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EIH plans to expand S-E Asian operations
BS Bureau in Kolkata | August 19, 2004 09:26 IST
EIH Ltd, which owns the Oberoi hotels, is planning to expand its operations in west and south east Asia, apart from developing new properties in Mumbai and Bangalore.
P R S Oberoi, chairman, said the company would look at picking up equity as well as taking up management contract in properties at selected locations.
"Globally, investments came to a standstill in the last three years. But since October 2003, things are looking up and we are also planning to expand the business. We are evaluating the number of opportunities including buying small stake or taking up management contracts," Oberoi said after company's 54th annual general meeting in Kolkata on Wednesday.
The company has lands in Bangalore and north Mumbai, which could be taken up for development. Arjun Oberoi, deputy managing directors said EIH was actively looking at those cities. The group, however, presence in both cities.
The company in the AGM passed an enabling resolution to raise Rs 1,000 crore (Rs 10 billion) from the market is situation so demands. "We normally spend Rs 25-30 crore (Rs 250-300 million) for the upkeep of the properties. But if there is a right opportunity in new project, we are ready to put in money," he added.
However, EIH is not going ahead with its north African projects in Morocco and Casablanca. "These are put on hold because of sensitive situation in Spain," the chairman informed.
The company would look actively pursue management of contract. "This will be a very important area for us. Globally, big chains own very few property but manage a large number of them. We will take up this model as well," he added.
Its recent strategic alliance with Hilton International to co-brand Trident Hotels in India has paid off. Under the alliance, the company manages and operates Trident Hilton hotels in the country.
This year the company is hoping to record a room occupancy rate of about 68-70 per cent in its properties. EIH has lost about Rs 300-400 crore (Rs 3-4 billion) in cash flow owing to downturn in the hospitality sector.
The company is also trying to spruce up its balance sheet to reduce debt. S S Mukherjee, vice-chairman of EIH Ltd, said it was drawing up plan to rejig the debt portfolio and reduce average cost of fund from 7.5 per cent to 6-6.5 per cent.The company is also exploring opportunities in service apartments, which is gaining popularity off late.