Bengal blooms

The hospitality industry in Kolkata has never had it so good with the average occupancy in star-category hotels hovering at around 75 per cent, as per the latest statistics available with HRAEI. By Joy Roy Choudhury

Kolkata has emerged as an important IT/ITeS destination in the country, which has scaled up business travel to the city thus pushing up occupancy in the city's star-category hotels. Though there are a number of luxury hotels in the city, the industry is feeling the heat due to an acute shortage of business category rooms to accommodate mid-level and lower-level executives.

Buoyant on the industry's growth, international hospitality players have now started taking Kolkata seriously. Emaar-MGF combine has just acquired a plot of land adjacent to the existing ITC Sonar Bangla Hotel to set up a five-star deluxe property on the busy Eastern Metropolitan Bypass. DLF-Hilton combine is also planning to set up a business hotel in the city.

City-based Shristi Infrastructure Development Corporation (SIDCL) along with HUDCO, the PSU has tied up with InterContinental Hotels Group to set up a five-star hotel complex at New Town in Kolkata. Even ITC has plans to set up another hotel in the state. The erstwhile state government owned Great Eastern Hotel now taken over by the Suris-owned Bharat Hotels Group, too will become fully operational by the end of 2008 after being re-christened Grand Great Eastern Hotel.

New entrant into the business, D S group, has recently acquired the 'non-operational' MBD Airport Hotel in the city and plans to revamp and renovate it into an international standard five-star hotel. The hotel will also have a large convention centre and banquet halls along with commercial area. Moreover, EIH has unveiled its plans to set up a Trident brand hotel in the city.

Local steel baron Bipin Vohra's S P S group has taken over the decade-old Hotel Rutt-Deen and plans to launch it shortly after a complete makeover. The hotel has been re-christened The Loudon. According to S K Khullar, president of Hotel & Restaurant Association of Eastern India (HRAEI) and former president of FHRAI, by 2009, more than 2,000 rooms will be added in the five-star category. "There could be further additions with the state keen on selling plots to five-star hotel developers," he said.

There are 10-12 luxury hotels coming up in the city with 2,400-odd rooms, most of which will be operational by 2009-10. Several star-category hotels are also coming up at important industrial towns like Durgapur and Siliguri. Ginger has opened its first hotel in Durgapur and Bhubaneswar too.

The hospitality industry in neighbouring Bhubaneswar and Guwahati too are also showing definite signs of growth. D S Group has signed an MoU with Guwahati Municipal Development Authority (GMDA) to set up the first five-star hotel of north-east in Guwahati, Assam. But stray incidents of violence and carnage unleashed by banned outfits like ULFA has affected the hospitality industry in the state.

Teething problems

The hospitality industry in Bengal is besieged with few teething problems too like high taxation rates, paucity of land, problems with service providers, health and hygiene issues and local issues like uncalled for strikes in this part of the country for reasons not related with the industry.

Alok Chowdhury, secretary general of HRAEI, says, "There's an immediate need for 2,000-2,500 rooms in the budget room segment. By 2009-10, the demand may double. At present, only 400 budget rooms are currently available in the city." The crisis will deepen with lack of any major additions in this high-demand budget category.

Senior officials at HRAEI said that the state government has to address this situation or risk losing tourists and business travellers. Rajesh Mishra, president of Federation of Hotel & Restaurant Associations of India (FHRAI), who hails from the city, said, "The state government should put greater thrust on development of budget hotels."

Mishra believes that investment worth Rs 300-500 crore is stuck in West Bengal due to non-availability of land. “The hospitality industry is facing severe shortage of rooms all over the country and West Bengal is not an exception. But we are not getting any response from the state government," he says.

HIDCO, the developing authority for the upcoming satellite township in New Town in the outskirts of Kolkata, has been informed about paucity of land and its rising prices in the state. We have also informed the state administration about the present crisis but no steps have been taken so far. Acquiring land is a problem as government goes for the highest bidder, he said.

The cost of setting up a three-star property in Kolkata is around Rs 6-7 lakh per room, excluding the land cost which has gone up to Rs 10 lakh. Mishra says, "There is a requirement of 15 hotels in New Town. There is a shortage of nearly 3,000 rooms in smart or budget hotels category. Almost all development in the hospitality sector barring one or two is in the luxury segment."

He added that a land crisis in the city has made it almost impossible for developers to launch projects in the smart or budget category. If the government does not address the issue immediately, the bulk of the market will be lost, he claimed. "Land use laws need to be overhauled in many such commercial or business districts to make way for hospitality projects," he added. It should encourage the public-private participation model and strengthen it for developing hotels, restaurants and food plazas in the state.

The hotel and the restaurant industry in the state is further grounded by the imposition of luxury tax by the state government which has increased manifold in the last couple of years. Experts feel that the state government should emphasise more on tourism promotion and understand the importance of the industry as a revenue earner. If it provides the kind of support and co-operation the sector needs, then Kolkata can become a 'hospitality hub' in this part of the world in the years to come.