Bharat Hotels to invest Rs 2,300 cr in four yrs

Bharat Hotels Ltd, which runs the Lalit Suri Hospitality Group, will invest around Rs 2,300 crore in 42 hotels over the next four years.

The company will invest around Rs 1,500 crore in its flagship luxury brand The Lalit and Rs 750-800 crore in mid-market segment brand, which the company is yet to name. The funds will be raised through internal accruals, debt and external commercial borrowings.

Jyotsna Suri, chairperson and managing director, The Lalit Suri Hospitality Group, said, "Our development plans are always based on sound finance planning and hence changes in the business climate does not affect our growth. This is reflected in our expansion activities, which continue to be on schedule. We have eight operational hotels currently and nine more will be opening shortly under The Lalit brand. Also, there will be seven new hotels in the mid-market segment scheduled to be operational by 2010." The company is looking at 25 hotels under the mid-market segment by 2014. Some possible locations for the mid-market segment include Drass (J&K), Pune and Baroda, among others. Suri said the company has enough land bank with it.

Bharat Hotels had entered into a marketing agreement with Intercontinental Hotels & Resorts in 1998. Later, the company decided to go on its own and the two parties mutually agreed to conclude the agreement for the luxury properties as and when it approaches expiry.

Asked why the company does not want to continue with the association with Intercontinental, Suri said, "Our vision is to build, operate and run the properties by ourselves. We have good relationship with Intercontinental and that's why we are slowly ending the agreement. As and when the expiry date nears for the various properties, they will be brought under The Lalit brand." The company's property in New Delhi is already out of the Intercontinental agreement and re-branded as The Lalit. Contract for properties in Mumbai and Goa are due to expire in 2011-12.

Furthermore, Bharat Hotels is also looking at floating a fresh initial public offering (IPO) and re-list on the bourses in 2012. The company was de-listed from the bourses in 2003 following the promoter shareholding exceeding 90%. In 2006, it had got approval to float an initial public offering (IPO) from Sebi. However, it decided not to go ahead due to the market conditions. "In 2012, we will have a good number of hotels in our kitty and I feel it will be the right time to go public. The promoters can dilute up to 15% stake through the IPO," added Suri.