DLF plans $800 mn capex for hotel debut

DLF Universal, for its foray into the hospitality sector, is considering investing at least $700-800 million in select hotel properties over the next seven years.

According to the draft red herring prospectus for DLF's forthcoming initial public offer, the realty company has identified 21 sites for developing hotels. The company has started acquiring land in some of these locations.

Bharat Hotels and one of DLF's special vehicle companies, in an equal partnership, purchased four acres in Chandigarh, Punjab. According to industry sources, this site will be used to develop a five-star hotel.

However, DLF declined to comment. Earlier this year, DLF had successfully bid Rs 97 crore for a hotel site in Rohini, New Delhi.

The prospectus stated that the company would also look at developing hotels in or close to its other developments, such as commercial centres, IT parks and shopping malls.

It added that besides the company's existing real estate capabilities, DLF would be building these assets with its 50 per cent joint venture partner Laing O'Rourke, a UK-based infrastructure-cum-construction company.

The company's foray into hospitality will be in all hotel categories. It is planning super luxury hotels in five or six cities over seven years and 100 business and four-star hotels in 50 cities over ten years.

DLF will also complement some of its retail projects with service apartments. For instance, the company's upcoming mall in Saket, New Delhi, will also include service apartments.

For the management of hotels, it is believed that DLF is in an active dialogue with Hilton International. This April, the two together bid for a six-acre hotel site in Kolkata. The site, however, was acquired jointly by Emaar MGF, a real estate developer, and InterContinental hotel chain.

In an earlier interview, Rajiv Singh, vice-chairman, DLF Universal, said each hotel segment could be managed by different international hotel chains.

With reference to the 2010 Commonwealth Games, Singh said DLF was not looking at specific projects. "We are considering only long-term gains. We are not looking at cashing in on any one event per se," he added.