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East India Hotels to go asset light, will stop owning new hotel properties

Thursday, 7 August 2014 - 7:25am IST | Place: Kolkata | Agency: dna

Company to invest Rs 1,000 crore in Bangalore and Goa projects; Properties in UAE and Marrakesh to start next year

Amid increase in supply of hotel rooms and dwindling tourist inflows, East India Hotels (EIH) said it will not invest in any new hotel properties going ahead and just complete the two ongoing projects at Bangalore and Goa. Henceforth, the company said it will only take up management contract of properties.

The company is investing to the tune of Rs 1,000 crore in the two projects.

"So far, there are only two projects, one in Bangalore and another in Goa. We are not going to invest totally in any other project," managing director SS Mukherjee told reporters after the annual general meeting of the company that owns or manages the Oberoi and Trident branded hotels.

"Our strategy is to consider projects where we will only manage. If there is an absolute need to invest in equity then only we will put in our money," he said.

While Bangalore is a 250-keys hotel and 65 apartment project, Goa will have 80 rooms project. Also, there will be 17 villas the company is looking to set up.

EIH is keen to get into high-end residential projects in Bangalore, where construction is likely to start in 2015.

Overseas, Oberoi's properties at Ajman in UAE and Marrakesh are slated to start next year.

"We are always in lookout for new projects. We would love to be in China while there were projects at advanced stages in Thailand but have been stalled due to political uncertainties, " chairman PRS Oberoi said.

With the overall economy still showing subdued growth and hospitality sector not showing any major uptrend, EIH has focused on realisation per room.

In April-June 2014, ARR (average room rate) improved to Rs 8,373 against Rs 7,723 in the corresponding period last year, Mukherjee said, "The travel and tourism sector has not been taken seriously by previous governments. Prime minister Modi's emphasis on this sector as one of the pillars on which it seeks to build Brand India is of important significance," Oberoi told shareholders.

India is one of the few countries which have a negative travel account balance. Foreign visitors' arrival to India is very low compared to China (57 millions), Thailand (over 22 million), Malaysia or Turkey. Phuket or Bali alone attract more foreign visitors than the whole of India, he said.

"Tourism is the most popular leisure pursuit among Chinese travellers with over 98 million travelling overseas in 2013. We can't afford to ignore this important market," Oberoi said.

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