New Delhi:Global hospitality company Accor SA said it has purchased land in Chennai to develop a mid-range Ibis hotel and a five-star Novotel, which will come up by September 2009, through its joint venture with InterGlobe Enterprises Ltd. With “IT exploding and lots of development to come in Chennai,” the Rs350 crore that the joint venture is spending for land and development costs makes sense, said Uttam Dave, head of Accor’s India unit as well as the joint venture. He said he hoped to recoup the investment by 2016, seven years after the hotel opens. Accor is spending several hundred million dollars to develop 50 hotel projects in India by 2010 through two joint ventures for hotel development and additional partnerships solely for hotel management.
Viraj Nadkarni, hotel industry analyst with Finquest Securities Pvt. Ltd, said though demand for rooms is currently strong in Chennai, driven by business traffic from the IT, auto and pharma sectors, room supply for five-star hotels should rise 160% from current levels to almost 4,000 by 2011. Accor’s new Ibis hotel “could be a profitable venture,” but the performance of the five-star Novotel hotel in Chennai“could be a point of concern.”