MANAGEMENT DISCUSSION & ANALYSIS REPORT The "Welcome Steps" initiated by the Government contained a proposals to extend Tourist Visa on Arrival (TvoA) to 150 countries from 43 countries in stages in its Union Budget for 2015-16 brsented in the Lok Sabha. The step should catapult the foreign visitors to exceed eight million in the current calendar year. Further, the restoration of facilities at India's 25 cultural World Heritage Sites. The development of heritage sites included churches and convents of Old Goa. The time bound improvement and development highlights the Government's focus on building India as a heritage tourism destination. Further, ease of doing business initiatives like a single clearance window will foster an environment of business growth. Apart from above, the focus areas such as infrastructure, skill development and rural development will have the potential provide a big tail wind for Indian tourism. The Hospitality industry will also benefit and contribute on initiatives of skill development in the achievement of objectives of the Government. The Business Environment: • Inflation of 6.5% will pick up marginally in 2016 but will resume moderating over the remainder of the forecast period, averaging to 5.7% annually in 2017-19. •• France is expected to witness the inflation rate at an average increase of 1.3% in 2016 and 1.5% on average in the remainder of the forecast period. In Germany, expect the inflation rate in 2016-19, forecast average consumer price inflation of 1.7% per year. And, in Italy, inflation to accelerate, to average 1.3% in 2016-19. •• In the United States, annual inflation will quicken to an average of 2.4% in 2016-18, before slowing in 2019 as economic demand declines. The dollar will soar against most currencies in 2015-16, the result of surging US growth, higher interest rates and softness in many other economies. The forecast, a US dollar apbrciation to an average of US$1.04:€1 in 2015 and US$0.99:€1 in 2016. • We then expect the euro to claw back some ground in 2017 19 as the sbrad between US and euro zone interest rates narrows. Indian Economic Indicators: a. GDP growth is expected to remain as 2015 - 7.5%, 2016 7.7%, 2017 6.9%, 2018 6.9% (Source: Economic Intelligence Unit) b. Inflation is likely to be 2015 5.9%, 2016 6.5%, 2017 5.7%, 2018 5.7% (Source : Economic Intelligence Unit) c. FTAs during the period January- March 2015 were 22.81 lakh with a growth of 3.2%, as compared to the FTAs of 22.10 lakh with a growth of 7.9% in January- March 2014 over January March 2013. d. FEEs from tourism in US$ terms during January- March 2015 were US$ 5.310 billion with a growth of 1.1% as compared to the US$ 5.253 billion with a decline of 6.9% during January March 2014 over January- March 2013. e. The total contribution of Travel & Tourism to GDP was INR7,642.5bn (6.7% of GDP) in 2014, and is forecast to rise by 7.5% in 2015 f. Expected that the currency will apbrciate modestly in 2016-19, as foreign investment inflows strengthen in tandem with improving economic growth. g. The policies of the new Government will encourage FII into India Political: - a. Stable governments both at the Centre and State likely to influence Tourism in a positive way b. Focus of the State Government with the help of the Centre on Infrastructure development like modernization of roads, bridges, airport and railways. c. Positive post-election scenario has aided FDI in various sectors which will help to boost the Indian Economy d. With no major change in the increase of luxury category hotel in Goa, the demand for existing rooms to increase Major Assumptions a. Macro-economic conditions expected to be buoyant due to political uncertainty b. Decline in Charter business continue from 2015 as Russian outbound to Asia has suffered damage due to Russian economic crisis since 2015 and will continue to lag in 2016. However inbound markets such as UK, Germany, United States of America, have been continuing their travel. New markets of Kazakhstan, Armenia and Georgia are being tapped by Indian DMC's as well Foreign Tour operators to replace the void left by the Russian and Ukrainian markets. c. Incentive group is an upcoming opportunity as this segment has witnessed upward trends from Spain, Portugal, French and Arab markets since 2014. d. Domestic market decisions are being influenced by overload of options and increased airfares e. Tourist inflow into Goa will increase from international market with the introduction of E-Tourist Visa at 9 airports in India which include Mumbai Delhi and Goa from 76 countries and territories and scheduled to be extended to further 31 countries and 7 new airports. However the affect will be visible once the concerned departments are able to iron out the existing complications. f. Minor revisions in taxation policy including service tax change for this year is expected. Relaxation of Luxury Tax during off season is expected to continue next year as well. g. Goa as a destination for leisure, wedding, Spa and MICE is evolving