Pre-Feasibility Study on Islamabad Airport Hotel
The
Sanctuary Inn Islamabad International Airport Submitted to: Board of Directors The Sanctuary Inn New Islamabad International Airport Dated: March 1, 2015
Pre-Feasibility Study on Islamabad Airport Hotel
March 1, 2015 Board of Directors The Sanctuary Inn New Islamabad International Airport Dear Sir, The Sanctuary Inn (TSI) Board of Directors, engaged The Corporate Bees (HR & Business Consulting) to conduct a market validation study and an analysis to determine the financial feasibility of a hotel, potentially with viability at the location of New Islamabad International Airport. The attached is our final draft report This deliverable has been prepared under the following general assumptions and limiting conditions: • The findings presented herein reflect analysis of primary and secondary sources of information that are assumed to be correct. The Corporate Bees (TCB) utilized sources deemed to be reliable, but cannot guarantee their accuracy. • No responsibility is taken for changes in market conditions after the date of this report and no obligation is assumed to revise this report to reflect events or conditions occurring after the date of this report. • TCB has no control over construction costs or timing of construction and opening. • Macroeconomic events affecting travel and the economy cannot be predicted and may impact the development and performance of the project. We have enjoyed serving you on this engagement and look forward to providing you with continuing service.
Sincerely yours, The Corporate Bees (HR & Business Consulting)
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CONTENTS Page No
CHAPTER I: Introduction 6 CHAPTER II:
Economic and Demographic Analysis
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CHAPTER III: Market Analysis and Trends 15 CHAPTER IV: Trends in International Market 21 CHAPTER V: Definition of Project 41 CHAPTER VI: Financial Projection 49 CHAPTER VII: Recommendation 55
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Pre-Feasibility Study on Islamabad Airport Hotel
Introduction The Corporate Bees (HR & Business Consulting) was engaged by the Board of Directors of The Sanctuary Inn to study the hotel market in Islamabad & Rawalpindi as well as learn the concept of hotels located near airports across the globe, and the pre-feasibility of responding with either a decision to construction or not to at potential proposed locations near New Islamabad International Airport. This pre-feasibility study is a detailed risk analysis of a project. It evaluates a project on the basis of operational income and expenses and shows its ability to meet the minimum equity yield requirements. The relevance of prospective market and pre-feasibility study relies not only on the independence and objectivity of its developers, but also on the accuracy and timeliness of the data used in the analysis. There is a plethora of information concerning the hotel market across globe, but very few reports actually use current or reliable data. Other factors, which can play for or against a hotel project in the Pakistani market, include ownership issues, local or national government interests, and financing. In order to support a proposed hotel complex, we have studied hotel models in various regions and countries by applying the following method of approach: • • • • • • •
Pre-fieldwork Fieldwork Market data analysis and conclusions Financial projections Report writing, review and revision Presentation to the client Pertinent amendment and final draft submission to the client
The Corporate Bees (TCB) has conducted a hotel feasibility study by using a detailed work program that provides a step-by-step approach. This program is designed to keep the engagement flowing smoothly and within the time and cost budget, The Corporate Bees apply the principles of the “Uniform System of Accounts for Lodging Industry” published by the Educational Institute of the American Hotel & Lodging Association. The high international acceptance of this accountancy system in the hospitality industry allows a direct comparison with other hotels and restaurants using this system and therefore enables a much higher cost transparency of the examined hotel businesses. This pre-feasibility study consists of the following key elements: • Background to the country, region and location for the proposed hotel including economic and demographic information; • An examination of the existing, and likely future tourism trends in the area; • Analysis of the trading performance of potentially competitive hotels; • A market analysis, including existing and future supply of and demand for hotel accommodation in the area; • Comments on the proposed hotel’s position in the market and projection of room rates and occupancy; • A statement of estimated profit and loss which includes all other revenues and expenses to gross operating profit level; • Cash flow projections for the project based on preliminary estimates of costs and method of financing.
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As a result of the analysis and research, The Corporate Bees is recommending the Board of Director to build sixty 60 rooms including five 5 Executive suites with full range of services and amenities Four Star Hotel on proposed fabulous land (84000 Sq ft) which is adjacent to New Islamabad International.
Purpose of the Document The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, and production, finance and business management.
Project Profile The project is about starting the business of a Hotel at New Islamabad International Airport (NIIA), Islamabad. The proposed plan is to offer complete package of boarding / lodging and dinning for tourists / visitors, and conference hall / ball rooms for different corporate clients for holding meetings / seminars etc. at/near NIIA.
Project Brief The study provides basic information regarding the investment opportunity for setting up an Airport Hotel. This project is a facility located near New Islamabad International Airport (NIIA) and where an airport is the primary focus for hoteliers, it may be called Islamabad Airport Hotel. The project would serve as a place where tourists, visitors, vacationers, leisure & motorway travelers could stay overnight, dine, and enjoy the breathtaking flight landing and take off views of the International Airport. Initially the project is proposed to attract domestic tourists/visitors/travelers but after its maturity, international tourists could also become a major part of its customer base.
SWOT Analysis A SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis has been conducted. A SWOT analysis identifies critical factors that will impact the Project’s overall performance. It also suggests implications for the sizing and quality of the project given the current environment. Strengths and weaknesses are currently factors impacting the potential project as well as items inherent in the project or market, while opportunities and threats are potential and external factors impacting the success of the Project.
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Pre-Feasibility Study on Islamabad Airport Hotel STRENGTHS
WEAKNESS
Visibility: The TSI will be clearly visible from the airport terminals as well as the traffic in and out on airport facility as it is just 1.6KM away from the main Terminal and 0.6KM from Cargo Terminal. The visibility factor is very vital for the travelers, who possibly can see the facility through Ariel view while flying.
Small Community Size: The population of that area and the community size is small in comparison to metropolitan areas, such as Islamabad or Rawalpindi downtown areas. As a result, there is not a critical mass of hotel demand from these traditional sources at the moment. This is the largest hindrance to the development and viability of a hotel, especially one with full-service amenities like catering and Access: The TSI will have an opportunity to access from ballroom space. However, initially the focus will be on leimultiple sides i.e. Motorway access via Thalian Interchange sure travelers and steadily development of townships will be (3.8KM), direct access from airport (1.6KM), and direct ac- a good addition in this market. cess from highway from Kashmir Highway Islamabad. The billboard and off-site advertisement will attract the motorway travelers to visit the facility and witness the quality at least once. Facility for Groups: Facility to attract groups they do not like being one of many events in the city. A group is able to book an entire facility and not host simultaneous events with other potential groups. This gives the sense of added importance and attention, as well as eliminates competition for shared facility space and amenities. In TSI, a group will likely “own the hotel� and establishments while in the City, providing a sense of attention and pride to the group, compared with Marriott, Serena & PC, which are much larger facilities. Flight to Quality: The location of proposed project is very much ideal and the recommended facility will be of one and only facility near to NIIA with complete services and amenities purely based on international standards. No such facility is available within 35KM radius area with such complete services and amenities.
OPPORTUNITIES
THREATS Competition: The Project may experience a competition in the future if another similar kind of facility developed. While, apparently there is no facility under way now or near future.
Non Availability of Existing High Quality Select or Full-Service Hotel: There is no direct competitor for the Project in that specific area as of yet, suggesting it would own the market. Growing Population and Business Base: Since the area is under developed or yet to be developed therefore, in future population base and business community continue to grow, which will be accompanied by more hotel room and meeting space demand. Catalytic Development: The proposed hotel can serve as a catalytic development to retain and attract businesses, groups and visitors to that particular area.
