Professional Documents
Culture Documents
FEASIBILITY REPORT
Shankar Nagar, Raipur C.G.
Develop Hotel at Kumhari , in the bank of Famous Kharun River, Raipur C.G.
Under Public Private Partnership (PPP) Mode.
This Pre-feasibility analysis has been undertaken by the Chhattisgarh Housing Board, Project Sponsoring
Organization through its PPP Consultant CA Sanjay Khare to assess broad viability of proposed project
envisioned to be procured on a PPP mode.
INTRODUCTION
Shankar
CHHATTISGARH STATE
One of the newest and the fastest growing state economies in India, Chhattisgarh is coming up with billion
prospects. Chhattisgarh has a vast reserve of natural resources. Full of mineral wealth including diamond,
forest resource, water resource, and many more, mining, iron ore and steel, cement and power are some of
the key thrust areas, where Chhattisgarh holds advantage over other states and hence is one of the wealthiest
states in India due to its abundance of minerals.
There are currently 27 different districts within Chhattisgarh. These include Bastar, Bijapur, Dhamtari,
Kabirdham (Kawardha), Koriya (Korea), Mahasamund, Narayanpur and Raipur.
Chhattisgarh have many power-intensive industries, which place this state in prime positioning to become the
main power supplier to the rest of the subcontinent. Chhattisgarh offers ample amount of land to establish
Housing development.
The Chhattisgarh State is primarily surrounded by Madhya Pradesh, Maharashtra, Andhra Pradesh, Orissa,
Jharkhand and Uttar Pradesh. The state of Chhattisgarh is characterized by a low population density and a
strong government, which works well to maintain political stability. Interestingly, Chhattisgarh is known for its
friendliness, openness and hospitality. It is renowned for its excellent record of public order, harmony
amongst its residence and generally peaceful ambience.
Transaction Advisor
Sanjay Khare & Associates
235-236, 2nd Floor, Ghasidas Plaza,
Near Vivekanand Ashram, G.E.Road, Raipur ( C.G.) 492013
Phone: 0771-4263664 E-mail : sanjay_ns@hotmail.com
This feasibility report has been prepared by the Chhattisgarh Housing Board, Project Sponsoring
Organization through its PPP Consultant Sanjay Khare & Associates to assess broad Finance Viability of
proposed project envisioned to be procured on a PPP mode.
DISCLAIMER
The information in this Report has been prepared based on information collected from primary and secondary
sources and from the interactions with representative officers of department. Wherever information was not
readily available, reasonable assumptions have been made, in good faith to draw meaningful inferences and
these have been mentioned in the respective sections of the report. All such assumptions are subject to further
corroboration based on availability of information. The information and analysis presented in this Report is not
and does not purport to be comprehensive or to have been independently verified. This report has been
prepared by Chhattisgarh Housing Board through his Consultant for its use for furthering the project. No
external agency shall use any part of this report without the prior permission from Chhattisgarh Housing
Board.
The information contained in this Financial Feasibility Report is strictly specific to the particular project under
specific circumstances and is not considered replicable or suitable for other projects. The information and the
report are also subject to updating, expansion, revision and amendment. It does not, and does not purport to,
contain all the information that may be required.
This Report includes certain statements, estimates, projections and forecasts. Such statements, estimates,
projections, targets and forecasts are based on the information provided by the concerned authorities and
reasonable assumptions made by the PPP Consultant. No representation or warranty is given as to the
reasonableness of estimates or the assumptions on which they may be based and nothing in this Report is, or
should be relied on as, a promise, representation or warranty. This report is intended to be of for information
only and does not constitute professional advice. PPP Consultant or Chhattisgarh Housing Board shall not be
liable to any user of this report or to any other person or entity for any inaccuracy of information contained in
this report or for any errors or omissions in its content, regardless of the cause of such inaccuracy, error or
omission.
Furthermore, to the extent permitted by law, PPP Consultant and Chhattisgarh Housing Board, its members,
employees and agents accept no liability and disclaim all responsibility for the consequences of you or anyone
else acting, or refraining from acting, in relying upon the information contained in this report or for any
decision based on it, or for any consequential, special, incidental or punitive damages to any person or entity
for any matter relating to this report even if advised of the possibility of such damages.
INTRODUCTION
Chhattisgarh Housing Board known as CHB, has comes under existence under Chhattisgarh Housing Board Act.
