Over half a dozen top property developers, including Tata Realty & Infrastructure, Oberoi Realty, Prestige Estates , Ambuja Neotia Group and Panchshil Realty, are looking to build new hotels and also manage global hospitality brands. The business can work as a hedge against the residential segment, which is cyclical. Eastern India-based Merlin Group on Thursday announced a partnership with Indian Hotels (IHCL) for the IBIZA resort near Joka, in Kolkata. The resort will now operate under IHCL’s SeleQtions brand as “IBIZA – an IHCL SeleQtions”, Kolkata.
Last month, Prestige Estates signed a deal with Marriott International to develop six hotels at an investment of Rs 1,000 crore. Suresh Singaravelu, ED – retail, hospitality & business, said the operations at the current hospitality assets have shown sustained performance. “We believe that we are riding the upcycle,” he said. He added that the company is looking to spread itself across all real estate classes, so as to hedge cyclical risks and tap into valuation upsides. Brand choices in the segment reflect a focus on both business and experiential travel with hospitality assets coming up in Goa and Sakleshpur besides Bengaluru, Singaravelu added.
Tata Realty & Infrastructure is setting up two hotels, one in Navi Mumbai with 200 rooms and another one in Pune with 175 rooms and is in talks with IHCL to manage these. Managing director Sanjay Dutt said, “We are looking to complement our commercial developments with hotels for the benefit of our clients. We have committed two projects which will take the total room inventory to just under 500 rooms.”
Valore Estate, earlier DB Realty, is constructing two hotels — with 800 rooms — with Prestige Estates in Delhi Aerocity under the brands St Regis and Marriott Marquee, sources said. In Mumbai , it plans to develop four hotels with 3,200 rooms. The board recently approved the demerger of its hospitality business. The company owns Grand Hyatt in Goa and Hilton near the Mumbai airport.
The chairman of Ambuja Neotia Group, Harshvardhan Neotia, said he is looking to develop resorts in Sundarbans in West Bengal and Sikkim and other places of scenic beauty and cultural importance. Ranjit Batra, chief executive of Pune-based Panchshil, which has eight hotel properties, is also looking to build new hotels if it gets a good opportunity.
In February, Oberoi Realty said it has entered into an agreement with Marriott International to develop two Marriott properties: JW Marriott Hotel Thane Garden City and Mumbai Marriott Hotel Sky City in Borivali, both in Mumbai and set for completion in 2027-2028.
Oberoi Realty has The Westin in Goregaon in Mumbai and building the RitZ Carlton in Worli.Sangram Baviskar, founding member and MD – real estate at TruBoard Partners, said, given the current state of the residential market, where demand may be fluctuating or subdued in certain areas, diversifying into the hospitality sector provides developers with alternative revenue streams and a hedge against market volatility.
Baviskar said although the hospitality sector, like others, faced setbacks due to the pandemic and economic uncertainties, causing a slowdown in new developments, the tide has turned. “We perceive promising prospects for viable projects, particularly within luxury and mid-scale hotel segments. We anticipate an upward trajectory in occupancy rates and room rates, thereby bolstering the viability of hotel ventures,” Baviskar said.
For a hotel project, 25-30% of the costs are accounted for by land. Construction, fixtures and finishing make up another 50%. A five-star hotel can take around three years to complete. From the revenue side, F&B makes up ~50% and room rentals make up ~40% and Ebitda margin is ~30%. “Considering that the development of a greenfield hotel project in India can take anywhere from 36 to 60 months, depending on the project type and location, the current momentum offers a strategic window for stakeholders looking to capitalise on the booming hospitality market,” said Mandeep S Lamba, president & CEO (South Asia ), HVS Anarock.