The hotel project, which is expected to be complete by 2002, will be set up at the ITC-owned property.Senior company officials at ITC Hotels, confirming the development, said: "As more companies are getting relocated to mid-town areas like Parel, we feel there is a huge occupancy requirement on that side of the metropolis. We already have about four acres of land at the site which will be ideally utilised."

The new hotel will be the second five-star hotel from the group to be set up in Mumbai. The first project in Mumbai is the Rs 450-crore five-star deluxe project near the Sahar International Airport at Andheri which is expected to open by October 2000.The ITC group, in a growth strategy study last year, had identified hotels as one of the core areas of operations. Subsequently, it has announced investing about Rs 1,500 crore in the hotels business over the next five years.

These investments will primarily be on new hotel projects, as well as expansion of existing hotels chains. Other five-star deluxe hotel project that are on the anvil include the one at Calcutta, while civil works for the 100-room expansion at Maurya Sheraton in New Delhi is nearing completion and is planned for opening in March next year.On completion of its expansion plans, nearly 1,500 deluxe rooms will be added to the Welcomegroup chain over the next five years.

As part of its financial restructuring, the ITC group has deployed around Rs 360 into real estate projects. It is now exploring the possibility of entering into international alliances to maximise value-additon in these projects.As part of its plans ITC Hotels has also already acquired 37.5 per cent equity in the Ansal Hotels group which is constructing a 222-room five-star hotel in Delhi.

The other joint venture of ITC Hotels is with Marudhar Hotels, launched under the WelcomHeirtage brand offers 14 havelis and palaces.

INSIGHT

Foray makes sense

ITC is moving agrressively into the premium hotels business. This is obviously part of the company's strategy to reduce its dependance on the stagnant cigarettes and tobacco business, which is increasingly facing strictures from governments worldwide. In that sense the foray into hotels makes sense. But at the same time this is a long gestation business and shareholders can look forward to returns only after a long time. Further, ITC's expansion also puts a question mark over the future of ITC Hotels, its subsidiary company. This is unlikely to help the stock.

-- Aaron Chaze