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Tatas to open 36 hotels in four years

August 03, 2013 11:00 IST

Undeterred by the slowdown in the global travel and hospitality market, Indian Hotels Company (IHCL), part of the Tata Group, has decided to open at least 36 new properties over the next four years, expanding its capacity by 30 per cent.

The 36 new properties, which will also include expansion across two new countries, will add 5,431 rooms. In all IHCL will take the total count to 156 properties with 19,937 rooms from its current tally of 120 properties and 14,506 rooms.

Last year, the company - India’s largest hotel chain - opened seven new properties with 776 rooms including four Ginger properties, two Vivanta by Taj properties and one Taj property. 

A majority of the new properties will come up under the Gateway brand, which has the least number of properties under its fold at the moment.

Addressing shareholders at its 112th annual general meeting, IHCL chairman Cyrus Mistry said, “The company had a challenging year in the wake of global and domestic economic slowdown coupled with intensified competition, adding 12,000 rooms to the existing inventory. The company is committed to expanding its portfolio to maintain its leadership.”

Among the new properties planned by the company is a 326-room hotel, to be built where the Sea Rock at Bandra, Mumbai, once stood. 

A new hotel just outside the domestic airport terminal in Mumbai, a Taj property in Dubai and a 50-room Taj property in the Andamans will feature in the list of expansion.

With almost all the major international hotel chains now operational in India, about 12,000 new rooms were added in the market, leading to a situation of excess supply. Such increased competition impacted room rate pressures on IHCL even as the company managed an average room occupancy of 64 per cent during the year.

“The market conditions continue to be challenging, growth is expected to flatter and dependent on economic activity within India and across the globe,” added Mistry, in his maiden speech to the shareholders.

IHCL is the longest standing company in the Tata Group.

Last year, IHCL reported a loss of Rs 277 crore (Rs 2.77 billion) mainly on account of impairment in value of assets concerned with investment in Bermuda-headquartered Orient Express Hotels followed by BJets. In 2011-12, IHCL had reported a profit of Rs 145 crore (Rs 1.45 billion).

Perhaps in the rarest of rare cases, shareholders were found questioning the management’s decision to hand out dividend in a year when the company had made a ‘huge’ loss. Despite the loss, IHCL paid a dividend of 80 per cent for the reporting year through the reserves of the company.

Several shareholders raised the question of the salary package offered to managing director Raymond Bickson. At a basic salary up to a maximum of $100,000 per month (Rs 60 lakh) Bickson, who was re-appointed as the company’s managing director for a further period of five years, is the highest paid executive in IHCL.

The continued muted performance by IHCL, not only in India but abroad as well, irked many shareholders. “There has been a steady decline in the company’s performance. Beyond a certain point, you have to accept responsibility. The company needs a change in the management,” said Nigel Gonsalves, an IHCL shareholder.

Swaraj Baggonkar in Mumbai