INDIA

D gest 2008
 CONTENTS

India 1

Bangalore 11

Chennai 18

Delhi 25

Hyderabad 34

Mumbai 41

Pune 51

Jones
Jones Lang
Lang LaSalle
LaSalle Hotels
Hotels
JonesJones
LangLang LaSalle
LaSalle Hotels,
Hotels, the first
the first and and leading
leading global
global hotelhotel investment
investment services
services firm,firm,in 2007
in 2007 in addition
in addition to bespoke
to bespoke clientclient research.
research. JonesJones
LangLang LaSalle
LaSalle Hotels’
Hotels’ services
services spanspan
is uniquely
is uniquely positioned
positioned to provide
to provide bothboth the depth
the depth and and breadth
breadth of advice
of advice required
required by hotelthe hospitality
by hotel the hospitality spectrum;
spectrum; fromfrom luxury
luxury single
single assets
assets and and
largelarge portfolios
portfolios to select
to select service
service
investors
investors and and
hotelhotel companies,
companies, through
through a robust
a robust and and integrated
integrated locallocal network.
network. In 2007,and and
In 2007, budget
budget hotels,
hotels, resorts
resorts and and
pubs. pubs.
TheirTheir services
services include
include investment
investment sales,
sales, mergers
mergers
JonesJones
LangLang LaSalle
LaSalle Hotels
Hotels provided
provided salesale
and and purchase
purchase adviceadvice on 259
on 259 hotelhotel transactionsand and
transactions acquisitions,
acquisitions, capital
capital raising,
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valuation and and appraisal,
appraisal, assetasset management,
management, strategic
strategic
globally;
globally; representing
representing a combined
a combined valuevalue of US$13.9
of USD13.9 billion,
billion, a total
a total of 54,763
of 54,763 hotelhotel
rooms roomsplanning,
planning, operator
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selection, management
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contract negotiation,
negotiation, consulting,
consulting, industry
industry
in 84incities.
84 cities. In addition
In addition advisory
advisory and and valuation
valuation services
services werewere provided
provided on 660
on 660 assignmentsresearch
assignments research
and and project
project development
development services.
services. JonesJones
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LaSalle Hotels’
Hotels’ clients
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globally
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(NYSE: JLL).JLL).
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hotelhotel specialists,
specialists, operating
operating fromfrom 27 offices
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16 countries.The The
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www.joneslanglasallehotels.com
supported
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global research
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whichwhich produced
produced overover 45 publications
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 Digest 2008: India

INDIA

MARKET OUTLOOK India has become a favoured destination for global

investors and multinational corporations ever since it
The outlook for India’s tourism and hotel industry is opened its economy in the early nineties. Although
upbeat. Key factors driving the tourism boom include sectors such as business processing, information
India’s sustained economic growth, strong foreign direct technology, telecommunications, and manufacturing,
investment inflows, increased air networks, the have prospered in recent years, India's economy
availability of cheaper air travel, a strong domestic remains largely driven by the agricultural sector.
market and aggressive marketing campaigns. Despite this, India's economy has performed well with
Challenges relating to inadequate tourism infrastructure the contribution from the services and manufacturing
still remain, but are not enough to dampen the bullish sectors growing by 9.4% in the fiscal year ending March
outlook for the Indian hotel market. 2007. Preliminary estimates by the government
according to the Union Budget 2008-2009 show a
Encouraged by this optimistic tourism outlook, many growth rate of 8.5% for the fiscal year ending March
developers, investors and international hotel management 2008. For the next financial year (FY), analysts expect
companies are jumping onto the India hotel bandwagon. real GDP to grow by 7.9%.
A number of the Indian real estate players view hotels
as a natural extension and synergy to their growing real While the Indian economy will be affected from
estate portfolios. The major cities that are the hub of moderation in global economic growth, any negative
economic and real estate development in India are: impact is expected to be minimal. Analysts also
Bangalore, Chennai, National Capital Region/Delhi anticipate some slowing in growth rates which reflect
(comprising the capital city Delhi and suburbs of Noida, an overheated economy such as that of China (PRC).
Gurgaon, Faridabad, Ghaziabad and Greater Noida),
Hyderabad, Kolkata, Mumbai and Pune.

Economic Snapshot - India

Indicator* 2005 2006 2007 2008F 2009F

Real GDP Growth (%) 9.2 9.4 8.5 7.9 7.4

Inward FDI (USD billion) 6.7 17.5 19.0 18.0 20.0
Inflation/CPI (%) 4.2 6.2 5.8 5.2 5.0
Prime Lending Rates (%) 10.8 11.2 13.0 11.3 10.7
Exchange Rates (INR Per USD) 44.1 45.3 41.3 40.0 39.0
Unemployment Rate (%) 8.1 7.6 7.2 6.8 6.4

* For fiscal year beginning April and ending March

F: Forecasts
Source: Actual - Central Statistical Organization, Forecasts - Economist Intelligence Unit (EIU), January 2008

1 Jones Lang LaSalle Hotels

 Digest 2008: India

TOURISM MARKET OVERVIEW round destination, with a focus on both generic and
niche areas. "Chasing the Monsoon" is the new
Key Trends and Demand Drivers theme for the west Asian market.

l India, which ranks after China (PRC) as the world's l The government has also introduced initiatives
second most populous country, has experienced to spur growth in the hospitality sector. Tax holidays
a tourism boom in recent years. Bolstered by a for two-, three- and four-star hotels established in
multi-faceted tourism product that ranges from 27 specified districts that have UNESCO World Heritage
world heritage sites to religious relics, spa/mountain Sites and convention centres with large seating
resorts and wildlife parks, India has much to offer capacities in the National Capital Territory of Delhi
leisure travellers. and in the adjacent urban areas of Faridabad,
Gurgaon, Ghaziabad or Gautam Budh Nagar, have
l The growing Indian economy will spur business been announced to foster development prior to the
travel. The strong performance of the corporate Commonwealth Games in 2010. In addition, there
sector and the growth in the economy has led to are proposals to improve the tourism infrastructure
an unprecedented surge in business travel. GDP that will lead to increased travel. These proposals
grew at a robust 9.4% in 2006-07 and is expected include constructing 33,000 kilometres of the National
to grow by another 8.5% in 2007-08. Furthermore, Highway in the Golden Quadrilateral, North-South
the industrial and services sectors have recorded and East-West Corridor areas, improving identified
double-digit growth rates. These undoubtedly ports to facilitate cruise tourism and evaluating
will continue to raise the level of business travel public-private partnerships to connect identified
in the country. circuits and destinations by rail.

l The liberalisation of the airline industry will promote l Medical tourism will also result in additional
increased travel by both international and domestic demand for hotel rooms. This sector has gained
travellers, further fuelling growth in the hotel sector. momentum in the past few years, given the cost
Open skies policies and direct international flights advantage and emergence of high quality
to the US and Europe have increased the country's healthcare services in India where a choice of
accessibility, raising international traveller flows. airlines, hotels, transportation, food and sightseeing
In addition, increased frequency of existing is offered along with medical treatment in the form
routes and the introduction of additional routes of packages. The country's medical tourism
by low cost carriers (LCC) such as Indigo, Spice industry is thriving, encouraged by the introduction
Air, Jet Lite and Go Air will enhance domestic of a medical visa. In addition, the Indian
travel flows. government has announced plans to promote
medical tourism with an investment of INR260
l Recognising the importance of the tourism billion for funding relevant infrastructure including
industry, the government has made large strides affordable hospitals and budget hotels for patients
in marketing India internationally. Building on and their relatives. Due to the lack of a "single
the success of the Incredible India campaign in window" clearance system, foreign investors have
previous years, the Ministry of Tourism has faced problems investing in this sector, and the
launched an integrated international media Indian government is looking at ways to improve
campaign to promote India as "must-see" year- the system.

2 Jones Lang LaSalle Hotels

 Digest 2008: India

International Visitor Arrivals l In tandem with the increase in foreign arrivals,

foreign exchange earnings soared by 34%
l India has set a tourism target of 10 million international over 2006 values to INR480 billion in 2007.
tourist arrivals by 2010, the year of the
Commonwealth Games in Delhi. l Leisure travel (96.6%) remains the primary
reason for travel to India, followed by business
l Preliminary statistics from the Ministry of Tourism (2.8%), according to statistics sourced to the
indicate that inbound tourist arrivals had already Ministry of Tourism. While we expect the overall
reached a 10-year high of approximately five trend to remain unchanged over the next few
million in 2007. This represents a 13% growth over years, the proportion of business travellers
the previous year and the fourth consecutive year could increase with the rise in foreign
of positive growth in inbound foreign travellers. investments to India.
Compared with the 2.4 million international arrivals
in 2002, the number of foreign visitors to India has
increased by an impressive 86%.

International Visitor Arrivals to India

6 30
25
5
20
Number of Visitors (million)

Annual Growth (%)

15
10
3
5
2 0
-5
1
-10
0 -15
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E

Number of Visitors (million) Annual Growth (%)

E: Estimates
Source: Ministry of Tourism, PATA (Pacific Asia Travel Association), Jones Lang LaSalle Hotels

Year Growth Over Historical

2007 2006 CAGR*
(1997-2007)

Total Number of International Visitor Arrivals 5.0m 13.0% 8.6%

* Compound Annual Growth Rate

Source: Ministry of Tourism, PATA, Jones Lang LaSalle Hotels

3 Jones Lang LaSalle Hotels

 Digest 2008: India

International Visitor Arrivals to India in 2005 - By Main Purpose of Visit*

Conference 0.2%

Education & Employment 0.4%

Business 2.8%
Tourism & Others 96.6%

* Updated official figures not available

Source: Ministry of TourismSource: Ministry of Tourism

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

4 Jones Lang LaSalle Hotels

 Digest 2008: India

Domestic Tourism strong economic indicators, expanded air networks

and the liberalisation of services.
l India's domestic tourism market is significant and
growing. According to the Ministry of Tourism, the l Pending the release of official data, this growth
number of domestic travellers has increased steadily is expected to have continued into 2006 with
from 140 million in 1996 to 391 million in 2005 (latest indicative statistics from the Ministry of Tourism
available statistics), a year-on-year increase of 7%. suggesting that it might have crossed the
The growth in domestic tourism is attributable to 460-million mark.
the increasingly affluent and growing population,

Domestic Tourism in India*

500 20
450
15
400
Number of Visitors (million)

350 10

Annual Growth (%)

300 5
250
0
200
150 -5
100
-10
50
0 -15
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006F

Number of Visitors (million) Annual Growth (%)

* Updated official figures not available
F: Forecasts
Source: Ministry of Tourism, Jones Lang LaSalle Hotels

Year Growth Over Historical

2005 2004 CAGR*
(1996-2005)

