Indian Hotels' expansion plans

By Our Staff Correspondent

MUMBAI, DEC. 22. Indian Hotels Company (IHCL) has announced plans to operate in Sri Lanka and Maldives and expand further into Southeast Asia through a new holding company, Taj Asia.

Indian Hotels runs three properties in Sri Lanka through Taj Sri Lanka and two in Maldives - Taj Lagoon and Taj Coral Reef - through Taj Maldives. Mr. R. K. Krishna Kumar, managing director, IHCL, while addressing a press conference here today, said the company had shortlisted two prospective investors for Taj Asia and has arrived at a partner.

Indian Hotels will divest up to 50 per cent in Taj Asia which will be formed by the merger of Taj Sri Lanka and Taj Maldives. Taj Asia would be the vehicle for the company's presence in Southeast Asia through management contracts or for acquiring properties.

The company also confirmed its intent to acquire the 100 room Radisson Hotel in Chennai. The acquisition, if made, would be done through its subsidiary, Oriental Hotels. Mr. Kumar said the property ``has the potential to grow and is a strategic property.'' A decision in this regard would be taken by the end of the current fiscal. The company has firmed up separate vehicles for acquisitions, in south India, it would be done through Oriental Hotels and GVK and in the west through PIEM and Indian Hotels.

Acquisition in U.S.

The acquisition of Carlysle Hotel in Manhattan, New York, would be done through an equal proportion of seller's finance and equity from IHCL and associates. The total cost of the acquisition has been pegged at $140 million. Mr. Kumar said more would be known in the next ten days on the Carlysle deal. The due diligence of another prospective buyer who has evinced interest in the property is currently on. IHCL is also considering other properties in Manhattan. Besides, it is looking at acquiring properties in Los Angeles and Chicago in the U.S.

Mr. Kumar said the purchase of these three properties in the U.S. would cost IHCL close to half a billion dollars over a period. The company would first focus on the properties in the U.S. and then expand further.

IHCL generates Rs. 200 crores as cash flow from operations which could be supplemented by debt and partnerships for business expansion. He said against the occupancy rate of 57 per cent last year, this year it has improved to 67-70 per cent and is still improving. With regard to the Government divesting its holding in Hotel Corporation of India (HCI), Mr. Kumar said, IHCL was keen only on HCI's Centaur Hotel at Santa Cruz, Mumbai.

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Section  : Business
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