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Shubhra Tandon

Mumbai, Dec. 1 DB Hospitality, part of the Mumbai-based real estate developer DB Group, would be adding 1,000 rooms by 2011 through its three ‘under construction’ properties in Goa, Pune and Mumbai.

The company has also recently signed a comprehensive agreement with Japan’s JAL Hotels for developing properties for its brand Nikko Hotels in nine cities in India. DB Hospitality would be investing a total of $1 billion over the next four years for the development of hotel projects in the country.

Speaking to Business Line, Mr Julian Groom, Chief Operation Officer and Executive Director, DB Hospitality said, “Significant portion of these investments will be for JAL properties.” He refused to give the exact figure, saying it would be too early to comment. The company would be arranging for funds through internal accruals.

The cities where these projects would come up are Mumbai, Pune, Delhi, Gurgaon, Noida, Chennai, Kolkata, Bangalore and Hyderabad. Mr Groom added that the developer also has the ‘first right of refusal’ on any other chosen location by JAL for hotels in India.

Commenting on why DB chose to take up the project in times when developers were deferring their room additions in the market, he said, “We feel this is a very good time to do it because land prices are declining. This assists in our feasibilities and makes hotel projects more realistic for us and our partners. Also, we have been approached by many (developers) with unfinished or partially finished or just started hotel sites, which are either distress sales or of that nature, which means that we can buy value. It would also enable us to complete our projects faster. And of course, the discussion (with JAL) had been going on for a certain period of time but it is only now that all was finalised.”

He also added that the gestation period for any hotel project is between three and five years. “We believe by the time these projects will be complete the economy will be in much better shape worldwide and in India. But even before that with some distress sales etc, we might be able to facilitate a hotel in the next two years.”

Currently, DB owns two hotel properties in Mumbai and Ahmedabad under Le Meridien brand. Mr Groom said, Hyatt Hotels have signed a letter of intent for the three upcoming projects.

“First of these is to be opened by the end of next year in Goa. The other two include one in Pune, which is under construction and should be operational by 2010, and the Mumbai property coming up in Marine Lines would be opening in 2011.”

As regards JAL, on the basis set forth in the agreement, the parties have commenced work on a sequence of hotel openings beginning in 2010.

DB Hospitality is aiming for the first 250 rooms under the brand by then. In total, there will be 3,000 rooms coming as part of the agreement between JAL and DB. However, the company declined to give details of which property will be the first one to enter the market.

More Stories on : Alliances & Joint Ventures | Hotels | Overseas Investments

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