Athletes and delegates who arrive in India for the New Delhi Commonwealth Games 2010 just might find themselves running around for a roof over their heads.
BANGALORE: Athletes and delegates who arrive in India for the New Delhi Commonwealth Games 2010 just might find themselves running around for a roof over their heads.
The Federation of Hotel and Restaurant Associations of India (FHRAI) has said that less than 50% of the proposed room inventory of 40,000 is likely to be ready in time for the Games due to the liquidity crunch the hotel industry is facing.
Top FHRAI officials say a relief package is all that can save the situation. In a letter sent by the FHRAI to tourism and culture minister Ambika Soni — which she sent across to Prime Minister Manmohan Singh — the hospitality industry has demanded sops including permission to raise funds through ECBs and FCCBs, reduction of luxury tax to 4%, and service tax exemption, among others.
Vivek Nair, former president of FHRAI, and vice chairman & managing director of Hotel Leela Venture Ltd, said hoteliers and developers are short of Rs 12,000 crore to complete the construction of these rooms. Around 18 large projects in Delhi and the National Capital Region with a total of 6,900 rooms have not taken off. Only 39 projects, with a total expected capacity of 7,478 rooms, have started construction (See List of projects). Delhi currently has 10,000 rooms across all segments.
In the letter, the FHRAI said the industry is threatened with a lot of non-performing assets because it had commissioned hotels after acquiring land at high costs to meet the estimated shortage of 1,50,000 rooms in the country. Many projects are now hanging in various stages of completion.
The liquidity crunch and the inability to tap the ECB route have left a number of projects in limbo, including those that were to open for the Games. The funds required for financing hotel projects have been stopped by the Reserve Bank of India since June 29, 2007, as hotels don’t figure in the infrastructure list.
The funds requirements of the industry are huge as 1,50,000 rooms have to be set up in the next five years to fill the shortage, with 40,000 rooms required in Delhi before the Games.
The FHRAI has also warned of widespread layoffs if no relief package comes through immediately.
“The package, if given immediately, could help stop the layoffs in this sector and generate new employment as it would encourage the shortage to be filled up by creating new hotel capacity,” the letter says.
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