Make room for budget properties

Anoop Bali, CFO, Tourism Finance Corporation of India (TFCI), claims that the market needs more budget hotels and entrepreneurs should shift focus to this segment soon.

TFCI has been funding tourism projects in the country for the last 25 years and is one of the biggest tourism advisory bodies in India. Anoop Bali, CFO, TFCI, says, “We fund hotels, resorts and other tourism projects, and this is our core business.” However, he revealed that their focus currently is on budget properties. “For the last five years, we have shifted towards budget sector and we feel that it is big for India as there are not many budget hotels in India. While it remains our priority, we also fund five star hotels.”

Talking about what makes them fund a project, he reveals, “There are two pre-requisites — one is land use permission and the second is building plan approval. Based on these two requirements, we consider a project for financing. Apart from that we do look at the background credentials and KYC of the parties involved. We have our appraising teams, for market information and other details. We appraise the project and then go ahead. There is also a market research team. Location of the project is also very important and we consider that as well.”

When asked about the hurdles faced when it comes to developing hotels, he revealed that since there is no designated industry for hotels and other such projects, there is no single-window clearance. “There are many agencies involved. Land is given by land revenue agency, building plan from the town planning department and there is also clearance from the state pollution control department. An entrepreneur needs to move to all these departments, which takes time. Even when the project gets completed, it takes 3-4 months to get the opening permissions and licenses from various agencies. If there is a central agency to pass everything, then it becomes easier,” informs Bali.

However, there are many states which have taken a step in this direction. “Andhra Pradesh’s policy used to be very simple because the building plan rules are very well defined, which makes building faster. Similarly, some other states, like Gujarat, have recently announced changes, that propagate ease of business,” claims Bali.

TFCI was a major part of the recently held Incredible India Tourism Investors’ Summit (IITIS). Bali has a suggestion for entrepreneurs wanting to develop tourism projects. “Build a product that the market requires. There is no need to build luxury hotel if the market requires affordable properties. If you are building a hotel for the target segment, there is a huge market available,” he advises.