FHRAI points out that the hotel sector’s inability to take advantage of the increased FAR is creating a widening gap in supply to meet the rising demand, driven by a sharp increase in airline passengers from 40 million to 70 million by 2024. Despite airlines like Indigo and Air India placing orders for over 1000 new aircraft, there is a notable lack of new hotel projects in Delhi.
While the airline industry is rapidly increasing its capacity with large aircraft orders, the development of new hotels is not keeping pace, failing to meet the swiftly growing demand.
Pradeep Shetty, President of FHRAI said, “Once Terminal 1 at the Indira Gandhi International Airport opens, its capacity will increase from 70 million to 110 million passengers per year, making Delhi an important regional hub. Opening up of new convention centres In Delhi is another major initiative taken by the Government to position Delhi as a MICE hub. However, in sync with these developments, the hotel infrastructure is not growing in Delhi is a major concern along with a more conducive environment for the viable functioning of the existing players. Addressing these issues would lead to sustainable growth, enhance employment opportunities, and strengthen Delhi’s position as a premier destination.
“The current challenges faced by hotels in Delhi regarding the utilization of additional FAR are hindering the sector’s ability to keep pace with the dynamic demands of the hospitality industry”.
The Federation of Hotel & Restaurant Associations of India (FHRAI) has identified several significant barriers that hinder hotels from utilizing additional Floor Area Ratio (FAR). One critical issue is the parking norms, which do not distinguish between new and existing hotels, resulting in unfair parking requirements. FHRAI advocates for more flexible parking norms for existing hotels to access additional FAR, similar to the standards for new constructions.
Although the FAR for hotels was significantly increased in 2013, the ground coverage limits were not adjusted, complicating the effective application of the FAR policy. Furthermore, FHRAI points out the excessive rates for additional FAR in hotels compared to those for commercial activities. Despite the Delhi Development Authority’s (DDA) approval of revised rates in 2021, a delay of three years in issuing the notification has exacerbated the challenges for Delhi’s hospitality industry.
FHRAI urges the DDA to correct the discrepancies in additional FAR rates between commercial properties and hotels, aligning them with the 2008 guidelines. Additionally, FHRAI suggests expanding the commercial components of hotels to ensure sustainable asset development and reduce the cyclical risks in the hospitality sector. Without these changes, the underdevelopment in the hotel industry could jeopardize Delhi’s capacity to match the dynamic growth of the tourism sector nationwide.
Tags: Federation of Hotel & Restaurant Associations of India FHRAI, Pradeep Shetty, Delhi Hotel Sector, Master Plan Delhi, Ministry of Housing and Urban Affairs
