Financial Daily from THE HINDU group of publications
Tuesday, Jul 09, 2002
Mergers & Acquisitions
Industry & Economy - Disinvestment
Taj GVK hopes to win ITDC hotel at Chandigarh
HYDERABAD, July 8
TAJ GVK Hotels & Resorts Ltd, the city-based hospitality joint venture between the Tatas and the GVK group, is set to acquire the five Star Hotel belonging to the India Tourism Development Corporation (ITDC) located in Chandigarh.
A senior official of Taj GVK confirmed that the company had submitted a financial bid for the partly built 130-room hotel of ITDC. "The financial bid submitted by our company is found to be the highest. We are waiting for an official communication from the Government of India in the regard," he told Business Line.
If successful in its bid, Taj GVK would add another hotel to its fold. The company already has three hotels operating at three different price bands within close vicinity in Hyderabad, catering to various segments of customers. These include Taj Krishna, Taj Residency and Taj Banjara all the three located in the posh Banjara Hills area here.
Despite the fact that the hospitality industry worldwide witnessed a major drop in revenues during the last fiscal owing to various adverse global and domestic developments, Taj GVK registered a significant growth of 22 per cent in gross income at Rs 65.19 crore over the previous year's figure of Rs 53.64 crore and a net profit of Rs 8.77 crore (Rs 4.53 crore).
On the key factors that helped the company register such an unusual growth, the Taj GVK official said it was largely due to synergies of operating three hotels at three different tariff bands in close vicinity. Apart from leveraging its dominant presence in Hyderabad, Taj GVK also centralised certain key service departments and renovated its main hotel, Taj Krishna, which resulted in a high level of occupancy. Another major factor that helped the company register substantial growth in net profit was a sum of Rs 4 crore received as compensation for transfer of the air catering business to Taj SATS Air Catering Ltd, he said.
Admitting that the badly affected global tourism industry could have an impact on the company's performance in future, the official said, "In view of the uncertainty in the inflow of foreign investors and tourists due to various incidents in the subcontinent, our company has strategised to target the domestic tourist and corporate accounts. As a part of this strategy, we have decided to explore newer markets. This was the reason why we bid for the Chandigarh hotel."
Further, he said, "The city of Hyderabad continues to grow with lot of developmental activities taking place and more being in the offing. While the IT industry is yet to recover from the recession, other industries such as biotechnology, pharmaceuticals, IT-enabled services and back-office services are thriving.''
``The State, by its dynamism, is also attracting the big corporate houses into Hyderabad. We expect all these factors to help grow the demand for rooms and food & beverages segment."
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