Indian Hotels was keenly greeted in early trades on Wednesday after the company turned out some eye-pleasing results despite trying times for the hotel industry in general.
The scrip of the hotel chain, in fact, advanced 2.58% to Rs 184.90 by 9:58 IST. The fact that the market was not too upbeat about Indian Hotels' results can be reflected by the scrip's declining 1.99% to Rs 180 ahead of the results yesterday.
In early trades today, the scrip registered volumes of 1,906 shares on BSE.
On Tuesday, after market hours, Indian Hotels said Q3 net profit soared 86% to Rs 11.17 crore compared to Rs 6.01 crore in the corresponding period of the previous year. Total income jumped 27% to Rs 170.50 crore (Rs 1.7 billion) from Rs 134.19 crore (Rs 1.34 billion) in DQ 2001.
The rise in business is mainly attributed to the easing of travel advisories on India by the US and UK. Earlier the two countries and several other western nations had issued travel advisories on India following escalating tensions between India and Pakistan .
The company has also stated that refurbishment and renovation of key food and beverage outlets led to a 29% growth in F&B income during the quarter.
The hotel industry all over the world has been struggling with falling tourism and hospitality revenues following the 11 September 2001 terrorist attacks in the US. A persistent global economic recession, too, has resulted in diminished inflow of tourists into India. Almost all hotel revenues and profits declined due to cancellations in booking following the terrorist attacks on the World Trade Centre.
Apart from the WTC attack, the Gujarat riots and the tension between India and Pakistan at the border have also contributed to the fall in income and business for the hotel industry.
However, aggressive marketing strategies have enhanced the recovery in the business. Change in travel agents' attitudes have helped the hotel industry to post growth. Travel agents are now promoting destinations in India and are working closely with hotels, railways and airlines to offer packages at competitive rates. Earlier, they largely focused on outbound tours for attractive margins.
Analysts now feel the hotel industry could make up losses if the positive trend continues for the rest of the fiscal. However, a possible war in Iraq could reverse the recovery.
In the current fiscal (2002-03), Indian Hotels is attempting to simplify the structure of the group by merging various subsidiaries together to build better transparency and better definition of business areas. There are, in all, about 57 subsidiaries and associate companies. The company plans to bring this number to about 30 in due course of time. In 2002-03, 19 of these companies will be dealt with.
The company plans to increase the value of the Taj brand in premium hotel properties such as palaces, super deluxe and luxury hotels. For this, the group will adopt renovation, upgradation and acquisition route to sustain its leadership. It also plans to introduce a chain of budget hotels and four star hotels in smaller cities, where the potential for growth is immense. The budget hotel brand will be distinct from the Taj brand and the company plans to have a chain of new properties under this brand. It will foray into a new segment of service apartments, the first one being the Wellington Mews in Mumbai, which is scheduled to be open in a year's time.
The group has acquired one of ITDC's properties under construction at Chandigarh for Rs 19 crore through its associate company TajGVK Hotels & Resorts. In September 2002, the company along with ICICI Trustee Services (I-Ventures) has acquired Lokhandwala Hotel's (LHL), Regent Hotel at Bandra in Mumbai for a total consideration of Rs 452 crore including transaction costs. This marks the company's much-awaited entry into the fast-growing North Mumbai market.
During the third quarter ended 31 December 2002, the occupancies increased by 48% in its newly acquired Regent Hotel, which is now known as Taj Lands End.
The Indian Hotels Company better known as the Taj group of Hotels set up in the early twentieth century, has since emerged as one of the leading players in the domestic hospitality sector in India and overseas. The Taj Group's operations cover over 60 hotels in India and abroad, and encompass a number of brands across various price segments.
At present, promoters hold 37.4% stake in the company, while the public, institutions and foreign bodies hold 28.84%, 22.75% and 9.12%, respectively.
BSE Code: 500850
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