Beleaguered Hotel Leela Venture hopes to monetise its 3.85 acre land in Hyderabad’s Banjara Hills later this year after efforts to build a luxury hotel could not materialise.
The land sale could fetch the loss-making company around Rs 150 crore enabling it to bring down its debt burden which as of last financial year is estimated to have stood at Rs 4,500 crore.
The Mumbai-based company has also commenced work on developing high-end residences next to the Leela Palace, Bengaluru where apartments are presently being sold. The company entered into a joint development agreement with Prestige Developers for the project.
A series of other projects are also under development, including a 250-room property near the Bengaluru airport, a 58-villa resort in Jaipur, a hotel-cum-branded residences project in Chandigarh and a 175-room luxury hotel in Kathmandu. The company made the disclosures in a filing with the BSE on Monday.
Earlier this month, it signed an agreement with Qatar’s Al Faisal Group to sell the 6.5 acre land near the Taj Mahal. A 100-room Leela Palace and a 150-room Aiana Hotel will come up on that land..Leela would only be managing the property which would see a combined investment of Rs 500 crore.
Hotel Leela has a total of nine operating properties with a combined inventory of 2,688 rooms. Weighed down by the debt pile the company has been struggling to grow for the past many years. It has been selling core and non-core assets which included two of its prime properties in Kovalam (Kerala) and Goa in 2011 and 2015 respectively.
However, even the sale of assets has been slow. For instance the Hyderabad land has been on the block for four years even as it had been looking at suitors for the Agra project for many years after it shelved plans to self-fund a luxury hotel there.
Downturn in the market coupled with stiff competition from domestic and foreign brands such as Marriott, Hyatt, Intercontinental, Sofitel, ITC and Taj, Hotel Leela has seen a steady decline average room rates (ARR) and occupancy at key properties such as Mumbai, Goa and Kovalam.
The ARR in Mumbai, for instance, stood at Rs 7,246 last year (as against Rs 8535 in 2011-12) while room occupancy declined to 69 per cent from 76 per cent. The rack rates at the Mumbai property, which is also the group’s oldest property is presently at Rs 11,000. Marriott opened its second JW property in the city and is set to add the Ritz Carlton soon. Indian Hotels also opened its third Taj-branded property near the domestic terminal in Mumbai.
