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High land cost will deter hoteliers: Carlson Group

Land cost in India is currently very high as per international standards.

Kolkata: Hospitality major Carlson Rezidor Hotel Group Tuesday said the new Land Acquisition Bill would hike land prices in India and this would cause a "big entry barrier" for hotel companies to invest.

The new Land Acquisition Bill, which could not be passed in the winter session of parliament (Nov-Dec 2012), was deferred till the budget session by the Lok Sabha as parties wanted more time to discuss its provisions.

The Carlson Rezidor Hotel Group, one of the world's largest hotel groups, said that land cost in India is currently very high as per international standards and the new bill would result in a further increase in land prices for hotel developers.

"Land costs are having a big toll on hotel projects. If you look at international standards, the cost of land for a project is as low as 15-20 percent even in the US. But in India, it can go up to 60 percent," Ronnie Lobo, vice president (operations) of the Carlson Rezidor Hotel Group, South Asia, said.

"When the land cost is 60 percent of the total cost of a project, it is a big entry barrier for hotel companies to come in," Lobo said.

About the bill, Lobo said: "It will make entry more difficult because projects would have to be viable at the end of the day."

Lobo was talking to reporters at the inauguration of a 92-room Park Plaza luxury hotel here.

Industry group Confederation of Indian Industry (CII) and developers' apex body CREDAI have also said that the Land Acquisition, Rehabilitation and Resettlement Bill, 2011, would cause a many-fold increase in land prices to the industry.