The financing of tourism and hospitality projects are specialized lending as well as, though one might hear names of numerous lenders, as not all of them are inspired to do the same. Personal loans in Hyderabad are availed at low-interest rate to help individuals overcome personal financial constraints. The progress of a hospitality venture is dependent on numerous factors for instance; city in which it is located, hotel location within the city, , occupancy levels, hotel category such as regular, 3/4/5 star, deluxe / luxury, etc who is the operator for most brands such as Taj, Oberoi, ITC, Marriott, Hyatt, etc, amenities, etc. Adding further it is highly dependent on the economic growth of the country as well as to also the global economic situation.
- VARIOUS COST COMPONENTS OF HOSPITALITY PROJECT
2.1 Land Cost: The land is the most significant ingredient to put up a hotel project as well as suitable land at the majority desired location is the next to overall success of the project. All of us know that in the past few years the cost of land has gone up phenomenally and it has become one of the major costs. Personal loan in Hyderabad are easily available to buy land for various personal reasons.
In most of the states across India higher FSI is available on land on which a hotel is constructed.
2.2 Construction Cost: This is the cost spent on construction of all the buildings in the project and landscaping.
2.3 Furniture & Fixtures: Depending upon the class of the hotel to be constructed this cost will vary and invariably results in cost overruns.
2.4 Plant & Machinery: Items such as HVAC, DG sets, Plumbing & fire fighting, Electrical, Lifts & elevators, Kitchen equipment, laundry set up, Health club, swimming pool, etc are an integral part of the hotel project and cost a huge amount of money.
2.5 Information Technology: Every good hotel requires world class information technology like internal communications system and equipment, software for managing the hotel and reservation system, etc and are quite expensive. Personal loans in Hyderabad are easily availed at low interest rates to help a person overcome personal financial constraints.
2.6 Consultant Fees: Setting up a hotel project is a complex process and requires services of various experts like; municipal architects, design architects, concept consultants, interior designers, MEP consultants, structural consultants, kitchen consultants, HR consultants, finance consultants, etc. These costs can go as high as 3 to 5% of the project cost.
2.7 Preoperative Expenses: It takes at least 3 to 4 years to complete a hotel project after commencement of construction and the pre operative expenses are incurred even before that and during construction.
2.8 Interest During Construction: The interest to be paid on loans taken for the project during the construction period is an integral part of the project cost and many a times this is the project killer especially when project gets delayed.
2.9 Contingency: A reasonable amount is to be provided for contingent expenses.
In the last few years India has seen several new hotels which have come up in different parts of the country and most of them are operated by International brands though the hotels are owned by various Indian companies, predominantly real estate companies. There are several more hotels under construction which are likely to be operative in the next 2/3 years and these will further add to the branded rooms inventory.
It is expected that most of these hotels will do well as India has very low inventory of branded hotels compared to the USA and China. Also it is expected that if our GDP improves the hotel room demand will increase tremendously and there is enough scope for growth in this sector.
It is expected that the Indian government and several state governments are likely to promote tourism activity as it is one of the largest employment generators and has a cascading effect on the economic growth. Already many states have successfully promoted tourism and the results are visible.
As the outlook for such a sector is very positive as per industry experts, the current scenario is gloomy all around with lenders shying away from funding new projects and quite a few existing borrowers are finding it difficult to fulfill their financial obligations towards lenders.
With such a background in mind as well as the practical experience of raising monies for numerous projects to give an overview of the process of raising funding for hospitality projects.
