Hospitality major East India Hotels (EIH) has decided to develop realty projects, a move that will also help achieve cost efficiency in its future hotel projects.
"In the wake of high prices of land, only hotel project does not remain viable," EIH Chairman and Chief Executive PRS Oberoi said today.
Company Vice-chairman SS Mukherji said: "we have adopted a new model for development of hotels. We will go for multi-use of land by which project value will come down."
To begin with, EIH will construct 60 luxury Oberoi apartments at their Bangalore project site of 8.2 acres where a 250-room Oberoi brand hotel would be built.
"We'll be for outright sale of these apartments. We'll use similar model for hotel project sites like Goa. It can be apartments or villas depending on project location," Mukherji said.
The hotel major had said in all the future projects they would like to concentrate in hotel management contracts with no or little stake rather than holding the entire real estates in their books.
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Stating that EIH wanted to enter the dragon land with the same strategy, Oberoi said "I plan to go to China and that would probably be a management tie-up".
However, there was no proposal from China so far, he added.
Oberoi, speaking about the future investment plans, said the group was cautious on investments after the recent global developments.
An investment of Rs 40 crore had been drawn by the hotel major during the year, but only for renovations and upgradations (including 5 floors at Trident Mumbai) and a flight kitchen project for Delhi Airport.
Oberoi said the company would be focusing on the domestic hospitality market.
"Earlier, share of revenue from domestic market was 20% which had now increased to 40% and in future Indian market will grow as overseas is uncertain," Oberoi said.
Despite this, Oberoi said there were no serious plans to foray into budget hotel segment.
Speaking about his plans for West Bengal, Oberoi said EIH was interested in hotel projects at Rajarhat with Trident and Oberoi brands management tieup.