IHCL to rejig global business, add 34 new hotels

13 Sep 2013


The Indian Hotels Company Ltd (IHCL), the hospitality arm  of the Tata Group, is planning to restructure its international business to make it more tax-efficient, the company's managing director and chief executive, Raymond Bickson, told various sections of the media today.

''We want to be able to take advantage of currency fluctuations,'' he said. IHCL and its subsidiaries are collectively known as Taj Hotels Resorts and Palaces.

Bickson also said IHCL plans to open 34 new hotels globally by 2017 to take its tally to 156 hotels with a total of nearly 20,000 rooms.

The company will mainly follow a management contract model that would be asset-light for future expansion.

The hotel company is also working out a plan to handle its debt of Rs3,800 crore.

Bickson said in the quarter ended June, revenues of the company's 10 international luxury hotels had surpassed that of the 17 luxury properties in India. ''International operations are growing exponentially. We have been adding one hotel every year,'' he said.

He said the board will soon take a decision on the company's Orient Express investment. Bermuda-based Orient Express had rejected the take-over bid of IHCL last year. The company took a hit of Rs424 crore on its investment in Orient Express for the quarter ended 31 March.

The firm is optimistic about the bookings in the upcoming festive season and is expecting to grow its revenues by 8-10 per cent. ''The market has been flat but the exchange rate has made India a very attractive destination. Countries like Spain and Greece that have been under economic crisis have seen record tourism this year. We are hopeful business will pick up,'' Bickson said.

IHCL's consolidated net loss fell by over 42 per cent to Rs19 crore in the quarter ended 30 June, compared with Rs33 crore net loss during the corresponding year-ago period.

Besides, with the extended lease of the Taj Mahal Hotel in Delhi (better known as Taj Mansingh) expiring next month and New Delhi Municipal Council referring the matter to the solicitor-general, Bickson asserted IHCL has a strong case.

On whether Taj should get the right of first refusal, he said, ''It is a different interpretation of the contract. It was the government who had come to us to develop the hotel.''

He was speaking on the sidelines of the launch of its 105th hotel at Surajkund in Faridabad. The new 287 rooms hotel property is under its upper upscale brand, 'Vivanta by Taj Hotels and Resorts', taking the number of properties under the Vivanta brand to 28.

IHCL expects Vivanta to clock a turnover of Rs 1,500 crore this financial year, compared to Rs 1,200 last year. The company plans to add 15-18 Vivanta hotels in the next five years.

"We plan to have a total of 156 hotels with 20,000 rooms in next four years as part of our expansion plans. The hotels will be across all our brands," Bickson said.

On the model the company will follow for expansion, Bickson said, "Most of the new hotels will be under the management contract and asset-light model. This is necessary if we want to get more market share."

Currently around 20 per cent of the company's portfolio is under the management contract and 80 per cent on various levels of equity and joint ventures, he added.

"In future over 80 per cent growth will be through management contracts," Bickson said.

Apart from increasing it's presence in the country the company is also looking at overseas expansion. "It is important for us to have a balance of portfolio and for this it is important to have business globally," he added.

The hospitality major currently operates in four categories ranging from the luxury brand Taj, upper upscale brand Vivanta by Taj Hotels and Resorts, upscale / mid-market hotels and resorts under the Gateway Hotel brand and economy hotels under the Ginger brand.

Taj Hotels Resorts and Palaces currently comprises 105 hotels across India and 17 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the Middle East.

IHCL and its subsidiaries are collectively known as Taj Hotels Resorts and Palaces. The company opened its first property, The Taj Mahal Palace Hotel in Mumbai in 1903.

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