Why Kashmir’s hotel and guest house owners are selling properties despite boom

By: Farhana Sheikh (Ziraat Times)

Srinagar: Kashmir’s tourism-driven hotel boom is facing a sharp reality check as a growing number of hotel and guest house owners across the Valley are putting their properties up for sale amid rising debt, weak occupancy rates and mounting operational costs.

From Pahalgam and the Lidder Valley to Sonamarg, Singh Valley, the Doodhpathri road and parts of Srinagar’s Boulevard and Dara-Harwan areas, “hotel for sale” advertisements are becoming increasingly visible on social media and real estate platforms.

Many of these properties were built in recent years in offbeat tourist destinations with heavy bank financing, as investors anticipated sustained tourism growth and stable revenues. However, industry stakeholders say the market is now suffering from excess room inventory and fierce competition, leaving many businesses financially stressed.

At least three hotel and guest house owners from Pahalgam and Sonamarg told Ziraat Times they are attempting to sell their properties because they are unable to generate enough occupancy to repay loans and manage operating expenses.

“We built our hotel during the tourism boom when business projections looked promising,” said a hotel owner near the rafting point in Pahalgam.

“But the occupancy levels we had expected never materialised consistently. Loan instalments, salaries and utility bills have become difficult to manage,” he said.

Another guest house owner in Sonamarg said investors underestimated the pressure of long-term debt repayment.

“We miscalculated the repayment burden against actual income streams. Tourism is seasonal and uncertain, while bank instalments are fixed every month,” he said.

Travel agents and tourism operators believe the Valley’s hospitality sector has expanded beyond sustainable levels in recent years.

A Srinagar-based travel consultant said thousands of new rooms have entered the market through hotels, guest houses and homestays, spreading business too thinly across operators.

“There are simply too many accommodation units now. Earlier, a tourist destination would have limited options. Today, almost every road has hotels and homestays competing for the same visitors,” he said.

According to industry observers, discounting wars have further affected profitability, with many hotels reducing tariffs sharply just to attract customers during lean periods.

Apart from debt repayments, operational costs are emerging as a major challenge for hospitality businesses.

Hotel owners say staff salaries, electricity bills, water charges, maintenance expenses and taxes are putting enormous pressure on already weak revenues.

The impact is particularly severe on hotel kitchens and food services.

“Chef salaries are among the biggest expenses in the hospitality sector,” said a hotel manager in Srinagar.

“When occupancy is low, many hotels cannot sustain kitchen operations. Some properties have partially shut kitchens while others outsource food services to reduce costs,” he added.

Property sale advertisements reflect the growing distress within the sector.

One recent listing offered a deluxe riverside hotel property at the rafting point in Pahalgam with permission for 20 rooms, five staff rooms and three kanal proprietary land, carrying an asking price of Rs 55 crore.

Real estate consultants dealing in commercial hospitality properties say such listings have increased significantly over the past year.

“Buyers are also cautious now because they understand the challenges of running hospitality businesses in an oversupplied market,” said a Srinagar-based property dealer.

Tourism industry veterans describe the situation as an “excess inventory problem,” where the rapid growth in accommodation capacity has outpaced actual tourism demand.

“The business has expanded horizontally across hotels, guest houses and homestays, but tourist spending has not increased proportionately,” said a senior industry observer.

Experts say the trend highlights the need for more realistic investment planning and better assessment of tourism demand before further expansion in the hospitality sector.

For many hotel owners in Kashmir, however, the immediate concern remains survival as rising liabilities continue to outpace revenues in an increasingly crowded market.