The Bird Group, a firm offering technology services to the tourist industry, said it will set up a hospitality unit that will build as many as eight high-end hotels in India by 2016.
This move will be taken in a bid to get a foothold in a market facing an estimated shortage of 1.5 lakh rooms. The hotels will be managed by a joint venture it has formed with Thailand’s Dusit Thani Public Co. Ltd.
The first six hotels, branded Dusit Thani, will come at a cost of more than Rs350 crore, according to calculations done by Mint, based on numbers provided by the group. The investments will be made by them.
The project by the group marks its entry into the hotel development and management business. For Dusit, which currently operates 18 properties mostly in Thailand, the partnership marks its move into India as it seeks to expand internationally.
Dusit, which operates luxury hotels and resorts in Thailand, is rebranding some of its hotels by adding the Dusit name to its existing brands such as Princess Hotels.
“The business prospects are very strong” for the group’s first three hotels, planned for 2010, said Pratik Dalal, a hotel industry analyst for Emkay Share & Stock Brokers. Dalal added that the Dusit-Bird Group management company has strong chances of success because “there are quite a few developers who are building hotels” that are outsourcing management because of lack of expertise in the industry.
The new partnership is the latest in a series of domestic-foreign ventures into the Indian hospitality market. Accor SA, Hilton Hotels Corp., and other international firms have pledged hundreds of millions of dollars to develop hotels in India in recent months.
The spurt of interest has led to extremely high land prices for hotel developers in major metropolitan areas such as Delhi.
For example, two adjoining properties of about five acres on the outskirts of south Delhi were bought by developer Emaar-MGF for Rs388 crore last year, approximately Rs77.6 crore per acre.
The newly announced hotels to be built by the group’s hospitality arm will come in phases, with three hotels completed by 2010, three by 2013 and two others by 2016.
The first three hotels will be built on land the group already owns in Delhi, in South Goa and near Rishikesh, said Bird Group executive director Ankur Bhatia said.
Mint‘s calculations do not include the land cost for these projects. However, the total investment by the group will likely end up significantly higher as it searches for available land in Pune, Amritsar, Jaipur, Hyderabad and Bangalore.
The Dusit-Bird Group management company will operate the projects built by the group and look for projects by other hotel developers to partner with.