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EIH rules out cut in room rates

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Mr P.R.S. Oberoi, Chairman, East India Hotels Ltd (right), along with Mr S.S. Mukherji, Managing Director, after the company's 53rd AGM in Kolkata on Thursday. - - Parth Sanyal

Kolkata , Sept. 18

RULING out any new hotel projects by way of expansion, the EIH Ltd, a member of the Oberoi Group of Hotels, said the first priority would be to complete the on-going projects, both domestic and international.

Also ruling out any further decline in room rates this financial year, or at best a small one, EIH said considering the occupancy rate of 55 per cent in all the group's hotels in a somewhat difficult operating environment, it pointed out that there may be a hike in room rates during 2004-05.

While the group is launching the M.V. Vrinda boat cruise in Kochi (two days in Kochi Trident and 2 days on board) on the picturesque backwaters of the Malabar coast in Kerala from November 1, running of heritage trains, both in North and South, which would be a major improvement on Palace on Wheels, was also being considered. Talks were on with the Indian Railways for re-fitting of old coaches. The group was also considering another major boat cruise project.

Talking to newspersons here on Thursday after the company's 53rd annual general meeting, Mr P.R.S. Oberoi, Group Chairman, said some of these important projects were the one at Gurgaon (to be completed sometime early next year) and the resort projects at Maldives and Dubai. Both are management contracts. The Marrakesh resort hotel is in the planning stage. The Dubai project is expected to cost around $35 million, and will take 7-8 months to be completed. He said while the management contract for Maldives hotel would be for 26 years, for the Dubai property, it might go up to at least 40-50 years.

Asked if there would be a difficulty in the recently concluded tie-up for Trident hotels of Oberois with Hilton, Mr Oberoi said while Trident was a 10-year brand, Hilton internationally was a 50-year brand and therein lay the strength of the co-branding exercise. He said both Hilton International and Hilton Corporation now had a common identity, and in those places where Hilton has a large presence, Oberoi hotels would not be present.

On the long pending objective to seek strategic marketing alliance for the more powerful Oberoi hotels, he said the talks got slowed down because of the 9/11 incident and then the attack on Parliament, and now with the adverse verdict on HPCL, IPCL disinvestments, which effectively has been put off to after the elections in 4 States.

He said foreign tourists, who account for 75 per cent of the occupancy rate in all Oberoi hotels, were just beginning to come in and hopefully the season should peak from October 2003. On the manpower rationalisation exercise started five years ago in Mumbai, and now extended to other properties in Kolkata and Delhi, he said it would continue.

Mr Oberoi also said the company sometime back also examined a Scottish Rail project (heritage run from London to Scotland), but gave it up as the infrastructure was not considered adequate.

On the proposed India Tourism Fund, a suggestion made by Mr Oberoi, involving a 3 per cent levy on room charges, and whose proceeds will go entirely to the industry and not to the Government exchequer, he said he intended to meet Union Finance Minister, Mr Jaswant Singh, soon.

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