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Our Bureau

New Delhi, Aug. 5 The PHD Chamber has mooted the idea of a guarantee return of 16 per cent on the investment on construction of new hotels in the National Capital Region (NCR) for at least 10 years.

This will act as inbuilt incentive for the industry to invest in the segment, according to the chamber.

Delhi has a shortage of 1.7 lakh hotel rooms and a sizeable part of this need must go on stream before the Commonwealth Games 2010.

It is a challenging task to create quality hotel rooms of that magnitude in a relatively shorter timeframe, the chamber said.

Timely completion requires speedy action in allotting the sites, making available adequate credit for construction and finally clearing the building for use, it added.

Many hoteliers are not coming forward to bid for the plots because of the higher floor prices fixed, since at that rate, operational efficiency, cash flows and amortisation of the costs will go out of gear.

The industry is not sure about the rate of return since the occupancy factor depends on many variables that are extraneous, according to the chamber.

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