FHRAI recommends government to rationalize taxes in hospitality sector
Published in IndiaHospitalityReview.com Dated 11 June 2014


In its pre-budget memorandum for 2012-13, Federation of Hotel and Restaurant Association of India (FHRAI) has asked the government to rationalize tax structure and provide incentives to mobilize capital investment. In its list recommendation and rationale, the body enumerated the problems faced by hospitality sector because of multi-stage tax policies of the government and various rules and norms causing unnecessary hindrance at the level of operation.

In its point by point list of suggestion, FHRAI enlisted the problems faced by hotels due to the provision of Section 194H. In lieu of this, it suggested that “commissions on hotel booking be treated on the same lines as under Section 194C” thus enabling an exemption from TDS if the transporter submits PAN. FHRAI observed that the present system of transacting with travel agents for the payment of commission on hotel booking is cumbersome and prolonged and should be resolved.

The body also asked the Government to dispense with the requirement to obtain PAN in case of payment received by modes other than cash (cheque/credit card etc) since it is a redundant practice given that there is already sufficient audit trail to identify the payer.

A clarification on inclusion of Hotels in Schedule XIV for the purpose of deduction under Section 80IC was also sought. They requested, “A suitable clarification be issued to treat hotels, resorts, spas as an eligible activity under Section 80- IC.”

FHRAI also considered the grievances of Heritage Hotels in its list of recommendations asking the government to extend the benefit of Section 35AD to this segment too.

Also, it has called for withdrawal of Section 206AA for non-resident payees and reduction of the default rate by 10% owing to the practical problems faced by the deductor.

A need to amend Section 32 of the IT Act in view of the given condition under which Hotels operate was also felt. The 24*7 service provided causes more wear and tear and therefore, the provision of depreciation allowance should be reconsidered, according to the statement released by FHRAI.

Among other things, the body recommended the Government to revisit the provisions related to license fee/rent payable by the hotel owners, payment of service tax on services rendered by foreign travel agents and other such issues related to current structure for the imposition of service tax.

service tax

These recommendations were made keeping in view the target laid by 12th Five Year plan to raise Rs 1.25 lakh crore.  Given the huge potential of hospitality sector, government has shown its keenness.

FHRAI feels that these suggestions will help mobilize capital investment also keeping in the interests of small and medium level enterprises into consideration. 

The entire pre-buget memorandum can be accesed here: FHRAI Pre-BUDGET Recoomentdation for FY 2013-14

  FHRAI submits its recommendations for the Union Budget 2014-15 Posted by admin on 11/06/2014 in Association News, BREAKING NEWS

Breaking Tourism News (BTN India)
The Federation of Hotel & Restaurant Associations of India (FHRAI) has presented its Pre-budget Memorandum for 2014-15 to the Union Ministry of Finance, encompassing recommendations on various issues of direct/ indirect taxation and financial policy, pertaining to the hospitality sector. A delegation from FHRAI, led by the President Mr. S.M. Shervani also participated in a high-level pre-budget meeting, chaired by the Secretary (Revenue), Government
of India, Mr. Rajiv Takru.
Outlining FHRAI’s key proposals, Mr. Shervani said: “The past two years have been a particularly challenging phase for the industry, due to the impact of continued global economic uncertainties and a sharp domestic downturn. However, despite these adverse headwinds, the long-term potential of India’s tourism sector and its strategic role in supporting our country’s quest for inclusive growth, remains undiminished. In this scenario, FHRAI’s recommendations for the forthcoming Union Budget have focused on policy measures which can allow our industry to deftly navigate the myriad near-term challenges which we confront and also build a strong foundation for the sector’s rapid and sustainable future growth.”
Mr Shervani said: “ We believe that there are three key priorities which merit the Finance Minister’s urgent consideration: -
• Rationalisation of our industry’s multiple tax structure, so as to position India as a globally competitive tourist destination
• Facilitating a broad spectrum of institutional mechanisms by which the hospitality industry, including our small & medium enterprises, can access lower cost long-term finance
• Offering fiscal concessions and incentives to help mobilise the massive capital investment of over rupees 1,25,000 crore, which is required to augment the country’s hotel room inventory by an additional 1,80,000 rooms, in view of the ambitious targets envisaged in the 12th Five Year Plan (2012-17).
The President added “We were greatly enthused when the Hon’ble Prime Minister himself very eloquently articulated that tourism will be one of the five pivotal drivers of India’s transformational growth. Recognising tourism’s multifaceted contribution as a key enabler of socio-economic progress through creation of jobs, enterprise, infrastructure development and foreign exchange earnings, his party’s election manifesto had proposed a visionary roadmap to more effectively leverage the sector’s vast untapped potential. We are optimistic that this unequivocal commitment will also be amply reflected in the Government’s maiden budget, by way of giving a strong policy impetus to the hospitality and tourism industry.”

