)
Foreign properties of Indian Hotels Company Ltd (IHCL), the country’s largest hotel chain operator, continued to hit profits of the Tata group company desperate to reduce its dependence on local business.
The three hotels in the US, including The Pierre in New York, posted a loss of Rs 155 crore during 2013-14, an annual report of IHCL said.
"During the year, it was a challenging environment across key international markets where the company owns or operates hotels," the report said.
IHCL operates hotels in Boston, San Francisco, London, Cape Town, the Maldives and Sri Lanka. The previous month, the company sold a hotel in Sydney for Rs 180 crore.
It said it intended to focus on Asia-Pacific, particularly China, where the company would manage two hotels under the Taj brand.
About 40 per cent of IHCL’s revenue is earned outside the country.
It has 11 properties outside India under the Vivanta and Taj brands, of which eight are operational, one was sold a few weeks ago and two are being renovated. With increased competition in India from Marriott, Starwoods and Hilton, Indian Hotels Company is eager to expand abroad.
Losses over the last four years in Indian Hotels Company’s international operations were over Rs 630 crore. A substantial chunk of this was due to the slowdown in the US, impacting profitability of The Pierre.
Last year, Indian Hotels Company’s losses swelled to Rs 590 crore, an increase of 113 per cent from Rs 277 crore a year before. Income over the period was flat at Rs 1,977 crore against Rs 1,924 crore.
A sum of Rs 687 crore was recorded as diminution in value of overseas investments the company had made, particularly in the US market. This included Indian Hotels Company’s fruitless investment in Orient Express Hotels, which it tried to take over.
However, with the recent pick-up in economic activity in the US, the troubled hotels have shown signs of revival. International Hotel Management Services, the company in which the three US hotels are lodged, reduced its net loss by 16 per cent in 2013-14 from a year ago.
"The company’s hotels in the US have shown improvement in turnover and margins despite the challenges faced by the US economy. The company is continuing its focus to improve the profitability of its US operations and selectively has invested to renovate and upgrade its hotels in Sri Lanka and the Maldives," Indian Hotels Company said.
