There is going to be a severe dearth of hotels during the Commonwealth Games, if industry experts and reports are to be believed. This, despite the several efforts being made by government to increase the number of hotel rooms in the capital. In fact industry estimates project a shortfall of nearly one lakh hotel rooms in the country during the event.

According to a study conducted by FICCI and Evalueserve, there will be a requirement of about 1.5 lakh rooms in the by 2011. However, based on the investment figures for this sector, there will only be an addition of around 50000 rooms by 2010, which is 66% less than the requirement.

Despite government’s encouragement, factors like abnormally high land prices, uncertain taxation policies, poor infrastructure as well as corruption and delays have been discouraging private investment in the hotel sector.

The situation is expected to be especially grim for Delhi, where there is expected to be a tremendous shortage, with only 20000 rooms expected to be available against the requirement of 50000 rooms. In fact, Delhi’s loss may be UPs gain, which plans to set up many new hotels with a total capacity of 5,000 rooms in Noida, Greater Noida and Ghaziabad before the event.

While the scenario in Delhi did not appear to be very bright, it was found that some other states have been taking greater initiative in facilitating new investments in the hotel industry. States such as Goa, Punjab, Bihar and Orissa have granted industry status to the hotel sector which enables hoteliers to avail benefits related to tariff, land and taxation that are applicable to other industries.

So in case you are looking for a new business to venture into, the Hotel industry might be a good option, just be mindful of the above risks.