BackLalit Suri group outlines Rs244 cr plan to restore London hotel
Lalit Suri group outlines Rs244 cr plan to restore London hotel
PremiumA file photo of Jyotsna Suri.
New Delhi: The Lalit Suri Hospitality Group, an enterprise of Bharat Hotels Ltd, said it is investing about £28 million (Rs244 crore) in its third overseas project—a heritage property in London that it has acquired and is restoring into a luxury boutique hotel.
The group will also develop four luxury hotels and 25 mid-market hotels in India over three-five years, the company said on Thursday. Overall, it will invest about Rs1,200 crore over three years.
London had an average hotel occupancy of 85% in the past 10-12 years, according to the firm’s feasibility study, and so made for “a great business opportunity", Suri said at a media conference.
“Despite the slowdown in western countries, London has not shown any drop in occupancy," she said. “Also, we are entering a high-end boutique segment, where there aren’t many properties like this."
The property will be developed into a 70-room, 4-star boutique hotel to be named ‘The Lalit London’. The restoration, entailing an investment of £12-13 million, will begin in March 2013 and the hotel is expected to be operational by the end of 2014.
The company acquired the heritage property for £15 million in an auction in 2012.
“We wanted to have a small high-end property where investment is not so high and which would start giving us higher returns quickly," said Suri.
The firm expects to achieve break-even within three years of the London hotel becoming operational, with an average room rate of £158-250 and an expected occupancy of 85% for its rooms.
“There is stress in European markets and some properties are likely to be available at attractive valuations. We have seen in the past such acquisitions happening in overseas markets during the downturn," said Subrata Ray, senior group vice-president and sector head at credit rating firm Icra Ltd. “The logic behind investing during cyclical downturns is to be prepared with adequate capacity when the industry turns around, even though the near-term outlook may not be very attractive."
The London property is the group’s third international project, after its investments of around Rs130 crore in Dubai and Thailand. Both these projects are stuck due to political and financial reasons and the company does not plan to develop them for now.
Other than in London, the company’s development focus will be on India, Suri said.
“Our focus is development of our properties in India. We are entering the mid-market segment with 25 hotels under our new brand Lalit Traveller in next five years," she said. “We have already a Traveller property in Jaipur and we are looking at properties in Amritsar, Pune and Dehradun by 2014." The group also wants to expand in the high-end luxury segment in India and plans to open new properties in Chandigarh and Kolkata by the start of the next fiscal, and subsequently open a luxury property in Ahmedabad.
moulishree.s@livemint.com
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