Railways chug into hotel business

Moving ahead with its long-pending plan of building budget hotels, the railways have identified Icra for conducting feasibility studies. The railways plan to build low-cost hotels at six places.

Apart from building new hotels through public-private participation, the railways also plan to lease out existing hotels and restaurants to private firms.

The cafeteria at the National Railway Museum, the railway heritage hotels in Ranchi and Puri and all the yatri niwases on the Howrah-Delhi route have been shortlisted to be spruced up through private investment.

Bangalore-based Capital Fortunes Ltd has been appointed consultant for the Ranchi hotel.

"Other places where tenders would be called for building budget hotels include Bhopal, Madurai, Secundrabad, Sialdah, Bangalore and Chandigarh," MN Chopra, managing director of Indian Railways Catering and Tourism Corporation (IRCTC) told Business Standard today. IRCTC is responsible for developing budget hotels.

The budget hotels will be developed on railway land that will be leased to private parties. The private players, apart from paying for the lease, will have to share revenues with the railways. The bidding is expected to take place on the basis of the share of revenue each private player will quote.

Chopra added that IRCTC had asked for about 30 sites for building budget hotels, six of which had been approved by the railway ministry. He said the contracts for all these projects would be awarded over the next 6 months. These hotels were expected to come up in 2 years, he added.

The budget hotel concept was mooted in 2001-02, when it was proposed that economical but good-quality places to stay would be developed all over India by the IRCTC.

No action was taken on the proposal owning to the absence of clear guidelines over commercial usage of railway land. With introduction of the Bill for amending the Railway Act of 1989 in the Rajya Sabha during the winter session, decks have been cleared for commercial exploitation of railway land. The amendments will enable setting up of a Rail Land Development Authority (RLDA).

The RLDA, to be headed by member, engineering, of the railway board, will have five other members for commercial utilisation of land and air space.

The proposed authority, when constituted, will be vested with sufficient powers and will have the flexibility to model its strategy in step with market imperatives.

Rail hospitality

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• Icra to conduct feasibility studies for the new hotels
• National Railway Museum cafeteria, the heritage hotels in Ranchi and Puri and all the yatri niwases on the Howrah-Delhi route will be leased out to private firms
• The budget hotels will be developed on railway land that will be leased to private parties