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Developers are increasingly combining hotels with projects such as malls and office complexes to extract the most out of their properties, given the high capital costs and the glut in the real estate sector

Integrated development may become the trend for the hospitality and real estate sectors.

Developers are increasingly combining hotels with projects such as malls and office complexes to extract the most out of their properties, given the high capital costs and the glut in the real estate sector. Even owners in leisure destinations are looking at setting up hotels in mixed-use projects.

There are advantages in setting up larger and varied developments. A hotel could benefit from demand generated by workers in adjacent offices. Retail outlets could improve a property’s restaurant and banquet offerings. Guests could find it more convenient to have quality lodging and retail options within the same complex.

The Hilton chain is trying to create higher value for its owners and more fruitful experiences for its guests through the integrated development model.

“In terms of upcoming projects, we have joined hands with our partners, Embassy Group, to manage over 600 rooms across our Hilton and Hilton Garden Inn brands at Embassy Manyata Business Park,” said Kaushik Vardharajan, VP for development at Hilton India, referring to the property in Bengaluru. “We are evaluating more of such opportunities and are committed to leverage them.”

Hilton’s Garden Inn New Delhi and Hilton Garden Inn Gurgaon Baani Square are located next to prominent retail spaces.

“These hotels have very quickly become the preferred choice for guests in their respective markets due to the hospitality, location and integrated utility we offer,” said Vardharajan.

Consultants said such projects are being considered even in leisure locations such as Goa, Mysore, Rishikesh, Haridwar and Jammu & Kashmir, where property owners face a glut.

“There is a lot of unsold inventory and they are trying to evaluate if those can be converted to hotels,” said Romesh Koul, CEO of Naaz Hotel Consultants. “Hospitality has also shown an upswing compared to the real estate sector. We are looking at projects in locations like Rishikesh and Noida.”

“Retail or commercial spaces, serviced apartments, hospitals, large-scale clubs are a few primary components of a mixed-use hotel development. Some of these components, being demand generators themselves, contribute direct business to the hotel. The quantum of such projects is more now as it makes absolute financial sense provided the other elements are amalgamated right at the design and planning stage. We are conducting multiple feasibility studies and brand searches with mixed use developments for our clients in cities like Goa, Gurgaon, Dehradun and Udaipur” said Beni Agrawal, founder of GK Hospitality Services.

Investors, too, are seeing returns emerging from such projects.

The St. Regis Mumbai is the only hotel owned by Pallazzio Hotels & Leisure and forms part of the mixed-use development at High Street Phoenix. Phoenix Mills raised its stake to 73% in Pallazzio Hotels & Leisure earlier this year.

“During the first half of the current fiscal year, St. Regis recorded a 21% increase in room revenue (Rs 546 million) with an average occupancy of 72% (up from 65% a year earlier). The hotel also saw an impressive 24% year-on-year increase in EBITDA to Rs 430 million,” said Shishir Shrivatsa, joint MD of Phoenix Mills.

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