Sterling Holiday Resorts (India) Ltd, vacation ownership and leisure hospitality company based in Chennai, is planning to invest around Rs 120 crore in the current fiscal for renovation of existing properties and open around five new resorts in the country.
The company is looking at long term leasing model as an option for new resorts, while majority of the investment would be on refurbishment of existing resorts, said Ramesh Ramanathan, managing director, Sterling Holiday. It currently has around 1,450 units or rooms, in a total of 19 resorts.
“Of the 1,450 units, around 1,100 are own units and we have completed renovation of around 350 units so far. We will be investing into renovating 700-800 units in this fiscal and majority of investment will be going into this,” said Ramanathan.
Around Rs 100 crore would be invested on renovation. The new resorts planned are on lease basis, which would not much of capex.
In leased resorts, there is an advantage that the time to market is short and in certain places, building a new resort would be difficult and leasing out a building would be easy. However, the company would continue to own 70 per cent of total assets, while the rest would be on lease basis.
“Since we are offering a 25 year product, we should own majority of the assets, to keep the business under our control,” he said.Meanwhile, the company is also planning to set up around five new resorts with focus on northern and western markets. It has already covered several locations in South India, while it see more room to set up resorts in northern and western parts of the country. It is to be noted that billionaire Rakesh Jhunjhunwala has made a considerable investment in the company last year.
According to reports, Jhunjhunwala and investor Radhakrishna Damani have invested around Rs 80 crore for a little over 14 per cent stake in the company. Along with this, the promoters has also put in money in the company.
“We have around Rs 46 crore to come in from this, after the balance sheet prepared on March, 2012. That will all be used for the capex, for this year. For the balance amount, we will securitise our receivables and get money for capital,” added Ramanathan.
The company would look at introducing new products after 12-18 months.