April 13, 2013--NEW DELHI -- Bangalore-based Amalgamated Bean Coffee Trading Co. Ltd, which runs the Cafe Coffee Day chain, plans to expand its hospitality business by more than doubling the number of luxury hotels it owns and operates under its subsidiary Coffee Day Hotels and Resorts (CDHR).

The company, which currently has three operational five-star hotels, is looking at adding seven more properties in the next five years, entailing an investment of around Rs175 crore, marketing head Anand Menon said on Friday.

CDHR operates luxury resorts under The Serai brand in Karnataka and is currently developing properties in Mangalore and the Andamans Islands that will be operational in the next two years.

"We have acquired a 20-room property in Andamans and will be adding another 20-25 rooms to it. Another property in Mangalore would be a greenfield project. Both will be operational by 2014-2015," said Menon. "We expect to have 10 properties by 2018. Each of our upcoming properties will have an investment of around Rs25 crore, though there will be an incremental cost going ahead."

Over the next few years, the company plans to expand its hospitality business in north India including Himachal and Rajasthan, in addition to increasing its presence in the south.

"Hospitality is a sunrise business for our holding company and we would like to be in top three business segments for the group," said Menon. The hospitality segment doesn't figure in the Coffee Day Group's top eight business segments.

Menon said the company wasn't largely affected last year by the economic slowdown though it was a rough year for the hospitality industry.

"In the financial year 2012-2013, we saw 72% occupancy across our properties and overall an average revenue growth of 18-20%," Menon said.

The company has 73 rooms across its three properties and will add more than 200 rooms in the next five years.

Industry analysts said the properties may do well provided they offer unique products and are targeted at certain segments.

"In the short term due to current economic scenario and with fair bit of new supply coming in all the segments, the company might feel some pressure, but if they have some differentiating factor, they may be able to continue to be profitable," said Chintan Patel, director, real estate and hospitality services, Ernst &Young. "Otherwise they will be one amongst many."

Patel, however, said that with the company already running three properties, it would not be a challenge for it to expand. "With growing disposable income and increasing number of travellers, the Indian hotel market will continue to grow," he said.

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