As room revenues swell, Indian Hotels sets eyes on distant shores
Daily News & Analysis — June 9, 2006

The Indian Hotels Company Ltd (IHCL) has taken a step closer towards strengthening its presence in the South Asian region. As reported in this paper on March 29, 2006 (Taj Group goes hip & Thai), the company has acquired the land required for this project and intends to start work soon. Confirming the development, Raymond N Bickson, managing director and CEO, IHCL said, "The project is being finalised and the property will be spread across 50 acres of land."

The Phuket property will be branded as Taj Exotica Resort & Spa, he added. While refraining from divulging investment details of the Phuket project, Anil P Goel, senior vice-president - finance, IHCL said, "It's not going to be directly out of IHCL but through a joint venture between Taj Asia, under which we run our Sri Lanka and Mauritius business." Construction on the project should start six months from now, he said. Meanwhile, the company has reported buoyant figures for the 2005-06 fiscal.

Revenues increased 29% to Rs 1,128 crore, even as the profit after tax jumped 74% to Rs 184 crore. Consolidated revenues improved by 40% to Rs 1,914 crore and the consolidated PAT improved by 93% to Rs 249 crore. The IHCL board has recommended a dividend of 130% as against 100% last year. Bickson said the growth was driven by healthy improvement in average room rates and food and beverage revenues across its hotels in India and overseas.

While average occupancy saw a minor dip of 2% from 72% last year, the average room rate and revenue per available room were much higher at Rs 7,187 (Rs 5,471) and Rs 5,060 (Rs 3,931), respectively. Said Bickson, "Besides the recent metro acquisitions that we did in New York and Sydney, the other growth will be taking place in the high-end resort category and primarily the Taj Exocita brand."

According to industry sources, IHCL is eyeing the Fiji islands next. The hotel chain has also zeroed in on a heritage property in Cape Town, South Africa, which it intends to launch as a luxury hotel. This will be under a 50:50 joint venture agreement with a local company. The project includes two structures and IHCL is looking at a hotel-cum-serviced apartment or a condo-hotel for this. "This apart, we are exploring opportunities in Johannesburg and Durbin but haven't finalised anything as yet," said Goel.