Diversified conglomerate ITC Group and hospitality major EIH have drawn up a blueprint to combine and emerge as the country?s largest hotel chain by revenues. Once the plan fructifies, it would see a three-way venture between the two groups and Reliance Industries (RIL) which recently picked up 14.8% stake in EIH. Currently, the Oberois hold 32% stake in EIH, while ITC holds 14.98%.
According to the plan being worked out, the ITC group would demerge its hotel business, which would then form a partnership with the EIH group. The combined entity would have a much larger revenue base of Rs 1,948 crore, which can then be leveraged for further expansion both domestically as well as overseas. The coming together of the two hotel chains would make them the country?s largest hotel conglomerate in terms of revenues, outstripping the Tata group?s hospitality company Indian Hotels.
Indian Hotels is currently the largest hotel chain in the country in terms of revenues, clocking Rs 1,566 crore for the fiscal 2009-10. Once the merger between the ITC hotel division and EIH takes place, the running of the hotel and its day-to-day management would be in their hands and RIL would not interfere in this aspect.
Sources said talks between the parties are at a preliminary stage, but would gather steam shortly. Analysts said it makes sense for ITC to demerge its hotel business and unlock some value from it. The bulk of ITC?s gross revenue comes from the tobacco business. In the 2009-10 fiscal, cigarette sales of ITC stood at Rs 17,283.03 crore, which is 66% of the company?s total revenue of Rs 26,259 crore.