| Long innings
Calcutta, April 24: Hotel Hindusthan International (HHI) plans to expand into the markets of Bangalore and Goa in the next couple of years.
'The property at Bangalore is acquired while the one at Goa is a greenfield project at a total investment of around Rs 150 crore,' chairman and managing director D. K. Jaiswal said.
The company has acquired a 176-room hotel property in Bangalore from Krishna International and is also constructing a five-star hotel at the Varga beach in south Goa.
The total investment is being financed by a mix of debt from banks and financial institutions and internal accruals in the ratio of 3:2, said Jaiswal.
The Bangalore property will be operational by December 2005, while the one at Goa will be completed in October 2006.
The company plans to enter into the budget hotels segment after the current projects are completed.
'After we successfully complete the projects at Bangalore and Goa, we plan to venture into the three-star hotel segment and float a separate company for the purpose. We also plan to offer a public issue for the new company, which will have at least 5-6 hotels under its management,' said Jaiswal. The size of the public offer will be around Rs 400-500 crore.
The company has already started identifying suitable locations in Mumbai, Chennai, Hyderabad and Pune. 'We plan to cover the A-grade cities first and then venture into the B-grade cities like Gurgaon and Pondicherry,' he added.
Jaiswal explained that the rationale behind setting up budget hotels is that companies are increasingly becoming cost conscious. Moreover, the cost of setting up a three-star hotel and operating it is just around Rs 40 crore compared with Rs 100 crore for a five-star property.