Commonwealth Games hotel projects to be ready only by 2011

In another setback for the 2010 Commonwealth Games, the 3,000 hotel rooms that had been expected to come up around the New Delhi international airport may be ready long after the curtain drops on the event.

The reason: tardiness by the airport developer in awarding contracts to hoteliers. At least 40,000 visitors are expected to fly in for the 3-14 October Games, the biggest sporting event to be hosted by India since the 1982 Asian Games.
“The contracts were awarded so late that I don’t think any of the hotels will come up in time,” says Uttam Dave, the India head of European hotel company Accor SA and president and chief executive officer of InterGlobe Hotels. “We are trying our best to open one hotel at the airport under the Ibis brand before the Games but even that is touch and go.”

Delhi International Airport Ltd (DIAL), the airport developer, has set apart a 45-acre hospitality district. It invited bids in October last year for 13 projects and received about 60 bids. Since March this year, DIAL has awarded hotel firms plots of land to develop and operate seven hotels.

While Accor, which was awarded two plots of land, will operate three hotels—one each under its brands Pullman, Novotel and Ibis—Lemon Tree Hotels, Bird Group and Hyatt Hotels with RS Saraf Juniper Hotels are setting up one each. Aria Hotels and Hyatt are setting up one hotel and more recently DB Hospitality, part of the Mumbai-based real estate developer DB Group, has been awarded two plots of land by DIAL.

As part of the deal, the developers were to build facilities such as convention centres, restaurants and commercial plazas within the hotels to meet the requirements of passengers and airlines. But except for Accor’s budget hotel Ibis, the other projects are likely to miss their deadline, say hotel industry officials.

InterGlobe hotels is Accor’s joint venture partner for the Ibis brand in India. The airport Ibis will have 465 rooms and will be built in two phases, with the first phase comprising 300 rooms. “We are hoping the phase-I will be ready before the Games,” Dave said. “We are working in 24 hour shifts to develop the hotel.”

A top DIAL official, who asked not to be named, said given the delay in awarding the contracts because of issues raised by the government over the financing model, there is unlikely to be even a single room ready for the event. “Even the ground breaking (ceremony) has not started,” this official said.

According to Patu Keswani, chairman and managing director, Lemon Tree Hotels, DIAL needed to resolve issues between its shareholders and the government, which led to a delay in awarding the contracts.

Lemon Tree is developing a 300-room hotel near the airport, which will be launched in mid-2012, according to information on the company’s website. According to an October report by hospitality consultant firm HVS India, around 60 hotel projects are being developed in Delhi and its suburbs in time for the Games. The report said only 53% of these hotels will be built over the next five years, which will make around 8,780 rooms available.

Out of this, only 5,700 rooms will open before the Games. “The hotel contracts at the airport were to be auctioned four years back,” said Manav Thadani, managing director, HVS India, a hospitality consultancy. “None of the hotels are going to be ready except maybe for Accor’s Ibis because a budget hotel does not take more than a year or year and a half to be built.”

Hyatt Hotels Corp., which sold shares in an initial public offering in the US in November, declined to comment, citing US Securities and Exchange Commission rules that bar company officials from making any public statements until 45 days after the listing.

The Bird group is developing a 240-room hotel under the Dusit 2 brand, which is expected to be ready by 2011 end. “Procedural delays by DIAL led to a delay in awarding the contract, so it is not possible for any hotel to be ready before the Games,” says Ankur Bhatia, executive director, Bird Group. The group is developing another 50-room hotel near the airport under the Dusit Devarana brand which is likely to be ready before the Games.