Tag Archives: indian property

Potential and roadblocks co-exist for hotels-I

Posted on by Track2Realty

By: Ravi Sinha 

Track2Realty Exclusive

Lemon Tree Hotels, Warburg Pincus, Track2Realty, Track2Media, Ravi Sinha, India real estate news, indian realty news, real estate news, property news india, indian propertyIt is not just real estate developers and national & international hospitality majors, but several high net worth individuals and business groups from sectors like auto, petroleum and telecom have grabbed hospitality assets, marking a strategic trend shift. Track2Realty analyses how opportunities and roadblocks co-exist in the hospitality, thus making it an interesting sector where there is room for everyone to grow.

On a macro level the hospitality sector is poised to attract the maximum attention with expected investment of $12 billion in 2012-13, with over 20 new international brands to be added to the sector. The real estate developers in search of greener pastures to overcome the sluggish market also find the sector attractive than it has ever been and set to grow as India expands its soft as well as hard power quotient.

However, on a micro level the sector in India has struggled throughout 2011 to deal with the dual challenge of cost cutting by global corporate houses that resulted in a significant drop in corporate travel, and a perception of being an unsafe destination due to the terror attacks in various parts of the country. The hotel industry is also very sensitive to economic cycles and is therefore intrinsically linked to the state of the economy.

However, weathering the storm the industry in general has managed to revive and the upward movement promises to improve the performance and lead to growth in 2012 as well. Although hotel room supply grew by nearly 15% in 2010/11, growth in demand outpaced supply, and nationwide occupancy grew by 1.7% over that of 2009/10. The growth in occupancy, despite a double digit growth in supply, signals the strength of the hospitality industry in India.

It is thus inevitable that realty developers are looking forward to the hospitality business. Real estate developers Emaar-MGF, DLF Universal, Ansals, Vatika, Ambience and Parsvnath are all bullish to the hospitality biz. While they want to retain the ownership of the hotels, large (mostly multinational) hotel chains are being invited to ally with them for management and marketing functions. Market dynamics of realty in general may have forced us to put the plan on hold, as a realtor says requesting anonymity, the plan has not been shelved for sure.

Sanjay Verma, Joint Managing Director, Cushman & Wakefield says real estate developers “bring value to the table”. “They have large existing land banks and also the ability to acquire more land.” And since one of the major deterrents to building new hotels is the availability of land, it is logical that the major realtors should foray into hospitality.

..…to be continued

Lemon Tree, Warburg to invest Rs 400 cr in housing projects

Posted on by Track2Realty

Lemon Tree Hotels, Warburg Pincus, Track2Realty, Track2Media, Ravi Sinha, India real estate news, indian realty news, real estate news, property news india, indian property Hospitality firm Lemon Tree Hotels is foraying into real estate, with plans to invest over Rs.1,400 crore, to launch housing projects in India in partnership with US-based investment firm Warburg Pincus.

New Delhi based firm has formed a 51:49 joint venture, Oceanus Real Estate Pvt Ltd, with Warburg Pincus for the housing projects. Besides diversification into housing, the hospitality chain has put in place a blueprint to expand in its core business within India and explore neighboring markets like Nepal and Sri Lanka.

“The joint venture with Warburg Pincus will develop at least three to four affordable housing projects in Gurgaon,” Lemon Tree Hotels chairman and managing director Patu Keswani said. Out of a total planned investment of Rs.1,400 crore by 2015, the JV will invest Rs.700 crore while Warburg Pincus alone will put another Rs.700 crore separately, he said.

Keswani said the residential apartments would be sold under the ‘Lemon Tree’ brand in the range of Rs.20 lakh to Rs.1 crore per unit. “We have already identified a couple of sites in Gurgaon and will begin construction soon and start selling by December this year,” he said.

In 2006, Warburg Pincus had invested in Lemon Tree Hotels and currently own 25.8% stake. In the hospitality segment, the company currently owns and operates 14 mid-scale Lemon Tree hotels in the country with a total capacity of 1,500 rooms.

“By mid 2013, we have a plan to own and operate total 20 hotels with 2,800 rooms and then we have a plan to go public by making an IPO,” Keswani said. The first Lemon Tree hotel was opened in 2004 and since the inception in 2000, Rs.1,600 crore has been invested in the company.

Asked about revenues, while he did not provide figures for the past fiscals, he said this financial year Lemon Tree Hotels expects the turnover to be around Rs.300 crore. Besides, domestic expansion, Keswani is also exploring Nepal and Sri Lanka to set up Lemon Tree hotels. “International expansion plans is at a preliminary stage at the moment,” he said.