Building a luxury hotel is an expensive business. But for The Leela, the cost of building its Delhi property became a major financial setback. Dinesh Nair, son of the group's founder Captain C.P. Krishnan Nair, has now spoken about just how much the project cost the family and why the mounting interest eventually became difficult to manage.
In a conversation with Vir Sanghvi for Culinary Culture's Table 1, Dinesh discussed the sale of the family's hotel business to Brookfield Asset Management in 2019. He spoke about the money spent on the Delhi property, the loans they took and the financial planning that, according to him, contributed to the business's downfall.
The Leela's Delhi Hotel Was A Major Financial Setback
Vir Sanghvi asked Dinesh whether the family had sold its hotel business partly because of how much it had overspent on the Delhi hotel. "You sold the real estate empire. Yes. And you sold it for many reasons, one of which was how much you overspent on the Delhi hotel. Is that fair?" Vir asked.
Dinesh agreed. "Yes, Delhi definitely pulled it down," he replied.
Vir then brought up the amount paid for the land. Dinesh revealed that the family had paid around Rs 600 crore for it.
But the land purchase was not the only expense that weighed heavily on the project. Dinesh said the total cost of the Delhi hotel eventually reached Rs 2,100 crore, including interest.
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He also spoke about the difficulties of borrowing money from Indian banks. According to him, the banks offered loan tenures of only five to six years. This made financing a large hotel project particularly difficult.
Explaining what went wrong, Dinesh said the interest component became too large because of poor financial planning.
"The main reason why the whole thing went for a toss, the interest component, because of the bad financial planning, was too huge," he said.
He estimated that interest alone could have accounted for Rs 700-800 crore of the total project cost.
Captain C.P. Krishnan Nair Built The Leela Hotel Group
The Leela's story began with Captain C.P. Krishnan Nair, who entered the hotel business at the age of 65. He wanted to build luxury hotels that could stand alongside the finest hospitality properties in the world.
The group went on to establish itself in India's luxury hotel market, with properties in cities such as Mumbai, Delhi and Bengaluru.
His younger son, Dinesh Nair, played an important role in the business. Before moving into hospitality, he had successfully managed the family's garment export business, Leela Lace. He later served as Co-Chairman and Managing Director of Hotel Leelaventure alongside his elder brother, Vivek Nair.
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The Leela had accumulated substantial debt over the years, and the cost of servicing its loans added to the pressure. In 2019, the family sold most of its hotel assets, including the Leela brand, to Brookfield Asset Management.
His Daughter Samyukta Continues The Family's Culinary Legacy
The family's association with hospitality did not end with the sale of its hotels. Dinesh's daughter, Samyukta Nair, CEO and Creative Director of LSL Capital, has built a restaurant business with establishments in London, Doha and Dubai. Her ventures include Jamavar London, a Michelin-starred restaurant, Bombay Bustle, Nipotina, and more.