The property will consist of around 180 rooms, a coffee shop and a speciality restaurant. It will also house Chuan Spa, the group’s spa brand. The group will also focus on developing an extensive conferencing facility to cater to the meetings, incentives, conferences and exhibitions (MICE) segment.

Besides this property, LHI also plans to expand its presence in the Indian market. “We’re in discussions with several real estate developers in India, and are considering locations in key cities like Mumbai, Ahmedabad, Delhi, Chennai, Kolkata, Goa and Bengaluru,” says Helmut Knipp, Senior Vice President - Development, Langham Hotels International.

Real estate developers with presence in National Capital Region (NCR), Bangalore, Chennai, Pune, among others, are opting out of four and five-star hotel projects. According to sources, a five-star hotel in Pune shelved its plans recently as its developer pulled out of the commitment.

“The return on investment in a hotel will not be as high as it will be in putting the land to commercial use. Committing to the hospitality sector means waiting for five or more years (till the hotel becomes operational) to get returns,” says Shivaram Malakala, executive director of Habitat Ventures, Bangalore.

“Developers are looking at realising their money through any alternative means and are thus in the exit mode,” he says.

However, Wyndham Hotel Group International, which is promoting Royal Orchid Hotels and Ramada Worldwide, has denied any such development.

Says Sunil Mathur, director (international development), Indian Ocean Region, Wyndham Hotel Group, “All our projects are doing fine. They could be delayed by a month or two but none of them have been shelved.”

While Bangalore is said to have around 10 such properties up for sale, NCR has over five properties. Last year, over 20 four-star hotels were slated for construction in Bangalore, of which six properties have begun operations.

According to a Mumbai-based hospitality consultant, the developers are facing cash crunch and have either put the property (unfinished buildings in some cases) on sale or have asked the hotel companies to find them partners who can invest in the venture.

Properties that were worth Rs 30 crore, for instance, are being sold at a discount of over Rs 25-50 lakh. To be sure, players in the field believe that this slowdown could benefit the big players in the market and hoteliers will look to acquire land in areas where it was otherwise difficult for them to make purchases.

“If the real estate market slows down and there is still demand for hotel rooms in that micromarket, a developer might want to mitigate his risk of holding on to unsold inventory by considering lower immediate returns in a hotel project,” says Shreenath Shastry, national director (hospitality and leisure), Knight Frank (India).

In 2007, over a dozen global chains, including the Hilton, Accor, Marriott International, Berggruen Hotels, Cabana Hotels, Premier Travel Inn and InterContinental Hotels group, announced plans to set up over 350 five-star, four-star and budget hotels and 50 villas in India.

Most of these chains joined hands with real estate developers. The plans would roughly translate into 65,000 additional hotel rooms a quantum leap, considering that over the past decade the total number of hotel rooms in all categories only grew by 10 per cent to about 92,000 rooms.

The slowdown in the real state sector can, however, soften the occupancy rate of hotels in the metros and leisure destinations, say analysts.

The occupancy rate in metros at present is between 75 to 80 per cent, which could go down to around 70 per cent in the next few months as the off-season will begin. “If the off season is weaker than usual, there could be a down grading of hospitality stocks,” said an analyst.

“Builders could be putting the land to commercial use as the land rates (FSI cost) are too high (more that 50 per cent of the cost of the project for a hotel), and the commercial market is bullish. Also, a particular micro market may see many hotel rooms coming up, as a result of which a non-hotelier developer may develop cold feet.

Feasibility studies to that effect have a tendency to scare a developer as it is easy to predict supply and difficult to predict demand for hotel rooms,” adds Shastry.

The eight hotels, says Sarovar Hotels & Resorts executive director Ajay Bakaya, will be set up at tier-II locations of Raipur, Udaipur, Nanded, Jabalpur, Chandigarh, Indore, Ujjain and Bhilai. At many of these places, the plan is to have malls-cum-hotels for which development and construction is already underway.