Total Number of Domestic Visitors** 390.5m 6.6% 12.1%

* Compound Annual Growth Rate

** Updated official figures not available
Source: Ministry of Tourism, Jones Lang LaSalle Hotels

6 Jones Lang LaSalle Hotels

 Digest 2008: India

HOTEL MARKET OVERVIEW growth in room rates and prompted the entry of new
players. To address the huge demand-supply
Existing Supply imbalance, we understand efforts will be directed
towards building 150,000 hotel rooms in the next
l Based on the facilities and services provided, the four years, in addition to the launch of a new "Bed
Ministry of Tourism approves and classifies hotels and Breakfast" scheme to meet the requirements.
in India into eight categories, namely five-star deluxe,
five-star, four-star, three-star, two-star, one-star, l The proposed known additions to supply are
heritage and classification-awaited hotels. expected to be rapidly absorbed as they come
on line over the next two to three years. After that
l As at the end of 2006, India had an estimated 1,169 we expect room rates to adjust to more realistic
approved hotels accounting for 75,787 rooms. The levels. Markets such as Bangalore - which is
majority of this supply was located in Delhi, Mumbai, generating one of the highest ADRs in India - are
Bangalore, Chennai and Hyderabad. expected to experience a substantial rate correction
by the end of the decade.
l Historically, the high land prices in many of the
key cities have resulted in hotels being developed Additions to Supply
in the upper tier categories, causing a scarcity
of supply in the lower categories. In its recent budget, l According to our research, the six major markets
the government has provided tax incentives to have approximately 28,000 new rooms planned
develop one-, two- and three-star hotels in and by 2011: Bangalore, Hyderabad and Pune will
around Delhi. be most significantly impacted as room supply
is forecast to increase almost 250% by 2011; in
Market Demand Delhi/NCR, the majority of supply is being
developed in Gurgaon and nearby Noida with
l Aggressive growth in revenue per available room almost 100% rooms is expected to be completed
(RevPAR) has been recorded in the three key by 2011; while Mumbai and Chennai are expected
Indian cities of Delhi/NCR, Mumbai and Bangalore to record growth rates of 35% and 55% respectively.
over the past five financial years. In FY2006-07,
the five-star deluxe and five-star hotel segment in l Chennai has established itself as a preferred
Delhi/NCR and Mumbai reported growth in average destination for the IT/ITeS (Information
room rates (ADR) of about 40% over the previous Technology/Information Technology enabled
year, while Bangalore reported almost 20% ADR services) industry. The major brands expected to
growth over the same period. In comparison, the enter in the market in 2009 such as Hilton, Hyatt
occupancy growth has been less aggressive and in and JW Marriot will raise the standard of
certain markets such as Bangalore, occupancies accommodation. Hyderabad has very few rooms
have stagnated and even declined. compared with Delhi and Mumbai. Most hotels are
now concentrated in the central business district
l Demand for rooms in India particularly in the key (CBD) and upcoming markets of IT/ITeS. The Taj
cities (e.g. Delhi/NCR, Mumbai and Bangalore) is Group’s hotels are expected to commence
exceeding supply. This has fuelled the aggressive operations in 2008.

7 Jones Lang LaSalle Hotels

 Digest 2008: India

l It is difficult to get accurate information on future l Credit Suisse, one of the world's top investment
developments in India, including hotels. There is banks, launched its domestic brokerage operations
an unusually long approval process which delays in India earlier this year and recently obtained its
projects and presents significant barriers to entry, Indian merchant banking licence. Credit Suisse's
particularly for foreigners. Land is very expensive real estate fund will acquire 10-15% in a hotel chain
everywhere and quality sites for hotels are even in a structured deal. This is Credit Suisse's second
harder to locate. In some cases, part of this delay investment in the real estate sector, the first being
is caused by the amalgamation of land which is its acquisition of 75% of a INR3-billion InfoTech park
time-consuming as it requires purchasing land from and five-star hotel project from Pune-based
different owners. developer, Vascon Engineers.

l The Orchid Group of Hotels is planning to invest

THE INVESTMENT MARKET over INR10 billion to set up seven five-star
properties in key centres across the country as it
l In November 2007 DLF Ltd. announced its equal mulls an international foray with properties in China
partnership with Amanresorts to enter into definitive (PRC) and South Africa. It is also planning to add
agreements to acquire a controlling interest in the nearly 2,000 rooms at seven locations across the
group. The entire transaction, when completed, country. The company has entered into management
is estimated to be valued at INR16 billion, with contracts for 10 hotels set to open acoss the country
an assumed debt of approximately INR6 billion. over the next two years.
In addition to expanding its resort locations,
Amanresorts is developing projects in key gateway l Milan-based Domina Hotel Group announced in
cities around the world, the first of which is scheduled November 2007 that it would develop 25 hotels
to open in New Delhi in 2008. through a joint venture and invest INR24 billion.
In India, its first hotel is already under construction
l US hospitality major Carlson is taking a 26% stake and will be marketed under the new brand Vedic
in a new venture with the Unitech group to introduce Domina Hotels & Resorts. Another four are
the Regent hospitality brand to India. The joint expected to be built within five years.
venture will develop a luxury hotel property
located at Greater Noida with an estimated l It was announced in December 2007 that Kamat
investment of INR4.5 billion. Hotels had bought a 60% stake in Concept
Hospitality for INR127 per share. The key hotels
l Domestic mid- to economy-segment group Lemon Concept will manage include Seasons in Pune,
Tree Hotels has announced that Kotak Mahindra Wall Street in Jaipur and Manor Floatel in Delhi.
Realty Fund has invested INR320 million in the All of these now fall under the management of
company. In a related development, Kotak Kamat Hotels. A total of 650 rooms will be under
Mahindra Realty Fund is investing about INR20 the listed Kamat Hotels entity which currently
million in Red Fox Hotels which proposes to operates about 600 rooms.
open limited-service economy hotels in the
price range of INR800-2,000 per night.

8 Jones Lang LaSalle Hotels

 Digest 2008: India

l Kotak India Real Estate Fund has just acquired an l Oberoi Hotels is fast expanding in India, Abu Dhabi,
approximate 11.11% stake in the Mumbai-based the Maldives, Cambodia and Dubai, partly through
The Pride Group of Hotels at a cost of INR450 management contracts and also through investing
million. The group, which currently operates four about INR5 billion of its own funds. The Group has
five-star hotels, has announced a INR3.5-billion hired Kotak Mahindra to help raise INR4 billion via
expansion and renovation plan which includes setting debt and new equity.
up five-star hotels in Mumbai, Goa, Bangalore and
Hyderabad in addition to a resort hotel and spa at l India's Parsvnath Developers Limited (Parsvnath)
Alibaug. The management envisages an overall has signed an agreement with conglomerate ITC's
inventory of 1,150 rooms in key cities by end 2009. Fortune Park Hotels to manage 50 hotels comprising
4,100 rooms for Parsvnath Hotels Limited, a
l Dubai Ventures, the private equity arm of Dubai subsidiary of Parsvnath. Parsvnath Hotels is
Investment Group, has bought a 5% stake in Delhi- expected to invest approximately INR25.4 billion to
based Bharat Hotels for INR1.6 billion - the deal develop and own 50 hotels in India which will
values the company at INR32 billion. The hospitality comprise 20 five-star hotels, 20 four-star hotels and
chain plans to raise up to INR10 billion for the 10 three-star and budget hotels between 2011 and
expansion of six properties under construction and 2013. The hotels will come under the brands of
has recently announced an international foray Fortune Select, which are likely to have at least
through a joint venture with the Dubai-based 100 rooms each; Fortune Park, which are expected
Nakheel Group - Grand Fort Dubai is set to open to have 75 or more rooms; and other brands such
in 2009. Other hotels are under construction as Fortune Inn and Fortune Faith, which are likely
and scheduled to open over the next two years to have at least 50 rooms. Parsvnath plans to
including The Grand Jaipur, The Grand Resort eventually develop 75 to 100 hotels across India,
Bekal, The Grand Ahmedabad, The Grand especially in the second- and third-tier cities, as
Chandigarh and The Grand Noida. well as other major centres.

l DB Realty, a domestic real estate fund, is investing l Choice Hotels India (CHI) has announced a INR7.6
about INR3.2 billion in a 320-room five-star billion franchise and management plan to partner
property in Goa. Hyatt International will manage with various investors to develop 20 new hotels with
and market the property. The project is likely to be approximately 2,000 guestrooms in India's major,
completed by the second quarter of 2009. tier-one and tier-two cities by 2010. CHI is also
planning to introduce India's first all-suite hotel,
l Financial services giant Morgan Stanley is close to Clarion Ludhiana, in Ludhiana, Punjab by the end
picking up a 15-20% stake in the Institute of of 2008. The 120-suite Clarion Ludhiana Hotel aims
Human Health Research Hospitality, owners of the to target non-resident Indians (NRI). In addition,
Ananda and Ista brands of spas and hotels, for CHI has also linked up with Royal Indian Raj
INR1.4 to 1.6 billion. Morgan Stanley will have a International Corporation which is expected to invest
seat on the board of the hospitality company which approximately INR160 billion from 2008 to 2012 to
is in the process of expanding its footprint in Delhi, develop 15,000 budget guestrooms across India
Hyderabad, Pune and Ahmedabad. It plans to have under CHI's hotel brands such as Clarion, Comfort
nine properties operating under the Ista brand over Inn, Quality Inn and Sleep Inn.
the next three years.

9 Jones Lang LaSalle Hotels

 Digest 2008: India

l India's real estate fund, Yatra Capital, has entered l ITC has announced that through its subsidiary,
into a joint venture with Atlas Hospitality Company Fortune Park Hotels Limited, that plans are
Private Limited (AHPL), a subsidiary of Ruia Group, underway to add 100 hotels in rural India to
to develop a luxury hotel and serviced apartments leverage the growing corporate demand as well
in Pune. Yatra is expected to hold a 20% stake in as reach out to approximately 792 million (72%
the INR286.4-billion venture, which also marks its of the 1.1 billion population) people living in the
entry into India's hospitality industry. Scheduled to rural areas. Fortune Park Hotels is expected to
be completed in late 2009, the 26,900 square metre expand hotels and inns with as few as 20 rooms
project is likely to comprise 319 hotel rooms and 96 each in the smaller towns of India by 2012, adding
serviced apartments. The project is expected to 3,000 rooms under its brand.
cater to business travellers in the area.
l Indian real estate developer DLF will open a Four
l Rakeen India Operations Company (Rakindo) has Seasons Hotel in Gurgaon at a cost of INR5.9
announced the signing of a Memorandum of billion. Part of DLF's ambition to become India's
Understanding (MoU) with Lotus Hotel Investment largest hotel group, the 250-room hotel will be
Fund (Lotus) to develop business hotels in Asia, developed on a 10-acre site at DLF Golf Link and
particularly in India. According to the MoU, a joint is expected to open before the Commonwealth
venture company will be formed to invest in three- Games in 2010. The developer has also secured
star and four-star hotels in Asia, with six major cities links with Hilton Hotels to construct over 25,000
in South India being the initial focus. hotel rooms on 40 parcels of land in 71 cities in the
country by 2010. The cities include Delhi, Mumbai,
l Real estate developer, Royal Palms India (RPI), Chennai, Kolkata, Bangalore, Hyderabad, Pune,
has announced its plans to invest INR15.3 billion Chhattisgarh, Amritsar and Ludhiana.
in the next three years to develop a 8-million square
feet development in suburban Goregaon. The
development is expected to comprise three-star to
five-star hotels, IT offices, residences, villas and a
retail mall.

10 Jones Lang LaSalle Hotels

 Digest 2008: Bangalore

BANGALORE

MARKET OUTLOOK l More than 6,400 rooms are expected to come

on stream in the next couple of years, with
Prospects for Bangalore's tourism and hotel industry international branded hotel offerings from the likes
remain positive over the next few years in view of the of The Ritz-Carlton, Shangri-La and JW Marriott.
following main factors:
l We expect business travel to be the prime contributor
l Bangalore is a key market for hospitality in India for room demand in the coming years on account
and will continue as such in the coming years. It is of increased IT/ITeS activity.
still the preferred destination for the IT/ITeS industry
and with the new international airport and other l In view of the substantial planned room additions,
infrastructure improvements, its appeal is expected we expect occupancies to dip as evident from
to increase further. the trend in 2007. We forecast occupancies to
stabilise at around 65-70% in the next five years
with ADR averaging at INR16,000.

