East India Hotels may set up five-star hotel in Kolkata

One of the oldest hoteliers in Kolkata, East India Hotels (EIH), is looking at setting up another five-star hotel in Kolkata.

The Oberoi group's flagship company has evinced interest in a Kolkata Municipal Corporation (KMC) plot off eastern metropolitan bypass, on the outskirts of the city. This is 68 years after the hotelier's first property.

EIH Vice-Chairman S S Mukherjee said the company was exploring the option and had picked up documents for the plot, but nothing had been finalised yet.

The EOI (expression of interest) was in response to an advertisement put out by KMC. If it materialised, it would be the Oberoi group's second property in Kolkata. The Oberoi Grand, in the central business district, has been with the group since 1938. It was the first city hotel of the Oberoi group.

Irrespective of the KMC bid, the company was keen on adding a second property in Kolkata. Mukherjee said, there was a natural interest and bondage with the city.

Mukherjee said the company was still undecided on which brand the group would bring to the city "� whether it would be the Oberoi brand.

EIH had embarked on an asset light strategy. He said the Kolkata property could be under a different corporate configuration, where a strategic investor could be inducted.

Mukherjee cited the example of the Gurgaon hotel, Trident Hilton, which was under a different ownership, and said there were a few such instances.

In March 2004, EIH signed an agreement with Hilton International to co-brand its Trident hotels in India.

Mukherjee said while Kolkata was growing and occupancy had picked up, it still had a long way to go, as far as average room rates (ARR) were concerned.

The ARRs in Kolkata were even lower those in Chennai, leave alone the more vibrant cities like Delhi, Mumbai, Bangalore. The investment in any Oberoi property, land cost aside, is around Rs 1.5 crore, per room.

Oberoi would be pitted against some of the domestic and international names in the hospitality industry for the KMC plot. KMC sources said around 19 hoteliers had so far evinced interest in the property, of which five-six were international. KMC has allotted five acres for the five-star property on eastern metropolitan bypass.

This comes after Kolkata Municipal Development Authority (KMDA) sold another property on a six-acre plot in the vicinity, at Rs 213 crore.