Joining the big league of property developers who have ventured into hospitality, Mumbai-based Phoenix Mills has said it will set up a 30-storeyed luxury hotel at Lower Parel, Mumbai.A subsidiary - Pallazzio Hotels and Leisure - will develop the property, while Hong Kong-based Shangri-La will manage the hotel.The property - to be named The Shangri-La Hotel Mumbai - will have 350-400 rooms and is expected to become operational by Q4 2009. The company is spending nearly Rs 300 crore on construction and interiors of the hotel."Hospitality is a critical part of mixed use development which we initiated earlier. There is a vaccum for good quality hotels in Mumbai and elsewhere in the country. We will primarily target business travellers with the hotel," said Shishir Shrivastava, CEO of Phoenix Mills' hospitality division.Atlas Hospitality, another Phoenix Mills subsidiary, is developing luxury hotels at Pune, Bangalore, Chennai, Mumbai and Agra. Each hotel will have nearly 300 rooms, and will be executed through special purpose vehicles (SPVs), Shrivastava added. "We have not tied up with Shangri-La for the other hotels, but we will explore the possibility of working with them in other locations.''According to hospitality industry estimates, nearly 7,000 rooms are available in the three-star and above category in Mumbai, while demand is in excess of 11,000-odd rooms. Demand is expected to zoom to nearly 20,000 rooms by 2012.Shrivastava said the Shangri-La would offer much lower tariffs as compared with $275-$300 charged by star hotels in Mumbai for a night's stay. The hotel is targeting revenues of Rs 275 crore after the first three years of operation.Phoenix Mills recently raised Rs 980 crore through a qualified institutional placement of 49 lakh equity shares. Around Rs 350 crore of these funds would go towards subscription of 30 lakh shares of Atlas Hospitality.Many top real estate developers have announced hospitality projects in conjunction with international hotel chains over the last one year. Delhi-based real estate major DLF announced its joint venture with hotel chain Hilton to develop 25,000 hotel rooms. Another property company Emaar MGF has entered into a JVs with hotel chains Whitbread PLC and Accor. Bangalore-based property developer Nitesh Estates is developing a hotel in Bangalore that will be managed by the Ritz Carlton.
