EIH plans Rs 4,500 crore expansion

The Oberoi Group, which owns or manages the Oberoi Hotels and Resorts and Trident Hilton brands, plans to invest Rs 4,500 crore to increase its room capacity in the super-premium segment by over 60 per cent over the next five years.

The group has a room capacity of 4,100 and it intends to increase this to 6,800, through new hotels in India and abroad.

The company would generate up to Rs 1,000 crore internally for this expansion, said P R S Oberoi, chairman, East India Hotels (EIH), the flagship company of the Oberoi Group, at an interactive session after the 57th annual general meeting today. The other Rs 3,500 crore would be raised through debt and equity.

The three ongoing projects of Oberoi-Trident hotels in Bangalore, Mumbai and Hyderabad, expected to be completed by the 2009-end, would increase the number of rooms in group hotels by 50 per cent, said EIH Vice-Chairman S S Mukherji.

These three projects involve an investment of about Rs 800 crore, and about Rs 500 crore has already been put in by the company. The 440-room Mumbai Trident is wholly owned by the Oberoi Group. The ones in Bangalore and Hyderabad are joint-venture projects with L&T and Hyderabad-based Ramarao Group.

The group is also scouting for a joint-venture partner for a Trident hotel in Kolkata.

"Ideally, we would like to have a 300-room hotel in Kolkata. We are looking for a joint-venture partner with land in an area with potential for growth," Oberoi said.

Also on the cards are two Oberoi flight kitchens in Kolkata and Indonesia. Nearly 12-13 per cent of the company's revenue comes from this segment.

With room rents having gone up by 13 per cent over the past year, the group is eyeing a 30-35 per cent increase in revenues this financial year.

In the first quarter the financial year, total income of the group was up by 18 per cent at Rs 234.25 crore against Rs 198.48 crore in the corresponding quarter last year. Operating profit in the same period increased by 23 per cent to Rs 86.35 crore against Rs 70.25 crore last year.

As a part of its international expansion plans, the group has signed management contracts for hotels in Dubai, Maldives and Angkor Vat.

It has also signed MoUs for hotels in Abu Dhabi, Oman, Egypt, Morocco and Bhutan.