Savvy's construction delay stunts Crowne Plaza entry in Ahmedabad

Shiva Satya Hotels and IHG have been facing conflict due to the delay by Savvy Realty

The conflict between hospitality group Shiva Satya Hotels Pvt. Ltd. and InterContinental Hotels Group (IHG) for the five star Crowne Plaza Hotel property has thickened due to construction delays by real estate developer Savvy Realty and Infrastructure Pvt. Ltd.

As against the promised completion date of January 2010, the city-based developer is yet to fulfill its commitment till now, thereby delaying the project by over 3 years.

"An agreement was signed between Shiva Satya Hotels and Savvy Realty and Infrastructure Pvt. Ltd. in October 2007 wherein the latter was supposed to construct the hotel property on turn-key basis and hand over in maximum 27 months i.e. January 2010. However, till date the first phase of the hotel is not guest ready due to construction delays. The hotel's fire and life safety is still not fully activated," said Vini Gupta, general manager of Crowne Plaza Hotel, who also represents Shiva Satya Hotels Pvt. Ltd.

According to Gupta, both Shiva Satya Hotels and IHG have been facing a conflict due to the construction delay by the city-based developer Savvy Realty and Infrastructure Pvt. Ltd.

This, despite the fact that Shiva Satya Hotels had paid roughly Rs 200 crore in full for purchase of the five star hotel property.

According to industry sources, Shiva Satya Hotels had signed a hotel management agreement with IHG under its five star Crowne Plaza brand on August 19, 2008 in an anticipation of opening the hotel in 2010.

However, the construction delays have not only stunted entry of Crowne Plaza in the city but also resulted in conflicts between the two parties. What's more, due to the conflict, Shiva Satya Hotels had to also remove the Crowne Plaza branding on the property and replace it with its own.

When contacted, Sameer Sinha, director of Savvy Realty and Infrastructure Pvt. Ltd. refused to comment on the development.

"Shiva Satya Hotels, which is the owner of the property is bleeding financially due to monthly overheads worth Rs 1.2 crore without earning any revenues since November 2012. We have roughly lost business worth Rs 7 crore due to construction delay hampering opening up of the Crowne Plaza Hotel. The latest deadline for opening up of phase one of the project has been fixed at June 2013," said Gupta.

Spread across an area of 7000 sq yards, the five star property is likely to house 200 rooms, apart from a ball room and two restaurants.

It has also been learnt that the construction delays have been due to liquidity issues troubling Savvy Realty and Infrastructure Pvt. Ltd. Meanwhile, according to industry sources, Shiva Satya has also lent Savvy around Rs 4 crore to ease liquidity scarcity in order to finish the project.