Detailed Project

Report On
Establishment of Rural
Home-Stay Tourism for A
Tourism Cooperative Society

Table of Contents
1. Executive Summary_
2. Introduction
3. Vision, Mission & Objective
4. Project Overview_
Objective _
Services to Offer _
Area of Operation _
Key Activities _
Key Resources _
Value Proposition
Customer Relationships
Channels_
Customer Segments _
Key Partners_
Assistance in Online Reservation/Marketing
5. Feasibility Assessment _
6. SWOT Analysis_ __
7. Detailed Project Cost and Financing
8. Business Revenue Model _
Tariffs _
Cash Flow Statement _
Capacity Utilisation _
Calculation of Cash Flow and DSCR _
9. Conclusion and Recommendations _

Executive Summary
Over the decades, tourism has experienced a continuous growth and increasing
diversification to become one of the fastest growing economic sectors in the world.
The
tourism sector can be considered an important driving force of economic
development.
Many developing countries recently ranked tourism high in their national
sustainable
development. One of the countries actively stimulating its tourism industry is the
India.
Tourism in India is economically important and is growing rapidly. The World
Travel & Tourism Council calculated that tourism generated ₹15.24 lakh crore
(US$230
billion) or 9.4% of the nation's GDP in 2017 and supported 41.622 million jobs, 8%
of its
total employment. The sector is predicted to grow at an annual rate of 6.9% to
₹32.05
lakh crore (US$480 billion) by 2028 (9.9% of GDP).
Homestay program have been a successful tool to increase tourism
visitation and broaden accommodation options in poorer rural communities.
The offering of these homestays is clean traditional houses with basic amenities
and unforgettable experience to the guest which they cannot get even in the most
expensive of hotels and resorts in the world.
Rural tourism is closely related to the villages, sinking in the age
old culture. Village tour is always in the colour of festivals connected with life
style,
which is ritualistic and brings forth the phenomenon of the originality of the
cultural
depth.
This project is mainly aimed at socio-economic growth, of rural
population/sector via rural tourism - homestay program, through cooperative
societies of the state and to provide “Homely stay arrangements to the tourists and
to
promote and make aware of the local culture of the Rural sector among the tourist”
at
very economical tariffs.
The cooperative societies wants to start Homestay services with four (4) master
bedrooms (with attached Bathroom and kitchen) under this project, which will have
all
the modern facilities and very much touch of rural infrastructure in the vicinity
of
village. Commutation to the nearby places/villages to understand the local culture
will
be part of the rural homestay tourism.
Once the Homestay facility is operational it will be a revenue generation model
for cooperative societies and parallelly it will result into socio-economic
development
and growth of the rural areas of Himachal Pradesh State.

Introduction
Keeping in view the potential and existing infrastructure available to
accommodate the tourist it is planned to target those tourists who wants to have
unique experience of the rural part of Himachal.
The tourists generally stay at hotels, guest-houses or dharmshallas, depending
on needs and budget. However, there are tourists who wish to stay in a homely
environment and not spend too much money on accommodation. Their service
expectations are modest; they do not expect room-service or round the clock
service.
On the other hand, there are people who have surplus accommodation in their own
premise; are interested in taking guests and earning additional income by providing
part
of the house and extending hospitality to the guests.
Importance and Relevance of Homestay with cooperative society
With the aim of providing comfortable Home Stay facilities of standardized
world class services to the tourists, and to supplement the availability of
accommodation in the rural tourist destinations, The basic idea is to provide a
clean
and affordable place for domestic tourists including an opportunity for foreign
tourists
to stay with Himachali families to experience Himachali customs and traditions and
relish authentic Indian/Himachali cuisine. On the other hand Homestay business will

generate additional income to the cooperative society and employment as well. The
cooperative society provides to the guest a decent room, attached toilet, toiletry
kit
and breakfast. The guest may avail of meals - lunch, dinner, snack- at an extra
cost.
5

Project Vision, Mission & Objectives

Vision:
Vision is to promote rural tourism in HP state through cooperative, keeping in view
to
continuously minimize the tourism cost to customer as well as optimum profit to the
society and
to explore untouched part of the Kullu Disttrict of HP state.
Mission:
Mission is to maximise footfalls of the tourist and to provide comfortable and
secured rural village
home stay.
• To develop rural tourism.
• To develop Socio-Economic of the Rural sector
• To provide job opportunities.
Objectives:
• To provide hospitality at its best leading to be a very special & soothing
experience to
feel at home staying away from Home.
• To create a feel to experience the benefits of Nature, the homely treatment,
exposure to
the Art and the Culture
• To make it a Traditional style home stay with fully equipped lodging for
travellers with
very earthy and a natural ambience.

