Peninsula Land, the property development arm of Ashok Piramal Group, today announced its foray into hospitality sector. Peninsula said it has entered into a joint venture with textile maker and real estate developer Arrow Webtex to develop business hotels across the country.
The group has entered into a new business vertical after it exited its retail business, Pyramid Retail, in December 2007. The group sold Pyramid Retail to Indiabulls group for Rs 208 crore.
The hospitality foray also marks the continuance of demarcation of group's businesses among Piramal brothers. While Urvi Piramal is the chairperson of the group her three sons, Rajeev, Harsh and Nandan head independent businessess.
While Rajeev Piramal heads the group's property business Peninsula Land, another brother Harsh Piramal heads the textile venture Morarjee Textiles and auto components business Miranda Tools and PMP Components.
Arrow Webtex, promoted by Jaydev M Modi, is engaged in the business of manufacturing narrow woven fabrics, real estate consultancy and development of properties. Modi is also on the board of Peninsula Land. Arrow has owned nearly 133,000 sq ft of property in Mumbai as on April last year.
Peninsula and Arrow Webtex will create a special purpose vehicle (SPV), where they will hold 50 per cent stake each. In the first stage, the JV will invest Rs 100 crore and it plans to build 10 hotels of 100 rooms each, aggregating 1000 rooms.
Initially, the JV plans to build hotels in Mumbai, Pune, Nagpur, Nashik, Kolhapur in Maharashtra and then develop hotels in Gujarat in cities such as Ahmedabad, Surat, Jamnagar, Mundra port and Goa. In the second phase, the JV is targetting southern markets such as Karnataka, Tamil Nadu, Andhra Pradesh and Kerala, Peninsula said today.
The hotels in the first phase are expected to be operational in the next 30 months.
PLL is developing nearly 4.5 million sq ft of real estate, including residential, commercial, IT parks and special economic zones across the country. It also has a real estate joint venture with global investor Lehman Brothers, wherein it holds 25 per cent stake.
"We have been there in real estate business for many years and operate in residential, commercial and retail spaces. We thought hospitality is right fit into our business model. Besides, the demand for rooms from business travellers made us look at hospitality business,'' Nandan Piramal said.
The JV is exploring whether to give management contract to hotel companies to run its hotels or run them by their own, Piramal said.
Banking on the acute shortage of hotel rooms in the country, a host of real estate companies such as DLF, Unitech, Parsvanath, Emaar MGF among others have has announced hotel projects and tie-ups with international hospitality majors.
DLF has plans to spend Rs 20,000 crore to build 125 hotels in the next seven years and another Delhi-based realty major Unitech has plans to build 35 hotels and it has already tied up with global hotel majors Marriott and Carlson Hotels to run its hotels.
