Noida pips Delhi in race for hotels

Ahead of the 2010 Commonwealth Games and the shortage of hotel rooms in the national capital region, Noida is clearly beating Delhi in wooing the country's leading hotel chains by offering land at rock bottom industrial rates.

While exact comparisons are difficult due to the diversity of locations and the inherent differences between the capital and the industrial suburb, the land cost for setting up a hotel in Noida works out to be much cheaper than anywhere in Delhi.

For instance, the Delhi Development Authority tried to sell two plots in Dwarka of 7.39 acres and 6.06 acres with a reserve price of Rs 723.10 crore (Rs 7.23 billion) and Rs 592.73 crore (Rs 5.93 billion), respectively.

Dwarka is near the airport and well-connected by the metro, and thus is a favourable location. Despite this, the auction failed as not a single bidder came forward.

On the other hand, leading hospitality chains like the Indian Hotels (Taj group), ITC, Bharat Hotels (promoters of the Grand group of hotels) and Apeejay-Surrendra Pal group (owners of Park Hotels) have each deposited an application fee of Rs 5 crore (Rs 50 million) with Noida for setting up five-star hotels.

The winning company will be decided on the basis of its experience and annual turnover.

Hotel chains are being lured by sites at well placed locations like near the Noida-Greater Noida Expressway at the industrial rate of Rs 7,500 per square metre. This means that the land cost for a five-star hotel on six acres will be only Rs 18 crore (Rs 180 million) in Noida.

Perhaps, this was the reason the DDA managed to sell only one of the 10 hotel sites it had put up for auction in September this year.

The location of the plots, coupled with the "exorbitant" reserve price set by the DDA, were primary reasons behind the lack of interest displayed by the hospitality industry.

Experts say the DDA is asking for too much even at locations that would normally not attract leading hoteliers.

For example, it fixed a reserve price of Rs 45.79 crore (Rs 457.9 million) for a 1.51 acre site in Shalimar Bagh, Rs 304.01 crore (Rs 3.04 billion) for 3.25 acres in Paschim Vihar, Rs 145.74 crore (Rs 1.46 billion) for 1.94 acres in Rohini and Rs 68.95 crore (Rs 689.5 million) for 2.09 acres in Shahadra.

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