Hospitality major EIH Ltd will follow an “asset light” model by focusing more on managed properties for expansions.
According to PRS Oberoi, Executive Chairman of The Oberoi Group, the share of owned vis-à-vis managed properties for the group, which runs hotels and resorts under the Oberoi and Trident brands, currently stands at 70:30. The aim would be to reverse the ratio.
“We have got too much real estate; major hotel companies do not own too many properties. We wish to be asset light and want to go for more managed hotels,” Oberoi told newspersons after the company’s annual general meeting here on Wednesday.
The group currently owns 10 hotels and has substantial ownership’ in another 12. Six of its hotels are managed properties.
Five of its upcoming projects will be managed properties. The company has also signed management contracts for a luxury Oberoi Hotel and a Trident Hotel on Koh Tan Island, Thailand.
The Oberoi, Marrakech, is in the final phase of completion and is scheduled to open in the first quarter of 2019.
The Executive Chairman, said that the company owns land in Bengaluru, Goa and Agra and might come up with its own projects at these sites, but as a policy, it would aim to be asset light.
Q1 result
For the quarter ended June 30, EIH Ltd posted 13 per cent growth in total revenue to ₹343 crore, as compared with ₹303 crore in the same period last year.
Net profit for the quarter under review was down by nearly 11 per cent at ₹10.19 crore. “The decrease in profit was mainly due to an increase in the provision for depreciation on capitalisation of The Oberoi, New Delhi, and also an increase in interest on borrowings,” he said. The company has a total debt of around ₹500 crore.
According to Oberoi, 28 per cent GST will “seriously affect travel and tourism” in India.
“The GST for hotels charging ₹7,500 or more is 28 per cent. Most international travellers are accustomed to much lower GST in other Asian countries. The hospitality industry has made several representations to the GST Council in this regard. We hope there will be a reduction in the near future,” he said.