Turf battle stalls railways' hotel plan

A turf battle between the Indian Railway Catering and Tourism Corporation (IRCTC), a railways-owned catering company, and the Rail Land Development Authority (RLDA), which has been set up to decide on commercial exploitation of railway land, has stalled the ministry's ambitious plan of setting up Rail Ratna hotels across the country.

While both the bodies are slugging it out as to who should manage the project, the ministry reportedly has not been able to decide upon a methodology on disbursing land for hotels.

Even six months after it had called for a second round of bidding for setting up budget hotels in the private sector, IRCTC is yet to shortlist the final bidders.

Amidst all this, the private players who had won the bids in January for setting up 20 budget hotels in the first round, are yet to get approval for their design and layout plans that they had submitted to IRCTC.

The hotel plan had been unfolded by IRCTC last year, when its then managing director PK Goel had announced setting up of 100 budget hotels throughout the country.

However, with the setting up of RLDA early this year, ministry sources say, a tussle has arisen over which of the two bodies should handle this project.

A senior ministry official said that as RLDA had been set up for the purpose of commercially exploiting railway land, the Rail Ratna project should be undertaken by it.

On the other hand, an IRCTC official claimed that the project had been announced at a time when RLDA did not even exist, and moreover, since catering was IRCTC's core activity, it was the appropriate body to handle such a project.

While the ministry continues to dilly-dally, the players are feeling the heat as they have already invested around Rs one to two crore in these projects, especially the ones that were shortlisted in the first round.

Initially, 30 hotels were to be set up, out of which bids for 20 hotels were awarded in January this year. In April, IRCTC invited bids for setting up the remaining 10 hotels.

Under the Rail Ratna scheme, the IRCTC will charge a licence fee in the range of Rs 1 to 2 crore, while the lease period for the hotels is 30 years. These hotels are to be built on build-operate-transfer (BOT) basis on the land lying vacant near railway stations.

The area allocated for setting up hotels is 2,000 square metres. The hotels would have 100 rooms, of which 25 would be priced on a par with railway retiring room prices (economy class rates ranging between Rs 800 and Rs 1,000 per day), while the rest would be charged according to market rates.