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Regulatory bottlenecks impacting hospitality sector: FHRAI Published in The Economic Times dated 18 Oct, 2013

NEW DELHI: Regulatory issues such as multiple taxation and lack of single widow clearance are adversely impacting India's hospitality and tourism sector, according to industry body FHRAI.

"The cascading effect of these multiple taxes has resulted in structural distortions in the industry's cost and pricing structure," Federation of Hotel & Restaurant Associations of India (FHRAI) said in a report.

This in turn makes the industry uncompetitive as an international tourist destination and also discourages discretionary spending by domestic tourists, it added.

The effective rate of tax on the customer is very high, FHRAI said, adding that in its view, "hotel accommodations and restaurants must be included in the negative list of service tax."

It also reiterated that luxury tax should be uniform and moderate across the country and must be applicable only on the actual and not published tariff.

The other major issue is that of lack of single window clearance. In some states hotels can require as many as 100 approvals, licences and permits to set up and commence operations, FHRAI said.

"The central and state governments must move towards the introduction of a uniform approval and licensing system across the country, with minimum local and regional permissions and sanctions required for hotel development....," FHRAI added.


Some Cheer, But The Hotel Industry Wants More published in Business World dated 18 Oct, 2013


·         Good things come in threes. After a largely gloomy spell, the hotel industry has just got three pieces of cheering tidings. But like Oliver Twist, it wants more. And perhaps its demands may be partially justified.

This week, the government included hotels with project cost above Rs 200 crore and convention centres with project cost above Rs 300 crore in the infrastructure lending list. That’s been a 20-year demand of the hospitality industry.  

Just before that, last week, the Planning Commission recommended that tourist visa-on-arrival facility be extended to nationals from 40 more countries. Significantly these are countries (Russia, Ukraine, China, Bahrain, UAE, etc.) from where Indian tourism can actually hope to benefit and not just some random list of countries the Ministry of External Affairs gives reciprocal rights to. Again easing visa norms has been a long-standing demand of the tourism and hospitality sector in India. 

And finally, the much delayed dogged-by-controversies Aerocity project near Delhi’s T3 terminal has finally taken off with the tarmac facing JW Marriott throwing open its doors yesterday (18 October). JW Marriott has had to change the window panes in several rooms and put in a seven layer security arrangement to meet new regulations.  

Off-record, one hears from sources that Asian Hotels, the owners of the property, has suffered losses (notional, of course) to the tune of Rs 22 lakh per day due to the delays in opening the 500-room, mega-sized hotel that had been ready to launch at least four months ago. Even now only 300-odd rooms in the hotel have got security clearance, but relieved hoteliers hope that worst is over and other hotels waiting in the wings (Lemon Tree, too has been ready since April) will get their permissions. 

