Financial Daily from THE HINDU group of publications
Tuesday, Jun 28, 2005
Corporate - Announcements
Taj to manage luxury hotel in New York
Mr R.K. Krishnakumar (right), Vice-Chairman, Indian Hotels Company Ltd, with Mr Raymond Bickson, Managing Director & CEO, at a press conference in Mumbai on Monday to announce the takeover of the management of The Pierre Hotel, New York. Paul Noronha
Mumbai , June 27
TAJ Hotels, Resorts and Palaces, the flagship brand of Indian Hotels Company Ltd, is to re-enter the US market by signing a contract to operate and manage The Pierre, a 75-year-old luxury hotel on New York's Fifth Avenue.
The Taj will take over the property on July 1 from the Four Seasons Hotel, which was running the property under a management contract with the owners, a co-operative of individuals who own residences in the hotel property.
The Taj will pay an annual lease fee of $5 million on the property, which has been taken on lease for 30 years. The hotel has 201 guest rooms including 52 suites.
The management fee will be comparable with the fees prevalent across the world, said Mr Raymond N. Bickson, Managing Director, Indian Hotels Company Ltd (IHCL).
This is the fourth management contract the Taj group has signed for an international hotel property this year, after the ones in Bhutan, Langkawi (Malaysia) and Dubai.
According to Mr R.K. Krishnakumar, Vice-Chairman, IHCL, the contract signed for the New York property fell in line with the group's strategy to internationalise its operations.
"The Tata group has decided to globalise its operations as part of its strategy to defend its home operations," Mr Krishnakumar said at a media briefing here on Monday.
The Taj group will continue to work on its global expansion strategy, which may see it acquiring properties in the gateway cities of Europe, North America, and China, he said.
Indicating a preference for the management contract route to expansion, Mr Bickson said, while global management contracts account for 12-14 per cent of revenues currently, the group was looking to increase this to one-third of total revenues over the next five years.
On future expansion, he said the group was considering an airport hotel at Santa Cruz, in the suburbs, on land currently occupied by its Flight Kitchen. The group is also looking at airport hotel properties in Hyderabad and Bangalore, said Mr Bickson. The group will invest around $35 million on renovation of The Pierre, which will be opened to the public next year, he said.
The deal is significant since the New York market is competitive and the US is the Taj group's second largest market after the UK and Europe, said Mr Bickson. The renovation will be financed with the proceeds from its FCCB (Foreign Currency Convertible Bonds) issue.
Having established its presence on the East Coast of the US, the Taj group is also looking at properties on the West Coast, including Los Angeles, company officials said.
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