With both the Oberoi group and Max India promoter Analjit Singh confirming that talks for a stake sale in East India Hotels Ltd (EIH) are underway, speculation is now rife about what role Singh will choose for himself if he becomes a majority shareholder. The big question though is whether the Oberois would cede management control of the group which they have held for the past 75 years.
Oberois currently own 43% in the group and plan to sell over 17% to Singh. After that, at 46%, Singh?s stake in the group would be more than the Oberois. The company has always tried to avoid outsourcing management of their hotels. Even when the larger industry trend was to strike management contracts with international hospitality chains, the Oberois kept away. In 2004, when PRS Oberoi struck a deal with the Hilton Hotels, it was only for sales and marketing of its properties. Moreover, only its Trident brand was attached with the Hilton tag, while the core Oberoi entity remained intact. The planned 15-year alliance lasted only four years, as the two parted ways last year.
Soon after, Hilton found a partner in DLF which offered them 26% stake along with management of their proposed 75 properties. Not just that, its alliance with Accor ended on a bitter note in 1997. Accor Asia Pacific MD Michael Issenberg later termed the four-year arrangement a bad experience.
There were reported talks of an alliance with Toronto?s Four Seasons Hotels, which did not materialise. The tie-up with ?The Leading Hotels of the World? and ?The Leading Small Hotels of the World??which are select associations of international luxury hotels also did not survive.
Globally, the trend with most international hospitality majors is to go asset light and strike more management and marketing deals, a model which the Oberois seemed to be following for long, but only by resisting other hotel chains from controlling their properties. If Singh?s involvement in the group is even a little more than just a passive reaper it will be a huge aberration to what the Oberois have always stood for and guarded with all their might.
?surabhi.a@expressindia.com