Facility planning laws-and-rules-hotel-industry

Governing Laws for Setting up Governing Laws for Setting up Hotels in IndiaHotels in India

Indian Hotel IndustryIndian Hotel Industry

Hotels are an important component of the Hotels are an important component of the tourism product.tourism product.

Contribution: standards of facilities and services Contribution: standards of facilities and services offeredoffered

A $23 bn industry.A $23 bn industry. Growing at a rate of 10.2% p.a.Growing at a rate of 10.2% p.a. Currently having supply of 1,10,000 roomsCurrently having supply of 1,10,000 rooms Shortage of 1,50,000 rooms.Shortage of 1,50,000 rooms.

Hotel ClassificationHotel Classification

I.I. Star Category Hotels:Star Category Hotels:– 5 Star Deluxe Hotel– 5 Star Hotel– 4 Star Hotel– 3 Star Hotel– 2 Star Hotel– 1 Star Hotel

II.II. Heritage Hotels:Heritage Hotels:– Heritage Grand– Heritage Classic– Heritage Basic

HRACCHRACC

The Hotel & Restaurant Approval & Classification Committee.

Inspects and assesses the hotels based on the facilities and services offered.– Hotel Projects are approved at

implementation stage– Operational Hotels are classified under

various categories

Regulatory PolicyRegulatory Policy

Nodal Authority: Department of Tourism.Nodal Authority: Department of Tourism. Important Guidelines:Important Guidelines:

– Approval of Hotels at Project Stage and Approval of Hotels at Project Stage and Classification & Reclassification of Hotels.Classification & Reclassification of Hotels.

– Guidelines for Classification of Heritage HotelsGuidelines for Classification of Heritage Hotels

– Time Share Resorts (TSR)Time Share Resorts (TSR)

– Stand Alone RestaurantsStand Alone Restaurants

– Guidelines for apartment hotelsGuidelines for apartment hotels

– Guidelines for approval of Guest HousesGuidelines for approval of Guest Houses

Approval of Hotels at Project Stage Approval of Hotels at Project Stage and and

Classification & Reclassification of Classification & Reclassification of Hotels.Hotels.

At Project LevelAt Project Level

The Ministry of Tourism will approve hotels at project stage based on documentation.

Project approvals are valid for 5 years.Project approvals are valid for 5 years.

Ceases 3 months from the date that the hotel becomes Ceases 3 months from the date that the hotel becomes operational even if all its rooms are not ready.operational even if all its rooms are not ready.

The hotel must apply for classification within these 3 The hotel must apply for classification within these 3 months.months.

DocumentationDocumentation

Duly filled up Application form.Duly filled up Application form. Application Fee.Application Fee. Proposed name of the hotel.Proposed name of the hotel. Name of the promoters with a note on their business Name of the promoters with a note on their business

antecedents.antecedents. Complete postal address of the promoters/tel./fax/emailComplete postal address of the promoters/tel./fax/email Status of the owners/ promoters:Status of the owners/ promoters:

– If Public/ private limited company with copies of Memorandum and If Public/ private limited company with copies of Memorandum and Articles of AssociationArticles of Association

– If Partnership, a copy of partnership deed and certificate of registrationIf Partnership, a copy of partnership deed and certificate of registration– If proprietary concern, name and address of proprietor/certificate of If proprietary concern, name and address of proprietor/certificate of

registrationregistration


Location of hotel site with postal addressLocation of hotel site with postal address Details of the siteDetails of the site

Area (in sq. meters)Area (in sq. meters) Title - owned/ leased with copies of sale/ lease Title - owned/ leased with copies of sale/ lease

deeddeed Copy of Land Use Permit from local authoritiesCopy of Land Use Permit from local authorities Distances from Railway station, airport, main Distances from Railway station, airport, main

shopping centers (in Kms)shopping centers (in Kms)


Details of the project:Details of the project:– Copy of feasibility report.Copy of feasibility report.– Star category planned.Star category planned.– Number of rooms and area for each type of room (in sq.ft.)Number of rooms and area for each type of room (in sq.ft.)– Number of attached baths and areas (in sq.ft.)Number of attached baths and areas (in sq.ft.)– Details of public areas - Lobby/lounge, restaurants, bars, Details of public areas - Lobby/lounge, restaurants, bars,

shopping, banquet/ conference halls, health club, swimming pool, shopping, banquet/ conference halls, health club, swimming pool, parking facilities.parking facilities.

– Facilities for the physically challenged persons.Facilities for the physically challenged persons.– Eco-friendly practices and any other additional facilities. Eco-friendly practices and any other additional facilities. – Date by which project is expected to be completed and Date by which project is expected to be completed and

operational.operational.


