Even as India is reeling under the pressure to bridge the gap between hotel room demand and supply, spiralling land prices and increase in construction costs across India is putting a spoke in the wheel of the much-needed hotel development, reports Savio Rodrigues of Express Hospitality.

Real estate review figures released by Knight Frank India and Tramwell Crow Chesterton Meghraj reveal that land costs in the metros have increased by a phenomenal 35% and in secondary cities by 30% since 2004. Construction costs, too, have gone up by 20% over the same period.

On account of this, industry estimates indicate that hotel project costs across the country have risen steeply by over 40%. In 2004, the cost to develop a five-star hotel room in a greenfield project in a metro city was Rs 15 million. This cost has escalated to Rs 23 million.

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