Are hotel owner-operator marriages becoming flings? Now Swissotel pulls out of Goa property

An edited version of this story first appeared in DNA Money edition on Monday, Sep 9, 2013.

With relationships between Indian hotel asset owners and international hotel operators getting sour, for various reasons, the Indian hospitality market is set to see an increase in the instances of such marriages hitting a rocky patch.

Emulating the split between Phoenix Mills and Shangri-La Hotels that happened last week, another foreign hotel operator has decided to call it quits.

This time it is Zurich-based Swiss hospitality chain Swissotel Hotels & Resorts which is pulling out of its five-star deluxe hotel at Calangute in Goa. The Goa property is owned by Bangalore-based Convention Hotels India Pvt Ltd (CHI).

Officials of both CHI and Swissotel could not be reached for a comment.

However, Swissotel’s website confirmed the development saying, as of September 9, 2013, Swissotel Hotels & Resorts will no longer manage Swissotel Goa. The hotel will be renamed and operated by the owner.

The international hotel chain -- Swissotel -- is owned by FRHI Holdings Limited, a leading global hotel company with 102 hotels and resorts worldwide under the Raffles, Fairmont and Swissôtel brands. The company also manages Fairmont and Raffles branded Residences, Estates and luxury private residence club properties.

Interestingly, Swissotel Goa was launched amidst great fanfare just six months ago i.e. March 2013 and, in most likelihood it is the shortest owner-operator marriage the Indian hospitality market has seen thus far. The fling between Phoenix Mills and Shangri-La Hotels had lasted nine months.

Convention Hotels is currently developing four hotels in the country with a combined guestroom inventory of 715 keys. The company’s development pipeline includes a 35-room tented resort is under development at Kabini (Bangalore), a 220-room Holiday Inn hotel in Goa to be managed by Intercontinental Hotel Group (IHG), a 200-room Hilton Garden Inn to be managed by Hilton Worldwide and a 260-room Hyatt Place hotel in Bangalore that will be managed by Hyatt Hotels & Resorts.

Industry experts said the Indian hospitality market will see many more asset owner-hotel operator relationships turning sour, citing conflict of opinion (on business operations and expected returns on investments) as the key reason for the split.

Another possibility of a fall-out, industry sources said, will be between Shiva Satya Hotels which is developing a five-star hotel to be managed by IHG under its Crowne Plaza brand. The duo had signed a management agreement back in August 2008 and the hotel was to be operational in 2010. However, the project has got delayed significantly and there is no clarity on its completion timeline as yet.

Information Update:

Before launching under the Swissotel brand, the management contract for the Goa resort was signed with the InterContinental Hotel Group and was to be operated under the Holiday Inn Resort. However, Swissotel came in at the last moment and bagged the management contract.

As of now, this flagship hotel from the Bangalore-based Convention Hotels India Pvt Ltd (CHI) has been re-branded as North16Goa.

Hoteliers add over 800 guestrooms across India in two weeks

This story first appeared in DNA Money edition on Thursday, Sep 5, 2013.

The current financial environment may remain tough, but that has not deterred Indian hospitality industry – both Indian and international – from pushing ahead with new hotels. In all, approximately 827 new guestrooms were added in the organised hospitality sector in the last two weeks and a majority – approximately 60% – of them have come up in South India alone.

Some of the big names here include Indian Hotels Co (Taj Group), East India Hotels (Oberoi Group), Accor, Berggruen Hotels and the Panaromic Group.

While French hospitality major Accor opened a 131-room budget hotel under the ‘Formule1’ brand in Bangalore, IHCL from the Tata stable rolled out its 200-room upscale ‘The Gateway Hotel’ on the IT Expressway in Chennai. September thus far has seen three hotels being launched with a combined guestroom inventory of 496.

Earlier this week (September 2), the Oberoi Group threw open its 323-key five-star business hotel under the Trident brand in Hyderabad. Berggruen Hotels, promoted by US-based Berggruen Holdings, opened its first five-star hotel in Pune under the Keys Klub brand featuring 115 guestrooms while a 58-room premium hotel got christened United 21 in Hyderabad.

