Foreign brands pressuring India hospitality firms: Mistry

Room rates of IHCL came under pressure due to increased supply from competitors

Tata group-controlled Indian Hotels Company Ltd (IHCL), in the red for the past three years, is likely to face continued pressure in the near term, according to Tata group chairman Cyrus Mistry.

Speaking to shareholders at the 114th annual general meeting of IHCL here on Monday, Mistry said the domestic hospitality firms were witnessing immense pressure owing to heavy influx of foreign brands.

“We will continue to see further supply coming in the domestic market, increasing competitive pressures. The company is committed to maintaining its market leadership and positioning itself suitably to explore any turnaround of the economy and the sector,” said Mistry.

In FY15, IHCL, had posted a consolidated loss of Rs 378 crore against Rs 554 crore in FY14. At a stand-alone level, the loss stood at Rs 82 crore. The company has 131 properties with 15,571 rooms, across the country and abroad.

Many shareholders raised the issue of the loss of dividend for a second year. “This is the second time in 100 years we have not paid dividend. It pains me. The worst is behind, or at least a significant portion,” added Mistry.



The company had written down Rs 229 crore in overseas investment last year, which led to the losses. The company had to write off the value of its holding in Bermuda-based Belmond (formerly Orient Express Hotels) in which it holds six per cent.

At the domestic level, room occupancies and average room rates of IHCL came under pressure owing to increased supply from competitors such as Hyatt, Marriott, Starwood, ITC, Intercontinental Hotels, etc.

The company has announced its intention to restructure the holding companies of overseas subsidiaries, joint ventures and associates and bring those under one umbrella company. “We are in the midst of obtaining various regulatory approvals across properties to complete this process. The company expects to complete this process this financial year (FY16),” said Mistry.

Meanwhile, IHCL has lined up the launch of 30 new properties including three properties under Taj, four under Vivanta by Taj and 13 hotels under Gateway. Mistry added that of the Rs 1,000 crore raised through rights issue last year, Rs 150 crore remains unutilised.

On the Sea Rock property in suburban Mumbai, which has been stuck for over three years, IHCL said it was exploring various options to determine the optimum use and the highest possible value of this marquee asset.

“We will take a final decision on this asset’s future in the course of the year to the best interest of the shareholder,” said Mistry, adding: “As the year unfolds, we expect improved economic environment and an improvement in hotels and hospitality industry.”