Embassy Group is scouting for stressed hotel assets to expand its hospitality business outside Bengaluru. It plans to enter Mumbai, Pune, Hyderabad, Chennai, Goa, and Delhi NCR over three years.
Mumbai: Embassy Group recently listed India’s first Real Estate Investment Trust (REIT) along with Blackstone, is scouting for stressed hotel assets to expand its hospitality business outside Bengaluru. The company, which operates around 700 hotel rooms, with another 1,100 under development in Bengaluru, is planning to enter Mumbai, Pune, Hyderabad, Chennai, Goa, and the National Capital Region (NCR) over the next three years.
While the company will continue to build hotels independently as part of its corporate parks outside Bengaluru, it is already looking to acquire existing hotel assets to ramp up its portfolio, said Sartaj Singh, president (hospitality business) at Embassy Group, in an interview.
Singh said the company plans to reduce hotel rooms to around 3,000 by 2025. While the group mainly focuses on building commercial office space, hotels have been a core component of its business parks. Three of its hotels are part of the company’s REIT portfolio, which comprises 33 million sq. ft of commercial space.
“We are seeing an upswing in the Indian hotel market in recent years. Over the last five years, supply has been contracting while demand continues to increase. All financial parameters are showing an upswing. This has given us the confidence to take our hotel business beyond our corporate parks in Bengaluru,” Singh said.
Over the last six months, the company has conducted feasibility studies to set up a hotel in Pune. New hotels will likely be built as part of existing office parks in Hyderabad and Chennai. “While we will be looking at greenfield projects, we may go for straight acquisitions in Goa and the NCR. We have already shown interest in some stressed assets and have pursued a few. We see a lot of opportunity in that space,” he added.
Currently, the Embassy operates two hotels under the Le Meridien and Hilton brands. It is gearing up to open Four Season luxury hotels in May. “We are seeing a lot of interest from private equity investors. However, we have funded mostly through internal accruals,” Singh said.
Many hospitality firms plan to ramp up their hotel businesses, given the growing demand and improved sentiment in the hotel space.
Real estate firm K. Raheja Corp.’s hospitality arm, Chalet Hotel Ltd, recently raised ₹1,641 crore through an IPO. It is also eying distressed hotel assets and bringing in more hotel brands to expand its portfolio. Hyatt Hotels Corp. has also said it will open 14 new properties over the next 24 months.