Project Overview
Society is having land in its own name and other modern machineries at several
locations in nHimachal Pradesh. Society’s financial health is very good and have
not
incurred any losses in last 7 years.
To promote rural tourism in the nearby area and to generate additional revenue
for the cooperative society and further to its members the cooperative society
wants to
enter into tourism business with Homestay business model primarily starting with 4
Master Bed Rooms with attached Bath and Kitchens.
Objective
The Rural Tourism-Homestay shall have the following objectives:
(a) To diversify business and generate additional income in tourism sector
(b) To Broaden the stake holder's base for tourism in the State
(c) To Take tourism to the rural and interior areas of the State
(d) To generate employment and economic values in the interior areas
Services to Offer
1. Home Stay (Main Activity)
2. Tours & Travels (Part of Main Activity)
3. Food & Beverages (Part of Main Activity)
Key Activities –
 comfortable economic Homestay at village level or interiors of the State
 Sight Seeing facility
 Local cultural Experience through involvement in local festivals
 Local food habit experience
Key Resources –
 Comfortable as well as modernise home stay along with rural home stay
arrangements
 Direct as well as indirect approach to attract tourist (e.g. HPTDC or tie with
private partners i.e. OYO etc.)
 Transportation, additional beddings and other additional feasible requirements
may be the additional revenue stream

Value Proposition
 Economical availability of Home Stay arrangements in rural/urban area to
explore untouched beauty of Himachal Pradesh state.
 Cross Cultural living experience
 Availability of homely stay as very low cost
Customer Relationships
 To develop Friendly and familiar relationship with tourist
 Self-service arrangement (e.g. self-cooking etc.)
Channels
 Through HP tourism dept.
 Through Pvt partners (e.g. OYO etc.)
 Self-Promotion activities
Customer Segments
 Domestic Customer
 Foreign Tourist
Key Partners
 Cooperative Societies
 State Govt
 Tourism Dept
 Pvt partners
 Local Suppliers
 Local People
Assistance in Online Reservation/Marketing
For marketing and booking of homestay Himachal Pradesh Tourism department
can can provide online booking facility in exchange of minimal service fee and can
be
tie-up with private online website e.g. MMT,Yatra etc.

MARKET POTENTIAL
The market for home stay facilities is in the early stage of development. The
relevant
segments now are:
 Individual foreign tourists
 Students, young professionals and domestic tourists
There are other potential sub-segments, e.g., elderly domestic tourists, long-stay
tourists and tourist-families for whom, the concept is appropriate. These segments
are not
yet harnessed fully mainly because of lack of awareness and the low-key brand
equity of
concerned website. The travel agents do not engage, by and large, in selling home
stay
facilities.
The market for such facility exists primarily at
 Tourist destinations
 Large cities
 Business hubs
Tourist destination business potential is evident; some tourists may prefer
home#stay. The large cities, because of their character, attract some tourists
(even if tourism
attractions are slender), professionals/executives – in-transit and long-stay
business
travelers. Hence, the potential. The business hubs have hotels, which are too
expensive
for some visitors. Besides, there are repeat visitors who desire familiar and home-
like
atmosphere.
The business will be generated mainly through affiliation with a trusted website
and reviews of guests who actually stay. The approval of the facility by Govt. of
India will
enhance credibility. The pricing will be influenced by the hotel-accommodation
pricing in
the city, the quality of accommodation, class (gold or silver) of home stay
facility awarded
by Govt. of India and the guest reviews. Most home-stay facility price of room
corresponds to pricing of three star hotels.

