Real estate firm K Raheja Corp’s hospitality arm Chalet Hotel Ltd, which recently raised ₹1,641 crore through IPO, is eying distressed hotel assets and bringing more hotel brands to expand its portfolio, said a top company executive.
The company is currently in talks with multiple hotel owners to buy out existing hotel properties in Pune, National Capital Region and Chennai to enter these markets, Sanjay Sethi, managing director and chief executive officer, Chalet Hotel Ltd told Mint.
“Acquiring ready operating assets is one of our strategy for expansion and this is where growth will come in future… Our balance sheet is a lot healthier (post IPO) to buy more assets. So the ability to buy more assets is far higher now,” Sethi said.
Last month, Chalet Hotel hit the capital market by raising₹1,641 crore. The company had said that it intends to utilise the proceeds from the IPO to repay debt and for other general corporate purposes. By the end of financial year 2017-2018, the company’s net debt stood at ₹2,499.8 crore. Post repayment of debt following the IPO, its debt stands at around ₹1,500 crore, Sethi said.
At present, the Chalet has five hotels and one service apartment property totalling around 2,300 rooms in Mumbai, Bengaluru and Hyderabad that are managed by global hospitality chain Marriott Hotels. Another three hotels with around 580 rooms in Mumbai and Hyderabad are in the pipeline. All of them are expected to be operational by 2021.
“We are looking to acquire large size operating hotels or brownfield hotels where construction have reached certain stage. Three or four of them are in advanced stage of negotiation,” he said.
The company is also expanding its branded hotel partners by signing on global hospitality firm Hyatt Hotels Corporation. It is gearing up to launch its 260-room Hyatt Regency hotel in Mumbai by April 2021. “As we grow the portfolio, we will work with other brands,” Sethi said.
Besides, the company is also developing other non-hotel assets particularly commercial office and retail assets in some of its land parcels which are not being utilised for hotel purpose. At present, around 1.1 million sqft of commercial space is under development. “We are not just a hotel operating company. We do not shy away from doing non-hotel assets on the same parcel of land. Sweating assets is expensive but we sweat those assets by developing non-hotels which are complimentary to the existing hotels” he said.
Source: Mint