Dubai Ventures buys 5% in Bharat Hotels

NEW DELHI: Dubai Ventures, the private equity arm of Dubai Investment Group, has picked up 5% stake in Delhi-based Bharat Hotels for Rs 160 crore. The deal values the company at Rs 3,200 crore. Post-deal, the promoters’ stake— the Suri family and associates — will come down to 92%.

The hospitality chain plans to raise up to Rs 1,000 crore through internal accruals, debt and private equity placements to fund its expansion programme. The expansion involves six properties under construction, while talks are on for setting up luxury hotels in Hyderabad, Amritsar, Chennai, Pune and Gulmarg.

The group had recently announced its international foray through a JV with Dubai-based Nakheel Group. Its Dubai property, The Grand Fort Dubai, is set to open in 2009. The group’s Kolkata property, the 165-year-old The Grand Great Eastern, is currently under renovation.

Other hotels under construction, scheduled to open over the next two years, include The Grand Jaipur, The Grand Resort Bekal, The Grand Ahmedabad, The Grand Chandigarh and The Grand Noida. “Our expansion is in line with our endeavour to be present in key tourist and business destinations,” said Bharat Hotels chairpersons Jyotsna Suri.

The group has a franchisee agreement with international hospitality chain, InterContinental Group, for properties at Delhi, Mumbai, Goa and Srinagar. Riding on growing business and tourist traffic to India, coupled with a general paucity of hotel rooms in the country, Bharat Hotels recorded a turnover of Rs 407 crore in 2006-07, a 35% jump over the previous year.

The group is expected to clock a turnover of Rs 550 crore in the current fiscal, company executives said. Promoted by late Lalit Suri, Bharat Hotels, had in 2006 looked at re-entering the capital market to raise funds to the tune of Rs 800-1,000 crore. But sources in merchant banking circles told ET that the group has put its listing plans on the hold for the time being.

Over the last two years, average room tariffs in the hotel industry have gone up by 20-25%, with average occupancy levels crossing 70% mark. As per industry estimates, the country needs to double its hotel room inventory from current level of around 1.1 lakh, over the next three years. Several international hospitality majors are entering into alliances with Indian developers to tap the business opportunities in booming sector.