Vikram O’Brien, the CEO, MD and executive director of EIH Limited, says that India’s luxury hotels are “significantly priced” lower than they should be.
Oberoi is eager to change this.
“Our goal is to drive our rates higherOberoi stated this during Monday’s earnings conference call. EIH Limited owns the Oberoi Hotel Group and Trident Hotels.
Oberoi suggested that the company would even sacrifice some occupancy to achieve a higher price. If demand remains the same as it is, we will continue to raise rates to the maximum extent possible even at the expense of occupancy. As long our RevPAR is growing, I see no reason to change that.
This shifts the focus away from simply filling rooms and towards making each night of accommodation more valuable.
He claimed that hotel prices in India’s most important cities, Delhi Mumbai and Bengaluru are much lower than what quality warrants, especially when compared to other countries.
He said it straight: “You can look online at the top hotels in major cities around the globe. A good hotel costs $1,000 upwards per night. We are well below that threshold. If I then combine that quality with our hotels in India, especially in the key cities of India, I believe there’s a tremendous opportunity to increase average room rate.
Highlights of Financial Performance
EIH’s financial results back Oberoi’s confidence. The company achieved its best performance ever. EIH reported an increase of 13% in EBITDA consolidated year-on-year to INR 11 billion ($135million) for fiscal 2020. Net profit increased by 14%, to INR 7,7 billion ($90m). Revenue from operations rose 9% to INR 25.35billion ($298m) on a stand-alone basis and 10% to INR28.8billion ($338m) on a consolidated basis.
RevPAR, or revenue per available bed (revenue), rose 22% on an annual basis in the fourth-quarter alone across all domestic hotels. Oberoi’s hotels were the leaders, with RevPAR rising by 24%, beating the industry average growth of 16%. They even beat Trident Hotels 22%.
The occupancy rate also increased from 81% to 84%.
The growth was good, even though international operations made up a smaller part of the total. Revenues rose by 10% and EBITDA grew at a similar rate.
Investing in India’s Travel Boom
Oberoi’s bullish outlook also has its roots in the structural changes that have taken place in India’s economic system. “There is an opportunity to increase rates, especially given India’s increasing affluence. And the growing demand for accommodation of high quality,” he said.
Oberoi also mentioned the “significant” changes taking place in India’s economy. According to Oberoi, with the increasing wealth of Indians and their desire for luxury hotels, they are looking for accommodations that offer exceptional service and experiences.
According to reports cited by the company, ultra high net worth individuals in India, defined as those with a wealth of at least $30 million, grew 11% in 2017. Oberoi views this as a major demand driver, particularly in the luxury leisure sector.
The number of domestic travelers is also increasing. The fourth quarter of 2018 saw an increase in air traffic of 9% compared to the previous year. Inbound tourism in fiscal year 2026 is expected to grow by 15%, boosted by India’s growing global reputation and improved infrastructure.
There are 21 New Hotels Coming Soon
EIH hasn’t raised prices just to raise them. it’s also growing its footprint. The company has plans to build 21 new properties in the next 3-4 year (approximately 1500 rooms). Twelve of these properties are located in India.
EIH’s expansion plan includes nine international projectsCruise ships are included. Two luxury boats, including a Nile-cruiser by 2026, will debut in this year. They will be accompanied by properties in Egypt. Nepal. Bhutan. and Saudi Arabia.
Upon completion, 16 hotels (including the boats and cruiser) will operate under the Oberoi brand and 5 hotels under the Trident brand, representing a total inventory of approximately 1473 keys.
The openings in India include Goa and Tirupati. Rishikesh, Bengaluru, and Bengaluru. Oberoi stated that the company was open to brownfield and acquisition opportunities in order to increase growth.
The group operates 4200 rooms in 30 hotels. The domestic portfolio includes around 3,700 rooms, while the international properties account for about 500.
Accommodations Sector Stock Performance Year-to Date
What am i looking at? The performance and stock prices of the hotels and short term rental sector within the ST200. The index comprises companies listed on global markets including international and local hotel brands, REITs in the hotel industry, hotel management firms, alternative accommodation, timeshares and other hotel companies.
The Skift Travel 200 is a 200-page guide to travel. The financial performance of more than 200 travel companies, worth over a trillion dollars, is combined into one number. See more hotels and short-term rental financial sector performance.
Read the full methodology behind the Skift Travel 200.
