MARKET FEASIBILITY STUDY

SECTION III: SUPPLY AND DEMAND ANALYISIS

Permohonan Kelulusan Kebenaran Merancang Bagi:

Cadangan membina dua (2) blok (1468 unit) perumahan rakyat mampan yang terdiri daripada

Permohonan Kelulusan Kebenaran Merancang Bagi:

Cadangan Membina Dua (2) Blok (1468 Unit) Perumahan Rakyat Mampan Yang Terdiri Daripada:

1- Blok A:

A) Blok A1: 279 Unit Pangsapuri 36 Tingkat

B) Blok A2: 186 Unit Pangsapuri 36 Tingkat (18 Unit Podium & 168 Unit Menara)

C) Blok A3: 269 Unit Pangsapuri 32 Tingkat (30 Unit Podium & 239 Unit Menara)

2- Blok B:

A) Blok B1:279 Unit Pangsapuri 36 Tingkat

B) Blok B2: 186 Unit Pangsapuri 36 Tingkat (18 Unit Podium & 168 Unit Menara)

C) Blok B3: 269 Unit Pangsapuri 32 Tingkat (30 Unit Podium & 239 Unit Menara)

3- Sebuah Podium Tempat Letak Kereta 7 Tingkat

4- 14 Unit Ruang Kedai Satu Tingkat

5- Sebuah Surau 1 Tingkat

6- Sebuah Dewan Serbaguna 1 Tingkat

7- Satu Unit Rumah Sampah Berpusat Satu Tingkat

Di Atas Lot 55961 (Pt 7243), Lot 55964 (Pt 7246) Dan Lot 118771 (Pt 9110), Bandar Tun Razak, Mukim Dan Daerah Kuala Lumpur, untuk Projek Usahasama Antara: Tetuan Dewan Bandaraya Kuala Lumpur Dan Tetuan Retro Highland Sdn BhdSection III: Supply and Demand Analysis

COMPETITIVE HOTEL SUPPLY

In order to assess room night demand for the proposed hotel development, AS2 CONSULT SDN BHD identified a competitive set of properties in the proposed hotel development area based on published room rates, level of service, amenities and location. All hotels in the competitive set are considered primary competitors of the proposed development. The properties used in our analysis are listed in the table below and shown on the map on page III-8.

Selected Competitive Set Properties

NoPropertiesNumber Of Available Rooms

1City Bayview Hotel282

2Eagle Bay128

3Hotel Langkasuka168

4Langkawi Seaview139

5Hotel Helang218

Source: AS2 Consult Sdn Bhd

Isle of Wight County, VA

COMPETITIVE SET

Following is a brief description of each property's amenities, location and probable market segmentation.

City Bayview HotelLocated in the heart of the commercial district of Kuah town, 5 minutes from the jetty and only 25 minutes from the airport. It is at walking distance from the seafront and shopping area as well. The hotel is designed to accommodate the demands of both leisure and business travellers alike wih its understated luxury and amenities.The estimated market segmentation for this property is 55 percent business and 45 percent leisure.

Eagle Bay

The Eagle Bay Hotel is a 3 star hotel. It is situated in the heart of Kuah Town, Langkawi's town centre and only 2 minutes drive from Kuah Jetty and 25 minutes drive from Langkawi International Airport, within walking distance to all the duty free shops, the Langkawi Fair shopping centre, many restaurants, Banks, tourist information centre, car rentals and taxis. Three of Langkawi's most prominent landmarks are right in front of the hotel like CHOGM Garden, Eagle Square and Lagenda Park with its long stretch of white, sandy beach. The budget hotel accommodates business travellers, families as well as budget travellers. The lobby is nicely decorated with Malaysian style handicrafts and some of the rooms also have Malaysian style features. They are well equipped with colour TV, IDD telephone, air-conditioning, pipe-in music, small refrigerator/mini-bar filled on request and the bathroom has a bathtub with shower head. A small outdoor spa swimming pool with swim jets that provides a body massage offers relaxation after a day of shopping or sight seeing.The estimated market segmentation for this property is 65 percent business and 35 percent leisure.

Hotel Langkasuka

The two star Hotel Langkasuka is located right in the heart of Kuah Town on the legendary Island of Langkawi. Conveniently located about 5 minutes from the Kuah Jetty and 30 minutes from the Airport it is easily reached by car within a short time. It is and inexpensive Hotel for businessman, leisure travellers, tourists and shoppers. Hotel Langkasuka are furnished in simple elegance with double or twin beds, for total comfort. The room facilities comprise of electronic keypad doors, colour television, IDD telephone and complementary coffee and tea making facilities. 24 hours security, a safe deposit box as well as free parking are also one of the advantages.

The estimated market segmentation for this property is 45 percent business and 55 percent leisure.