While it may appear as a sheer coincidence that almost half-a-dozen hotels have entered the Indian hospitality market at around the same time, experts said most of the projects have been under development for some time now. “Hotel chains ideally like to time their new launches and September being the shoulder month it makes for a sensible move. The Indian hospitality sector will enter the peak business season starting October going up to January/February and launching at this time will help them tap incremental business,” said Ashish Bharadia, senior consultant, Mahajan & Aibara Management Consultant.

There is unanimity that coming months will see more additions from the likes of Marriott, Starwood, Accor, Hyatt and IHCL.

For instance, Marriott International is set to open its account for its 297-room five-star deluxe JW Marriott hotel in Bangalore this month. Another 510-room JW Marriott hotel is slated to take off inside the DIAL Hospitality District in New Delhi. Marriott will also open a few Courtyard by Marriott branded hotels with a total inventory of 350-odd in cities like Bilaspur (104), Pune (180) and Agra (150), in addition to a 150-key Fairfield by Marriott in 2013-14.

Similarly, for Accor, it’ll be a 104-room Formule1 and 223-room Novotel hotel each in the Pune hospitality market this calendar year. Two more Novotel hotels, one each in Ahmedabad (180 room) and Goa (150 room) are likely to hit the market in 2013.

A 167-room Hyatt Regency is currently under construction in Ludhiana and projected to go live this year. Starwood Hotels and Resorts will take the curtain off a 323-room five-star hotel in Kolkata under the Westin brand and a 126-room Le Meridien hotel in Mahabaleshwar. Hilton Worldwide is in the process of opening DoubleTree by Hilton hotels in Jaipur (179), Bangalore (172), Pune (115) & Agra (102) and a Hilton Residences in Bangalore (243 rooms) in 2013.

Cement makers seen hiking prices in September

This story first appeared in DNA Money edition on Saturday, Aug 31, 2013.

Cement companies have decided to hike prices starting next month, according to some  dealers in the know. “It could be around Rs 50 per 50 kg bag in Mumbai,” said Peeyush H Shah, promoter, Shri Padmavati Enterprise, a Mumbai-based dealer.

The hike will be effective next week, he said, adding, “The increase, from what I understand, will be taken by all cement manufacturers”.

In a cement sector review on Friday, Mihir Jhaveri and Prateek Kumar, analysts with Religare Institutional Research, said that though some dealers have indicated about manufacturers pushing for hikes from September owing to input cost escalation and the rupee’s decline, the move is not sustainable given the weak demand scenario.

Based on their discussions with over 40 dealers across 30 Indian cities, the Religare analysts said cement prices took a sharp hit during August after remaining relatively stable during July. “Prices in regions have corrected in the range of Rs 10-50 per bag in both trade and non-trade segments. The north and central markets witnessed a sharp fall of as high as Rs 40-50 per bag for select brands. 

"In Andhra Pradesh, prices have corrected by Rs 60 per bag after sharp hikes of Rs 60-80 per bag in June. Other southern states have seen a milder decline of Rs 10-15 per bag. Declines in the western and eastern regions have been in the range of Rs 10-30 per bag,” the duo noted.

The decline was primarily led by increased supply due to the entry of new players, poor demand owing to a weak macro and shortage of materials (sand/brick), and good monsoons across most regions.

The current all-India trade segment average is pegged at Rs 280-285 per bag as compared to the estimated average of around Rs 290-295 per bag in the quarter ended June.

Cement prices in the non-trade segment were lower by Rs 10-20 per bag.
The decision to hike prices, industry experts feel, is certainly motivated by the fact that cement prices suffered significantly in July and August. And with input costs continuously on the rise, a price hike is the only way to stimulate demand and deal with the current slump in the market.

“Cement companies are expecting construction activity to increase considering the monsoon season is almost getting over, and are using this opportunity to bring prices back to the pre-monsoon levels,” said an analyst with a domestic brokerage.

