The Federation of Hotel and Restaurant Association of India (FHRAI), an apex body in the hospitality industry, has said that the industry is set to see an investment of about Rs 26,000 crore by 2017.
“The sector will witness and investment boom soon. According to estimates, we will require an additional 1,88,000 rooms by the end of the Twelfth Five Year Plan Period. We expect an investment of about Rs 26,000 crore by then,” said Kamlesh Barot, president, FHRAI. The industry currently employs 24 million people and by 2017 it is expected to add another 44 million employees. From the present 26 lakh rooms, the industry is likely to double its number of rooms by 2017.
Meanwhile, FHRAI has said that the hotel tariffs may go down by 2 to 3 per cent, if the infrastructure status demand made by FHRAI in its post-budget memorandum submitted to the Government, is extended to below three star hotel categories and the threshold of location outside cities with population of more than one million is removed, in the near future.
“Infrastructure status to hospitality industry under the RBI’s Infrastructure lending list would mean bank loan repayment periods will be extended to 10 -15 years and the interest rate would settle around 3-4 per cent compared to 12-13 per cent now. When interest rates will come down, more in tune with international hotel lending rates, it would translate into our input costs getting lowered. If the interest burdens are reduced, tariffs may come down by 2-3 per cent.” he said
According to FHRAI, though the industry was given infrastructure status, it excludes majority of hotels in the country. “It covers only 5 per cent of hotels. The remaining 95 per cent will not enjoy infrastructure status. We have requested the Government to provide this status to the entire segment. We will then be able to compete with the rates at which foreign hoteliers operate,” he added. Barot said that the hike in service tax from 10 to 12 per cent during the last Budget has also affected the sector negatively.