From Hospitality to Hazard: How the Regulatory Loopholes of B&B Licence Led to the Malviya Nagar Fire

The dense urban villages of New Delhi became the site of a horrific tragedy on June 3, 2026, when a catastrophic fire tore through Flourish Stay B&B in the crowded Hauz Rani area of Malviya Nagar. 

The blaze resulted in at least 21 deaths and left dozens of others critically injured, predominantly trapping foreign medical tourists from African and Central Asian nations. The five-storey commercial death trap was officially registered and operating under the Delhi Government’s residential Bed and Breakfast (B&B) scheme.

What is Delhi Government’s bed and breakfast license

The Bed and Breakfast scheme was originally introduced by the Delhi Government's Department of Tourism ahead of the 2010 Commonwealth Games to address a severe shortage of affordable tourist accommodation by then CM Sheila Dixit. 

Championed as a way to promote neighborhood-based tourism, the policy allowed local homeowners to earn extra income by renting out underutilized residential spaces. 

To ensure these establishments maintain a purely domestic character, the rules strictly dictate that a property must be purely residential, the owner or a caretaker must reside on the premises, and the setup must have a minimum of one room and a maximum of eight guest rooms, with a total cap of 16 beds.

The loophole in the system

However, the well-intentioned policy inadvertently created a dangerous regulatory bypass for greedy commercial operators. 

While standard commercial hotels face grueling municipal clearances, environmental reviews, and rigorous Fire Department No-Objection Certificates (NOCs), the B&B scheme offers a streamlined, online self-certification framework designed for the "Ease of Doing Business." 

Applications featuring basic property deeds and police clearances operate under a quick, seven-day deemed approval window. Unscrupulous landlords quickly learned to exploit this light-touch system, using the residential B&B license as a legal shield to bypass the strict fire safety codes mandated for commercial properties.

Malviya Nagar fire

The fatal cost of this systemic exploitation was laid bare in the Malviya Nagar fire. Preliminary investigations revealed that while Flourish Stay B&B held official tourism department approval to operate just six residential rooms, the owners had carelessly constructed and packed 24 rooms into the building, actively selling them to unsuspecting travelers via major online travel aggregators. 

When the fire ignited, the heavily altered building offered only one single, narrow escape route and virtually no ventilation. Thick, toxic smoke filled the corridors instantly, suffocating guests in their rooms and forcing others to leap onto the streets below because the building completely lacked the emergency exits required of a standard commercial hotel.

Not the first tragedy - 2019 Hotel Arpit Palace fire

This disaster is a horrific echo of the February 2019 Hotel Arpit Palace fire in Karol Bagh, which resulted in 17 deaths. In that incident, a standard budget hotel illegally expanded by adding unauthorized extra floors with inflammable wooden paneling and locking its emergency exits from the inside. 

While the 2019 tragedy triggered a temporary crackdown on budget hotels, it ultimately drove corrupt operators to migrate toward the residential B&B scheme. Rather than fixing their infrastructure, operators simply used the homestay framework to run the exact same unregulated, high-density mini-hotels under a friendlier administrative label.

The tragedy at Malviya Nagar serves as a reminder of a critical failure in shifting from physical enforcement to digital self-certification. While the government has recently floated a new Draft Bed and Breakfast Policy to mandate strict electronic records and basic fire apparatus, the policy is yet to take proper ground. 

Also Read: Malviya Nagar Fire: Owner Lokesh Bajaj Identified As Probe Expands