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Sujit Banerjee, tourism secretary wants hotels to fully open to get their tax break

Hotels stand to loose their five year tax break of the special Commonweatlth Games scheme this year if they do not completely open by the March '10 deadline.

“How can hotels open partially and yet get the tax-holiday. They will have to come to us for registration and classification, and we will not allow such a thing,” tourism secretary Sujit Banerjee told the Financial Express.

However, the tourism ministry is also pushing for an extension of the tax-holiday till July 2010 from the earlier March deadline.

A host of hospitality majors—domestic and foreign—including the Taj Group, InterContinental, Hilton and Starwood Hotels and Resorts (Westin) have projects in the pipeline, which are slated for launch before the Commonwealth Games. While InterContinental plans to open its Crowne Plaza in New Delhi before the Games, its two other properties would be operational in 2010 but not necessarily before the event.

According to market estimates, only 50% of the total proposed room inventory will be ready before the Games.

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Though some hotel majors maintain they will launch full operations of their properties, sector analysts and experts are of the opinion that ground realities are different and as projects are met with delays, owners are planning to go for only partial openings.

This could come as a rude shock to the tourism ministry, which is struggling hard to put together a list of 40,000 hotel rooms in the NCR (required to host one lakh tourists expected for the Games).

However, according to the ministry data accessed by newspaper, out of the 10,420 rooms in the definite category, over 4,400 rooms are still to come up.

Of these, 11,000 are rooms in guest houses, 5,500 in DDA apartments and 3,000 out of the bed-and-breakfast scheme. There are around 10,000 rooms which are part of the existing room inventory in the region. Out of the 10,400 rooms that were supposed to come up before the Games, 5,980 are completed and the rest are still to come up.

The slowdown has hit the hospitality industry hard. While revenues nosedived, credit crunch impaired the launch of new projects. Getting licences (some 130-odd) is the most tedious part of setting up a hotel in the country.

Source: Financial Express

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