Rising dollar pushes up hotel project costs in India

Imports make up about 40 percent of the project cost and comprise items such as carpets, chandeliers, furniture, beds, bathroom fixtures, crockery, glassware, kitchen equipment and Ac plants

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The depreciation of rupee has added to the woes of hotel developers, pushing up project costs by up to 15% and increasing the possibility of delays at a time business has already been hit by a slowing economy.

Developers say imports make up 30-40% of the project cost, excluding the cost of land, and comprise items such as carpets, chandeliers, furniture, beds, bathroom fixtures, crockery, glassware, kitchen equipment and air conditioning plants. Architects and consultants are also paid in dollars, they say as per a report in ET.

"For building a luxury hotel, reliance on imports is invariable. But the rupee's decline is making it difficult for us," says Ranjit Batra, president -hospitality at Panchshil Realty, which is building a Ritz Carlton hotel in Pune. Batra adds that apart from the direct impact on imports, there is an additional cascading effect on prices of domestic supplies that are dependant on imported parts.

A spokesman for Mumbai based K Raheja Corp, which is currently building a JW Marriot hotel at the airport in Mumbai, says the biggest problem is the fluctuating currency, which is threatening to increase the overall project cost.

The construction of the hotel is at a stage where various equipments need to be imported. "The impact on the project cost will be close to 10%," he says.

Rajiv Kaul, president of The Leela Palaces, Hotels and Resorts, which is building a new hotel in Jaipur, says the market is currently overheated. "We are in a wait-and-watch situation," says Kaul.

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