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Economic and Demographics Analysis
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Pre-Feasibility Study on Islamabad Airport Hotel
Economic and Demographics Analysis Economic Overview Islamabad is the capital city of Pakistan located within the Islamabad Capital Territory. It has a population of 2 million and together with its neighboring twin city of Rawalpindi, the greater Islamabad-Rawalpindi metropolitan area is the third largest in Pakistan with a population of over 4.5 million inhabitants. Since its foundation, Islamabad has attracted people from all over Pakistan, making it one of the most cosmopolitan and urbanized cities of Pakistan. As the national capital, Islamabad is the seat of the Government of Pakistan; the Presidential Palace (Aiwan-e-Sadr) is located here. Islamabad is also home to the Pakistan Monument, which is one of the two national monuments of Pakistan. Islamabad hosts a large number of foreign diplomats, politicians and government employees. The Capital Development Authority is responsible for managing the public works within the city. Islamabad is located in the Pothohar Plateau in the northeastern part of the country, within the Islamabad Capital Territory. The region has historically been a part of the crossroads of Punjab and Khyber Pakhtunkhwa with the Margalla Pass acting as the gateway between the two regions. The city was built during the 1960s to replace Karachi as Pakistan’s cap-
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ital. Islamabad is a well-organized international city divided into several different sectors and zones. It is regarded as the most developed city in Pakistan and is ranked as a Gamma+ world city. The city is home to the Faisal Mosque, the largest mosque in South Asia and the fourth largest mosque in the world. Islamabad has one of the highest literacy rates in Pakistan. There are 16 recognized universities in Islamabad, including Quaid-i-Azam University and the National University of Sciences and Technology. Allama Iqbal Open University in Islamabad is one of the world’s largest universities by enrollment. Islamabad has the lowest infant mortality rate in the country at 38 deaths per thousand as compared to the national average of 78 deaths per thousand. The Pakistan Institute of Medical Sciences is one of the largest research oriented hospitals in South Asia. Islamabad is a net contributor to the Pakistani economy, as whilst having only 0.8% of the country’s population, it contributes 1% to the country’s GDP. Islamabad Stock Exchange, founded in 1989, is Pakistan’s third largest stock exchange after Karachi Stock Exchange and Lahore Stock Exchange. The exchange has 118 members with 104corporate bodies and 18 individual members. The average daily turnover of the stock exchange is over 1 million shares. As of 2012, Islamabad LTU (Large Tax Unit) was responsible for Rs 371 billion in tax revenue, which amounts to 20% of all the revenue collected by Federal Board of Revenue. Islamabad has seen an expansion in information and communications technology with the addition two Software Technology Parks, which house numerous national and foreign technological and information technology companies. The tech parks are located in Evacuee Trust Complex and Awami Markaz. Awami Markaz houses 36 IT companies while Evacuee Trust house 29 companies. Call centers for foreign companies have been targeted as another significant area of growth, with the government making efforts to reduce taxes by as much as 10% to encourage foreign investments in the information technology sector. Most of Pakistan’s state-owned companies like PIA, PTV, NTC, PTCL, OGDCL, FFC, and Zarai Taraqiati Bank Ltd. are based in Islamabad. Headquarters of all major telecommunication operators such as PTCL, Mobilink, Telenor, Ufone, and China Mobile are located in Islamabad. Above all armed forces HQ’s are located in Islamabad-Rawalpindi.
Accessibility and Transportation Islamabad is connected to major destinations around the world through Benazir Bhutto International Airport, previously known as Islamabad International Airport. The airport is the third largest in Pakistan and is located outside Islamabad, in Chaklala, Rawalpindi. In fiscal year 2004 - 2005, over 2.88 million passengers used Benazir Bhutto International Airport and 23,436 aircraft movements were registered and in fiscal year 2008 - 2009, over 3,136,664 passengers used Benazir Bhutto International Airport and 34,025 aircraft movements were registered. New Islamabad International Airport is under construction at Fateh Jang (our proposed recommended place for the project) to cope with the increasing number of passengers. When completed, the airport will be the largest in Pakistan. The airport will be built at a 11
Pre-Feasibility Study on Islamabad Airport Hotel cost of $400 million and is expected to be complete and operational by 2016. This will be the first green field airport in Pakistan with an area of 3,600-acre (15 km2). All major cities and towns are accessible through regular trains and bus services running mostly from the neighboring city of Rawalpindi. Lahore and Peshawar are linked to Islamabad through a network of motorways, which has significantly reduced travelling times between these cities. M-2 Motorway is 367 km (228 mi) long and connects Islamabad and Lahore. M-1 Motorway connects Islamabad with Peshawar and is 155 km (96 mi) long. Islamabad is linked to Rawalpindi through the Faizabad Interchange, which has a daily traffic volume of about 48,000 vehicles. Rawalpindi-Islamabad Metro bus Service was inaugurated in February 2014 and the work is scheduled to complete in 2015. There is an Islamabad/Rawalpindi central railway station that allows travel to every major city in Pakistan. In addition to freight, Pakistan Railways provides passenger rail service throughout the day, with train coaches that have air-conditioning in first-class. The routes the British built from Rawalpindi, which contained a major military base, linked to Lahore, Karachi, Peshawar, Quetta, Multan, Faisalabad, Hyderabad, Sindh, Sukkur, Bahawalpur, Jhelum, Gujrat, Gujranwala, Kohat, Khanewal, Nawabshah, Nowshera and the Malakand Pass.
Culture and Tourism Islamabad is home to many migrants from other regions of Pakistan and has a cultural and religious diversity of considerable antiquity. Due to its location on the Pothohar Plateau, remnants of ancient cultures and civilizations such as Aryan, Soanian, and Indus Valley civilization can still be found in the region. A 15th-century Gakhar fort, Pharwala Fort, which was built on the remains of a 10th-century Hindu fort, is located near Islamabad. Rawat Fort in the region was built by the Gakhars in 16th century and contains the grave of the Gakhar chief, Sultan Sarang Khan.
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Saidpur village in Islamabad is supposedly named after Said Khan, the son of Sultan Sarang Khan. The 500-year-old village was converted into the place of Hindu worship by a Mughal commander, Raja Man Singh. He constructed a number of small ponds: Rama kunda, Sita kunda, Lakshaman kunda, and Hanuman kunda. The region is home to many Hindu temples that are preserved, showing the history of Hindu civilization and architecture in the region. The shrine of Sufi mystic Pir Meher Ali Shah is located at Golra Sharif, which has a rich cultural heritage of the pre-Islamic period. Archaeological remains of the Buddhist era can also still be found in the region. The shrine of Bari Imam was built by Mughal Emperor Aurangzeb. Thousands of devotees from across Pakistan attend the annual Urs of Bari Imam. The event is one of the largest religious gatherings in Islamabad. In 2004, the Urs was attended by more than 1.2 million people. The Lok Virsa Museum in Islamabad preserves a wide variety of expressions of folk and traditional cultural legacy of Pakistan. It is located near the Shakarparian hills and boasts a large display of embroidered costumes, jewellery, musical instruments, woodwork, utensils and folkloristic objects from the region and other parts of Pakistan.
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Pre-Feasibility Study on Islamabad Airport Hotel Islamabad holds the distinction of a leading city in tourism industry of Pakistan. Islamabad has the natural beauty and good atmosphere for both the seasons and it is a good place for the foreign and local tourists. Pakistan travel and Tourism Corporation is doing every step to promote tourism in the country. There are numerous places in Islamabad, which are beautiful and attract the tourists to Islamabad .i.e. Margalla Hills, Islamabad Zoo, Shaker Parrian, Rawal Lake, Lotus Lake, Khanpur Dam Lake, Simli Dam Lake, Shah Faisal Mosque, Daman-e-Koh, Fatima Jinnah Park, Rose And Jasmine Garden, Japanese Park, and Chattar Park. There are numerous places in Pakistan, which are worth seeing and attract the attention of tourist of both national and international. i.e. Murre, Patriata, Nathigali, Ayubia, Bhurban, K2, Rakaposhi, Nanga Perbat, Rush Peak, Badshahi Masjid, Lahore Fort, Minar-e-Pakistan, Jehangir Tomb, Mazar-e-Quaid, Naran And Kaghan, Hunza Valley, Swat Valley, and Quetta Valley.
