The meeting room at the Oberoi at Mumbai’s Nariman Point had a special working lunch last Tuesday. The Reliance top brass, the Oberoi family and senior management thrashed out the modalities of a deal under which RIL picked up over 14 per cent stake in East India Hotels.
The Ambani family, for one, is no stranger to Prithvi Raj Singh ‘Bikki’ Oberoi’s hospitality — nor to his eye for detail. A leading investment banker, for example, who was to meet him for a business meeting at noon received a call from Mr Oberoi’s office, asking for his meal preference: vegetarian or non-vegetarian.
The deal came as a surprise to many. Just six days before RIL bought 14.12 per cent stake in EIH, the hotel chain’s brass had termed “wild imagination” reports that it is looking to sell stake. Even RIL had earlier denied reports about any plans to acquire stake in EIH.
There is more than one reason why Oberoi as a brand is so close to the heart of India’s classiest hotelier. For one, he is one of the last of a vanishing breed of hoteliers who have lent their own name on the upscale luxury properties they own. But those who know him personally, or have worked with him, say his universe is his hotels, his oxygen the Vilas and premium resorts that he so passionately built, modelled on Adrian Zecha’s East Asian-Balinese uber luxe Aman Resorts.
But India’s most sophisticated hotelier need not be India’s best businessman. And perhaps taking advantage of that, tobacco-to-soaps-to potato chips-and-hotels major ITC gradually nibbled in. Over time, ITC became a threat, cornering a too-close-to-comfort 14.9 per cent of equity in EIH.
Oberoi needed a white knight. There was Analjit Singh of Max, who extended a hand; according to hospitality sector mandarins, so did DLF and Sunil Mittal. But in the end, it had to be Ambani.
Why? Reliance is unlikely to overshadow the Oberoi brand name, at least in the hospitality space. Ambani brings in capital — all of Rs 1,021 crore for the 14.2 per cent stake for starters — that will help the promoters pump in much needed capital to expand its footprint. More important, it will aid them in shoring up their holding in EIH. Following the deal, the promoter holding will drop to 32.3 per cent, but another 5 per cent acquisition in the near future via the creeping route will ensure that Reliance and EIH will collectively own over a critical 51.5 per cent. That’s a decisive majority. Did anyone say takeover threat?
For Ambani, being a part of the Oberoi luxury cult has sentimental value as well. It was his father’s favourite hotel chain. Dhirubhai was a frequent visitor to the health club at the Mumbai property after a hard day’s work. His office, which even today is the RIL headquarters, is just a block away from the Oberoi, Mumbai. Years later, when the ITC threat was very real, RIL chief Mukesh Ambani and trusted friend and lieutenant Anand Jain personally assured Oberoi that they would always be there as support to counter any hostile bids, say Reliance executives in the know. They kept their word.
Though he is high profile, just who is the real Bikki Oberoi? A legend who unleashed the upmarket chain-hotels concept in India? The obsessively hands-on hotelier who gave his guests butler service, super expensive restaurants a la Rotisserie for the first time? Or is he the playboy turned dream merchant who gave his destination resorts an exotic feel across Rajasthan, in Agra and even beyond Indian shores? Or is he actually a visionary who started thinking of management contracts and an asset-light business model by separating the real estate part of the business from the actual running and management of the hotels?
What everyone agrees to is he is the last word in luxury. Today, the hotelier has also become a suave businessman. But many don’t see Ambani stopping just at helping out a family friend who needed the cash. They say RIL will certainly take a board seat and play an active role in the management. Probably, in future, even hike its stake.
But in one move, Bikki Oberoi has made sure that the hotels he built and for which he will be forever remembered, remain in safe hands.
