Raheja may invest Rs 3000 crore to double hotel rooms

NEW DELHI: K Raheja Corp’s hospitalitycompany Chalet Hotels that owns several hotel properties, including Marriott and Renaissance, is looking to double its room portfolio with total planned expenditure of Rs 3,000 crore over the next 4-5 years, said a top company official.

The company is looking to de-risk geographically by investing in luxury properties in other tier-I cities including Bengaluru, Goa, the National Capital Region and Pune apart from increasing its presence in Mumbai. Chalet Hotels, which has a current portfolio of around 2,800 rooms, is planning to add around 1,500-2,000 keys through acquisitions and 1,000 rooms through greenfield developments including land cost. It owns total seven properties and co-owns one property in Western and Southern India.

“Chalet Hotels and its subsidiaries are looking at an aggressive growth plan over the next 4-5 years, with an intention to diversify the geographical reach of the portfolio in India. We are looking at expanding capacity in Mumbai and Hyderabad and looking for acquisition of operating hotels in Delhi, Pune and Goa,” Sanjay Sethi, MD & CEO, Chalet Hotels, told ET. “Markets are good with an excellent growth forecast. We are bullish and would like to have our inventory ready during the upside.”

The proposed expansion plan will be financed through a mix of internal accruals, group resources and debt.

For the year ended March 2017, the company’s turnover for its total seven hotels stood at Rs 950 crore with earnings before interest, depreciation, tax and amortization (EBIDTA) of Rs 350 crore. After including the performance of the company’s co-owned hotel in Juhu, the turnover stood at Rs 1,100 crore and EBIDTA at Rs 400 crore.

“We are looking at doubling our capacity in the next 4-5 years in the five-star segment. Following this, we expect to see proportionate translation in revenue. We expect both topline and EBITDA to at least double after that,” Sethi said.

For the year 2017-18, the company expects 20% year-on-year growth in top line and 30% growth in EBITDA. The company’s portfolio recorded total occupancy of 74% with an average room rate of Rs 8,500 net of taxes in 2016-17.

Navi Mumbai will be a focus market for the company, where it is planning to build two new hotels with 500 rooms in total. Of this, the first one will have 260 rooms and the other will add around 250 keys. With the new airport and aggressive infrastructure development in Navi Mumbai, the company is bullish on this micro market.

The company will also weigh its opportunities for acquisitions, or brownfield expansion, based on the attractiveness of the micro market.

“We will pursue every opportunity based on right price and right property and location after studying the micro market. We have already expressed our interest for a couple of opportunities available in the market right now,” Sethi said.

 (source by:-The Economic Times)

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