Hilton, Bharat Hotels To Part Ways

Global hotels major Hilton International and the Lalit Suri-promoted Bharat Hotels have decided to part ways, barely two-and-a-half years after Hilton signed a contract to manage Bharat Hotels Delhi property for 25 years.

The New Delhi Hilton is likely to sport a new name by next month, although the Suris have not yet finalised a new partner. However, Bharat Hotels is reported to be in talks with Intercontinental. Interestingly, both Hilton and Intercontinental are owned by the UK-based Bass group, but operate independently of each other.

Bharat Hotels chairman and managing director Lalit Suri was unavailable for comment. However, company sources confirmed that Hilton International and Bharat Hotels have decided to terminate their contract.

 

By the end of the month, it should all be over. This has been conveyed to Hilton International. One of the main reasons for the two partners falling out is low financial returns, said the sources.

The sources added that Bharat Hotels was holding talks with Intercontinental, which is attempting to re-enter India. Intercontinental earlier had alliances with the Taj group and the Oberoi group, which were terminated several years ago.

Bharat Hotels earlier had a tieup with Holiday Inn Crowne Plaza for its prime property, just off Connaught Place. Later, the Indian company signed a pact with Hilton after severing relations with Holiday Inn.

The management agreement between Hilton International and Bharat Hotels, signed in 1995, stipulated that the latter was to retain 40 per cent of gross operating profit in each of its Hilton properties.

In the past, Bharat Hotels had periodically conveyed its unhappiness about Hiltons failure to achieve its promised operating profit figures for the Delhi property. The Indian company had made it clear to its foreign partner that the existing management contract was not yielding satisfactory returns.

A shortfall of about Rs 21 crore was reported in the annual budgeted operating profit of the New Delhi Hilton for the first six months of the current fiscal. In 1996-97, the propertys operating profit had fallen about Rs 12 crore below target.

According to the unaudited financial results for the six months to September 30, 1997, the New Delhi Hiltons net profit plunged to Rs 13.56 crore from Rs 18.37 crore in the corresponding period for the previous year.