While a private equity fund has expressed interest, and is willing to pay ₹350 crore for the property, an additional ₹40-50 crore will be required to complete the construction, said two of the three people cited above. 

The construction is 75% complete, and the hospitality firm expects to finalize the deal within two months, they added.  

Twenty14 Holdings, the hospitality investment arm of LuLu Group International, founded by Adeeb Ahamed, had earlier announced that the hotel asset, which will be operated by Marriott International, would be ready by 2019. However, Twenty 14 Holding’s mounting debt resulted in a delay, the people said. 

“They have grown too fast in the last few years, and that is the reason they are in debt. To offload their debt, they are looking to sell this asset. The buyer is looking to pick up the asset for around ₹350 crore, and may have to pay a little more for the fit-outs,” said the third person, a consultant.

Last week, PE firm Blackstone had announced that it was evaluating two assets in south India for ₹300-400 crore.

Queries sent to the company did not elicit any response till press time.

To be sure, the Lulu Group’s 20-year-plus lease agreement with Marriott Hotels, will not be affected, even in the event of a change in ownership of the hotel property. The hotel is strategically situated in a hospitality hub near Kempegowda International Airport, alongside two other Marriott International-operated establishments: Bloom and Moxy hotels.

In India, the Lulu Group owns six more properties, including a 135-room hotel in Bengaluru, and five assets in Kerala’s Kochi and in Kannur, including the Grand Hyatt Kochi Bolgatty. Additionally, construction is underway for four other hotels.

In 2014, the company had announced a $1-billion investment spread over six years. Half of this amount was earmarked for acquisitions in Europe, and the remaining was allocated across India, the Middle East, and far Eastern nations. The company is also pursuing other hotels projects in Dubai, the UK and Oman. 

According to a 2022 analyst report by CareEdge, the company secured a 20-year hotel management agreement with Marriott for overseeing operations at the hotels in Kochi and the 217-room property near Bengaluru airport. 

One of the hotels in Kochi is part of Marriott Tribute Portfolio, India’s first Tribute hotel. The company also collaborates with Hyatt to manage another hotel in Kochi.

According to hospitality consultancy Horwath HTL Consultants, in 2023, a record 14,000 hotel rooms were added in India, taking the key count to 183,000 in the organized space. This number is expected to balloon to 250,000 by 2027, it added. 

Hotel occupancy rates are also on the rise. In 2023, rooms were occupied 63.6% of the times, a big jump from 43.1% and 59.6% in 2021 and 2022, respectively. Although occupancy has not reached the pre-pandemic peak of 64.5% in 2019, it’s inching closer.

“The Bangalore market is 13-15% above pre-covid levels in terms of the average room rates hotels are charging, and has been performing very well. Assets around the airport are generally valued higher due to their locational significance. Since getting in and out of the city is difficult, many travellers who come in for business around the Hebbal and Devanahalli areas may find that they would like to stay around the airport,” said Achin Khanna, managing partner, strategic advisory, Hotelivate.

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Published: 11 Apr 2024, 07:10 PM IST