Phoenix Mills to invest Rs 1,100cr over 3 yrs

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By Vivin Mathew /CNBC-TV18

 

Mall developer Phoenix Mills is getting into the business of building hotels. The company plans to invest about Rs 1,100 crore over the next three years.

 

Phoenix Mills Company , which until now has only built malls, is now planning to build 23 hotels across India in the next 36 months. The company says demand for such properties is huge. Shishir Shrivastava, CEO, Hospitality Market City Resources , said, "If we compare our current 1,10,000 categorized hotel rooms in India and compare that with Chicago which has 1,25,000 rooms, one can see there's a huge demand and supply gap that exists."

 

To capitalize on this gap, Phoenix is building seven premium hotels and eight economy hotels. These properties were acquired when Phoenix bought a 75% stake in Atlas Hospitality for Rs 350 crore. A further Rs 750 crore will be invested to build 18 more hotels. In all, Rs 1,100 crore for 23 hotels over three years.

 

All the hotels will come up in developments that consist of malls, offices, and hotels that the group is constructing across the country. "These could be mixed use development ranging from 2.5 million to 4.5 million sq ft in premium or Tier I cities and part of 750,000 sq ft developments in Tier II or III cities," Shrivastava said.

 

The company said it is in talks with leading hospitality groups across the world to tie-up management contracts. Phoenix will raise about Rs 700 crore through private equity first and then through an IPO of the hospitality arm. It said that by 2011, the company should be making profits of about Rs 400-500 crore.