Feasibility Assessment
The Homestay-Rural Tourism is feasible in the area as there is high volume of
tourist throughout the year. Also most of the hotels too costly to afford and are
in main
city of the district which is very far from the main tourist spots. The proposed
facility is
on the highway and approachable to the tourist spots.
In the year 2017 total tourist footfalls in HP state was 196.02 Lacs which is 12
lacs more than the previous year. Statistics shows that every year tourists are
increasing
in the state and hence huge demand for stay arrangements. At present about 2,907
hotels having bed capacity of about 81,514 are registered with the tourism
department.
Keeping in mind the number of hotels already available in the state it is viewed
as opportunity to start a Home-stays concept at rural Level at low cost so that
target
tourists can be approached and livelihood of the rural families can be increased.
The Project Revenue has been taken into consideration from the homestay tariffs
along with foods and transportation.
Mandates of the Homestay run by Cooperatives
a) The Cooperative shall get the Home Stay unit registered with the Department of
Tourism H.P and follow the guidelines framed there under for the Himachal Pradesh
Home Stay, Scheme which shall be binding on the owner of the Home Stay Unit.
b) The Home Stay Unit shall at all times maintain the minimum standards of the
cleanliness, sanitation, quality food etc.
c) The operative cooperative of Homestay shall maintain a register for letting out
the
rooms to the tourists, which can be inspected by the concerned Dist. Tourism
Development Officer.
d) The operative cooperative of Homestay shall maintain a bill book/ Home Stay pad
for
issuing the bills to the tourist's with a stamp.
e) All the Home Stay Unit holders shall to submit Form C with passport details to
the
nearest Police Station as done by the hotels accommodating foreign tourists.

10

SWOT Analysis
Strength Weakness Opportunity Threat
Aims to Bring
benefits of tourism
to rural
communities
No community
involvement during
planning and policy
making process
Homestays as
prospective summer
vacation homes
Competition from
similar mountain
destinations in the
same segment.
Increase in
inventory in the
areas that lack
hotels and lodges
and non interest of
private players to
invest in those
areas
No institutional
mechanism for
generating
awareness,
providing
trainin
g and finance and
for marketing
and
promotion.
'Home like' factor
with the
opportunity for
more
personalised service
and care
Rural communities
moving away from
agri/horticulture in
pursuit of tourist
Employment
opportunities and
augmented
supplementary
income for rural
No defined criteria
of fixing rates and
inspection of these
accommodations
Create rural micro
economies
Pursuit of
education for
professions other
than tourism gets
diluted in rural
communities

11

Project Costs & Financing

Construction cost and broad specification of Homestay Facility
There will be 4(four) new rooms to be constructed under homestay arrangement and
each room having an area of approximately 15 sq ft necessarily consisting of a
bedroom and attached toilet and kitchen with modern fittings and a walk-in closet.
The
time for construction is considered is 6(Six) months.
The specifications of the construction should be as follows :-
(i) Plastic paint to interior walls including providing marble flooring
(ii) Anodised aluminium/wooden doors and windows
(iii) Weather shield exterior wall finish
(iv) Bathroom fittings should be of branded company with ISI mark. Water closet,
cistern, basin etc should be of porcelain and bib cocks, towel rails, soap trays
etc should be chrome plated.
(v) Provision of solid waste management with incinerators and rain water harvesting
Means of Finances
Cooperative contribution 2.00 Lakhs
Term loan 20.00 Lakhs (16 Lakhs for base Infrastructure
Development and 4 Lakhs for other operative
expenses)
Total 22.00 Lakhs

Cost of the project Particulars (Breakup of rate for construction considered)

LAND AREA 1000 Sqft
FLOORS Ground Floor Only
No of Rooms 4 Rooms
PAINT TYPE Premium
DOOR TYPE TeakWood
FLOORING Wooden
4 Rooms Homestay
Construction Cost (Aprx)

₹ 16,62,188

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Foundation ₹ 1,82,390
Earthwork and Excavation
ITEM QUANTITY PRICE
Labour and Earth Filling 2,625 cubic ft @ ₹ 10 per unit 26,250
Total Price 26,250
Cement Concrete
ITEM QUANTITY PRICE
Cement 9 bags @ ₹ 270 per unit 2,430
Sand 3 cubic meters @ ₹ 6,500 per unit 19,500
Course Aggregate 5 @ ₹ 600 per unit 3,000
Total Price 24,930
Brick Work
ITEM QUANTITY PRICE
Bricks 4,840 nos. @ ₹ 6 per unit 29,040
Cement 16 bags @ ₹ 270 per unit 4,320
Sand 4 cubic meters @ ₹ 6,500 per unit 26,000
Total Price 59,360
DPC
ITEM QUANTITY PRICE
Horizantal DPC 120 sqft @ ₹ 130 per unit 15,600
Total Price 15,600
Labour
ITEM QUANTITY PRICE
Labour Cost excl Earthwork 113 man days @ ₹ 500 per unit 56,250
Total Price 56,250
TOTAL FOR FOUNDATION ₹ 1,82,390

