Boom Time

The Kashmir region has been witnessing consistent decline in the number of tourists since 2012. But that is not stopping local hoteliers as well as big names in the country's hotel industry from embarking on huge capacity expansion in the state. The names - which include Carlson Rezidor, ITC and Vivanta By Taj - are expanding through tie-ups with local hoteliers as Jammu & Kashmir's special status prevents outsiders from owning a hotel here.

As per the tourism department figures, in 2015, 9.6 lakh tourists visited Kashmir compared to 11.68 lakh in 2014. The figures were 11.7 lakh in 2013 and 13.08 lakh in 2012. At the same time, between 2008/09 and 2013/14, the number of hotels rose nearly 75 per cent (see Room For Growth) to 1,631. The Kashmir Hotel and Restaurant Owners Federation, or KHROF, however, puts the number of hotels in the Kashmir region at 2,000. Its numbers are different from that given by the tourism department as many hotels are not registered.

While local hoteliers are expanding on their own, too, the big trend is the sheer number of management contracts that they are entering into with the country's top hotel chains. Such tie-ups help local hotels improve service standards to match the best in the country. Besides, the rebranding that this entails brings in more business. For instance, last December, the Mushtaq Group, which owns nine hotels in the state, signed a management agreement with Carlson Rezidor under which the former will invest Rs 1,000 crore in seven hotels. The properties will be branded as Rezidor hotels and managed by the international hotel group. Of the seven hotels, three will be built anew, while the rest will be existing properties renovated to meet the Carlson Rezidor standards.

In September 2015, Nedous, another local hotel group, signed an agreement with ITC for managing one of its hotels in Srinagar. ITC also inked a management agreement with Ahad Hotels and Resorts in September last year to manage two of its properties, Heevan Resorts in Srinagar and Hotel Pine & Peaks in Pahalgam. Heevan Resorts will be branded as ITC Welcome Heevan Resorts and Hotel Pine and Peaks as ITC Welcome Pine and Peaks.

Mushtaq Group Chairman Mushaq Chaya told Business Today that after the agreement with Rezidor, seven group hotels, with a total of 817 rooms, will be run as Radisson Blu, Radisson and Country Inns & Suites by Carlson. He said these hotels will position Carlson Rezidor Hotel Group as the largest international hotel operator in Jammu & Kashmir. "We hope to recover our investments in 10 years," he says.

The Director of Ahad Hotels and Resorts, Asif Iqbal Burza, said the tie-up with ITC would add a lot of value to their properties. "The heads of departments will come from the ITC Welcome group. The rest of the staff will be ours. All the employees will be on our rolls," he says, adding they will pay an annual fee to ITC.

In April 2011, SAIFCO Hill Crest Hotels Pvt Ltd had entered into a management contract with Taj Hotels Resorts and Palaces for managing the former's hotel in Srinagar. The hotel has been renamed as Vivanta By Taj. However, here, the entire staff has been provided by the Taj Group.

Regulatory Knot

These tie-ups have not come a day too soon. This is because lack of competition in the industry due to barring of outsiders and lax regulations have ensured that service standards at many hotels are below par and rates keep fluctuating throughout the year. Unlike the star rating system worked out by the Union Ministry of Tourism, the state government classifies hotels into A, B, C, D and E categories. In the state's criteria, not much thrust is laid on high-end facilities. The Jammu and Kashmir Registration of Tourist Trade Act, 1978, specifies that a Category A hotel has to be located in an area suitable for stay of upper middle class tourists and have adequate space for cars and a lawn or a terrace garden for guests. It also mentions the other facilities a hotel must have for Category A status. However, many hotels in the category lack even the basic facilities.

Moreover, even though the Act specifies that the government shall, through a notification, fix rates and service charges, the tariffs keep fluctuating throughout the year. For a Category A hotel, they range from Rs 20,000 to Rs 2,50,000 a day. Deputy Director, Tourism, Mohammad Shafi Kakroo, says the rates, last worked out in 1996, will be revised shortly. "We are discussing the matter with the local hoteliers. We have revised the charges of different services and will do the same for room tariffs too," he says. A senior official of the tourism police says they act against hotels only if someone files a complaint about overcharging. We do not carry regular inspections based on the tariff schedule, he says.

Tourism Director Mehmood Shah says the government will amend the Act to revise the rates and match them with the facilities provided. "In other states, there is proper star rating. The Act needs to be amended. There is disparity between facilities available and rates charged." On falling tourist numbers, he says Kashmir's hospitality industry is the best in the country and "the decline in tourist numbers last year was due to the massive devastation here during the 2014 floods whose impact was visible even last year."

KHROF President Javed Burza attributed the boom in opening of hotel properties to lack of other opportunities in the state. "The industry has picked up as other businesses are not viable."

Whatever the reasons, the industry is not complacent about growth and is doing everything it can to keep consumer interest intact. "Occupancy at our hotel has increased due to focus on alternative business streams. Conferencing facilities have given us good business," says Basharat Rasheed, Director Sales, Vivanta By Taj. He added that during the peak season, between April and June, occupancy remains nearly 80 per cent. The number declines to 40 per cent during winters.

It seems the hotel industry is in no mood to slow down its pace of expansion in the state.

The author is a Srinagar-based freelance journalist