Maintaining a cautious outlook on cement sector for the current quarter, the Religare analysts said that sluggish demand and weak pricing would likely keep profitability under pressure. Also, if prices fail to revive in September (with monsoons still prevailing in some regions), realisations are likely to be sharply lower again on a year-on-year basis, exasperated by last year’s high base due to delayed monsoons.

“With minimal benefits from lower international coal prices (owing to depreciation of Indian rupee), operating profit per ton (ebitda/t) of cement companies could see a quarter on quarter dip in the range of Rs 200-250 (depending on regions, but mid-caps likely to be hit more). The July-September quarter for the sector is also likely to remain muted, with sluggish volumes, weak pricing, cost pressures and a high base,” the analysts said.

A top official of a leading cement firm, however, denied any possibility of pan-India price hikes, saying it would more likely be a regional. “It’s very difficult to say if there will be a price hike in September. It is also the ‘Shraadh’ month and is not considered auspicious, so demand from the real estate sector will anyway be muted. As for festive season, I think there is still some time for that,” the official said.

Depreciating Indian rupee = 12% growth for domestic travel and tourism industry

My colleague Yuga Chaudhari co-authored this story appearing in DNA Money edition on Friday, Aug 30, 2013.

The past 10-15 days have turned out to be quite a surprise for Himmat Anand, founder, Tree of Life Resort and Spa in Jaipur. The 14 villas premium property has been receiving host of inquiries and bookings for the month of November and December, a phenomenon he’s not experienced in the past. “This never happened before because the domestic market usually reacts 2-3 weeks before the travel time,” said Anand.

The sentiment is pretty much the same among travel and tour operators in the country. In fact, experts are of the opinion that the domestic travel and tourism industry which has been growing exponentially in the past years despite economic slowdown is in for a big bounce this business season.

Ashwini Kakkar, executive vice chairman, Mercury Travels, attributed the impact of depreciating Indian rupee (INR) as a key reason for the increased optimism in the domestic travel market. “Domestic travel is set to benefit in a big way. The industry has been growing at 6% odd and it could certainly hit double digit this time around,” said Kakkar.

Anand agrees saying based on the current market scenario, growth in domestic tourism should be upwards of 12% if not more. He added, there is a shift in people’s mindset with a realisation that overseas travel will be challenging. As a result, they are planning and freezing their holidays across domestic destinations.

“In the near term I definitely see an increase in the of number of people choosing domestic travel over internatinal. In fact, a lot of bookings for our property have already come in for the first half of October. The increase in percentage terms this season will be anywhere between 8 and 10% year on year (yoy),” said Anand.

Echoing the sentiment are Regi Philip of travel company Cosmos Agencies and Jai Bhatia, chairman western region, Travel Agents Association of India (TAAI) who expect domestic travel to pick up this year during the holiday season.

In fact, Bhatia is of the opinion that people are also deferring their international travel plans as the INR continues to depreciate compared to euro and dollar. "Domestic travel is expected to get a boost this year as people may look at postponing their international travels," he said.

Industry experts are of the opinion that people are being very cautious and are generally scaling down all types of travel more so the international travel and are think twice before traveling abroad as everything has become expensive. According to Amrit Pandurangi, senior director, Deloitte in India, airlines are also not in a position to provide discounts as oil prices are going up. “International travel, in the absence of any serious airfare reduction, will see a reduction this year. Business travel overseas will also remain muted as companies are focusing on cutting costs," said Pandurangi.   

The general consensus this holiday season is that international travel will take a beating. Based on his interactions with the travel trade, Anand said, outbound tourism is seeing a drop in bookings to the rune of 20-30%. In fact, business to long-haul high-value (holiday packages ranging from Rs 80,000 to over Rs 1 lakh per person) destinations like US, UK and Europe has gone down probably more than 40% or so. Short-haul low-value destinations (holiday packages ranging between Rs 35,000 and Rs 50,000 per person) like Thailand and other Far East countries are seeing a drop of 10-15%.

