‘Family offices’ (investment offices of wealthy families) invest in hospitality assets around major pilgrimage sites across India – such as Deoghar, Mathura, Saurashtra and Udupi. This is opening up new avenues of growth for the local hotel industry. Be it Mumbai-based ‘Family Office”s acquisition of a near-ready luxury hotel in Udupi or RR Kabel’s investment in Salasar Balaji – big families are pouring capital into branded hotels around India’s biggest pilgrimage destinations. According to ‘Nosis Hotel Advisors’, around Rs 2,000 crore has been invested in major religious places in the last 12-18 months. Some of India’s wealthiest business families have translated their faith in these pilgrimage sites into investments in the hospitality sector.

The Udupi deal includes a 137-room luxury hotel, which is almost ready. The hotel will operate under the premium brand of ‘Indian Hotels Company’ (IHCL). At Salasar Balaji, a ‘Family Office’ is developing a 108-room property, while ‘ITC Hotels’ has tied up for a 145-room ‘Welcomehotel’ project on six acres of land near the temple. In Khatu Shyamji, ‘Royal Orchid Hotels’ has tied up with the Agarwal family for a 120-room hotel about 2 km from the temple. These deals are indicative of a growing shift away from traditional inns and private lodges towards branded and professionally managed hotels. Hotel operators such as IHCL, ITC Hotels, Sarovar Hotels and Radisson are expanding into markets with religious destinations. For Mahendra Kabra, Managing Director of ‘RR Cable’, the investment in Salasar Balaji is motivated by personal trust as well as business confidence.

Strengthening religious pilgrimages

“I have deep faith in Salasar Balaji and I go there every year,” he said in an ET report. It would be better to invest in hospitality assets in Salasar Balaji instead of building a Dharamshala there. This hotel will be managed by ‘Sarovar Hotels’. Its attraction for investors lies in the fact that the trend of religious travel remains quite stable and strong. A Mumbai-based representative of ‘Family Office’ (a private investment firm) said on condition of anonymity that hotels in metro cities depend on the corporate cycle, while hotels in pilgrimage destinations continue to see inflows of guests in both good and bad times. The firm has recently invested in this sector.

Ajay Bakaya, chairman of ‘Sarovar Hotels’, a company that has ventured into many religious places in the early stages, said in an ET report that ‘shraddha’ is the most reliable medium to generate demand in India. According to him, hotel occupancy (room bookings) in these markets is very good, especially in mid-range hotels with 80-100 rooms. He said many ‘family offices’ also see growth potential in property investment at such religious sites. Most of the capital invested in this comes from families from Rajasthan, Madhya Pradesh, Uttar Pradesh, Karnataka and Andhra Pradesh, who are involved in business, industry or real estate sectors. According to ‘Nosis Hotel Advisors’, staying in a mid-category hotel costs Rs. 60 crores, while for a large or premium hotel this investment is Rs. 150 crores or more.

This is how investing is done

Nandivardhan Jain, founder and CEO of ‘Nosis Hotel Advisors’, said in a media report that this is not speculative money. These are families who have seen the number of pilgrims in their cities double over the past decade. Now they are translating this trust into branded and professional-grade properties. His company has also advised in some such deals. Jain further said that this capital is patient, local and supported by the land these families already own. This combination makes it one of the most stable sources of hotel equity in India today. Jain also cautioned that strong demand and family-owned land does not necessarily mean the hotel business will succeed there. He said that the mere existence of a temple does not guarantee the success of a hotel.

Thus the financial aspect became good

Due to better roads, airports, expressways and pilgrimage corridors, people are now coming to these places not only for a day but also for an overnight stay. Due to this, the economic aspect of branded hospitality (hotel business) has become better. For hotel chains now looking beyond the saturated markets of big cities, temple towns are a growing source of demand, where the number of branded hotels is still very few. Experts believe that this investment for the ‘family office’ is like a bet on ‘trust’ – a reason to travel forever.