Acquires land in Bangalore and Goa for the projects.
EIH, the Rs 1,100-crore hotel chain, plans to invest close to Rs 650 crore to set up hotels in Bangalore and Goa. The company has secured land at both the places, its Chairman P R S Oberoi said.
“The debt-equity ratio of the projects will be 2:1,” Oberoi told reporters after the firm’s annual general meeting in Kolkata today. The company also plans to add 2,300 rooms in India and abroad through 10 projects in the next three-and-half years.
Of the 10 hotels planned, seven will be management contracts, while two will be joint venture projects in which EIH’s investment will be to the tune of Rs 70 crore. The new hotels in Goa and Bangalore will be owned by EIH.
“We will invest close to Rs 500 crore to build a 225-room luxury hotel in Bangalore spread over eight acres. We will also build a luxury hotel and villas for sale in Goa over 50 acres. We own the properties. Around 15 villas will be built for sale. We are waiting for the government’s approval, which we hope to obtain by October,” Oberoi said.
“We plan to build hotels through JVs and management contracts, because owning hotels has become an expensive proposition. It costs around Rs 1.5 crore per room. So, our strategy will be to manage more hotels instead of owning them,” he added. EIH is also in talks with real estate developers and plans to sign deals with more than two.
“The advantage of working with real estate developers is that they have the land bank. But we will not get into exclusive contracts with any one developer so that we can ensure flexibility. The idea is to leverage every opportunity that could lead to profits. Within a few months, we will announce contracts with at least two real estate developers,” Oberoi said.
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The company will also add new flight kitchens at airports in Mauritius, Kolkata, Kochi and Calicut. These flight kitchens will open by 2010. Currently, the company’s flight kitchens are located in Mumbai, Kolkata and Chennai. The company has also identified land in Kolkata to build a Trident property.
Currently, EIH has only one Oberoi hotel in Kolkata. “Our Kolkata Trident property will probably be a 300-room hotel. The property will be a multi-use project with service apartments and offices along with the Trident hotel,” Oberoi informed without divulging further details.
EIH warned that during the current year the world economic growth is expected to slow down, which may impact the overall business of the company. In the last one year, EIH had increased average room rates by 10-15 per cent to combat the overall slowdown and marginal drop in occupancy rates. Among projects, the company has signed management contracts through a foreign subsidiary for two Oberoi luxury hotels in Abu Dhabi and one in Oman.
Construction of the hotels has begun.
“The increase in the price of crude oil is likely to impact travel. The high aviation fuel prices has seen several domestic and international airlines reducing the number of flights and also raising air fares. As of now, the full impact on our business has not been felt. But we recognise these challenges and we have initiated steps to reduce waste, increase productivity and create sustainable marketing strategy,” Oberoi pointed out. without elaborating further on the strategies.
Among projects, the company has signed management contracts through a foreign subsidiary for two Oberoi luxury hotels in Abu Dhabi and one in Oman. Construction of the hotels has begun.
Construction of the 440-room Trident in Bandra-Kurla Complex (Mumbai) is nearing completion and is expected to open in the third quarter of the current financial year.
EIH also expects to inaugurate a luxury hotel at Gurgaon by 2009. It has a management contract for the hotel.
Another 320-room Trident hotel at the new Bangalore airport is under construction.
EIH will manage the hotel when it opens in 2010.
EIH’s alliance with Hilton International for marketing and co-branding of Trident hotels in India ceased from March 2008. Thereafter, all Trident Hilton hotels have been rebranded ‘Trident’.