Raising funds has become costly and these realtors are finding it tough to complete their hospitality projects. With not many options left, they are looking at distress sale of hospitality assets to generate liquidity, say industry experts according to a report.
Keeping close watch on such assets are hotel companies such as Taj Group, Pride Hotels, Panoramic Universal and global chains like French hospitality company Accor.
Panoramic Universal recently closed a distress sale deal in Secunderabad and is negotiating for another in Ahmedabad. It will develop a 3- or 4-star 90-room hotel in Secunderabad. The Ahmedabad hotel is operational with 35 keys.
Owners of Taj group hotels, Indian Hotels Company Ltd (IHCL), the Tata group company is also looking at such properties if they find a strategic fit with its expansion network. Says Anil Goel, senior VP (finance), "We are scanning the environment to see what opportunities are available in the market and whether the asset suits our criteria."
The Tata Group had earlier announced an investment of Rs. 13 billion for expanding its hotel network across India. Of this, about Rs 8 billion has been invested and the balance will be used for further expansion.
"It is very much a micro market wherein all the components, like the hotel site, product, brand etc, have to make sense for a hotelier to go for it. That's the way we have always done it and will continue to in the future," says Uttam Dave head of Development India for Accor which ' hasn't come across too many projects that fit its criteria for expansion into various geographies'.
Some hoteliers feel the market is yet to bottom out. S P Jain, MD, Pride Group of Hotels says, "My feeling is that realtors will not be able to deliver 60-75% of all the developments announced in the last two years. So yes, we are certainly looking at quite a lot of hospitality assets being put on the block in the near future when desperation starts setting in." |