Blue prints/ sketch plans signed by owners and Blue prints/ sketch plans signed by owners and architect showingarchitect showing– Site planSite plan– Front and side elevationsFront and side elevations– Floor plans for all floorsFloor plans for all floors– Detail of guest room and bath room with dimensions in Detail of guest room and bath room with dimensions in

sq.ft.sq.ft.– Details of Fire Fighting Measures/ Hydrants etc.Details of Fire Fighting Measures/ Hydrants etc.– Details of measures for energy conservation and water Details of measures for energy conservation and water

harvesting.harvesting. Air-conditioning details for guest rooms, public areasAir-conditioning details for guest rooms, public areas


Local approvals by:Local approvals by:– Municipal authoritiesMunicipal authorities– Concerned Police AuthoritiesConcerned Police Authorities– Any other local authority as maybe required.Any other local authority as maybe required.– Approval /NOC from Airport Authority of India (for Approval /NOC from Airport Authority of India (for

projects located near Airports)projects located near Airports) Proposed capital structure:Proposed capital structure:

– Total project costTotal project cost– Equity component with details of paid up capitalEquity component with details of paid up capital– Debt - with current and proposed sources of fundingDebt - with current and proposed sources of funding



New Hotel must apply within 3 months of New Hotel must apply within 3 months of operations.operations.

Operating hotels may opt for classification Operating hotels may opt for classification at any stage.at any stage.

Classification will be valid for 5 years.Classification will be valid for 5 years.


Certificates/No Objection Certificate's (attested copies)Certificates/No Objection Certificate's (attested copies)– Certificate/ license of Registration from Municipality/ Certificate/ license of Registration from Municipality/

Corporation Corporation – Certificate/ license from concerned Police Department Certificate/ license from concerned Police Department

authorizing the running of a hotel.authorizing the running of a hotel.– Clearance Certificate from Municipal Health Officer/ Clearance Certificate from Municipal Health Officer/

Sanitary Inspector.Sanitary Inspector.– No Objection Certificate from the Fire Service Department No Objection Certificate from the Fire Service Department

(Local Fire Brigade Authorities)(Local Fire Brigade Authorities)– Public liability insurancePublic liability insurance– Bar License (necessary for 4*, 5* & 5*-D only)Bar License (necessary for 4*, 5* & 5*-D only)– Money Changers License (necessary for 4*,5*& 5*-D only)Money Changers License (necessary for 4*,5*& 5*-D only)


Sanctioned building plans/occupancy certificateSanctioned building plans/occupancy certificate If classified earlier, a copy of the earlier "Certificate of If classified earlier, a copy of the earlier "Certificate of

Classification issued by Department of TourismClassification issued by Department of Tourism For Heritage property: certificate from the local authority For Heritage property: certificate from the local authority

stating age of the property and showing new and old built up stating age of the property and showing new and old built up areas separately.areas separately.

Any other local authority as maybe required.Any other local authority as maybe required. Approval /NOC from AAI for projects located near AirportsApproval /NOC from AAI for projects located near Airports Indicate whether a few rooms or all rooms are to be let out Indicate whether a few rooms or all rooms are to be let out

on a time-share basis.on a time-share basis. Application feesApplication fees

FDIFDI

100% FDI permitted.100% FDI permitted. Automatic Approval:Automatic Approval:

3 percent of the total expense of the project 3 percent of the total expense of the project occupies infrastructural developments.occupies infrastructural developments.

Up to 3 percent of the net turn over is payable as Up to 3 percent of the net turn over is payable as marketing fee.marketing fee.

10 percent of the gross operating profit is payable 10 percent of the gross operating profit is payable as management fee. as management fee.

Budget 2010-11Budget 2010-11

Investment Linked Deductions.Investment Linked Deductions. Extension of time line under section 80-Extension of time line under section 80-

ID: Profit & gains from business of hotels ID: Profit & gains from business of hotels and convention centers in specified areas.and convention centers in specified areas.

“To give a boost to investment in the tourism sector which has high employment potential, I propose to extend the benefits of investment-linked deduction under

the act to new hotels of two-star category and above anywhere in India.”

- Mr. Pranab Mukharjee

OpportunitiesOpportunities

Sports events like IPL and the Sports events like IPL and the Commonwealth Games have a potential to Commonwealth Games have a potential to create demand for both T&L and create demand for both T&L and hospitality industry in India hospitality industry in India

Growing demand for branded hotels in Growing demand for branded hotels in mid-market Category of hotels in Indiamid-market Category of hotels in India

Untapped markets of Tier II & III cities in Untapped markets of Tier II & III cities in IndiaIndia

ChallengesChallenges

Poor connectivity (air, rail and road)Poor connectivity (air, rail and road) Poor on-ground infrastructurePoor on-ground infrastructure Industry status to tourism in few states onlyIndustry status to tourism in few states only Hotels considered as 'Real Estate‘ rather Hotels considered as 'Real Estate‘ rather

than infrastructure projects which increases than infrastructure projects which increases the cost of borrowingsthe cost of borrowings

Multiple licenses required with a lengthy Multiple licenses required with a lengthy approval processapproval process

Documents

Facility planning laws-and-rules-hotel-industry