Novotel project required Rs 70 crore to Rs 80 crore to make the hotel fully operational
Infrastructure major Hindustan Construction Company's (HCC) realty firm Lavasa Corp has exited one of its hotel developments at its Lavasa hill city project near Pune. To be operated by French hospitality major AccorHotels under its Novotel brand, the project featuring between 200 and 350 guestrooms was earlier owned under a special purpose vehicle (SPV) Warasgaon Lake View Hotels Ltd (formerly known as Lavasa Star Hotel Ltd). The ownership has now changed, said industry sources requesting anonymity.
The identity of the new owner and financial details could not be ascertained. When contacted, HCC did not comment on the development.
Industry sources familiar with the development said, "The Novotel development has new asset owners and construction work on the site has started in the last quarter of the calendar year 2017."
According to industry sources, the Novotel project required Rs 70 crore to Rs 80 crore to make the hotel fully operational. However, since Lavasa Corp is undergoing the Reserve Bank of India's strategic debt restructuring (SDR) scheme, it was unable to raise funds from banks to complete the project.
"The only option left (for Lavasa) was to exit the project thus paving way for a third-party to come in and bring fresh equity or raise debt from banks to complete the hotel development," said another source.
The management contract for the upcoming Novotel and a Mercure branded hotel was signed between Lavasa Corp and AccorHotels back in 2006. While the Mercure hotel along with the Lavasa International Convention Centre (LICC) was launched sometime in 2010, construction on the Novotel was delayed for reasons unknown.
Jean-Michel Casse, chief operating officer - India and South Asia, AccorHotels, also did not respond to queries seeking details on the development.
Another hotel project under the Pullman brand from AccorHotels that was planned in 2007 at the Lavasa hill city has been scrapped as well. Interestingly, Starwood Hotels and Resorts International (now merged with Marriott International) was appointed by HCC to manage this hotel under one of its brands. However, the global hospitality chain (Starwood) eventually backed out of the Lavasa project. HCC had to then approach the existing partner Accor, which had agreed to manage the hotel under its Pullman brand once operational.
The hill station being developed in the Sahyadri ranges, was touted to have 18 hotels with approximately 4,000 rooms, aiming to cater to the tourist requirements of the 12,500-acre project. To this effect, HCC had got on board a host of Indian and international hotel chains – Taj Group, ITC's Fortune Hotels, InterContinental Hotels Group (IHG) for its Holiday Inn Express brand, Hilton Hotels, Radisson, Langham Place, Choice Hotels and Oakwood among others.
However, only Fortune (ITC's mid-market hotel company) and Mercure from AccorHotels have come up apart from The Waterfront Shaw and Ekaant – the retreat. And given the delay in development, most of the other hotel management agreements are likely to have expired.
Clarification:
In response to report titled 'Lavasa Corp exits Novotel project after funds crunch' published on January 09, 2018, Lavasa Corporation Ltd (LCL) has clarified that there is no change in the ownership structure of the Novotel project and LCL continues to hold 26% stake in the project since initiation. 'All partners of Novotel project remain committed to completing the project'.
While DNA Money had sought a written response from LCL before publishing the story, the HCC spokesperson had said they would not give any written statement.
INCOMPLETE DEAL
- Novotel project required Rs 70 crore to Rs 80 crore to make the hotel fully operational
- Lavasa is undergoing the RBI's strategic debt restructuring scheme
- It was unable to raise funds from banks to complete the project
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Lavasa")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}