Asian Hotels Ltd (AHL) plans to set up two new five star hotels in Mumbai (450 rooms) and Calcutta (250 rooms) at an estimated cost of Rs 4.6 bn. These hotels would be operated by Hyatt International and the promoters plan to put in Rs 1.8 bn in these two projects as their contribution.
Asian Hotels Ltd owns and operates the five star deluxe 518 room Hyatt Regency hotel in New Delhi. It reported a turnover of Rs 1.4 bn in FY99.
The rest of the project would be financed by debt to the tune of Rs 2.8 bn and the hotels are expected to be ready by 2001. Like AHL's existing hotel property, the Hyatt Regency Delhi, these two hotels will be managed by Hyatt International. However Hyatt International will not take a equity stake in these projects.
Though occupancy rates in metro cities like Mumbai and Calcutta are yet to pick up, analysts expect them to start improving over the next one year with the improvement in the economic scenario and stable political condition. If AHL manages to start these hotels by next year it would be one of the first few hotel companies to open new hotels and this could be to its advantage if occupancy rates were to pick up by then. However as AHL has been a zero debt company in the past this would pressure on its margins as interest costs would soar when the hotels' start operations.
Hotel Stocks have been out of favour with analysts due to fall in occupancy rates and pressure on average room rates in the five star city hotels and Asian Hotels is no exception to this. Many analysts have a "Sell" on it.
More Views on News
Sorry! There are no related views on news for this company/sector.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407