
The site offers beautiful view of the valley; and it also has a number of big trees
on the periphery.
4.5 Proximity to Key Areas
The site is hardly within 500 meters from the Saputara circle on the entry point
to Saputara. The other Toran facilities are also in the vicinity.
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4.6 Existing Infrastructure
The bidder will be required to apply for required capacity/ load of water /
power connection based on the proposed project. The site being within city
there is no apparent difficulty in obtaining water and power connections. The
bidders are free to demolished the existing buildings within site, if the need
arise, before commencement of any kind of development on site.
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5 DEMAND ASSESSMENT AND PROJECT CONFIGURATION
In this chapter we shall compare the demand for tourism facilities versus the
supply at present in Saputara; and based on the understanding of the place, site
and overall tourism scenario we shall propose the project configuration for the
proposed site.
5.1 Tourist Arrival
As we have seen in the earlier section, about 5.4 lakhs tourists visit Saputara
every year. In absence of any seasonal data of tourist arrival at the location, the
yearly data has been interpolated based on the number of visitors to Toran
property (Gujarat tourism’s property) at Saputara for the last year. We can
assume that the flow of tourists to Saputara follows the same pattern.
As it can be seen from the above chart, the peak tourist season is month of May,
followed by month of October. The fact could be easily explained since most of
the Tourists are domestic tourists. In the month of May, the schools are closed
because of summer vacation; and around Diwali the schools are closed for
Diwali vacation.
Further, the peak tourist flow is about 12%. Hence, a 15% of the annual tourist
arrival can be taken as the total demand for rooms. Most of the Domestic
Tourists in this region choose to travel with family; i.e. the group size is usually
3 to 4. Hence to arrive at number of rooms required, the peak tourist’s number
can be divided by 3; and then by 8 (weekend days) to arrive at demand for
number of rooms.
April2014
May2014
June2014
July2014
August
2014
Septemb
er2014
October
2014
Novembe
r2014
Decembe
r2014
January
2015
February2015
March
2015
No of Tourists 1632 2670 2374 1878 1706 1654 2182 2027 1679 1601 1245 1249
Percentage 7.45%12.19 10.848.58%7.79%7.55%9.96%9.26%7.67%7.31%5.69%5.70%
0
500
1000
1500
2000
2500
3000
Month Wise Tourist Arrival at Toran saputara
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So, in case of Saputara, since 4.5 lac tourists visit every year, and 15% is the
peak traffic, 67,500 people in a month may be the peak demand. Divide it by
group size of 3; then we get 22500 rooms in a month. In the peak season too, if
we assume that 80% of the tourists visit in weekend (Saturday and Sunday);
and 20% during weekdays; then we get 18000 rooms in weekend. Divide this
by 8 to get the demand for rooms in a weekend day. Hence, the total demand is
2,250 rooms.
5.2 Demand- Supply Scenario
Based on the earlier sections, we know that Saputara has about 800 rooms and
the peak demand may be 2250 rooms. So, the demand is higher than the supply.
However, the feedback from the Hotel Operators is that the demand is only for
the weekend only through-out the year; while during the vacations, it is for the
entire month; and that the efforts should be made to make it a year round
tourist destination. To make this happen, there would be additional
components required which can add to the kind of activities that the tourists
can undertake- activities such as MICE; which can provide occupancy during
weekdays also.
5.3 Recommended Project Components
Based on the visit to the site, survey of the hotels in the area, and from the
interaction with locals, it is understood that the following issues are important
from the Tourism perspective for Saputara:
There is very low demand during weekdays; and MICE tourism needs to be
promoted at Saputara
Adventure sites needs to be increased - such as trekking sites, bungee
jumping, etc.
The site available has a very unique view and half of the site is already being
used as tourist cottages. Further, the patch of land available is not very large;
and it is on the edge of the valley; hence it would not be possible to develop a
large facility here. However, at the same time, the cottages that exist are
outdated and they are not fully utilizing the potential of the site.
It is therefore, proposed that the site may be re-developed as a high end Tourist
resort/ hotel with 5 star facilities.
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5.4 Site Development Options
Since this is a hilly and undulating site, there could be different ways of
developing the site:
Option 1: Cut & Fill to make a Flat
site
This option would involve making
the site flat by way of retaining wall
and cutting and filling; and
constructing a Compact Building.
This option has higher costs of
cutting & filling and creating
retaining walls, and would alter the
landscape.
Option 2: Building on Stilts
This option would entail raising the
Building on Stilts, leaving the
ground below as it is, with only
little landscaping to make the
sitting areas beneath the Building.
