2021 hotel development

HOTEL DEVELOPMENTCOST SURVEY INDiA

2021

Megha TuliPartner & Co-Founder, Hotelivate

Shailee SharmaSenior Associate, Strategic Advisory, Hotelivate

2021 Hotel Development Cost Survey I 2India

Understanding the ReportHotelivate is pleased to share the analysis and insights of the 2021 Hotel Development Cost Survey | India. This survey presents the results of an extensive review of actual development costs of nearly

400 hotels, across positioning and locations, that opened in the country between 2002 and 2020, in addition to offering an in-depth understanding of trends and the factors impacting them.

The survey sample set profile of 378 hotels, having 55,488 rooms across 102 Indian cities, has been illustrated below. Totally, this represents ~40% of the nation’s branded/organised hotel inventory

spanning 38 hotel companies with numerous sub brands. In the report, where the sample set profile has influenced the survey results in ways contrary to the trends witnessed on ground, we have provided

the necessary indications. This section further offers qualifying conditions and the methodology deployed whilst analysing the data.

SURVEY SAMPLE SET PROFILE

Figure 1: Sample Set of the Survey

Hotels by Positioning

57(15.08%)

95(25.13%)

(17.2%)

38(10.05%)

(6.08%)

(26.46%)10065

23

Hotels by Inventory Range

(53.97%)(38.36%)

29(7.67%)

204145

Positioning

Economy/Budget

Mid-Market

Upper Mid-Market

Upscale

Upper Upscale

Luxury

Room Inventory Range

300 or more

100 - 299

Less than 100

Inventory Represented

Hotels Represented

Cities Represented

Brands Represented

55,488

378

102

38

Mid-Market and Upper Mid-Market hotels have the

highest representation in the sample set, together

accounting for 52% of the total; this supports the

trend that the development of lower positioned

hotels has gained traction in the last decade.

Additionally, most of the hotels are based in urban

locations (primarily in Tier 1 and Tier 2 cities) and

have 100–299 rooms, with the mean inventory of the

sample set being 147 rooms. Also, 85% of the hotels

opened in 2010 or later years, allowing for the

identification and analysis of more recent trends.

Figure 2: Hotel Brands Represented in the Survey

Hotels by Location Type

298 (78.84%)

80 (21.16%)

Hotels by Tier Type

150 (39.68%)

152 (40.21%)

76 (20.11%)

Tier Type

Tier 1

Tier 2

Tier 3

Location Type

Urban

Leisure

Hotels by Opening Year

Opening Year

2010-2015

2016-2020

2009 & prior

Accor

Berggruen Hotels

Independent Royal Orchid Hotels

The Leela PalacesHotels & Resorts

The Park Hotels

Shangri-LaHotels & Resorts

51 (13.49%)

191 (50.53%)136 (35.98%)

Dusit Hotels & Resorts

Four Seasons Hotelsand Resorts

Indian Hotels CompanyLimited

Jaypee Hotels & Resorts

Lemon Tree Hotels

Golden Tulip Hotels

Hard Rock Hotels

Best Western Hotels

Oakwood

Oberoi Hotels & Resorts

Mayfair Hotels& Resorts

Planet HollywoodInternational

Rosakue Hospitality

Spree Hotels

Svenska Design Hotels

Sarovar Hotels& Resorts

The Zuri Hotels& Resorts

Triumph Realty

Whitbread PLC

Wyndham Hotels& Resorts

Choice Hotels

Citrus Hotels

Concept Hospitality

Hyatt Hotels & Resorts

Hilton Hotels & Resorts Peppermint Hotels

IHG

ITC/Fortune Hotels

Lords Hotels & Resorts

Marriott International

QUALIFYING CONDITIONS

PRESENTATION OF SURVEY RESULTS

The development cost of each hotel and related information has been self-reported by the respondents. While careful attention has been paid to address anomalies and filter out incomplete or

questionable data, we have not independently verified the accuracy of each data point.

The survey results do not consider effects of inflation, change in prices of essential commodities, and currency exchange rates, and instead reflect the development cost provided by the

respondents as of the opening year of the hotel. Moreover, hotel development costs are impacted by a variety of factors that are unique to each project and hence, the survey results must not be viewed

in isolation. They are only meant to serve as a guideline to aid comparison across positioning and other parameters used in this survey.

Not all hotels in the sample set have provided complete information on the breakdown of the development cost or other related information that has been analysed in this report. In such cases, we have

carved out subsets of the sample to perform the analysis, eliminating responses with insufficient information.

