New Delhi: The newly formed joint venture between the UAE-based Rakeen Pvt. Ltd and Chennai-based mining firm Trimex Group, Rakindo Developers Pvt. Ltd, plans to expand into the hospitality sector in India with two separate partnerships.
Room service: The Millennium hotel in central London. While the joint venture will own the hotel properties, Millennium and Copthorne will manage and operate the hotels.
It is partnering with global hotel chain Millennium and Copthorne Hotels Plc. to build hotels in India and is also pooling resources with a UK-based private equity fund to invest in hotels in Asia.
Rakindo Developers, and Millennium and Copthorne have formed a joint venture company, Millennium and Copthorne Rakindo Hospitality. Rakindo holds 40% stake in the joint venture and the balance is with Millennium and Copthorne.
While the joint venture will own the hotel properties, Millennium and Copthorne will manage and operate the hotels. The hotel firm operates hotels under the Millennium and Copthorne names across the world.
The joint venture company plans to develop mid-tier business hotels in India. “We are looking at developing business hotels with rooms that cost around $100 per day (Rs3,900),” Kishore Kothapalli, director, Rakindo Developers, said. “The cost of a room in business hotels is between $150 and $200. So, what we are looking at is hotels that fall between a business hotel and a budget hotel.”
The joint venture has committed to invest $100 million (around Rs3,900 crore) initially in India to develop five-six business hotels. The company is looking at developing hotels in south and west India in cities such as Chennai, Bangalore, Hyderabad, Coimbatore, Kochi, Pune and Nagpur.
Millennium and Copthorne owns and operates more than 110 hotels in 17 countries in the world. The hotel chain operates three, four and five-star hotels globally.
The joint venture has not yet decided “on the brand”, Kothapalli said. “It will, however, be a single brand.”
The demand for hotel rooms is soaring in India due to an increase in the influx of foreign tourists and a growth in domestic tourism. India has a huge shortage of hotel rooms. According to a report by industry lobby group Federation of Indian Chambers of Commerce and Industry, India has 105,000 hotel rooms, while Shanghai in China alone has 135,000 rooms.
Real estate developers are cashing in on the shortage of hotel rooms in India to develop hotel properties in one of the fastest growing economies in Asia. Developers such as DLF Ltd, Unitech Ltd, and Parsvnath Developers Ltd have announced plans to develop budget and luxury hotel properties across India.
Rakindo has also partnered with the UK-headquartered Lotus hotel investment fund, a private equity fund, to form a joint venture in India, Lotus Rakindo Hospitality, which will invest in three- and four-star hotel properties in the country and Asia. Rakindo holds 40% stake in the joint venture and the balance is held by Lotus hotel investment fund.
“We did not want to have an exclusive partnership with a single company,” Kothapalli said. “We wanted to have multiple operators for our hotel properties, as every company has its own limitations.”
The joint venture will initially focus on investing in hotel properties in six cities in south India such as Chennai, Bangalore and Hyderabad. The joint venture has committed an initial investment of $100 million in India. While the joint venture will own the hotel properties, the hotels will be managed by an international hotel chain. Lotus hotel investment fund already has an existing partnership with Carlson Hotels Worldwide to focus on hotel development opportunities in Asia.
“The hotels could be managed by one of the partners of Lotus,” Kothapalli said.
Rakeen is a property development company with more than $1 billion in revenues that develops resorts and residential properties in West Asia, China and Europe. Trimex Group is a transnational mining conglomerate with more than $500 million in revenues that processes and supplies industrial raw minerals to oil-well drilling, ceramic and fertilizer industries in India and West Asia.
The two companies announced the formation of a 50:50 joint venture company Rakindo Developers recently.
Rakindo plans to invest up to $5 billion (Rs19,850 crore) over five years in the Indian real estate market to develop various projects in the country.