Yet, the FHRAI or the Federation of Hotels and Restaurant Association of India - even as it cautiously lauds these developments - has several grumbles. Chief among these are the high taxation that hotels in India have to bear. Compared to the 7 per cent tax that hotels in Singapore pay or 7 per cent in Malaysia, the Indian customer at five-star hotels ends up paying as much as 40 per cent tax if you combine Room (about 21.7 per cent) and F&B (19 per cent). 

The other grouse the industry has is to do with coastal area development for tourism. “India has a coast line of 7,500 kms. All we are asking is 125 kms for development of hotels but we get mired in environmental clearances,” says S.M.Shervani, President FHRAI. 

Vivek Nair, chairman and managing director, Leelaventure and Honorary Secretary FHRAI, pointed out that it takes 24 months to get a permission to build a hotel in a coastal zone (including Goa) due to India's rigid Coastal Regulation Zone norms, whereas neighbouring countries have the luxury of putting up an entire hotel in under 18 months. Nair points to missed opportunities here as fat cat tourists from Russia, Ukraine and Eastern European countries who are denied permission to visit Middle East and Egypt would have loved to visit India if there was some good leisure hotel capacity on the beaches here. 

Unless we have great leisure destinations, how can we meet the target of getting 12 million foreign tourists in five years time, he queries. As of now India barely attracts 6.5 million foreign tourists (and this figure might include visiting NRIs) while a country the size of Turkey gets 35 million foreign tourists. And even as supply of business hotels is rising, it’s a challenge to create leisure hotels claims the FHRAI.  

Also Shervani cautions that while the visa-on-arrival proposal has been mooted on paper, the home ministry is yet to clear it. “People tell us that you showcase Incredible India and yet don’t give visas,” he points out.  

On the infra status, the industry hails the move. As Nair, points out, the hotel industry can now borrow from organisations such as IFDC and IDBI and look forward to a reduction in interest rates on loans. This would help in capacity expansion of hotels. 

What they would like, however, is full-fledged industry status (currently it is only in lending), which would make a difference in operating costs as electricity, water and other rates would come down. But then something is better than nothing.


Coverage of the FHRAI media interaction on 18th October Published in Business Standard dated 19 October 2013  

Tourism industry wants electronic visas to meet targets

To attract the envisaged 12 million foreign tourist annually in the next five years as laid down in the 12th Five Year Plan (2012-17), the tourism industry strongly feels the government should ease the visa norms and introduce electronic visas.

"I strongly feel that the government should ease visa norms. It should introduce electronic visa so that foreign tourists travel with lot of ease.

"E-visa is the answer for tomorrow. The government should also make simplified single taxation, which will help us to become competitive," S.M.Shervani, president, Federation of Hotel & Restaurant Association of India, said here Friday in an interactive session.

The total number of international tourists that came to India in 2012 was 6.58 million compared to 57.72 million in China, 35.69 million in Turkey and 25.03 million in Malaysia.

The country earned foreign exchange of $17.74 billion in 2012 from tourism industry and till September 2013, it earned $13.20 billion.

Shervani said the hospitality sector is subject to many central and state levies like service tax, value added tax, excise duty and luxury tax.

"The cascading effect of these multiple taxes has resulted in structural distortions in the industry's cost and pricing structure. This in turn, makes us uncompetitive as an international tourist destination," he said.

Hotel accommodation and restaurants must be included in the negative list of service tax, he demanded.

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attained infrastructure status
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New Corporate Friends Expand Horizons for Cornell Center for Hospitality Research

April 26, 2013

Ithaca, NY, April 26, 2013 - Two new corporate friends have joined the Cornell Center for Hospitality Research (CHR) at the School of Hotel Administration, with a goal of continuing the expansion of the CHR's research program. The new friends are FHRAI Magazine and Sustainable Travel International. FHRAI will help the CHR share its research findings throughout southeastern Asia, and Sustainable Travel International (STI) will augment the CHR's research into sustainability issues.

