Sahara Hotels plans to set up three properties, expand Mumbai hotel

Sahara Hospitality, which runs the luxury hotel Sahara Star near Mumbai’s domestic airport, is looking to pump in Rs 3,000 crore for setting up three more properties in north India.

A part of the group's existing land bank could be tapped to set-up these properties, a senior company executive told Moneycontrol.

"We might invest Rs 3,000 crore on new properties. Sahara Group has huge land banks across India. We will identify the location at later stages," said Chintan Shah, Virtual Head of Finance, Hotel Sahara Star.

The group is looking to draw learnings from operating its current and only property located in Mumbai, which it has been running since 2002. The Sahara Star runs at an average occupancy of 85-90 percent, which has prompted its management to add more rooms and features.

A total of 62 rooms, a 14,000 sq ft gym and a 13,000 sq ft spa (largest for any luxury property) facility will come up in coming months inside the property. The hotel currently has 344 operational rooms and recently opened its eight restaurant.

“We want to keep the momentum going and hence we would be setting up another property. In fact, we have three in mind, but we would like to go a little slow. We will add at least three more properties in the next two years,” Shah added.

When asked about its funding plans, the executive said the company is exploring roping in investors.

"We won't opt for debt. We would rather look at internal accruals or a partner who is ready to bring in some equity. Branding of new properties will be under Sahara Star. We have taken learnings - both hits and misses from this one property in Mumbai," he said.

The management is spending about Rs 20 crore on brownfield expansion at its Mumbai property, which will be completed by November.

"We implemented some basic strategies in Q1 FY18. Last fiscal, we achieved 60 percent growth in topline and a 42 percent EBITDA margin. In 2017-18 our topline was Rs 160 crore. In 2018-19, we will close at Rs 230 crore. RevPar (revenue per available room) of Sahara Star was Rs 7,300,” Shah added.

As per research and consultancy firm HVS, the nationwide RevPar rate should grow 9.5 percent on the back of growth in average daily rate. Supply is anticipated to grow at four percent, while demand is expected to grow at seven percent.