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Market Analysis & Trends
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Pre-Feasibility Study on Islamabad Airport Hotel
MARKET ANALYSIS & TRENDS General Hospitality industry is one of the fastest growing industries in the world but unfortunately in Pakistan people are unaware of it. It is well-known that tourism activity is minimal in Pakistan and there is no surprise that the law and order situation is the biggest reason. Thus, the hotel industry becomes largely dependent on the corporate sector and other business institutions. The industry’s decline began with the global recession in 2008. It was further hit by terrorist activities across the country. The attack on Marriott Hotel in Islamabad had a devastating impact. Additionally, Pakistan being banned from hosting international sporting events took down what was left of the tourism industry. In countries, where tourism is a key component of the economy, the hotel industry contributes around 20% to GDP. In Pakistan, however, its contribution is at a meager 3%, said an industry expert. Despite this stagnant growth, a few new structures appeared in different cities especially in Lahore where currently four new five-star hotels are under construction. “The hotel industry showed gradual growth since 2012 and in the first quarter of 2014, the growth rate was 7%, more than the corresponding period previous year, which is encouraging,” Pearl Continental hotel Lahore General Manager Haseeb Gardezi. The growth was primarily due to increased business activity after the general elections, experts said. Foreign delegations along with local business activity increased hotel occupancy rates. However, the recent attack at Army Public School Peshawar, political instability and the military operation in North Waziristan once again has slowed down the growth in hotel industry. The picture is hopefully set to get clearer by September this year and if things go right, then a 10% growth target will be set for next year. Previously, when the law and order situation in the country was better, the textile sector was contributing a handsome share in hotel’s revenue. Foreign firms and their officials often visited Pakistan to finalize transaction deals. Trade with India is another attraction for the hotel industry, especially for Lahore, but some players see this prospect with limited effect. “For growth, the Indian component will play a limited role. The industry will revolve around the corporate sector and other business activities”, said Ramzan Sheikh, an entrepreneur in the hospitality industry. “The local hospitality brands should strengthen themselves now because foreign brands might hesitate to invest in Pakistan for some years to come.” The hospitality industry in Pakistan has taken a hit due to multiple problems faced by the country. People associated with the industry, however, remain optimistic over future growth provided that business activities regain momentum.
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Current & Future Hotel Supply The Hotel industry is among the top three constituents of the world economy after oil and autos. It is larger than automobile industry in Japan, agriculture in the U.S.A. and banking in Switzerland. Whereas, in Pakistan it is constantly struggle to get maximum out of it. Islamabad’s significance as the capital city of Pakistan and its location with the backdrop of the Margalla Hills plays a pivotal role in its hospitality sector. The key driving factor for the hospitality market of Islamabad is the presence of all government offices, foreign embassies and NGOs in the city due to which government employees, foreign dignitaries and delegations have to visit the city. In addition, Rawalpindi, which is the Army Headquarters of Pakistan, is only a thirty minutes drive from Islamabad. Islamabad, the political and commercial powerhouse of Pakistan, has a prosperous hotel market. As a city of distinctive tourist stop over, it represents an important travel destination with a balanced demand base in terms of corporate and leisure tourism. Basically, hoteliers in Pakistan benefit from the very good market characteristics and hence reported remarkable performance growth during the last decade. The field of hospitality management stipulates the hotels and restaurants to be more service innovator in order to create a center of attention for a larger share of its customers. Tourism and hotel service industry go side by side. A country having a larger number of tourists must have such type of hotels and restaurants which offer what exactly travelers want. The hotel industry showed a growth of 9.7 percent in hotels and 9.5 percent in rooms over the year 200506. The average growth rate in Hotel Industry was 5.0 percent in hotel establishments and 3.5 percent in rooms during the last five years. According to our estimates, Islamabad’s hotel market currently comprises of 2,500 - 3,000 rooms approx. This includes all categories of hotels currently operating in Islamabad along with guesthouse rooms. Despite being the capital of the country, there are only two five-star hotels operating in the city, Serena Islamabad and Marriott Islamabad. In addition to the two five-star hotels, there are many three and four-star hotels operating in Islamabad. Few major four-star hotels operating in the city are Crown Plaza, Islamabad Hotel (formerly Holiday Inn), Best Western Hotel and the recently refurbished and re-launched Regency Hotel. Anecdotal evidence suggests there are more than 200 guesthouses operating in Islamabad. During 2004 - 2007, upon realizing the potential of Islamabad, many developers planned to develop hotels in the city with brands such as Intercontinental, Sheraton, Grand Hyatt, and Avari. There were ten hotels proposed for development in the city which would have injected around 1,500 rooms. However, due to the economic recession and security issues of the country, majority of those projects were plagued by postponement/construction delays. In 2009, Bahria Town ventured into a joint collaboration with Sheraton Hotels to develop two hotels in Islamabad, The Sheraton Golf City and The Sheraton Hotel Islamabad. The Sheraton Golf City hotel is a golf resort with a master plan and elevation similar to the Atlantis Hotel, Dubai. It is currently facing construction delays. The other Sheraton Hotel was planned for development on Islamabad Club Road. Currently, Ramada is the only hotel near completed with 110 rooms. One Constitution Avenue will feature a 380 room’s five-star hotel with the brand Grand Hyatt. 17
Pre-Feasibility Study on Islamabad Airport Hotel
Competitive Analysis From today’s perspective the proposed hotel will face approximately five main competitors. The list of competitors summarizes the assessment of the main leading hotels in Islamabad, which are most likely to be the chief competitors of this proposed hotel project. This assessment was conducted by an evaluation of the most prominent features and facilities of these hotels in terms of location, size of hotel, size of rooms, pricing, product attributes, strengths, specials, key accounts, market segmentation as well as average occupancy rate. After assessing all venues within the five to three star segments in twin city market, the following hotels are identified as the most important competitors in the market: • • • • •
Serena Hotel, Islamabad Marriott Hotel, Islamabad Pearl Continental Hotel, Rawalpindi Islamabad Hotel, Islamabad Ramada Hotel, Islamabad
Rooms
Rate (Min-Max)
Ball Rooms
Marriott Islamabad
290
190 - 260 USD
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Pearl Continental Rawalpindi
200
130 - 340 USD
2
Islamabad Hotel
131
16,000 - 25,000/- PKR
4
Ramada Hotel Islamabad
110
Hotel Name Serena Hotel Islamabad
387
250 - 600 USD
10,764 - 26,910/- PKR
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2
All above five mentioned hotels are about 35KM away from the New Islamabad International Airport (NIIA). Therefore, prospective for new hotel facilities closer to airport will be of high value for the clientele.
Hotel Demand Pakistan has recently emerged as an important investment destination for new hotel development. After a gap of almost five years, hotels in Pakistan are witnessing substantial increase in growth, both in terms of occupancy and average rate and this trend is expected to continue. Since Pakistan is on the rising curve of the trend cycle, hotels will show signs of better performance in yields through consistent occupancies and higher average rates. The feasibility of new hotel development is determined by the relationship between replacement costs and existing values for hotels. Based on hotel value per room and the associated cost benefit ratio, the cities in Pakistan have been ranked. The rankings may be used as a measurement index and should enable investors to choose the city of development. 18
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Pakistani hotel industry has experienced a rapid growth during 2004-2006 (Musharraf regime). Because of decreasing rigorousness of foreign direct investment worldwide, many industries flourished rapidly. Hotel industry is also not an exception. Many international and domestic giant players are in the field. They are also making efforts to become more competitive. Hotel stay is not only limited to foreign travelers like tourists but domestic travelers also. The Foreign and domestic Tourism Survey 2000, conducted by the Ministry of Tourism showed that the rate of stay of foreign tourists is 34.7 percent while 15 percent is the rate of stay of domestic tourists in hotels and 95% annual occupancy (Ministry of tourism 2005-6). Michel A Galopin General Manager of Islamabad Serena Hotel has recently said that Pakistan has huge potential for hospitality industry. An improved security situation of the country can surely contribute greatly toward promotion of tourism industry as well. Tourism is a growing industry in Pakistan, based on its diverse cultures, people and landscapes. Examples include ancient civilization ruins such as Mohenjo-daro, Harappa and Taxila, to the Himalayan hill stations that attract those interested in field sports and winter sports. Pakistan is home to several mountain peaks over 7,000 m, which attracts adventurers and mountaineers from around the world especially to K-2. The northern parts of Pakistan have many old fortresses, towers and other architecture as well as the Hunza and Chitral valleys, the latter being home to the small pre-Islamic animist Kalash community who claim descent from the army of Alexander the Great. Punjab is the site of Alexander’s battle on the Jhelum River and the historic city Lahore, Pakistan’s cultural capital with many examples of Mughal architecture such as the Badshahi Masjid and the Shalimar Gardens. It is believed that there are prospects of growth in hotel industry in the long and expect market to rebound in the long term depending on the implementation of appropriate policies by the government for increasing domestic and foreign tourism, closure of illegal guesthouses and reducing safety and security risks. The proposed recommended facility for hotel is near to New Islamabad International Airport (NIIA) which is being constructed. It is being built to replace the existing Benazir Bhutto International Airport
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Pre-Feasibility Study on Islamabad Airport Hotel located in Chaklala, Rawalpindi. It is expected to be completed and operational by January 2016. The airport will have 180,000m² modular terminals building which will initially be able to handle 9 million passengers and 80,000 metric tons cargo per annum. The numbers are expected to reach 15 million passengers by 2019 and increase to 25 million passengers by 2024. Being a new airport, a significant portion of the land has been earmarked for commercial purposes such as duty-free shops, hotel and convention centre, air malls, business centre, food courts, leisure and recreational facilities.
