Mahendra Nath Chopra, managing director of the Rs 136 crore Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) is happy in the new year. The ministry of railways has finally given IRCTC the green signal for starting work on the budget hotel project at railway stations that it had proposed. The project had been awaiting government approval for over two years.
IRCTC's budget hotel project involves inviting private hotel chains to build and operate budget hotels on the railway station sites. The corporation has invited the interested parties to bid.
The MD claims that major hotel chains have already informally expressed their intention to apply. At least six railways stations on prime locations suitable for budget hotels have been identified.
"Railway stations that have sufficient space for small hotels include Nizamuddin in Delhi, Chandigarh, Bangalore, Bhopal and Secundarabad," says Chopra. What makes the proposal attractive to the hospitality industry is the captive footfall, he adds.
The reason why IRCTC, the PSU of the railway ministry, is getting into the hospitality business is that tourism was one its mandates when the corporation was formed in August 2001.
Chopra claims that IRCTC focused on "enhancing the the Indian railways revenue and better utilisation of its prime real estate."
The corporation launched the online ticketing service where tickets could be booked on the Net and were delivered by a courier. Today, the service is available in 140 cities.
"Secondly, the railway stations were also seen as static units where catering was limited to aloo-puri and chai. With rising incomes of the customers it was imperative to offer a different cuisine in an airconditioned environment," says Chopra.
In the last three years, 50 food plazas on railways stations were commissioned of which 30 are operational. Ten more will open by March 2005.
The food plazas were given out to restaurant owners on a build-operate-transfer basis. The companies have been given the land on lease for nine years.
As a result of the effort fast food brands Wimpy's and Mcdonald's are now available on railways stations. A host of regional and local players also bid for different stations in the states and have set up their restaurants.
These food joints can also be accessed from outside the railways stations encouraging those planning to eat out to drop by. Most of the companies have made heavy investments "" between Rs 40 lakh and Rs 1.5 crore "" in building these properties.
Currently, the corporation makes Rs 8 crore from the private food plazas project. But the complaint is that the private restaurants are eating into the Indian Railways own catering business.
Chopra admits that it may be true at some stations. "But monopoly is not good. Besides railway catering needs to pull up its socks as the more expensive stuff on the platform is selling."
Chopra, keen to lease out space at another 50 stations, says the ministry has cut back the lease time to private operators from nine to five years. "Such a short lease is not viable. We've requested the ministry to change the rule," he adds.
The railways may be sprucing up its act, but aren't cheaper airline tickets eating into its passenger traffic? It may not be a real threat for the Indian railways: the domestic airlines carry 20 million passenger a year, but "the railway ferries 14 million passengers a day," concludes Chopra.
