The plan to upgrade the hotel had found favour in a Parliamentary Standing Committee report presented last December. The panel on transport, tourism and culture had said, “The committee recommends that measures should be taken by the government to improve performance of the hotel with that of other luxury hotels in Delhi.”

Airport operators Delhi International Airport Limited (DIAL) has, however, indicated that the hotel is on the footprint of the new terminal building as per its masterplan for the IGI Airport. As per the masterplan, the hotel needs to be demolished by 2016, based on traffic triggers.

But the current traffic growth, in comparison with the masterplan projections, may necessitate the hotel’s removal possibly as early as 2011 or 2012.

“We were initially told that the hotel was in the way of the airport expansion plan and may have to be pulled down and relocated,” Tanvir Haziq, senior vice-president, Hotel Corporation of India (HCI), said. “But DIAL has informed us that the demolition plan falls under the second phase of airport expansion and will not be taken up before 2012.”

Sources said HCI, which runs the five-star hotel, has already sent a proposal to the government for renovating the property at a cost of Rs 35.15 crore. Government sources said the proposal is under examination, particularly after DIAL’s proposal for handing over the hotel by 2011-12 for the airport expansion programme.

Haziq said the HCI Board has sanctioned Rs 8 crore, and 127 rooms have already been renovated with the money. “The health club and other works have now been taken up,” Haziq said.

The HCI contends that three years is sufficient time to recover the costs. “We have calculated that Rs 8 crore spent on renovation will be recovered in three years. The hotel, which is a wholly-owned subsidiary of Air India, is already doing quite well and should be allowed to maintain its glory,” Haziq said.

Being an airport hotel, the 376-room hotel has an average occupancy of 50 to 60 per cent at all times,” Haziq said. “At times of fog or other delays, the occupancy goes up to 110 per cent.”