Buying land and then building hotel has become unviable: Hotelier

Dehradun
5 Jan 2019

Buying land is one of the main issues plaguing the hospitality industry, says hotelier Abhishek Goel.
"Constructing a hotel after buying a land has become unviable. It's impossible right now to purchase land in the heart of the city, or even outside like this hotel, construct a full-fledged hotel and break even in less than 20 years," says Goel, the owner of Regenta LP Vilas.
The 29-year-old says his establishment, which is managed by Royal Orchid Hotels, was possible because they had land. "(If) we had to buy even land, it would've been impossible."  This is the problem in the hospitality sector. It is time-intensive and capital-intensive, Goel says, adding that the return that needed to come, as compared to a real estate or other project, was very long term.
Talking about the Goods and Services Tax (GST), he is of the opinion that it had helped the hotel industry. Elaborating, he said during the VAT (value added tax) regime, there was no clarity regarding which products would have input tax credits and they got inputs only on selected products like food items.
Now, Goel says, in everything, from raw materials to all the services, there is a input tax credit. "Even if I build 30 rooms and buy TV sets, I get the input in that too."  He recalls that due to VAT, sales tax and service charge, people used to think that hoteliers fleece people. But the customers have more clarity now.
Goel, however, lists some problems like frequent rate changes and the counting, which he says, is not yet foolproof. Talking about the tourist sector in Dehradun, Goel, who was born and brought up in the city, rues that it has not much developed. He cited the nearby tourist hotspots like Mussoorie, Rishikesh and Haridwar as one of the reasons. Except a few spots, there is not yet the potential where tourists can spend a day in the city, he says.
Neither it is a hill station, nor has religious aspect like the Ganga, he says. The 74-bed hotel, which opened in mid-2017, was operationally viable in the second month or the third month and has 160 staff. (PTI)