All information has been collected and analysed by the staff of Hotelivate. Data confidentiality has been strictly maintained throughout this report, with survey results being presented only in the

aggregate; no individual hotel, brand or operator has been identified. Hotelivate reserves the right to amend all or part of the report without prior notice. No information contained in this report may

be reproduced or distributed in any form without the due acknowledgment and prior written consent of Hotelivate.

In this report, the survey results have been presented under the following four major sections:

Section A: Development Cost per Key

Section B: Development Cost per Key Breakdown by Major Cost Categories

Section C: Average Development Cost per Square Foot of Average Total BUA

Section D: Construction Tenure

Under each section, we have performed detailed analyses using five primary independent variables, as highlighted below.

IND

EP

EN

DEN

T V

AR

IAB

LES

PA

RA

MET

ER

S

Less than 100 100-299 300 and above| |

Urban Leisure|

Tier 1 Tier 2 Tier 3| |

2009 and prior 2010-2015 2016-2020| |

Room Inventory

Location

City Tier Type

Opening Year

Market Positioning Economy/Budget Mid-Market Upper Mid-Market Upscale Upper Upscale Luxury| | | | |


Hotel Development Through the Ages

In the mid-90s, when the market size of branded/traditional chain-affiliated hotel rooms in India was assessed for the first time, there were around 18,200 rooms operating across budget to luxury

positioning. Per our latest estimates, this figure stands at over 1,46,000 rooms as of 2020-21. Such an impressive growth has been possible owing to numerous factors, including the advent of

international hotel chains in India; rising popularity of the asset-light model for expansion (franchise and management contracts); increasing tourism demand (both domestic and international) that has

resulted in the need for quality accommodation across positioning; improving macroeconomic conditions that have supported the growth of businesses in the country, further enhancing commercial

travel; and a gradual shift in hotel development from upscale-luxury hotels to budget mid-market hotels that are quicker and relatively less expensive to build.

Around two decades ago, the Indian branded hospitality landscape was referred to as an inverse pyramid, with a larger chunk of rooms operating in the upscale-luxury category; however, this has

transformed dramatically since then, with almost 60% of the current room inventory positioned in the economy/budget-upper mid-market space (Figure 4, above).

As the supply of rooms rises, heightening the competition across positioning, determining the viability of hotel projects becomes even more necessary. To that end, a critical component to assess is the

hotel development cost. How much does it cost to build a hotel? How long does it take? Is it different across locations? Has it increased or decreased over the years? Endeavoring to address these

questions and many others, we are pleased to share the results of the 2021 Hotel Development Cost Survey | India.

Figure 3: Growth in the Branded/Traditional Chain-Affiliated Room Inventoryin India | 1995-96 to 2020-21

Note: Branded/Traditional hotel chains refer to companies with hotels that are predominantly organic-branded.

Source: Indian Hospitality - The Stats & Pulse (S&P) Report FY2021

Branded Rooms

Figure 4: Branded/Traditional Chain-Affiliated Room Inventory in India by Positioning | 2000 vs 2010 vs 2020

Upper Mid-Market/Mid-Market

Economy/Budget

Luxury

Upper Upscale/Upscale

2010 2020

18,160 33,500

1,08,682

1,46,352

1995-96 2005-06 2015-16 2020-21

2000

6,269

8,620

8,019

120

19,031

24,550

5,406

6,444

44,676

65,992

21,204

14,480


CAGR: 9%

CAGR: 13%

CAGR: 6%

Figure 8: DCost/Key (IL) by Tier Type

Tier Type

Tier 1

Figure 6: Avg. DCost/Key (IL) by Inventory and Positioning

Figure 10: DCost/Key (IL) by Location Type

Location Type

Figure 9: DCost/Key (IL) by Opening Year

Opening Year

Section A: Development Cost per Key

The sample set of 378 hotels (across all positioning) has a total development cost of 57,372 crore, with the `

average development cost per key computing to 1.03 crore. The survey results have been presented below by the `

primary independent variables listed earlier in the report.

Validating the general understanding that development cost increases with the rise in hotel market positioning, our findings suggest that an economy/budget hotel in India costs ₹36.61 lakh/key to build while a luxury hotel costs a little over five times at ₹194.54 lakh/key.

The range of development cost within the same positioning is vast, indicating a lack of standardisation. This can be attributed to two main factors – (i) some international brands tend to position their product a notch higher to gain acceptance from the Indian market, and (ii) personal aspirations of Indian owners to develop landmark projects as against efficient ones.

