ITC likely to take over Ramada Resorts

ET, MUMBAI | 14 July 2014 20:38 IST

ITC Ltd's hotel division may soon be able to get its first luxury property in Goa, one of India's top tourism destinations.

It's close to acquiring the Ramada Caravela Beach Resort from Advani Hotels & Resorts at a cost of Rs 700 crore, according to people with direct knowledge of the negotiations. 

The 199-room, five-star deluxe hotel, which had a third of its rooms renovated in October last year, is managed by US headquartered Wyndham Worldwide. ITC declined to comment. "As a policy we refrain from commenting on speculation related to the future plans of the organization," a spokesman of ITC said. 

Asenior Advani Hotels executive also declined to comment. The property gives ITC the opportunity to take over a readymade hotel in a state where getting land for new projects hasn't been easy, according to experts. 

ITC Hotels currently operates amid-market facility under the Fortune brand in the state and has been on the hunt for a bigger property for some time now. The Ramada property has substantial scope for expansion and is very close to the sea, making it an ideal choice for a luxury hotel operator, according to those cited above. 

Located on Varca beach, the resort was built in the 1990s and is one of the prominent hotels in Goa built in the Portuguese architectural style. 

"The property was built before there were stringent CRZ (coastal regulation zone) norms. So the hotel rooms are closer to the beach than most other hotels in Goa," said a consultant who did not wish to be named. CRZ regulations don't allow buildings to come up too close to the sea shore. 

The hotel has more than 1 lakh sq ft of additional floor space index (FSI) available, according to the FY13 annual report of Advani Hotels. This can be utilised by a potential acquirer to undertake any expansion, adding new services such as a spa or more rooms or villas and conference centres, among others. FSI refers to the ratio that determines how many floors a building can have. 

Goa is one of the country's premier leisure destinations, thanks to the number of flights connecting it to various parts of the country. 

It got nearly 28 lakh tourists in 2013, about 24 lakh of them domestic visitors. The total is expected to cross 31 lakh this year, according to the tourism board. 
Goa is in a league of its own and will be a perennial market that will offer an opportunity for any hotel chain entering the market, said PR Srinivas, realty firm Cushman & Wakefield's director of hospitality services in India. "It can take supply more easily as compared to most other leisure markets," he added. 

The state has a room inventory of 9,800 keys in total, of which 68 per cent belong to the organized/branded segment, according to Cushman and Wakefield's Hospitality Almanac 2014. The average occupancy rate increased marginally to 66 per cent in 2013 from 65 per cent in 2012, reflecting the slowdown in tourism amid an overall slump. 

In the next five years, the state is expected to witness the addition of 3,300 branded hotel rooms. 

However, supply increments have been slow. "It has lagged behind because of unavailability of suitable land for development of hotels," said Srinivas. 

Branded luxury hotels account for an 8 per cent share of Goa's overall total. That's expected to rise to 14 per cent by 2018. International brands set to enter the market include W Retreat & Spa, Grand Mercure, The Fairmont, The Hyatt Place, Holiday Inn, The Four Seasons Golf Resort and Hard Rock Hotel. 

ITC Hotels plans to launch six new hotels by 2018. The company will soon open resort properties in Manesar near Gurgaon and Mahabalipuram near Chennai, followed by upcoming premium hotels in Hyderabad, Kolkata and Ahmedabad, slated to be launched in 2014-2017. ITC's first overseas hotel in Colombo, being built in conjunction with the Sri Lankan government, is expected to open in 2018. 

Currently, ITC operates more than 90 hotels under four distinct brands--ITC Hotel at the luxury end, WelcomHotel in the 5-star segment, Fortune in the mid-market to upscale segment and WelcomHeritage in the heritage leisure segment. 

Original Report

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