EIH Defers Major Expansion Plans

Kolkata, Sept 18: | Updated: Sep 19 2003, 05:30am hrs
East India Hotels (EIH) has decided to put on hold all its major expansion plans for the time being because of the general recession in the industry, which is impacting on the occupancy rates of its hotels, chairman PRS Oberoi said.

The number of tourists, be its business tourists or leisure tourists, has declined drastically since the destruction of the World Trade Centre twin towers on September 9, 2001. The series of disturbances in India like the twin Mumbai blasts have made the situation more difficult. In such a situation, we have decided not to go ahead with our major expansion plans for the time being, Mr Oberoi said at a press conference after the 53rd annual general meeting of the company here on Thursday.

Managing director SS Mukherjee said the Supreme Court decision of HPCL and BPCL disinvestment has made the entry of foreign investors uncertain. This phenomenon is bound to put pressure on the hotel industry, he said.

He, however, pointed out that the sharp decline in room rate as well as occupancy rates have started declining of late. We expect the situation to improve further both in terms of occupancy rate and room rate from 2004-05 onwards, Mr Oberoi said.

He said foreign tourists contribute 75 per cent of EIH income, while the remaining 25 per cent is contributed by domestic tourists. However, we expect the number of domestic tourists to increase substantially in the near future, Mr Oberoi said.

Commenting on the EIH decision to re-brand all its Vilas properties, Mr Oberoi said the decision was taken following a survey that showed that a number of customers perceived the Vilas properties as separate and distinct from the Oberoi brand. Hence, we have re-branded all our Vila properties as The Oberioi Rajvilas, The Oberoi Amarvilas, The Oberoi Udaivilas and The Oberoi Vanyavilas. I am confident that the re-branding of the Vilas properties will further strengthen our brand in the worlds market, he said.