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EIH – Visit Note
Aug 12, 2005

We recently met the company in Kolkata last week to understand the growth prospects of the tourism sector, whether then current buoyancy is sustainable and what is the strategy of East India Hotels (EIH) over the next three years. Here are the key takeaways. Key highlights…

  1. Last three years: In the last three years, the industry has gone through a cycle with various factors, both domestic and international, impacting tourist inflow into the country. However, the last three quarters of FY05 and 1QFY06 has witnessed significant improvement in arrivals, occupancy rates and average room rates (ARR). In this context, the performance in FY05 is not comparable to that of FY04.


  2. FY05: Occupancy rate of EIH in FY05 were 67.4% as compared to 61.0% in FY04. Almost 61% of revenues of EIH are foreign exchange denominated and in our view, is comparable to that of Indian Hotels.


  3. The next three years: Growth outlook for the next three years – pretty bullish on tourist arrivals, ARRs and margins. From what is seems, despite capacity expansion, demand is likely to outstrip supply in cities like Bangalore, Delhi and Kolkata and to some extent in Hyderabad and Chennai. Mumbai is likely to witness improvement in room rates in the next three years, even after the planned capacity expansion. Increasing prices for rooms therefore, is not an issue going forward.

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