13

Super Structure ₹ 4,97,708

RCC Pillars
ITEM QUANTITY PRICE
Cement 38 bags @ ₹ 270 per unit 10,260
Sand 4 cubic meters @ ₹ 6,500 per unit 25,256
Coarse Aggregate 8 cubic meters @ ₹ 600 per unit 4,800
MS Steel 471 cubic meters @ ₹ 48 per unit 22,608
Total Price 62,924
RCC Beams
ITEM QUANTITY PRICE
Cement 91 bags @ ₹ 270 per unit 24,570
Sand 10 cubic meters @ ₹ 6,500 per unit 65,000
Coarse Aggregate 19 cubic meters @ ₹ 600 per unit 11,400
MS Steel 1,238 Kg @ ₹ 48 per unit 59,424
Total Price 1,60,394
Brick Work – Sidewalls
ITEM QUANTITY PRICE
Bricks 8,820 nos. @ ₹ 6 per unit 52,920
Cement 28 bags @ ₹ 270 per unit 7,560
Sand 6 cubic meters @ ₹ 6,500 per unit 39,000
Total Price 99,480
Brick Work – Innerwalls
ITEM QUANTITY PRICE
Bricks 7,075 nos. @ ₹ 6 per unit 42,450
Cement 23 bags @ ₹ 270 per unit 6,210
Sand 5 cubic meters @ ₹ 6,500 per unit 32,500
Total Price 81,160
Labour
ITEM QUANTITY PRICE
Labour 188 man days @ ₹ 500 per unit 93,750
Total Price 93,750
TOTAL FOR SUPER STRUCTURE ₹ 4,97,708

14
Flooring ₹ 3,62,220
Main Flooring
ITEM QUANTITY PRICE
Wooden 530 sqft @ ₹ 390 per unit 2,06,700
Labour 21 man days @ ₹ 500 per unit 10,500
Miscellaneous LUMP SUM 1,24,020
Total Price 3,41,220
Bathroom and Kitchen Flooring
ITEM QUANTITY PRICE
Tiles 150 sqft @ ₹ 75 per unit 11,250
Labour 6 man days @ ₹ 500 per unit 3,000
Miscellaneous LUMP SUM 6,750
Total Price 21,000
TOTAL FOR FLOORING ₹ 3,62,220
Plastering and Wall Tiles ₹ 2,61,380
Plastering - Walls
ITEM QUANTITY PRICE
Cement 20 bags @ ₹ 270 per unit 5,400
Sand 5 cubic meters @ ₹ 6,500 per unit 32,500
Labour 280 man days @ ₹ 500 per unit 1,40,000
Total Price 1,77,900
Plastering – Ceiling
ITEM QUANTITY PRICE
Cement 4 bags @ ₹ 270 per unit 1,080
Sand 1 cubic meters @ ₹ 6,500 per unit 6,500
Labour 60 man days @ ₹ 500 per unit 30,000
Total Price 37,580
Wall Tiles
ITEM QUANTITY PRICE
Total Price 45,900

15

ITEM QUANTITY PRICE

Glazed Tiles – Kitchen 360 @ ₹ 40 per unit 14,400
Glazed Tiles – Bathroom 400 @ ₹ 40 per unit 16,000
Labour 31 man days @ ₹ 500 per unit 15,500
Total Price 45,900
TOTAL FOR PLASTERING AND
WALL
TILES
₹ 2,61,380
Wood Work ₹ 85,600
Doors
ITEM QUANTITY PRICE
Teakwood Frames 260 ft @ ₹ 95 per unit 24,700
Teakwood Shutters 200 sqft @ ₹ 130 per unit 26,000
Iron grilling with labour 200 sqft @ ₹ 20 per unit 4,000
Total Price 54,700
Windows
ITEM QUANTITY PRICE
Teakwood Frames 120 ft @ ₹ 95 per unit 11,400
Teakwood Shutters 130 sqft @ ₹ 130 per unit 16,900
Iron grilling with labour 130 sqft @ ₹ 20 per unit 2,600
Total Price 30,900
TOTAL FOR WOOD WORK ₹ 85,600
Painting ₹ 1,36,890
Exterior Painting
ITEM QUANTITY PRICE
Putty and primer – ceiling 150 sqft @ ₹ 12 per unit 1,800
Paint – ceiling 150 sqft @ ₹ 15 per unit 2,250
Putty and primer – walls 1,210 sqft @ ₹ 12 per unit 14,520
Paint – walls 1,210 sqft @ ₹ 15 per unit 18,150
Total Price 36,720
Interior Painting