However, outbound business to South Africa (SA) and Australia is still looking good as the Indian rupee (INR) hasn’t devalued so much (in these destinations) as compared to other currencies. In fact, just a few days back, SA started a very aggressive promotion for the Indian travellers highlighting the fact that the INR will still get them good value in SA.

As a result, bigger tour operators including the likes of Cox & Kings, Thomas Cook, Mercury Travels etc are proposing those destinations where the currency weakening has been of the similar order to the INR so that the impact is not felt by the traveller. “Destinations like Australia, South Africa, Brazil, Turkey, Mexico have seen almost similar devaluation in their currency when compared to the INR. So tourists are open to shifting preferences from say the US or Europe to South Africa or for that matter Australia,” said Kakkar.

With bookings for outbound travel are yet to happen coupled with the volatility in the exchange rate people are taking the wait and watch approach expecting the INR to stabilise and then take a call on their international plans.

Starwood, Marriott in race for Phoenix's Mumbai hotel

This story first appeared in DNA Money edition on Thursday, Aug 29, 2013.

While Phoenix Mills, the promoters of erstwhile Shangri-La hotel in Mumbai, have renamed the property Palladium Hotel for now, it is understood that the asset owners are in talks with global hospitality majors for a new management contract.

Global hospitality majors, including Starwood, Marriott and Hyatt, are said to be engaged in hectic negotiations with the asset owner, Pallazzio Hotels and Leisure, a unit of Phoenix Mills.

The current operator, Hong Kong-based Shangri-La Hotels & Resorts, handed over the hotel to Pallazzio on September 6, 2013. Earlier this week, Pallazzio and Shangri-La decided to mutually terminate the 20-year management contract after operating the luxury hotel for nine months.

Shishir Shrivastava, Group CEO and joint managing director, PML, did not respond to a query on the new international hotel operator/brand.

Industry sources said Starwood is a strong contender for the new management contract. Marriott and Hyatt are equally aggressive pursuing the matter, said one of the sources.

“These chains certainly are front-runners but then the hotel owners could be practically speaking to every possible operator,” the source said.

The current discussions with the asset owner are an indicator that a new hotel operator is yet to be finalised as against PML’s claims of already having someone on board.

Officials at both Starwood Hotels & Resorts and Marriott International said they were not in a position to comment.

Responding to a dna email, a Hyatt International spokesperson said, “The company is not in the race for the management contract at this time.”

There’s also some buzz that the hotel in question will join Starwood’s ‘Westin’ network. Interestingly, Pune-based Avinash Bhosle Group owns a 27% stake in PML’s Mumbai hotel and already has Starwood as the operator for its five-star hotel in Pune under the Westin brand. Its another upcoming property in Goa will also be managed by Starwood under the ‘W’ brand.

PML will have to take a final call on the new operator at the earliest.

This is because the Indian hospitality industry is set to enter the peak business season starting October and not having a hotel operator will make it very challenging for the asset owners.

Shangri-La, Phoenix Mills scrap management agreement for Mumbai hotel

An edited version of this story first appeared in DNA Money edition on Tuesday, Aug 27, 2013.

Nine months after operating the luxury hotel atop the Palladium Mall at Lower Parel in Mumbai, Hong Kong-based Shangri-La Hotels and Resorts is now calling it quits. Industry sources familiar with the development told dna that the hotel operator has decided to part ways with the Pallazzio Hotel and Leisure Ltd, which is the asset owning company and a subsidiary of BSE-listed Phoenix Mills Ltd (PML).

Shishir Shrivastava, Group CEO and joint managing director, PML, confirmed the separation though he denied that Shangri-La was walking out of the management agreement. “It is with mutual discussion that we have decided to terminate the contract. A new operator has been finalised already details of which will be made public shortly,” said Shrivastava. Being a mutual decision there will be no penalties levied for terminating the management contract with Shangri-La Hotels & Resorts which was for a period of 20 years.

