Investments are heavy, returns lower, says T14H managing director Ahamed

The hospitality industry requires funding at a lower interest rate than other sectors because of the heavy investments involved and the lower rate of return on investments, said Adeeb Ahamed, managing director of Twenty14 Holdings (T14H).

He was speaking to The Hindu on the immediate business plans laid out by T14H, the hospitality investment wing of the Abu Dhabi-based LuLu Group International.

Low-cost loans can attract more investors into the hospitality sector, which is a great employment generator even as India grapples with unemployment problem, he said.

Such loans must be given to those investing in two and the three star segments, which are more essential for the growth of tourism industry in the country.

Processing delay

Mr. Ahamed said the development of the tourism and hospitality industry required a different model from what is currently in place.

He suggested, for example, that once a suitable spot is identified, government or an agency so entitled, should be able to develop the basic infrastructure for the area, get all clearances and then sell the space to the investors.

This will make life easier for the investors and help do away with the long-drawn process of getting clearances even for acquiring the land, getting permission for buildings, environmental sanctions etc.

Mr. Ahamed said that in the current situation it takes five to six years to get all clearances, which is a drag on investments.

Frequent changes in regulations too play a role in keeping investors away from the hospitality industry.

T14H had already invested more than ₹5,000 crore in the hospitality sector in the country. These investments include the up and running facilities in Kerala and the upcoming ones in Hyderabad, Bengaluru and Visakhapatnam.

Zurich Airport hotel

More recently, T14H had entered into an agreement with the Swiss property developer Necron AG for the upcoming InterCityHotel, Zurich Airport.

The property is scheduled for opening in 2020 and will be operated by Deutsche Hospitality under a 20-year lease contract.

T14H now has a portfolio of $750 million in luxury property across the U.K., West Asia and India.