Analysts say combining malls with hotels has proved to be a very successful business model in southeast Asia - especially Singapore, Bangkok and Hong Kong.
KOLKATA: Malls may now just have to look up to rake in the moolah. Budget category hotels are looking at the top floors of malls as a serious option to save on real estate expenses and synergise on fixed costs like insurance and other public- liability costs as well as food and beverages.
Generally, it is a tough task for mall owners to attract consumers to buy space above the fourth floor unless there are very strong entertainment anchors up there.
Analysts say combining malls with hotels has proved to be a very successful business model in southeast Asia - especially Singapore, Bangkok and Hong Kong.
At malls, floor space closer to the ground commands higher rentals and so it is a good way for hotels to rationalise on real-estate costs.
It has said that real estate costs form 50% of hotel room costs in India. Ajaya Bakaya, executive director, Sarovar Hotels, said: “In this model, hoteliers are not expected to buy property but work on a lease rental or profit share model.”
Sarovar Hotels is negotiating one property in Chhattisgarh while it already operates a Sarovar Portico at the Treasure Island mall in Indore.
Ginger Hotels has reportedly tied up with Aerens for a mall in Ludhiana and with Ansal API for their malls across India while Lemon Tree Hotels, with its Red Fox brand, has three hotels in the pipeline atop malls in Ghaziabad, Pune and Jaipur, said a company spokesperson.
Kshitij Investment Advisory, the asset management company from the Future Group, is also looking at hotels combined with malls in Trivandrum, Kolkata, Lucknow and Bangalore. “We want to make the best use of our properties. The hotels should be at least 250-odd keys,” Shishir Baijal, CEO, Kshitij, told DNA Money.
“Malls offer the budget hotels locational advantage - most are centrally located. The synergy in F&B reduces costs and increases efficiency,” added Baijal.
However, analysts warn that in such a “mixed use” scenario, hotels preferably need a dedicated driveway and lobby on the ground floor as well as dedicated elevators. Security is a huge factor that has to be kept in mind.
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