News & Views on Indian Real Estate

Friday, August 01, 2008

Six hotel projects shelved as small realty cos give up

A buoyant real estate market last year saw several realty firms foray into the hospitality sector. But with slowdown hitting real estate and choking cashflow, several small realty firms have been forced to put at least half a dozen hotel projects on the block. A developer has put on the block a 200-room hotel project in Ahmedabad that has a management tie-up with a reputed international hotel brand. Work on the project is around 60% complete. Similarly, two mid-size hotel projects in Bangalore, which are in the early stages of construction, and one each in Pune, Chandigarh and NCR have been put on the block. Almost all the projects are mid-size. Some developers are looking at completely exiting the hotel projects while others are looking at stake sale. Till six months back when the going was good, several realty developers, who had parcels of land at strategic locations, were trying to get into the glamourous hotel business. With hotel room shortage taking room revenue to new levels, the hospitality business looked very attractive. And with foreign hotel chains looking to aggressively expand in India, even small developers could easily tie up with them for a management contract.

Mamta Sinha said...

The Indian hospitality industry is poised for tremendous growth. The demand-supply imbalance has prompted several national and international hotel companies to focus their energies towards expansion in India. The next few years will thus witness the opening of several hotels that will span the length and breadth of our nation. While these developments are well overdue and a welcome metamorphosis in the growth pattern of our industry as compared to the last couple of decades, one must also pay heed to the challenges that are meeting us head on.

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