The Union Ministry of Tourism has reportedly proposed to accord infrastructure status to hotel projects costing in excess of Rs 50 crore. According to reports, the Ministry has already circulated a note to the Cabinet to bring down the threshold level for hotels to about Rs 50 crore, for which it is hopeful of getting a Cabinet pass. This proposal, if approved, will lower the threshold limit from the current Rs 200 crore for hotel projects to qualify for priority lending. With this, there is a great potential opportunity for smaller players to enter and invest in the hotel industry. As Nirupa Shankar, Director, Brigade Hospitality, says, “This is a good move and should encourage more players to develop good quality three-star hotels or higher. The Rs 50-crore threshold makes it a lot more feasible to develop hotels on a larger scale. The Rs 200-crore threshold would apply to extremely few players and would not be much of an incentive to many. It would also encourage players only in the five-star luxury space, whereas at the Rs 50-crore threshold, high quality three-star hotels can also be built.”
Decreasing the threshold limit comes from a need to bridge the shortage of around 1 lakh classified hotels rooms in the country by enabling smaller investors to build hotels.
- SERAPHINA D’SOUZA