The project suffered cost overrun, from the originally budgeted at Rs 660 crore to about Rs 1,200 crore at the time of recent commencement of the project
The recently-opened JW Marriott’s luxury hotel, its first in Kolkata, has suffered significant overruns in cost, which has almost doubled, and the promoters are now trying to pay off the debt by selling their luxury serviced apartments.
The developer of the project, Fabworth Promoters, is raising the serviced apartments capacity of the project from 196 rooms to 208.
The US-based hospitality chain opened its luxury property, its first in the eastern region, in October-end, with 281 hotel rooms along with 50 luxury serviced apartments named Vivara.
The project suffered cost overrun, from the originally budgeted at Rs 660 crore to about Rs 1,200 crore at the time of recent commencement of the project.
The developers are now paying off the banker by selling off service apartments, with one being given out on a long-term lease for Rs 8.2 crore, documents available with DNA Money show.
In March, the debt rating of Fabworth was downgraded from BB+ to BB- by ratings company CARE after the company faced delays in interest payments.
The rating was temporarily downgraded to default grade D but revised to BB- after the payment was regularised.
“The rating of bank facilities of Fabworth Promoters continues to be constrained by delay in execution of the project, project cost overrun, delay in infusion of funds by the promoters, lower than envisaged booking of serviced apartments, inherent seasonal nature of the hotel industry and competition from existing and new hotel ventures coming up in Kolkata,” CARE said in April.
Even before it was conceptualised, JW Marriott in Kolkata had a chequered time.
The project was conceived in 2006 at the height of the real estate bubble just before the 2008 meltdown when Emaar MGF bought the 5.6-acre plot along Eastern Metropolitan Bypass for little over Rs 200 crore, which was the costliest land deal at that time. Fabworth Promoters was incorporated in 2006 for this purpose.
And then after four years, Emaar sold off 74% stake in it at the same price, thereby incurring significant losses to a consortium of Bipin Vohra’s SPS Group, Kolkata’s real estate developer the Mani Group and Bangalore-based Sattva Group.
Vohra, who is also based out of Kolkata, later exited the project.
JW Marriott’s predicament is bad news for ITC’s hotel division.
ITC, which has a 238-room hotel there, is setting up an adjacent structure adding 500 rooms, slated to be Kolkata’s grandest property when it opens in 2017.
The three properties are located next to each other.
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