Nita Ambani with P.R.S. Oberoi in Calcutta on Tuesday. Picture by Kishor Roy Chowdhury
Calcutta, Aug. 7: Mukesh Ambani’s Reliance Industries and the Oberois of EIH Ltd may kick off their partnership at an operational level two years after the former picked up a strategic stake in the hospitality chain.
Reliance is planning to develop a 15-acre plot in Navi Mumbai to build a hotel along with service apartments, leaving the management of the properties to the Oberois.
“We are thinking about a fourth property in Navi Mumbai. The land belongs to Reliance. They will build the hotel and we will manage it,” P.R.S. Oberoi, chairman of EIH Ltd, said after the 62nd annual general meeting where Nita Ambani, wife of Mukesh, participated for the first time as a director.
For the Oberoi group, which owns and operates the Oberoi and the Trident chain of hotels, including the Grand in Calcutta, it will be the fourth property under the Trident brand in Mumbai. “We have seen the property. It is very good. But when it would be ready depends on Reliance,” EIH vice-chairman S.S. Mukherjee said. The hotel is likely to have 160-180 rooms and is expected to do well in the absence of similar properties in the area.
Reliance, through its wholly owned subsidiary Reliance Industries Investment and Holding Pvt Ltd, had picked up 14.12 per cent in EIH in 2010. The move was widely seen as an attempt to thwart the possibility of a hostile takeover by tobacco-to-hotel major ITC, which holds 14.98 per cent in EIH.
Nita Ambani was incorporated as a non-executive director on the EIH board in October. Reliance later increased its holding in EIH to 18.53 per cent.
There is a possibility that EIH may get to manage more hotels built by Reliance. EIH wants to follow an asset-light model whereby its partners will develop and own properties, leaving the management to EIH. Though the company has lined up quite a few expansion projects, Oberoi said business was not looking good. “The hospitality industry’s performance is directly related to economic growth and investor confidence. Unfortunately, the economies on which we depend are shrouded in uncertainty.”
The company’s projects in Bangalore and Goa and are yet to get environmental clearances, and the proposed 18-room jungle lodge at Kabini in Karnataka could face trouble, following the ban imposed by the Supreme Court on tourism in the core areas of tiger reserves. The company’s 25-room property at Ranthambhore National Park could also be impacted. Mukherjee, however, seemed hopeful.
New hotels in Hyderabad and Dubai are likely to become operational by the end of this year. The company is also scouting for opportunities in Ahmedabad and Shanghai in China.
EIH is also exploring possibilities to revive operations at its hotel, The Mount Everest in Darjeeling.