Key issues in setting up a hotel in India: a practitioner perspective

Purpose – The Indian hotel industry is poised for growth but there are a number of issues that are impeding a much‐awaited boom in this sector. This paper seeks to provide a first‐hand perspective on the challenges faced in setting up a hotel in India. It aims to identify the issues that can be quite frustrating for a hotelier as well as for investors in India and to provide practical solutions that could lead to a higher growth rate for the industry. Design/methodology/approach – The authors have drawn together practitioner insights from open‐ended discussions with several senior managers in leadership positions representing national and international brands experts who are developing hotel properties in India. Findings – The capital expenditure for building/acquiring a hotel in India is measurably higher when compared to those in most developed countries. The major factors driving this higher capital expenditure are the land costs, complexities relating to land acquisition and construction thereof, tax structure, the complex regulatory environment, and promoter preferences. If these could be eased through a visionary change by the policy‐making bodies, it would provide a boost not only to this sector but also an assured contribution to the economy. Originality/value – The literature reveals that various issues and challenges relating to hotel development have been identified including some of the issues mentioned here. However, there is almost no literature that addresses the specific challenges of setting up a hotel in India.