Real estate companies review hospitality projects

BANGALORE: The capital-intensive nature and long gestation periods of hospitality projects seem to be forcing a rethink among real estate developers
on such ventures.

While DLF has decided to sell about 7.5 acres in Kolkata and Gurgaon after scrapping plans to build luxury hotels, Emaar MGF Land is putting on the block about 5.6 acres on the outskirts of Kolkata, four years after buying the same at a whopping Rs 190 crore.

"We are not pursuing hospitality projects aggressively and plan to sell lands where we do not see the projects coming up on time," said a senior official of DLF, who is close to the development. However, he refused to comment on the specifics of the proposed land sale.

DLF is said to be in talks with Duet Groups India for the sale of its two-acre plot in Cyber City, Gurgaon. It had secured the Kolkata plot on lease in an auction from the Kolkata Municipal Corporation (KMC) for Rs 155 crore and had plans to build a 16-storey hotel under the Hilton brand at an investment of Rs 900 crore. The hotel was expected to be operational by 2010.

Emaar MGF had also won the land from the Kolkata Metropolitan Development Authority (KMDA) in an auction. It had proposed to build four hotels in and around Kolkata, including three luxury hotels - JW Marriott and Holiday Inn on the EM Bypass and Park Hyatt at Russell Street at an investment of Rs 1,300 crore.

"We do not wish to comment on market speculation, but the company continues to evaluate its development plans and take suitable steps in line with market conditions," an Emaar MGF spokesperson said.

Early this year, DLF had sold two land parcels in Mysore too, where it was expected to take up hospitality projects. The company plans to raise Rs 900 crore by selling eight hotel plots across Mumbai, Kolkata, Bangalore, Gurgaon, Baroda, Lucknow, Kasauli (Himachal Pradesh) and Sikkim by the end of June.

According to Cushman & Wakefield, both DLF and Emaar are revisiting their earlier plans and are developing hotels only in specific locations. "We will see specific cases where firms will look at exiting the hotel business," said Akshay Kulkarni, executive director, hospitality services, Cushman & Wakefield.