On analysing development cost by inventory and positioning (Figure 6) to determine whether economies of scale can be achieved beyond a certain number of rooms, we found that mid-market and lower positioned hotels, which are predominantly rooms-oriented, can optimise up to ₹11 lakh/key (or 19%) if they have 150 rooms or higher. Though this is not the case with higher positioned hotels, possibly due to the presence of more built-up public areas, such as F&B outlets, meeting facilities and other operating departments such as spas and fitness centres, it is interesting to note that the incremental cost per key is moderate (13%), to build an upper mid-market or higher positioned hotel with an average inventory of 252 rooms vis-à-vis another with 98 rooms. Hence, the viability of developing higher inventory must be evaluated in the context of market conditions.

Hotels in Tier 1 cities have a higher cost per key in comparison to Tier 2 and Tier 3 cities in India. We also observe that while the land cost is substantially lower in Tier 3 cities than in Tier 1 (and to a lesser extent Tier 2), the costs related to construction, MEP and FF&E aren’t vastly different (detailed later in the report). It must be noted, however, that the average room inventory of hotels in Tier 1 cities is 193 rooms, while that in Tier 2 and Tier 3 cities is 126 room and 98 rooms, respectively.

Leisure hotels in India seemingly cost slightly more to build than urban hotels although the average room inventory of leisure hotels in the sample set is 95 rooms, while that of urban hotels is 161. While this impacts the development cost per key one must also note that many emerging leisure destinations in the country are limited by the availability of resources to efficiently build a hotel, increasing the overall development costs as a result.

Hotel development costs have increased over the years, with the cost per key rising by 28% between the periods 2009 and prior and 2010-2015. Hotels that opened in the last five years cost 58% more to build per key than those that opened in the early 2000s.

Key Insights

Figure 5: DCost/Key (IL) by Positioning

DCost/Key (IL)

Po

siti

on

ing

Economy/Budget

Mid-Market

Upper Mid-Market

Upscale

Upper Upscale

Luxury

Median of Sample Set: 94,03,822

64,68,391

71,95,837

1,16,11,808

1,62,28,769

1,94,53,560

3,661,392

55,73,26744,90,899

1,11,62,647

1,25,87,056

Mid-Market& Lower

Upper Mid-Market& Higher

Figure 7: DCost/Key (IL) by Inventory Range

DC

ost

/Key (

IL)

Inventory Range

300 or more100 - 299

1,3

7,8

9,3

89

1,0

0,2

5,3

28

Less than 100

74,5

8,9

23

Costs 19% less per key

Costs just 13% more per key

2016-20202010-20152009 & prior

1,2

3,3

3,2

29

10,0

78,2

38

7,7

89,3

43

Leisure Urban1,0

5,9

6,0

16

1,0

2,9

8,6

47

11,0

34,6

54

Tier 3

9,6

87,7

70

Tier 2

9,5

41,3

18


150 rooms or less 151 rooms and above

*All numbers are in Indian Rupees

**DCost/Key (IL) = Development Cost per Key (Including Land Cost)

Section B: Cost per Key Breakdown by Major Cost Categories In this section, we have presented the survey results pertaining to the composition of the

development cost of hotels by the salient cost categories, further analysed by the primary

independent variables. It must be noted that for this specific analysis, we looked at a subset of

104 hotels comprising 13,322 rooms, eliminating entries with insufficient information.

Building/construction costs make up the highest portion of hotel development costs for most market positioning except upper upscale/luxury hotels, where MEP & FF&E collectively constitutes the largest cost category.

While Professional & Legal costs represent a near similar level of contribution across positioning, in absolute figures, upper upscale/luxury hotels have average soft costs that are 5.5 times more than economy/budget hotels.

Unsurprisingly, land cost as a percentage of total development cost (incl. land) is the highest for economy/budget hotels due to lower cost of construction for such hotels, resulting in lower project cost as a whole, while IDC is the highest in case of upper upscale/luxury hotels possibly due to a longer construction tenure and higher absolute amount of debt.

The ratio of various cost categories to the total development cost per key has remained comparable over the years; however, land cost has increased, contributing a higher percentage of the total.

