Duet, DLF hotel plot talks called off

Duet India Hotels Ltd (DIH), the private equity firm focused on the hospitality sector, has said its talks for picking up a 2-acre Gurgaon hotel plot of DLF, the country’s biggest realty developer, have fallen through.

The PE firm also denied reports about it buying any of the hotel plots of the Delhi-based realtor Parsvnath Developers Ltd.

Dilip Puri, CEO, DIH, said, “We were in talks with them (DLF), but nothing materialised.” On Parsvnath plots, he said, “We were never in dialogue with Parsvnath for anything of that sort.”

Industry sources told DNA that a high asking price for the land parcel could have been the key reason behind the DLF plot deal falling through.

“DLF had started with asking Rs 10,000 per square feet for the floor space index (FSI). There were talks that the rate was brought down to Rs 8,000. There were also rumours that the plot was being picked up by Duet for Rs 200 crore,” the source said.

A DLF group spokesperson said, “Nothing has happened about the hotel plot in question.”

In another development, Duet India Hotels recently bought two sites for setting up hotels in Lucknow and Nasik. The Lucknow piece is under an acre while the Nasik site is around 30,000 square feet. “We are looking to build three-star, 100-room hotels in these locations,” Puri said. The cost for these hotels is expected to be $6 million, or Rs 35-odd crore, each.

On the firm’s land acquisition strategy, Puri said the company has decided to go for smaller land parcels because a project size of 100-keys requires around 45,000 sq ft of floor space index (FSI).

“If you are taking a 1:2 FSI a total land area, 20,000 to 25,000 sq ft is enough. Anything above that doesn’t make sense to buy as the project will then become unviable,” Puri said.

The PE firm is currently in negotiations for a large brownfield development in south India for its foray in the five-star hospitality segment in the country.

“We are in the final stages of concluding a big transaction in Bangalore. The deal should be sealed within a month. It will be a five-star hotel with over 300 keys,” Puri said.

With a fund size of $166.5 million, Duet has seven properties with an investment of $51 million. “Before the end of this year we expect to invest another $25 million taking it to around $80 million,” Puri said.

UK-based Duet Group promoted DIH is developing hotels in central business districts and suburban business districts in India. The fund is understood to have crossed 1,000 rooms under development already and is targeting to reach 3,500 rooms within the next 12-18 months. It plans is to have 5,000 rooms.