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TRENDS IN INTERNATIONAL MARKET
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TRENDS IN INTERNATIONAL MARKET Hotel Properties near or at International Airports
The past decade has seen the rise of a new style of airport hotel. A luxurious, resort- style haven that takes the weary traveler from airport scramble to an unexpected sanctuary in a matter of steps. These uber convenient hotels are in growing demand as time poor business travelers find they can be both productive and relaxed.
What characterizes the hotel near airport? Many of the world’s major airports have hotel properties located next to them or in close proximity. However, the new hotel near airport hotel sits near the physical boundary of the airport. Connected or located adjacent to airport/cargo terminals, it allows travellers to step directly from their arrivals gate, in most cases via Immigration, into a different world. The majority of these hotels are five-star properties that blend luxury with convenience. In contrast to the sterile airport hotels of old, these newer properties exude the local culture, beauty and style throughout their design. They acknowledge that they are providing the traveller’s first experience of a country. From room furnishings, to artwork, and even panoramic views or plane spotting advantages, the new airport hotel design immediately reminds the traveller of which country they are visiting. Rooms are of a high quality with an emphasis on comfort, and noise levels associated with the airport are minimized through effective sound proofing. Airport hotels offer excellent facilities for the travellers who need to work, including in-room Wi-Fi, meeting rooms, business and conference facilities, and ambient lobbies. Travellers working for multinational companies can meet face-to-face with peers or clients based in the city where they are transiting, away from the hustle of the airport terminal. Leisure facilities also abound in these properties, allowing travellers to dine in relaxed settings, work out at the gym, enjoy a massage or soak up a rehydrating skin treatment. What’s on offer at major airports? The airport hotel product has changed dramatically and helped create a new market. They are now meeting centres, places to enjoy fine dining, and places to relax in indulgent spas you would expect at a luxury resort. “In Bangkok, Novotel Suvarnabhumi Airport has packages such as ‘24 hours occupancy from the time you arrive’, recognising that guests can arrive at any hour of the day or night. The Novotel is a virtual resort right next to the airport because it is so often used by people to re-set their body clocks after an extended stay in Europe. It offers 24 hour breakfast, a resort-style pool, large spa centre and extensive restaurant facilities. It’s not unusual for guests to stay a couple of nights to reacclimatise themselves.” 22
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Tom Rosepick, General Manager of the Marriott Houston Airport Hotel, which offers free shuttle services to/from the airport via underground tram, says there are several reasons why the US has less airport hotels directly connected to the terminal than Asia. Mr Rosepick believes one of the biggest changes in airport hotels over the past decade has been technology. “At Marriott Houston Airport we’re providing more free and reliable wireless access in the hotel lobby and upgrading the capacity of our network to allow for several devices per guest to connect,” he said. “We’re also providing more outlets in the lobby for charging devices, as well as boarding pass printers and flight boards so guests can check their gate and departure information.” Michael Johnson, General Manager of the PARKROYAL Melbourne Airport, says that as a hotel located next to a 24-hour airport, the PARKROYAL understands that guests have travelled from around the world and are on different time zones. “We aim to be a ‘trusted local companion’ for our guests, so we have implemented a flexible service culture. This includes a 4.00am in-room dining start for our early departures, staggered rostering in front office and housekeeping to cater for early and late arrivals, plus the ability to service the needs of any delayed flights,” he said. The services and facilities offered by modern airport hotels around the world vary depending on the airport to which they are linked. For example: In Singapore, the Crowne Plaza Changi Airport allows travellers to link to Terminal 3 via a cutting-edge bridge, while Terminals 1 and 2 are accessible by Skytrain. A distinguishing feature is the tropical resort hidden inside this hotel, with courtyard gardens and a landscaped pool area. Guests can host a tropical garden conference in any of the seven meeting rooms and ballroom, while peaceful garden views can be enjoyed from the lobby lounge or al fresco courtyard. The hotel also has a bar, restaurant and spa facilities. In Europe, the Hilton Frankfurt Airport is situated directly above the InterCity Express (ICE) railway station with direct pedestrian access via skywalk to Terminal 1. Located in the iconic ‘The Squaire’ building, the hotel features 10 meeting rooms and a grand ballroom, a 24-hour business centre, 24hour fitness centre, sauna, lounge and bar, and a restaurant. All guest rooms and suites feature soundproof windows, LCD TV and dedicated work space. In Canada, the Fairmont Vancouver Airport was designed to redefine airport accommodation when it opened in 1999. Situated exactly 99 steps from the US departures terminal this highly awarded hotel is a haven for harried travellers. Features include total soundproofing of guest rooms, a noise-free zone and ‘quiet rooms’ where there are no bellmen, housekeeping or room services to keep guests awake. With amazing views over the runways and the majestic Rocky Mountains. The hotel also offers unique activities including Learn to Fly packages in a motion simulator. Other packages allow guests to leave their bulky winter woolies in storage before their departure to a warmer part of the world - a feature that is becoming popular due to increased luggage restrictions now enforced by the airlines. There are even BMW bicycles for the energized traveller - ready to explore the nearby trails. Source: White Paper published by FCM Travel Solutions http://www.fcm.travel/white-papers/transit-another-world-rise-airport-hotel
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Pre-Feasibility Study on Islamabad Airport Hotel Some relevant examples of airport hotel properties from Middle Eastern, East Asian and American continents have been described below: 1. 2. 3. 4. 5. 6.
Concorde Inn Kuala Lumpur International Airport (KLIA) Malaysia Miami International Airport Hotel, USA Dubai International Airport Hotel, Dubai Le Meridien Hotel Dubai Airport, Dubai PARKROYAL Melbourne Airport, Australia The Houston Airport Marriott, USA
Concorde Inn Kuala Lumpur International Airport (KLIA) Malaysia Concorde Inn KLIA is strategically located and getting to Concorde Inn KLIA from both airports Kuala Lumpur International Airport (KLIA) and Kuala Lumpur International Airport 2 (KLIA2). Hotel guests can conveniently transit to the hotel via their complimentary airport shuttle services.
Exuding a relaxing ambience with the resort-feel design and cool colors, Concorde Inn KLIA has 338 well-furnished rooms and suites, offering comfortable accommodation in KLIA with four room categories, ranging from Superior, Deluxe, and Executive to Suites. For good dining in Sepang area, Concorde Inn KLIA features a variety of food selections that have earned good reputation for its fine quality mix of local, Asian and Western cuisine, of sumptuous quantity that are well-received by our guests. Alternatively, you may relax over a drink at the poolside which offers a nice view of the swimming pool and beautiful lush greeneries of a Japanese Garden. Concorde Inn KLIA gives you the memorable service as any those hotels in Kuala Lumpur. Concorde Inn KLIA offers various flexible meeting and incentives packages that can be tailored to suit your requirements and budgets. The hotel has 6 well-equipped function rooms can accommodate up to 300 guests. This Sepang hotel is about 28-minute ride on the Express Railway Link or 50 minutes drive to most Kuala Lumpur hotels.