Key Insights

Figure 12: Land Cost % by Positioning

Land Cost %

0% 10% 20% 30%

Po

siti

on

ing

Economy/Budget

Mid-Market

Upper Mid-Market

Upscale

Upper Upscale

Luxury

34.71%

18.98%

22.04%

13.70%

13.37%

17.17%

0%

20%

40%

60%

80%

100%

Bre

akd

ow

n P

erc

en

tag

e

Economy/Budget Mid-Market Upper Mid-Market Upscale Upper Upscale Luxury

MEP & FF&E

Soft Costs

Pre-Opening Costs

IDC

Building Construction Cost Civil Construction Cost for all above ground areaas well as basements

Mechanical, Electrical, Plumbing and Furniture,Fixtures & Equipment

Professional and Legal Fees, Project Management Fees,Architects, Consultants and Licenses

Linen, Operating Supplies and Working Capital

Interest During Construction

47.51%

20.58%

14.52%

5.67%

4.01%

7.71%

39.24%

24.22%

17.48%

5.71%

4.77%

8.58%

41.96%

14.88%

20.84%

4.07%

5.65%

12.61%

28.50%

19.47%

19.50%

6.22%

5.93%

20.39%

31.39%

11.60%

26.89%

8.95%

6.89%

14.28%

17.55%

15.99%

6.01%

5.13%

8.23%

47.08%


Figure 11: Development Cost Breakdown by Positioning

Pre-Opening Cost Interest during Construction Professional & Legal FeeTotal Building Cost MEP FF&E

Positioning

Figure 18: Land Cost % by Tier TypeFigure 17: DCost Breakdown by Tier Type

Figure 16: Land Cost % by Location Type

0% 10%

20%

20%

Tie

r Typ

e

0% 10% 20%

Lo

cati

on

Typ

e

Leisure

Urban

17.79%

16.05%

Tier 3

Tier 2

Tier 1

19.13%

16.02%

15.85%

0%

20%

40%

60%

80%

100%

Bre

akd

ow

n %

13.35%18.66%

9.31%

5.67%5.18%

7.37%

22.78%16.33%

14.81% 18.49%

34.57% 33.47%30.80%

19.66%

20.82%

3.94%4.11%

10.67%

0%

20%

40%

60%

80%

100%

Bre

akd

ow

n %

11.78%15.32%

7.24%

5.71%

5.12%5.35%

17.88%23.91%

19.45%14.55%

36.52%37.18%

Tier 1 Tier 2 Tier 3

Figure 15: DCost Breakdown by Location Type


Leisure Urban0%

20%

40%

60%

80%

100%

Figure 13: DCost Breakdown By Inventory Range

Bre

akd

ow

n %

Figure 14: Land Cost % by Inventory Range

0% 10%

Inven

tory

Ran

ge

100 - 299

Less than 100

300 or more

17.72%

16.61%

13.34%

9.05%

4.62%

5.01%

21.12%

17.80%

42.40%

Less than 100

21.95%

6.53%

5.61%

18.98%

16.93%

30.00%

300 or more

38.00%

19.33%

18.59%

5.84%

5.40%

12.84%

100-299

Pre-Opening Cost Interest during Construction Professional & Legal FeeTotal Building Cost MEP FF&E

Figure 20: Land Cost % by Opening Year

0% 10% 20%

Op

en

ing

Year 2016-2020

2010-2015

17.69%

13.96%

Figure 19: DCost Breakdown by Opening Year

0%

20%

40%

60%

80%

100%

Bre

akd

ow

n %

17.57%12.96%

6.21% 5.64%

5.21%

5.63%

20.64%16.35%

18.52%18.28%

37.03%35.97%

2010-2015 2016-2020

Inventory Range

Tier TypeOpening Year

Location Type

Section C: Development Cost per Square Foot of Average Total Built-up Area

This section looks at the Total Built-up Area (BUA) of the surveyed hotels, and the Average Total Development Cost per Square Foot of the Average Total BUA by the primary independent variables. For this

analysis, we considered a subset of 143 hotels comprising 18,261 rooms, eliminating entries with insufficient information. Moreover, for the calculation of Gross Floor Area (GFA), only the BUA “above”

ground has been considered.

We observe that the BUA below ground (typically basements) tends to average 27% of the Total BUA, with luxury hotels representing the higher end of the range, possibly owing to a larger support team as well as higher requirement of back of the house areas.

Although the development cost per key rises with the increase in positioning, the development cost/ft2 of total BUA is nearly similar across for hotels across the budget/economy to upscale positioning, rising steeply only for upper upscale/luxury positioned hotels, driven mainly by high FF&E costs, soft costs, and MEP costs, as mentioned in the previous section.

