Scheduleforming part of the Balance Sheet - Domain-b

The Indian Hotels Company Limited
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Management Discussion and Analysis
In line with the international practice, The Indian Hotels Company Limited (IHCL) has been reporting consolidated results taking
into account the results of its Subsidiaries, Joint Ventures and Associates (together referred to as “the Group”). This discussion,
therefore, covers the financial results and other Group developments during April, 2007 to March, 2008 in respect of the Group.
Some statements in this discussion describing the projections, estimates, expectations or outlook may be forward looking. Actual
results may, however, differ materially from those stated on account of various factors such as changes in Government Regulations,
Tax Regimes, Economic Developments within India and the countries within which your Company conducts its business, exchange
rates and interest rates fluctuations, impact of competition, demand and supply constraints.
INDUSTRY STRUCTURE AND DEVELOPMENTS
An Overview of the Global Tourism Industry
Global tourism continued to move upward during 2007-08 with the number of international tourist arrivals worldwide reaching
about 1,000 million (UNWTO estimates) and international tourism receipts scaling US$ 900 billion in the year. Despite continuing
challenges, 2007-08 proved to be another excellent year for travel & tourism – the fourth consecutive year of healthy growth. Since
2004-05, the annual increase in travel & tourism economy GDP has averaged 4% in real terms – faster than the overall global
economy and in the same period, travel & tourism has created more than 34 million jobs.
The prospects for Travel & Tourism over the coming decade look bright, with the Travel & Tourism Economy forecast to sustain
annual growth of more than 4% over the next ten years. Emerging economies are expected to continue growing rapidly, boosting
both international and domestic travel and globalisation will be sustained, as these economies become increasingly integrated into
the world economy, providing ongoing support for both business and personal travel. In developed countries, rising living
standards and an increasing preference for leisure are expected to generate new long-haul travel, while the popularity of short
breaks shows little sign of abating. Although growth is expected to slow in 2008-09, in line with the recent deterioration in the
economic environment in developed economies, led by the USA, WTTC forecasts – developed in collaboration with research
partner Oxford Economics indicated a 3% increase in Travel & Tourism Economy GDP and 6 million additional Travel & Tourism
Economy jobs worldwide. World travel & tourism is expected to contribute nearly US$5,890 billion to global GDP in 2008, rising to
approximately US$10,855 billion over the next ten years, according to the latest tourism satellite accounting (TSA) research from
the World Travel & Tourism Council (WTTC). In terms of regional performance, Africa, Asia Pacific and the Middle East are
experiencing higher growth rates than the world average, in terms of total Travel & Tourism Demand, at 5.9%, 5.7% and 5.2%
respectively, while the matured markets – most notably the Americas and Europe – are falling below the world average with growth
of 2.1% and 2.3% respectively.
The Charts below depict the Travel & Tourism demand amongst the top nine countries in the world and the employment potential
contributed by Travel & Tourism as per the research based forecast from the WTTC.
(Source: WTTC report – Progress & Priorities 2008/09)
Travel & Tourism Demand, 2008-18 (% annualized growth) of top countries