Hotel Leela sells its property to unburden the debts

Burdened with debts of Rs 3, 830 crore at the end of FY11, Hotel Leelaventure is likely to sell its propertyworth Rs 500 crore to non-resident Indian industrialist Ravi Pillai. The property is situated in Kovalam,Kerela and is known as Leela Resorts Kovalam. The property would sell as a management contract underwhich Pillai would be managing the property for 30 years. The sell could be considered as a part of theHotel chain's plan to sell its property in order to raise Rs 950 crore. The raised amount is likely to getused for the developing project in which the chain is entering simultaneously.

The chain also released its first quarter financial results for the quarter ended June 30, 2011. It posted anet loss of Rs 26.49 crore as compared to a net profit of Rs 9.24 crore in the corresponding quarter lastyear. The loss further adds to the urgency of the chain to make arrangements to clear out its debts. Theincurred loss was accounted for the instability that caused while opening the branch, The Leela Palace atthe national capital, New Delhi. Further, the loss deepened due to the expenditure in renovation that itsbranch in Goa, The Leela Goa is going through.

Hotel Leelaventure is a known chain of five-star hotels. The name is estimated to have an ongoingcapital expenditure plan of more than Rs 4,000. The Hotel chain was recently in news in April forlaunching a 260-room property in Delhi. As for the further plan, the Hotel chain is likely to open a newhotel in Chennai in the endings months of this year. Besides, it also announced a partnership withPrestige Estate Projects to construct premium apartments on part of its land bank in Bangalore, fromwhich it expects to earn 150 crore over 4 years.