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Taj Samudra hotel in Colombo, Sri Lanka.
Taj Samudra hotel in Colombo, Sri Lanka.

Indian Hotels looks to enter branded homes business

Indian Hotels is in talks with Chaudhary Group to set up a residential project under the Taj brand in Colombo

Mumbai: Indian Hotels Co. Ltd (IHCL), the operator of the Taj chain of hotels, is looking to enter the branded homes business, following the example of global companies like Four Seasons, Ritz Carlton and Grand Hyatt that lend their brands and provide hospitality services to luxury homes across the world.

The Tata group firm is in talks with Kathmandu-based Chaudhary Group (CG) to set up a residential project under the Taj brand in Colombo, where both the firms jointly own over 10 acres of land, according to two people aware of the development.

IHCL already operates a 300-room luxury hotel Taj Samudra in the Sri Lankan capital. The new high-end residential development is likely to come up within the same premises, said one of the two people mentioned above.

“CG group has entered into an in-principle agreement with Taj group to build a residential development within the same Taj Samudra premise. Discussions are currently on over the Taj brand name, number of apartments and price of the apartments," the person said, adding that terms of the development are likely to be finalized in the first quarter of this year. CG, the makers of the Wai Wai instant noodle brand, is likely to develop the project under the Taj brand, according to the second person.

In an email response to a query seeking confirmation, a spokesperson for IHCL said: “We are always exploring and evaluating possible opportunities, in line with our group’s vision to showcase our iconic and legendary hospitality of IHCL." However, the company has not disclosed details of the plan.

CG and IHCL jointly operate three luxury hotels under the Taj brand in Sri Lanka and the Maldives. Two more Taj hotels are being developed in Nepal and Thailand.

CG had not responded to email queries till press time.

According to analysts and hotel experts, getting into the branded residence space would be a strategic move for Taj to expand its brand and reach, apart from improving its cash flow. Besides, developing branded residential projects over land parcels it owns could also help unlock the value of the land assets, they said.

According to information available on the company’s website, IHCL owns around 900 acres of land in total across 26 cities in the country in India.

“The Taj Group is currently evaluating strategic options to efficiently leverage the value creation potential in its land bank and project time lines," the company said in its corporate presentation dated May 2016.

While it is unclear if IHCL would introduce any Taj branded homes in India, the company already operates service apartments under the Taj Wellington Mews brand and provides hospitality services to Imperial Heights, a high-end luxury apartment complex in Mumbai, developed by SD Corp., a joint venture between the Shapoorji Pallonji Group and Dilip Thacker Group. 

“This experiment of ‘Hospitality by Taj’ for Imperial Heights was a small step in that direction of getting into the branded residences space," said an analyst who did not want to identified.

According to Gulam Zia, executive director of Knight Frank India, a property consultancy, branded residences are “a great strategy to broaden the reach of their brand equity".

“People who stay in high-end and super-luxury housing are typically the target audience of big hospitality groups. So, taking up such initiatives will create stronger brand and loyalty. Put together, it is a strategy to broaden the horizon of the brand and get more loyal customers," he said.

Some of the big branded residences that are under development in India are Four Seasons Private Residences, Trump Towers and Grand Hyatt Residences.

However, sale of luxury hotels, including branded residences, has suffered in the past three-four years in India, Zia said.

“Five-six years ago, a lot of brands were keen to come and offer their brands but only a few decided to enter. People have been experimenting but the market is not ready to pay that kind of premium for these brands," he said.

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