The depreciating rupee is wreaking havoc for exporters, but it does have its advantages. For Indian Hotels, which is hit by the slowdown in its international operations, especially the recovery in its US business, it is good news.
"The group business is impacted by about 20% to our advantage due to the INR depreciation," said Raymond Bickson, managing director and chief executive officer, IHCL. "But our business growth does not depend on forex."
The Tata group subsidiary is maintaining a bearish outlook for its overseas properties as it tries to stem losses and defer new hotel openings. Its Morocco hotel, for instance, scheduled for opening in this quarter, is now expected to become operational only by the end of next quarter, according to Bickson.
The company has presented a specific plan to the IHCL board to turn around properties outside India. A turnaround in US is expected to take another 18 months, he said.
"The growth in North America is nowhere close to India but our focus is on New York and Boston," he said. "There has been an impact of the slowdown especially in new projects because of the cost of capital."
He however conceded that the company's investment in luxury hotel chain Orient Express Hotels (OEH) had misfired, with the stock quoting at almost one-tenth of its $64 peak share price achieved in October 2007, soon after IHCL bought 10% stake.
On domestic front, the company plans to introduce a new brand positioned between the Ginger and Gateway hotels. "We are planning to launch a mid-scale brand and that could happen within next 24 months," Bickson said.
IHCL is present in budget space, high-end and top end.
Bickson discounted fears of an oversupply. "There are only 90,000 branded rooms in India. When we compare this with destinations like Thailand, China or Dubai, this is small. India needs a lot more hotels and rooms."
The company is awaiting environmental ministry approval for the Rs 680-crore Sea Rock it bought in 2009, to be developed as a luxury hotel. "We have knocked (the old hotel) down," Bickson said.