Mumbai: Atul Ruia-owned Phoenix Mills Ltd is entering the hospitality sector with six hotels in Mumbai, Pune, Chennai, Bangalore and Agra over the next five years.
The first of these properties, a 430,000 lakh sq. ft, 400-room luxury hotel, is coming up at the Phoenix Mills property at Worli in central Mumbai, and is expected to be operational by end-2009.
The company has floated a special purpose vehicle, Pallazio Hotel and Leisure Ltd, for managing the property with Hong Kong-based Shangri-La Hotels. The investment in the hotel is expected to be around Rs320 crore.
The Taj Group, Hilton and Marriott were also in contention for that managementcontract.
Two more unrelated hotels are expected to come up in the area—Four Seasons is coming up with a 120-room hotel, while DLF Ltd, which is building a luxury mall on the Mumbai Mill property it had acquired last year, had talked about building a mall-hotel on the property.
Central Mumbai alone is estimated to have a demand for around 5,000 hotel roomsannually over the next two years.
Of the other five hotels planned by Pheonix, four are expected to come up atshopping complexes, called Market City, which the company is developing.
The fifth one will come up at Kurla in North Mumbai on a 15-acre plot that the company acquired from MukundSteel Ltd.
However, investment across these properties has not been finalized.
Shishir Shrivastav, chief executive officer of the group’s hospitality division, said the group plans to spend between Rs600 crore and Rs1,000 crore on each of its the Market City properties.
Shrivastav said thatthe company was alsoconsidering budget hotels once all six luxury hotels are operational.
Earlier this month, Barclays Capital, Citigroup, HSBCFinancial and DB Fund Mauritius, Alpine Capital and Bluerich Fund, collectively acquired a 24% stake in the company for Rs 1,300 crore.
Six funds—Barclays Capital, Citigroup, HSBC Financial, DB Fund Mauritius, Rhodes Diversified, DWS Invest Bric Plus and Americorp Ventures—acquired 7% stake in Phoenix Mills for Rs330 crore through preferential allotment. The real estate funds and other private equity funds picked up an 18% stake in the comapny for Rs980 crore.