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Indian Hotels to spend Rs 450 crore, increase capacity by 26%

Indian Hotels Company (IHCL), the country’s biggest hotel chain, will augment capacity by 26% to nearly 20,000 rooms in the coming years.

The owner of the Taj Hotels brand, Mumbai-based IHCL will add 33 new hotels across its four brands – Taj, Vivanta by Taj, Gateway and Ginger – having 3700 rooms.

A capital expenditure outlay of Rs 450 crore is made for the coming years though IHCL has already outlined it intention of becoming asset light with minimal spending plans.

Cyrus Mistry, chairman, IHCL said, ” The hospitality sector continued to face a very challenging environment (in the previous year). Additionally significant increases in new domestic supply has put immense pressure on all hotels”.

Mistry was addressing shareholders at the company’s 113th Annual General Meeting held today.

“There will be improved political and economic environment and the sentiment in the hospitality sector will improve. The company is committed to expand its portfolio to maintain market leadership and position itself strongly for the time the markets are expected to turnaround”, Mistry added.

IHCL reported a loss of Rs 35 crore in the first quarter ended June 30 on a consolidated basis on a revenue of Rs 955 crore. On a standalone basis the loss reported was Rs 7 crore for the same quarter on a revenue of Rs 410 crore.

The company saw its rights issue subscribe 1.6 times, which was recently issued. The proceeds of this issue, Mistry said will be used in bringing down the debt equity ratio to 0.97 from 1.72 at present.

Two years after buying the sea-facing Sea Rock hotel in suburban Bandra, Mumbai, IHCL’s plan of building a hotel and a convention center in its place remains largely on paper.

Mistry clarified that approval from the Brihanmumbai Municipal Corporation (BMC) regarding the floor space index for this new hotel is pending causing the delay. The old Sea Rock hotel, which stood at a stone’s throw away from the Taj Land’s End, was razed to the ground more than a year ago.

The company would not be following the idea of its outgoing managing director Raymond Bickson of creating a new brand in the mid-market space. Bickson had stated earlier that IHCL was exploring a new brand positioned between its low-cost brand Ginger and upscale brand Gateway.

“The company continues to look at its brand architecture but there is no thought process for now for a new brand”, Mistry added.

Shareholders also pointed out Mahindra Group’s success in the time share category with Mahindra Holidays. Shareholders wanted to know if IHCL will explore that space in future.

“The concept of time share is interesting and the company will explore that concept”, Mistry added.

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