The Hindu Business Line : DLF likely to tie up with Hilton

Real estate developer DLF is likely to tie up with the global hotel major Hilton and foray into the hospitality business to build a hotel chain across the country.

According to sources the DLF Group hopes to build 25,000 rooms in the next five years, entailing an investment of between Rs 10,000 crore and Rs 12,000 crore. The group wants to build a chain of hotels including some 10-12 luxury resorts in certain exotic locations and 100 business hotels with an average capacity of 100-250 rooms in the tier-II cities.

It is learnt that DLF and Hilton would float a joint venture company, where the real estate developer would hold 74 per cent and 26 per cent would be held by the hotel major. In future, DLF may dilute its equity to 51 per cent.

The two companies have been discussing the matter for quite some time now. Formalities are now under way for a formal agreement to be signed by the two parties.

To follow SPV route

According to the arrangement that is being worked out, DLF would carry out the construction work and develop the hotel, with the day-to-day operations managed by Hilton.

To start with, DLF would follow the SPV (special purpose vehicle) route for its hotel business and would replicate this for its SEZ (special economic zone) business.

DLF has already signed an MoU with the Punjab Government for developing an 11,000-acre multi-product SEZ at Amritsar. The Union Commerce Ministry has also cleared two more SEZ proposals of DLF, at Ambala (5,000 acre) and Gurgaon (20,000 acre).

Sources said the first phase of work for the Amritsar SEZ would start within the next six-eight months.

There would be an investment of Rs 1,000 crore. DLF would be tying up with several service companies for specific activities at the SEZ. Currently, the group is busy in land acquisitions.

At present, DLF is developing several projects spread across 19 cities.

The company claimed that its total income has increased from Rs 630 crore in 2004-05 to Rs 1,259 crore in 2005-06.

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