Lemon Tree Hotels, which will list on the stock exchanges today, has entered Hyderabad's Banjara Hills' hospitality market with an 85-room business hotel that will be officially launched in the coming weeks. The unique aspect of this new-built hotel, which was soft-launched last month, is that it will feature a revolving restaurant. Once operational, this revolving restaurant will be the only such facility in Hyderabad that will tickle the taste-buds of the elite class of this upmarket locality close to Jubilee Hills.
When contacted, Lemon Tree Hotels did not comment on the development.
However, according to the hotel company's website, the soon-to-open revolving restaurant christened 'Slounge' will offer pool game facility for patrons who can sip their drinks while listening to some good music. Featuring a chilled-out ambience the restaurant will serve popular Indian and international cuisines.
Interestingly, the Banjara Hill hotel is among the 10-odd properties that Lemon Tree has taken on long-term lease of 30 years from J Venkata Krishna Rao and J Vamshider Rao, owners of Arka Hotels Pvt Ltd. This hotel was signed in August 2017 post which the owners have been purpose-building it, according to Lemon Tree specifications.
Speaking to DNA Money, Arka Hotels' J Vamshider Rao said, the hotel project was being built with the intention of operating it under a third-party management contract. "We have entered into an agreement with Lemon Tree, wherein the hotel company will brand, operate and manage the property for 30 years. We will get a monthly lease rental in addition to a certain percentage as our share of revenue generated by the hotel," said Rao without sharing financials related to this deal.
The Hyderabad-based Arka Hotels and its group companies are into diverse businesses, including real estate, hospitality, education and event management across Telegana state.
Given the location, the project would have attracted investment of around Rs 130 crore, including land cost. According to estimates by industry experts familiar with commercials of such long lease deals, the asset owners could get anything between Rs 175 to Rs 200 crore (through a combination of monthly rentals and revenue share) spread over the next 30 years.
According to Noesis Capital Advisors that acted as sole advisor to this transaction, this hotel is in one of the most established micro markets of south India and will be positioned as a business hotel under the Lemon Tree brand.
Nandivardhan Jain, chief executive officer, Noesis Capital Advisors, said, "With fresh investments coming in to Hyderabad city, hospitality business here is looking promising. Hotels are well set to benefit from the up-cycle in the market, which will be visible in the results of coming quarters, both in terms of occupancy and average room rates. We see a strong demand for quality rooms at premier micro markets like Banjara Hills and long-term lease contracts is a great strategy to tap this opportunity."
Located adjacent to the CARE hospital, this 85-room hotel is in close proximity to major commercial hubs and popular malls. The catchment also comprises pharmaceutical companies like Dr Reddy's, Aurobindo Pharma, Laurus Labs, GVK Biosciences and other multinational companies.
In terms of business potential, the hotel is expected to command average room rates between Rs 4,000 and Rs 4,500 with an occupancy level of 70% to 75%. Food and beverages operations are likely to play a critical role as the hotel features three restaurants and a banqueting facility of 5,000 square feet.
"Occupancy will largely come from business travellers while 15% to 20% will be from medical tourism. Currently the Banjara Hills market boasts of 1,100 branded hotel rooms in mid, upscale and luxury segment from players like Fortune, Taj Banjara, Taj Krishna, Taj Deccan, Radission Blu Plaza and Park Hyatt. This market is likely to see future supply of 600 rooms over the period of 36 months," said Jain.
LUCRATIVE DEAL
- Soft launches 85-room hotel with city's only revolving restaurant
- Project likely to have seen investment of around Rs 130 crore
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