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Closure of its Delhi property, The Oberoi New Delhi, for renovation may impact EIH Ltd’s bottom-line at least for another quarter. The property has been closed since April.
The 283-keys, Oberoi New Delhi reported a revenue of ₹190 crore and a profit of ₹65 crore, last year, company sources said.
According to PRS Oberoi, Executive Chairman, EIH Ltd, revenue and profitability in the first quarter (April to June) of this fiscal were affected due to the closure. Asset write-off (for Oberoi New Delhi) impacted profitability by ₹18.35 crore.
Net loss (after tax) – during the period – stood at ₹12.24 crore as against profit of ₹21.15 crore in the year-ago-period.
Total income from operations declined by 8 per cent (or ₹25 crore) to ₹276 crore against ₹301 crore in the corresponding period last year.
“Additional write-offs are also expected in the second quarter of this financial year,” he said during the company’s 66th Annual General Meeting.
Post completion of the ₹500-crore renovation by April 2018, The Oberoi, New Delhi will become “highly profitable” and “among the best hotels” in India, he said. “The 1965 vintage hotel needed extensive work to protect against risk of declining market share and to ensure a future leadership position in the national capital,” heö added.
Disruptive technologyVikram Oberoi, MD and CEO of EIH Ltd, maintained that disruptive technology companies like Airbnb – which has operations in the country – have minimal impact on the hospitality chain.
Airbnb (a San Fransisco-based aggregator) and Stayzilla – that enable people to list, find and rent vacation homes for a fee – are amongst the major names in the homestay segment. “Disruptive business models are not affecting our businesses now. But we will continue to pay attention on these disruptive models… However, it will be wrong to say that there will be absolutely zero impact in future. But it will be minimal,” he said.
Sources indicate that homestays are coming up as popular choice for travellers. Shortage of rooms; informal but relaxing experiences and so are said to be reasons for rising popularity of this segment.
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