This option is cost effective and
doesn’t disturb the landscape as
well. The maintenance of Building
is also easier because the
possibility of moisture and pests creeping into Building also reduces
considerably.
Options 3: Dispersed Cottages
This option would involve leave the site as it is with Dispersed Building
Structures with connecting corridors. Currently, the structures are in the
similar fashion, but the kind of building design and finishes are outdated. The
number of lettable rooms is also very less in this type of design. It is advisable
that modern structures with very high rentals are erected, so as to serve the
premium customers. The cottages should also be connected through corridors
so as to protect from the very high rainfall that Saputara witnesses.
The kind of revenue would be different based on the type of design selected, the
furnishing of Rooms, and activities provided for the Guests.
Option 1: Cut & Fill to get a Flat site
Option 2: Build on Stilts
Option 3: Dispersed Cottages
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5.5 Area Programme
Site Area 12,000 Sq. Mt
FSI 1.0
Maximum Ground Coverage (@40%) 4800 Sq. Mt
Number of Floors 2.5 (Stilts + 2 Floors, with
reception and some activities on
Ground Floor)
Total Built-up Area 4800 Sq. Mt
Area under the rooms for guests
(about 50%)
2400 Sq. Mt
Approximate area under one room 38 Sq. Mt
Approximate number of rooms 60
Parking Space (@28 Sq. Mt/ECS for
100 ECS)
2300 Sq. Mt
5.6 Activities other than Rooms
The following activities would be added to the Built-up Area apart from the
Rooms:
i. Multi Cuisine Restaurant (accessible from outside also)
ii. Lounge
iii. Reception
iv. Kitchen
v. Business Centre (accessible from outside also)
vi. Gym
vii. Staff Rooms
viii. Rest rooms for staff (separate for male & female with bunk beds)
ix. Travel desk
x. Laundry Room
xi. Stores
xii. Left Luggage Room
xiii. Reception
xiv. Space for Room Service Trolleys
xv. Mechanic Room
xvi. Linen Room
xvii. Book Shop (accessible from outside also)
Note:
The areas for Guests and Staff would be separately marked.
The Building would be a double storied structure; while the space beneath
(stilt area) would be used as sitting area, landscaping and Reception and
Lounge.
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The terrace would be used to fit the solar water heaters, solar panels for
electricity back up, for drying the washed linen & clothes.
5.7 Mandatory Development Obligations
1. 5 -Star category hotel / resort
2. Minimum 60 keys / rooms & 2 suites
3. Reception, Multi-cuisine restaurant cum coffee shop
4. Provision of car parking to be made as per TCGL/ Local Building Bye-Laws
5. All Other common / support / required facilities such as internal roads,
street lights, water harvesting system, solid waste disposal, storm water
drainage system, main sewer line, water supply including storage tank(s),
transformer, electrical substation, green areas etc. as per applicable
Building Bye-laws/ any other relevant guidelines issued by GoI/ GoG
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6 FINANCIAL ANALYSIS
6.1 Introduction
It is proposed that the development may be undertaken on PPP mode. Hence,
in this section we will consider all the costs and revenues and their phasing
from the Private Developer’s perspective. These inputs will be utilized for the
preparation of Financial Model to understand the financial viability of the
project.
6.2 Capital Cost Estimates
Entire Lifecycle cost shall be estimated so as to simulate the correct picture of
the project’s financial viability.
6.2.1 Offsite Infrastructure requirement
Road Development
The access road to the site is operational; hence there is no requirement for
road up-gradation.
Water Supply Connection
The bidder will be required to apply for water connection of required capacity
based on the proposed project. The site being within city there is no apparent
difficulty in obtaining water connection.
Power Connection
The bidder will be required to apply for power connection of required capacity
based on the proposed project. The site being within city there is no apparent
difficulty in obtaining water connection. However, to ensure reliability of power
supply a generator would be required to be installed at the site, during and after
construction. The capacity of the generator has been worked out in the
Machinery and Equipment section.
6.2.2 Site Preparation & Development
Site Preparation
The site is sloping down from the road level towards the valley in the north.
The average slope of the site is about 30-35 degrees up to 45-50 mt from
the road line. Thereafter the slope is about 45-50 degrees.
Firstly, the access to the site would need to be leveled. At present also, the
access to the site is about 2-3 meters lower than the Road. The Access Road
and Open Parking would be accommodated at this level.
The side of the Road would need to be strengthened by a retaining wall,
about 200 meters in length and 3 meter in height. Average thickness of the
walls may be taken as 0.5 Mt.
