The Rs 6.2 bn Indian Hotels chain is extending its premium 'Taj' brand of hotels to smaller cities. The company plans to set up at least 10 properties in smaller cities under the Taj brand name. The brand has so far been used only for premium hotels in the major cities in India.
The move comes at a time when most of the industry majors are restructuring their business operations. The industry has been forced to explore alternate avenues for revenue generation in the wake of low tourist arrivals and declining room rentals in major cities.
Indian Hotels had recently decided to give a fillip to its catering business through a foray into marketing of branded food and beverages at the retail level. The group exited from its overseas operations in the US and is focussing on its hotel business at home. The group is also looking at expanding overseas, this time closer to home. It has already announced plans to set up hotels in neighbouring countries like Sri Lanka and Bangladesh. The move is aimed at hands on management of its existing operations.
Other hotel chains like the Regency Group and the Park Sheraton (managed by the Welcomgroup) have also announced plans ranging from refurbishing their hotels to starting new restaurants and health clubs within their hotel premises. All these moves are primarily aimed at reducing dependence on room revenues to shore up bottomlines.
The IHCL stock after a long period has made it to the "BUY" list of analysts and fund managers. This change in rating is largely based on the signs of improving economy and the management's committed restructuring moves. In the recent rally, the IHCL stock has moved up by 40-45% from Rs 280 levels to the current Rs 380 plus levels.
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