Bharat Hotels Eyes Others As Ties Sours With Hilton

The Lalit Suri-promoted Bharat Hotels is scouting for another partner after its relationship with Hilton International (HI), got strained over poor results for the first six months of the current fiscal.

According to industry sources, Lalit Suri has been holding talks with the US-based Intercontinental, which snapped ties with the Taj group of hotels over a year ago and prior to that with the Oberois.

Bharat Hotels in the past had questioned Hiltons failure to meet its promised annual budgeted operating profit figures for the Delhi property and had made it clear to its foreign partner that the existing management contract was too expensive and was not yielding returns for the Suris to justify its continuation.

 

There has been a shortfall of about Rs 21 crore in the annual budgeted operating profit figures of New Delhi Hilton for the first six months of the current fiscal.

The US-based hotel major was to send its Indian collaborator a fresh set of business proposal last December. However, it was delayed owing to the Christmas and new year holidays.

Under the management agreement between Hilton and Bharat Hotels, signed in 1995, the latter was to retain 40 per cent of annual gross operating profits in each of its Hilton properties.

Though Bharat Hotels CMD Lalit Suri was unavailable for comment, industry sources said, The Suris have been holding talks with Intercontinental as well as other hotel majors. The picture will be clearer by February when the Suris are likely to take a final decision on whether to continue with HI as per the existing contract or change it to a franchisee one or break off altogether for Intercontinental. In 1996-97 there had been a shortfall of about Rs 12 crore from the budgeted gross operating profit figure provided by Hilton to Bharat Hotels a fact duly conveyed to HI by latter.

Unaudited results of six months ending September 30, 1997, shows that the net profit of the New Delhi property of Bharat Hotels managed by HI had plunged to Rs 1,355.68 lakh from Rs 1,836.74 lakh in the previous corresponding period. The figures buttress the claims being made by the Suris that the management contract with HI has been proving to be too expensive vis-a-vis the returns, the sources said.

Total income of Bharat Hotels too has come down from Rs 4,336.85 lakh during the first six months in 1996-97 to Rs 4,154.30 lakh in the corresponding period of the current fiscal.

What has also irked Bharat Hotels is the fact that it has been paying huge amounts as salary to about six senior Hilton International executives now relocated in India by the international hotel major.

As a result of the serious differences between Bharat Hotels and HI, the Suris have shelved earlier plans to float two more joint venture companies. One of these was a hotel owning company and a management firm with Hilton International to manage the Comfort brand of four-star hotels in India.