Orient Express, in which the Tatas picked up 11.2 per cent stake recently, had earlier said that an association with Taj Hotels would dilute its (Orient Express) brand value and alleged that the Taj group was only seeking to improve the performance of its non-Indian properties through the association.
Stung by this, Indian Hotels vice-chairman R Krishna Kumar wrote a strongly-worded letter to Paul White, president and CEO of Orient, on Wednesday night.
The letter said that Taj Hotels had a strong and growing mix of properties, both in India and globally, catering to high-end luxury travellers as well as corporate travellers around the world.
Orient, in comparison, was catering primarily to the leisure travellers and was significantly unrepresented in key segments of the emerging global hospitality industry, Kumar said in the letter.
"One way to gauge the premier status of a business or a brand is to look at how much customers will spend to be associated with the brand and performance of the underlying business and the management team. Orient lacks a presence in major metropolitan markets, which makes an apples-to-apples comparison difficult," he added.
However, the publicly available data concerning the North American properties of both the hotel chains showed that Orient's average room rates were "meaningfully" below those of Taj's properties, he said.
Also, as per the latest financial statements, the trailing 12 month EBITDA margin of Indian Hotels was around 15 per cent higher than that of Oriental, the letter pointed out.
Indian Hotels also accused Orient of having an entrenched board and management that did not meet the needs of its shareholders, nor respected the most basic tenets of corporate governance.
Citing examples, Kumar said that Taj Hotels and Dubai Holdings, the two largest public shareholders of Orient, were unable to enter into any meaningful dialogue with Orient's board.
"Furthermore, despite a governance structure severely limiting shareholders' participation, Orient has seen fit to amend its poison pill" to further solidify the position of its board and management, to the detriment of public shareholders.
Tatas demand apology from Orient-Express
