EIH sees traction in revenues, apprehends pressure on margins

KOLKATA - East India Hotels, which runs the Oberoi and Trident chains, expects an increase in occupancy levels and average room rates along with a rise in inbound tourists this fiscal, though there could be pressures on margins due to inflation.

“I expect demand to grow as the financial year progresses. Room rate would begin to improve, but margins are, however, likely to be under strain due to inflation,” Chairman P.R.S. Oberoi said, addressing shareholders at the Annual General Meeting.

Oberoi said the company has taken “appropriate measures” to curtail cost wherever possible without sacrificing service excellence.

“Plans of consolidation and expansion continue to make steady progress,” he added.

The 202-room Oberoi Hotel, Gurgaon, is expected to open in the fourth quarter of the current financial year (2010-11).

Construction of the 229-key Oberoi Hotel at Cyber City, Hyderabad, is underway. “This is in addition to a 323-key Trident Hotel, which is also under construction at the adjacent site. Both the hotels should open in phases, beginning the summer of 2012″.

He said the 440-key Trident at Bandra Kurla in Mumbai opened Dec 1, 2009.

The company is ramping up operations at the Oberoi Towers and Trident, Nariman Point, in Mumbai, which were damaged in the terrorist attack in 2008.

Oberoi asked the government to look more favourably at measures to boost tourism and hotel infrastructure such as power, water and roads.

In 2009, the travel and tourism sector accounted for 6.4 percent of the total employment. It is estimated that the sector would account for 10 percent total employment by 2014.

“This will make it the second largest employer in the country,” he said.

EIH had posted a loss of Rs.15.93 crore for the quarter ended June 30, 2010, against a profit of Rs. 19 crore during the corresponding period a year ago.