Kamat Hotels India, the hospitality chain that runs The Orchid Hotel, is restructuring its business operations. It is planning to sell three land parcels and adopt the franchisee route for expansion.
The move comes even as lenders are considering restructuring the Mumbai-based company’s debt aggregating Rs 435 crore.
According to Vikram Kamat, Executive Director, Kamat Hotels India, “The plots of land in Coimbatore, Raipur and Nagpur are for sale on an outright basis.
“We are also looking to expand our presence in Maharashtra and Gujarat through the franchisee model. Our focus will remain on increasing awareness about our brand.”
The hotel group, which is in a consolidation mode, will scale up its Regional Sales Offices from seven to 13 within the next one year. “Our new offices will come up in cities like Kolkata, Kochi and Panjim,” Kamat added. The hotel chain is present in cities like Mumbai, Delhi, Goa, Pune, Aurangabad, Bhubaneshwar and Konark.
At a recent press meet, S Visvanathan, Managing Director, State Bank of India, said when capacities were getting built up in the hotel industry, banks gave loans for 7-8 years and not for 10-15 years as is done abroad.
“At that point in time, given the kind of flows (business) that we were expecting, this seven year period was viable. The whole system was gung-ho…….
“But what happened, there were certain delays in commissioning, there was lesser traffic compared to what was assumed, all these things put pressure on repayment. And they came to us for lengthening of maturity i.e. restructuring,” said Visvanathan.
He explained that when the maturity period of the loans is lengthened, the repayment instalments go down and people are able to pay better.
CRISIL Research, in its latest industry report, said that profitability of premium hotels (5-star and 5-star deluxe) is expected to plunge in 2012-13 and 2013-14.
“Occupancy rates of premium hotels will fall from 64 per cent in 2011-12 to 56 per cent in 2013-14 due to large scale room additions and global economic slowdown. Operating margins will drop to just over 16 per cent in 2013-14, the lowest in 10 years,” the report added.