and growing however infrastructural reforms need to take place simultaneously. h. Planet Hollywood Hotel opened in Q2 2015 in South Goa with a 115 keys. Additionally, new hotels planned to enter the market in 2016-2017 such as Four Seasons, W Retreat & Spa and Hilton; however the exact opening dates are yet to be announced. i. With no major change in the increase of luxury category hotels in Goa, the demand for existing rooms will increase Macro Environmental Elements In 2015/16 the budget deficit will remain stable, at the equivalent of 4% of GDP, largely because lower oil prices will lead to a smaller subsidy bill. • ICRA estimates 8-13% growth in revenues for the industry over the next two years, with growth picking up in line with the macro-economic outlook for the country leading to mobilization of travellers and pick up in FTAs • International relations with BRICS, SAARC, ASEAN and USA to further strengthen with the newly formed Government • GDP growth to average 6.5% a year driven by India's strong economic fundamentals high saving and investment rates, rapid workforce growth, quickly expanding middle class and a shift from low productivity agriculture to higher productivity manufacturing • Consumer price inflation likely to average at 7.7% in 2016. However, withdrawal of fuel subsidies or insufficient rains could increase inflation. On the other hand, subsidies introduced for fertilizers, power and a good harvest could decrease prices Inbound Tourism India: The Tourism Industry's contribution to the country's GDP will grow at the rate of 7.8 percent yearly in the period 2015-23 India's rich cultural heritage and history, food, friendly people, architectural monuments, hospitality and services are positive strengths for its tourism sector, which make it ahead of many of the emerging markets. • YTD figures showed that Asia-Pacific region experienced negative year of year results in all the three performance metrics year to date. India witnessed a minor increase in occupancy of +1.4%, -2.0% dip in average rates and 0.7 % negative variance in Rev Par.(STR Global) • As per Horwath HTL's India Hotel Review Report released in December 2014, Goa was the only destination recording a double digit RevPar growth inspite of the negative impact of the Russian business. • The percentage share of Foreign Tourist Arrivals (FTAs) in India for 2014 was highest from USA (17.62%), followed by UK (11.44%), Australia (4.75%), Russian Federation (3.91%), Germany (2.58%),China (2.25%), Japan (2.21%), France (2.19%) • According to World Economic Forum Travel and Tourism Competitiveness Report 2015 India ranked 52nd out of 141 countries while natural and cultural resources are major drivers however infrastructural gaps become a deterrent. India's relevance as business travel destination is increasing along with its economic growth, and it remains a price-competitive destination (8th) and recent changes in its visa regime: not yet reflected in the data rankingshave the potential to improve international arrivals Room Rates: Transient downfall -The shift of individual travelers to new destinations and newer products available in the state have adversely affected the foot fall. Hence it is imperative to focus on the transient segment moving forward to regain and retain the clientele. • New markets from the inbound arena to be identified in order to decrease dependability from the Russian federation which has been our largest contribution over the past 7 years • UK, Germany, CIS and Europe have maintained and recorded an upward trend in comparison to the brvious year and fixing contribution from Russia to the 8th rank in terms of business on books for the coming season (YTD) • Transient segment performance will continue to be uplifted through marketing efforts by traditional methods and from Digital marketing innovations, this will help grow our capture ratio of respective ancillary departments such as F&B and Spa • Weddings and MICE continue to build base occupancy with opportunity to achieve an optimum market mix of all segments with high yield Tourism and Hotel Industry in Goa Goa Tourism bagged the brstigious 'Wellness Destination of the Year' award at the India International Travel Mart (IITM) 2015 which took place over three days in Chennai (July 17-19, 2015) Goa Tourism has won the brstigious award as the "Wedding Destination of the Year" at the Indian International Travel Mart (IITM) Bangalore. In 2015, Goa Tourism has bagged two brstigious awards, one the PATWA award at ITB Berlin for the Best Wedding and Honeymoon Destination 2015, and the Best Wedding Destination in India by Travel plus Leisure Magazine. Goa has been chosen as 'Best Value Destination (India)' by the Lonely Planet Magazine India Travel Awards, which were held on June 22 in Mumbai. Goa Tourism has decided to undertake massive promotion of Goa as a leading destination for Ornithologists and bird lovers from all over the world, given the fact, that the tiny State has an amazing bird diversity boasting of almost 