Its main object to attained general improvement of the city, construction of houses for removing slums and
improvement of general sanitary condition to safeguard public health. Chhattisgarh Housing
Ho
Board was formed
with many objectives which emphasis on development of land. The main object of the housing board is to
provided housing accommodation to the needy citizens at an affordable price.
Chhattisgarh Housing Board also committed to provide recreational and conventional facilities to its residents.
For undertaking investments on this scale, CHB is seeking participation of private investors in this venture
who will contribute financially as well as in the Operation and Management of its club facilities.
PROPOSED PROJECT
CHB intents to develop,, maintain and run a Club with Convention & Recreation Facility
F
at Sector 1, Shankar
Nagar Raipur situated in Central Place of the Raipur City and a Community Centre for the marriage and other
purposes. Both project place is located in the centre of Shankar Nagar Township offering perfect location
which create and boost the demand for the recreational and conventional destinations.
Both Project has to be developed
ed through Design, Finance, Built, Operate
perate and Transfer (DFBOT) basis for a
period of 30 years on
n Public Private Participation (PPP)
(PPP). CHB is the Sponsoring Department for this proposed
project.
Raipur City
provided
fresh
impetus
to
the
economic
The city is also a prominent emerging hub for tertiary economic activities such as services, trade and
commerce, wherein it is serving as a regional node for trade and commerce for a variety of local agricultural
and forest products.
Table Error! No text of specified style in document.-1: Key Statistics for Raipur Municipal Limits
City snapshot
Area of Municipal limits (sq km)
188
6,204
1,166,475
3.48%
72%
4.7
230,779
73,902
2.1.
Raipur city occupies a strategic position on the national transport network, which includes four national
highways, broad gauge and narrow gauge rail connectivity and air links with other important cities of the
country.
Road connectivity: National Highway 6 passes through the city of Raipur, connecting the city with Dhule in
Maharashtra and Kolkata in West Bengal. National Highways 43, 200 and 12A link the city with Jagdalpur,
Bilaspur and Jabalpur in Madhya Pradesh. It is well connected by road to all important places of India. Recently
a 4 Lane Expressway has also been constructed via Raipur connecting with the adjoining industrial cities of
Bhilai and Durg in Chhattisgarh.
Rail connectivity: Raipur is situated on the Mumbai-Howrah route of Indian Railways and is well connected with
the four metropolitan cities of the country alongwith other important nodes such as Bhopal Junction, Indore,
Gwalior, Jabalpur, Amritsar, Jamshedpur, Pune, Nagpur, Vishakapatnam, Thiruvananthapuram, Patna,
Ahmedabad, Gandhinagar, Jodhpur, Jaipur, Bhubaneswar, Secundrabad, Lucknow, Kanpur, Gorakhpur, and
Bangalore.
Air connectivity: Air links to the city were revived after the city became the state capital. The city is connected
via air with Delhi, Mumbai, Chennai, Koata, Bangalore, Bhubaneswar, Nagpur, Bhopal, Indore, Ahmedabad, and
Hyderabad.
2.2.
Demographic Profile
to
grow
to
approximately
Population in '000
1,600
80
1,400
70
1,200
60
1,000
50
800
40
600
30
400
20
200
10
0
1991
2001
2008
2011E
2021E
approximately
were
added
to
2.09
the
lakh
Population in '000
Raipur
Indicus Analytics
The age wise population distribution of the city shows that nearly 20% of the total population falls in the
segment of 20-39
39 years of age group. This coupled with the citys high literacy rate of 72%, indicates the
presence off a sizeable young workforce.
2.3.
style
document.-3:
50% of the CWEs of households are in executive positions while the other half comprises
Economic
industrialists or businessmen or high class shop owners
Nearly
SEC A
Almost all
Classification
Majority
SEC B
of the CWEs of households are primarily employed at clerical or supervisory level, while
few as industrialists or businessmen or shop owners.
Around 50% are either graduates or post graduates. Of this lot, only 38% are educated till 10
grade, while a fraction have had only some secondary education.
More
SEC C
than one-fourth
fourth of the total CWEs of households are employed at clerical or supervisory
Almost one-fourth as skilled workers, while some section as petty traders or as shop owners.
owners
Almost three-fourth
fourth of the total family units are educated till 10th or 12th grade while others
attended school beyond 9th grade.
Less
SEC D and E
than half the CWEs of households belonging to the SEC D&E are unskilled workers.
workers
fourth are skilled workers while a very few are petty traders.
Consequently, half of the CWEs have attended school till a maximum of the 9th grade and nearly,
them are illiterate.
