In a bid to optimise its revenue streams, Indian Hotels Company intends to focus on two key markets — Gulf Co-operation Council (GCC) and South-East Asia.
“We cannot risk our balance-sheet by being present in places like Beijing or Tokyo, as they need intensive investments and have high entry barriers. Our focus has to be on GCC cities like Muscat, Abu Dhabi and Doha along with Thailand, Cambodia and Vietnam in South-East Asia. Today we have to be asset-right,” said Rakesh Sarna, CEO.
Dubai plansDubai is another market where the hospitality major is launching a slew of hotels, mostly on management contracts.
Having recorded a standalone profit of ₹88 crore for the March quarter against a loss of ₹119 crore in the corresponding quarter last year, Indian Hotels is cautious when it comes to adding new properties in international markets.
As part of a divestment plan, it has already sold properties in places such as Sydney and Marrakech and, more recently, announced plans to sell Taj Boston in the US.
While it continues to own 13 international properties across countries like Sri Lanka, Maldives and the UK, it is the US market that has proved to be most challenging for the company, where it had made heavy investments in properties like Belmond (formerly Orient Express).
It is now opting for management contracts to retain the Taj brand in the US while selling off assets, mainly to retire offshore debt.
“While we have sold two of our properties, we still have 13 outside India. Though we want to bring relief to the balance-sheet, we have to be careful with our financial decisions,” said Sama.
In the domestic market, the hospitality major has exited its Gateway brand from places such as Ahmedabad, Jaisalmer and Jodhpur. It would rather focus on Mumbai and Delhi apart from the North-East, said Sama.
In 2016-17, Indian Hotels intends to add 1,000 rooms across all its brands like Gateway, Vivanta and Taj Luxury. Last year it had added a Vivanta by Taj in Guwahati and Taj Santacruz in Mumbai. “We have plans of entering the secondary markets and the North-East is an area waiting to be discovered with our brands,” Sarna said.
On the global merger of Starwood and Marriott, he said he expects the consolidation to bode well for the hospitality industry.
Stronger industry
“The merger would bring down the cost of doing business and also make it stronger while dealing with the online travel agents. We do not have a burning desire to be as big but we have our own strategies in place and are not better or worse than them,” he said.
Indian Hotels has narrowed its consolidated loss to ₹61 crore in the March quarter from ₹378 crore from the year-ago period, but Sarna expects it to take at least a year before the company is out of the red.