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DLF plans to exit international luxury resort chain Amanresorts less than two years after the country's largest real estate company acquired a 50% stake the Singapore-based hotel chain.

DLF has held preliminary talks with at least two Indian hotel chains to sell off or dilute its stake in Amanresorts, but a huge gap between its expectation and what the buyers are willing to pay is holding up the talks, three industry executives close to the development told ET.

'There is surely an interest among potential buyers'but their offer price is too low compared with the price we had paid for Aman in 2007,' said a senior DLF executive, who asked not to be named.

He did not name any company that has shown interest, but two hotel industry executives said DLF has held preliminary talks with ITC Hotels.

Both the companies denied the development. A DLF spokesman said the company had no plans to dilute equity or sell any property of Amanresorts, while an ITC spokesman denied any interest in the international chain. DLF may also consider hiving off Aman properties in Alwar in Rajasthan and two loss-making properties in Sri Lanka to some investors or hotel chain without the Aman brand, said an industry executive requesting anonymity.

Amanresorts opened his first hotel, Amanpuri, in 1988 at Phuket, Thailand. Today it has 23 small luxury resorts across the world, including three in India. It is rated highly by international hotel rating agencies such as Condé Nast Traveler and Zagat Survey. DLF acquired 50% in Amanresorts in 2007 in a deal estimated between $200 and $250 million and signed a definitive agreement with Adrian Zecha, founder and chairman of Amanresorts, to acquire a controlling interest in the group.

That means DLF may not be able to exit the company without the consent of Mr Zecha, who could not be contacted for this story. In the past, while announcing company's falling interest in the hotel business, DLF vice chairman Rajiv Singh had said that the company wanted to retain Aman as it was a boutique brand.

According to executives, the company may have changed its mind because of its increasing cash needs and also considering that luxury hotels around the world have been struggling for more than a year now with the global economic recession taking a toll on business and leisure travel. DLF has targeted to raise Rs 5,500 crore by selling assets and exiting businesses such as wind power and township projects in Dankuni, West Bengal and Bidadi, Karnataka, as it struggles to deal with the sudden fall in demand for homes, offices and shops in the wake of the global downturn.

It has already sold its small hotel project in Saket, Delhi. It has put on the block over 10 hotel plots across the country, including in Gurgaon and Mumbai.

Back in 2007 when realty boom was at its peak, DLF had plans to get into the hotel business in a big way. Besides buying Amanresorts, it announced plans to build around 75 hotels in India in a joint venture with international hotel chain Hilton. But after Hilton was taken over by private equity company Blackstone, the two partners scaled down their ambition to just four properties.

Courtesy:- ET dt:- 21st Sep. 2009