City Snapshot (as at 2007)

Bangalore
Total Land Area (square kilometres) 741
Resident Population (million) 5.6 (2001 census)
Major Industries IT/ITeS, Telecom,
Aerospace & Defence

Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels

11 Jones Lang LaSalle Hotels

 Digest 2008: Bangalore

TOURISM MARKET OVERVIEW includes the building of new elevated highways,

widening of existing roads and setting up of a mass
Bangalore, the capital city of the southern state of transit system in the city.
Karnataka, and one of the top five largest cities in India
in terms of population, is widely recognised as the l Given its strategic location as a key gateway,
country's IT and outsourcing hub. The city therefore particularly for domestic tourists, to the World
receives a higher number of business travellers than Heritage sites of Hampi and Pattadakal and historical
leisure tourists, both from the international as well as attractions such as Tipu Sultan's 18th century fort
domestic markets. and palace, Bangalore is in a good position to further
expand its leisure tourism segment.
The city's tourism industry is poised for further growth,
supported by progressive improvements made to the l Bangalore is also able to offer visitors some of
tourism infrastructure as well as the continued growth India's best-rated golf courses at the Bangalore
in inbound arrivals. Major initiatives such as the Golf Club and Karnataka Golf Association (KGA)
opening of the new Bengaluru International Airport in Golf Course as well as dedicated resorts such as
Devanahalli in May 2008, the construction of a metro Eagleton on the Bangalore-Mysore highway.
rail and the Bangalore-Mysore Infrastructure Corridor
will improve accessibility and also help to relieve the l Improvements to the air transport infrastructure
existing strain on the city's transport system. with the new international airport and expansion
of the city's international air network will improve
Key Trends and Demand Drivers accessibility and facilitate the growth in
international arrivals.
l Bangalore is positioned as India's IT/outsourcing
hub. The Whitefield suburb of Bangalore, located l Bangalore is aiming to become a healthcare hub
16 kilometres east of the city, is the IT and by 2011, with heavy investments by the Manipal
software centre of Bangalore and home to many Group, Wockhardt and Columbia Asia to increase
multinational companies. the number of hospital beds in the city. State-of-
the-art facilities and specialty treatments offered
l The state government has launched various by these private hospitals are targeted at both
initiatives to develop Bangalore into India's Silicon discerning domestic patients as well as international
Valley by inviting foreign investors to become medical tourists. Bangalore is also home to renowned
involved in various private-public partnership medical clinics such as Jindal's health farm for
infrastructure projects. The development plan visitors looking for less intrusive alternatives.

Key Tourism Data

International Tourism FY2006-07 Change over FY2005-06 (%)

Total International Tourist Arrivals (million) 1.3 +46.2

Domestic Tourism
Total Domestic Tourist Arrivals (million) 6.9 +43.2

Source: Ministry of Tourism, Airport Authority of India (AAI)

12 Jones Lang LaSalle Hotels

 Digest 2008: Bangalore

l The MICE segment has the potential to grow International Visitor Arrivals
provided plans for the proposed International
Convention Centre adjacent to the new international l According to statistics from the Airport Authority of
airport materialise. The development is expected India (AAI), international passenger traffic at
to fill the demand for full-scale exhibition and Bangalore International Airport (BIA) increased
conference facilities that are currently lacking in the steadily from 0.2 million in FY2001-02 to 1.3 million
city and compete directly with Hyderabad. in FY2006-07. Compared with FY2005-06, arrivals
had surged by over 46%. This uptrend is expected
l The booming commercial and IT sectors, to continue into FY2007-08 as indicated by the 31%
improved direct air connectivity as well as heightened year-on-year increase in international arrivals to
investor interest contributed to the buoyant one million during the April to November 2007 period.
state of the international visitor arrivals. While
the leisure segment has potential to grow, the
business segment continues to dominate.

International Passenger Traffic via Bangalore International Airport

1.4 80

1.2 70
Number of Passengers (million)

60
1.0

Annual Growth (%)

50
0.8
40
0.6
30
0.4
20
0.2 10

0.0 0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*

Number of Passengers (million) Annual Growth (%)

* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

13 Jones Lang LaSalle Hotels

 Digest 2008: Bangalore

Domestic Tourism year-on-year increase in domestic passengers at

the airport during the first eight months of the financial
l AAI statistics show that domestic passenger traffic year to 5.6 million.
has more than tripled from 2.1 million in FY2001-
02 to 6.9 million in FY2006-07. On an annual l The outlook for domestic tourism is positive with
comparison basis, domestic arrivals recorded an arrivals expected to increase due to demand from
impressive growth of 43.2%. corporate travellers. The incoming traffic has been
further fuelled by the increased frequency of existing
l Similar to the trend for international arrivals, the routes or introduction of additional routes by LCCs
domestic market is expected to register strong such as Indigo, Spice Air and Go Air.
growth in FY2007-08, as indicated by the 33.5%

Domestic Passenger Traffic via Bangalore International Airport

8 50

7 40
Number of Passengers (million)

6
30

Annual Growth (%)

5
20
4
10
3
0
2

1 -10

0 -20
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*

Number of Passengers (million) Annual Growth (%)

* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

14 Jones Lang LaSalle Hotels

 Digest 2008: Bangalore

HOTEL MARKET OVERVIEW Future Supply

According to our research, Bangalore has 20-25 l Based on our research, Bangalore will witness
government-approved hotels with a total count of the entry of more than 6,400 rooms between
2,600-2,900 rooms. Geographically, there is no 2008 and 2010.
distinct hotel district in Bangalore and the greater
part of the major hotel accommodation is located l The new projects in the pipeline, which comprise
in the CBD along Race Course Road, MG Road a mixture of domestic and international brand
and Sankey Road. names, will diversify the city's accommodation
offerings ranging from the internationally branded
With the new international airport, hotels such as hotel segment such as The Ritz-Carlton,
the Windsor Manor, Le Meridien, Grand Ashok and Sheraton, Shangri-La and JW Marriott, to budget
Taj West End, which are located along Sankey and and economy establishments such as Ibis.
Race Course Road, will benefit from a direct road
link from the airport to their properties. Currently, l A number of additions to supply are to be located
these properties have a perceived disadvantaged near the new airport although construction has
location relative to the existing airport as yet to commence. We understand from our
accessibility is often via the congested CBD area. research that a substantial amount of land on
both sides of the roads leading to the airport has
For 2007 we are only aware of the addition of The been land-banked by developers and local hotel
Leela Palace Kempinski's 105-room extension companies such as Taj and Oberoi were awaiting
which entered the market in January. The additional the development of the airport.
rooms have placed some downward pressure on
market-wide occupancies during the year.

Major Future Supply in Bangalore (as at March 2008)

3.5

3.0
Number of Rooms (’000)

2.5

2.0

1.5

1.0

0.5

0
2007 2008 2009 2010 onwards
Estimated Year of Completion
Completed Supply Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources

15 Jones Lang LaSalle Hotels

 Digest 2008: Bangalore

The following table details the major supply in the pipeline from 2008 through to 2010.

Major Future Hotel Supply In Bangalore (as at March 2008)

Project Name Location Rooms Due/Open Likely Star

Positioning

Taj ITPL Bangalore International Tech Park 199 2008 Five-star Deluxe
JW Marriott UB City, City Centre 250 2008 Five-star Deluxe
Trident Bengaluru International Airport 321 2008 Five-star
Shangri-La CBD 350 2008 Five-star Deluxe
Shangri-La Resort & Spa IT Corridor 474 2008 Five-star Deluxe
Traders Hotel Whitefield 280 2008 N/A
Bell Tower Hotel Whitefield 100 2008 N/A
Keys Hotel Hosur Road Hosur Road 180 2008 Three-star
Keys Hotel Whitefield 150 2008 Three-star
Hilton Bangalore Ulsoor District 300 2008 Five-star Deluxe
Unnamed Hotel (by Chancery Group) Devanhalli 250 2009 N/A
Renaissance Race Course Road 328 2009 Five-star
Sheraton Bangalore Hotel at Malleshwaram West 300 2009 Five-star
Brigade Gateway
Taj Residency (by Naveen Hotels) Yeshwantpur 350 2009 Five-star
The Westin Bangalore Outer Ring Road, Hebbel 300 2009 Five-star Deluxe
Lemon Tree Hotel St. John Road 173 2009 Three-star
ITC Gardenia Residency Road 230 2009 Five-star Deluxe
Ibis Bangalore TBC 380 2009 Three-star
Novotel Bangalore TBC 200 2009 Three-star
Park Plaza Bangalore Outer Ring Road 167 2009 Four-star
Mövenpick Bangalore TBC 220 2009 Three-star
The Ritz-Carlton Off Residency Road 275 2009 Five-star Deluxe
Hampshire Hotel TBC TBC 2010 Four-star
Holiday Inn Bangalore Near Bengaluru 250 2010 Four-star
International Aiport International Airport
Oberoi Hotel Overlooking Hebbel Lake 225 TBC Five-star Deluxe
Ista Golf View Koramangala 70 TBC Four-star
Unnamed Hotel TBC 100 TBC N/A
(by Surraaj Hotels & Resorts)
Fortune Hotel Bangalore TBC TBC TBC Four-star
Total New/Proposed Supply 6,422

TBC: to be confirmed
N/A: not avaliable
Source: Jones Lang LaSalle Hotels, Media Sources

16 Jones Lang LaSalle Hotels

 Digest 2008: Bangalore

Five-Star Deluxe and Five-Star Hotel Market l In view of the relatively large new supply anticipated
in 2008 and with room demand expected to remain
l Bangalore's five-star deluxe and five-star hotels strong, we expect RevPAR growth to be driven by
enjoyed another robust year as demand continues ADR growth in 2008-09. The anticipated addition
to exceed supply. of almost 3,700 new rooms in 2008 and 2009 is
expected to alleviate the current shortage in supply
l ADR saw a 16% increment in 2006-07 to INR16,000. however the resultant increase in competitive
Due to the addition of rooms in 2007, occupancy pressures within the market could lead to some
dropped two percentage points to 74%. rationalisation in ADR growth rates.

l Led by growth in room rates, RevPAR strengthened

by 13% year-on-year to a seven-year high of
INR12,000.

Five-Star Deluxe and Five-Star Hotel Performance in Bangalore

18 78
16
76
14
ADR/RevPAR (INR) (’000)

74
12

Occupancy (%)
10 72

8 70
6
68
4
66
2
0 64
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Financial Year*

ADR RevPAR Occupancy (%)

* Beginning 1 April to 31 March
Source: Jones Lang LaSalle Hotels, Industry Sources

17 Jones Lang LaSalle Hotels

 Digest 2008: Chennai

CHENNAI

MARKET OUTLOOK l Our research shows that Chennai will see the
entry of almost 3,700 rooms between 2008 and
Chennai's tourism and hotel industry prospects are 2011. The majority of this supply (2,075 rooms) is
positive in view of the following key contributors: expected to enter the market by the end of 2009.
Major brands include Hilton, Hyatt and JW Marriott,
l Chennai, like Delhi to the north, will continue to be which will broaden the range and lift the city's
the prime gateway to south India for both leisure standard of accommodation.
and business tourists.
l Regardless of the relatively large supply in the
l Chennai has established itself as a preferred pipeline, we expect robust demand drivers to
destination for the IT/ITeS industry as well as the continue the trend of increased ADR and
auto and electronic equipment manufacturing stabilised occupancy.
industry. With confirmed plans of the auto and
electronic industry to expand and establish new l Occupancy in Chennai is forecast to remain
bases, we expect Chennai to be a favourable stable at 73% in the next five years with ADR
market for the hospitality industry. averaging INR10,000.

l We forecast leisure and business travellers to

maintain their share whereby increasing numbers
will drive the growth of the city's hospitality industry.

