EIH Ltd, an Oberoi group company, would prefer managing hotels in the future rather than investing.
Indicating a clear shift in strategy, P R S Oberoi, chairman of EIH made the statement at the company's annual general meeting here today.
Speaking to newspersons after the meeting, Oberoi explained that this would be in line with the company's policy outside India. "We have joint venture overseas to the extent of 30-40 per cent, whereas in India we manage only one property. In future, we will limit our investments and use our expertise in managing hotels," he said.
Oberoi today announced that the group has decided to put on hold all its capital expenditure in view of difficult situation in the hotel industry. "We do not plan to expand in the next 2-3 years, and instead we will consolidate," he said.
The company is in fact, slowing down its ongoing Mumbai project. "We will phase it over a longer period" said Oberoi. The project may be completed by end-2005 or may even spill over to 2006, unless the market improves.
On the Morocco project, Oberoi said the planning has just begun and will take 16-18 months to complete. There will be no substantial investment in Morocco, this year.
The company is looking for tie-ups with international hotel chains abroad including strategic partnership and co-branding. Oberoi said, "We have been looking for a tie-up for the last two years but, nothing has happened thus far. The search is still on."
Oberoi was sceptical of the tourism industry and said, "The present situation does not augur well for the travel and tourism industry in the current year. Travel advisories were issued by the US, Australia, Canada, Japan and many European countries. As most foreign visitors plan their travel several months in advance, I do not think we will see occupancies increase substantially till the last quarter of this year."
Promoters hike holding to 42.44%
The promoters have scaled up their holding in EIH to 42.44 per cent from 40.95 per cent as on March 31, 2002. Oberoi refused to comment on ITC subsidiaries picking up shares in EIH. "We are taking steps so that we do not have any problem" he said. ITC has acquired around 14 per cent in EIH through its subsidiaries.
On buyback of shares, Oberoi said, "We have considered it and will consider it again."
Oberoi said EIH is open to the idea of acquiring UTI's stake in the company, if the mutual fund ever expresses its desire to sell.
When asked whether promoters will acquire shares from UTI, which is on a selling spree owing to redemption pressure, P R S Oberoi said, "We will buy their shares or get someone to buy them for us." He however clarified that UTI has not expressed any such desire, so far. UTI holds around 7 per cent in EIH.