"The CHR will become the founding Academic Partner of the Sustainable Travel Leadership Network (STLN), which will increase the flow of information between the CHR and the industry. Participation in this network will allow CHR research fellows to interact and exchange ideas and information with other leading hospitality and travel companies in order to expand the CHR's existing efforts to assist the hospitality industry with sustainability-related issues," said Jennifer Macera, the CHR's associate director.

As explained by STI, the STLN is an executive-level association of forward-thinking multinational organizations, working together to tackle today's industry challenges. This unique collaboration is centered on the development of sustainability solutions that impact tourism businesses and destinations worldwide.

The new agreement includes more opportunities for CHR to become more involved and more aware of sustainability matters and concerns. Already the CHR has conducted several Industry Roundtables and issued CHR Reports in the sustainability area.

FHRAI, the Federation of Hotel and Restaurant Associations of India, will provide space in the FHRAI Magazine, and CHR will contribute research columns to the FHRAI Magazine. "This is a tremendous resource to help us connect with India's rapidly growing hospitality industry," said Rob Kwortnik, CHR's academic director.

The CHR's corporate supporters—Senior Partners, Partners, and Friends—have made it possible for the CHR to develop research studies and to share these studies at no charge with the hospitality industry.

About Sustainable Travel International
Sustainable Travel International is a non-profit organization with a purpose. We've been collaborating with destinations, businesses and travelers to implement innovative sustainable tourism development and conservation solutions since 2002. We combine the mission and transparency of a non-profit NGO with the business acumen and expertise of the private sector, ensuring our partners achieve their desired results and receive a strong return on investment.

About FHRAI 
Now in its fifth decade, the Federation of Hotel and Restaurant Associations of India (FHRAI) is the central organization for four of India's hotel and restaurant associations. Under its president, Vivek Nair, FHRAI represents over 2,400 hotels and nearly 1,200 restaurants. As such, FHRAI advocates for the hospitality industry with government officials and promotes educational efforts throughout the industry.

About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 72 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit www.chr.cornell.edu


Patrons and hoteliers fume over service tax on all AC restaurants

Chittaranjan Tembhekar, TNN Apr 17, 2013

MUMBAI: Hoteliers and patrons in Mumbai Fraternity from the hospitality industry and the patrons and consumers of bars and restaurants in the city have criticized strongly the tax on fully or partly air-conditioned restaurants. "How is air-conditioning a luxury in this city where the daytime temperature in summer is 35 degrees Celsius and humidity levels can reach 100%," said Arvind Shetty, president of Association of Hotels and Restaurants (Ahar), a body of more than 8,000 restaurants and bars in the city.

Patrons of non-air-conditioned sections of partly AC restaurant too have to pay the tax. On Monday, hoteliers and bar owners announced their nationwide closure on April 29 demanding the withdrawal of service tax on fully or partly air-conditioned restaurants. A day after hoteliers and bar owners announced their nationwide closure on April 29 demanding the withdrawal of service tax on fully or partly air-conditioned restaurants, support is pouring in from many hospitality establishments and consumers who have wholeheartedly supported the call.

Abhishek Nerkar, a regular at a Matunga restaurant who prefers non-AC sections, said he will have to pay the service tax on 40% of the bill. "This is in addition to the VAT levied on 100% of the bill," said Krishnan Iyer, Abhishek's friend, who demands withdrawal of the "multipletaxation". "Service tax is now being recovered from partly air-conditioned restaurants. Consumers sitting in non-air-conditioned sections of such hotels also have to pay the levy. Due to the tropical climate in our country, air conditioning is a necessity. In Gujarat, where there is no liquor served in public, the tax is new and affects all restaurants," said Ashwin Gandhi of Gujarat Rajya Hotel Federation.

"Earlier expenditure tax levied on AC restaurants during the budget of 1991-92 was subsequently withdrawn citing air conditioners provided in high-humidity conditions were a necessity and not a luxury. Under the prevailing circumstances, burdening patrons who come to restaurants for a wholesome meal is highly unfair. Similarly a lot of confusion and confrontation amongst the patrons and restaurant operators are bound to arise wherein customers availing of services in a non A/C area of a restaurants will also be charged with the tax," said Shetty.