These eight new hotels will add anywhere between 1,000-1,100 rooms to Phoenix’s hospitality portfolio. Going by an average of Rs 30 lakh a room as development cost, the total cost of these eight hotels could be around Rs 300 crore, excluding the cost of land, says an industry source.

Sarovar Hotels & Resorts will manage, market and provide reservation systems for these properties across India for 15-20 years, It would also guide in the design process, says Mr Bakaya. Phoenix, on its part, has the option to choose from Sarovar’s portfolio of Premier, Portico and Hometel brands for these hotels as well as the Park Plaza and Park Inn brands that Sarovar represents in India.

Many of these locations do not have any quality hotels and with these properties, Sarovar and Phoenix would gain a first-mover advantage in these markets. The average room rates that can be expected in these locations is in the Rs 2,000-3,500 range. Since Sarovar itself has an aggressive expansion plan across India, the two are likely to have a non-compete agreement within the same brand (within a 2-3 km radius) in the city.

Apart from the proposed hotels, Phoenix Hospitality, the hospitality arm of Phoenix Mills, is developing nearly 14 hotels across the country. Phoenix has tied up with Hong Kong-based Shangri-La to manage its hotel property in Lower Parel in Mumbai (which opens in 2009) and has also tied up with the Hyatt Group and US-based Marriott International to manage its other hotel properties.

Phoenix, which had picked up a 42% stake earlier in EWDPL, a mall developer based in Indore, was reported earlier this month as planning to raise nearly $450 million (nearly Rs 1,890 crore) from private equity investors to fund its mall and hospitality projects. The company is planning to raise $200 million to fund its retail plans while the $250 million would fund its hospitality projects.

The company has hired Ravi Deol as chairman and chief executive of Mars Restaurants, the hotel and food services division of IHC, to initate acquisitions. Deol is the former managing director of Barista and ex-chief executive of FieldFresh Foods.

“We are looking to add 2,000 hotel rooms across 17 cities, including metros and towns such as Lucknow, Amrtisar, Raipur, Chandigarh among others. We may acquire hotel groups having 5-7 properties. We are also looking at acquiring restaurants or restaurant chains and then take them to the leadership position,” Deol told Business Standard.

All these acquisitions will be done by Mars Restaurant. “We may go for a rebranding of an existing hotel chain as and when we acquire them,” Deol said.

IHC has formed a $200-million ‘hospitality opportunity fund’ and $220 million worth of warrants to be converted into equity. The balance amount will be raised by selling equity or through borrowings, IHC executives said.

Mars Restaurants has brands Such as Tendulkars’ (a 50:50 joint venture with cricketer Sachin Tendulkar), China Joe, The Pizzeria, Dosa Diner among others, while Gordon House is a venture of Mars Restaurants and currently has three properties in Mumbai and Pune. The acquisitions will add to the portfolio of Gordon House hotels.

The Indian leisure and hospitality industry is set for high growth, according to the World Travel and Tourism Council. According to industry estimates, the Indian hotel and hospitality industry generates foreign exchange earnings of Rs 35,000 crore each year in addition to Rs 10,000-12,000 crore generated from Indian customers.

The market size of branded fast-food and dine-in restaurants is estimated at over Rs 600 crore. This segment is grwoing in double digits annually attracting players like IHC, industry experts said.

According to sources, popular north Indian restaurant chain Nirulas along with Clarks hotel chain may be on the radar of IHC for acquisition and subsequent re-branding.

On the air-catering front, IHC is looking to expand SkyGourmet to 11 cities from six metros at present. SkyGourment will soon set up its air catering facilities in Kochi, Jaipur and Amritsar among other cities.

“We will also expand our air catering services globally when Kingfisher goes international. We are already catering for Jet Airways, Kingfisher Airlines, Air India Express, Indian Airlines, Malaysian Airlines and Air France. We are looking at providing catering to Emirates and Lufthansa too,” Deol said. SkyGourmet was incorporated in 2002 and is headquartered in Mumbai and employs about 1,150 people.

A measure of the shortage is the fact that India has about 1.1 lakh hotel rooms compared to 1.35 lakh rooms in just the Chinese commercial capital Shanghai. The Planning Commission estimates the scarcity at 1.5 lakh rooms by 2010.

