Rail Ratna budget hotel plan to get back on track
Indian Railways has chalked out plans to set up a total of 100 budget hotels across the country. The plan is drawn up over the next three years to create an inventory of over 10,000 rooms.
By Sudipto Dey & Rajat Guha , TNN |
NEW DELHI: Indian Railways has chalked out plans to set up a total of 100 budget hotels across the country. The plan is drawn up over the next three years to create an inventory of over 10,000 rooms.
To start with, the Indian Railways Catering and Tourism Corporation (IRCTC) has asked for bids from private hospitality developers and foreign players for setting up two or three star hotels in 20 locations, under the ‘Rail Ratna’ brand.
The regions to be covered under Railway’s budget hotel plan include Madurai, Vijaywada, Secunderabad, Chandigarh, Mumbai, Tirupati, Kanyakumari, Rameshwaram, Nagpur, Ooty, New Jalpaiguri, Agra, Pune, Darjeeling, Bhopal, Jodhpur, Jaisalmer, Udaipur, Sealdah, and Bikaner.
This will include re-bids for five sites as the Uppal-Kamat-IRCON consortium — which bagged four of the locations in June this year — surrendered their rights following differences of opinion among the partners. “This will be first test case for private-public participation in creating hotels in the budget segment,” PK Goel, managing director, IRCTC, told ET.
Several Indian and foreign hospitality majors, including Tata group promoted Indian Hotels, the Uppal group, Kamath Hotels, InterGlobe Hotels and Sarovar Hotels have shown interest in developing these budget hotels in association with Indian Railways.
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Foreign hospitality majors can also take part in the bids in association with Indian partners. The bid winners will develop and manage the hotels for a 30-year licence period. On an average, each property will house around 100 rooms.The Indian hospitality market has around 1,00,000 rooms in the organised segment. An estimated 80% plus of these are star-rated hotels.
The hospitality industry needs to double its room inventory over the next three years. Each development company has to enter into a revenue-sharing arrangement with IRCTC, along with an annual licence fee, based on valuation of the land. Plans are afoot to have at least three budget hotels in Delhi and the national capital region (NCR), in view of the forthcoming Commonwealth Games in ’10.
Indian Railways is also in the process of upgrading its Railway Yatri Niwas in New Delhi, Howrah, Puri and Ranchi. It recently asked private hotel operators to bid for re-development of these properties. Several international hospitality brands such as the French group Accor, and US-based Choice Hospitality, are scouting for opportunities in the mid-market segment.
And it is likely that these companies may jump at the opportunity presented by the Railways. Given the size of the project, the deal would prove lucrative for all parties involved, especially given the boom in the hospitality industry.
Even several state governments such as those of Rajasthan and Andhra Pradesh are looking at giving out tax incentives for setting up budget hotels, since these hotels are enjoying increased demand among tourists in recent times.
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