For the first time in the country's history all associations from various states , representing from the smallest eating houses to the multi-cuisine restaurants, right from Tamil Nadu to Uttar Pradesh have come together and resolved not to take the additional tax burden. "Food is the fundamental right of every human being. It's absolutely impossible for each one of us to move around with stoves and raw materials to prepare our food wherever we go and hence it is the absolute necessity. So how can a necessity be taxed in such a way? Its unfair, without merit and inhuman. We want its immediate withdrawal," said Federation of Hotels and Restaurants Association of India (FHRAI) in a statement issued here.

"The existing system of traditional family-owned restaurants is already facing the onslaught of high inflation, multiple taxes and competition from the unorganized sector," said Ahar general secretary Shashikant Shetty.

"The new tax will endanger businesses. The last bastion of affordable social entertainment will be lost forever for most of the middle class families in India," he added.

Shetty said "multiple taxation" was forcing several restaurant and bar owners to wind up. "Several establishments have already closed down in Mumbai since the past couple of years as taxes were making business an unaffordable and unprofitable proposition," he added.



Hospitality sector may have to invest up to Rs 90,000 crore


The hospitality industry in India needs to add a further 1.8 lakh rooms to meet the demand from foreign tourists, according to Vivek Nair, President, the Federation of Hotel and Restaurant Associations of India (FHRAI).

“This is a humongous task because, right now, we only have 1.2 lakh guest rooms in the country, right from one-star to five-star deluxe categories. And, those catering to foreign tourists are only about 70,000 (three-star to five-star category). This is even less than what Manhattan has and half of what Bangkok has,” Nair said.

With an average investment cost of Rs 50 lakh a room, the hospitality industry is looking at an investment of Rs 90,000 crore in the next five years, he added.

According to Ministry of Tourism estimates, foreign tourist arrivals in India grew by 6 per cent until November 2012. During January-November 2012, around 6 million tourists visited India against 5.5 million in 2011. The Ministry of Tourism aims to increase foreign tourist arrivals to 11 million by 2016.

Hospitality industry players say that, for a country of India’s potential, these are meagre numbers. “Malaysia and Indonesia get 12 million and 14 million foreign tourists, respectively, while Dubai crossed 12 million this year. Egypt had 4 million tourists visiting just its beaches, apart from the other historical sights, and Turkey has crossed 35 million foreign tourist arrivals,” said Nair, who is also the Chairman and Managing Director of the Leela Palaces, Hotels and Resorts.


Easing infrastructure status rules will boost hospitality sector



The hospitality industry is set to get a major boost. The Government is considering extending the “infrastructure status” to all hotel projects with capital expenditure of Rs 250 crore and above.

The principal benefit of this would be easier access to long-term funding as well as lower interest rates.

The tweaking of eligibility criteria marks a significant relaxation in the current rules that prescribe only three-star or higher category hotels located outside cities with population of more than 10 lakh to be reckoned as infrastructure projects for bank finance.

According to the Federation of Hotel and Restaurant Associations of India (FHRAI), 95 per cent of the hotels were outside the ambit of this provision.

Vivek Nair, President of FHRAI, said that the rules were counter productive. He said that the idea of lobbying for infrastructure status was that it should benefit capital intensive hotels. These hotels would get the benefit of 15-year loans and avail themselves of infrastructure bonds issued by IIFCL and IDFC, he said. He expected a notification to this effect to come up in the next two months.

This will benefit hotel projects not just in rural areas but across the country as long as the project size is Rs 250 crore, he added.

Many hotel projects have been weighed down by huge debt, forcing some of them to be shelved or change their business model. In the past two to three years, eight listed hospitality companies went for corporate debt restructuring as they were unable to meet their loan repayment commitments to banks.