On the other hand, there are no reliable estimates of the number of serviced apartments, largely dominated by unorganised players. “Serviced apartments have found favour so far only as an offshoot of corporate needs and/or due to shortage of hotel rooms in most cities. In today’s supply shortage scenario, it seems like whatever one can build will get filled up, even if only through word of mouth,” says Cushman & Wakefield Hospitality director (South Asia) Akshay Kulkarni.

However, he predicts tariffs to fall by 15%-20% in 4-5 years as branded products become popular and unbranded ones die out. “The occupancy in the unbranded segment of the serviced apartments will actually drop as more and more limited-service, economy, branded products come to the fore. Without doubt the per-room realisation for the developer or the manager will not be the same in the next 5 years,” Mr Kulkarni adds.

Experts also see international players digging into the Indian market. An example is Brigade Hospitality’s tie-up with the European group Accor for the upcoming Mercure Homestead Residences in Bangalore’s Koramangala suburb.

“Our occupancy levels are 75-80% throughout the year. We have 120 keys on offer and plan to have an additional 126 at Mercure Homestead. With our inventory increasing in a year or two, we see the occupancies settling down at about 75%,” Brigade Hospitality CEO Vineet Verma says.

However, there are those who believe that it would be too optimistic to expect the good times to continue for the serviced apartments business. “One has to look at the growth of the popularity of serviced apartments in context of the huge investments being made in hotels now,” says Taj West End regional GM P K Mohan Kumar.

The market-share of hotels is bound to increase as there are about a dozen new hotels coming up in Bangalore alone, which will add 4000-5000 rooms to the existing inventory by 2012, he says. “As the mismatch in inventory gets corrected, and mid-market as well as budget hotels gain territory and share of the market, serviced apartments will become the last choice since hotels are now looking to accommodate longterm stayers also.” Being able to provide services tailored to the needs of customers is the USP of serviced apartments and the ones that can do so consistently have no need to worry, Brigade’s Mr Verma says.

“At serviced apartments, one is willing to change and customise most services to suit the guest’s specific needs. The space one gets is well planned and addresses the basic requirements of an extended stay, like providing a well-equipped kitchenette etc.”

Furthermore, as hotel room tariffs sky-rocket, service apartments are seen as an economical option. “Currently our choices are not really governed by the full range of products,” feels Mr Kulkarni.

The hotel founded by Ghai Enterprise aims to build 100-room boutique hotels in leisure and business destinations across the country.

“We are also expanding Mayfair, our banqueting business to five more cities. Beginning 2009-end, we will add one property in either segment every quarter,” said Raman Mehra, chief executive, GL Hotels. Indian Hotels, which owns the Taj Group chain and East India Hotel, owners of Oberoi group of hotels among others, are building new properties to meet the surging demand for rooms from local and overseas business and tourists. The industry has a shortage of 1,50,000 rooms and this is fuelling hotel room rates across the country.

The Mumbai-based company will use its own cash and raise debt to fund the Mayfair expansion, while private equity investors have pledged money for the boutique hotels. The group may raise 40 per cent from selling bonds or bank loans to expand its hotel business and raise 30 per cent in debt for boosting banquets. Dunearn Investments, a unit of the Singapore-based Temasek Holdings, bought a 22 per cent stake in GL Hotels last year.

The enterprise is set to launch its own hotel brand soon. “We are in the process of acquiring a brand name,’ Mehra added. It will develop leisure hotel properties in Goa and Jaipur, and a business resort property at Shirdi, the pilgrimage destination near Mumbai.

The company will have business hotels in Chennai, Hyderabad, Bangalore, Gurgaon and Ahmedabad. It also has plans for a small hotel and spa at Alibaug near Mumbai, to be operational by the end of next year.

The boutique hotels will cost Rs 50 crore per key, exclusive of land costs. A 100 per cent subsidiary of GL Hotels, Kwality Resorts & Hospitality, is managing land deals and acquisitions in various cities for the company.

