New Delhi: International hospitality brands are increasingly managing hotels built by smaller real estate firms, as major developers such as DLF Ltd, Parsvnath Developers Ltd and Unitech Ltd move away from the business.
Chains such as Marriott International, Hilton Hotels, InterContinental Group and Clarks Group have signed deals with developers such as Prestige Leisure and Resorts Pvt. Ltd, Panchsheel Group, Nitesh Estates Ltd and Amrapali Group.
International hoteliers earlier used to sign on developers with a national presence to manage their hotels. But losses suffered during the economic slowdown have forced the bigger firms to focus on their core areas of building homes and offices.
Marriott International, which operates and franchises hotels under brands such as Marriott and Ritz-Carlton, plans to operate 40 hotels by 2013. “By the end of 2010, we plan to operate 15 properties,” said Rajeev Menon, the group’s area vice-president for India, Pakistan, the Maldives and Malaysia. “We will soon announce our expansion plans.” Though Menon declined to talk about new management contracts, he said Marriott has signed deals with Mumbai-based Panchsheel Group and Bangalore-based Nitesh Estates.
Nitesh Estates will build a 281-room Ritz-Carlton in Bangalore for Marriott International, according to the developer’s website. Its spokesperson did not comment, saying the firm was in the silent period ahead of its initial public offer of shares.
Hilton Hotels has tied up with the Bangalore-based Prestige Leisure and Resorts, a subsidiary of the Prestige Group, which will build a 300-room hotel in the city likely to be operational in three years. “We have also tied up with Marriott for the management of a golf course resort,” said managing director Omer Bin Jung. “It is in the planning state.”
Noida-based Amrapali Group plans to open 15 hotels in Greater Noida, Indore, Jaipur, Udaipur, Vrindavan and Kochi, and has tied up with the Clarks Group of Hotels, the Choice Group and the InterContinental Group for their management.
The developer will launch its first hotel in Bareilly in June, and one each in Greater Noida and Vrindavan by December.
Chairman and managing director Anil Sharma said the group had bought hotel plots while acquiring land before the economic slowdown set in.
New engagement: A JW Marriott hotel in Mumbai. Soumitra Ghosh/Hindustan Times
“We are using debt funding and internal accruals to invest around Rs20 billion (Rs2,000 crore) over the next three years. We may also raise Rs10 billion (Rs1,000 crore) next year through an initial public offering for our hospitality venture. By that time we would be running some hotels successfully,” Sharma said.
Kolkata-based Ambuja Realty Group is also expanding into the hospitality sector and has recently signed a management contract with Swiss Hotels for its property in Rajarhat on city’s outskirts. Sudip Jain, vice-president of hotels for property consultants Jones Lang LaSalle Meghraj, confirmed the deal.
DLF, Parsvnath and Unitech have scaled down plans of expansion in the hospitality space, according to a 2009 report by the property consultancy.
Parsvnath, Jones Lang LaSalle Meghraj said, had stopped acquiring land for its plans to add at least 10,000 hotel rooms. Unitech has sold a Gurgaon hotel project to reduce its huge debt burden. DLF, too, is in talks to sell off eight or nine plots demarcated for hotel projects to raise funds. “Hotel is not our core business,” said Rajeev Talwar, managing director, DLF.
Spokespersons of Parsvnath Developers and Unitech did not respond to emailed queries sent on 7 April.
“Hotel chains have been associating with more popular regional developers because big developers have suffered huge losses. Some of them have already sold their properties,” said Manav Thadani, managing director, Hospitality Valuation Services India, a consultancy focusing on hotels. “Regional developers are more willing to sign such contracts.” Anshuman Magazine, chairman and managing director of property consultant CB Richard Ellis South Asia Pvt. Ltd, cited another reason.
“Several developers in 2007-08 had announced mixed land use development projects,” he said. “Of these, hotel and commercial projects became a part of the entire integrated township. So hotel chains look at this as an opportunity to sign deals with such developers.”