16

ITEM QUANTITY PRICE

Putty and primer – ceiling 750 sqft @ ₹ 12 per unit 9,000
Paint – ceiling 750 sqft @ ₹ 15 per unit 11,250
Putty and primer – walls 2,760 sqft @ ₹ 12 per unit 33,120
Total Price 1,00,170
ITEM QUANTITY PRICE
Paint – walls 2,760 sqft @ ₹ 15 per unit 41,400
Paint - Doors and Windows 360 sqft @ ₹ 15 per unit 5,400
Total Price 1,00,170
TOTAL FOR PAINTING ₹ 1,36,890
Electrical and Plumbing ₹ 1,36,000
Electrical
ITEM QUANTITY PRICE
Electrical LUMP SUM 61,200
Total Price 61,200
Plumbing
ITEM QUANTITY PRICE
Plumbing LUMP SUM 74,800
Total Price 74,800
TOTAL FOR ELECTRICAL AND
PLUMBING
₹ 1,36,000

17

Business Revenue Model

The project will be acting as a revenue model and the main source of income is from
rental
income.
Home-Stay Room Tariff Chart
Season Month Cost/Roo
m
Peak
Season
April-june 2500
Mid-Season Nov-March 2000
Off-Season July-Oct 1000

Expected Annual Earning

Season

Month
No of
Days
Cost/R
oom
/Day

Units
%age of
Occupancy
Days
No of
Occupancy
Days
Expected
Earning/Outcome
Peak
Season
April#june
90 2,500.00 4 90% 81 8,10,000.00
Mid#Season
Nov#March
150 2,000.00 4 70% 105 8,40,000.00
Off#Season
July
-
Oct
120 1,000.00 4 50% 60 2,40,000.00
Total (Annual Earning Approximation) 18,90,000.00

Expected Capacity Utilisation Year-wise

Year % Capacity
Utilization
1st year 65%
2nd Year 70%
3rd year 75%
4th year 80%
5th year 90%

18

Cash Flow
Year 0 1 2 3 4 5
Potential Rental
Income 0 1,890,000.00 1,890,000.00 1,890,000.00 1,890,000.00 1,890,000.00
General Vacancy 0 661,500.00 623,700.00 472,500.00 378,000.00 189,000.00
Effective Rental
Income
0 1,228,500.00 1,266,300.00 1,417,500.00 1,512,000.00 1,701,000.00
Depreciation (10% /
Annum) 0 122,850.00 126,630.00 141,750.00 151,200.00 170,100.00
Taxes (NIL) 0 - - - - -
Insurance (0.02%) 0 245.70 253.26 283.50 302.40 340.20
Management Expense
(Salary Etc) 0 120,000.00 130,000.00 140,000.00 150,000.00 160,000.00
Maintenance (5%) 0 61,425.00 63,315.00 70,875.00 75,600.00 85,050.00
Total Expense 0 304,520.70 320,198.26 352,908.50 377,102.40 415,490.20
Net Operating Income 0 923,979.30 946,101.74 1,064,591.50 1,134,897.60 1,285,509.80

19

se\w

20

Conclusion & Recommendation

Cooperative are the backbone of the rural economy. Developing rural tourism
via cooperatives will definitely a self-sustaining revenue model which will
flourish the
cooperative and its members with the generation of employment in tourism and allied

activities which results in boost in rural economy and ultimately helps in

generating
revenue for the cooperative society. Society is in profit since last 7 years and
showing
strong financials. Also society is agreed for the security against the loan amount
required and hence it is safe investment.
It is clearly analyzed from the facts and figures shown in the project report that
it is a good revenue model for the society and hence project may be financed for
economic growth of the cooperative society