economic meltdown, impact and actions taken by the indian hospitality industry
TRANSCRIPT
Economic Melt Down
Impact and actions taken by the hotel industry
December 17, 2008IHM Pusa, New Delhi
www.lemontreehotels.com
The Lemon Tree Hotel Company
• Lemon Tree Hotels: India’s fastest growing, upscale, full service, moderately priced hotel chain
• Red Fox Hotels: Economy hotel brand, under development
Global Economic & Financial Indicators
GDP 2007
GDP forecast
2008
GDP forecast
2009
Interest rates
Budget balance
% of GDP 2008
% change in market Nov ’08
vs. Dec ’08
USA 3.2 1.4 -0.2 1.28 -4.6 -34.2
Japan 2.3 0.5 -0.1 0.77 4.0 -46.3
China 9.8 9.6 8.0 3.47 8.9 -72.8
Europe 2.2 1.1 -0.1 3.90 -0.4 -47.6
Russia 5.2 7.0 3.7 12.00 6.2 -67.9
India 8.2 6.3 6.1 7.29 -3.2 -55.5
Source: Economist intelligence unit, Swivel
Source: HVS
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
2,000
4,000
6,000
8,000
10,000
Occ% '08 53.90% 57.20% 51.60% 57.20% 64.80% 69.00% 71.50% 71.40% 69.50% 64.20%
ARR '08 3,505 3,731 3,467 3,269 3,569 4,299 5,444 7,071 7,915 8,469
'99- '00 '00- '01 '01- '02 '02- '03 '03- '04 '04- '05 '05- '06 '06- '07 '07- '08 '08- '09
PokharanNuclear Tests
Economic Sanctions
Gujarat Earthquake
9/11
Afghanistan war
Kargil War
Iraq War
Global EconomicMelt-Down
Mumbai Terror Attacks
Occupancy & ARR Over The Past Decade
Stock Price: International Hotel Companies
Source: Google finance
Source: HDFC
Stock Price: Indian Hotel Companies
Effective Management
Strategic Cash Management
Aggressive Cost Control
Innovative Distribution
Strategy
Controlling Costs Is Critical To Bottom Line Success
Balancing Distribution
Budget
Economy
Mid Market
Upscale
Upper Upscale
Luxury
Low engagement
High engagement
En
gag
em
en
t w
ith
th
e p
rod
uct
Online channels Legacy channels
Purchase Influencers
Location
Brand/Flag
Services
Facilities/Amenities
Price
Static
Dynamic
Determinant(can’t be changed)
Static (can be changed)
Incremental
Filter/Stimulant
Major Drivers: Indian Travel Market
Source: 11th Five Year Plan of the Indian Government
2006 2010
Railways Passengers 6.60 billion 8.00 billion
AirlinesDomestic 25.50 million 60.00 million
International 22.50 million 40.00 million
HotelsOutbound 7.50 million 60.00 million
Inbound 4.00 million 10.00 million
Source: WTO
Tourist Arrivals (Million)
2005 2006 2007Change 06-07
World 806 846 898 6.10%
Europe 441 461 480 4.20%
Asia & Pacific 155 167 185 10.70%
America 134 136 142 4.30%
Middle East 39 41 46 13.20%
Africa 37 40 44 9.70%
Tourist Arrivals
Infrastructure:Economic Growth Driver
Source: Swivel
China India RussiaMiddle East
Brazil US Japan EU
Airports 467 346 1,260 1,200 4,263 14,947 176 3,393
Railways (Km.) 75,438 63,221 87,157 23,198 29,295 226,612 23,474 236,436
Roadways (Km.) 1,870,661 3,383,344 871,000 1,068,480 1,751,868 6,430,366 1,183,000 5,269,163
Source: Goldman Sachs
GDP Projections: 2050
US$ Billion
Y Factor
Source: Indexmundi
0
5
10
15
20
25
30
35
40
45
50
2007 2008 2009 2010 2012 2013 2014
Pre Economic Melt Down Post Economic Melt Down
Forecasted Shift in REVPAR Trending
