Eih Plans To Hold 26% In Hotels It Manages

EIH Ltd (formerly East India Hotels Ltd), a member of the Oberoi group of luxury hotels, has taken a policy decision to pick up at least 26 per cent equity in any hotel which it takes up for managing.

Speaking to reporters after the company's 47th annual general meeting yesterday, P R S Oberoi, vice chairman and managing director of the company said it was neither practical nor desirable to manage any hotel without equity participation. "This is the practice adopted worldwide," Oberoi said.

EIH is, however, keeping its options open about management without equity as a last option, in case conditions are not favourable for that in some cases. The company is also going in for major overseas operations through joint ventures in Indonesia, Mauritius and Egypt. There are also tentative plans to set up a hotel in Dubai where EIH is likely to hold a 49 per cent equity stake.

 

"Though occupancies in general have not been as good during the last fiscal as compared with 1995-96, I am bullish about the rest of the year," Oberoi said.

On the domestic front, the Cecil Shimla, the only luxury hotel in the Himalayas opened on April 2. However, the occupancy rate has suffered owing to poor infrastructure like flights and other support services, he said.

A 325-room luxury hotel in Chennai managed by EIH is scheduled to open in 1998 and construction has already commenced on another luxury hotel in Agra which is a joint venture with Goyal International. Four-star or budget hotels will also be a thrust area of business this year for EIH. Two three-star hotels are slated to be commissioned next year at Udaipur and Cochin under the Trident brand name.

The Trident Jaipur, also a three-star, will open later this year. In July 1997, the company, in association with Hong Kong based CCA International announced the formation of a joint venture company, CCA Leisure Services, to develop, market and manage private clubs in India.

CCA currently manages 31 clubs of various kinds worldwide.

Oberoi also said by the year 2000, EIH should touch 8,600 rooms worldwide as a result of all its expansion and upgradation activities. It has been estimated that India would receive 5 million foreign visitors by the year 2000 and would therefore be required to double its room capacity by then."I don't, however, see that happening, which means the hotel industry would not expand that rapidly," Oberoi said.

The company's hotel in Darjeeling in West Bengal, which is now closed, would reopen shortly since the hotel is acquiring a dedicated pipeline for water supply.

The total cost of the pipeline was estimated at Rs 92 lakh and EIH would probably bear half of the cost.

EIH posted an increase in revenues during 1996-97, at Rs 469.48 crore, up from Rs 421.27 crore the previous fiscal. Profit after tax grew to Rs 138.12 crore, from Rs 120.16 crore the previous year. The dividend has also been upped to 50 per cent from 45 per cent in 1995-96.

An "FAAA" rating has been assigned to the fixed deposit programme of EIH. This rating indicates highest degree of safety with regard to timely payment of interest and principal on the instrument. The rating reflects EIH's strong brand equity in the hotel industry, a press release said.