City Snapshot (as at 2007)

Chennai
Total Land Area (square kilometres) 181
Resident Population (million) 4.3 (2001 census)
Major Industries Manufacturing (automotive
& electronic), IT/ITeS,
Banking & Financial Services

Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels

18 Jones Lang LaSalle Hotels

 Digest 2008: Chennai

TOURISM MARKET OVERVIEW Nadu contributes almost 15%, second only to

Karnataka. Chennai has popular government and
Located on the Coromandel Coast of the Bay of Bengal, private universities that are known in India for
Chennai is the capital of the Indian state of Tamil Nadu. engineering courses.
It is the fourth largest metropolitan city in India and one
of the largest metropolitan areas in the world. l It is of religious importance to a large number of
south Indians. Many temples of religious significance
Chennai's economy has a broad industrial base in the are present in the state of Tamil Nadu and Chennai
automobile, technology, hardware manufacturing and serves as a gateway to the state.
healthcare industries. The city is home to much of India's
automobile industry and is one of the major hubs for the l Chennai is the origin of the majority of the expatriate
IT/ITeS industry after Bangalore. and NRI population. Many Indians from this part of
the country migrate to the US and Gulf countries,
The city is served by an international airport and mostly as software workers and as construction
two major ports; it is connected to the rest of the professionals. They visit the country once every two
country by five national highways and two railway years on average and stay about 30 days. During
terminals. Being an economic centre in south India, this period they undertake religious and tourist
Chennai receives both domestic and international excursions within the state.
business travellers.
l Emerging fast as a preferred destination for medical
Key Trends and Demand Drivers tourism, Chennai offers world-class treatments with
modern medicine as well as traditional Indian
l Chennai has a broad industrial base with a strong medicine being available. Popular hospital chains
focus on the automobile and electronic industries. such as Apollo, Max and Fortis have established
The city hosts world majors such as GM, Hyundai, speciality hospitals that cater to patients from the
Nokia and Motorola. These companies have plans Gulf and Southeast Asia.
to expand their facilities further and develop Chennai
as a regional hub for Asia Pacific. l Chennai's large industrial base, booming IT/ITeS
services, widespread religious importance and
l It is one of the largest exporters of IT/ITeS mushrooming healthcare sector renders a preferred
services in India after Bangalore. Out of India's destination for business and leisure.
total IT/ITeS workforce, the parent state of Tamil

19 Jones Lang LaSalle Hotels

 Digest 2008: Chennai

Key Tourism Data

International Tourism FY2006-07 Change over FY2005-06 (%)

Total International Tourist Arrivals (million) 2.9 +11.5

Domestic Tourism
Total Domestic Tourist Arrivals (million) 6.1 +45.1

Source: Ministry of Tourism, AAI

International Visitor Arrivals l Latest available statistics from AAI indicate that
this growth trend will continue into FY2007-08.
l Statistics from AAI show international passenger For the period from April to November 2007, total
traffic at Chennai International Airport reached 2.9 international passenger arrivals increased by
million in FY2006-07, up by 61% from 1.8 million 19% year-on-year to 2.2 million.
in FY2000-01.

International Passenger Traffic via Chennai International Airport

4 25

20
Number of Passengers (million)

3
15 Annual Growth (%)

10
2
5

0
1
-5

0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*
Number of Passengers (million) Annual Growth (%)
* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

20 Jones Lang LaSalle Hotels

 Digest 2008: Chennai

Domestic Tourism l Similar to the trend for international passenger

arrivals, the number of domestic passengers rose
l Statistics from AAI show domestic passenger traffic 27% year-on-year to 4.9 million over the April to
at Chennai International Airport reached 6.1 million November 2007 period.
in FY2006-07, up from 2.2 million in 1999.

Domestic Passenger Traffic via Chennai International Airport

7 50

6 40
Number of Passengers (million)

5 30

Annual Growth (%)

4 20

3 10

2 0

1 -10

0 -20
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*
Number of Passengers (million) Annual Growth (%)
* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

21 Jones Lang LaSalle Hotels

 Digest 2008: Chennai

HOTEL MARKET OVERVIEW Future Supply

According to our research and latest available l Our research shows that Chennai will witness
statistics, Chennai has 55 government-approved the entry of almost 3,700 rooms between 2008
hotels with a total of 5,500 rooms. Most of the hotels and 2011.
in Chennai are concentrated near to the CBD or
along Anna Salai road that connects the international l The Hilton is expected to start operations in 2008
airport to the city. However, many new hotels are while both Hyatt and JW Marriott hotels are
expected to come up along the Old Mahabalipuram scheduled to be operational by 2009.
Road (OMR) which is fast emerging as a micro
market for IT/ITeS activity. We are aware of only two l There is a major concentration of hotels along
openings for 2007, the Asiana at OMR Road with the OMR and the rest are scattered around
114 rooms and The Pride at Poonamallee High the CBD.
Road with 115 rooms. Both properties are in the
five-star category.

Major Future Supply in Chennai (as at March 2008)

2.5

2.0
Number of Rooms (’000)

1.5

1.0

0.5

0
2007 2008 2009
Estimated Year of Completion
Completed Supply Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources

22 Jones Lang LaSalle Hotels

 Digest 2008: Chennai

The following table details the major supply in the pipeline from 2008 to 2011.

Major Future Hotel Supply In Chennai (as at March 2008)

Project Name Location Rooms Due/Open Likely Star

Positioning

Taj GVK Chennai Mount Road 221 2008 Five-star

Lemon Tree Hotel Opposite Raj Bhavan 110 2008 Three-star
Hilton Chennai Guindy 253 2008 Five-star Deluxe
Unnamed Hotel Old Mahabalipuram Road 300 2008 TBC
Unnamed Hotel (by Femena Hotels) TBC 100 2008 TBC
Deccan Park Ltd Old Mahabalipuram Road 66 2008 TBC
Hyatt Regency Chennai TBC 225 2009 Five-star
The ITC Grand Chola Mount Road 550 2009 Five-star Deluxe
Hyatt Close to the Chennai Airport 250 2009 Five-star
JW Marriott Estuary near the Adyar river 300 2009 Five-star Deluxe
The Leela Palace Kempinski Adyar Beach 380 2010 Five-star Deluxe
Hampshire Hotels TBC TBC 2011 Four-star
Unnamed Hotel (by Bharat Hotels) TBC 320 TBC Five-star Deluxe
Raintree-branded Hotel Anna Salai 200 TBC TBC
(by Ceebros)
Unnamed Hotel Off College Road 150 TBC TBC
Fortune Old Mahabalipuram Road Three-star
Empee Group Inner Ring Road 253 TBC
Total New/Proposed Supply 3,678

TBC: to be confirmed
N/A: not avaliable
Source: Jones Lang LaSalle Hotels, Media Sources

23 Jones Lang LaSalle Hotels

 Digest 2008: Chennai

Five-Star Deluxe and Five-Star Hotel Market increased from INR4,000 to INR8,500. Increased
business travel and the lack of hotel rooms are
l Chennai has approximately 1,500 rooms in the the prime reasons for this trend.
five-star deluxe and five-star hotel market segment.
No new addition to the stock has taken place in the l Taking into account the future supply in this
past couple of years. segment, we anticipate downward pressure
on the RevPAR.
l Occupancies in this segment increased from 51%
in 2002 to 76% in 2007. For the same period, ADR

Five-Star Deluxe and Five-Star Hotel Performance in Chennai

9 90
8 80
7 70
ADR/RevPAR (INR) (’000)

6 60

Occupancy (%)
5 50
4 40
3 30
2 20
1 10
0 0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Financial Year*
ADR RevPAR Occupancy (%)
* Beginning 1 April to 31 March
Source: Jones Lang LaSalle Hotels, Industry Sources

24 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

DELHI

MARKET OUTLOOK l The Commonwealth Games in 2010 is expected to

attract 50,000 foreign visitors to Delhi. Our research
Delhi is both the nation's capital and its prime economic indicates that approximately 30,000 rooms will be
hub. It is home to the administration, Supreme Court required to accommodate these visitors.
and political base which governs and exercises
supervisory powers over the whole country. With l Gurgaon, the satellite city of Delhi, is witnessing
decentralisation policies for urban development of the a phenomenal increase in development activity
National Capital Region (NCR), Delhi comprises the with a major increase in MNCs (multinational
National Capital Territory of Delhi itself and the corporations) and domestic BPOs (business
neighbouring satellite urban areas including Gurgaon process outsourcings) setting up their offices
and Faridabad in Haryana and Noida, Greater Noida there. There are about 4,087 rooms in the pipeline
and Ghaziabad in Uttar Pradesh. in Gurgaon which will make it an alternative to Delhi
city's existing commercial districts.
Further growth and development in Delhi's tourism and
hospitality sectors is expected to be supported by the l With the influx of specialty hospitals such as Apollo,
following key factors: Fortis, Artemis Health Institute and Wockhardt
Hospitals, it is expected that medical tourism will
l Delhi will continue to be the prime gateway to India increase and this will further strengthen the demand
for both leisure and business travellers. With for hotel rooms.
emerging suburbs as centres of corporate activity,
coupled with Delhi's positioning as the seat of the l Notwithstanding the large volumes of new rooms
central government, and the expanding international expected in the future, we forecast robust demand
airport, the city's tourism industry is expected to drivers to continue the trend of increased ADRs and
grow further in the coming years. We expect stabilised occupancies. Occupancy in Delhi is
increasing leisure and business travellers to be a expected to remain at 75% in the next five years
prime demand driver for the hospitality industry in with ADR averaging at INR17,000.
the city.

