Realty firms exit hotel projects
Hit by liquidity problems, several real estate companies have put their hotel projects on sale to retire borrowings and to keep financers at bay.india Updated: Dec 02, 2008 20:59 IST
Hit by liquidity problems, several real estate companies have put their hotel projects on sale to retire borrowings and to keep financers at bay. Hotel company executives have confirmed this but declined to divulge names.
In last two years, realty firms had diversified into hospitality to attract private equity at high valuations. Since the realty bubble has burst, they are shedding flab. Recently, Unitech reportedly announced plans to sell its hotel in Gurgaon and some other hotel projects.
DB Hospitality, which owns two hotels and constructing three more, is evaluating offers to acquire such hotels. Recently it tied up with Japan’s JAL Hotel Co to construct nine hotels across Indian to be operated as Nikko hotels.
“Several developers have put their hotels on distressed sale. Some of the nine properties planned for JAL would be acquired through this route,” said Julian Groom, executive director, DB Hospitality. “We have lot of offers and due diligence is on,. DB plans to investment Rs 5,000 crore in hotels.
Hotel owners are expecting massive discounts. “The project has to be attractive. Builders often develop inefficient hotels that are not operationally lucrative,” said Partha Chatterjee, director, Berggruen Hotels. “Our website is flooded with offers,” he added.
“Hospitality is a capital intensive business with long gestation period. Most realtors ventured into this because they had land. Now they are cashing out,” said Anshuman Magazine, CMD, CB Richard Ellis.