No room for hotels

With the Commonwealth Games only three years away, the lack of enough hotel rooms takes on some urgency.

Less than three years away, the 2010 Commonwealth Games, to be held in Delhi, are all but breathing down our necks. But is the city any nearer to having the infrastructure needed for the event than it was in November 2003, when it won the bid to host the games?

To begin with, the Commonwealth Games (CWG) village, that is to come up on 40 acres on the banks of the Yamuna for the 8,500 athletes and officials who'll take part, still hasn't seen light of day.

And where will the hoardes of tourists who'll flock Delhi for the games stay? The ministry of tourism and the government of Delhi had estimated that 35,000 rooms would be needed in the National Capital Region to accommodate the CWG traffic.

However, according to HVS Hospitality Services' TNO 2007 report, the proposed supply in the NCR for the next five years is only 19,500 rooms. This is a 245 per cent jump over the existing 7,990 quality rooms across all segments, available. This means NCR will have only 27,490 rooms by 2010 "" 7,510 short of the 35,000 needed.

Siddharth Thaker, associate director, HVS Hospitality Services, says that the active development ratio of this proposed 19,500 rooms is 56 per cent "" that is only 10,850 rooms are under construction or will start being built very soon. Which puts the shortfall in rooms for the CWG at 16,000 in all.

Of the 8,650 rooms on which even construction has not started, 30 per cent has been held up by Mayawati's cancelling the auction of 10 hotel sites in Noida earlier this year and the pending auction of hotel sites around the new airport by GMR.

Also, the Delhi Development Authority (DDA) has managed to sell only 13 of the 38 plots it put up for auction in the past one year. The reasons, analysts say, are unviable locations and high reserve prices.

Rajeev Talwar, group executive director, DLF, which won two plots in a DDA auction, agrees. DDA's reserve prices are so high, he feels, that only five-star hotels can be planned on them.

Reportedly, DDA is now considering slashing the reserve prices of plots not sold by about 20 per cent. Talwar has another suggestion "" DDA could take a fixed percentage of the hotel's gross turnover as lease payment, as it does in the case of ITC Maurya, Taj Mahal and many others.

The higher cost of borrowing and fears of a slowdown in the economy are some of the other factors delaying the hotel projects, Thaker says. Then there is the confusion over FAR (floor area ratio) norms in Delhi. The new master-plan talks of a higher FAR, and developers may fear that if they apply for permissions now, they might get the old, lower FAR.

Be that as it may, experts say the minimum time needed to set up a hotel (after you have all the permissions in the bag and in Delhi you need permissions from 11 agencies) is three years. So if work on the rest of the hotels doesn't start tomorrow, there is no way they will be able to open for the games in October 2010.

In addition, construction companies are so overloaded that even if permissions were to come in now, building work could only begin three-four months later.

Looking at the urgency of the situation, the ministry of tourism has set up a task force which is evaluating the rooms situation for the games and keeping tabs on a weekly basis. It has also launched a bread-and-breakfast scheme, by which it expects to get at least 8,000-10,000 rooms.

The situation looks grim and if the planned hotels don't open in time for the games they won't get a good opening and have a tough time surviving. But there is hope. Says HVS's Thaker, "There is a huge unaccomodated demand in the market which is getting absorbed by stand-alone hotels and guest houses. Once new supply comes in the next five years, demand will move to the branded properties."