Nine months after the first Shangri-La hotel in Mumbai opened for guests, the operator, Hong Kong-based Shangri-La Hotels and Resorts, and the asset owner, Pallazzio Hotel and Leisure Ltd, have mutually decided to part ways.
Pallazzio, a subsidiary of BSE-listed Phoenix Mills Ltd, has already finalised a new operator for the hotel situated atop the Palladium Mall in Lower Parel.
Shishir Shrivastava, Group CEO and joint managing director, Phoenix Mills, confirmed the development.
“It is with mutual discussion that we have decided to terminate the contract. A new operator has been already finalised, details of which will be made public soon,” said Shrivastava.
The asset owner has invested Rs294.6 crore as equity and Rs652.6 crore debt for the hotel.
The overall project cost has been pegged at Rs1,050 crore.
Being a mutual decision no penalties will be levied for termination of the contract, which was for a period of 20 years.
Sources said the two parties explored various options including a buyout by the operator before deciding on the move.
A spokesperson for Shangri-La Hotels confirmed the development.
Shangri-La will withdraw from the management of the hotel on September 6, it said.
Shrivastava said, “The property will continue to operate as an uber luxury hotel with several enhancements, new banquet facilities and further the signature restaurant Mekong and Libai Bar will launch as planned by mid September.”
After a delay of about three years, the hotel began receiving guests in December last year.
The delay led to the overall development cost of Rs1,050 crore overshooting by Rs 400 crore. Of the planned 390 guestrooms and suites, around 221 were operational as on June 30, 2013.
By August end, this inventory is planned to increase to 300 rooms and another 90 were to be added in a phased manner depending on the demand.
With 40% average occupancy for the April-June quarter, the hotel enjoyed an average room rate of Rs8,473. Room revenues for the first quarter of fiscal 2014 were Rs5.9 crore as against Rs5.8 crore for last the four months of fiscal 2013.
Of the planned 11 restaurants, only three are operational while the balance were projected to be operational by September this year.
Revenue from banqueting and food & beverages in the first quarter of this fiscal stood at Rs9.1 crore as compared with Rs9.4 crore in the last quarter of the last fiscal.