The Hindu : Business : Sabari group of hotels plans big expansion

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Saturday, Dec 20, 2008
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Business

Sabari group of hotels plans big expansion

Shanthi Kannan

Mulls Rs. 400 crore investment by 2011 in various projects

CHENNAI: The concept of budget hotels or ginger hotels is fast catching up. A budget hotel by definition means low tariff, with minimum facilities, and less number of rooms.

In the current economic slowdown, corporates have started cutting on travel expenditure of their executives. This will automatically increase the demand for budget hotels. These hotels, even today, have 75-80 per cent occupancy rates, according to K. R. V. Ramani, Managing Director, Sabari group.

Mr. Ramani is of the view that the economic meltdown and the recession will not impact severely budget hotels. But the fact remains that these hotels have shown a dip of 10 per cent in occupancy rate in the current scenario.

Even during this slump, the Sabari group has acquired the Nilgiris Nest Hotels in Chennai, Bangalore and Coimbatore at a total cost of Rs. 95 crore.

Though the takeover talk began during June this year, the deal got concluded this month. The entire transaction was done in cash. Of which Rs. 65 crore was through debt from State of Bank Hyderabad and the balance through equity.

After the takeover, these hotels would be run under the brand name ‘Sabari’s Nest’ and all three properties of the Nilgiris come under the budget category, which would be refurbished after acquisition. The Sabari group already has two hotels in Chennai.

The Sabari group was planning to invest Rs. 400 crore by 2011 in various projects such as acquisition of hotels and expansion of the existing ones. The company has set a target of 1,000-room inventory by 2012.

The company had already acquired land to construct three 120-room hotels in Coimbatore, Bangalore and in Pune. It would invest Rs. 72 crore in Pune and Bangalore, funded by State Bank of India.

Mr. Ramani said the company had recently acquired a 50-room hotel in Kodaikanal, which was under renovation and would be launched next month.

The acquisition cost is Rs. 6.50 crore. “Once all these hotels become functional, the Sabari group would have a turnover of Rs. 150-200 crore by 2010-11 against the present Rs. 35 crore from its two hotels,” Mr Ramani said.

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