Reliance Industries enters hospitality sector

Online, May 14, 2010 (Newswire.com) - After entering and ruling oil and gas and retail sectors, Reliance Industries (RIL) is now stepping into hospitality through a JV with Mumbai-based real estate company Maker Builders. They will build two hotels at the Bandra Kurla Complex in suburban Mumbai.

The partners are in final talks with an international hotel chain listed in London -- Mandarin Oriental of Jardine Matheson group -- to run their hotels. Terms and conditions of a revenue sharing deal between RIL, Maker and Mandarin are expected to signed shortly. The first project -- Maker Maxity -- will come up in the open-air theatre ground in Bandra.

Reliance and Maker will hold 35 per cent stake each in the project, while Urban Infrastructure Venture Capital Fund and Zander Private Equity Fund will hold 15 per cent each. One hotel will be a five-star property and other will be a seven-star super luxury hotel and Mandarin will manage both.

Mandarin Oriental will oversee construction of both the properties and ensure that they meet the hotel chain's specifications. Construction of both the hotels is estimated to cost about Rs 1,200 crore, excluding land value of about Rs 3,000 crore. Construction cost will be borne by RIL and Maker Builders.

According to people close to the negotiations, the business plan and the revenue sharing agreement between Maker Maxity and the hotel chain is in place. "It will take two to three years for the project to be set up."

In reply to a questionnaire from Financial Chronicle, a RIL spokesperson said, "As a policy, we do not comment on speculation." Though RIL has not lined up any other hotel projects, it may look at setting up more hotels in other cities. "If there is good revenue generation from the business, the company may have more such properties," said a person close to the project.

Mandarin Oriental is an international hotel investment and management group that operates, or has under development, 41 properties representing more than 10,000 rooms in 26 countries, with 17 hotels in Asia, 13 in the US and 11 in Europe, the Gulf, and North Africa. Its parent, Mandarin Oriental International, is incorporated in Bermuda and has its primary share listing in London and secondary listings in Bermuda and Singapore. Mandarin Oriental Hotel Group International, which operates from Hong Kong, manages the group's hotels.