Contractual relationship will shift to Hilton Corporation

Mohan Padmanabhan
Jayanta Mallick

Hiving off


Last month

, Ladbrokes, the British gambling company which controlled Hilton UK, sold its interests in the hotels business to Hilton Corporation, virtually signalling its total exit from the hotel business for now.

Kolkata, March 3

A complete change in the business profile of Hilton UK, with which EIH has a 15-year co-branding agreement, will not affect the marketing and brand use relationship for the domestic hotels major.

Mr S.S. Mukherji, Vice-Chairman and MD of EIH Ltd, told

Business Line

that the Oberoi Group's contractual relationship would now automatically stand shifted to Hilton Corporation (US).

The deal between The Oberoi Group and Hilton UK had come into effect from April 1, 2004.

Last month, Ladbrokes, the British gambling company, which controlled Hilton UK, sold its interests in the hotels business to Hilton Corporation, virtually signalling its total exit from the hotel business for now. Internationally, Hilton Corporation earlier had been looking after the hospitality business in the US, while Hilton UK managed and controlled all Hilton hotels outside the US, that is, Europe and elsewhere in the world.

Co-branding deal

The co-branding deal with Hilton entails management of eight hotels in India by the Oberoi group outfits (EIH and EIH Associated Hotels).

Hilton UK, (now Hilton Corporation), is to market these hotels internationally and lend its brand name to the Trident group of hotels. Hilton is entitled to a franchise fee, varying between 3 and 5 per cent of the gross room revenue. The Trident hotels of the Oberois are located in Chennai, Kochi, Bhubaneswar, Gurgaon, Agra, Udaipur, Jaipur and Mumbai.

Explaining the variation in franchise fee, Mr Mukherji, who is also the Managing Director of EIH Associated, said that for smaller hotels it was 5 per cent since the tourist traffic and the room numbers are lesser as compared to the bigger ones in metro cities.

The recent reshuffle of management control of the Trident hotels portfolio between EIH and EIH Associated Hotels has brought about a dramatic increase of room strength in favour of EIH Associated.

From 230 rooms in two hotels, EIH Associated, a subsidiary of EIH, now boasts 850 rooms. The total number of hotels managed by the subsidiary is now eight, out of which four are Trident hotels.

(This article was published in the Business Line print edition dated March 4, 2006)
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