Source:
ource: City
Analytics
Skyline
2008
2008-09,
Indicus
Figure 5-5:Household
:Household Distribution based on
income classification
in
Socio
Consequently the city has a work participation ratio of 32.7% which ensures higher availability of disposable
income. Work force participation rate (WFPR) in Raipur Urban Agglomeration is 32.5%, which is slightly greater
than the state urban work force par
participation
ticipation rate i.e., 31.1%. Service sector contribution has also been
increasing after the formation of state capital
in 2000.
dwelling
units
in
Raipur
is
comparatively
tively higher as compared to that of
respectively.
ely.
Consequently,
it
is
2.4.
The city is fast becoming one of the most important regional commercial and industrial centres for power, steel,
aluminum and coal industries. With its 170 steel rolling mills, 170 sponge iron plants and more than 250 steel
plants, Raipur is one of Indias biggest steel markets.
Jindal Steel & Energy Ltd. and Monnet ISPAT & Energy Ltd are some of the prominent players in the region
among many others. Monnet Group has set up its Steel and Energy Plant on NH 6 supported with their private
rail siding set up, while Jindals have set up a large scale machinery division on NH 6. Surya Roshni Ltd., a
prominent player in lighting and steel pipe solution providers, has recently announced its plans of diversifying in
infrastructure sector and setting up a steel plant in Chhattisgarh. Reportedly, the company has signed a MoU
with the Government of Chhattisgarh for setting up a steel plant in Raipur.
In regional context, Raipur acts as the trading centre for the manufacturing towns of Durg and Bhilai. This can
be assessed with regard to the wholesale activity and the freight movement in the city.
The city is also home for the wholesale markets of commodities like textiles, fruits, vegetables, grains,
pharmaceuticals, timber, cattle and electrical goods. Metallurgical, chemical, agro based, mechanical and
engineering industries are dominant in both large and small scale sectors. Cottage industries like handloom,
bidi, jewelry and wooden products also provide large scale employment opportunities.
The Pandri wholesale market, located in central part of Raipur City, is one of the biggest cloth merchandise
market in Central India and it is very near to project site. It has trade connected with neighbouring states like
Orissa, Jharkhand, Madhya Pradesh and Maharashtra. The market spread over an area of approximately 25
acres has almost 500 wholesale shops. Extension of the existing wholesale market has been planned on the
Dhamtari Road between Raipur and Naya Raipur area, 9 km from Raipur along Raipur- Jagaldalpur National
Highway.
LOCATION OF PROPOSED PROJECT:Proposed place is known as Sankar Nagar located at Center Place of Shankar Nagar from 6 KM from Jaistambh
Chowk being centre place of the city. The site is 6 kms from Raipur main railway station and 10 km from the
Airport. Overall, access to the subject site is considered favorable. The location of the site also makes it
favorable for hotel, recreation and convention.
.85 acres
recreational
Existing structures
Site morphology
Type of land
Surface elevation
Level
Soil nature
Non clayish
Water/
sanitation
availability
Yes
Power availability
Yes
Site Neighborhood
Immediate vicinity
Approach road
2.4.1.
Primary Catchment zone- Primary catchment zone will be residential area of Shankar nagar and many other
residential and commercial area like Rajendra Nagar, Gayatri Nagar, VIP Estate, Shanti Nagar, Pandri and many
others. Neighbor colonies, Government Colonies and Commercial Area will use for recreation and convention
facilities. Even crowd from saddu can be taken in the primary catchment zone for accommodation and
functions which is on very much demand.
.
access of
CLIMATE
Raipur District has pleasant winters with temperatures in the range of 10C to 25C. The summers (April to
June) are oppressive with temperature in the range of 29C to 45C. The average annual rainfall
in the district is around 1400 mm.
Residential / Commercial Township : There are lots of residential township are located from the distance of
5-6 KM from proposed place of project. Details of which and distance is as described below :Name of Residential Area
Shankar Nagar
Gayatri Nagar
VIP Estate
Khamardih
Saddu
Rajendra Nagar
Shanti Nagar
Pandri
Telibandha
Civil Lines
Katora Talab
Mowa
Avanti Vihar
Ministers Houses
Nature
Residential & Commercial
Residential
Residential
Residential
Residential
Residential
Residential
Residential & Commercial
Residential & Commercial
Residential
Residential & Commercial
Residential
Residential
Residence
In Shankar Nagar colony area and surrounding residential and commercial area where project is proposed,
there are presently no Club, Convention & Recreation centre facilities.
