FPJ Interview: 'Hotels Need Higher FSI To Remain Viable'; Pride Hotels Flags Mumbai’s High Costs, Seeks Policy Boost

‘Hotels need higher FSI to remain viable’ 

“The returns from residential and retail segments are much higher, so nobody wants to build hotels. Hotels, however, are essential for an economy to grow,” said Pride Hotels Ltd Chairman SP Jain and MD and CEO Satyen Jain. In an interaction with FPJ Principal Correspondent Sweety Bhagwat, the father-son duo spoke about Mumbai’s hotel market, high real estate costs, tourism, employment and the need for higher floor space index (FSI).

Why is higher FSI important for hotel development in Mumbai?

Residential and retail projects offer higher returns, making hotels less attractive to developers. But hotels are essential for business, tourism, large events and meetings, incentives, conferences and exhibitions (MICE). In Thailand, higher FSI allows more construction on smaller plots, helping keep room rates reasonable. Mumbai similarly needs higher FSI to make hotel development viable.

How does Mumbai’s micro-market structure affect hotel demand?

Mumbai is effectively a cluster of eight to ten micro-markets. Demand depends on where people work or conduct business. Someone working in BKC, for instance, is unlikely to stay in Thane, making adequate hotel supply necessary across individual micro-markets.

Does the high cost of hotel development affect international tourism?

Yes. International tourists are price-sensitive and arrivals in India have yet to cross pre-Covid levels. Rising fuel prices have increased airfares, while higher construction and operating costs have pushed up hotel room rates, making India more expensive for overseas tourists.

How important is the domestic market for Mumbai hotels?

Domestic tourism is doing well. Mumbai attracts people for business and other purposes and also offers onward travel to Goa and Alibaug. However, while residential redevelopment is widespread, hotel construction has not kept pace.

How does hospitality create jobs?

A 200-room hotel can generate around 1,000 direct and indirect jobs through vegetable and milk suppliers, service providers and associated businesses. Including families, its economic impact can extend to around 4,000-5,000 people.

What support do you expect from the government?

Infrastructure development, particularly better road connectivity to pilgrimage destinations, is helping tourism. However, hotels require more than 100 permissions for different activities. A single-window system would ease the approval process.

How do you view action against restaurants and food establishments?

Rules must be followed, but smaller establishments should sometimes be given time to rectify shortcomings. Immediate closure notices can affect jobs.

Published on: Friday, August 21, 2026, 11:14 AM IST