Luxury hotels look to India's northeast; is midscale far behind?

This week, India's Tata Group made a notable expansion when the Vivanta by Taj opened in Guwahti, the state capital of Assam in the country's northeast. 

Tata Group chairman Cyrus Mistry said that the opening was significant for the entire region. “This is a landmark development in Northeast India," he said, calling the area a "natural gateway" to Bhutan, Bangladesh, Myanmar, Thailand and China.

The hotel was developed under a public-private partnership with the Assam government, which provided land on a 60-year lease that can be extended by 30 more years. 

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Vivanta by Taj is the second five-star hotel to open in Guwahati. The first was a Radisson Blu, which was also set up under a public-private partnership model with the Dharampal Satyapal group and the Assam government. The Radisson Blu opened last year in Guwahati.

Vivanta by Taj was built at an estimated cost of Rs. 165 crore. Sources told the Business Standard that the hotel has been paying a rental of Rs. 30 lakh to the Assam government since 2010 when the agreement was signed, with a 6.5-percent appreciation annually. The property will also share 3 percent of its revenue with the Assam government. 

“We have heard about [public-private partnership] models, but this is a unique PPP model that we could create which equally benefits the state government,” Ranjit Barthakur, chairman of Amalgamated Plantations Private Limited and investment advisor to the Assam chief minister, told the paper.

Assam Chief Minister Tarun Gogoi urged Mistry to consider further investment in the area, calling the hotel a "welcome step" and explaining the region's potential for growth. Gogoi told the Hindu Business Line that midscale and upscale brands like Radisson and Novotel have expressed interest in the region, and Tata's presence will make Assam more appealing for investors and global companies.

Rakesh Sarna, managing director and CEO of Taj hotels resorts and palaces, said that the group "remained committed" to hotel industry in Assam and the northeastern region.

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