Debt-ridden Indian Hotels to cut costs, rejig operations

  • Nachiket Kelkar, Hindustan Times, Mumbai
  • Updated: Apr 20, 2015 23:46 IST

Indian Hotels Company Ltd (IHCL), which runs the iconic Taj Group of hotels, is restructuring its operations to reign in high debt, while continuing to expand its presence in India and abroad.

With a digital-first approach, the company has adopted a geographical approach to expand the Taj brand. It also plans to focus on joint ventures and take the buyout route for growth.

Managing director and CEO Rakesh Sarna said the company was still two years away from posting a full-year net profit, as it initiates cost cutting and operational measures to boost performance.

Last month, the company started an organisation-wide restructuring to reduce Rs 4,000-crore debt.

The former Hyatt executive (he was group president of Americas) took over as Indian Hotels’ MD in August 2014, replacing Raymond Bickson who had been at the top for 11 years.

“We need to improve cash flows, plug losses in our US properties, exit Belmond (formerly Orient Express Hotels) and settle pending issues like the Sea Rock property in Mumbai,” Sarna said.

In 2013, Indian Hotels walked away from its bid to acquire Bermuda-based Belmond. But it still holds 6.9% stake, and Sarna said the company would sell the stake at a “right price.”

IHCL reported a consolidated operating profit of Rs 251 crore in 2013-14, but net loss of almost Rs 554 crore. To increase sales, IHCL has roped in a chief revenue officer, as the company seeks to move away from traditional sales and marketing to customer analytics and e-commerce.

IHCL is also moving away from a model of three chief operating officers managing brands such as Gateway, Vivanta and Taj; now there will be executives tasked with driving the Taj Group, geographically across the world.

The company, which operates 112 hotels in India and 16 abroad, plans to open 19 more with 2,500 rooms over the next three years.

The company plans to explore overseas markets such as Bangkok, Hong Kong and Shanghai.

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