Why I bought Taj Vizag
The Taj hotel in Vizag has been one of the most coveted and sought after properties in the city for a very long time. Many have grown up idealizing this hotel as a posh and luxurious place to dine/stay at. One of the few early five star properties in the port city, Taj (later renamed Gateway) has always been one of the most admired hotels in Vizag.
Thus it would be of no surprise for someone wanting to buy this iconic property in Vizag. However one was a bit startled when the news came in of the property being bought over by the Varun group.
And it wasn’t about the country’s largest automobile dealer getting into the hospitality sector as the group already operates two hotels in this region.
The Novotel Varun Beach in Vizag is right next to Taj Gateway property while Varun beach Bhimili resort is in Bheemunipatnam and the group has another Novotel coming up in Vjayawada.
Therefore the idea of buying another star hotel adjacent to their existing property and that too of a competing brand seemed a bit startling.
However being adjacent to Novotel was exactly one of the reasons the Varun group’s founder Mr Prabhu Kishore thought of it to be a great buy.
Ask him what made him buy the Taj Gateway property in Vizag and he says: Sea front, Adjacent to Novotel and the ‘right price’.
And what was the right price? Well, for Mr Kishore, Rs 120 crores. Albeit SBI are their bankers he is quick to point out that the entire money was arranged internally. ‘OHL (Oriental hotels ltd.) gave us just 20 days to come up with the money.’
‘I will redevelop it as Taj and it will be one of the most spectacular properties in this city’ says the founder of the Varun group.
‘We just cannot continue to keep it operating like this. Times have changed and so have the demands and requirements of infrastructure. Among the many there is a huge requirement to enhance parking space in this property therefore we will have a totally new structure ready in about 4 years time’.
The Taj gateway is expected to be operational for about a year’s time post which the Varun group plans to re do the entire structure from scratch. This means that the Taj hotel will probably be closed for some time.
And the amount that the group plans to spend on this redevelopment is a whopping Rs 300 crores over the next 3-4 years.
Talking on the deal he says that discussions went on for about 3 months wherein they were close to dropping out of the deal just a day before they actually sealed it.
‘On 28th September we had almost dropped out and on 29th September the deal was actually done’.
Mr Kishore says he had the backing of the state government to go ahead and do the deal. ‘I went to the CM (Mr N Chandrababu Naidu) and concerned secretaries telling them about this development and they all said go ahead Prabhu’.
With this acquisition Varun Hospitality P Ltd has now close to 600 hotel rooms in its network.