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Accommodation Concorde Inn KLIA is an international budget hotel in Sepang with a total of 338 well-furnished rooms and suites for your comfortable accommodation in KLIA. Guest rooms are categorized into Superior Rooms, Deluxe Rooms, Executive Rooms, Executive Suites and Family Suites. All rooms are equipped with individually controlled air-conditioning, color TV with six national channels and five satellite TV channels (24-hour coverage), wireless Internet access, coffee and tea making facilities, private shower, International Direct Dial telephone facility, mini-bar, in-room safe, hair dryer and complimentary bottled drinking water. Superior, Deluxe and Executive Rooms have a floor area of between 19m2and 27m2, while Executive Suites and Family Suites are between 57m2 and 89m2 in area. Guest Room Categories 1. Superior Rooms 2. Deluxe Rooms 3. Executive Rooms 4. Executive/Family Suites
• • • • • • • • • •
Room Amenities Individual Controlled Air-conditioning Unit Cable & Satellite TV channels Coffee & Tea Making Facilities Private Shower Telephone with IDD Service In-room Safe Deposit Box (selected room only) Mini-bar (selected room only) Hair Dryer Complimentary Bottled Drinking Water Complimentary Wifi Internet Access
Dining Concorde Inn Kuala Lumpur International Airport has three food and beverage establishments serving sumptuous and a variety of mix Asian and Western cuisine. Each establishment provides a distinctly different but memorable dining experience - from delightful dining to casual meals in a sporty and fun atmosphere. Be it a brief transit or stop-over, Concorde Inn KLIA is the place for travelers temporary sojourn in the vicinity of KLIA. They can have a light meal or drinks, and enjoy the warmth and charm of this 25
Pre-Feasibility Study on Islamabad Airport Hotel
Sepang hotel in KLIA where hotel deliver professional and personalized service. • Melting Pot Café • Crossroads Lounge • Poolside Snack Bar
Meetings & Events Concorde Inn KLIA is the ideal choice for meetings in Kuala Lumpur; for ease and flexibility due to its close proximity to Kuala Lumpur International Airport. This Sepang hotel in KLIA has six wellequipped function rooms numbered and named after the hotel’s brand. Concorde 1, with a floor area of 280 square meters, is the most versatile amongst all meeting rooms and can accommodate up to 300 guests in various settings. The smaller meeting room is Concorde 6 with a floor area of 48 square meters that can seat 15 to 20 persons comfortably.
Facilities & Services Concorde Inn KLIA offers a wide range of facilities and services to complement travelers stay. Be it a secretarial service at Business Centre or a leisure activity at the gym or pool; travelers will find it available at their convenience within the hotel. • Complimentary Transfer • Executive Business Centre • Concierge / Other Services 26
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• • • • • • • • • • • • • •
Swimming Pool Leisure Spa Gymnasium & Health Centre Drugstore / Gift Shop Sports & Recreation Complimentary daily newspaper (on request) Safety Deposit Box Wireless Internet (complimentary) Air Ticketing Service Doctor on Call Foreign Currency Exchange Limousine Hire Mail and Information Travel & Tour Assistance
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Pre-Feasibility Study on Islamabad Airport Hotel
Miami International Airport Hotel Miami International Airport Hotel (MIA Hotel) is inside the airport terminal, on concourse E, at the Departures level. Guests have direct access to airline ticket counters, departure concourses, airport concession shops, restaurants, public transportation and rental car center among other airport features and services. At the hotel, guests are able to dis-engage from the hustle and bustle of the airport, making layovers, delays and overnight stays seem appealing.
Accommodation MIA Hotel features elegantly appointed accommodations that create a warm and peaceful atmosphere; its 252 rooms and 7 suites are soundproof and nonsmoking. All rooms are equipped with premium bedding (Sealy Posturepedic sleep system), flat screen TV’s with ondemand movies available, telephone with voicemail, clock radio and coffee maker. Room service, concierge baggage service, business center services and conference center facilities with full catering services are offered. Breakfast and WiFi are complimentary. Spectacular views of the airfield are visible from Top of the Port, MIA Hotel’s signature restaurant. The Lobby Cocktails Lounge is another great spot to socialize and relax. 28
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Guest Rooms Categories 1. 2. 3. 4. 5. 6. 7.
Queen Room Double Queen Room King Room Jr. Suite King HC Accessible Room Double Queen HC Accessible Room Twin Single Room
Dining • Top of the Port Restaurant • Sushi Bar and Lobby Cocktail Lounge
Groups & Meetings 1. 2. 3. 4.
Sports Groups Cruise Travelers Business Travelers International Travelers
Conference Room Main conference room holds up to 200 guests and has access to wireless Internet and A/V equipment. With all these amenities, our conference room is the perfect location to host a meeting or get your group of travelers organized and on their way.
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Pre-Feasibility Study on Islamabad Airport Hotel
Facilities & Services • Day Stays from 10 a.m. to 6 p.m. available at discounted rates. • Lobby Cocktail Lounge open from 11 a.m. to 11p.m. • Complimentary Wi-Fi. • Room Service from 6 a.m. to 11 p.m. • Concierge Baggage Service available 24 hours. • ADA Accessible rooms. • Miami International Airport Hotel is completely non-smoking and a $150.00 fee will be incurred if not compliant with our non- smoking policy. • Pet friendly ($25.00 fee per stay). • Banquet and Meeting Facilities with A/V Equipment. • Complimentary Newspaper at the Restaurant. • Currency exchange, baggage storage, bank and ATM’s within Walking Distance. • Duty Free Shops and Specialty Stores within walking distance. Source: http://usmia2.webhotel.microsdc.us/home.jsp
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Dubai International Airport Hotel Dubai International Airport Hotel is located inside Dubai Airport terminals 1 and 3. This hotel is perfect for a short rest in between international flights. Dubai International Hotel provides passengers with everything they need to have a comfortable stay without leaving the airport or clearing Immigration and Customs.
Hotel Rooms and Suites The hotel offers 5 Royal/Presidential Suites, 9 Executive Suites, 38 Executive Rooms. 14 Junior Suites, 22 Superior Deluxe Rooms, 253 Deluxe Rooms.
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Pre-Feasibility Study on Islamabad Airport Hotel
The bedrooms range in size from 85 sq m to 32 sq m, and have all the facilities you can expect from a luxury Dubai hotel: • High speed internet access • Flat screen television with multiple channels • Automatic Mini Bar • IDD Telephones • Massage Chair (Only for suites, Executive and Superior Deluxe rooms) • Hair Dryer and Electronic Safe • Complimentary fruit basket • Complimentary tea/coffee service • Chocolate and canapés and fresh juices (only suites) • Make up service on request
Health and Fitness Fitness Centre and Health Clubs are located on the arrivals level in Sheikh Rashid Terminal and Hotel 5 in Terminal 3 Concourse 2 and offer the following facilities: • Gymnasium • Swimming pool • Ladies and Gents Jacuzzi • Ladies and Gents Steam Room • Ladies and Gents Sauna (Sheikh Rashid Terminal only) • Massage service (Sheikh Rashid Terminal only) • Shower Stalls
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Dining Safar Restaurant located between Gates 117 and 119 in terminal 1, the Dubai Airport restaurant Safar offers an international buffet for breakfast, lunch and dinner. An a la carte menu is also available together with a comprehensive choice of beverages.
Seafood Market restaurant located near Gate 203, this Dubai restaurant offers succulent selection of fresh seafood cooked to your preference by our Chef Des Cuisine and his team of talented chefs. A fine selection of wines, champagne and other beverages is also on offer.
