We will just concentrate on managing the existing hotels and will not go for any kind of expansion during the next two years, he told reporters after the 52nd annual general meeting of the company here on Friday.
He said the cascading effect of the World Trade Centre attacks of September 11, 2001, had badly hit EIH. The occupancy rate in EIH hotels has come down by about eight per cent during the current financial year.
In such a situation, any fresh investment for any new project will not be viable and the EIH management has hence decided to stringent checks on capital expenditure, he said.
EIH had reported a net profit of Rs 66 lakh on a total income of Rs 91 crore for the three months to June 30, 2002, against Rs 10.65 crore on an income of Rs 109 crore for the corresponding period of the previous year.
For the full year to March 31, 2002, EIH had reported a net profit of Rs 33 crore against Rs 95 crore the previous year. In fact, it banked on other income of Rs 52 crore to report the profit in 2001-02 as it lost money operationally.
He said EIH will continue to reduce staff, although it will not go for any more voluntary retirement schemes. During the last two years, we have reduced our staff strength through three separation schemes, he said.
However, he added, that there might be some minor investments in the two proposed hotels one in Bandra-Kurla in Mumbai and the other in Morocco. He said the Madhya Pradesh government has allotted an old palace near Khajuraho for developing a hotel. However, this is only at the planning stage and will not attract any immediate investment, he said.
Commenting on the downgrade of EIHs fixed deposit programme by Crisil from AAA to AA, Mr Oberoi said it reflected the overall slowdown in the hospitality industry and did not arise from any particular weakness of the company.
He said occupancy is unlikely to improve substantially till the last quarter of the current fiscal. Regarding the travel advisories issued by foreign nations, he said: Since most foreign visitors plan their travel programme several months in advance, I do not expect any improvement in the occupancy rate in the immediate future, he said.
Mr Oberoi refused to comment on the statement made by ITC Ltd chairman YC Deveshwar that his company might increase its stake in EIH. ITC holdings in EIH currently stand at around 14 per cent, he said.
According to him, the EIH management will also carry on with the buyback of shares from the market. The promoters have already increased their stake in EIH to 42 per cent through buyback and we will continue with the process slowly, Mr Oberoi said.
Mr Oberoi also criticised the Union government for its negligence in developing the tourism industry. According to him, the government should give tourism industry infrastructure status to attract incentives.
He pointed out that while the September 11 syndrome has adversely affected the inflow of foreign tourists, some wrong policies of the Union and state governments are having cascading effects on the movement of domestic tourists.
He said that most states are charging exorbitant sales tax on aviation fuel, which is affecting the airlines companies.
Now the growth in tourism industry is heavily dependent on the airlines companies and hence its indirect affect is also affecting our growth, he said. He also said that some states like Rajasthan and Maharashtra were levying high sales tax on food and liquor.