PHDCCI calls for Guarantee Return of 16% for new hotels

New Delhi, Aug 5 (UNI) Industry chamber PHDCCI has mooted the idea of a guarantee return of 16 per cent for new hotels, which are coming up in the NCR for the Commonwealth Games, on the investment for atleast 10 years.

According to the chamber's estimates, Delhi has a shortage of 1.7 lakh hotel rooms and a sizeable part of it should be put into the stream before the Commonwealth Games in 2010.

''It is a challenging task to create quality hotel rooms of that magnitude in a relatively shorter timeframe and timely completion requires speedy action in allotting the sites, making available adequate credit for construction and finally clearing the building for use,'' Chamber's President Sanjay Bhatia said.

Many of the hoteliers are not coming forward to bid for the plots because of the higher floor prices fixed since at that the rate the operational efficiency, cash flows, amortisation of the costs etc will go out of gear, Mr Bhatia said adding that industry is not very sure about the rate of return since the occupancy factor depends on many variables, which are extraneous to the industry.

The chamber points out that there is a need for a perspective plan to put to use the additional capacities created after the Games.

India's share in the international tourist arrivals is around 0.40 per cent. International tourist arrivals touched 3.92 million in 2005 and 4.4 million in 2006. There is an estimated 400 million domestic tourists and that number is rising rapidly.

The chamber said for manning the hotels that will come up for the Games, at least two lakh trained manpower is required.

Major concerns of industry include lack of availability and high cost of land, restrictive building norms/by-laws, long procedures and multiple clearances, lack of basic infrastructure and poor quality of infrastructure, high taxes, restrictive floor area ratio (FAR) guidelines and longer gestation period, the chamber added.

UNI