Most of the hotel projects being developed by PML sit under a separate special purpose vehicles (SPVs). The Shangri-La Hotel, Mumbai is under Pallazzio Hotel and Leisure Ltd (a subsidiary of Phoenix Mills Ltd). The company has invested Rs 294.6 crore with a debt of Rs 652.6 crore. The overall project cost however is pegged at Rs 1,050 crore.

On what led the parting of ways between the two entities, industry sources said that a misalignment in their vision for the luxury hotel development was the key reason. This clearly is a case wherein the owner-operator did not get along a bit. The source said there was major disconnect between them for various reasons including significant delays and the hotel being partially developed in terms of total guestrooms and food and beverage facilities.

“The operator wasn’t very happy with the overall development. In fact, being a flagship hotel in Mumbai, Shangri-La also offered to buy out the asset owners and develop it as per their international standards but in vain. Finally, when nothing appeared to be working they decided to walk-out of the management agreement,” said the source.

The office of Farhat Jamal, area general manager (India, Sri Lanka and Maldives), Shangri-La Hotels and Resorts, also confirmed the development saying Shangri-La will withdraw from the management of the hotel on September 6.

Shrivastava said the hotel will continue to operate as an uber luxury hotel with several enhancements, new banquet facilities and further the signature restaurant Mekong and Libai Bar will launch as planned by mid September.

The new brand will have to be announced in the shoulder month itself as the Indian hospitality sector will enter the peak business season starting October.

After significant delays of approximately three years, the Shangri-La Hotel, Mumbai began receiving guests in sometime in the third week of December last year (2012). The delay led to its overall development cost of Rs 1,050 crore overshoot the planned expenditure by Rs 400 crore. Of the total 390 guestrooms and suites approximately 221 guestrooms were operational as on June 30, 2013. By August end this inventory was to increase to 300 rooms and another 90 rooms were to be added in a phased manner depending on the market demand.

With an average occupancy of 40% for the April-June quarter, the hotel enjoyed an average room rate (ARR) of Rs 8,473 which could have been better given the luxury positioning of the hotel. Room revenues for the first quarter of fiscal 2014 was Rs 5.9 crore versus Rs 5.8 crore for FY13.

Of the planned 11 restaurants, only three are operational while the balance were projected to be operational by September this year. Revenue from Banqueting and F&B in Q1FY14 stood at Rs 9.1 crore as compared to Rs 9.4 crore in four-odd months of FY13.

Phoenix plans to raise Rs 1,000 crore

This story first appeared in DNA Money edition on Saturday, Aug 24, 2013.

Mixed-use developer Phoenix Mills Ltd (PML) is expected to soon kick-start the process of raising Rs 1,000 crore following shareholder nod for the proposal at its 108th annual general meeting.

The funds mobilisation will be in one or more tranches through a public issue or a private placement or a preferential issue or any other kind of public issue or private placement as may be permitted under applicable laws from time to time, PML said.

The PML management did not share any details about this fund-raising exercise. However, it is very likely that the company may use some portion of the Rs 1,000 crore towards repaying debt.
PML’s standalone debt as of June 30 stood at Rs 284 crore, stake-wise effective gross debt at Rs 2,025.3 crore and consolidated gross debt at Rs 2,400.5 crore.

The consolidated debt, the developer added, went up mainly on account of new special purpose vehicles (SPVs) being consolidated. PML’s total debt figure across all SPVs edged up to Rs 3,167.4 crore in the April-June quarter compared with Rs 3,117.6 crore in the previous quarter.

There are some new launches in the pipeline, which may add up to approximately three million square foot (msf) spanning over 2013-14 to 2014-15. The rollouts will be spread over cities like Bangalore (1.4 msf), Chennai (0.4 msf) and Pune (0.4 msf).

Analysts put FY14 (estimated) at 1.4 msf and value at Rs 1,550 crore.

“Since the bulk of the new launches are in the premium segment, the success remains a key re-rating trigger,” said Parikshit Kandpal and Varun Chakri, research analysts with Karvy Stock Broking, in a June-end report.