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The CPWD schedule of rates for retaining wall shuttering is Rs. 335/Sq. Mt;
and that for concrete in retaining wall is Rs. 7531/Cu Mt. with a 5% per
annum escalation, these costs would become 370 Rs/Sq. Mt and 8300
Rs./Cu Mt. If the average width is taken as 0.5 Mt, then the total volume of
retaining wall would be 300 Cu Mt; and shuttering required would be 200
Sq. Mt.
Removal of Existing Structures
There are existing buildings on the site, some of which are lying in a
dilapidated condition; and some are in operational condition. The bidders
are free to demolished the existing buildings within site, if the need arise,
before commencement of any kind of development on site.
From the reconnaissance survey and the Google imagery, we know that the
approximate built-up area of the dilapidated structures is about 500 Sq. Mt.
The Cost of demolition and removal of debris for RCC in CPWD manual
2013 rates is Rs. 1176.40/Cu M and that for brick masonry in cement
mortar is Rs. 681/Cu M. Hence for RCC slab and Cement Mortar brick wall,
the rate may be taken as Rs. 900/ Cu M. Further, since the slab, walls, and
plinth also needs to be removed, the volume may be taken as 1.5 Cu M for
every 1 Sq. M area.
Landscaping
The area beneath and around the building would need to be landscaped. The
cost of landscaping is assumed to be about Rs. 1000/Sq. Mt. This would be for
about 6000 Sq. Mt of area.
6.2.3 Building Construction
The Building proposed is about 4800 Sq. Mt of structure with stilts. The cost of
building structure has been taken as Rs. 2500/Sq. Ft. (Rs. 26900/Sq. Mt)
6.2.4 Furniture & Furnishing
The basic furniture and furnishing cost has been taken as Rs. 2000/Sq. Ft (Rs.
21520/Sq. Mt) for overall building area- 4800 Sq. Mt.
6.2.5 Machinery & Equipment
The indicative type of equipment and their estimated costing is provided in this
section.
The Cost of Electrical Works is assumed to be 12.5% of the Building Cost.
Fire Fighting Costs is assumed to be Rs. 1000/Sq. Mt
Plumbing Cost is assumed to be 4% of the Building Cost.
The HVAC costs area assumed to be Rs. 8000/Sq. Mt
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The Costs of External Service Connection is assumed to be 5% of the
Building Construction Cost.
The CCTV cost is assumed to be Rs. 300/Sq. Mt for the public areas of the
Hotel; which would be roughly 2000 Sq. Mt
The cost of Telecom and Internet is assumed to be 1% of the Building Cost
One 1010 KVA Diesel generator, price Rs. 1.5 Crore
6.3 Operational Cost Estimation
Manpower Cost
Front Office Staff- 6 (3 shifts, 2 persons per shift) @25000 per month
Manager-1 @100000 per month
Accountant-1 @40000 per month
Cook and his support staff- 10 @20000 per month each
Service Staff- 30 (1 for every two rooms) @10000 per month each
Supervisors- 25 @20000 per month each
Security Guards- 3 @10000 per month each
Maintenance Personnel- 5 @15000 per month each
Electricity Cost
The power consumption is assumed to be 100 KwH per occupied room per day.
Diesel Cost
The Genset would consume about 2.2 Liter Diesel per hour when it runs on 50%
load.
6.4 Assumptions for Financial Analysis
The following are the assumptions taken in the Financial Analysis:
6.4.1 Construction Period
It is assumed that the construction would be completed in two years.
6.4.2 Concession / Lease Period
The concession period shall be 35 years.
6.4.3 Phasing of Capital Cost
60% of the capital cost shall be consumed in the first year, remaining 40% in
second year.
6.4.4 O & M Cost Assumptions
Operational costs are estimated in section 6.3. The maintenance cost is taken as
1% of the capital cost to be incurred every year.
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6.4.5 Financing & Taxation Assumptions
The Interest rate is assumed as 12% per annum.
The corporate income tax would be at 33% and the MAT is assumed to be 20%.
6.4.6 Sources of Finance
It is assumed that 30% of the expenses would be from the developer’s own
source; while the rest 70% could be taken as a bank loan. In case the project is
not viable, up to 20% of the project cost can be taken as Viability Gap Funding.
6.4.7 Project Revenue Assumptions
Number of Visitor to Saputara Annually: 4,50,000
Monthly average number of visitors: ~37500
80% Tourists visit on weekends, 20% during weekdays
Visitors on Weekends: 30000
Visitors on Weekdays: 7500
Number of visitors on a weekend day: 3750
Number of visitors on a weekday: 375
If the average group size were 3, then number of groups on a weekend day
would be 1250; while total number of Rooms in Saputara is about 800. Hence,
there is a strong likely hood, that the Hotel would be fully occupied during
weekends (100%)
During the weekdays, the occupancy would be 10-12%
Average Occupancy works out to be around 45%
Multi Cuisine Restaurant & Bar
The revenue from Restaurant and bar is assumed to be 5% of revenue from the
Hotel.
