Rajathi Group plans expansion in tier 2-3 cities

Chennai: Chennai-based Rajathi Group is planning to take its hotel brand Breeze to other cities. This would cost around Rs 750 crore in three phases beginning early next year. The company has roped in Deloitte Touché Tohmatsu as consultants for the project.

The expansion plan will adopt a combination of green-field projects, joint ventures, hotel management arrangements or purchase of existing properties in the targeted cities. “We have identified 15 tier-II and tier-III cities, of which 13 are in Tamil Nadu and two in Andhra Pradesh,” said Mr Amrendhran, CEO, Breeze Hotels.

According to him, while the identified cities include Coimbatore, Tiruchirapalli, Tuticorin, Sriperumbudur (near Chennai), Madurai, Ooty and Kanniyakumari in Tamil Nadu and Krishnapattnam and Visakhapatnam in Andhra Pradesh.

All the hotels will be in the three-star category. The logic behind the decision to go to tier II and tier II cities is that “we realised that there is a huge demand for quality rooms in those cities,” he said.

Deloitte Touche has been mandated with carrying out a thorough research and prepare a master plan for this expansion drive.

On the funding part of it, Mr Amrendhran said in the first phase the company will invest a third of its total outlay to build hotels in Sriperumbudur (where the company has enough land), Tiruchi, Tuticorin, Madurai and Coimbatore. While in Coimbatore and Tiruchi negotiations for land are almost at final stages, it is scouting for properties in Tuticorin and Madurai.

Of the Rs 250 crore, Rs 100 crore will be raised through equity and the rest as debt.