 "Shangri-La ends Mumbai hotel contract")
Pallazzio Hotel and Leisure is the subsidiary of Bombay Stock Exchange-listed Phoenix Mills, a mixed format real estate developers. The 400 room premium hotel is located in the popular commercial district of Lower Parel in the city.
A new operator has already been finalised by the owner and will likely take over before the end of this year, said sources. As per the original agreement with Phoenix Mills Shangri-La had rights to operate the property for a period of 20 years.
When contacted Shangri-La refused to share the reasons behind its sudden exit. The hotel which opened doors to guests in January this year, had been operating at around 50% capacity with an average room rate of under Rs 9,000.
"Shangri-La International Hotel Management Pte Ltd and Pallazzio Hotels and Leisure have mutually decided to end their relationship and Shangri-La will withdraw from the management of the Shangri-La Hotel, Mumbai. The hotel will be handed over to the owning company on 6 September 2013 and will no longer be part of Shangri-La Hotels and Resorts", a release from Shangri-La stated.
With the walkout the Asian hotel chain will be reduced to just one property in India which is located in Delhi. Two more are supposed to come up in Bangalore in 2014 and 2015. All properties are on management contracts.
The hotel was originally set to be operational by end of 2009. As per the contract Phoenix would have retained exclusive rights for the Shangri-La brand in the Mumbai region. Shangri-La was responsible for management of the property, branding, technical assistance, and reservations, sales & marketing.
The stock of Phoenix Mills closed 1.89% down on the BSE at Rs 205.15 as against its previous close of Rs 209.10.