Budget hotels should also be given infra benefits: FHRAI

The hotel industry today demanded that the government should provide infrastructure status to budget hotels below Rs 100 crore so that they can avail of cheaper loans and incentives.
The Federation of Hotel & Restaurant Associations of India (FHRAI) said that the real growth drivers of industry are the small one star and two star budget hotels, which have a development cost starting from Rs 25 crore.
"Unless we have cheaper finances for the cost of land and infrastructure for these hotels, then they would not grow and if we do not help them out, these hotels would not qualify for at least the five per cent if the development taking place," said FHRAI President S M Shervani.

"It is very difficult to understand that a 300 deluxe room hotel is an infrastructure and why 80 to 100 room 2 star hotel is not an infrastructure. They should get the same benefits," he said during the launch of FHRAI's Indian hotel industry survey report of 2012-13.
According to the report, Indian hotels have an average occupancy rate of 60.4 per cent during 2012-12, which is slightly lower than 2008-09, which was 63.1 per cent.
Moreover, share of revenue from room occupancy has gone down to 52.2 per cent in 2012-12, while it was 60.5 per cent in 2008-09.

Contribution of Food and Beverage section has increased to 29 per cent in 2012-12 as against 25.6 per cent in 2008-09. Similarly revenue from banquet and conferences has also gone up to 12.2 per cent from 8.8 per cent from 2008-09 to 2012-13.

It also noted decline in the net income of the hotels due to rising costs.
"The year 2012-13 has been seen a decline of 4.7 per cent in net income as a percentage of revenue over the previous year. This phenomenon is mainly attributable to rising departmental costs, which are result of rising inflation coupled with an increase in energy cost," the report said.

It further added: "Employee-to-room rations in India continues to be on the higher side (1:1.6) when compared with global benchmark, almost twice as much."
USA and UK remained the largest international source market for the Indian hospitality sector with 23 per cent, however, it was on decline of 4.3 per cent.
"This may be attributed to the fact that Indian hotels gave seen a greater contribution from Middle East, Russia and SAARC nations," it said.