25 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

City Snapshot (as at 2007)

Delhi
Total Land Area (square kilometres) 1483
Resident Population (million) 13.8 (2001 census)
Major Industries IT/ITeS, Manufacturing,
Banking & Financial Services

Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels

TOURISM MARKET OVERVIEW international convention centre at Dwarka, located

five kilometres from the international airport. This
As the capital city and one of the key international centre is designed to have a seating capacity of
gateways to India, Delhi benefits from India's continued 12,000 with a convention hall, auditoriums,
economic expansion, rising foreign investment inflows conference rooms, banquet halls and exhibition
and increasing attractiveness as a tourist destination. areas, along with two hotels with up to 850 rooms.
It is expected to attract large conventions to Delhi
Delhi's tourism industry stands to benefit from India's and boost the city's MICE (meetings, incentives,
continued economic boom and the resulting influx of conventions and exhibitions) capabilities.
foreign investment and visitors to the capital city. Playing
host to the upcoming Commonwealth Games will not l A hospitality district is being developed by Delhi
only help the city to raise its profile as a business and International Airport Limited (DIAL) with over
leisure destination in the international arena but will also 40 acres of land allocated for luxury and business
spur improvements to the existing tourism and transport hotels, serviced apartments and a convention
infrastructure, thereby benefiting the tourism and centre. The district, which is alongside the
hospitality sector. Delhi-Gurgaon road, is expected to help ease the
shortage of hotel rooms in the capital and
Key Trends and Demand Drivers transform the complex into a hub for hospitality,
commercial and retail space.
l Delhi is the second largest metropolis in India and,
along with Mumbai, attracts the majority of tourist l Delhi is expected to see an increase in connectivity
arrivals to the country. As India's long-term capital, in both domestic as well as international air routes.
Delhi's culture is strongly embedded in its history, Apart from national carriers, private carriers are
and reflected in the 175 monuments that have been also securing direct or single leg international
marked as national heritage sites. This results in a connections from Delhi to major cities worldwide.
steady stream of visitors to the metropolis keen to The entrance of many LCCs has boosted traffic to
witness the remnants of its Mughal past in the many and from the capital, stretching the current aviation
bazaars and historical sites around the city. infrastructure even further. DIAL currently handles
23 million passengers a year against its official
l The Delhi Development Authority (DDA) has put capacity of 14 million.
forward a proposal to set up India's largest

26 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

l In an effort to increase mobility within the city, and the city centre. The scheme is expected to
plans are being put in place to expand the metro greatly reduce journey time to the city centre.
system in time for the Commonwealth Games. The This is to be further enhanced by the introduction
second phase of the metro system includes an of high capacity bus systems which are already
extension into the city's southern neighbourhoods being developed.
as well as a high-speed rail link between the airport

Key Tourism Data

International Tourism FY2006-07 Change over FY2005-06 (%)

Total International Tourist Arrivals (million) 6.7 +15.4

Domestic Tourism
Total Domestic Tourist Arrivals (million) 13.6 +31.7

Source: Ministry of Tourism, AAI

27 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

International Visitor Arrivals l Of all the foreign tourists coming to India, 35-40%
make Delhi their first port of call, with 62% of these
l Statistics from AAI show international passenger being business travellers.
traffic at Indira Ghandi International Airport reached
6.7 million in FY2006-07, up 15.4% from the l Industry estimates suggest that all business
previous financial year. This growth in inbound travellers and 12% of foreign leisure travellers
foreign travellers is expected to continue into coming to Delhi prefer to stay in star-rated hotels.
FY2007-08 as indicated by the 11% year-on-year
growth in international passenger arrivals to 4.5 l According to our estimates, Delhi is expected to
million for the April to November 2007 period. host 50,000 additional foreign tourists during
Commonwealth Games in 2010.

International Passenger Traffic via Indira Ghandi International Airport

7 20

6 15
Number of Passengers (million)

5
10

Annual Growth (%)

4
5
3
0
2
-5
1

0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*

Number of Passengers (million) Annual Growth (%)

* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

28 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

Domestic Tourism l Domestic tourists to Delhi comprise 60-65% of

total arrivals with 50% preferring to stay in
l Based on data from AAI, domestic passenger traffic star-rated hotels.
at Indira Ghandi International Airport has surged
by 31.7% from 10.5 million in FY2005-06 to 13.6 l Anecdotal evidence suggests domestic guests
million in FY2006-07. A similar growth trend is typically stayed for two to three days.
expected for FY2007-08 as the first eight months
of 2008 witnessed an increment of 26% year-on- l The outlook for domestic tourism is positive, with
year to 8.6 million domestic passengers. domestic visitor traffic expected to surge during the
Commonwealth Games.

Domestic Passenger Traffic via Indira Ghandi International Airport

16 40

14 35
Number of Passengers (million)

30
12
25

Annual Growth (%)

10 20
8 15

6 10
5
4
0
2 -5
0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*

Number of Passengers (million) Annual Growth (%)

* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

29 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

HOTEL MARKET OVERVIEW Future Supply

Existing Supply l Our research shows that Delhi/NCR will see the
entry of almost 7,400 rooms between 2008 and
According to our research and the latest available 2010. The majority of supply (3,037 rooms) is
statistics, Delhi has 48 government-approved hotels expected to enter the market in 2009.
with a total of 7,165 rooms. If we include Noida and
Gurgaon (the suburbs of Delhi in neighbouring states), l Aside from the Crowne Plaza Gurgaon (234 rooms)
there are 62 hotels with 7,781 rooms. The majority of which recently opened and The Westin Resort &
Delhi's upmarket hotels are located in its traditional Spa (97 rooms), other prominent additions will
business districts of Connaught Place, Nehru Place and include the 322-room Leela Kempinski Gurgaon
Bhikaji Cama Place however the emergence of Gurgaon which is scheduled to open end 2008.
and Noida as major commercial and residential centres
on the outskirts of Delhi has also led to increased hotel l Approximately 55% of the total room inventory in
development activity in these areas. the pipeline will open in Gurgaon. The concentration
of hotels parallels the commercial, residential and
Our statistics indicate that of the 30,000 approximately retail activities taking place. Some of the proposed
rooms required in the NCR region for the Commonwealth hotel additions in the area include the Courtyard by
Games, there are presently approximately only 10,500 Marriott, Novotel and The Westin, Gurgaon.
rooms. With the expected forecast for the number of
hotels coming up, it is still expected that an additional l While the increase in supply will help to address
15,000 to 18,000 rooms will be required during the the current shortfall of hotel rooms in the city, new
Games. This potential demand-supply gap presents challenges such as manpower shortages will need
huge untapped opportunity for potential investors in to be addressed following the surge in supply.
the industry.

Major Future Supply in Delhi/NCR (as at March 2008)

3.5

3.0
Number of Rooms (’000)

2.5

2.0

1.5

1.0

0.5

0
2007 2008 2009 2010 onwards
Estimated Year of Completion
Completed Supply Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources

30 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

l New projects in the pipeline, which comprise a ranging from the upper tier hotel segment such as
mixture of domestic and international brand names, the Leela Kempinski to lower tier establishments
will diversify the city's accommodation offerings such as Ibis and Lemon Tree.

The following table details the major supply in the pipeline from 2008 to 2010.

Major Future Hotel Supply In Delhi (as at March 2008)

Project Name Location Rooms Due/Open Likely Star

Positioning

The Leela Kempinski Gurgaon Gurgaon 322 2008 Five-star Deluxe

The Leela Residences Gurgaon 90 2008 Five-star Deluxe
The Aman, Lodhi Road Delhi 69 2008 Five-star Deluxe
The Claridges Atrium Suraj Kund Faridabad 275 2008 Five-star
Park Plaza Extension & Convention Centre Gurgaon 32 2008 Five-star
DLF Hilton Garden Inn, Saket Delhi 118 2008 Five-star
Park Plaza Noida Noida 88 2008 Five-star
Courtyard by Marriott Gurgaon 199 2008 Five-star
Picadilly, Janakpuri Delhi 240 2008 Five-star
Courtyard by Marriott Noida 250 2008 Five-star
Ibis Gurgaon 217 2008 Three-star
Red Fox Manesar Gurgaon 110 2008 Three-star
Red Fox Jasola Delhi 77 2008 Three-star
The Westin Gurgaon Gurgaon 300 2009 Five-star Deluxe
The Westin Service Residences Gurgaon 150 2009 Five-star Deluxe
Regent Gurgaon Gurgaon 300 2009 Five-star Deluxe
Today Hotel Delhi 250 2009 Five-star
Radisson Manesar Gurgaon 225 2009 Five-star
Crowne Plaza Today Delhi 200 2009 Five-star
Clarion Hotel Gurgaon 80 2009 Five-star
Unnamed hotel by Narsi group Gurgaon 250 2009 Five-star
Savoy Suites - Apartments Gurgaon 110 2009 Four-star
Dawnay Day Gurgaon 100 2009 Four-star
Oakwood Apartments Gurgaon 64 2009 Four-star
Mariott Executive Apartments Gurgaon 173 2009 Four-star
JMD Hotel on Sonha Road Gurgaon 175 2009 Four-star
Shipra Hotel Ghaziabad Ghaziabad 250 2009 Three-star
Novotel Gurgaon 320 2009 Three-star
Formula 1, Gurgaon Gurgaon 90 2009 Three-star

31 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

Major Future Hotel Supply In Delhi (as at March 2008)

Project Name Location Rooms Due/Open Likely Star

Positioning

The Leela Palace New Delhi Delhi 210 2010 Five-star Deluxe
The Oberoi Gurgaon 150 2010 Five-star Deluxe
Four Seasons Hotel Gurgaon Gurgaon 230 2010 Five-star Deluxe
Hilton Dwarka New Delhi Delhi 300 2010 Five-star
Eros Boulevard Hotel Delhi 350 2010 Five-star
JP Greens Greater Noida 200 2010 Five-star
Taj Business Hotel Gurgaon 200 2010 Five-star
DLF Rajiv Chawk - Connaught Place Hotel Gurgaon 200 2010 Five-star
Hilton Garden Inn New Delhi Delhi 400 2010 Four-star
Six Senses Greater Noida TBC 2010 Five-star Deluxe
Total Proposed Supply 7,364

TBC: to be confirmed
Source: Jones Lang LaSalle Hotels, Media Sources

32 Jones Lang LaSalle Hotels

 Digest 2008: Delhi

Five-Star Deluxe and Five-Star Hotel Market l In comparison, occupancy rates remained stable
at 75% but are expected to decline in the coming
l The performance of five-star deluxe and years on account of upcoming supply in Noida
five-star hotels in Delhi/NCR reached record and Gurgaon.
levels in 2007 on the back of robust demand
and limited supply. l With room demand anticipated to stay strong, we
expect RevPAR growth to remain driven by ADR
l ADR rose to historic highs at INR12,500 though growth in 2008. However, the growth in ADR may
the additional supply coming online could affect moderate slightly following the anticipated entry
its growth. of over 3,400 new rooms in 2008 and 2009.

Five-Star Deluxe and Five-Star Hotel Performance in Delhi/NCR

14 80

12 70
ADR/RevPAR (INR) (’000)

10 60

Occupancy (%)
50
8
40
6
30
4
20
2 10
0 0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Financial Year*
ADR RevPAR Occupancy (%)
* Beginning 1 April to 31 March
Source: Jones Lang LaSalle Hotels, Industry Sources

33 Jones Lang LaSalle Hotels

 Digest 2008: Hyderabad

HYDERABAD

MARKET OUTLOOK l Our research shows that Hyderabad will see the
entry of around 5,600 rooms between 2008 and
Hyderabad's tourism and hotel industry has the 2011. About 1,700 rooms are expected to come
potential to develop and grow further in light of the on stream in 2008 including major brands such as
following key factors: Marriott and Westin.

l Hyderabad is a key market for hospitality in India l We expect business travel to continue to be the
and will remain so in the coming years. It has prime demand driver in the coming years on account
established itself as a preferred destination for the of increased IT/ITeS activity.
IT/ITeS industry after Bangalore and with the new
international airport and other infrastructure l With the expected room additions, we forecast
improvements, its attractiveness is expected to occupancies to dip in the coming years. We estimate
increase further. that occupancies will stabilise at around 65-70% in
the next five years with ADR averaging INR15,000.

