Close on the heels of the announcement of the Anil Ambani Group's Hollywood venture, Reliance Industries led by brother Mukesh has signed a $1-billion joint venture with US-based real estate firm Vornado Realty Trust to enter the real estate and hospitality sectors in India.

The joint venture between Reliance Retail Ltd (RRL) and the New York-listed firm will develop a network of mega malls and highway shopping centres across the country – both for itself and for others.

Having entered consumer retail and special economic zones in the last two years, the diversified group, is likely to set hotels across all categories - luxury, business and budget – as a natural an extension of its retail business.

Reliance has also been exploring tie-ups with Canada-based Four Seasons Hotels and French group Accor to set up hotels at some of its properties in Mumbai and Ahmedabad, reports quoting RRL sources said.

Taking a leaf from the success story of motels run by Gujarati Patels in the US, Reliance had, early this year, started over 100 company-owned fastfood joints along the highways that form the 5,846-km Golden Quadrilateral and the north-south/east-west corridor.

Reliance, which had over 1,400 petrol pumps along these stretches  had, however, to close all of them as it was unable to face up to competition from the heavily subsidised sale of auto fuel by state-run oil marketing companies.

Reliance has also a technical services agreement with US-based Flying J, a highway hospitality service provider to the transportation sector.

The plan is to set up value-added retail outlets every 100-300 km or after four-five hour drive to coincide with every journey break. Currently, there is a shortage of good quality accommodation and lodging facilities for highway  stretches.

Reliance, sources say, is betting big on this segment of the hospitality sector and may model it on the lines of US expressways and the German autobahns.
 
In addition to the joint venture with Vornado, Reliance has partnership with other retail majors like  Marks & Spencer, Vision Express, Miss Sixty and Office Depot.

Reliance is also pushing plans for an integrated project comprising shopping malls, corporate offices and hotels at its Bandra-Kurla property as it looks to tap synergies with its reality business.

Reliance is developing an integrated project, including corporate offices, shopping mall and five-star hotels, on a 25-acre plot at Mumbai's prime location Bandra-Kurla Complex. It is, however, not yet clear whether the real estate joint venture with Vornado would extend to hotel project.
 
Vornado develops and manages retail properties and office spaces in Washington and New York. Vornado-owned and managed malls in the US have Wal-Mart, JC Penny and Macy's as anchor tenants.

With tourist arrivals – both domestic and foreign - increasing every year, hospitality is expected to be a booming business in India. The country currently has a shortage of 1,10,000 hotel rooms across all categories.