We have a long-standing reputation for pursuing excellence which has been a tremendousstrength for our Company. We put our guests first and maintain high standards in everyaspect of our business - from ethics and transparency to environmental and socialsustainability to diversity and inclusion. We believe that each interaction with ourbrand is designed to uniquely delight guests create indelible memories and build anenduring loyalty. Hence we are proud to be voted the fifth top brand in a worldwide 2016survey by the renowned Travel+Leisure USA and ranked above some of the most acclaimedluxury hospitality chains around the globe. It is indeed one of the most prestigioushonours in the travel and hospitality industry.
With six consecutive years of downslide the hospitality industry is finally showingsome signs of recovery. In 2015 we saw a small addition to hotel inventory in primemarkets where a demand-supply mismatch still exists an upturn in average room rates anda marginal increase of 3.3 per cent in occupancy rates. It is encouraging that domestictourists continue to account for significant spending. Also India witnessed a modest 4.5per cent growth in Foreign Tourist Arrivals (FTAs) which is of course significantly lowerthan other countries in the region such as Thailand at 30 million Malaysia at 25.7million and Dubai at 15 million.
India's share of the total world tourist arrival is only 0.6 percent a fraction of itstrue potential. It is therefore the goal of the Ministry of Tourism Government ofIndia to increase this percentage from 0.6 per cent to i per cent by 2020 which is indeeda very daunting task keeping in mind that another i80000 guestrooms would need to beadded to the present inventory of 120000 guestrooms. At an average of crore perguestroom this tantamounts to capital expenditures of Rs.i8oooo crores. This is why theMinistry of Finance Government of India has accorded hotels over project cost of Rs.200crores the same benefits of infrastructure sectors such as airports ports etc. enablingthem to raise loans for a tenure of 15 years and for projects of over Rs.500 crores underthe 5x25 Schemes.
The Government's decision to open up tourism by introducing e-Tourist Visa to 150countries as against the coverage of the earlier TVoA scheme for 12 countries andallowing multiple entries has been a very welcome move in the right direction.
It is hoped that rationalization of taxes in the proposed Goods and Services Tax (GST)bill will further enable hotels to attract business from around the globe. Internationallythe Indirect Tax levies are less than 10 per cent overall while the applicable cumulativetaxes now for hotels in India amounts to 25-30 per cent. Due to these excessive taxesIndian hotels cannot compete with international destinations. We hope that the proposalwill keep the tax rate for tourism and hospitality business in the lowest GST slab of sixto eight per cent in order to enable us to compete with other destinations such asThailand Malaysia Indonesia Sri Lanka and China whose incidence of GST averagesbetween six and eight per cent.
The Ministry of Tourism Government of India also launched the Swadesh Darshan'Scheme to develop 13 theme-based and sustainable tourist circuits to generate touristarrivals and enhance employment opportunities. The Buddhist Circuit expected to be ingreat demand among international tourists will span all Buddhist sites around thecountry. The hospitality sector can be a key partner in this development story since thereis a critical need for hotels in these sites from Lumbini (the birth place of Lord Buddhain Nepal). Bodhgaya Kapilvastu Sarnath and Varanasi. Development of this well-structuredproposal will help showcase India to tourists from around the world especially China SriLanka Thailand Malaysia South Korea and Japan.
In addition to the Government implementing the aforesaid measures and executing thevarious policy initiatives granting of "Infrastructure Status" is important forhotels that have already availed of about Rs.20ooo crores loans in the last five years toput up recently-opened projects which have become Non-Performing Assets (NPA) or Bankshave sold their liabilities to Asset Restructuring Companies. The main reason for this hasbeen the very short tenure of term loans given to hotels of io years. The repayment ofsuch loans being invariably before the Hotel is able to stabilize itself leads it tobecome an NPA.
Progress on our Asset-light Strategy
The Leela Palace New Delhi continues to be the market leader in the Capital city interms of RevPAR ranked number three in Top City Hotels in Asia' and is voted amongThe World's Top 100 Hotels' in USA's Travel+ Leisure 2016 World's Best Awards. TheLeela Goa has been ranked among The World's Top ioo Hotels' in UK's Conde' NastTraveller Readers Travel Awards 2015; and The Leela Palace Udaipur has been voted India'sFavourite Leisure Hotel' in Conde' Nast Traveller India Readers Travel Awards 2015.These Awards are a testament to our commitment to providing the finest hospitalityexperience in India and overseas.
In India we announced a new addition to the Group's luxury portfolio with thereflagging of Ambience Group's 5-star Deluxe Hotel in East Delhi. Renamed The LeelaAmbience Convention Hotel Delhi' the 480-room property ofFers one of the largest MICEspaces in the country with 70000 square feet of multi-purpose meeting and banquetingspace capable of holding a reception of more than 6000 guests. With the newest additionThe Leela Group now operates three unique properties in the Delhi-NCR totaling over 1150rooms which makes it the Brand with one of the highest number of guestrooms in the NCRRegion.
Other projects are moving forward as scheduled including The Leela and The LeelaResidences on a 125 acres township - Bhartiya City - near the Bangalore InternationalAirport. The development has a Leela Hotel with 256-rooms a Convention Centre and 150Leela Residences. These Leela Residences will provide all the luxury services that TheLeela is acclaimed for within the privacy of their residences. Other projects in AgraJaipur and Chandigarh are in different stages of planning and implementation and we expectto launch the Jaipur hotel in 2017.
We are also pursuing other international opportunities in Maldives Abu DhabiSeychelles Dubai and Fujairah Beach. To sum up we expect a better performance this yearespecially in hotels located in the business destinations. We are focused on restructuringour debt
and driving growth while maintaining our operational excellence. Whilst doing so we areaware of the pain caused by the disinvestment of stellar properties such as The Leela Goabut it is important to make the Company lean and with the least amount of debt. Thus theemphasis is on securing new management contracts without any investment from your Companyof course in the process retaining many of the current hotels which are the bestperforming in all the various markets they operate in.
For the outstanding comments received of guest experiences I thank our extraordinaryassociates who make the mission of The Leela their own. I would like to thank you allour Shareholders Board Members Lenders the Ministry of Tourism Government of India andthe Tourism Departments of the various State Governments for their whole hearted support.
Chairman and Managing Director
Hotel Leelaventure Limited