An important aspect to bear in mind here is that economy to mid-market hotels are represented almost equally (40% of the total) in both Tier 1 and Tier 3 cities in this subset; however, the product profile is quite different. In Tier 3 cities, such hotels have fewer rooms and more public areas (F&B outlets and event venues), whereas in Tier 1 cities they are akin to room factories.

The larger incremental spaces in Tier 3 cities are not as expensive to build/furnish as rooms. Thus, with an average room inventory of 98 keys, similar positioned hotels in Tier 3 cities have a lower development cost when compared to Tier 1 cities (where the mean room inventory is 190 keys).

In this subset, economy to mid-market hotels constitute 31% of all hotels that opened between 2010 and 2015 and 50% of all hotels that opened between 2016 and 2020. Consequently, the GFA/ft2 is lower for hotels that opened in the last five years. This is reflected in the average development cost per key as well.

Key Insights

Figure 22: DCost/Key (IL) & DCost/SqFt (IL) by Positioning

Average of Total BUA UG (Sq Ft)

GFA/Key

Figure 21: BUA (Sq Ft) & GFA/Key by Positioning


540

1,478

774

812

1,3231,311

Average of Total BUA AG (Sq Ft)


GFA/Key



51,87,472

77,37,15685,00,146

1,45,42,414

2,21,17,389

2,36,06,109

7,537

13,221

6,954

7,816

10,849

7,386

Positioning

Figure 27: Average of Total BUA AG (Sq Ft), Average of Total BUA

UG (Sq Ft) and GFA/Key by Tier Type

Figure 28: DCost/Key (IL) and DCost/SqFt (IL) by Tier Type


1,51,32,933

1,07,52,08497,27,582

9,534

8,670

7,414

Figure 25: Average of Total BUA AG (Sq Ft) and GFA/Key byLocation Type

Leisure Urban

93,114

1,42,879

35,556

65,686

944

1,025

Figure 26: DCost/Key (IL) and DCost/SqFt (IL) by Location Type

Figure 29: Average of Total BUA AG (Sq Ft), Average of Total BUA

UG (Sq Ft) and GFA/Key by Opening Year

2012 2016

1,6

9,7

34

1,1

6,7

55

95,6

32

45,924

1,030

998

Figure 30: DCost/Key (IL) and DCost/SqFt (IL) by Opening Year

Location Type

Opening Year


Leisure

95,6

0,2

52

7,329

Urban

1,3

3,2

5,5

84

8,905

Tier 2

1,03,928

46,346

Tier 3

80,750

28,923

Tier 1

2,05,625

96,057

1,082

826

1,003






GFA/Key

GFA/Key



GFA/Key


GFA/Key

Figure 23: Avg. BUA (Sq Ft) & GFA/Key by Inventory Range Figure 24: DCost/Key (IL) and DCost/SqFt (IL) by Inventory Range

Less than 100 100 - 299 300 or more

77,99,420

1,28,09,943

1,91,79,235

6,113

11,419

8,705

Inventory Range

Dcost/Sq Ft (IL)

Dcost/Sq Ft (IL)

Dcost/Key (IL)

Dcost/Key (IL)

Dcost/Sq Ft (IL)

Dcost/Key (IL)

Dcost/Sq Ft (IL)

Dcost/Key (IL)

Less than 100 100 - 299 300 or more

60,56426,473

1,59,418

67,874

4,30,181

2,30,744

1,032

1,091

888

2012

1,3

5,6

4,1

39

8,420

2016

1,2

0,5

6,5

75

8,673

Tier Type

Section D: Construction Tenure

We also analysed the construction tenure of the surveyed hotels to analyse its impact on development cost. For this analysis, we reviewed a subset of 352 hotels comprising 52,442 rooms, eliminating

entries with insufficient information.

The average construction tenure of all hotels in the subset is 42 months.

When reviewed by positioning, as anticipated, luxury and upper upscale hotels have the longest construction tenure averaging 51 months and economy/budget hotels have the shortest tenure averaging 30 months.

However, when one looks at the maximum tenures, there are hotels that took 8 to 12 years to build as well, many of which were in politically unstable regions, holding back commercial and infrastructural development.

Nonetheless, maximum tenures ranging from 54 months to 144 months point to the fact that the actual time taken to acquire the funding and statutory licenses, permissions and approvals to open hotels in India delays projects.

