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Realty business takes a hospitable turn

August 03, 2005 11:22 IST

The Indian real estate business is all set to take on a very hospitable turn, with the booming hospitality sector expected to get into the driver's seat over the next couple of years.

According to a survey by Crisil, the hospitality business will attract an investment of Rs 200-230 crore (Rs 2-2.3 billion) over the next five years.

According to industry estimates, around 15,000 new rooms will be added to cater to the growing number of domestic and international business travellers over the next five years.

Of these, 2,500-3,000 rooms will hit the market in the next two years as 25 odd mid segment hotels are set to open by the end of 2007.

Homi Aibara of Mahajan and Aibara, a Mumbai-based hospitality consultants, said, "It is an early trend yet, but in the next two to three years the number of hotels that are now on the drawing board will surely drive real estate growth."

According to Aibara's estimates, investment in the sector could go up to Rs 500 crore (Rs 5 billion).

The hottest destinations are Mumbai, Delhi, Chennai, Bangalore, Hyderabad and Kolkata for business travellers, while for the leisure traveller it is tourist destinations such as Jaipur and Kerala.

In the fray are not only Indian hotel chains, but also builders and real estate developers such as DLF, Ansals, Rahejas and Hiranandanis who are building multi-use properties, including hospitality spaces.

These hotels are being eyed by the international hotel chains such as the US-based Centent and the French Accor groups, both of which have big plans for India.

Thomas Cooke too is said to be in the fray, though no confirmation from the company was available.

Said a DLF spokesperson, "We are looking at a variety of business opportunities and hospitality is one of them."

DLF which bought an 18-acre mill property in Mumbai recently is planning a luxury 7-star hotel as well as 4-star hotel on the property. In Delhi, the company is planning a series of mid-segment hotels in their malls.

Other Delhi developers in the fray are Omaxe, Ansals, Select Citywalk and Choice hotels, a part of the US-based chain.

Mumbai developers eyeing hospitality include Nirmal Lifestlye, Rahejas and Hiranandani constructions. Nirmal, which bought an industrial estate in north Mumbai in June this year, plans a luxury hotel there.

The Ruias who own the hugely successful Phoenix High Street mall are building a hotel on the property.

New entrant Kohinoor too is eyeing a hotel to boost the footfalls at its mall in north Mumbai's Vidya Vihar.

Amitabh Devendra, national head of hospitality and leisure services, Chesterton Meghraj, property consultants, said, "It works best for both parties since the builder has the expertise in property development and has already got the clearances in place and the hotel chains come in with their management expertise.

"And if things don't work out, both parties can pull out. As for the hotel guest, he has entertainment, eating out and shopping options all under one roof since mall and multiplexes will be close by."

Of the Indian hotel chains, the Oberois are building a new property in New Delhi, and another one in the Bandra-Kurla complex in Mumbai, while the Leela is planning to build new properties in Hyderabad, Chennai and Delhi.

In Bangalore, they are planning to raise their capacity from an existing 180 rooms to 300 rooms.
Gayatri Ramanathan in Mumbai
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