TEAM HERALD
PANJIM: The lukewarm response of hoteliers to the government’s additional Floor Area Ratio (FAR) for existing and new hotels re-notified scheme suggests that the hotel industry finds the scheme too ‘far’ fetched.
Notified in September this year, and approved in the last Budget, just one hotel from Porvorim has applied for the 20 per cent additional Floor Area Ratio (FAR) benefits under the scheme with hardly four months left for the scheme to close.
Indications are that the additional 20 per cent FAR offered to hotels already existing under the four and five star category may not be of much use as hotels have already consumed the permissible coverage and height restrictions in the building regulations for the particular zone in which they exist. Apparently most of the hotels were availing of .8 FAR when they were constructed. Subsequently the government reduced the FAR in certain areas. It is therefore difficult or next to impossible to load the additional FAR for existing hotels unless the height and coverage restrictions are relaxed.
According to the hotel industry, existing hotels and proposals for construction of new hotels will get benefit of 20 per cent additional built-up area in relation to the FAR they are presently entitled under the ordinary rules. For example, in areas within the jurisdiction of VP1 where the FSI is 80 per cent, a hotelier will get 96 per cent FAR per sqm.
In VP2 jurisdiction areas where the FSI is 60 per cent for plots with area below 4,000 sqm, the total built-up area permissible would be 72 per cent per sqm.
In cases where the FSI is 50 per cent for plots larger than 4,000 sqm, the total built-up area would be 70 per cent per sqm. In cities where the plots are situated in commercial areas and having an FAR of 200 per cent per sqm, they will be able to construct 2.40 sq m per sq m of land. The main hitch is on the price for every additional square meter of built up area fixed by the government at Rs 20,000 per sqm.
“This is extremely high,” said a hotelier from North Goa responding to the government scheme and re-publication of the notification inviting hoteliers to avail of the additional 20 per cent FAR scheme.
If one recalls, the TTAG in its pre-budget representation to the government in March 2013, had suggested a staggered fee depending upon whether it is in city, VP1 or VP2. It was suggested that in cities it should be Rs10,000, in VP1 it should be Rs 7000 and in VP2 it should be Rs 5000.
“The idea of this additional FAR was based upon the fact that the revenue of the hotels is much lower than the real estate industry. It was also felt that the hotel industry is over taxed and therefore the government should boost this industry by granting additional FAR,” said a member of the Travel and Tourism Association of Goa. The TTAG had played a key role in convincing the government to increase the FAR by an additional 20 per cent for all hotels even as the government has granted this benefit only to four and five star category hotels.
“This proposal is in keeping with the additional FAR being granted by the State of Maharastra for Bombay, the state of Delhi for New Delhi and other metro cities in India as it is felt that the hotel industry is capital intensive and the period of the return on investment is much longer than in other industries and more so in the real estate industry,” TTAG says, adding further that there is need to make the Goan hospitality industry more competitive in relations to the hospitality industry in Sri Lanka, Thailand and other destinations where taxation is low. ‘’
While hoteliers have welcomed the decision of the government to grant additional FAR, however they feel there will be few takers for the scheme.
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two reasons. One reason is on account of the high price of the cost of additional FAR and the second that the existing hotels will have difficulty in loading the additional FAR on account of height and coverage restrictions, which need to be relaxed on case to case basis.
It is also felt that the notification states that the approval will be subject to existing regulations and subject to payment of the entire consideration for additional FAR along with the application for approval. Another hotelier not willing to be named said, “The payment should have been called for after the grant of the approval and before issuance of the same to the party as is done in normal approvals and grant of conversion sanad under the land Revenue Code. In case the building regulations are not modified to allow relaxation of height and coverage restrictions, any permission so granted may be subject to challenge in the Courts.”
According to industry kingpins, there is need to frame additional rules to permit relaxation of height and coverage restrictions in respect of hotels in order to facilitate the hotels to avail of this additional FAR.
Many hoteliers from Goa, having 3 stars and below rating are complaining that this additional FAR should also be made applicable to them as also smaller hotels. They say that every department such as commercial taxes always mentions 3-star and above.
They point out that whenever tax is being collected it is based on 3-star and above, whereas when any benefits are granted by the government 3-star category hotels are bypassed which is an injustice to this category.
“In fact, more benefits should be given to mid-class hotels as they are the most in need for additional FAR. Most of the 5-star and 4-star hotels have huge lands and question of getting additional FAR will not be of any benefit to these hotels,” said another owner of a three star hotel in South Goa.
The representation of the TTAG however had not distinguished the hotels based on its star rating.
Another leading Hotelier from the South said, “The notification states that applicants should submit a certificate of star category in order to get additional 20 per cent FAR. This is okay for the existing hotels, but for the new hotels, star category certificates are issued only after submission of the approved plan to the Union Tourism Department (Centre) for their approval and subject to construction of the hotel. The final certificate is granted after completion of the hotel. Initially it is only a project approval. It is a long and tedious process which can take years by which time the scheme for additional FAR will lapse. Once the project is approved by the Tourism Department (Centre), no changes in the plan are allowed.”
It is feared by hoteliers that they will not be able to avail of the new hotel scheme due to the above mentioned problems.