Expectedly, large format hotels take longer to build (53 months on average) than smaller hotels (38 months on average). Additionally, the fact that most of the large format hotels in the subset have a higher positioning, further contributes to this trend.

Hotels in urban and leisure locations suggestively take nearly the same amount of time to build and open. Even when viewed by positioning, upscale-luxury hotels in both leisure and urban locations take, on average, 46-51 months to open.

Construction tenure of hotel projects in India has increased over time even though lower positioned hotels are being built, project management companies are being hired and more technology is being used. That said, many emerging locations are being tapped in recent years, where initial logistical challenges could have delayed hotel projects to a certain extent.

Key InsightsFigure 31: Construction Tenure by Positioning Figure 32: Construction Tenure by Inventory

Figure 33: Construction Tenure by Tier Type


20 1811

44 42 40

117

144

72

Figure 34: Construction Tenure by Location Type

Urban Leisure

1811

42 43

117

144

Figure 35: Construction Tenure by Opening Year

2009 & prior 2010-2015 2016-2020

18 1811

3543 4448

102

144

18 1121

30 30 3230 3844 48 51 5154

72

144

84

117

72

Economy/Budget Mid-Market Upper Mid-Market Upscale Upper Upscale Luxury Less than 100 100 - 299 300 or more

1118

3438 4353

144

108117

Inventory Range

Opening Year

MaximumAverageMinimum


Location Type

Positioning

Tier Type

Additional Takeaways for Developers

Overall, we note that hotels in India, particularly in the economy to mid-market positioning,

offer substantially more non-room areas in the form of multiple F&B outlets and meeting facilities

than similarly positioned hotels in North America or Europe. While this has always been true for

domestic hotel chains, international brands that have an established presence in the country or have

recently entered, have also realised the need to offer extended F&B options. While F&B contributes

anywhere from 20%-45% of the top line, based on the positioning, it certainly increases the

development cost of hotels as well.

The availability of less expensive manpower in comparison to North America and Europe has allowed

international brands to develop full-service instead of select-service hotels, even in the budget

and mid-market space in India. This further contributes to an increase in the development costs.

Another critical aspect to consider is the rise in construction input costs in recent years, especially

that of cement and steel. However, the implementation of uniform Goods and Services Tax (GST) is

being viewed positively by the construction industry, as it has helped standardise taxation rates of

raw materials across states. Going forward, an increased use of technology, streamlining of

development regulations by the government, and the advent of international contractors and

project management companies will likely make hotel construction in India more efficient.

While on this analysis, we also reviewed the impact of construction tenure on Interest During

Construction (IDC). As Figure 36 shows, when you have a longer construction tenure, IDC costs are

understandably higher, irrespective of the market positioning. For example, 53% of the hotels with an

IDC between 10.1%-15% of the development cost and 44% of the hotels with an IDC over 15% of the

development cost are in the upper mid-market and below segments.

On average, IDC accounts for 15% of the total development cost of hotels in India, which is on

the higher side. This is largely attributable to the high lending rates as well as long construction

tenures for hotel projects in the country. The industry’s long-standing demand from the government

for being accorded the infrastructure status that could possibly address this challenge hasn’t fully

been met yet. In 2012, infrastructure status was granted to three-star or higher category hotels

outside cities with a population over one million. Then in 2013, the government granted

infrastructure status only to hotels with a project cost of more than `200 crore (excluding land).

Significantly, both thresholds covered a very small percentage of hotel projects in the country.

Figure 36: Avg. Construction Tenure & Avg. IDC % by IDC % Range

IDC % Range

<5% 5.1%-10% 10.1%-15% >15.1%

37

44

5658

2.65%

20.76%

12.07%

6.90%

Avg. Construction Tenure Avg. IDC %


IN CONCLUSION

Our report seeks to provide trend lines across a variety of data points and matrices relevant to the

development cost of hotels. Having said that, hotels are a unique asset class with the

development timeline and cost breakdown for each one being different. This report provides

broad indicators to aid developers in controlling individual cost lines without getting entrenched

in the specifics of the outcome. To reiterate, there is no ideal cost structure for hotels of any

positioning, but an understanding of cost breakdown and range for the development cost per

key can result in efficient cost structures and hotel development.

The authors wish to thank Neha Katyal, Sanaya Jijina, Achin Khanna & Deepika Thadani for their

contributions to this report.

nd2 Floor, Paras Downtown Centre, Golf Course Road, Sector-53, Gurugram 122002, India www.hotelivate.com

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