Kamat Hotels to set up 36 4-star hotels in Maharashtra

Vithal Kamat, CMD, Kamat Hotels India said that in order to cater to the Commonwealth Youth Games in Pune, they are going to come up with a 5-Star hotel Orchid and a 4-Star hotel called VITS.

Q: You are building this hotel for the Commonwealth Youth Games in 2008. You have to complete the project by June. You are going to be in the business of managing this 400-room property. Is it a 5-Star hotel? You mentioned there were two entities coming up.
A: There are going to be two. One is a 5-Star hotel - Orchid, environment sensitive hotel, and the other one will be a 4-Star hotel, a new brand called VITS. So, these two hotels will be catering for the Commonwealth Youth Games in Pune.


Q: So, what kind of an investment does it involve from you?
A: Clear Water have taken 49% in a joint venture; 51% is going to be put in by our joint company.

Q: Are you investing anything at your end apart from the private equity player getting in money?
A: Yes. We are also joint owners, we have participation in it. And we will be managing this entire hotel for the next 60 years.

Q: Could you talk about the potential revenue that you would get from managing these hotels because as you spelt it out, about 70% of the work is already done? So, once the hotels actually start, post-June 2008, what kind of revenue can we expect from the company on a QoQ basis?
A: At present, the trend is such that our PBT and PAT, this quarter our PAT has gone up by around 377% compared to last year, which is Rs 1.852 crore to Rs 7.25 crore. The half yearly to half yearly turnover has grown from 42.75 crore to Rs 65 crore. And PAT has gone from Rs 3.2 crore to Rs 11.3 crore.

Q: Going forward, what kind of revenue do you see particularly from this project as you have 17% stake for the services of managing these hotels, what will be your revenue on a time on time basis?
A: When we take any hotel for management, we get approximately 8% of the turnover. Our first full-year turnover would be around Rs 90 crore, which is the minimum turnover. Also, there will be the Food and Beverage business, and both these will combine to over Rs 100 crore.

Q: A quick word on the kind of expansion plans you have? Do you intend to raise further funds?
A: Right now we have acquired 60% share of Concept Hospitality, a hotel management company, which is subject to government approval. At the same time, at the end of this month, we are opening a new chain; Gadh hotels chain and we have three more properties in the same Gadh Hotels. We are also starting 36 small hotels, which are going to be 4-star hotels in all districts of Maharashtra.

Q: What is the kind of capex, the kind of expenditure that you would be incurring? Do you have that money with you or would you need to raise it?
A: We have the money with us. But at the same time, today for all the VITS brand hotels; we have people who have approached us. So, we will also be managing it and giving it on a franchise basis. So, this is a new opportunity where your capex will be very low.