This property is not considered to be a primary competitors.

Langkawi Seaview Hotel

Located in Kuah Town only 5 minutes from Kuah Town with the Teluk Baru Ferry Jetty and 30 minutes drive from Langkawi International Airport the Langkawi Seaview Hotels is the ideal place for business travellers and tourists. Being in town Langkawi Seaview Hotel is within walking distance to all the major duty free shopping areas, the Langkawi Fair Shopping Centre and many smaller shops, souvenir markets and restaurants.

The Hotel features rooms in different sizes and prize range. The hotel is the ideal choice with its low prices and a taste of luxury. Each of the rooms is furnished with double or King size beds, TV-set with in-house movies, individually controlled air-conditioner and balcony. Most of the rooms have a beautiful view out to the sea, the Marina and the bay.

A roofed swimming pool on the second floor with an attached pool Jacuzzi, surrounded by comfortable sun beds and big lush green flower pots, invites guest to relax and get a nice tan.

The estimated market segmentation for this property is 60 percent business and 40 percent leisure.

Hotel Helang

Ideally located within walking distance to the Langkawi International Airport and the Masuri International Exhibition Centre (MIEC). It is currently being Langkawi's premier convention hotel, features eight conference rooms of which one is suitable for 200 people complete with an extensive range of audio visual equipment for various kinds of events. The other meeting rooms come in different sizes to cater different businesses and functions. On an area of 71,400 square meters, the hotel and the MIEC which is within walking distance are able to cater up to 3,000 participants.

It offers a beautiful swimming pool next to the restaurant terrace, a games room which provides pool table, dartboard and board games like Mahjong, Cyber Cafe with Internet as well as a private beach in the nearby sister hotel Langkasuka Beach Resort.

The estimated market segmentation for this property is 68 percent business and 32 percent leisure.

This property is being considered as the primary and major competitor to the proposed hotel development projectAddition to Supply

Based on our field research and interviews with local government officials, business and tourism organisations, there are no planned additions to supply within the masket drawing area at this time.

HISTORICAL PERFORMANCE OF THE COMPETITIVE SUPPLY

The aggregate average annual available and occupied rooms and resulting occupancy levels, for the competitive supply from 2005 to 2008 are presented in the following tables.YearAnnual Room SupplyTotal Room Nights OccupiedAnnual Occupancy

2004--58.8% (a)

2005--60.2% (a)

2006--58.6% (a)

20076323 (c)408564.6% (a)

20087385 (c)479364.9% (b)

Notes: (a) - Source - MOT

(b) - Source - AS2 Consult S/B

(c) - Source - LADA

Between 2005 and 2007, occupancy levels at the hotels in Kedah steadily increasing from 58.8% in 2004 to 60.2% in 2005. Please note that the occupancy rate for 2006 was set at only 58.6% due to global economic climate but shot up to 64.6% in 2007.As can be noted in the table above, total occupied rooms nights experienced only a slight increases from 2007 to 2008 with an annual growth rate of 0.03% but the addition to supply of rooms for the same period increased signifantly at 16.8%. This displays the attributed of demand in the market of the proposed project area.

SEASONALITY

AS2 Consult has analyzed the subject market to determine its seasonality with regard to room

night demand. Based on information obtained during field research and statistics from LADA, the market experiences peaking of Foreign and International demand for the year 2008, during the months of January untill March and between June and August.

The domestic demand peaks in the months of May, November and December and the lowest being in the months of January and September.

MonthsJanFebMarAprMayJunJulAugSepOctNovDecTotal

Foreign11.4%12.5%11.2%7.8%6.2%8.4%11.5%9.9%5.5%5.4%4.45.7100%

Domestic5.9%8.1%8.5%6.4%10.1%8.7%6.7%8.7%3.8%8.7%9.3%15.3%100%

Total17.3%20.6%19.7%14.2%16.3%17.1%17.2%18.6%9.3%13.1%13.7%21.0%

In overall, total demand, except for the months of September, is almost always constantly available throughout the year, in-line with holidays and major events held on the island.SEGMENTATION OF HOTEL ROOMS' DEMAND

Leisure Demand

Leisure demand consists of families, couples, and individuals seeking vacation experiences including a weekend get-away or an experience that is different and unique when compared to their normal routine. Typically associated with vacationing, leisure demand can encompass anything from an overnight festival attendant to the extended vacationer. According to research conducted by the International Travel Industry Association, approximately 66 percent of all domestic travel in 1999 was leisurerelated.Seasonality is a major factor when attempting to attract the leisure traveler. Peak demand periods for the leisure traveler are expected during School Holidays, Public Holidays and Long week Ends, as shown in the table above. Typically, the months of January and September are slower periods for leisure demand. The proposed hotel will need to promote off-season recreation activities, packaging, and special events to entice leisure travel demand. This period will be associated with discounting in an effort to stimulate this demand.

