The Indian Hotels Company Ltd has acquired a strategic 10% stake in Orient-Express Hotels, a US-based hospitality chain, for $211.28 million.
MUMBAI: The Indian Hotels Company Ltd — which owns, operates and manages hotels under the Taj Hotels, Resorts and Palaces brand — has acquired a strategic 10% stake in Orient-Express Hotels, a US-based hospitality chain, for $211.28 million.
The acquisition was through its wholly owned subsidiary Samsara Properties. The Indian Hotels management plans to discuss a global alliance with Orient-Express to leverage each other’s strengths next.
R K Krishna Kumar, vice chairman, Indian Hotels, said the company has been pursuing the objective of growing the Taj brand internationally over the past few years and the stake buy was part of this.
“We have been pursuing alliances and relationships with leading hotel groups that have not yet set up a presence in
India, but have secured leadership positions in various geographies. This move is in line with our plans and we look forward to pursuing a possible association between Indian Hotels and Orient Express” said Kumar.
The Taj management is confident that a combination with Orient express will create a powerful competitive advantage.
“We are committed to working together in a friendly and supportive manner with Orient-Express,” said Krishna Kumar. Meantime, within the country, Indian Hotels is managing to notch up some industry-beating margins.
Vandana Gupta and Suryaneel Kumar, analysts with Religare Securities, said Indian Hotels had the best margins in the industry in the first quarter.
In a recent report, they said the hotel sector saw good sales growth backed by strong 8.2% growth in foreign tourist arrivals, and constraints in the supply of premium segment rooms in major cities.
Debashish Mazumdar, hotel sector analyst at Mata Securities, in a recent report said IHCL is growing rapidly in terms of its room inventory and properties.
In the last five years, the company built 23 properties in key growth locations within India and as well as abroad; all in luxury, business and budget segments.
“An interesting point to note is that IHCL has low concentration risk in terms of geographical spread. Further, its presence in various spheres of hospitality like smart basic ‘Ginger’ hotels, food & beverage business, air-catering and travel assistance services etc insulates it from segmental business risk,” Mazumdar said.
Founded in 1976, Orient Express currently owns or has investments in 49 businesses: 39 highly individual hotels, two restaurants, six tourist trains (including Venice Simplon-Orient-Express, British Pullman, and Eastern & Oriental Express) and two river cruise operations, located in 25 countries worldwide.
Among the jewels in its hotel crown are the Hotel Cipriani in Venice, Italy, and Mount Nelson Hotel in Cape Town. In the cruise and restaurants space, it operates Myanmar’s Road to Mandalay cruise ship and New York’s landmark 21 Club restaurant.
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