Chennai's leading real estate developer AR Foundations forays into hospitality
The developer with high-end housing, commercial and IT projects in Chennai collaborates with FHD Group to develop Sheraton Grand Resort & Spa
AR Foundations, a leading developer with high-end housing, commercial and IT projects in Chennai, entered the hospitality segment by developing Sheraton Grand Resort & Spa in collaboration with the FHD Group. Mathan Ramaiah (director-FHD Group) had an interesting conversation with Amarnath Reddy (managing director – AR Foundations) about the hospitality project.
Mathan Ramaiah: Being a successful real estate developer, what prompted you to enter into the hospitality sector?
Amarnath Reddy: I always wanted to build a resort – but every time I came close to it, I saw the numbers and it didn’t make sense. Then I came across this property which was ideal for a resort because its property rules do not allow any use other than that of a resort – so I decided to follow my passion.
Ramaiah: Why did you change your decision? Initially you were talking about a big function hall and extended beach, which went through several iterations, then became a resort.
Reddy: As the market was good for convention centres; we initially thought the numbers will be better – but we were not planning for that type of crowd, so we opted for a hotel with convention hall where we can accommodate up to 1000 pax.
Ramaiah: You are moving from housing development to resort…when you could have done a convention centre.
Reddy: Yes, there is lot of demand for big convention centres. But I think this is the right decision. Another reason is that, during the time hotels were doing badly, the market was driving bigger convention centres with lesser number of rooms. Now there is a turnaround and hotels are also doing better. Credit goes to Mr. Dhamotharan, who guided me.
Ramaiah: What is the biggest pain point of the switch?
Reddy: Luckily, the operators did not change the architecture much at all. The bigger challenge was the fire and life safety issues. Dhamu (Dhamotharan) had done a study of the brands, and already incorporated most of the requirements.
Ramaiah: Post operator entry, did you feel that you could have changed certain things?
Reddy: One point which I always told Dhamu was that we should have less setback and bigger courtyard at the centre – but we cannot visualise everything, and overall the product that the architect has given us is outstanding. Everybody who enters is amazed by the usage of spaces, the flow of traffic and planning, spacing, size of the rooms, size of the banquet hall. I think the flow is very good. One area where the operating team helped us was in the placement of public areas, so that operations were service-wise. All public areas are on one side of the building (earlier, one or two were on the other side).
Ramaiah: The landscaping has come out really well.
Reddy: I am very passionate about landscaping, but I know nothing about it – so I was keen on getting the right person on board, and Saritha Pandey is a fantastic landscape architect.
Ramaiah: At that point, we at FHD had also not done too many hotels, but you trusted us.
Reddy: It was definitely a big risk, but FHD had the knowledge as they had already done 4 star hotels. I went through presentations of various architects, including international firms, but I liked what FHD had given me. I trusted FHD because they delivered all the projects so far in a very professional way. They are also highly ethical, which is important for me. I think it is much easier to work with a known Indian architect rather than go to an unknown person. I was also clear that my deadlines have to be met, which could not have been possible with anyone else. No international architect would not have put up with so many changes.
Ramaiah: In the case of procurement, you went to China; why couldn’t you do it in India?
Reddy: I did a study by going to a number of places to check different possibilities. China was the right option, I realised – not for the price, but the quality. They were more professional, and had better quality than what we have here. But it has to be scaled. So, I decided to go for the room furniture to China, and for public areas to various places including India.
Ramaiah: What were the savings resulting from this, considering that you went for quality?
Reddy: In China, you get all kinds of quality. We found one of the best factories, superbly organised, super services. In spite of going to the best, it was 20% cheaper than what we would get here. The quality is good and they deliver on time.
Ramaiah: Towards the sea, you have space restrictions…
Reddy: We have space because of the CRZ rules, so we want a nice landscape with activities like golf, children’s play area, etc. We have a sea-side restaurant, party lawn and function lawn, so it’s not that empty.
Ramaiah: Between real estate developer and hotelier, which one would you prefer?
Reddy: Passion wise, hotelier…but money wise, I need to do real estate projects to keep the cash flow going.