Wednesday, November 26, 2008 6:46 PM
Major Hospitality Projects in Bangalore on Hold
Until recently, Bangalore used to boast of the highest average room rates among hotels in India but now the heydays of the tourism and hospitality sector are over. Most of the hotel projects announced two years ago have not taken off yet.
Here is a verbatim transcript of Sunanda Jayaseelan’s comments on CNBC-TV18.
It is proving to be no holiday for hospitality majors looking at setting up shop in Bangalore. CNBC-TV18 has learnt that several of the large hotel chains that were supposed to have come up in the city have run into delays. The Hilton Group's venture with Bangalore-based Prestige Constructions was supposed to be completed by mid 2007. The property, being promoted by Prestige at a cost of Rs 200 crore was to be managed by the Hilton Group. However, sources say that due to a demand slump, it hasn't even kicked off. Funding could be another reason. Prestige's IPO which was slated for earlier this year has now been put off by another two-three years.
The company when contacted say that they are waiting for government approvals for their project and once that it is received, the project should be ready in the next three-years.
While Sobha Developers has two hotel projects for Bangalore in the pipeline, its property at St. Marks Road is facing problems reportedly over land ownership rights. While the project was announced two years ago, it has been learnt that the company hasn't applied for plan approval yet something which is granted only once 'no objection certificates' or NOCs have been obtained. An email sent to the company requesting for details of project completion, land size and investment did not elicit any comment.
This channel has also learnt reliably that Bangalore-based Nitesh Estates has been facing legal issues over land ownership. Nitesh, in partnership with Ritz Carlton, was to set up a 250-room luxury hotel in the heart of the city at a reported cost of USD 100 million. The problems have forced the company to delay its project completion. When contacted however the company said, "Construction is on in full swing and on schedule and the hotel will be operational by end 2010 and run by Ritz Carlton."
Such delays and pullbacks do not seem to have dampened developers appetite for growth. However, CNBC-TV18 has learnt that Nitesh Estates is planning a 250-room property, again with Ritz Carlton, which will come up in Chennai by 2012.