GL Hotels already has a boutique hotel in Mumbai, InterContinental, which is a 58 room property with a bar, lounge and banquet venue in the plush Marine Drive area.

Giving a boost to its standalone five-star banquet services, GL Hotels will open Mayfair Banquets in five cities, including Ahmedabad (unit starting end of this month), Gurgaon (2008) and Bangalore (2009). In Gurgaon, it has tied up with real estate major DLF for its banquet business. This expansion will make Mayfair the first branded banquet service to have a presence across country.

The hotel business contributes 55 per cent of the revenues and banquets account for the remaining 45 per cent. “In due course, banquets will contribute at least 50 per cent of the revenues. The idea is to bring both the businesses together for a synergy as the F&B revenues are substantial,” said Mehra. Going into the next phase, the enterprise will look at getting into management contracts for operating hotels.

“Once our brand is established, we would go into markets where we would not have to invest but will operate hotels. Owing to the escalating land costs, the option of buying land and then having a property is not too viable,” Mehra added.

The hotel founded by Ghai Enterprise aims to build 100-room boutique hotels in leisure and business destinations across the country.

“We are also expanding Mayfair, our banqueting business to five more cities. Beginning 2009-end, we will add one property in either segment every quarter,” said Raman Mehra, chief executive, GL Hotels. Indian Hotels, which owns the Taj Group chain and East India Hotel, owners of Oberoi group of hotels among others, are building new properties to meet the surging demand for rooms from local and overseas business and tourists. The industry has a shortage of 1,50,000 rooms and this is fuelling hotel room rates across the country.

The Mumbai-based company will use its own cash and raise debt to fund the Mayfair expansion, while private equity investors have pledged money for the boutique hotels. The group may raise 40 per cent from selling bonds or bank loans to expand its hotel business and raise 30 per cent in debt for boosting banquets. Dunearn Investments, a unit of the Singapore-based Temasek Holdings, bought a 22 per cent stake in GL Hotels last year.

The enterprise is set to launch its own hotel brand soon. “We are in the process of acquiring a brand name,’ Mehra added. It will develop leisure hotel properties in Goa and Jaipur, and a business resort property at Shirdi, the pilgrimage destination near Mumbai.

The company will have business hotels in Chennai, Hyderabad, Bangalore, Gurgaon and Ahmedabad. It also has plans for a small hotel and spa at Alibaug near Mumbai, to be operational by the end of next year.

The boutique hotels will cost Rs 50 crore per key, exclusive of land costs. A 100 per cent subsidiary of GL Hotels, Kwality Resorts & Hospitality, is managing land deals and acquisitions in various cities for the company.

GL Hotels already has a boutique hotel in Mumbai, InterContinental, which is a 58 room property with a bar, lounge and banquet venue in the plush Marine Drive area.

Giving a boost to its standalone five-star banquet services, GL Hotels will open Mayfair Banquets in five cities, including Ahmedabad (unit starting end of this month), Gurgaon (2008) and Bangalore (2009). In Gurgaon, it has tied up with real estate major DLF for its banquet business. This expansion will make Mayfair the first branded banquet service to have a presence across country.

The hotel business contributes 55 per cent of the revenues and banquets account for the remaining 45 per cent. “In due course, banquets will contribute at least 50 per cent of the revenues. The idea is to bring both the businesses together for a synergy as the F&B revenues are substantial,” said Mehra. Going into the next phase, the enterprise will look at getting into management contracts for operating hotels.

“Once our brand is established, we would go into markets where we would not have to invest but will operate hotels. Owing to the escalating land costs, the option of buying land and then having a property is not too viable,” Mehra added.

“Unlike the first Radisson property developed by the Sahil Group in Alibaug, which is a mix of business and leisure services, the upcoming property in Pune will be a typical business hotel,” says Ajit Dharmadhikari, Executive Director, Sahil Resorts and Spa India Ltd. Commenting about the group’s expansion plans, Dharmadhikari said that the company will subsequently diversify into developing and managing their own brands through their hospitality subsidiary, Sahil Resorts and Spa India Ltd.