Note: Dubai International Hotel only provides accommodation for International arrival and departure passengers in transit at Dubai International Airport terminal. Dubai International Hotel is located inside Dubai International Airport Terminals 1 and 3 with access to Dubai Duty Free Shopping areas, Post Office, Mosque, Currency exchange, ATM, Bank, Medical Centre and other facilities available within the Airport. Source: http://www.dubaiairporthotel.com/dubai-international-airport-hotel
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Pre-Feasibility Study on Islamabad Airport Hotel
Le Meridien Hotel Dubai Airport Le Meridien Hotel Dubai Airport is located near Dubai International Airport
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Source: http://www.dubaiairporthotel.com/le-meridien-hotel-dubai-airport
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Pre-Feasibility Study on Islamabad Airport Hotel
PARKROYAL Melbourne Airport Linked directly to the terminal via sky bridge, PARKROYAL Melbourne Airport offers the ideal location for business and leisure travellers alike. Whether you need to rest before a flight or refresh before heading home, the 276 spacious guest rooms with city skyline, airport and mountain views will reinvigorate you for the day ahead. Catering for corporate meetings of 12, to social events of 300, the PARKROYAL Melbourne Airport hotel is an ideal and convenient Melbourne venue, with a range of professional services on hand to ensure a memorable event. Take advantage of our experienced events team to transform one of our 16 Melbourne function rooms into an unforgettable exhibition, conference, seminar or social banquet. The friendly PARKROYAL associates are on hand to help you discover the area’s best kept secrets and getting around is a breeze with a host of excellent transport options at the airport, including taxis, car rental and SkyBus express. A short 10 minute drive will take you to the much loved Sunbury Wine Region. They have more to offer to experience the hustle and bustle of Melbourne city centre, a haven of secret cafes, fashion hot spots and lush parklands 36
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just 25 minutes drive away. Distance from terminal 100 metres from the Melbourne Domestic and International Airport.
Features • 276 guest rooms and suites with spectacular views of Melbourne Airport, City Skyline or Macedon Ranges. • 16 versatile meeting and function rooms catering for all occasions, from boardroom meetings of 12 to 36 guests, to cocktail parties of 25 to 300 guests. • • • • • • •
Fully equipped 24 hour gymnasium Heated indoor lap pool Spa, sauna and steam room Business Centre 24 hour Reception High speed broadband Internet access Wi-Fi access on Lobby Level and Conference Level
Source: http://melbourneairport.com.au/flight-passenger-info/aiport-facilities/airport-hotels/parkroyal-melbourne-airport.html#sthash.GE1v8qP2.dpuf
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Pre-Feasibility Study on Islamabad Airport Hotel
The Houston Airport Marriott The Houston Airport Marriott at George Bush Intercontinental provides a welcome retreat from the energetic pace of one of the world’s busiest airports. The Houston airport hotel is inspired by how you work, play and socialize through an honest blend of style and comfort. High-touch, yet unobtrusive service. And by knowing our guests and what makes them feel completely connected. Enjoy the convenience of fast and easy check-in through our mobile app, rejuvenate with a restful sleep in stylish guest rooms, enjoy casual dining throughout the day, and maintain your active lifestyle with our spacious fitness center and outdoor salt water pool. Our easily accessible hotel is also a great location for Houston weddings, business meetings and other group functions. Just minutes from the airport gates, we offer convenient and complimentary transportation to and from your terminal via a connected un38
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derground tram.
Key Amenities • • • •
Airport shuttle Fitness center Pool Meeting event space
Services & Amenities • Airline reservation desk, nearby, Continental Airlines • Airline reservation desk, nearby, Delta Airlines • Airline reservation desk, nearby, United Airlines • All public areas non-smoking • Beauty shop, nearby (referral at front desk) • Buffet breakfast, fee: 20.57 USD • Cash machine/ATM • Coffee/tea in-room • Concierge Lounge Hours • Continental breakfast, fee: 15.16 USD • Evening turndown service • Full American breakfast, fee: 16.24 USD • Gift/newsstand • Grab-n-Go breakfast, fee: 6.00 USD • Hot breakfast, fee: 20.57 USD • Housekeeping service daily • Laundry on-site • Mobility accessible rooms • Newspaper delivered to room, on request • Newspaper in lobby • Phone calls: toll-free • Room service, 6:00 AM-12:00 AM • Safe deposit boxes, front desk • Valet dry-cleaning • Vending machines • Virtual Concierge Available
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Pre-Feasibility Study on Islamabad Airport Hotel
General Room Amenities • Air conditioning • Alarm clock • Bottled water, for a fee • Coffee maker/tea service • Crib • Individual climate control • Iron and ironing board • Luxurious bedding - down comforters, custom duvets, cotton-rich linens • Pillows: down/feather • Pillows: foam • Rollaway bed
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Definition of Project Concept
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Pre-Feasibility Study on Islamabad Airport Hotel
Definition of Project Concept Site Analysis Currently the project is being designed / proposed for “Mooza Katarian� being the most nearest and developed locality near Cargo facility of NIIA. The following figures illustrate the exact site of recommended hotel facility:
The site of recommended hotel facility has 155 feet front and 450 feet length. It is located 600 meters from the existing boundary wall from cargo terminal side and it is 1.5 KM away from the main terminals. The proposed site is directly connected to Motorway (M2) at Thalia Interchange which is 3.8KM away from recommended hotel facility. It has also been confirmed by NHA that the main road which was previously planned to be connected directly through Golra Mor as shown in red dotted line in above figure has been changed and now, it is being connected with Kashmir Highway through Motorway M2/M1 Interchange/ zero point as shown in below figure.
The site of recommended facility is an ideal location and viable for the construction of hotel facility. The land is flat and very fertile as shown in figures below:
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The site is ready for the construction and it will not require any land preparation i.e. land leveling etc; however, it entails basic earth work such as soil testing and sewerage work etc, before actual construction work is initiated. Land development / site preparation work will start immediately after requisite approval of the stakeholders and would be followed by construction of proposed recommended hotel facility with an objective to complete construction work within the one year of span.
Concept of a Proposed Hotel Considering 1 Marla = 272.25 sq. ft. Marla
Square Feet
Square Yards (Gaz)
Square Meters
1
272.25
30.25
25.29
An extensive benchmarking exercise was carried out by the core consulting team for the purpose of identifying parameters that critically contributed to the success of hotel near airports around the world. The purpose of this extensive research was to select the critical and common factors and building blocks for the establishment of state of the art hotel facility. As mentioned earlier in this report “Concorde Inn Kuala Lumpur, Malaysia� is considered as a benchmark for this project. The whole project site encompasses approximately 84,000 square feet. The estimated net floor space of 32,000 square feet is spread over one floor above ground and one underground floor. The following overview illustrates the elements foreseen within the framework of the project:
Main Entrance and Lobby The main entrance established at the front of the hotel which will provide a highly exclusive access to the lobby (see figure below). 43
Pre-Feasibility Study on Islamabad Airport Hotel
The integration of a generous lounge into the lobby will serve guests either arriving or departing but also visitors as a “meeting point� of a special atmosphere due to the outstanding ceiling height. Furthermore, the attractiveness of the ground floor is enhanced by the integration of a state-of-the art cafe.
The Restaurant In the mezzanine, a restaurant, a lounge and a cafe will be integrated building with grand interior design providing guests with a magnificent atmosphere. The restaurant will offer the highest international standards in terms of a comprehensive, contemporary arrangement of food and coffee in combination with an outstanding and unique service on a total of approximately 2,500 square feet.
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Roof Top BBQ Restaurant
In addition to previously mentioned ground restaurant, the hotel will integrate a splendid roof top BBQ restaurant on the attic floor of the building, providing a magnificent view of the New Islamabad International Airport (NIIA)
Conference and Meeting The conference and banqueting facilities are planned to be located in the underground floor, which has an exceptionally high ceiling, hence providing space as well as unique atmosphere for glamorous and grand events and festivities with overall capacity to cater 1000 persons (See Diagram).
Moreover, parts of the ballroom will provide a variety of smaller conference and banqueting rooms in order to assure private and exclusive accommodation for large-scale, but also small, meetings.
Guest Rooms The hotel will be equipped with 60 guest rooms and suites, all featuring the highest international luxury standards in terms of size, layout, furnishings and equipment. Approximately 75 per cent of the total amount of guest rooms will be designed as superior double rooms with an average size of approximately 500 Square feet. Furthermore, the remaining 25 per cent of 45
Pre-Feasibility Study on Islamabad Airport Hotel
all guest rooms will be designed as Executive rooms and suites. In order to attract the very high-end clientele, these executive rooms and suites will be of classic and timeless design in accordance with the high end features of the building. Depending on type and size, the suites will feature spacious living and dining areas, one to three bedrooms, state-of-the-art bathrooms equipped with wellness and spa facilities. Furthermore, the Executive suites will be facing the outdoor central pool.
