The 287-room Lemon Tree Premier hotel at Delhi's Indira Gandhi Airport features a dramatic view of planes landing and taking off, but it has no guests to see them.
According to a Reuters report, the hotel — one of 12 built or planned next to India's busiest airport at a total cost of more than $2bn – has been unable to open as it awaits security clearance from police worried about its proximity to an active runway.
The cluster of hotels known as Aerocity, on a site bigger than 40 football fields, was approved by the government six years ago. India is eager to attract foreign investment to revive economic growth that is at a decade low and help plug a current account deficit that has widened to a record.
Yet bureaucratic hurdles including a lack of coordination among authorities still plague big-ticket projects, such as the hotel development at the capital's $3bn airport.
"On the one hand the prime minister wants to drive investment into the country, the finance minister is travelling halfway around the world to get investment, but on the other hand these things spoil the country's reputation," said Rahul Pandit, chief executive of Lemon Tree Hotels.
The Lemon Tree Premier and 208-room Red Fox have been ready to open since late December and are losing a combined INR2 million rupees (USD$36,800) a day, said Pandit of Lemon Tree, which is backed by US private equity firm Warburg Pincus.
A property under French giant Accor's Ibis brand, which does not face the runway, has been ready for more than a month, its developer said.
A JW Marriott hotel is due to open this month, according to its website.
The 43-acre Aerocity site owned by Delhi International Airport — a consortium led by GMR Infrastructure and including the Airports Authority of India, Germany's Fraport and Malaysia Airports Holdings – sits about 400 metres from the runway. Between the runway and the hotels lies an aircraft taxiway.
In 2007, the Indian government approved plans to develop 12 hotels with about 5,500 rooms on the site, making it the largest hotel project in the country, in hopes of being ready for the 2010 Commonwealth Games, an event that was plagued by corruption scandals and missed deadlines.
In 2011, the police called for a security review, saying its proximity to one of the runways at India's largest airport makes it a potential launchpad for militant attacks.
"This is a huge setback for investment coming in the country," said Uttam Dave, chief executive of InterGlobe Enterprises, which is investing INR12 billion rupees to build three airport hotels under Accor's Ibis, Novotel and Pullman brands.
DIAL's stance is that before leasing the land to developers it had the necessary approvals and police clearance was not required, a source at the airport operator said, declining to be identified because of the sensitivity of the matter.
Negotiations between the airport, police and hotel operators are ongoing and a solution is expected soon, said a separate source directly involved in the talks.
The airport operator and police officials declined to comment.
Asked how soon he expects the security issue to be resolved, Lemon Tree's Pandit said, "I don't know. We are hoping within this month. It could be longer but this is what we have been hoping every month since January."
Given security concerns, police had initially said none of the 30,000 construction workers on the project could work before their identities were verified but later backtracked because of the magnitude and cost of the task, said a source involved in the process.
At the Ibis, construction on five floors is complete and work is ongoing on the remaining two, said Naresh Chandel, a security supervisor at the hotel. Although only 354 rooms of a planned 464 are ready, InterGlobe's Dave said it can still open for business while the remaining work goes on.
Other hotels planned on the site include Andaz by Hyatt Hotels, Aloft by Starwood Hotels & Resorts, Holiday Inn and a Dusit D2 hotel.
Hotel owners and operators fear they will be forced to make costly structural and cosmetic changes to the buildings before they are allowed to open for business.
"Why are we being singled out when you have slums, hotels and residential colonies surrounding airports in other parts of the country?" said InterGlobe's Dave.