Conference Room
The revenue from the Conference Room is assumed to be 5% of revenue from
the Hotel.
6.5 Results of Financial Analysis
Based on the above-mentioned assumptions, the Financial Model was
prepared; and the Viability Analysis was carried out.
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The sensitivity analysis was done using concession period and annual premium
as variable components.
The most recommended option emerged from sensitivity analysis is as follows:
Summary Base Construction Cost (Rs. Lakh) 3662.48
Net Construction Cost (Rs. Lakh) 3662.48
Pre-operative Expenses (Rs. Lakh) 234.01
Interest During Construction (Rs. Lakh) 69.85
Landed Project Cost 3965.85
Annual Premium (Rs. Lakh) 50.00
Debt (Rs. Lakh) 1940.31
Equity (Rs. Lakh) 1293.54
Construction Period (Years) 2
Concession Period 35
Room Rent at 2016 prices (Rupees per night) 7500
Revenue from Conference Hall (% of room rent revenue) 5%
Revenue from Multi-cuisine Restaurant (% of room rent revenue) 5%
Project IRR 13.71%
Equity IRR 14.38%
Average DSCR 1.12
6.6 Recommendations
It is recommended that the Project may be taken up on PPP mode; while
keeping Concession Period as 35 years.
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Annexure: Financial Analysis
Space and Cost Estimates for different components
S. No
Component Units
(Sq Mt) Per Unit Cost
(Rs.) Total Cost Remarks
1 Removal of Structures 500 1,350 6,75,000 900 Rs./Sq Mt; 1.5 Cu Mt in 1 Sq Mt area
2 Retaining Walls- Shuttering 200 8,300 16,60,000
3 Retaining Walls- Concrete 300 370 1,11,000
4 Landscaping 6,000 1,000 60,00,000 100 Rs./Sq Ft
6 Building Construction 4,800 32,280 15,49,44,000 Base for the other % based costs
7 Furniture & Furnishing 4,800 21,520 10,32,96,000
Total Building Cost 26,66,86,000
Electrical Works 12.50% 15,49,44,000 1,93,68,000 12.5% of Building Cost
Fire Fighting Works 4,800 1,000 48,00,000 Rs. 1000/Sq Mt
Plumbing Costs 4% 15,49,44,000 61,97,760 4% of Building Cost
HVAC Costs 4,800 8,000 3,84,00,000 Rs. 8000/Sq Mt
External Service Connections 5% 15,49,44,000 77,47,200 5% of Building Cost
CCTV Costs 2,000 300 6,00,000 Rs. 300/Sq Mt
Telecom & Internet 1% 15,49,44,000 15,49,440 1% of Building Cost
1010 KVA Diesel Generator 1 1,50,00,000 1,50,00,000 Lump Sum
X ray scanner 1 13,00,000 13,00,000 Lump Sum based on quotation
Gym Equipments 1 5,00,000 5,00,000
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S. No
Component Units
(Sq Mt) Per Unit Cost
(Rs.) Total Cost Remarks
TV sets, Set top boxes, Computer, printer, Refrigerator, Coffee Maker, Iron, hair dryer, hand dryer, air fresheners, lighting, Telephone systems, etc. 1 41,00,000 41,00,000
60 Rooms (@50k each), 4 Toilets (@25k each), 10 Computers@70 k each, 3 printers/scanners/ high performance machine @total of 3 lakhs
Total for Machinery & Equipments 9,95,62,400
TOTAL 36,62,48,400
Monthly expenditure
S. No Source of expenditure
(per month) No. of units Charge per unit Total Remarks
1 Front Office Staff 6 25,000 1,50,000
2 Manager 1 1,00,000 1,00,000
3 Accountant 1 40,000 40,000
4 Kitchen Staff 10 20,000 2,00,000
5 Service Staff 30 10,000 3,00,000
6 Security Guards 3 10,000 30,000
7 Maintenance Personnel 5 15,000 75,000
8 Supervisors 15 25,000 3,75,000
9 Power Cost (KwH) 81000 5 4,05,000 100 KwH/Occupied Room/day
10 Diesel Cost 4276.8 50 2,13,840
2.2 liter/Hour, 10% of the
Operating time
11 Maintenance expenditure 1% 15,49,44,000 1,54,944 1% of Building Cost per annum
Net Expenditure 20,43,784