Fund crunch, getting sanctions biggest hurdles; global chains such as Intercontinental, Conrad, Hyatt Place and Nikko yet to break ground.
Over a dozen cranes, hundreds of workers in hard hats and piles of steel bars are all a pointer to India's first hospitality district coming up near Delhi's international airport. A drive down the plush Terminal 3 of the airport gives you a full view of the construction site, that can well become India's answer to The Strip of Vegas or the Raffle Square of Singapore.
Several international brands, though committed to this district, are running slow mainly due to funds crunch.
The hospitality district aims to bring together major international hotel brands, all at one place in a planned manner. Some famous foreign chains, including MGM, Marriott, Hyatt, Intercontinental and Conrad, will set foot in the 43-acre DIAL hospitality district. Delhi International Airport Pvt Ltd or DIAL is a joint venture company comprising the GMR group, Airports Authority of India, Fraport (which runs the Frankfurt airport in Germany) and Malaysia Airports Holdings.
| ROAD MAP |
| * 13 land parcels in the 43-acre DIAL hospitality district |
| * An inventory of 5,000 rooms to be created |
| * 16 branded international hotels, a commercial complex and convention centre to come up |
| * Most hotels expected to open by 2014 |
At present, one can only see the bare structures of the buildings, which would give a posh look to the vicinity, once ready. It would have cinema halls, commercial complex and convention centres, and Delhi could turn into a significant transit hub for international travellers.
Besides fund crunch, getting clearances is another challenge for the companies. “There is no single-window clearance, even though you are in a hospitality district (the first in the country), and there are 150 permits required, which can impact the launch dates,” said a senior hotel executive.
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Work not yet begun
While some hotels are being built, many haven’t even dug the ground. Among those who are yet to begin are four foreign chains — Intercontinental, Conrad, Hyatt Place and Nikko — to be developed by DB Hotels in the largest land parcel of 7.7 acre in this district. The Las Vegas luxury chain, MGM, is another not to have broken ground yet.
The economic slowdown has impacted the pace of construction at the hospitality district, as some companies have found it tough to raise enough funds, experts said.
“The economic sentiment has not been very encouraging for the hotel companies. The business not only involves a long gestation period; the return on investment is also a little delayed,” a senior analyst said.
Also, since there is a long-term lease of 80 years, there is a certain amount which needs to be paid to DIAL on a yearly basis. As hotels are not operational yet, companies are bearing an additional cost. Besides, according to the contract signed with GMR, the companies have to finish construction within six years of the signing of agreement, which is 2015-16. Else they will have to pay a penalty.
The overall room inventory in the region is expected to go up by 5,000 once all these hotels are operational. While many were hoping to open their doors by the 2010 Commonwealth Games, only Ibis managed to finish construction. The Delhi government had even announced incentives for hotels that opened before the CWG. Currently, apart from Ibis, JW Marriott is also close to completing its construction.
“In fact, it is because of the Games that we got delayed as we were told to vacate the construction site and the labour was asked to leave. Getting labour was also a challenge,” said Ankur Bhatia of Bird Group. The group is opening a 216-room five-star property — Dusit D2 hotel — and plans to launch it by April 2013. Most of the hotels are expected to be now operational by 2014, including Accor Group’s Pullman and Novotel.
With the capacity of T3 expected to cross 75 million after the completion of phase 1, the hotel companies see the Delhi airport becoming a hub for long haul-markets passing through Delhi, for conferences and MICE (meetings, incentives, conferences and exhibitions) business.
International hotel company Starwood is also in talks with developers to bring one of its upscale brands to the DIAL hospitality district. “We would like to be present there since it is a very strategic location for corporate business, conferences, transit travellers etc. We will soon make an announcement in this regard,” said Dilip Puri, managing director, India and regional vice-president, South Asia, Starwood.
Design of the hospitality hub is another concern. One complaints is the place resembles a colony and the hotels should have been sprinkled in the whole area, instead of being placed next to each other.