Heritage Hotels

Q) Explain the concept and growth of heritage hotels in India. Discuss main guidelines for their classification and incentives provided for their promotion?

The concept of heritage hotels is not new to the world. There were famous hotels in Europe in the past. After independence in India, the prime time was over for the palaces and havelis of Maharajas and British lords. Marharajas wanted to use the palaces for some useful purpose than getting them ruined. The first heritage hotel in India was set up by Maharaja Man Singh II of Jaipur. Thus Ram Bagh Palace became the first heritage hotel on 8th December 1957. Later it was taken over by Taj group of hotels.

Another type of heritage hotels also came into being in Kerala. Traditional wooden houses were dismantled and put up near back waters in the name of 'coconut lagoon'. Heritage hotels provide a glimpse of the luxury and royal life led by the Maharajas. The ministry of tourism realized that the traditional rules and norms for conventional hotels would take away the ambiance of these residences and would lead to losing its traditional nature.

The traditional looks and lifestyle of these buildings attracted a lot of tourists. And thus a new classification of hotels emerged in 1991 as Heritage hotels.


1. Definition

Heritage hotels should cover running hotels in palaces/castles, forts/havelis/residence of any size, which where built prior to 1950.

2. General Features
  • Architectural features and construction must be in the traditional way
  • Adequate parking space
  • Well maintained and well equipped rooms with carpets and furniture in keeping with the traditional lifestyle
  • Guest rooms should be clean, airy, pest free and attached bathrooms should have modern facilities
  • There should be a reception, cash and information counter attended by trained and experienced personnel
  • The kitchen and poultry should be professionally designed to ensure efficiency of operation
  • Knives and utensils used in kitchen should be of high standards
  • Drinking water should be bacteria free
  • Garbage disposal arrangements and dish washing should be done with running hot and cold water
3. Service

It should offer quality cuisine and beverage. Trained professionals should be at service, who can understand English. There must be phone service in the rooms.

4. Conservation

The basic architecture should not be interfered while renovation or expansion. The hotels must be run on a professional basis while losing none of their ambiance and services. Heritage hotel's standard should not be less than 4 stars.


1. Tax Exemptions

50% exemption from income tax and balance 50% is also exempted if reinvested in tourism industry. Hotels approved between 1990-1995 are eligible for Tax Holiday Deductions. It constitutes 25-30% of profit for 10 years. Banks like ICICI, IDBI etc provide grant interest debate of 20% on foreign exchange earnings. 

2. Depreciation

Hotel buildings are eligible for depreciation of 20%. Furniture and fittings have a depreciation of 15%.

3. Interest Subsidy

IFCI, TFCI and state financial institutions provide interest subsidy. 4,5 star hotels get 1% interest subsidy for up to 75 lakhs. 1-3 star hotels get 3% on entire loan. 

4. Foreign Exchange Incentive Quota

10% of direct foreign exchange earnings of approved hotels are eligible for foreign exchange incentive. This can be used for importing vehicles, publicity, advertising etc.

5. Concessional Customs Duty

Customs duty reduction is allowed for imports of goods for initial set up or substantial expansion of the hotel.

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