Renewed focus on heritage sites

DAY-2 BUDGET 2008-09 IMPACT/ HOTELS

Inder Jain, Chairman of Anupam Housing group, a real estate company in Agra, has been busy attending calls since the Budget was announced on Friday. He has already received a dozen enquiries from hotel chains on the availability of land in Agra.

Real estate developers in Varanasi too are happy with similar enquiries. With the Ancient Buddhist site Sarnath on the tentative list of Unesco, entrepreneurs and hoteliers plan to meet the need of 200 more rooms in Varanasi. The city has around 500 rooms available in the budget category, at present.

With the Finance Minister announcing a five-year income tax holiday to two-, three- and four star hotels in specified districts which have Unesco-declared World Heritage Sites, cities like Agra and Varanasi have found favour with hoteliers. There are around 27 such World Heritage Sites in India.

Agra has three properties on the Heritage Sites list"" Agra Fort, Fatehpur Sikri and Taj Mahal. The city has four three-star hotels, four five-star hotels and two five-star deluxe hotels. Room rates for three star hotels vary between Rs 3,000- 7,000 and for four stars are between Rs 4,000 and Rs 8,000.

The occupancy rate in Agra during the peak season between October and March stands at 80-90 per cent. However, between April to September, the level drops as low as 20 per cent.

Says Mahatim Singh, Secretary, Tourism guild of Agra, "Agra is a very lucrative market. The city has around 5,000 rooms and can do with an additional 2,000 rooms."

Price of land in Agra varies between Rs 15,000 and 20,000 per square yard. On an average, it takes around 12-18 months for a three-star hotel to come up in any location.

Incidentally, Ginger Hotel, a popular budget brand, had already decided to build hotels in some of the cities, which fall under the list of world heritage sites.

Says Prabhat Pani, CEO, Ginger hotels, "We already had plans to be in Aurangabad, Agra and Goa which fall under the World Heritage Sites list. With the announcement of the tax-holiday, we might put our project in these locations on the fast track."

ITC's Fortune brand of hotel on the other hand does not have any plans to make a foray into these areas, at present. But the hotel could look at it in future. Says an official from Fortune Hotels, "The tax holiday has opened good avenues for investors. We could look at these cities in future."

Analysts however, say that once branded hotels come to these cities and the supply of rooms goes up, it will impact the occupancy rate and the average room rates could fall. For instance, in Agra, the ARR for a three star hotel is around Rs 2,500 and this could drop further.

Singh however, is optimistic. "The increase in supply will not impact the ARRs as there is always a demand for rooms in Agra. With Delhi being overcrowded too, tourists sometime move to the neighbouring cities such as Bharatpur," he said. Total tourist inflow to Agra in 2007 stood over 32.1 lakh as compared to 25.39 lakh in 2006.