Therefore it is clear that supply of facility in this area is very less and this benefit would provide a good
prospects to the promoter for this club.
Rooms
3
8
13
8
3
14
32
10
6
15
14
400
Non Veg *
450
500
NA
450
450
There are several key characteristics of a destination which are viewed by convention and event planners
as critical to the success of a convention centre as stand along. One of the most important of these would be
the number of hotel rooms available and the quality of these properties. Hence the hotel rooms available for
convention business is very important.
The analysis of the number of upscale and mid level hotel properties in Raipur has been undertaken. The total
quality room supply in Raipur is about 900. Below mentioned CHART provides the room details for 23 hotels in
Raipur providing banquet as well as room facilities.
RATES OF HOTELS IN RAIPUR
Hotel Name
No. of Rooms
Std Dix Suite Total
Category I
12
60
33
24
41
10
10
5
29
35
247
11
7
16
4
4
5
5
4
5
61
106
80
72
45
14
34
10
49
43
453
12
18
12
39
20
27
10
22
7
9
17
9
4
2
2
4
2
5
48
24
29
33
26
19
29
34
63
151
28
12
10
5
32
16
15
6
96
304
17
3
14
9
26
12
23
104
492
2
1
6
4
13
98
RME ( 5 Star )
Hotel Babylon ( International)
Hotel Babylon ( In)
Hotel Celebration
Hotel Queens Club
Hotel Golden Tulip
Florence Hotel
Hotel Mayura
Hotel Piccadily
Sub Total/Average
Category II
Grand International
Hotel Chhattisgarh
Hotel Sharda
Hotel Sudha Regency
Hotel Ambiyence
Hotel Ishika
Hotel Grand Arjun
Hotel Aditya
35
40
32
0
Sub Total/Average
Others
Hotel Anpurna
Hotel Mahindra
Hotel Kanishka
Hotel Allnear
Simran Motel
Hotel Satlaj
Hotel Subh
Sub Total/Average
Total/Average
19
0
16
3
145
21
6000
5000
5000
7000
6000
6000
3300
4500
5000
3600
3850
2650
4500
15000
12000
12000
8000
3000
8000
3900
4450
3750
8000
1050
1050
2300
3000
2000
2500
3500
3400
1500
1650
2700
4500
3000
4000
4500
5200
2600
4000
242
1750
2600
4100
29
15
20
41
48
27
33
213
894
1500
1000
1300
1100
1200
1000
1000
1100
2250
1500
1200
1800
1400
1500
1200
1400
1400
2750
-1500
2000
2000
1900
1900
4550
3000
-2750
2050
3900
2500
All the above mentioned hotels with the exception of Hotel Babylon have occupancy levels of about 70%
with an ARR in the range of Rs. 2000 to 3000 depending on the property. There are various other hotels
belonging to the economy segment. These hotels enjoy a higher occupancy level of about 80% to 85%.
with an ARR in the range of Rs. 1000 to Rs. 2000.
It should be noted that in the hospitality industry, it is generally accepted that when city wide performance
for a lodging market is approx 70%, there is a need for additional hotel rooms. Year round average
occupancy for Raipur is close to the 80% mark, this does not take into account the seasonal variations in
demand which may be witnessed once the Housing sector gets developed occupancy percentage will increase.
Among the hotels, the medium segment hotels clocked higher occupancy levels. The average length of stay
for Guest was in the region of 2 4 days.
OVERALL HOTEL PERFORMANCE
Hotel Name
Category I
RME 5 Star
Hotel Babylon( International)
Hotel Babylon( In)
Golden Tulip
Hotel Celebration
Florence Hotel
Hotel Mayura
80
72
34
45
10
49
13
6000
6000
5000
4000
3500
3500
60%
60%
60%
72%
50%
80%
Hotel Piccadily
Sub Total/Average
Category II
Royal Ambiyence
Hotel Sudha Regency
Hotel Ishika
Hotel Sutlej
Sub Total/Average
Others
Hotel Kanishka
Simran Motel
Hotel Mahindra
Hotel Allnear
Sub Total/Average
Total/Average
43
333
2500
4300
50%
60%
26
33
19
27
105
4000
3000
1000
1000
2250
70%
80%
80%
80%
75%
20
48
15
41
124
562
1200
1200
1000
1000
4400
3650
85%
85%
85%
80%
80%
72%
Further, since another club should not allowed in the proposed area hence proposed club shall enjoy a
monopolistic position in its class.
