10 More Plots Put up for Budget-hotel Bid

Ten more plots of railway land in places such as Chennai and Guwahati have been put up for bidding by the Indian Railways’ tourism unit for building budget hotels. This brings the total up to 31 so far, of the 100 low-cost hotels its plans countrywide.

The Indian Railway Catering and Tourism Corporation Ltd (IRCTC), the dining, ticketing and tourism subsidiary of the railways, estimates it will earn more than Rs690 crore in lease income over the next 30 years from the 21 properties already awarded to private hoteliers such as Indian Hotels Company Ltd, the Taj Group and the Ginger Hotels chain. Winning bidders need to have experience in running hotels, profits in two of the past three years, and should agree to co-brand hotels with the ‘Rail Ratna’ tag.

“As a concept, it’s great. We badly need one- and two-star hotels in the country,” said Himmat Anand of Kuoni Travel Group, India. Only 25% of the hotel rooms in the Rail Ratnas have to be at Rs1,000 or less for a night, stoking concern not enough budget rooms will be built. We need to “ensure that it doesn’t become a four-star category hotel because that defeats the purpose,” he said.

With high demand for rooms, rents have increased sharply in large cities. For example, hospitality consultants HVS International reported last year that the average rate for a room in Agra, which boasts of the Taj Mahal, increased 20.3% to Rs3,622 from fiscal 2005 to fiscal 2006. The ministry of tourism estimates that the Indian economy needs 1.5 lakh additional rooms to meet the needs of business and leisure travellers; it has emphasized the lack of budget rooms in particular.

On railway land without hotels, IRCTC is offering 30-year leases to companies such as Bangalore-based Royal Orchid Hotels Ltd and Signet Hotels Consortium, which is funded by non-resident Indians, to develop new ones. At four railway hotels (such as the Rail Yathri Niwas) that the companies are redeveloping, IRCTC has leased the properties for 15 years. The bids for the 10 new plots will close by 7or 8 March, depending on the location.