Builders create room for 15 five-star hotels

REALTY RISES IN AHMEDABAD

Investments worth Rs 2,500 crore lined up.

Builders in Ahmedabad are finding hotels cozier than residences. The scarcity of hotels in the city has created enough room for local builders to forge joint ventures with leading hotel chains and join the hospitality bandwagon.

Over a dozen five-star hotels are planned in Ahmedabad and the spadework on almost half-a-dozen has already begun, estimated to draw an investment of Rs 2,500 crore.

"There are 15 five-star category hotels that will mushroom in Ahmedabad. If we take the average area of a five- star hotel to be 300,000 sft, then at an average cost of Rs 5,000 per sft the overall investment comes to about Rs 2,500 crore," said Shekhar Patel, president of Gujarat Institute of Housing and Estate Developers (GIHED).

Many of these hotel projects will be displayed at the upcoming GIHED Property Show 2008.

Local real estate developers including JP Infrastructure, Savvy Infrastructures, Ganesh Housing, NG Group and Dharmadev Infrastructure have planned their foray in hospitality and are in talks with various hotel chains both national and international.

While JP Infrastructure is in talks with Hyatt, the NG Group is also in talks with one of the Hyatt-owned chains, sources familiar with the development said.

"We are planning to set up three five-star hotels in the city and have already zeroed in on the location," a senior company official said. Savvy Infrastructure is setting up a 240-room hotel on the SG Highway.

"This will be the largest hotel in Gujarat and will be run by Crown Plaza. We aim to invest about Rs 160 crore in this project," said Jaxay Shah, director of Savvy Infrastructures.

Besides, ITC is setting up a hotel in the Satellite area while the US-based Pacifica Group has tied-up with Marriott for a five-star hotel project. Among other hospitality projects coming up in the city include Cambay Spa & Resorts, Gulmohar Greens, and Indraprasth.

The Delhi-based Parsvnath group is in talks with various hotel chains including Le Meridien for setting up a hotel in Vejalpur, sources said. Another Delhi-based realtor Alpha G: Corp has roped in 'Ista', to be developed and managed by hospitality player IHHR in its 1-million sft development project at Vastrapur. DLF had in the past said that it intended to set up Hilton hotels in Ahmedabad.

"The total number of rooms announced for development over the next one year slightly exceeds 1,000. However, not all announced projects may reach actual completion, owing to the fickle dynamics in the hospitality sector. One can reasonably expect in excess of 2,000 rooms to be added to Ahmedabad's hospitality arsenal over the next three years. This is significant, considering the fact that there was an acute shortage of quality rooms in Ahmedabad in the past," said Anuj Puri, country head and MD of Jones Lang LaSalle Meghraj.

A minimum of seven to eight major projects have been lined up for 2008, each with an average 100-120-room capacity. In the limited case of 5-star hotels, the room count is 250 or more, he said.

"The hospitality sector in Ahmedabad currently features an investment climate that is suitable for those who aim to invest in a business model. Such a model generates cash flows rather than short-term returns, and is the favoured route for those who invest in hospitality in Europe and in the US. In other words, investing in Ahmedabad's hospitality sector may not be lucrative for individual short-term investors with a low risk appetite, though the long-term prospects are definitely encouraging," Puri added.