The tourist traffic to Raipur doesnt have any great seasonal variations in occupancies; however on a micro
level the higher occupancies are recorded in the months of March to May. However, the same may increase if
the Housing sector gets a boost as it attracts more leisure visitors during the holiday season.
MARKET SEGMENTATION
For the existing Raipur lodging market, the primary sources of demand (market segmentation) include the
traders and businessmen for official work. While it is important and key to understand the demand potential
for the medium segment, it is also useful to understand the overall market dynamics. This would be especially
pertinent for the Hotel with Convention & Recreation Centers generally require a ramp-up period of one to
two years to reach stabilized demand.
BANQUET RATES HOTELS
Hotel Name
Hotel Babylon
Hotel Mayura
Hotel Midtown
Hotel Sharda
Hotel Celebration
Hotel Piccadily
Hotel Sutlej
Hotel Mahindra
VIP Club
Hotel Kanishka
Simran Motel
Hotel Sudha Regency
Hotel Ishika
Hotel Allnear
Banquet Size
Covered
Sq ft
8400
2500
2500
3700
5500
4000
650
4200
800
750
4000
650
1500
1200
Open
Sq ft
15000
12000
10000
-
Total/Average
53500
52000
14
Banquet Rate
Veg
Non Veg
450
350
350
350
400
350
300
300
275
275
300
350
300
300
550
400
400
400
450
400
350
350
325
325
350
400
350
350
246
285
15
use. For this retractable seating, divisibility, the ability to combine spaces, wireless systems, etc., are the
order of the day. Raipur being a trading town has a good scope for Trade Fairs / Exhibitions and Consumer
Events. This has been factored while arriving at the capacities.
2. Hotel - Based on demand projections and the market study of the Raipur Hotel and lodging sector, it is
recommends that a full service hotel with at least 20 rooms / keys be developed. In addition, the hotel should
contain one full-service Restaurants (Specialty / Multi-Cuisine), a Bar, an Indoor Pool and Spa.
3.
Recreation - The proposed project is located in the center of residential area hence recreation activity
specially Gym, Spa, Table Tennis, Long Tanis, Badminton and Swimming Pool etc will be most suitable.
This place is surrounding by many residential areas hence it will be attractive place for recreational
activity.
A Convention centre host hotel has to be of a minimum size to cater to conference, convention and
exhibition requirements. If were to do only, say, 20 rooms then the maximum size on
16
residential conferences, even after taking into account hotels within a 5 to 10 km radius would be
insufficient to support the facility planned.
In the Conventional business a average of 20 rooms is considered essential. Ideally the hotel should be
of larger size but given the present state of development in this area it would not be reasonable to
insist upon this.
Branding Since proposed site is surrounding by posh area with residence of top government officers
and ministers hence the attraction will be there for the public if promoter will gives good branding
and quality infrastructure. Moreover club with restaurant and hotel as well as both recreational &
conventional facility is important, especially in a new destination. The better brands in the market be
more interested even in smaller properties for reasons of their own economics.
The hotel may need to target other sources of room night demand, especially in the first few years of
its operations. In addition, convention and recreational activity to be promote to cater local public
and publicized the hotel.
Object to built Community Centre is solely for the use of medium and low income group. The building
will be comprises of a hall of about 2500 sq. ft with 6 rooms and open space of about 5200 sq. ft.
0.86 Acres
FAR
1.42
Ground Coverage
44.60%
13500 Sq.Ft.
Ground Floor
16500 Sq.Ft.
First Floor
13000 Sq.Ft.
Second Floor
13000 Sq.Ft.
Third Floor
9750 Sq.Ft.
65750 Sq.Ft.
Construction Area
Sq.
5000 Ft.
Open Space
Sq.
5200 Ft.
17
Revenue Streams
No. of Rooms
20
Restaurant
Banquet
Lawn
Swimming Pool
Area
13,500.00
Basement Parking
Construction
Cost/ Sq. Ft.
1,500
Total Cost
Rs / Sq. Ft.
Basement 13,500.00
20,250,000.00
20,250,000.00
Lobby
1,500.00
2,500
Rs / Sq. Ft.
3,750,000.00
Banquet Hall
6,000.00
2,500
Rs / Sq. Ft.
15,000,000.00
Restaurant
2,800.00
2,500
Rs / Sq. Ft.
7,000,000.00
Kitchen
600.00
2,500
Rs / Sq. Ft.
