The Mumbai-based IT Microsystems has proposed a $600 million expansion in its newly diversified hotels business in the next three years. The $600 million will used for expansion of hotels, restaurants and franchisee outlets, said Sudhir Moravekar, chairman of Panoramic group, said.
The company also proposes to change its name to Panoramic Universal.
The company has plans to spend $90 million in 2006-07, $150 million in 2007-08 and the remaining $360 million in the third year. To fund the expansion, the company has proposed an overseas issue of $30 million.
Another $50 million will be raised in two years through GDR/ADRs. The remaining fund will be mobilised through a public offer and internal accruals.
"We proposed to offer hotels, restaurants, franchisee outlets and much more, with plans to convert in-house centralised IT operations into a BPO services outfit for the hospitality sector," said Moravekar.
"We have planned to acquire and operate a majority of hotels in the US. At the movement we have five hotels worth $25 million in the US with total capacity of 787 rooms," he added.
Based on a McKinsey survey, the company has targeted to set up 100 hotels in three years and 1,000 over 5 to 7 years. In future, the company will be to acquire mid-sized franchised and non-franchised properties that are operating and generating profits.
The company has targeted to set up 25 hotels valued at $125 million with a total room capacity for 3,000-4,000 by 2007. Franchising would be a priority tool for global growth. We intend to adopt the franchising growth model by 2006, with the help from iFranchisee.
In the first year the company is targeting 25 hotels, 100 in second and 250 in the third year under the franchisee mode.
Apart from our regular stream of revenues from the hotel business, the company has also plan to keep churning portfolio. If we see that property prices have peaked in a particular region or find that a particular mid-sized hotel is not doing well, and it is more profitable to sell it, we would rather book our profit and move elsewhere, says Moravekar.
In the near future, the company is planning to launch multi cuisine lounge bar Area 51 in Pune in December 2005 and The Country's Best Yogurt in the first quarter of 2006. Our future plans also include setting up a tourism agency and providing BPO services to the hospitality and tourism industry.
With this business model in place, we are optimistic to grow from an 4.02 million company into a $150 million hospitality conglomerate by 2008. Indian hospitality sector is booming.
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