this story originally appeared in on oct 9 2017new delhi highpriced debt and tougher lending norms of banks under stress due to rising nonperforming assets have slowed down hotel development activity in india and hotels are holding back supply proposals compared to a few years ago for the last 12 months the hotel industry has been in a flat trajectory in terms of occupancy average room rates and profitability the development activity has slowed considerably as access to debt funding is a big issue said siddharth thaker managing partner at prognosis global consulting a hotel consulting firm earlier the natural diversification for real estate companies was to get into hospitality industry but now it is not that easy he said a lot of hotels being planned are stuck in the development pipeline the cost of debt is averaging at 13135 its not easy for people to get funding for hotels thaker added nirupa shankar director hospitality for brigade enterprises said the hotel industry has seen tough times in the last two years from a development perspective where companies have scaled down development or delayed projects as a company we want to focus on development of midmarket business hotels of around 120 to 170 keys as the breakeven is faster we do not want to do luxury hotels as a strategy she said brigade enterprises also wants to develop hotels as mixed used projects primarily prestige group another bengalurubased builder that will soon open hiltons conrad hotel said investing in hotels will be more of a strategic decision the company will not go and invest heavily in the hotel development business said an official from the company the company currently has about 1000 keys across three hotels under development there have been oversupply issues depending on the micro market that one operates across additionally the gestation period is very high he added however kaushik vardharajan vicepresident of development hilton india said the group has been expanding rapidly in india through a multibrand multiple partner and high growth strategy and has in the last few years opened several hotels and built a strong development pipeline mandeep lamba managing director hotels and hospitality group at jll india said sentiments have dampened as the real estate sector witnesses one of its most sluggish periods with most developers facing severe cash flow shortages and a long bear run that hotels across the country underwent leading to nonperforming assets investment most investors are looking at buying incomegenerating operating assets and are not keen on greenfield projects or any development platforms given the inherent risk and the long gestation period before assets start operating and are stabilised he said rushabh shah chief revenue officer at horwath htl india said several real estate players have not had a successful experience in the hospitality sector leading to limited exposure proposed supply pipeline has reduced significantly from 20078 when it was at its peak at 114466 rooms said a report by consulting firm hvs in 201617 the number stands