PREMIUM SPACE: The Ashok, one of the hotels preferred by government officials visiting Delhi
India has a fair number of archaic laws that have long lost their relevance. One such is the Delhi Hotels (Control of Accommodation) Act of 1949, which mandates that up to 25 per cent of hotel rooms in the capital should be reserved for government officials. Few follow that rule today, which is why there’s a new bill in the works called the Delhi Hotels (Control of Accommodation) Repeal Bill, 2014, that seeks to expunge the old one completely.
When it was enacted in 1949, the Delhi Hotels (Control of Accommodation) Act had a rationale. It was a time when India had just got its independence. Government officials travelling to the national capital did not have too many places to put up at as hotels were few and far between. There weren’t too many state-run hotels either. Hence the law was passed to ensure that visiting officials could always fall back on a pool of rooms reserved for them.
According to the act, the director of estates (under the ministry of urban development) was vested with the authority to book the reserved rooms at a short notice in any hotel in the national capital. This was done by the director simply issuing a written order to the hotel or guest house to reserve as many rooms as required, so long as it did not exceed 25 per cent of the total number of rooms in that property.
Today, though, there are more than enough government-run hotels and guest houses in Delhi to house officials coming to the capital. Indeed, many officials don’t even bother looking for rooms in the private hotels of the city.
After all, there are a total of three ITDC hotels in Delhi. Apart from that, the directorate of estates has as many as 63,745 residential units in Delhi alone (from single rooms to entire bungalows) — more than twice the total number of units they have outside the national capital, which stands at 31,436. Also, most prefer to stay at ITDC or government guest houses simply because they are quite economical.
“There is a general preference for the ITDC Ashok hotels,” says Madhu Dubey, spokesperson for ITDC. “Not only are the accommodations good, the tariffs are comparatively attractive as well. And while we do see a lot of guests from corporate and other sectors, government officials make up a large number of our guests.”
This assertion is backed by private players in the capital’s hospitality industry. “Most of them go straight to the ITDC hotels or guest houses,” confirms Narendra Verma, principal consultant of Hospitality Consultants India Pvt. Ltd, a company that provides consultancy services to the hospitality industry. “Private players rarely see government officials taking rooms in their properties.”
Industry insiders admit that the law has been utterly redundant for years. “In all my years of being a hotelier in Delhi, I have never once seen or heard of this law being put to use,” says Virat Verma, CEO of Global Hospitality Consultants, another consultancy group.
This, Verma says, is underscored by the fact that even though most hotels in Delhi are running with “extra inventory” (industry speak for extra rooms; there are an estimated 1,000 extra rooms in the capital), the government has never once tried to occupy them. “They’ve never taken advantage of the fact that most hotels in the capital actually have space to spare right now!”
Still, private players are relieved that the act is being repealed since its stipulations are much like a ticking time bomb waiting to go off at any minute. “It’s not practical for hotels to reserve a quarter of their rooms for officials on the off chance that they may show up,” says Verma. “What if they cancelled at the last minute? Will there be payment for the unused room that could have been booked for someone else? And while larger players might still be able to absorb such a loss, it could be disastrous for smaller players.”
It doesn’t help that the government doesn’t pay hotel bills on time. The government-run Ashok chain itself is known to have had problems getting its dues for officials who have lodged there at the government’s expense. For example, in 2007, the government owed the Ashok hotel around Rs 15 crore in unpaid dues. And you can go all the way back to 1998 when the hotel was waiting to be paid a whopping Rs 38.45 crore for hosting a variety of official lunches and stays.
“It’s because of this that private players are a bit hesitant to deal with government officials,” Verma explains. “Repealing this bill certainly removes a lot of potential trouble for us.”
Indeed, once the repeal comes into effect, Delhi’s hotel fraternity is likely to heave a collective sigh of relief.