Indian hospitality and real estate spaces have seen phenomenal growth in recent years. And even though the pandemic has had a negative impact on both sectors, they are now eyeing a comeback with the reopening of Indian markets. India is also witnessing an increase in investment from Millennials and NRIs, which is helping the sectors to revive and follow an upward growth trajectory. Both of these sectors are constantly evolving and offering different models to cater to different audiences, harnessing the potential of once uncharted territory.
The ResiTel concept
ResiTel’s concept has already been successfully implemented in other parts of the world, such as the United States, United Kingdom, Latin America and Middle Eastern countries. In essence, ResiTel is a concept that juxtaposes Residence (Resi) and Hotel (Tel), bridging the gap between real estate and hospitality. It allows owners to invest in a suite at a resort and enjoy it as a vacation home as well as a source of rental income. The unit owner may use the suite for a certain number of days per year, and the rest of the year the unit is used to accommodate guests as part of the resort inventory. The owner of the unit receives a portion of the proceeds of this income, after deducting operating expenses, which facilitates a regular income. The investment is completely hassle-free as all operations, maintenance and other requirements are taken care of by the station’s management company – in this case, Rhythm ResiTel.
When we implemented the ResiTel concept in India in 2010, the market was not exposed to it and even the banks did not understand how to partner or finance such assets. future unit owners did not know how to evaluate investments in these projects or how to consider buying units. So we had to pass on a lot of learning to all the stakeholders involved.
Initially, many hotel industry players thought the ResiTel model would be difficult to implement in India. But now, with the huge changes and developments in the industry, other established hotel brands are also trying to implement similar models. We have amply demonstrated the viability of our business model and have received enormous appreciation for it.
Turning stressed assets into opportunities
The COVID-19 pandemic has caused massive disruption across the hospitality industry and it has been difficult for many players to manage and maintain continuous operations. Many properties fell under the prerogative of stressed assets, for example Aveda Kumarakom. It is located in the backwaters of Kerala with a beautiful view of Vembanad Lake. Here we stepped in and invested INR 9.1 Cr for a one-time settlement of existing debts, with an agreement to renovate and operate the property under the ResiTel model.
We think Aveda Kumarakom is a great case study for understanding how to solve those debt issues for assets when there is no other viable financial solution. There are also other properties, which are in a similar situation, and we believe that many of them can undergo the same type of conversion – from a normal operating asset to a ResiTel property. We believe Rhythm is in an optimal position to provide comprehensive solutions to all relevant stakeholders.
Hand in hand with MTDC Matheran Resort
To revive and explore different ways of developing and promoting tourism in Maharashtra, the Maharashtra Tourism Development Corporation has created an extremely forward-looking policy of privatization of some of the state-run resorts. We are honored and happy to partner with MTDC to help translate their vision into reality. Matheran is a spectacular hill station near Mumbai and has great old-world charm, however, it has not reached its full potential as a tourist destination and needs further development. Through this partnership, we will support the renovation of the facility and the provision of our high-quality services at the state-run resort.
We have a long-term lease-concession agreement with MTDC where we as the operator are required to provide capital for the further development of the property and operate it on a revenue sharing model with MTDC .
Future of ResiTel
ResiTel is a model that can be successfully scaled up in India and has the potential to grow exponentially. We are constantly striving to expand the ResiTel footprint in Maharashtra, as well as other parts of the country. India is a wonderful nation and every state has a lot to offer. We are working on projects in Rajasthan which provide us with a fantastic opportunity due to the rich folklore and heritage in the state. Additionally, we have projects in Coorg, Karnataka which is another pristine recreation destination with ideal weather conditions all year round. Also, there are many other places in Maharashtra such as Sindhudurg and Igatpuri which can be explored and their true potential can be tapped.