EIH to spend Rs 325 cr in renovating Oberoi Delhi

The 283-room hotel will remain closed for two years from April 1

BSE-listed hotel company EIH will spend Rs 325 crore over the next two years to completely renovate its 51-year iconic property, Oberoi Hotel, in New Delhi. The hotel will be closed for a two-year period beginning April 1, 2016 for renovation. It was the first hotel to be built by M S Oberoi, founder of The Oberoi Group.

The 283-room hotel on Delhi's Dr Zakir Hussain Marg contributed Rs 187 crore or 14 per cent to the company's annual revenue of Rs 1,341 crore in the year ended March 31, 2015. The company posted a net profit of Rs 96.63 crore during the year.

"The Oberoi, New Delhi, has a gross operating profit of approximately Rs 65 crore. To this extent, EIH's profitability will be impacted during the renovation. We will make every effort to open the hotel before April 1, 2018. We are confident the hotel will be far more profitable when it reopens driven by both a higher average room rate and occupancy," said a company spokesperson in response to queries.

All guest rooms, public areas including the restaurants, bar, business centre, spa and shopping arcade, as well as all back-of-house areas of the hotel will be completely renovated. It is, however, not clear if the number of rooms will go up after renovation. The spokesperson said all employees associated with the hotel would be looked after during the two-year period.

Founded in 1934, the Oberoi Group operates 30 hotels under the Oberoi and Trident brands and has presence in six countries. The Group is also engaged in flight catering, airport restaurants, travel and tour services, car rentals, project management and corporate air charters.

In 2010, Mukesh Ambani's Reliance Industrial Investments and Holdings became an investor in EIH and it currently holds 18.54 per cent stake with two board-level representations: Nita Ambani and Manoj Modi. Ambani spent Rs 1,213 crore to acquire the stake between 2010 and 2012. Tobacco-to-hotels major ITC, which has been buying EIH shares since 2000, has a 14.99 per cent stake in the company. The promoters, Oberoi family, hold a 35.25 per cent stake in the company.

Delhi's hotel scene could see more changes if Taj Mansingh of the Tata group is auctioned this year.

After several lease extensions, New Delhi Municipal Council is believed to have taken a decision to auction the Taj Mansingh property, which could attract bids from several hospitality chains.