“This was because of the mismatch between the cash flow and the debt service requirement. Once the new recommendations are accepted, we can replace our existing debts by long-term debts given by the institutions,” Nair said.

The Reserve Bank of India had recently allowed Indian hospitality players (with a total project cost of Rs 250 crore or more) access to the ECB (external commercial borrowing) market.



NEW DELHI: Hotels and restaurant owners today asked Finance Minister P Chidambaram to rollback theservice tax proposed on all air-conditioned restaurants. 

"The Finance Minister should reconsider it. This will have a very bad impact on the 
hospitality industry," Federation of Hotel & Restaurant Associations of India (FHRAI) Secretary Vijai Pande said. 

He said the move will mean an additional burden on customers. 

Expressing similar sentiments, McDonald's India (North & East) JV Partner & Managing Director Vikram Bakshi said: "By introducing service tax on AC restaurants, the discretionary spends of consumers which are already tight are expected to come under further pressure." 

Expressing concern over the proposal, Indian Association of Tour Operators President Subhash Goyal said: "It is unfortunate that the government is systematically killing the goose that lays the golden egg. How long you can tax the same sector. This 
taxation part has made India very cost prohibitive." 

He also said the increase in import duty on high end motor vehicles from 75 per cent to 100 per cent is also going to negatively impact the tourism industry as the sector uses a substantial amount of luxury vehicles. 

While announcing the levy on all air-conditioned restaurants in the Budget for 2013-14, Chidambaram said:"At present, service tax does not apply to air conditioned restaurants that do not serve liquor. The distinction is artificial..." 

As per Tourism Satellite Account (TSA) data 2009-10, the contribution of tourism to India's 
GDP was 6.8 per cent (3.7 per cent direct and 3.1 per cent indirect) and its contribution to total employment generation was 10.2 per cent (4.4 per cent direct and indirect 5.8 per cent indirect), Economic Survey for 2012-13 tabled in Parliament yesterday had said. 

Aviation minister’s help sought to secure clearance for Delhi airport hotel projects    MUMBAI, FEB 11, 2013

The Federation of Hotel and Restaurant Associations of India (FHRAI) has sought the intervention of the Civil Aviation Minister on the delay of clearances to hotels in Delhi's Indira Gandhi International Airport 'Aerocity'.

Vivek Nair, President of the Federation of Hotel & Restaurant Associations of India (FHRAI), in a meeting with the Minister of Civil Aviation Ajit Singh, sought his intervention in the matter of the undue delay in issue of completion certificates and other clearances to hotels in Delhi’s upcoming hospitality district.

As many as 13 hotels are being built in Aerocity at a combined project cost of approximately Rs 10,000 crore. The hotels, which include the J.W Marriott, will together contribute 5,500 “much-needed” additional rooms to the Capital city's limited inventory of 11,000 rooms in the branded segment and generate direct employment for several people. The construction of some of these hotels is either already complete or in an advanced stage. “An inordinate delay in their commissioning would not only cause colossal financial losses to the individual developers but also put in peril the vision of establishing a world-class hospitality hub, which was conceived as an integral component of the modernisation programme of Delhi International Airport,” said FHRAI in a statement.

FHRAI said all these hotels are being developed in accordance with the duly approved master plan and requisite statutory clearances had been obtained, including NOC on height clearance from the Airports Authority of India, prior to commencement of construction four years ago. “To impose structural modifications or alteration of building plans at this late stage, ostensibly to allay perceived security concerns, would be unreasonable and impractical. Moreover, it has already been clarified that all buildings in the area will incorporate modern security and surveillance infrastructure,” it added.

The Ministry of Tourism and the Planning Commission have estimated that 1.8 lakh additional hotel rooms would be required across the country, entailing a massive capital investment of over Rs 1,25,000 crore. “Any prolonged and unwarranted uncertainty on receiving final regulatory clearances could potentially undermine the viability of a landmark and prestigious project such as the Aerocity,” FHRAI added.

