Cabana to invest $1.2bn for Best Western hotels

MUMBAI: Mumbai-based Cabana Hotel Management on Monday said it has signed a master licensee agreement with world's largest hotel group Best Western International and will invest USD 1.2 billion in developing over 150 hotels under their flagship.

"We will invest USD 1.2 billion in next 7-9 years to construct and manage our own over 50 hotels and 100 will be sub-licensed," Cabana group Co Chairman Prabhu Goel said.

The over 150 hotels would range from 3.5-5 star hotels, all under our brand name," Best Western International Chairman of the Board Charlie Helm said.

"Sixty per cent of the funding of USD 1.2 billion will be through debt and the rest through private equity and internal accruals," Cabana Group Director of Investment Parimal Patel said.

Cabana has already identified locations for six Best Western hotels and would invest USD 10 million in each.

"We are establishing hotels in Ooty (Udhagamandalam), Bangalore, Kanyakumari, Jaisalmer, Rameshwaram and Bhubaneshwar, on which we will start construction soon," Goel said.

Asking about revenue expectations, he said, "It depends on market tariffs but it should be over USD 10 million per hotel by 2010 for these six locations." These six properties would complete construction in two years' time, he said.

For other locations, the company is looking at Delhi, Mumbai, Hyderabad and all the gateway cities as well as the secondary ones. "India ranks top among our focus markets," Best Western International President and CEO David Kong said.

Best Western, which has hotels in 82 countries, had earlier retreated back from its development agreement of a similar kind in India for reasons not known.

"We did have a similar agreement in India more than five years back. I don't know where the things went wrong then, but I know this business model will be extremely successful," Kong said hoping to be a second time lucky in the country.