Larsen and Toubro Ltd seeks to double overseas orders

This story first appeared in DNA Money edition on Friday, Aug 23, 2013.

Larsen and Toubro Ltd (L&T) is working on a template to more than double its international order flow this fiscal.

This, it feels, will go a long way in maintaining operating profit margins at 11-11.5% this year, given an overall financial weakness affecting the Indian infrastructure industry.

A M Naik, group executive chairman, L&T, said the management has worked aggressively on building a strong organisation outside India to bag infrastructure projects. “We are targeting order inflows of Rs30,000 crore in this fiscal. As challenges become more intense in the domestic market, we are focusing overseas.

Our strategy is to do as many projects in international markets as possible. This will help us overcome the overall slowdown experienced in the domestic market,” he said at the company’s 68th Annual General Meeting in Mumbai on Thursday.

In the next few days, the company is expecting Rs3,500 core worth of orders from Qatar in the power transmission and sub-station space. Another Rs1,500 crore to Rs2,000 crore worth of road projects from Doha, in addition to a metro project, is in the works.

The company sees a bulk of these international orders coming in from the Middle East. It’s also targeting the Commonwealth of Independent States (CIS) and Far East markets, thus widening its scope for any overseas business opportunity. The current domestic to international order flow mix in the company now stands at 75:25.

In fact, the infrastructure major has started to sharpen its focus on international orders over the last couple of years.

For instance, its order book stood at Rs6,000 crore, excluding IT, engineering and exports of products, in fiscal 2012 and the company achieved a figure of Rs12,000 crore in the last fiscal.

There have been some earlier reports that L&T is weighing divesting stake in Dhamra Port Company Ltd – L&T currently owns 50% through its subsidiary, Infrastructure Development Projects Ltd (IDPL) and the balance is owned by Tata Steel. Clearing the air, Naik said discussions (for IDPL stake sale) are still going on.

“In the current economic situation, valuations tend to get depressed. We are not in a distressed sale position. If we get the right value, we will go ahead with plans to dilute up to 20%,” said Naik.

The company management has clarified that it has no overseas fund raising plans citing strong cash flows and will be able to meet funding requirements. At a group level, the company debt stands at Rs60,000 crore, much of which comes from financial services and concessions business.

On how much of the debt is hedged and vice-versa, R Shankar Raman, CFO, L&T, said, “The debt is largely in Indian rupee (INR) as the revenue profile is INR as a result the question of hedging a significant portion doesn’t arise for the group,” he said adding that earning more dollars will be the best bet to deal with the depreciating INR.

Naik added, “The current situation in terms of economic development is not good at all. People say that the gross domestic product (GDP) growth is around 5% and sometimes one wonders if it is really the case looking at what is really happening on ground at present. The INR is reaching a new low on a daily basis and we really have no idea how further down will it go. The infrastructure sector has been going through troubled times since the last over two years now and I don’t see any improvements (in terms of possible economic recovery) in the next one year or so,” he said.

The company is restructuring its engineering and services business (a major part within L&T). A new subsidiary -- L&T Technology Services Ltd -- is being formed which will buy over the engineering piece which is with L&T Infotech.

“We will then transfer -- at the right time between now and April 1, 2014 -- within engineering also in that company thus making it a technology services company. This will make us a very strong engineering service provider. It’s too early to say if we will be listing that company,” said Naik.
 

Shot in arm for Wockhardt as pledged shares released

This story first appeared in DNA Money edition on Wednesday, Aug 21, 2013.

Drug-maker Wockhardt said its promoters and promoter-entities have completely released shares pledged by them earlier.

Over 6.97 crore shares held by Khorakiwala Holdings and Investments and another 442,785 shares held by Habil Khorakiwala were released. With this, promoters have no more shares pledged in the market.

Wockhardt did not share other details.

Analysts said the release of pledged shares is a positive for the stock, but it does not end troubles for the company.

