Bigwig hospitality players open to management deals to limit debt exposure
Indian and international luxury hotel chains are apparently open to management deals to avoid getting into a debt trap.
Highlighting the hospitality majors’ apparent preference for a contract route to limit debt exposure, Raymond Bickson – Managing Director of Indian Hotels Company – said that his company is ready to take over the management of the hotels of Sahara Group via management contracts, but is not ready to purchase its distressed assets or set up greenfield hotels.
In a recent reporting of Indian Hotels Company’s quarterly results, Bickson said that the company’s balance sheet clearly shows that it is “not that rich to buy the Sahara Group hotels.” However, Bickson also added alongside the company would be “happy to manage properties for them (Sahara).”
With the hospitality major bogged down by debt and widening losses every consecutive quarter, most of the 14 new hotels planned will be on management contract rather than being fresh projects.
Among the other bigwig hospitality players turning to management deals to pare debt, the BSE-listed Leela Palaces & Resorts has taken back its Kovalam property – which it had sold, to reduce debt – on management contract. The company is currently looking to sell its Delhi and Chennai properties, and is willing to go in for management deals for these properties.
Similarly, EIH (Oberoi group) has also decided to put future properties under management contract, so as to evade a debt situation.
Source – The Hindu Business Line
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