Commercial Individual Demand

Commercial individual demand is generated by business people traveling to or through the area to complete some facet of business. This group typically is the least price sensitive of the demand segments in that they are usually reimbursed for their expenses. They include business representatives, corporate trainees, interviewees, sales representatives, contractors and any other business associated traveler. This segment is expected to represent a smaller portion of demand to the proposed property due to the non-presence of large corporations in the proposed hotel development area .Group Demand

Group demand is generated by associations, government, and business groups, which hold meetings, corporate retreats/outings, and conferences. This segment includes groups (10 or more people) who reserve guestrooms typically with meeting/conference space, food and beverage. Expected sources of group demand include corporate groups, associations, non-profits, and a limited number of government groups.Research compiled by AS2 CONSULT S/B, indicate that group demand is most concentrated in the months of March, April, May and through November. The first 2 months of the year are usually somewhat slower for group demand due to the high incidence of vacations and the inability of groups to ensure participation by key individuals.

Groups typically receive some of the lowest room rates offered as the result of volume purchasing. In addition, group demand peaks, as described above, occur during shoulder seasons, a period when properties begin to offer incentive discounting.

DEMAND DESCRIPTIONS

Interviews conducted with local government officials, tourism organizations, and area commercial establishments indicated that different variations of demand exist within the primary market area. In general, demand for hotel rooms can be categorized as demonstrated demand, induced demand, and unsatisfied demand. AS2 CONSULT S/B estimates that all three exist within the market area to certain degrees. Following is a brief description of each type of demand and how they relate to the subject property market:Demonstrated Demand: Demonstrated demand is demand that is already captured by the competitive hotels. Currently, the competitive supply captures demand from primarily two of the three segments previously mentioned: commercial individual and leisure. Commercial individual demand comes from the large demand generators as stated in the Demand Generators listing within and surround the area.

Induced Demand: Induced demand is the demand that does not presently seek accommodations in the competitive market, but could be persuaded to do so as a result of increased market capacity through marketing efforts, room rates, facilities, services and amenities.

AS2 CONSULT S/B estimates that there is potential to generate induced demand from all three segments (commercial, leisure, and group) with the leader being the group segment if the number of rooms increase in the subject market area. In addition to the demand generators already participating in the market, the hotel's large ballroom may prompt interest to use accommodations too. Unsatisfied Demand: Unsatisfied demand is the demand that seeks accommodations in the market but is not satisfied due to any one or more of a number of factors: sell-outs during peak season; lack of a particular type of accommodation; lack of meeting space; or high room rates.In the case of the subject market area, any unsatisfied demand is primarily a result of a limited number of a particular type of accommodations and lack of meeting space. An increase in market supply of full service guestrooms can facilitate the accommodation of this kind of demand. AS2 CONSULT S/B estimates that with the new proposed hotel development, unsatisfied demand for group room nights will increase as interest in the Seri Malaysia Hotel Chain increases. The induced demand as illustrated above will be forced to seek accommodations elsewhere or hold meetings in other areas due to the lack of rooms. The proposed hotel could focus its bookings on events that require limited overnight accommodations such as company holiday parties, large company meetings, and weddings.SUMMARY OF DEMAND GROWTH AND MARKET OCCUPANCIES

For the purpose of this analysis, AS2 CONSULT S/B has projected demand growth and market occupancies to the current market supply with the the construction of a new, free standing, 305-room full service hotel. AS2 CONSULT S/B estimated that the addition to supply would accommodate some of the current unsatisfied demand and possibly generate induced demand.

Using the historical growth in the market as a base, and taking into account the current demonstrated and projected economic conditions in 2010, we have estimated future growth in overall market demand as outlined in the tables below:

YearAvailable RoomsOccupied RoomsPercentage Of Occupied RoomsMarket Occupancy

2010101,87035,68550.0%64.9%

201111132567,90861.0%65.5%

201211132570,13563.0%66.1%

Note: Hotel is expected to commence operation in February 2010 for a period of 11 months only

Average daily rate is estimated to increase at levels approved by the Franchaisor, Rangkaian Hotel Seri Malaysia.

SECTION IV: SITE SELECTION ASSESSMENT

PROPOSED HOTEL

HOTEL XXXX XXXXXXXX XXXXXXX LANGKAWIMARCH 10, 2009

Section IV: Site Selection Assessment

SITE EVALUATION

AS2 CONSULT S/B identified and concurs that the site for the proposed hotel development shows potential for development as illustrated by the map below. As mentioned previously, hotel properties are generally located near major demand generators such as the tourist attractions center. The area that was most comparable to this profile was Mutiara Damansara in Petaling Jaya. The site was evaluated based on potential for expansion, access, visibility, and relationship to demand generators.

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