Stung by the global meltdown, terror attacks in Mumbai and now swine flu, EIH Ltd, a member of the Oberoi Group, is “curtailing” capital expenditure for the next 18 months, not adding employees and trying to increase sales despite the "unprecedented downturn".
At the company's 59th AGM in Kolkata on Thursday, chairman & CEO of EIH Ltd, PRS Oberoi, said: “This is the most difficult period for the hospitality industry since I can remember…and we have seen bad times during the Gulf and Kargil wars, 9/11, but I have never seen such bad times as now.”
With a sharp drop in the number of foreign visitors to India, Oberoi doesn't see a revival in the sector till October 2010. “Hotel occupancies and revenues have been significantly affected,” he said. Profit in the first quarter of 2009-10 was down to Rs 19 crore from Rs 38 crore in the corresponding period last year. "Business conditions during the rest of the current fiscal will continue to be difficult," he added.
In Mumbai, for example, occupancy levels are still at 45%--"it hasn't picked up since the November 26 attacks last year." Average room rates are down almost 30%, from Rs 12,500 last year to Rs 9,500 now. He said The Oberoi, Mumbai, the group's flagship hotel, which was damaged badly in the terror attacks and is being renovated at a cost of Rs 120-130 crore, would be re-opened in the first quarter of 2010. EIH, which has 4,022 rooms now, will add 2,600 rooms by 2012.
Vice-chairman SS Mukherji said the company was working on a medium-term plan because of the downturn. It has planned a capex of Rs 350 crore up to 2011, of which "we have already invested Rs 100-odd crore".
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