Hotel Leelaventure to sell Kovalam hotel to Travancore Enterprises for Rs500 crore

Hotel Leelaventure will spin off its luxury hotel Leela Kovalam into a special purpose vehicle (SPV) and sell it to Travancore Enterprises, owned by Saudi Arabia-based non-resident industrialist Dr Ravindran Pillai, for Rs500 crore.

 Last week promoter CP Krishnan Nair told the media that the Leela Group  would sell Leela Resorts Kovalam in Kerala, to a non-resident Indian Ravi Pillai for Rs500 crore to ease its debt burden,

Hotel Leela, which had acquired the Kovalam property in 2005 for about Rs150 crore, will continue to operate the hotel through a long-term management contract to be finalised with the SPV.

Hotel Leela, which has a debt of Rs3,830 crore as of last fiscal, said in a statement, ''The deal was pursuant to the decision of the Board to pursue an asset light strategy to reduce its debt.''

Leelaventure had taken a debt of Rs3,000 crore to develop properties in Delhi, Chennai and Jaipur, and is also buying land in Agra, Pune and Hyderabad.

In line with other Indian luxury hotels, Leela has been struggling with mounting debt after buying land at over the hill prices and had to fund most of its expansion through high-cost debt as the global economic crisis dried up other sources of funding.