Indian Hotels cuts losses, clocks 6.6% revenue growth in Q1

Indian Hotels Company Ltd (IHCL), the country’s largest hotel operator that runs several hospitality brands such as Taj Hotels and Ginger, has pruned its net loss for the first quarter but continues to see sluggish growth in top line.

The firm reported net loss of Rs 19.09 crore for the quarter ending June 30, 2013, compared to the loss of Rs 33.36 crore in Q1 FY13. Its net revenues rose 6.58 per cent to Rs 908.7 crore in the quarter.

IHCL reported a net loss of Rs 339 crore for the quarter ended March 31, 2013, impacted by provisions worth Rs 423.66 crore for its investment in Orient Express Hotels. The company holds 6.9 per cent stake in the American luxury hotel chain Orient Express. Interestingly, it made a $1.86 billion acquisition bid to acquire Orient Express in late 2011 but was spurned. This was the second takeover bid by IHCL, after an attempt in 2007 to increase its stake failed due to stiff opposition from the Orient Express management.

Taj Hotels Resorts and Palaces comprises 93 hotels in 55 locations across India with an additional 16 international hotels overseas. It is the biggest hotel chain in the country.

While the company maintains that these results are not indicative of performance for the entire year, they do show a trend in the hospitality sector.

East India Hotels Ltd, which owns the Oberoi Hotels brand and is the second largest hotel chain in the country, reported a modest growth of 10.2 per cent in revenues. However, it was much better-placed in terms of bottom line and clocked 11.6 per cent rise in net profit for the quarter ended June 30, 2013.

The Indian hotel industry has been facing a slowdown amid the economic slump and growing competition due to oversupply of rooms and entry of new brands. The top end of the market, occupied by luxury players, are the worst hit as customers are now choosing to go for less expensive mid-scale and upper mid-scale brands.

(Edited by Sanghamitra Mandal)

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