City Snapshot (as at 2007)

Hyderabad
Total Land Area (square kilometres) 625
Resident Population (million) 3.8 (2001 census)
Major Industries IT/ITeS, Biotechnology

Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels

34 Jones Lang LaSalle Hotels

 Digest 2008: Hyderabad

TOURISM MARKET OVERVIEW metre facility with a 287-room capacity business

hotel, Novotel Hyderabad, the convention centre
Hyderabad is the capital city of the Indian state of has a seating capacity of 4,000 and can be
Andhra Pradesh. It has an estimated metropolitan configured to accommodate a seating capacity
population of 6.1 million, making it a mini-metro of about 6,500 guests.
city and India's sixth largest metropolitan area. The
city is renowned for its rich history, culture and l The city is an emerging base for semiconductor
architecture representing its unique character as a fabrication activity. With the opening up of India's
meeting point for north and south India as well as its semiconductor policy, large manufacturing
multilingual culture. companies such as Intel and Cypress have
shortlisted the city to set up their first fabrication
Also known as The City of Nizams, Hyderabad is today plants in India.
one of the most developed cities in the country and a
modern hub for IT/ITeS and biotechnology. l The presence of multiple speciality hospitals has
established Hyderabad as a preferred destination
Hyderabad is predominantly a business destination for medical tourism. Hospital operators including
and derives 98% of tourism revenues from business Apollo, Max and Fortis have established hospitals
travel. Domestic business travel constitutes 70% of which cater to domestic as well as international
total revenues. patients, particularly from the Middle East and
Asia Pacific.
Key Trends and Demand Drivers
l Hyderabad is a strong base for local and
l With its strong IT/ITeS industry and emerging international business in precious stones, gems
biotechnology hub, Hyderabad is home to large and jewellery. The city is a major hub for the
campuses of major international and domestic processing and export of gems and jewellery and
IT/ITeS companies including Microsoft, Infosys, draws a large number of international business
Wipro, Deloitte and UBS. visitors for this purpose.

l Hyderabad is a preferred MICE destination. l Hyderabad is the origin of a large expatriate and
The Hyderabad International Convention Centre NRI population based mainly in the US and the Gulf
has established itself as a popular MICE venue who travel to India for long periods every two years.
and has played host to numerous large and small
events including Infocom in 2007 and is set to l Its strong IT/ITeS industry, emerging biotechnology
host the PATA Travel Mart in September 2008. and established MICE segment has helped
The centre was developed by Dubai-based the city create a niche for itself on the travel
Emaar Properties. An integrated 27,000 square and tourism map.

35 Jones Lang LaSalle Hotels

 Digest 2008: Hyderabad

Key Tourism Data

International Tourism FY2006-07 Change over FY2005-06 (%)

Total International Tourist Arrivals (million) 1.2 +21.0

Domestic Tourism
Total Domestic Tourist Arrivals (million) 4.5 +51.8

Source: Ministry of Tourism, AAI

International Visitor Arrivals l Latest available statistics from the AAI show that a
total of 0.9 million international passengers were
l Statistics from AAI show international passenger received at the airport for April to November 2007,
traffic at Hyderabad International Airport reached representing an increase of 23% from the
1.2 million in FY2006-07, an increase of more than corresponding period in 2006.
400% from FY2000-01.

International Passenger Traffic via Hyderabad International Airport

0.9 50

0.8 45
40
Number of Passengers (million)

0.7
35
0.6 Annual Growth (%)
30
0.5
25
0.4
20
0.3
15
0.2 10
0.1 5
0 0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*
Number of Passengers (million) Annual Growth (%)
* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

36 Jones Lang LaSalle Hotels

 Digest 2008: Hyderabad

Domestic Tourism l According to the latest available statistics from the

AAI, a total of 3.6 million domestic passengers were
l AAI statistics show domestic passenger traffic at received from April to November 2007, up 29%
Hyderabad International Airport reached 4.5 million year-on-year.
in FY2006-07, an increase of more than 200% from
FY2000-01.

Domestic Passenger Traffic via Hyderabad International Airport

5.0 60
4.5
50
4.0
Number of Passengers (million)

3.5 40

Annual Growth (%)

3.0 30
2.5
20
2.0
1.5 10
1.0
0
0.5
0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*
Number of Passengers (million) Annual Growth (%)
* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

37 Jones Lang LaSalle Hotels

 Digest 2008: Hyderabad

HOTEL MARKET OVERVIEW l Most of the rooms in 2008 will be in new hotels
being developed by the Taj group, while Westin
According to our research and latest available statistics, is expected to start operations with this year.
Hyderabad has 40 government-approved hotels with
a total of 2,000 rooms. Given the importance of the l The existing Hyderabad International Convention
city in the economic landscape of India, Hyderabad has Centre and the new Rajiv Ghandi International
a very low number of rooms compared with cities such Airport will keep room occupancy rates high for five-
as Mumbai and Delhi. Most of the existing hotels in star hotels in the near future.
Hyderabad are located in the CBD and upcoming micro
markets for the IT/ITeS industry namely Madhapur l Despite the interest generated by mid-market and
and Gacchibowli. budget hotel development, more than half of the
new properties are concentrated in the luxury and
Future Supply upper tier segment.

l Our research shows that Hyderabad will see the

entry of about 5,600 rooms between 2008 and 2011.
Most of these hotels will be located in the areas of
Banjara Hills, Madhapur, Gacchibowli and Begumpet.

Major Future Supply in Hyderabad (as at March 2008)

3.5

3.0
Number of Rooms (’000)

2.5

2.0

1.5

1.0

0.5

0
2008 2009 2010 onwards
Estimated Year of Completion
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources

38 Jones Lang LaSalle Hotels

 Digest 2008: Hyderabad

The following table details the major supply in the pipeline from 2008 to 2011.

Major Future Hotel Supply In Hyderabad (as at March 2008)

Project Name Location Rooms Due/Open Likely Star

Positioning

Lemon Tree Hotel Cyberabad (HITEC City) 260 2008 Three-star

Park Hotels Raj Bhavan Road, Somajiguda 225 2008 Four-star
Taj Falaknuma Palace Old City 60 2008 Five-star Deluxe
Taj-Begumpet Begumpet 189 2008 Five-star
Penna Cements Banjara Hills 180 2008 Three-star
Taj Residency Banjara Hills 180 2008 Five-star
Quality Inn Ameerpet 225 2008 Three-star
Westin Madhapur 428 2008 Five-star
Courtyard by Marriott Near Rajiv Gandhi TBC 2009 TBC
(former Viceroy Hotel) International Airport
The Leela Palace, Banjara Hills 225 2009 Five-star
Kempinski Hyderabad
Lemon Tree Hotel Jubilee Hills 200 2009 Three-star
Taj Krishna Banjara Hills 200 2009 Five-star Deluxe
Raheja Mindspace HITEC City 200 2009 Five-star Deluxe
Prajay Engineers Syndicated Group Adis 140 2009 Three-star
Unknown hotel HITEC City 400 2010 Five-star Deluxe
Ibis Shamshabad 200 2010 Three-star
Hampshire Hotel TBC TBC 2010 TBC
Trident HITEC City 150 2011 Five-star
Hilton Hyderabad Saifabad/Adarsh Nagar 299 2011 TBC
Hyatt Banjara Hills 200 N/A Five-star Deluxe
Green Park Ameerpet 120 N/A Four-star
Mantri group HITEC City N/A N/A Five-star
GoAP HITEC City 150 N/A Three-star
ITC HITEC City N/A N/A Five-star
Emaar Golf Resorts Gacchibowli 70 N/A Five-star Deluxe
Grand Hyatt Manikonda 400 N/A Five-star Deluxe
Holiday Inn Manikonda 350 N/A Five-star
GMR Group Shamshabad 300 N/A Five-star
Regal Broadway Shamshabad N/A N/A Five-star
Emaar Shamshabad 70 N/A Seven-star
Hometel HITEC City 200 N/A Four-star
Total New/Proposed Supply 5,621

TBC: to be confirmed
N/A: not avaliable
Source: Jones Lang LaSalle Hotels

39 Jones Lang LaSalle Hotels

 Digest 2008: Hyderabad

Five-Star Deluxe and Five-Star Hotel Market ADR improved from INR2,700 to INR9,500.
Increased business travel and the lack of hotel
l The five-star deluxe and five-star market segment rooms are the prime reasons for this trend.
in Hyderabad has approximately 1,300 rooms. This
is expected to increase to almost 2,800 rooms by l Taking into account the future supply in this
the end of 2009. segment, we expect downward pressures on the
RevPAR.
l The occupancies in this segment increased from
65% in 2002 to 73% in 2007. For the same period,

Five-Star Deluxe and Five-Star Hotel Performance in Hyderabad

10 78
9 76
8 74
ADR/RevPAR (INR) (’000)

7 72

Occupancy (%)
6 70
5 68
4 66
3 64
2 62
1 60
0 58
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Financial Year*
ADR RevPAR Occupancy (%)
* Beginning 1 April to 31 March
Source: Jones Lang LaSalle Hotels, Industry Sources

40 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

MUMBAI

MARKET OUTLOOK l Mumbai has also gained new international

connections with direct flights from both private and
Mumbai is the financial capital of India and the base for national carriers.
most national and international banks, funds and other
financial institutions operating in the country. It serves l Asia's largest slum, Dharavi, is being redeveloped
as a gateway to western India and has the busiest by private entrepreneurs in partnership with the
domestic and international airport after Delhi. Apart from government. This is expected to release prime real
business, it is also popular among leisure tourists, both estate of about 535 acres that will cater to the
domestic and international, as it serves as a starting development of new commercial and residential
point for visiting popular tourist destinations in western real estate in Mumbai.
India such as Goa and Pune.
l In addition to Dharavi's redevelopment, the Mukesh
Further growth and development in Mumbai's tourism Ambani-promoted Reliance Industries is developing
and hospitality sectors is expected to be supported by a Special Economic Zone in Navi Mumbai which is
the following key factors: proposed to comprise 35,000 acres. This will further
foster commercial activity in city and generate
l With emerging suburbs as centres of corporate demand for rooms.
activity and the expansion of Mumbai towards
the north and an expanding international airport, l Notwithstanding the large volumes of new rooms
Mumbai is expected to see growth in tourist activity planned, we expect robust demand drivers to
in the coming years. We expect leisure and business continue the trend of increased ADR and stabilised
travel to be a prime demand driver for the city’s occupancies. Occupancy in Mumbai is expected to
hospitality industry. remain stable at 75% in the next five years with
ADR averaging at INR17,000.
l Mumbai is also emerging as a popular medical
tourism destination with popular hospitals such as
Lilavati, Hiranandani, Hinduja and Jaslok offering
speciality treatments.

41 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

City Snapshot (as at 2007)

Mumbai
Total Land Area (square kilometres) 4,355
Resident Population (million) 17.8 (2001 census)
Major Industries IT/ITeS, Manufacturing,
Banking & Financial Services

Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels

TOURISM MARKET OVERVIEW in the suburbs as well as Hinduja and Jaslok

downtown offer state-of-the-art facilities,
Mumbai's tourism prospects are promising in the renowned doctors and outpatient services to
immediate term. Any unfavourable impact on foreign international patients.
arrivals arising from the country's political risk, security
concerns and airport congestion is expected to be limited. l Improvements to the existing airport infrastructure
However, while Mumbai's medium- to longer-term tourism will boost the airport's passenger handling
prospects remain positive, the development of the capacity and strengthen Mumbai's positioning
supporting tourism infrastructure needs to keep pace as a key international gateway. The Chhattrapati
with the inflow of visitors in order to ensure the sector's Shivaji International Airport (CSIA) is currently
future sustainability and to validate Mumbai's position the busiest airport in India, handling 22.2 million
as the commercial hub of India. domestic and international passengers during
FY2006-07 against its capacity of 14 million.
Key Trends and Demand Drivers Upgrading of the airport, including a new passenger
terminal is underway, and when completed
l Mumbai offers visitors a number of historical, will alleviate some of the congestion. The city's
architectural, religious and cultural attractions airport infrastructure will receive a further boost
unique to the city such as the Gateway of India, following government approval for the construction
Haji Ali Mosque, Hanging Gardens and the of Mumbai’s second international airport at
promenade of Marine Drive also known as the Navi Mumbai.
"Queen's Necklace". Home to Bollywood, Mumbai
also attracts a large number of visitors trying to l The addition of new air routes will expand
catch a glimpse of the stars. Additionally, Mumbai Mumbai's international air network and improve
has two World Heritage sites: the Elephanta Caves accessibility. For example, the recent liberalisation
and Chhattrapati Shivaji Station (Victoria Terminus). of the aviation sector has led to the rise of the
London-Mumbai route as one of the fastest growing
l The city's medical tourism segment is expected sectors with five carriers currently offering services.
to benefit from the government's recently announced Finnair launched its Mumbai-Helsinki route in June
plans to launch a medical tourism campaign to this year while Continental Airlines will operate
raise awareness about India's private medical between New York and Mumbai daily from October.
services as a part of the Incredible India campaign. EgyptAir also started tri-weekly services on the
Private hospitals such as Lilavati and Hiranandani Mumbai-Kuala Lumpur route from June 2007.

