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Taj adds Hotel Blue Diamond to portfolio - Views on News from Equitymaster
 
 
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  • Oct 27, 1999

    Taj adds Hotel Blue Diamond to portfolio

    The Indian Hotels Company (IHCL), the hospitality arm of the Tata Group has acquired a controlling 40% stake in Hotel Blue Diamond, Pune. The hotel will be run under the Taj banner as a business hotel.

    The Rs 6.2 bn Indian Hotels is the largest hotel chain (capacity: 2,574 rooms) in India and has a presence across all segments of the hotel industry. The company has built up sizeable brands in each of the segments it operates in. It operates the Taj luxury hotels, Taj residency hotels, Gateway residency hotels, palace hotels, beach resorts, garden retreats and wildlife lodges.

    The move to acquire the hotel in Pune is part of the IHCL strategy to extend 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. With the acquisition the tally of properties under the Taj name will go up to 50.

    The acquisition 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 growth in tourist arrivals and declining room rentals in major cities. Hotels in metro cities like Delhi and Bombay account for about 70-75% of room capacities generating above 80% of total revenues. Urban occupancies are on the decline and the companies’ bottomlines are getting hit.

    With economy showing signs of improvement, business travel within India is likely to pick up. There is need for good hotels in the business segment. Therefore, it is a positive move to tap this demand. The company might face some problems from Blue Diamond's 300 strong staff who are resisting this change of ownership.

     

     

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