423 bird species which are available in the State. This is expected to give a big boost for eco and hinterland tourism. Goa Tourism has tied up with the Bird Society of Goa based in Panjim, which is an autonomous society to promote ornithological interest in the State. Avi-tourism is expected to attract high-end tourists and bird lovers from all over the world to it's bird hotspots scattered across the State. Goa is also expected to be prominently featured as a Bird Watchers Paradise on the global map. Financial Performance with respect to operational performance Park Hyatt Goa Resort and Spa is known for a luxury. Luxury hotel means escaping concrete jungles for the refined beach resort and landscaped gardens of the hotel property. The success of a Hotel depends on offering value for money to the guests, Food & Beverage, brand value, role of GM in fostering sustainability for a hotel. The coordination between revenue management and marketing team of the hotel is critical. The adoption of new age technologies in hotel operations is gaining importance day by day. The major source of revenue in hotel is no longer limited to rooms and restaurants. The emerging areas of huge revenue generations are from conferences, events and Wellness, which is equipped with Spa, swimming pool, and state of the art gymnasium. The concept of in-room dining is gaining currency in today's hotel business. The expectation of the guests from in-room dining has also increased. The growth of budget properties is posing a major challenge to the luxury hotels For the period under report the Company's total income for the year under report stood at Rs 10765.43 Lacs (brvious period Rs 10420.85Lacs). The Company has incurred a net loss (after tax) of Rs 1979.03 Lacs as against the net loss (after tax) of Rs 1809.86 Lacs last year. For the period under report Park Hyatt Goa Resort & Spa achieved an average occupancy of 75.2% and its Rev PAR is 3.67% higher than brvious year. Segment Wise Performance The company is brsently engaged in only one segment of business i.e. Hotel and owns Park Hyatt Goa Resort & Spa which is located in the State of Goa. Park Hyatt Goa Resort and Spa is known as one of the India's finest luxury beach resort and spa providing a distinct product and personalized servicein an environment truly committed to our guests. Future Plans and Outlook The existing land parcel of 45 acres of the hotel land contains an Agriculture land / orchard land on which the Company has the potential to get the land converted and put to its commercial use such as development of high end residential villas or addition of the rooms / suites / banquet facilities to increase the existing hotel inventory Internal Control Systems and their adequacy The Company believes that internal controls are essential ingredient towards achieving excellence in corporate governance. Accordingly, it has set adequate control systems in terms of financial reporting, efficiency of operations and compliance with various rules, regulations etc. Regular Audit is being carried out by the Internal Auditors as well as Statutory Auditors, reports whereof are regularly brsented before the Audit Committee of the Board which reviews the adequacy of the internal control system on regular basis and monitors on continuous basis the implementations of the Internal Audit recommendations. Development in Human Resources Your Company lays great emphasis on the importance of human resources and recognizes the fact that no organization can grow without a committed team of employees at all level. The company continues to focus on its endeavor to be a brferred employer in Goa and aims to retain and recruit quality professional and provide them with a high performance environment. The number of people employed on full time basis by the Company as on 31st March 2015 stood at 580, including outsourced employees. Cautionary Statement Certain statements made in the Management Discussions and Analysis Report is based on the brdiction and expectations of the Management and may be 'forward looking statements' within the meaning of applicable securities laws and regulations. The views and futuristic statements contained in this report are the perception of management and subject to certain risks and uncertainty that could cause actual results to differ materially from those reflected in such statements. The Company undertakes no obligations to publicly update or revise any of these futuristic statements, whether as a result of new information, future events, or otherwise. KEY ECONOMIC ASSUMPTIONS - • The INR exchange rate to the USD will be at INR 60.63 / USD • Labor situation and Industrial relations reforms will continue to evolve. Minimum wages have increased in 2015 and expected further increase 2016 • GDP growth is expected to remain as 2015 - 7.5%, 2016 - 7.7%, 2017 - 6.9%, 2018 - 6.9% (Source : Economic Intelligence Unit) • Inflation is likely to be 2015 - 5.9%, 2016 - 6.5%, 2017 - 5.7%, 2018 - 5.7% (Source : Economic Intelligence Unit) |