42 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

l The Finance Ministry is committed to transforming construction, competition is expected to intensify.

Mumbai into an international financial hub over Certain areas, identified as micro-markets for
the next 10 years, and is aligning current urban international luxury brands, have seen the
infrastructure and lifestyle facilities with global development of speciality malls. These developments
standards. The state government has launched will broaden the city's offering and attract both
a number of projects to reduce pressure on international and domestic visitors.
existing infrastructure. These include drainage
system upgrades, road widening and privatisation l Realising the acute land shortage situation in
of airports and development of metro train services south Mumbai, MMRDA started developing
in addition to the construction of 42 new flyovers a series of new growth centres in Greater
across the city. This long term traffic scheme by Mumbai to help ease the pressure on offices
the Mumbai Metropolitan Region Development and commercial activities in south Mumbai. The
Authority (MMRDA) includes expressways as well Bandra Kurla Complex (BKC) is being developed
as arterial routes in presently traffic-congested areas as an alternative location where future growth
such as Andheri-Ghatkopar Link Road, S V Road of offices and commercial activity can be
and L B S Marg. absorbed and where some of the existing activities
from south Mumbai can be relocated. The British
l Several hotel projects are now being considered in Deputy High Commission's recent purchase
locations along the Mumbai metro lines. The first of office space and the construction of the
phase of the 11-kilometre Versova-Andheri- American Consulate in the BKC are examples
Ghatkopar route of the Mumbai metro became of the south-to-north Mumbai migration
operational in June this year. When completed in by corporations.
2011, the metro is expected to dramatically lessen
bottlenecks on these roads and reduce travelling l Lured by its modern infrastructure, centralised
time by half. To be built over several phases, the location and its viability as a new commercial hub,
metro will have nine lines of which 32.5 kilometres more commercial and diplomatic offices are
will be underground and 114 kilometres on elevated finding the BKC appealing. With limited existing
rails. The first phase will be fully functional by 2011, supply in the vicinity and two other known
the second phase by 2016 and the third phase developments underway, the potential demand for
by 2021. hotel rooms that is created by the shift in activity
could exceed supply.
l The development of the eight-lane Bandra-Worli
Sealink will improve intra-city connectivity as it l Recent years have seen a trend towards the
will ease the congestion at Mahim Causeway development of mixed-use projects with a hotel
which is currently the only link along the North- component. For instance, a High Court order in
South corridor. Once this happens, the travel late 2005 saw the opening up of 600 acres of
time from one end of the city to the other will be mill land, of which 200 acres has been allocated
greatly reduced, thus increasing competition to commercial space. Various bids for these
among hotels that have so far only competed land parcels are underway for the purpose of
in their micro-markets. mixed-use developments with a retail and hotel
component. Many local landowners are in talks
l Mumbai has the potential to develop into a key with international hospitality brands to launch
shopping destination with a number of new malls new properties and we expect to see more joint
opening in the city. While many are still under ventures in the future.

43 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

l With the availability of land from the mills area, l Cruising is a growing lifestyle choice among affluent
we are likely to witness an increase of commercial Indians and Mumbai is poised to become a prime
activities at locations such as Worli, Parel and destination. The economic growth in the city, along
Lower Parel which may also attract hotel with a new cruise shipping policy, has led to 40
developments. With the new Bandra-Worli Sealink, international cruise lines calling on the port. We
these locations will also be more accessible. expect to see a boost in both domestic as well as
international leisure travel in future.

Key Tourism Data

International Tourism FY2006-07 Change over FY2005-06 (%)

Total International Tourist Arrivals (million) 7.3 +9.2

Domestic Tourism
Total Domestic Tourist Arrivals (million) 14.9 +27.6

Source: Ministry of Tourism, AAI

44 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

International Visitor Arrivals l Indicating the continued growth in international

arrivals, latest available statistics for up to the third
l Our analysis of Mumbai's international tourism quarter of FY2007-08 showed that the number of
market is based on the international passenger international passengers at CSIA had increased by
traffic arriving at CSIA. The ease of accessibility to 11% year-on-year to 5.1 million.
other destinations from Mumbai also reinforces the
city's reputation as an international gateway to the l Given Mumbai's positioning as a commercial hub
rest of the country. and logistics centre, business travel remains the
key motivator for visiting Mumbai. However, the
l International passenger movement at Mumbai's leisure segment has further potential for growth.
CSIA has increased steadily from 4.9 million in
FY2001-02 to 7.3 million in FY2006-07. Year-on- l Anecdotal evidence suggests international visitors
year, international passenger traffic was up 9.2%. generally stayed for two to four days.

International Passenger Traffic via Chhattrapati Shivaji International Airport

8 20

7
15
Number of Passengers (million)

6
10

Annual Growth (%)

5

4 5

3
0
2
-5
1

0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*
Number of Passengers (million) Annual Growth (%)
* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

45 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

Domestic Tourism l The domestic tourism market received a boost from

the entrance of local airlines which made air travel
l The burgeoning business sector is fuelling domestic accessible and more affordable to the masses. For
travel growth. Reflecting the growth of Mumbai's example, Kingfisher Airlines launched direct flights
domestic tourism market, domestic passenger traffic in April 2007 from Mumbai to Nagpur, Indore and
at Mumbai’s Santa Cruz Domestic Airport more than Guwahati. We expect other domestic airlines to
doubled from FY2001-02 to 14.9 million in FY2006- follow with more connections between the
07. The annual growth in domestic passenger traffic commercial capital and other emerging economic
was 27.6%, up from 22% last year. centres in India.

l This growth trend is expected to continue into l Anecdotal evidence suggests domestic visitors
FY2007-08, with latest available statistics for the generally stayed for two to four days, similar to the
first eight months (April to November) of the financial international segment.
year showing a 24.5% year-on-year increase in
domestic air passengers to about 12 million.

Domestic Passenger Traffic via Santa Cruz Domestic Airport

16 30

14 25
Number of Passengers (million)

12 20

Annual Growth (%)

10 15

8 10

6 5

4 0

2 -5

0 -10
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*
Number of Passengers (million) Annual Growth (%)
* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

46 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

HOTEL MARKET OVERVIEW in these sectors. Moreover, Navi Mumbai Special

Economic Zone (NMSEZ) will promise enhanced
l Demand for rooms will remain strong with development and also push the demand for hotel
expectations of a continued steady increase in accommodation in north Mumbai. The construction
arrivals, generating healthy yields across the market. of Navi Mumbai International Airport at Kopra-Panvel
Due to the geographic layout of Mumbai, the south is expected to increase capacity and connectivity,
offers limited opportunities for real estate boosting the demand for hotels in Navi Mumbai.
developments. With the saturation of prime land
in south Mumbai, most of the development is Existing Supply
taking place near the commercial centres of central
Mumbai and the airport vicinity of north Mumbai. l As at end 2007 (latest available statistics), Mumbai
had 74 government-approved hotels with a total
l Traditionally, the Mumbai hotel market has been count of 9,503 rooms.
skewed towards the upper tier hotels, most likely
the result of the high land prices in the city. Most of l The concentration of hotels is now in three
the upcoming projects are expected to fall within broad localities: in south Mumbai, in the Colaba-
the five-star deluxe and five-star hotel category Marine drive area, in north Mumbai next to the
while the mid- to lower tiers are expected to be airports and Bandra-Kurla. Central Mumbai has
developed in the outer suburbs. seen some development with more projects expected
in the future.
l The redevelopment of mill land area in central
Mumbai into commercial will add to the supply l As the journey from the airport to south Mumbai
and enhance the demand in the hospitality sector. can take as long as 90 minutes, visitors on a
Two prominent developments are the Four Seasons short stopover typically stay at hotels near the airport
at Worli and Shangri-La, High Street Phoenix at such as the ITC Grand Maratha Sheraton, Hyatt
Lower Parel. Regency, Le Meridien, The Leela Kempinski and
InterContinental The Grand Mumbai.
l Proposed infrastructure projects such as the Bandra-
Worli Sea Link, Mass Rapid Transit System (MRTS) l According to our research the 226-room Sahara
and Mumbai Trans Harbour Link (MTHL) between Star in Vile Parle near the domestic airport was the
Nhava and Sheva will augment growth in hospitality only major hotel opening in 2007.

47 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

Future Supply with Sofitel at Bandra-Kurla. Additionally,

Starwood is expected to launch its 100-plus
l Our research reveals more than 3,000 new rooms room property under the aloft brand in 2010,
in the pipeline from 2008 to 2011. The majority of and there will be a new 200-room Park Hyatt in
this new supply (51%) is anticipated in 2008. 2011. Searock Sheraton, which was acquired by
Claridges Hotels, is being refurbished and
l The new projects are mainly local brands, many upgraded to a five-star deluxe hotel and is strongly
of which are brand extensions of existing properties rumoured to be rebranded as Mandarin Oriental.
expanding to other parts of the city. For example, The entrance of international brands will raise the
a new Taj Santacruz is coming up near the airport city's accommodation standards.
while Hyatt International recently announced the
development of a Park Hyatt on Marine Lines in l There is also an established but small serviced
south Mumbai, making it their third operation in apartment market in Mumbai. Main developments
the city. by hotel operators include the Lakeside Chalet
Marriott Executive Apartments at Powai Mumbai
l Mumbai will also see several major international (177 units) and Grand Hyatt serviced apartments
players enter the market with flagship properties at Santa Cruz (147 units).
such as the Four Seasons in Worli and Accor

Major Future Supply in Mumbai (as at March 2008)

1.8
1.6
1.4
Number of Rooms (’000)

1.2
1.0
0.8
0.6
0.4
0.2
0
2007 2008 2009 2010 onwards
Estimated Year of Completion
Completed Supply Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources

48 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

The following table details the major supply in the pipeline from 2008 to 2011.

