The Hindu Business Line : Leela Group enters Delhi market

Hotel Leela Venture Ltd has signed a management deal with Ambience Hotels and Resorts Ltd to manage a five-star deluxe hotel with 319 guestrooms and suites and 90 service residences, now under construction in Gurgaon. "It was important for us to be in Delhi,'' said Mr Vivek Nair, Vice-Chairman, Hotel Leela Venture.

Delhi, according to him, is faced with a huge shortage of rooms. This is the first time Leela is looking at the management route. Most of its hotels are owned and run by it. Here the company would manage a five-star hotel. Profit margins are much higher in this scenario, officials said.

According to an official statement, this is the most upmarket of hospitality projects being implemented in Gurgaon. It plans to enter into more such management agreements selectively in India and abroad provided the standards of the hotels were in line with the standards of Leela and its affiliate Kempinski.

"The Leela Kempinski Gurgaon and The Leela Residences will be part of an upscale, mixed-use development located on a plot of about five acres which includes an upmarket shopping centre measuring 15,000 sq. m. Strategically located just across the Delhi border, the development has the unique feature of having one kilometre long frontage alongside National Highway No 8 leading to Gurgaon City," it said.

The new property would cater to upmarket clientele belonging to the same marketing segments, that is IT, ITES, BPO and other corporate business as its highly successful hotel, the Leela Palace in Bangalore. The building would have a modern architectural façade with interior design by a US firm.

Civil work is nearing completion and the hotel should be operational by April 2007.

The Leela Palace and Resorts now owns and operates four properties with 1,001 guestrooms spread across Mumbai (406 rooms), Bangalore (256), Goa (152) and Kovalam (192). Five projects under implementation, at present, would add a further 1,546 guestrooms, taking total inventory to 2,547 guestrooms by 2008. These include expansion of the Bangalore hotel by 144 guestrooms and properties in Udaipur (77 rooms), Gurgaon (319 rooms and 90 service residences), Chennai (416 rooms), Hyderabad (300 rooms) and Pune (200 rooms).

The Udaipur property is slated to open late 2006/early 2007, while the Chennai property would be opened in September 2006. Overall, the hospitality industry has been on a buoyant growth path. Leela's average occupancy was in the range of 80 per cent - Goa 75 per cent, Kovalam 70 per cent, Mumbai 86 per cent and Bangalore 82 per cent. Its Bangalore property was a major contributor to revenues.

For the nine-month period ended December 31, 2005, the company posted a 215 per cent gain in net profit to Rs 63.30 crore on a 26 per cent rise in turnover to Rs 226.66 crore.

Tie-up with RIL likely

THE Leela Group may partner with Mr Mukesh Ambani's Reliance Industries Ltd (RIL) for the upcoming convention centre at Bandra Kurla Complex in Mumbai. RIL acquired the convention centre land for Rs 1,104 crorerecently.

"We have been waiting for such a convention centre in Mumbai for a long time. We will offer our rooms and services when the convention centre comes up," said Captain Krishnan Nair, Chairman, Leela Group. He, however, ruled out any equity holding in the convention centre.

The Leela Group had earlier made a bid for the land, but lost as it was being offered on a licence. "Financial institutions and banks do not give us funds for property on a licence. Therefore, we had to back out and in the process we lost Rs 2 crore," he said.

The Leela Group also ruled out any property acquisition at the current juncture. "There are no properties worth our repertoire at the moment. We prefer the greenfield route for expansion," said Mr Vivek Nair, Vice-Chairman.

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