Reliance Industries, the Indian multinational conglomerate, has teamed up with Oberoi Hotels to jointly manage three hotels in India and the U.K.
The hotels include the upcoming Anant Vilas Hotel in Mumbai’s Bandra Kurla Complex (BKC), the historic Stoke Park in the U.K. and another project in the Western Indian state of Gujarat.
Financial terms of the partnership were not disclosed.
This development comes after Reliance Industries Chairman Mukesh Ambani acquired a controlling stake in Mandarin Oriental New York for around $98.15 million in 2022. In 2021, Ambani acquired the iconic country club and luxury golf resort Stoke Park for £57 million ($72.25 million). Stoke Park Ltd., a Reliance subsidiary, owns the property in Stoke Poges, Buckinghamshire.
Anant Vilas Hotel will be Oberoi’s first-ever Vilas-branded hotel in a metro city. The hotel is situated in the business neighborhood of BKC, which also features retail space, F&B outlets and residential areas. The hotel aims to augment the business district’s hotel footprint.
The yet-to-be-named hotel project in Gujarat is expected to tap into the state’s tourism potential. The project is currently under implementation.
Reliance’s decision to co-manage these properties is significant as it appears to be the early signs of the company diversifying and venturing into the hospitality sector despite investing in landmark properties in the U.S. and the U.K.
Mumbai-based Reliance holds around 19% of East India Hotels (EIH), the flagship company of the Oberoi Group. Reliance first bought a 14.12% stake in EIH in 2010 to protect the company from a hostile bid from another stakeholder and competitor, ITC Ltd. ITC held a stake of nearly the same size. Despite ITC making it known that it had no intention to snap up EIH, former EIH Executive Chairman PRS ‘Biki’ Oberoi brought Reliance in to firewall his company.
If Ambani decides to acquire more properties and become an active player in the hospitality sector, Reliance will be pitted against Tata Group’s Indian Hotels Co. Ltd. (IHCL) and ITC in India.
Eyebrows were raised when Reliance acquired a 75% stake in Mandarin Oriental New York, which is within a stone’s throw distance from the Pierre, a Taj Hotel that is run by the IHCL. This made Reliance a direct competitor of IHCL in New York.
The timing seems appropriate for Ambani, the richest person in Asia, to foray into the Indian hotel sector as it will benefit from his deep pockets.
ITC, the Kolkata-based cigarettes-to-hotel conglomerate, recently decided to hive off its hotel business unit into ITC Hotels Ltd. In August, the board of ITC gave its approval for the demerger. The high capex on the hotel business and the subpar returns had been worrying investors and analysts, which ITC hopes to overcome by creating a separate entity.
As situations improve after the pandemic, room demand seems to exceed supply. EIH Chairman Arjun Singh Oberoi mentioned in the company’s annual report that room supply has increased by 3.5% while demand grew by 5.4%, as reported by the media. Out of the 170 hotels that opened in 2022, the average inventory was 65 rooms, he said.
“These figures indicate the pressing need for increased investment in the hotel industry, meeting rising demand and addressing the supply shortage,” Oberoi added.