Hotel Leelaventure will hive off its luxury hotel Leela Kovalam into a special purpose vehicle and sell it to Travancore Enterprises, owned by Dr B. Ravindran Pillai, for Rs 500 crore.
Leela will continue to manage the five-star Kovalam property with its own brand name through a long- term management contract to be finalised by the SPV, said The Leela in a statement on Wednesday.
Dr Pillai is an industrialist from Kerala based in Saudi Arabia and is in the petrochemicals business. He was awarded the Padmashree in 2009.
The Leela group had acquired the Kovalam property for about Rs 150 crore in 2005.
The statement said: “The deal was pursuant to the decision of the Board to pursue an asset light strategy to reduce its debt.” Leela has a debt of Rs 3,830 crore as of last fiscal.
Hotel Leelaventure had posted a net loss of Rs 26 crore in the June quarter compared with a net profit of Rs 9 crore in the corresponding quarter last fiscal. Income during the quarter was up 15 per cent at Rs 125 crore (Rs 109 crore).
The Leela group manages luxury hotels in Bangalore, Gurgaon, Mumbai, New Delhi and holiday escapes at Goa, Kovalam and Udaipur. The Group is also constructing a luxury hotel in Chennai. It has marketing alliances with Germany-based Kempinski, US-based Preferred Hotels and Resorts and is a member of Global Hotel Alliance-based in Switzerland.
With 182 rooms and suites dotted over many verdant acres, Leela Kovalam is Kerala's largest beachside resort. It is cradled between two sweeping beaches. Perched on a rock-face, the five-star deluxe resort offers a panoramic view of the famed Kovalam shoreline.
The company's shares on BSE were down two per cent at Rs 38 on Wednesday.