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Railways’ budget hotel plan caught in red tape

The Rlys’ project for building 100 budget hotels slows down with the decision to transfer the project from IRCTC to RLDA, reports Hemendra Singh Bartwal.

business Updated: Jul 03, 2007 23:02 IST
Hemendra Singh Bartwal

The Railways’ ambitious project for building 100 budget hotels on its land across the country has slowed down with the decision to transfer the project from the Indian Railways Catering and Tourism Corporation (IRCTC) to the newly created Rail Land Development Authority (RLDA).

Upset over continued criticism of the IRCTC for the substandard quality of food being served on trains, Railway Minister Lalu Prasad had expressed the view that the organisation was unable to concentrate on its main function of catering as it was dabbling in too many areas, including setting up of budget hotels.

He was in favour of taking away this project from the IRCTC and entrusting it to some other authority.

Under the proposal, the Railways will hand over its surplus prime land around stations to private parties for setting up budget hotels under the public private partnership (PPP) model. The land would be leased out to the private groups for a long-term and the hotels would be operated on a revenue-sharing basis, thus bringing funds to the Railways’ coffers.

The IRCTC had called bids for 20 hotels in different cities and also singed agreements with some of the hoteliers. Bids for other cities had also been called.

But the process is now said to be limbo as all activity on the front has been stopped for the time being as the RLDA has yet to begin working on the project, sources said.

This may slow down the project which has to meet the deadline of the 2010 Commonwealth Games to be held in Delhi for which a large number of additional accommodation will be required in the Capital and neighbouring areas of the National Capital Region (NCR).