Spa & Wellness Area Plans include an exclusive spa and wellness area offering all types of treatments, therapies and further amenities as well as recreation facilities such as sauna and herbal steam bath. The generous spa and wellness area is planned on approximately 1,500 square feet.
An outdoor pool will be integrated on the ground floor, but separated by a reasonable distance from the “Health club�. This area will cover approximately 2000 square feet. In addition, an exercise room including a gym will be attached, which will occupy some 700 square feet.
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Car Parking Facilities In order to guarantee advanced service for the luxury seeking guest, a drop-off zone will be integrated in the generous drive-up zone in front of the hotel entrance. Car parking possibilities will be provided in the underground floor approximately 200 parking spaces.
Executive Business Centre
Space Allocation Program The following table summarizes the general outline of rooms and suites with the total number of rooms, the square feet of each room and suite as well as the total square feet number of all rooms and suites. In total, the hotel will occupy 60 key rooms including 45 Superior and Deluxe rooms and a total of 15 Executive rooms & Suites. Following basic guidelines are recommended by responsible architect..
Room Types
No. of Rooms
Size each Room (Sq Ft)
Total Size (Sq Ft)
Superior Room
25
300
7,500
Deluxe Room
20
400
8,000
Executive Room
10
600
6,000
Executive Suite
5
750
3750
Total
60
25,250
Other Services & Amenities • Individual Controlled Air-conditioning Unit • Cable & Satellite TV channels • Coffee & Tea Making Facilities 47
Pre-Feasibility Study on Islamabad Airport Hotel • • • • • • • • • • • • • • • •
Private Shower Telephone with IDD Service In-room Safe Deposit Box (selected room only) Hair Dryer Complimentary Bottled Drinking Water Complimentary WIFI Internet Access Drugstore / Gift Shop Sports & Recreation Complimentary daily newspaper (on request) Air Ticketing Service Doctor on Call Foreign Currency Exchange Rent a Car/Hire Mail and Information Travel & Tour Assistance Pick & Drop from Airport to Hotel and Hotel to Airport
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Financial Analysis & Projections
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Pre-Feasibility Study on Islamabad Airport Hotel
Financial Analysis & Projections According to the market analysis in above chapter, proposed location represents a solid hotel potential with strong growth prospects. The financial projections and other details relating to operating income and costing are as follows:
Initial Project Costing The initial project costing involves construction, development of building and complete infrastructure required for a four start luxury hotel. The costing includes two major costs i.e. hard cost and soft cost details are as follows:
Scenario Rooms Total Covered Area
Estimated Hotel Cost (excluding land) Proposed Expansion in future Plan Plan 1* 60 60 32000 16000
(Sq Ft) Floors 2 3 Months of Constructions 12 6 Estimated Cost per Sq Ft 2500 2500 (PKR) Structure Type Concrete Concrete Estimated Cost Structure Estimated Hard Cost (PKR) 80,000,000 40,000,000 Estimated Soft Cost/ Other 35,000,000 10,000,000 Cost (PKR) Estimated Development Cost 115,000,000 50,000,000 (PKR) Costing in Millions 115 M 50 M
Expansion in future Plan 2* 80 21000 5 6 2500 Concrete 52,500,000 10,000,000 62,500,000 62.5 M
*Note: Plan 1 & Plan 2 costing is additional and treated as separately as compare to current proposed plan
Hotel Trading Estimates The detailed trading estimates for the proposed hotel project are illustrated and summarized in the tables below. The financial forecast depends partly upon key assumptions. The forecasted income reflects the most likely future development from today’s point of view assuming that the hotel is operated by an exclusive luxury brand. External circumstances such as economic crises may have a considerable impact on the financial performance. The stated values are partly subject to rounding. In some cases, rounding differences may apply since calculations were conducted upon exact figures, but rounded figures are displayed. The forecast is based on the following parameters: • Positioning of the hotel: Four star luxury • Number of keys: 60 50
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• Management: International luxury hotel brand • Inflation: 3.88 per cent per annum (estimations by the author referring to www.tradingeconomics. com) According to the market analysis, it is expected that rates and occupancy of four & five star hotels in Islamabad will increase due to further hotel supply. Rooms Revenue No of rooms Type of room
Price/ Room
Size of each room (Sq Ft)
(US $)
Daily room revenue
(PKR)
(US $)
(PKR)
25
Superior room
300
80
8000
2000
200000
20
Deluxe room
400
120
12000
2400
240000
10
Executive room
600
180
18000
1800
180000
5
Executive suites
750
390
39000
1950
195000
8150
815000
Total Total room revenue/ occupancy 100% occupancy
Total daily revenue/ per day
Total revenue/ per month
Total yearly revenue
US $
PKR
8,150.00
815000
244,500.00
24450000
2,934,000.00
293400000
Year 1
Total daily revenue/ per day
56% occupancy rate
Total revenue/ per month
Total yearly revenue
4,564.00
456400
136,920.00
13692000
1,643,040.00
164304000
Year 2
Total daily revenue/ per day
59% occupancy rate
Total revenue/ per month
Total yearly revenue
4,808.50
480850
144,255.00
14425500
1,731,060.00
173106000
Year 3
Total daily revenue/ per day
64% occupancy rate
Total revenue/ per month
Total yearly revenue
5,216.00
521600
156,480.00
15648000
1,877,760.00
187776000
Year 4
Total daily revenue/ per day
69% occupancy rate
Total revenue/ per month
Total yearly revenue
5,623.50
562350
168,705.00
16870500
2,024,460.00
202446000
Year 5
Total daily revenue/ per day
75% occupancy rate
Total revenue/ per month
Total yearly revenue
51
6,112.50
611250
183,375.00
18337500
2,200,500.00
220050000
Pre-Feasibility Study on Islamabad Airport Hotel The following trading estimates will illustrate figure mentioned below:
Timeline The financial forecast reflects the first five years from 2016 to 2020. The first four to five years of operation will constitute the hotel’s start-up phase, hence the first stabilized year of operation is assumed to be 2018. The first four to five years are all trading years representing full calendar years.
Inflation rate The inflation rate is assumed to be at approximately 3.88 per cent per annum for the projected period up to the end of 2018.
Rooms Based on the assumption of 60 guest rooms and suites, average room occupancy is estimated to be at 56 per cent in the first year and is rising continually during the years to come. In 2018, the start-up phase ends with an average room occupancy rate of 69% per cent.
Food & Beverage Food and Beverage revenue is composed of income from the restaurant and coffee house in the mezzanine, the lounge in the main floor, the roof top restaurant, conference/banqueting division as well as from room service. As the hotel is anticipated to attract a high number of external guests for business dinners and drinks, the total income of F&B is estimated to stabilize at approximately PKR 70 million per annum. The unique design of the conference and banqueting facilities will attract high-quality functions and events, hence contributing the high F&B income of approximately 28 per cent of total revenue.
Minor Operated Departments MODs are expected to carry revenue of approximately PKR 7.7 million plus 2.5 million from other diverse sources, accounting for about three per cent of the total revenue in the first year. The majority of this income represents revenue from the generous spa and recreation facilities but also from minor services such as laundry and telephone. Sales Rooms 64% F&B 28% Conference 4% Minor operated dpts 3% Diverse 1% Total Sales 100%
2016 164304000 71883000 10269000 7701750 2567250 256725000
2017 173106000 75733875 10819125 8114343.75 2704781.25 270478125
2018 187776000 82152000 11736000 8802000 2934000 293400000
2019 202446000 88570125 12652875 9489656.25 3163218.75 316321875
2020 220050000 96271875 13753125 10314843.75 3438281.25 343828125
Departmental Costs Departmental costs are calculated with assumed parameters as a percentage of total revenue.
