This story first appeared in DNA Money edition on Thursday, December 22, 2011.
DB Hospitality, a sister company of DB Realty whose promoters have been mired in the 2G scam, is in talks with the Sahara Group to sell its newly launched five-star hotel Grand Hyatt Goa, according to industry sources.
“The deal is currently at the due diligence stage,” said an industry source familiar with the development.
An email sent a week ago, seeking comments, to a Sahara Group spokesperson remained unanswered and when contacted a DB Hospitality spokesperson said, “This is not true.”
But industry sources said the asset owners were demanding a huge premium for the hotel, which opened for guests in August 2011, and as a result the mandate has travelled from one firm to another. It is not clear which firm is finally advising on the deal.
In terms of valuation, sources said DB Hospitality is seeking Rs1,000 crore, which they felt is quite high, especially for a project in Goa.
“Assuming overall development cost of around Rs1.25 crore a key in an ideal situation, the promoters would have invested (including debt) around Rs390 crore for 314-room hotel, excluding the land cost. However, one will also have to factor in the almost a year-long delay, which would have increased the project cost by 15%-20% on a conservative note,” said a top official of one of the big four international property consultants.
“The general market practice with most hotel owners in Mumbai is to value the asset at Rs2 to 2.5 crore per key. However, the per-key figure will certainly be lower in Goa. Based on these assumptions, Rs1,000 crore for a 314-room hotel appears quite steep, that too in such a stressed market environment,” said the official.
Grand Hyatt Goa is not the only asset that DB Group’s hospitality vertical is understood to have put on the block. The group’s Mumbai hotel, managed by Hilton Worldwide, is also up for grabs, sources said.
The promoters are looking to raise Rs450 crore from the sale of this 171-room boutique hotel, which was launched back in 2000 under the Le Royal Meridien brand.
The deal has been doing the rounds in the market for a while now with no potential suitor willing to pay the valuation sought. DB promoters are targeting to raise a total of Rs1,500 crore by divesting the two hotels, sources said.
Nestled in a 28 acre beach front land parcel, the hotel is part of a 140 acre high-end mixed-use development called Aldeia De-Goa and located in Dona Paula in North Goa.
DB Hospitality has four operational hotels and several in pipeline.
DB Hospitality, a sister company of DB Realty whose promoters have been mired in the 2G scam, is in talks with the Sahara Group to sell its newly launched five-star hotel Grand Hyatt Goa, according to industry sources.
“The deal is currently at the due diligence stage,” said an industry source familiar with the development.
An email sent a week ago, seeking comments, to a Sahara Group spokesperson remained unanswered and when contacted a DB Hospitality spokesperson said, “This is not true.”
But industry sources said the asset owners were demanding a huge premium for the hotel, which opened for guests in August 2011, and as a result the mandate has travelled from one firm to another. It is not clear which firm is finally advising on the deal.
In terms of valuation, sources said DB Hospitality is seeking Rs1,000 crore, which they felt is quite high, especially for a project in Goa.
“Assuming overall development cost of around Rs1.25 crore a key in an ideal situation, the promoters would have invested (including debt) around Rs390 crore for 314-room hotel, excluding the land cost. However, one will also have to factor in the almost a year-long delay, which would have increased the project cost by 15%-20% on a conservative note,” said a top official of one of the big four international property consultants.
“The general market practice with most hotel owners in Mumbai is to value the asset at Rs2 to 2.5 crore per key. However, the per-key figure will certainly be lower in Goa. Based on these assumptions, Rs1,000 crore for a 314-room hotel appears quite steep, that too in such a stressed market environment,” said the official.
Grand Hyatt Goa is not the only asset that DB Group’s hospitality vertical is understood to have put on the block. The group’s Mumbai hotel, managed by Hilton Worldwide, is also up for grabs, sources said.
The promoters are looking to raise Rs450 crore from the sale of this 171-room boutique hotel, which was launched back in 2000 under the Le Royal Meridien brand.
The deal has been doing the rounds in the market for a while now with no potential suitor willing to pay the valuation sought. DB promoters are targeting to raise a total of Rs1,500 crore by divesting the two hotels, sources said.
Nestled in a 28 acre beach front land parcel, the hotel is part of a 140 acre high-end mixed-use development called Aldeia De-Goa and located in Dona Paula in North Goa.
DB Hospitality has four operational hotels and several in pipeline.
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