Bhavika Thakker, research analyst with IIFL, said the June quarter has not been kind to the company.

One bad news followed another: US drug regulator FDA issued ‘Form 483’ – it is a post-inspection record of violations of quality or safety norms at the drug manufacturing plant – last week to Wockhardt’s Chikalthana unit, which contributes the largest chunk to the company’s revenues; before that, there was a warning letter; then, an FDA import alert for the Waluj facility. Even the UK drug regulator was not happy with the Chikalthana unit.

Consequently, Wockhardt’s stock plummeted 77% this fiscal so far (from Rs2,005.80 on April 1 to Rs454.25 on Tuesday).

“Release of the promoters’ pledged shares is just a short-term measure. I’d still advise a wait-and-watch approach on this stock. There are some serious operational issues that need to be addressed by the management to bring back confidence in the market,” said Thakker.

Analysts said Wockhardt now looks like a beaten-down stock. Although some traders may perceive in it a counter-bet, the stock does not make for a good pick from an investment perspective, they said.

“Any bad news from the Chikalthana facility will see the stock getting battered,” said an analyst. To preempt any such situation, Wockhardt has got on board the US-based Lachman GMP Consultant to assist it in reviewing all the regulators’ observations.

Tony Fernandes eyes railway hotels

This story first appeared in DNA Money edition on Monday, Aug 19, 2013.

Hospitality companies including Tune Hotels, owned by AirAsia promoter Tony Fernatndes, are in the race for setting up hotels at 14 semi-developed sites near key railway stations across the country.

Ircon International, a company under Railways, is offering multi-functional complexes (MFCs) that feature hotel rooms, designated space for food and beverage and operations facilities at key railway stations across India.

The total guest room inventory across these hotels is expected to be over 600.

Tune Hotels India Services (THIS) operates as a 60:40 joint venture between Tune Hotels and Mumbai-based Apodis Hotels and Resorts Ltd. While Apodis holds the master franchise for Tune-branded hotels in India, the management of these properties will be handled by THIS, which will also look after technical and development services and project management consultancy.

Apodis Hospitality Group, which also owns and operates bed-and-breakfast hotel chain Mango Suites along with Cafe XO restaurants, confirmed it is in the bidding participation.

Umesh Luthria, executive director and CEO, Apodis Hospitality Group, said the company is working on the tender document. “We are looking into the legalities of the tender document while simultaneously assessing the market demand. If it is an over 100-room hotel, then we will go with Tune brand and if the location has a smaller inventory of 50-70 guestrooms, then it will be Mango Suites,” he said.

The 14 sites are in Jammu, Allahabad, Haridwar, Udaipur, Jodhpur, Gwalior, Indore, Jabalpur, Raipur, Digha, Siliguri, Hubli, Madurai and Kannur.

With railways offering hotel developments on their land parcels, industry experts said a huge opportunity awaits the hotel chains operating in India.

The projects are located in close proximity to railway stations and some of the sites even have space for meeting rooms, banquet halls, food courts, supermarkets, shops for pharmacies and ATMs.

Shreenath Shastry, national director-hospitality and leisure, Knight Frank (India), the company which is handling the bidding process, said, “The organised segment will see value in the sites on offer because of prominent locations, clear title developments and ready markets.”

Sanjay Sethi, MD & CEO of Berggruen Hotels, said, “It will give an opportunity to a lot of new, improved, competitive and quality products to address the market. I’ll be very keen to explore this opportunity. While not all sites will be viable, at least 20-30% of the locations on offer would certainly make for ideal locations,” he said. Berggruen is in the process of creating a separate brand to tap the ever-growing budget and economy travellers, he said.

Industry sources said the 14 sites are only the first tranche. In all, there are over 100 developments in various stages of  planning and development.

Tata Group’s Ginger, Accor’s Formule 1 and Lemon Tree’s Red Fox are the other major players in the budget hotel segment, and are likely to participate in the bidding process as well.

The final date for submission of the bids is September 5 and the technical bids will be opened the next day.