Bangalore-based Royal Orchid Hotels Ltd is entering the Mumbai hospitality market.
The hospitality chain has acquired a majority stake in Powai-based Amartara Hospitality Pvt Ltd with plans to set up a four-star business hotel.
Keshav Baljee, president and co-promoter, Royal Orchid, told DNA Money that the company had been negotiating this deal for a while now.
“We have acquired 74% in a company that holds a 50,000 square feet land parcel at Powai. The land parcel has been valued at Rs34 crore. We have already finalised plans for our hotel development there, which will be a 250 room, four-star property,” Baljee said.
Royal Orchid, which will fund the Amartara buy through internal accruals, is likely to start work at the site in a couple of months. The hotel should be ready to receive guests after 22 months from groundbreaking, the official said. With the cost per key averaging between Rs30 lakh and Rs35 lakh (excluding land cost), the overall project cost will be around Rs125 crore (including land cost).
The hotel, which will be branded as Royal Orchid Central, will compete with international brands such as Marriott’s Renaissance, Wyndham’s Ramada and Carlson’s Radisson.
The Powai hotel will be the company’s first owned and managed property in Mumbai. Its only other property currently is a management contract in Navi Mumbai — a 67-room Royal Orchid Central Grazia.
Royal Orchid is also in the final stages of acquiring a site in Shimla, where it is looking at a greenfield, four-star resort development under the Royal Orchid Resorts brand.
On the company’s international foray with a hotel in Tanzania, Baljee said while plans to develop the hotel have been revived, the management is still in the process of finalising the mix considering it’s a fairly large site.
“There are possibilities of bringing in a development partner as well. It’s a large development and a very lucrative option for the company. We may look at a mix of residential and hotel development. We haven’t taken a final call on it though,” Baljee said.
Royal Orchid’s current portfolio comprises 14 hotels with an inventory of 1,200 guest rooms. The company is looking to add over 700 rooms this fiscal spread over five new developments, including 140 keys in Hospet, 60 keys in Mussoorie, and 108 keys in Shimoga. Also, a hotel each in Hyderabad (230 rooms) and Jaipur (160 rooms) are in the final stages and should open this year.
“While completing hotels underway, we will be simultaneously looking at doubling the overall portfolio in the coming couple of years from now. A large part of the new inventory will come in through management contracts. We will still continue to invest in tier I cities like our Powai project,” Baljee said.
The company is also looking to raise Rs150 crore to tap growth opportunities. Its board in its meeting last month approved the fundraising.
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