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Hotels can grow vertically,at a lower price

In a boost to the hospitality sector,the central Urban Development Ministry has decided to provide financial incentives to hotels in the Capital that are interested in expanding their infrastructure.

Written by Esha Roy | New Delhi | January 9, 2009 12:52:31 am

In a boost to the hospitality sector,the central Urban Development Ministry has decided to provide financial incentives to hotels in the Capital that are interested in expanding their infrastructure.

The ministry has decided to slash the fee hotels were to pay the Delhi Development Authority (DDA) if they wish to increase the built-up area of the establishment. Secretary of the Urban Development Ministry M Ramachandran said the fees will be lowered as soon as the minister concerned,Jaipal Reddy,gives the go ahead.

This proposal follows an earlier initiative by the DDA to allow hotels to build more so that ‘supply’ could move closer to ‘demand’. A DDA official said: “The new Masterplan allowed hotels to build upto 150 Floor Area Ratio (FAR),which would mean that they can increase built-up area by adding more storeys on the same plot. This was later increased to 225 FAR.”

In order to increase built-up area,it was stipulated in the Masterplan that hotels will pay 75 per cent of the zonal auction rate — the rate at which plots for hotels are auctioned in different zones. This has now been brought down to 50.

M Ramachandran said on Thursday: “We have also suggested that hotels be allowed 20 to 30 per cent extra ground coverage,keeping in mind the parking space and the area to be left unoccupied at its sides and front.”

The ministry has told the DDA that it should help clear the plans on behalf of the hotel industry. It has also directed the respective urban local body to expedite the process. This proposal is applicable to all existing hotels that want to expand,to the 39 for which the DDA has already auctioned plots and to any new venture. The new policy will not be applicable for plots in the Civil Lines,in the Lutyens Zone and also for heritage hotels.

Ministry officials said they anticipate 6,000 brand new rooms to emerge from this government largesse,out of which 4,000 will be in the 39 new hotels. “There will still be a shortfall of 2,000 rooms that needs to be addressed,” a ministry official said.

Ministry sources pointed out that Jaipal Reddy was likely to sanction the proposal early next week. The new policy as well as the final rates will be notified soon after.

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