Major Future Hotel Supply In Mumbai (as at March 2008)

Project Name Location Rooms Due/Open Likely Star

Positioning

New/Proposed Hotel Projects

Four Seasons Hotel Mumbai Worli, Central Mumbai 230 2008 Five-star Deluxe
Fortune Select Exotica Navi Mumbai TBC 2008 Four-star
Renaissance Mumbai Hotel & Powai, Central Mumbai 291 2008 Five-star
Convention Centre (expansion)
Ibis Mumbai Mumbai Airport 145 2008 Three-star
Taj Santacruz Mumbai Near Santa Cruz Airport 175 2008 Five-star Deluxe
Radisson Hotel Mumbai Powai, Central Mumbai 275 2008 Five-star
Trident Bandra Kurla Complex 437 2008 Five-star
Sofitel Mumbai Bandra Kurla Complex 311 2009 Five-star
Mandarin Oriental Lands End TBC 2009 Five-star Deluxe
(former Searock Sheraton)
Crowne Plaza Juhu, Mumbai Juhu 225 2009 Five-star Deluxe
Shangri-La Mumbai Lower Parel, Central Mumbai 350 2009 Five-star Deluxe
Westin Goregoan TBC 2009 Five-star Deluxe
aloft TBC 130 2010 Three-star
Lemon Tree Hotel Andheri 250 2010 Three-star
Park Hyatt Mumbai Marine Lines 200 2011 Five-star
Royal Orchid TBC TBC TBC Four-star
Total New/Proposed Supply 3,019

TBC: to be confirmed
Source: Jones Lang LaSalle Hotels

49 Jones Lang LaSalle Hotels

 Digest 2008: Mumbai

Five-Star Deluxe and Five-Star Hotel Market l Occupancy rates, however, recorded a marginal
0.8 percentage point increase to about 78.0%
l Strong demand in the wake of limited supply pushed over the same period.
occupancy and ADR for five-star deluxe and five-
star hotels in Mumbai to a seven-year high in l With room demand anticipated to remain strong,
FY2006-07 as trading performance improved for we expect RevPAR growth to be driven by ADR
the fourth consecutive year. growth in 2008.

l Compared with FY2005-06, ADR rose by 40.4% to

about INR9,000 in FY2006-07. We anticipate
downward pressure due to the additional supply in
the pipeline.

Five-Star Deluxe and Five-Star Hotel Performance in Mumbai

10 90
9 80
8
70
ADR/RevPAR (INR) (’000)

7
60

Occupancy (%)
6
50
5
40
4
3 30

2 20
1 10
0 0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Financial Year*
ADR RevPAR Occupancy (%)
* Beginning 1 April to 31 March
Source: Jones Lang LaSalle Hotels, Industry Sources

50 Jones Lang LaSalle Hotels

 Digest 2008: Pune

PUNE

MARKET OUTLOOK l Hotels from major international chains such as JW

Marriott, Westin and Hyatt are set to start operations
Pune's tourism and hotel industry has the potential by 2010.
to grow and develop further due to the following
key factors: l We forecast business travel to continue as the prime
demand driver in the coming years on account of
l Pune has established itself as a preferred destination increased IT/ITeS activity
for the IT/ITeS industry and is the second most
popular city in Maharashtra after Mumbai for l With the expected room additions we forecast
business and education. With a new international occupancies to dip in the coming years. In our
airport and other infrastructure improvements, its opinion, occupancies will stabilise at around
attractiveness is expected to increase further. 75-80% in the next five years with ADR averaging
INR11,000.
l Our research shows that Pune will record the entry
of around 3,365 rooms between 2008 and 2010.
Around 1,129 rooms of total supply are expected
to come on stream in 2009.

City Snapshot (as at 2007)

Pune
Total Land Area (square kilometres) 700
Resident Population (million) 2.5 (2001 census)
Major Industries IT/ITeS, Manufacturing,
Education

Source: Census of India 2001, City Municipal Website, Jones Lang LaSalle Hotels

51 Jones Lang LaSalle Hotels

 Digest 2008: Pune

TOURISM MARKET OVERVIEW been present in the city and are expanding their
existing operations.
Pune is in the western Indian state of Maharashtra.
Capital of Pune District and the eighth largest urban l An established IT/ITeS destination for major
centre in India with a population of five million, it is domestic and international firms, Pune has large
the second largest city in the state. It is located campuses and offices of both domestic and
approximately 150 kilometres east of Mumbai and is international IT/ITeS firms including TCS, Infosys,
at the eastern edge of the Western ghats on the Wipro, Cognizant and Kanbay.
Deccan plateau.
l The city is home to several reputed government
Pune is widely considered the cultural capital of and private universities attended by students
Maharashtra. The city has several reputed colleges from other parts of India and throughout Asia Pacific.
and other educational institutions and is called the Pune University has more than 100,000 students
"Oxford of the East" (or "Oxford of India"). It has a across a diverse range of studies from engineering
very strong presence in the automobile sector and to medicine to management.
is on its way to consolidating its position as the "Detroit
of India". It is now home to numerous software and l Pune will host the third Youth Commonwealth
IT companies. Games in October 2008. It is expected that 71
countries will take part in these games and the city
Pune is predominantly a business and education will host more than 2,000 athletes and professionals.
destination and derives most of its tourist revenues
from business travel. Compared with other prominent l With its proximity to Mumbai and ease of access
cities in India, air connectivity to Pune is still undeveloped on an expressway or a 30-minute flight, Pune is
and is proving to be an inhibitor towards the growth of easily accessible from international destinations
the city. The Defence Ministry has recently provided in- via Mumbai. The travel time between Pune and
principle clearence for a proposed international airport Mumbai has been greatly reduced following the
project in Pune. opening of the Mumbai-Pune expressway and also
with the advent of multiple flight options via LCCs
Key Trends and Demand Drivers and private airlines.

l Pune is a strong automobile manufacturing base l As a hub for colleges and universities, and a
for major domestic and international car strong automobile manufacturing base, Pune has
manufacturers. Auto majors such as GM, Mercedes a lot to offer.
Benz, Tata Motors and Bajaj Auto have traditionally

52 Jones Lang LaSalle Hotels

 Digest 2008: Pune

Key Tourism Data

International Tourism FY2006-07 Change over FY2005-06 (%)

Total International Tourist Arrivals (million) 6.7 +15.4

Domestic Tourism
Total Domestic Tourist Arrivals (million) 13.6 +31.7

Source: Ministry of Tourism, AAI

International Visitor Arrivals Domestic Tourism

There are no available statistics for international l Domestic passenger traffic at Pune Airport reached
connections to and fro Pune Airport. 1.5 million in FY2006-07, up by more than 250%
from FY2000-01.

l Statistics from AAI show domestic passenger

traffic for the period April to November 2007
increased by 19% to reach 1.1 million compared
with the same period in 2006.

Domestic Passenger Traffic via Pune International Airport

1.6 80
70
1.4
60
Number of Passengers (million)

1.2
50
Annual Growth (%)

1.0 40
0.8 30
20
0.6
10
0.4
0
0.2 -10
0 -20
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2006-07 2007-08
(Apr-Nov) (Apr-Nov)
Financial Year*
Number of Passengers (million) Annual Growth (%)
* Beginning 1 April to 31 March
Source: AAI, Jones Lang LaSalle Hotels

53 Jones Lang LaSalle Hotels

 Digest 2008: Pune

HOTEL MARKET OVERVIEW Future Supply

According to our research and the latest available l Our research shows that Pune will see the entry
statistics, Pune has 36 government-approved hotels of around 3,365 rooms between 2008 and 2010.
with a total of 1,000 rooms. Given the importance of Most of these hotels will be located in the areas of
the city in the economic landscape of India, Pune, Hinjiwadi and Senapati Bapat Marg.
like Hyderabad, has a very low number of rooms
compared with cities such as Mumbai and Delhi. l Hotels from major international chains such as JW
Most of the existing hotels in Pune are located near Marriott, Westin and Hyatt are expected to start
to the CBD. operations by 2010.

Major Future Supply in Pune (as at March 2008)

1.6

1.4

1.2
Number of Rooms (’000)

1.0

0.8

0.6

0.4

0.2

0
2008 2009 2010 onwards
Estimated Year of Completion
Forecast Supply
Source: Jones Lang LaSalle Hotels, Industry Sources

54 Jones Lang LaSalle Hotels

 Digest 2008: Pune

The following table details the major supply in the pipeline from 2008 to 2010.

Major Known Hotel Supply In Pune (as at March 2008)

Project Name Location Rooms Due/Open Likely Star

Positioning

Lemon Tree Hotel City Centre 230 2008 Three-star

Ibis Pune TBC 180 2008 Four-star
Marriott Courtyard West Pune Hinjawadi 153 2008 Five-star
Marriott Courtyard Sassan Road 210 2009 Five-star
The Leela Palace, Kempinski Pune Yerwada 200 2009 Five-star Deluxe
ISTA Hotels and Spa NA 150 2009 Four-star
JW Marriott Airport Road 250 2009 Five-star Deluxe
The Yatra Nagar Road 319 2009 Three-star
Pune Marriott Senapati Bapat Road 430 2010 Five-star Deluxe
Royal Orchid TBC 140 2010 Four-star
Hyatt Regency Airport Road 250 TBC Five-star
Radisson Kharadi 156 N/A Five-star
Peppermint NA 90 N/A Three-star
Westin Koregaon Park 277 N/A Five-star Deluxe
Novotel Magarpatta City 330 N/A Four-star
Total New/Proposed Supply 3,365

TBC: to be confirmed
N/A: not avaliable
Source: Jones Lang LaSalle Hotels

55 Jones Lang LaSalle Hotels

 Digest 2008: Pune

Five-Star Deluxe and Five-Star Hotel Market ADR has increased from INR3,000 to INR7,500.
The growth trend can be attributed to increased
l The five-star deluxe and five-star hotel market business travel as well as the lack of hotel rooms.
segment in Pune has approximately 530 rooms.
This is expected to increase to more than 1,300 l Taking into account the future supply in this segment,
rooms by the end of 2009. we expect the occupancies to stabilise in the near
future and settle at 75% in the next four to five years.
l Occupancies in this segment have increased from ADR is expected to be about INR12,000, backed
70% in 2002 to 82% in 2007. For the same period primarily by corporate demand.

Five-Star Deluxe and Five-Star Hotel Performance in Pune

8 84

7 82
80
6
ADR/RevPAR (INR) (’000)

78

Occupancy (%)
5
76
4 74
3 72
70
2
68
1
66
0 64
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Financial Year*
ADR RevPAR Occupancy (%)
* Beginning 1 April to 31 March
Source: Jones Lang LaSalle Hotels, Industry Sources

56 Jones Lang LaSalle Hotels

Copyright © Jones Lang LaSalle Hotels 2008

Disclaimer
This report is confidential to the recipient of the report. No reference to the report or any part This report has been produced solely as a general guide and does not constitute advice. Users
of it may be published in any document, statement or circular or in any communication with should not rely on this report and must make their own enquiries to verify and satisfy themselves
third parties without the prior written consent of Jones Lang LaSalle Hotels, including specifically of all aspects of information set out in the report. We have used and relied upon information
in relation to the form and context in which it will appear. from sources generally regarded as authoritative and reputable, but the information obtained
from these sources may not have been independently verified by Jones Lang LaSalle Hotels.
We stress that forecasting is a problematical exercise which at best should be regarded as
an indicative assessment of possibilities rather than absolute certainties. The process of Whilst the material contained in the report has been prepared in good faith and with due care,
making forward projections involves assumptions in respect of a considerable number of no representation or warranty is made in relation to the accuracy, currency, completeness,
variables which are acutely sensitive to changing conditions, variations in any one of which suitability or otherwise of the whole or any part of the report. Jones Lang LaSalle Hotels, its
may significantly affect the outcome and we draw your attention to this factor. Jones Lang officers, employees, subcontractors and agents shall not be liable (to the extent permitted by
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