1,500,000.00
Lawn
10,000.00
300
Rs / Sq. Ft.
3,000,000.00
Swimming Pool
1,000.00
2,000
Rs / Sq. Ft.
2,000,000.00
400.00
1,500
Rs / Sq. Ft.
600,000.00
1,500.00
300
Rs / Sq. Ft.
450,000.00
Cafeteria
500.00
2,000
Rs / Sq. Ft.
1,000,000.00
Commercisl Space
1,000.00
2,000
Rs / Sq. Ft.
2,000,000.00
Landscaping Etc.
4,700.00
300
Rs / Sq. Ft.
1,410,000.00
7,000.00
500
Rs / Sq. Ft.
3,500,000.00
41,210,000.00
2,500
13,000.00
2,000
Second Floor
Third Floor
18
Rs / Sq. Ft.
32,500,000.00
Rs / Sq. Ft.
2,500 Rs / Sq. Ft.
26,000,000.00
9,750.00
Total Construction Area
24,375,000.00
65,750.00
150,000.00
800.00
800
Rs / Sq. Ft.
640,000.00
5,000,000.00
4,600.00
2,000
Rs / Sq. Ft.
9,200,000.00
400.00
1,200
Rs / Sq. Ft.
480,000.00
500,000.00
Estimated Cost
160,305,000.00
1,603.05
Phasing
It is assumed that the project will take 2 to 3 years for construction and development. Hence 2 to 3
years construction period has been allowed to the developer before operations start in the project.
Period of Analysis
Period of financial analysis is taken as 30 years, including period of construction.
Financing and Taxation assumptions
Debt Equity Ratio: Debt Equity Ratio is taken as 70:30.
Interest Rate: The rate of interest for the analysis has been assumed as 15% per annum.
Debt Repayment Period: 12 year debt repayment period has been considered for the proposed
Development with three year moratorium period.
Depreciation : The depreciation on the project components of Buildings, Plant & Equipment
and Fittings has been taken as per the Companys and Income Tax Act through Straight Line Method
(SLM) method.
Summary of Financial Analysis Results
IRR
Project IRR (Pre-Tax)
23.07%
Post Tax Equity IRR of the Project
23.32%
NPV
NPV of Equity Cash Flows (Rs Lakh) @20% discount 172.97
Rate
19
Results of financial analysis show that Pre Tax Project IRR is coming out to be is 23.07%, which indicates that
project is viable. Post Tax Equity IRR of the project is coming to 23.32%, which is higher than the target of 20%,
which is IRR that investors will most likely seek from such an investment.
Considering a discount rate of 20%, the NPV of equity cash flows, which symbolizes the surplus/ deficit
generated by the project, while insuring 20% returns on developers equity, comes out to be Rs 172.97 Lakh.
This indicates the project has potential of generating Rs 172.97 Lakh in NPV terms.
Why PPP Procurement Route is Advisable:- The project can be defined in terms of clear and measurable performance in output terms, rather than
input terms.
-
Opportunity for innovation by a private partner. Chhattisgarh Housing Board does not have expertise
in operation of Recreation or Convention center. On the same line CHB is successfully running a club at
VIP/ Airport Road in Raipur in the name of Queens Club on PPP basis.
Attractive size and project scale of interest to private sector investors and operators.
What PPPs do allow, however, is an important leveraging opportunity for Governments to use their
limited public sector resources better in order to attract new private sector investment, technology,
and risk-sharing into key infrastructure sectors in order to deliver more value for the economy and for
consumers.
The analyses of Club, Hotel or Guesthouses established elsewhere in the city and outer side, indicate that the
vast majority of standalone club, hotel or guesthouse facilities typically realize an operating deficit and hence
are not commercially viable. However, club, hotel or guesthouse that are packaged as part of a larger
urban development, benefit from the revenue generated by convention & recreation related activities, such
as gym/spa, restaurant, banquet hall, entertainment related activity, lease rentals from open space etc., can
provide a financially bankable model.
Political risk can be mitigated by effective legal documentation and insurance whereas designing parameter of
club building should be environment friendly to the extent possible so that environment risk is not envisaged.
Recommendation:
On the basis of the findings of the feasibility study which includes the financial analysis of the projects
estimated construction and O&M cost and projection revenue cash flows, it is recommended that the
project is viable on a PPP basis. The demand analysis of the end users of the sport, convention & recreation
centre also validates the claims of viability of the project.
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