Hotel Leelaventure Ltd, the company which runs the The Leela Palaces, Hotels and Resorts, is going slow on expansion plans. Whereas the group will be opening its properties in Gurgaon, Udaipur and Chennai this year, it plans to wait for the market to revive before it breaks ground on its other planned hotel ventures in Hyderabad, Pune and Agra. The company is also slated to open a property in New Delhi before the Commonwealth Games in 2010.
?We have already acquired land at these sites (Hyderabad, Pune and Agra), but plan to wait for the market to stabilise before we start construction there,? said VL Ganesh, director-finance and chief financial officer, Hotel Leelaventrure Ltd. He said that the Rs 1,850 crore that will be invested in the Udaipur, New Delhi and Chennai properties over the next 18 months has been already raised; the company, therefore, does not need fresh funds.
Indicating that the hospitality sector has taken a hit due to the slowdown and later the terror attack in Mumbai, Rajiv Kaul, senior vice-president, Hotel Leelaventure Ltd, said, ?We are expecting a 20-25% drop in revenues per available room in the metros, including Mumbai and Bangalore, in the third quarter (Q3?09). This is expected to continue into the fourth (Q4?09) as well.?
Revenue per available room indicates the overall financial performance of a property. Overall, the hospitality industry is expected to see an erosion of 25% in bottomline in the third and fourth quarter of this financial year. The industry has seen around 15% correction in room rates.
Kaul said that metros have witnessed a greater decline in occupancy rates compared to resort destinations. Bangalore, for instance, has seen a 20%, which is expected to continue into Q4. Mumbai, however, managed to maintain an occupancy rate of 60%, much higher than other metro in India, despite the terror attacks in November, he added.
Kaul said that business is expected to rebound ?not before the third quarter of the next financial year? (Q3?10). Bangalore contributes 40% of The Leela group?s revenues, while Mumbai contributes 25%. The rest of the revues come from resorts. Currently, the group has properties in Goa, Kovalam, Mumbai and Banglaore.
The Leela group, meanwhile, plans to enter the mid-market segment with a new brand by 2013. This will be done after it has achieved a pan India presence with 12 hotels.
The group also plans to focus on the build and operate model, while management will not completely be ruled out, he added. ]
Applying brakes
• The Leela Group will wait for the market to revive before starting new ventures
• It has one planned hotel venture in Hyderabad, Pune and Agra each
