The Hindu Business Line : Royal Orchid eyes Tier I, II cities

Bangalore, Nov. 15 Royal Orchid Hotels Ltd plans to have a pan-India presence by 2010, said Mr Chander Baljee, Chairman and Managing Director. The company is looking at having 25 properties under its fold mainly in tier I and tier II cities — in ownership, joint venture, lease and management contract formats — by 2010.

With an inventory of 800 rooms currently, “the target is to have 2,000 rooms depending on the size,” he said. “Going forward, we are looking at five-star and four-star business hotels,” he added.

The company, which raised Rs 112 crore through its IPO last year, has used a major part of its funds for developing new properties and also funding a recent acquisition. For future funding, the company will be “mainly looking at private equity at the SPV level, and not at an entity level,” and also at debt financing besides internal accruals, Mr Baljee said. “We have enough funds; there is no constraint of funds in the company for the next couple of years,” he added.

The company, which announced the acquisition of the Hotel Royal Orchid Central in Bangalore through its subsidiary, Icon Hospitality, for Rs 82 crore couple of days ago, has invested about Rs 15 crore for renovating the hotel (which it had leased till now) over 3-4 years. The hotel enjoys an occupancy rate of 79 per cent, said Mr Baljee, with an average room rate of about Rs 6,000.

Exclusive tie-up

The company had also entered into an exclusive tie-up with the Ramada chain for 10 properties last year, and “the target is to have 10 hotels under this tie-up in the next 5-6 years,” he said.

While Ramada will own the brand, Royal Orchid Hotels will take care of the management. He added that five properties are under development in Mumbai, Delhi, Hyderabad, Goa and Jaipur. “The memoranda of understanding have been signed; discussions on the finer details are on,” he said, adding that the business models for these properties are yet to be decided.