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Departmental Costs of Total Revenue (%) Department
Costs of total revenue (%) 25 78 17 66
Rooms F&B Conference & banqueting facilities Minor operating departments
Deptt Expenditures Rooms 25% F&B 78% Conference 17% Minor operated dpts 66% Total Deptt Exp
2016 41076000 56068740 1745730
2017 43276500 59072422.5 1839251.25
2018 46944000 64078560 1995120
2019 50611500 69084697.5 2150988.75
2020 55012500 75092062.5 2338031.25
9396135 108286605
9899499.37 114087673.1
10738440 123756120
11577380.63 133424566.9
12584109.38 145026703.1
Operating Expenses Operating costs are calculated with 25% per cent of departmental revenue in the first operating year and similarly for consecutive years. Undistributed expenses are estimated and include the following: • • • •
Administrative & General expenses (Salary exp is approx 18.9 Million per annum) See Appendix Sales & Marketing Repairs & Maintenance System costs
• Heat, Light & Power
Operating Income & Profit The forecasted for (5) five years net operating profit for 2016 - 2020 Calendar year No of rooms Avg. No of occupied rooms/ year Occupancy Average daily rate PKR
2016
2017
2018
2019
2020
60
60
60
60
60
33.6
35.4
38.4
41.5
45
56%
59%
64%
69%
75%
1,283.33
1,283.33
1,283.33
1,283.33
1,283.33
Total Sales Rooms 64%
164304000
173106000
187776000
202446000
220050000
F&B 28%
71883000
75733875
82152000
88570125
96271875
Conference 4%
10269000
10819125
11736000
12652875
13753125
Minor operated dpts 3%
7701750
8114343.75
8802000
9489656.25
10314843.75
Diverse 1%
2567250
2704781.25
2934000
3163218.75
3438281.25
256,725,000.00
270,478,125.00
293,400,000.00
316,321,875.00
343,828,125.00
Total revenue
53
Pre-Feasibility Study on Islamabad Airport Hotel Expenditures Rooms 25%
41076000
43276500
46944000
50611500
55012500
F&B 78%
56068740
59072422.5
64078560
69084697.5
75092062.5
Conference 17%
1745730
1839251.25
1995120
2150988.75
2338031.25
Minor operated dpts 66%
9396135
9899499.37
10738440
11577380.63
12584109.38
Departmental costs
108,286,605.00
114,087,673.12
123,756,120.00
133,424,566.88
145,026,703.13
64,181,250.00
67,619,531.25
73,350,000.00
79,080,468.75
85,957,031.25
Total revenue
256,725,000.00
270,478,125.00
293,400,000.00
316,321,875.00
343,828,125.00
Departmental costs
108,286,605.00
114,087,673.12
123,756,120.00
133,424,566.88
145,026,703.13
Gross operating income
Operating costs S&M, A&G, Heat, Light, Repairs & Maintenance 25%
148,438,395.00
156,390,451.88
169,643,880.00
182,897,308.12
198,801,421.87
Operating costs
64,181,250.00
67,619,531.25
73,350,000.00
79,080,468.75
85,957,031.25
Gross operating profit
84,257,145.00
88,770,920.63
96,293,880.00
103,816,839.37
112,844,390.62
12,638,571.75
13,315,638.09
14,444,082.00
15,572,525.91
16,926,658.59
12,638,571.75
13,315,638.09
14,444,082.00
15,572,525.91
16,926,658.59
71,618,573.25
75,455,282.54
81,849,798.00
88,244,313.46
95,917,732.03
Fixed charges Property tax and insurance etc Total fixed charges 15% Net operating profit
Financial Outlook
Amount in Millions
Total Cost of Construction of Building & Infrastructure
115
Total working capital requirement
40
Total amount required
155
Amount in Millions
Total Revenue for first year 2016
257
Total departmental, operational & fixed costing 2016
184
Total Operating Profit
73
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Sanctuary Inn Islamabad International Airport
Recommendations
55
Pre-Feasibility Study on Islamabad Airport Hotel
Recommendations This pre-feasibility depicts that the project location is key to success as location is very critical for hotel business success. By following the concept of combining international factors with latest trends and innovations, exceptional services, furnishings of the highest standards, exclusive architecture with modern interior design, and private and clam location with an exclusive luxury brand, the hotel will be able to secure the highest position in the market and target the upper premium business and leisure market. Based on the above analysis we completely and strongly support this project and recommend the following actions, for immediate start of this project:• • • •
Hire Proper Architect for the Project Hire Contractors for Constructions Hire Project Manager/Team for the Project Engage/consult professionals for prospective operations
Summing up, change is here to stay, today’s scenario posing the strengths & opportunities to capture the untapped excellent market segment might not offer a chance to grab the grapes in future. In view of above, timeline for project completion will be 1 to 1 1/2 years. Therefore, it is highly recommend and desirable that the proposed hotel facility is to be operational by 2016 along with the opening of New Islamabad International Airport.
Limiting Conditions The Corporate Bees relied on primary and secondary sources of information for the assumptions made in this report and assumes these sources to be accurate. Assumptions created for the analysis were based on the data available to The Corporate Bees during the study period as well as professional judgment. The Project is assumed to be operated by professionals in a first-class manner who have got an extensive knowledge and experience in the relevant industry. No responsibility is taken for unforeseen events occurring after the date of the analysis, including war and terror attacks, natural disasters and major economic recessions. This report is intended to be used as a tool for decision-making by the contracting parties related to this Project and for no other purpose.
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Appendix
Departments
Sections
Executive Office
General Managers
200,000
2,400,000
1
Executive Secretary
25,000
300,000
Administration
1
Assistant Food and Beverage Manager
50,000
600,000
1
F&B Coordinator
20,000
240,000
Restaurants
Room service
Kitchen Section
Rooms Division
Standard Designations
Salary Per Year (PKR)
1
Food and beverage Division
Posts
Salary Per Month (PKR)
1
Assistant Restaurant Manager
25,000
300,000
1
Captain & Hostess
20,000
240,000
2
Waiters
15,000
360,000
2
Busboys
12,000
288,000
1
Assistant Room Service Manager
25,000
300,000
1
Order taker
15,000
180,000
1
Captain
20,000
240,000
2
Waiters
15,000
360,000
1
Assistant Sous Chef
35,000
420,000
1
Chef de Partie
30,000
360,000
1
Cook I
25,000
300,000
1
Tandoorichis
20,000
240,000
Bakery Chef
1
Chef de Partie Pastry
30,000
360,000
Front office
1
Assistant Front office Manager
35,000
420,000
1
Guest Services Officers
15,000
180,000
1
Bell boys
12,000
144,000
Health Club
1
Masseurs
30,000
360,000
1
Pool Attendants
12,000
144,000
House keeping
1
Floor Supervisors
20,000
240,000
2
HK Attendants( back of the house, Public area, Floors)
12,000
288,000
1
gardeners
15,000
180,000
Laundry
1
Laundry Attendants (Markers, shakers, Folders, Extractors, washers men, dry-cleaning)
15,000
180,000
1
Pressmen
15,000
180,000
Sales and Marketing Division
1
Sales Manager
70,000
840,000
2
Sales Executive
25,000
600,000 180,000
1
Sales Coordinator
15,000
Reservation
1
Reservation Supervisor
30,000
360,000
2
Reservation Officers
25,000
600,000
Finance
Accounts & Finance
1
Accounts Officer/Executive
25,000
300,000
1
Cashiers
15,000
180,000
Purchase
1
Material Officers
30,000
360,000
1
Driver
18,000
216,000
1
System Support Engineers
25,000
300,000
1
Telecom Engineers
30,000
360,000
1
HR officers
20,000
240,000
IT Dept
HR
57
Pre-Feasibility Study on Islamabad Airport Hotel Security
1
Security Supervisors
25,000
300,000
1
Security System Supervisors( CCTV operators, Luggage scanners)
20,000
240,000
5
security guards
20,000
1,200,000 600,000
Engineering
1
Repair and Maintenance Engineer
50,000
1
Boiler Engineers
40,000
480,000
2
Technicians ( electricians, A/c Technicians)
20,000
480,000
1
HVAC Engineer
40,000
480,000 240,000
1
Carpenters
20,000
1
Plumbers
20,000
240,000
1
helpers
12,000
144,000
1
Store man
20,000
240,000
1,378,000
18,984,000
1.3 M
18.9 M
Total Total Salary Expenses in Millions
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The
Sanctuary Inn Islamabad International Airport