Hotels Eye Expansion via Mixed-use Development Route
Many hotels have now taken the route of mixed-use development to combat rising real estate costs and to expand. Taking this route helps the hotels save on the fixed operating costs per room, as this is based on the shared services concept. Some of the hotel chains include Lemon Tree, Ginger and Tune.
Mixed-use development
The concept of a mixed-use project involves developing a locality that combines residential, commercial, institutional, cultural and/or industrial facilities. Hence, a mixed-use project essentially has residential units along with commercial establishments such as offices, banks, party halls, shopping complex amongst others. Towns and cities are developed for mixed use. But, such projects cover smaller geographical areas. A mixed-use project may be as big as a township or village or may be as small as a tower with different floors dedicated to different facilities. This means that a mixed use development may be done in a multi-storeyed hotel building as well.
A mixed-use project has several advantages. For example, the distance between houses, commercial establishments and other amenities is reduced. More compact development utilizes the available space more efficiently. It provides better housing density and variety. It also helps in more affordable housing due to smaller units.
Hotels opt mixed-use development
Many hotels perceive that a mixed-use development is the way forward. Experts in the hotel industry believe that hotel brands are able to tap into densely populated areas, by transforming the existing resources into the hotel’s touch points. There are some important advantages available for the hotel brands here. For example, setting up a new standalone property requires significant capital and time. It takes about 2-3 years for even a budget hotel to launch. Moreover, there are delays in securing approvals and licenses for the building, which can hamper the development. However, under mixed-use development, the hotel brand sets up its back-end facilities and rooms in a portion of an existing complex. This significantly reduces both the time and money involved in developing a hotel property.
Moreover, embedded cost of a piece of land is high. In a mixed-use development, the lower floors may be used for commercial purposes and the hotel is set up on higher floors. Many hotels have utilized the revenues earned from the mixed-use development to pay off their debts.
Examples of hotels
One of the hotels that has gone for mixed-use development is Mango Hotels brand. The hotel property was recently launched in Airoli, Navi Mumbai, and has 64 rooms spread over two floors. It has a food and beverage outlet and a conference centre. The hotel is designed to carve out the maximum number of rooms with minimum space wasted on public areas. The hotel took just one year to design the property as opposed to more than three years, had it gone for building an entirely new property. Svelte Hotel & Personal Suites, a part of Tristar Hotels, is another hotel that has opened up at Select City Walk Mall in South Delhi recently. Davanam Sarovar Portico Suites, a part of Sarovar Hotels & Resorts, is a mixed-use property at Total Mall in Bengaluru.
There are also some major real estate companies such as DLF, Rahejas and Unitech that have tied up with some major hotel brands to bring in mixed-use development in hotels.
