Leela to set up three hotels in Rs 500 cr plan

Luxury hotel group Leela Palaces and Resorts, as part of an expansion plan, is setting up three new hotels in Udaipur, Chennai and Hyderabad at a cost of Rs 500 crore.

The company currently owns three properties in Goa, Mumbai and Bangalore. Chennai and Hyderabad properties will be marketed as corporate hotels and Udaipur as a luxury hotel.

A 25 per cent increase in foreign tourist arrivals last year and extreme paucity of rooms is the main reason behind the expansion plans, according to Vijay Nair, vice chairman of the group.

"Also as most international airlines have increased number of flights to India, the demand for rooms will further increase," he added.

The company will raise all its funds through internal accruals and foreign currency convertible bonds worth $80 million.

They are also eyeing two properties in Kerala. One of the hotels will have 200 rooms built with an investment of Rs 110 crores.

The group is also looking at the possibility of acquiring an existing beach resort or a plot being offered by Government of Kerala at Bekal Tourism Zone in North Kerala.

The hotel at Udaipur, already under construction, will be a new palace hotel at Lake Pichchola. It is being built with an investment of Rs 65 crores and is expected to be complete for 2007 winter season.

" The lake is dry since past one and a half years, but Rajasthan government has plans of refilling it," Nair said.

"Chennai and Hyderabad are emerging as formidable IT and BPO centres," said Peter J Leitgeb, president, Leela Palaces and Resorts.

The group proposes to build a 15 storey high-rise building with 360 rooms and suites, at a cost of Rs 320 crores. Work on the property will start in August this year and is expected to be commissioned by early 2008.

" Few floors in this hotel might be converted into exclusive women executives' rooms, if there is such a demand," Leitgeb added.

The Hyderabad hotel is being built at a cost of Rs 310 crores. It will have 300 rooms and will also be commissioned by early 2008.

Leela Palace Bangalore has one of the highest average room rates (ARR) in Asia at Rs 14,000 . The hotel also has an 85 per cent occupancy during weekdays.

Due to high turn-away factor, an additional wing of 120 guest rooms is being added with an investment of Rs 40 crores, as per a company release.

This wing is expected to be operational by May 2006. " We will have a new marketing plan for Bangalore aimed at increasing occupancy during weekends," added Leitgeb.

Leela Kempinski Mumbai is also undergoing a refurbishment programme at a cost of Rs 90 crores. 119 guest rooms are being renovated to suit the needs of business travellers.

" Mumbai Leela has an ARR of Rs 6200, the second highest in the city," Leitgeb said.

Leela Group might look at the six properties being offered by Delhi government in view of the Commonwealth Games, added Nair on the sidelines.

He said that the property in Delhi would be more expensive due to high real-estate prices with each room being built at a cost of Rs 1 to Rs1.25 crore .

He also mentioned that the government still owed them Rs 20 crores for the land they returned as they were unable to set up the project in 1990.