Hotelier PRS Oberoi has said that 60% of his business will come from management contracts in 10 years as the group shifts focus away from owning real estate.
Oberoi has plans to develop some of land he already owns – in Goa, for instance – and expand his international business.
“But I have no plans to compete with international players in the mass segment in India. I want to be the best, not the biggest.” His business will remain confined to the five-star first-class (Trident) and luxury (Oberoi) segments.
The Oberoi group’s flagship company EIH owns around 30 hotel properties, which it runs under the Oberoi and Trident brand names. EIH has recently begun to take up hotels on management contract, wherein hotel companies operate their brand in properties owned by someone else for a fee. EIH is currently taking up contracts at a fee of 12-16% of profits, Oberoi said.
India is one of the fastest growing hotel property markets in the world behind China, and has seen many international hotel chains entering with their brands across the band – from budget to five-star categories.
The last two years have been tough for the industry, and EIH also had to suffer due to the financial downturn. “This winter has been reasonably good. Most hotels met their budget. Hopefully, the business will be better than expected.” He blamed the global financial crises including those in Greece, Ireland and Portugal behind the negative sentiment.
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