Eih Global Co-Branding Talks Falter Over Us Attacks

The Oberoi group's plan to seek a global co-branding and marketing alliance with international hotel chains in the US and Europe has hit a roadblock following the terrorist attacks in the US. S S Mukherjee, deputy managing director of East India Hotels said, 'Discussions have come to a complete standstill.'

The group was in talks with the Canada-based Four Seasons and the US-based Ritz Carlton for the alliance.

The entire dynamics of the talks have changed since the recent events with recessionary trends in the US and globally, which is adversely impacting the tourism and hotel industries, he said.

"Negotiations may start afresh only after the tourism industry revives," Mukherjee said.

Besides India, the other destinations that have been marked as areas where EIH has decided to make a co-branding effort with a foreign partner are Sri Lanka, Maldives, Egypt, Mauritius and so on. Through the alliance the group will be able to position the brand globally as it will get a presence in the US and Europe through the partner.

The co-branding exercises and marketing alliances will also bring in economies of scale for the group through cost reduction and the advantage of centralised reservation system that the partner will bring, analysts said.

Meanwhile, the promoters are planning to increase their holding in the company to 51 per cent through creeping acquisition. Currently the Oberois holds 41 per cent in EIH.

For the quarter ended December 31, 2001, EIH posted a net profit of Rs 2.99 crore compared with Rs 25.36 crore in the corresponding period last fiscal.

Total income decreased from Rs 139.56 crore to Rs 93.37 crore in the quarter ended December 31, 2001. The terrorist attacks on New York and Washington on September 11, 2001 and on the Indian parliament on December 13,. 2001 have affected the company's business.