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Mumbai-based Kamat Hotels is negotiating with PE funds to raise money for expanding its five-star eco-friendly hotel brand ‘Orchid’ to new markets such as Delhi, Kolkata and Bengaluru and also to reduce its debt.
This comes after a CDR (corporate debt restructuring) exercise in 2012 failed to reduce its debts, which stood at ₹550 crore. After exiting CDR in 2014, debts reduced by ₹100 crore and currently stand at ₹450 crore.
“PE funds will help in restructuring our debt partially and the ideal level should be between ₹250 crore and ₹275 crore in the next two years. The CDR failed because we did not manage to sell one of the properties under Vits (brand) in Andheri,’’ said Vishal Kamat, CEO, Kamat Hotels.
Kamat Hotels has nine properties across Mumbai, Pune, Goa, Nashik and Odisha under brands such as Orchid, Vits, Fort Jadhavgadh, Fort Mahodadhinivas and Lotus Resorts.
The ₹150-crore listed hospitality company has chosen to expand its five-star hotel brand Orchid.
“We are preparing a war chest to expand our hotels under the Orchid brand and have been approached by PE players who want to invest in the hospitality industry. These are mostly domestic funds. They may even acquire hotel assets and give it to us to manage. There are also joint ventures being explored with hospitality investment companies to take our Orchid brand to new markets,’’ he said.
However, raising money through PE funds will not be easy since the debt levels are still high, according to industry observers.
More propertiesCurrently, Kamat Hotels has one Orchid Hotel each in Mumbai and Pune and two more expected to get added this year. “The hospitality industry has been down but we are looking at opportunities to acquire properties where PE funds are seeking an exit and acquire their stake as well. The economy is picking up and we intend having more five star properties under the Orchid brand,’’ he added.
The Orchid is Asia’s first eco-friendly five-star hotel and was launched in 1997.
MICE segment“Orchid is a 21-year-old brand and has been catering to the MICE (meetings, incentives, exhibitions, conferences) segment. With its expansion into more cities, we intend leveraging its strengths in this segment,’’ he said.
Kamat Hotels is likely to opt for management contracts rather than ownership of hotels under ‘Orchid’ brand.
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