FHRAI is the apex body of the Indian hospitality industry and represents over 3,800 members including hotels, restaurants and associates.


Urgent action warranted for Aerocity projects: FHRAI       28 Feb 2013

By Anu Bararia

As big brand hotels in the New Delhi's Aerocity near Indira Gandhi International Airport await security clearance, FHRAI is seeking urgent action from the concerned authorities. Speaking to India Hospitality Review, MD Kapoor, General Secretary, FHRAI said, “The total project cost of hotels being built in Aerocity is estimated to be around 10,000 crores and some large properties are ready for commissioning, due to which urgent action is warranted.”

He also drew attention to the fact that “even during the construction phase, these hotels have had to encounter frequent interruptions and stoppage of work due to VIP movement and other administrative delays, which has put further pressure on their timely completion."

No clear directive has been issued yet to the 13 hotels which are either ready for opening or at various stages of construction. The security clearance might come at the cost of replacing windows with walls, demolishing top two or three floors and installing six-layered bulletproof windowpanes and higher boundary walls.

In the meantime, hotels continue to languish in their completed states awaiting clearance and incurring massive losses on a daily basis. 

Lemon Tree and Red Fox, brands by Lemon Tree Hotels group, having a total of 500 rooms and 600 employees on standby, is reportedly registering a daily loss of Rs2.5 million (US$46,294). This correspondent spoke to Patu Keswani on the approach he hopes to adopt with regard to the inordinate delay, he refused to comment saying "it is a very serious matter for us".

The management of the 523-room JW Marriott Hotel New Delhi Aerocity is optimistic about commencing operations from April this year. Balan Paravantavida, General Manager, JW Marriott Hotel New Delhi Aerocity, toldIndia Hospitality Review that the property is slated to host a couple of big conferences and conventions in April and May and does not see “challenges” as far as operational clearances are concerned.

Earlier this month, on February 5, FHRAI President, Vivek Nair had met with the Union Minister for Civil Aviation, Ajit Singh raising the the issue of the inordinate delay in giving clearances to Hotels coming up in Aerocity.

During the meeting, Nair had emphasized that prolonged uncertainty on receiving final regulatory approvals will not only lead to financial losses for the individual developers involved in the project but also adversely impact domestic and foreign investor sentiment in the sector.

“The Minister has assured us that he will look into the matter,” said Kapoor.

He said, “The hotels are being developed in accordance with the duly sanctioned master plan and statutory clearances had been obtained prior to commencement of construction, four years ago. It has also been clarified that all buildings in the area will be fully equipped with state-of-the-art security and surveillance infrastructure. We believe this should adequately address any apprehensions which some agencies may have expressed.”

Aerocity will add about 5,500 much-needed hotel rooms to Delhi’s currently limited inventory in the branded segment. To achieve the ambitious growth trajectory envisioned in the 12th Five-Year Plan (2012-17), 1,80,000 additional hotel rooms will be required in the country, for which the industry would need to commit capital investment of a staggering Rupees 1,27,600 crores.

“In this context, a marquee project such as the Aerocity should be leveraged as a showcase of the dynamism and enormous potential inherent in our hospitality sector and must not become a victim of red tape,” he said.

On their next course of action, he said, “The industry will work constructively with all stakeholders, including DIAL and various Government agencies for an early resolution of the matter. In view of the genuine constraints, we have also sought regulatory forbearance from the RBI, so that new hotels are allowed to extend their commercial operation date (COD) by two years, without their loans being classified in the NPA/ restructured category, instead of six months like at present."

  INTERVIEW- HOTEL LEELAVENTURE PLANS ENTRY LEVEL 5 STAR BRAND, SAYS V-C & MD VIVEK NAIR, published in Financial Express, Dated 01.01.2013 National


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