The Hindu Business Line : Indian Hotels net rises to Rs 22.31 cr

INDIAN Hotels Company Ltd (IHCL), on Thursday, reported higher profit after tax of Rs 22.31 crore for the second quarter as against the previous corresponding Rs 3.48 crore.

Sales and other operating income increased to Rs 172.81 crore (Rs 137.56 crore for the year ago period). Other income was Rs 9.17 crore (Rs 5.75 crore).

IHCL had a profit of Rs 16.58 crore on sale of investments, which were gains from sale of shares in TCS. While most components of its expenditure remained under control, `other expense' rose to Rs 74.30 crore (Rs 51.17 crore).

This was attributed to the impact of increased operating expenses in line with higher sales including, a provision of Rs 5.85 crore as `mark to market' of IHCL's foreign currency assets and liabilities and an increase of Rs 5.19 crore in fees paid to consultants.

Mr Anil P. Goel, Senior Vice-President (Finance), said the higher interest of Rs 7.87 crore (Rs 6.01 crore) in the quarter was mainly due to the commissioning of Wellington Mews and the impact of incremental funding. At half-year level, interest was again up to Rs 16.92 crore (Rs 12.58 crore) due to the benefit of lower LIBOR rates in the previous fiscal.

"The tourism industry has benefited from the buoyancy in the market. We are very bullish about the future as we go into the second half," Mr Raymond N. Bickson, Managing Director, IHCL, said. The first half is typically the weaker half for the industry.

While no forecast of the company's growth in FY05 was provided, senior officials said overall foreign tourist arrivals for the first half was up 25 per cent and already 40 per cent of the total inflow seen in FY04, had landed. "We expect the growth rate in arrivals seen for the first half to continue into the second as well," Mr Ajoy Misra, Senior Vice President (Sales & Marketing), said.

The demand-supply equation is also holding well for the industry, no reports yet of big inventory chunks scheduled for addition to supply. The position varies from market to market and Bangalore maintains its strong position from the perspective of room rates.

According to him, on a like-to-like basis, the room rate at Indian hotels is attractive in a regional context.

The benefit of higher ARRs and occupancy was across IHCL's hotel categories.

Occupancy for the quarter touched 68 per cent (62 per cent) and for the first half, 66 per cent (61 per cent), ARR was Rs 4,559 (Rs 3,815) and Rs 4,530 (Rs 3,824) and REVPAR, Rs 3,080 (Rs 2,375) and Rs 2,979 (2,329).

IHCL currently has a room inventory in excess of 8,000 rooms. This should be at least 10,000 plus over the next couple of fiscals. The idea is to double the company's size over the next five years.

This fiscal so far, it has added 534 rooms and renovated 353, the process nearly bringing to a close IHCL's first round of expansion and renovation. Last fiscal, it spent Rs 120-130 crore on this programme and this fiscal expense for the same should be in the "the three digit" realm.

The company, which recently entered into a marketing alliance with Raffles International, hopes to sign one or two more such alliances soon besides a tie-up with a luxury cruise line, Mr Bickson said.

IHCL continues to pursue its plans for overseas acquisition with equity partnership mooted in China, London and New York and sliver equity or property management in other geographies.

"By this time next year, at least 10 IndiOne hotels should be up," he said. The target for that segment is to add 11-12 hotels every year and attempt taking the concept overseas once the required critical mass is achieved in the domestic market, possibly in another two years.

Currently, all investment for IndiOne comes from internal accruals. "We will address the issue of long term funding as we go along," Mr Goel said.