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Delhi’s luxury tax leading hotel visitors to shift to Gurgaon

 

The severe shortage of hotel rooms is finally showing signs of abating somewhat. Hotels have enjoyed room rates that are more expensive than renting a similar hotel room in New York or San Francisco.

 

The increase in supply has been primarily a spate of glitzy new luxury hotels in Gurgaon which have started eating into the profits of Delhi’s five-star hotels. Most of Delhi's hotels are a few years old, showing signs of wear and tear and lacking the luxury amenities and high quality construction and facilities that the newer hotels in Gurgaon offer.

 

Dealing with a reasonable cost base, Gurgaon hotels are offering rooms at bargains while Delhi is sticking to the policy of charging luxury tax on rack rate, instead of the actual room rent, over 20% of the city’s regular clientele has already shifted base to the cheaper yet more luxurious Gurgaon hotels .

 

As it stands today in Delhi , even if a hotel gives discount to a customer, they have to pay the luxury tax on the actual room rate. This exodus of guests to Gurgaon has resulted in Delhi recording a 16% loss on luxury tax in the first two months of this fiscal year as compared to the same period last year.

 

 

Gurgaon Hotel Rental Advantages

 

Distance to Airport - Gurgaon has the advantage of being closer to the international airport. Travel from the airport to Gurgaon takes about 10 minutes and U.S. and European travelers appreciate the quick check in after long flights.

 

Tourism advantages - Gurgaon also falls on the route to Jaipur, which is why a lot of European tour operators are now choosing Gurgaon over Delhi according to the Chamber of Commerce’s committee of aviation and tourism.

 

Airline Staff - Airlines have started preferring Gurgaon hotels over Delhi, though both cities have a 10 per cent luxury tax due to savings on taxi fare, proximity to airport, modern restaurants, malls, open atmosphere among other advantages.

 

First Choice for Tourists - Gurgaon is fast becoming the first choice for tourists. Already there are 5,000-6,000 rooms with nearly 10 new five-star hotels coming up soon.

 

Facts & Figures

678 Hotels in Delhi

 

21 Five-star hotels

 

Rs 14 crore Average luxury tax earned a month

 

Falling revenue
April 1 - June 8, 2010
Rs 31.61 cr

April 1 - June 8, 2009
Rs 37.71 cr