Lap of luxury & light on assets

Agencise
New Delhi, July 24:
Recently, when PRS 'Biki' Oberoi invited media to announce the accolades that one of his opulent properties had won on a global platform, everybody was thinking more about the (uncomfortably high) stake of rival ITC in the Oberoi Group's flagship company East India Hotels (EIH). Silencing rumour mills, Oberoi, chairman & CEO of EIH, indicated that the plan to get Max India promoter Analjit Singh on board had been shelved and clarified: "We have 46.4% (in EIH) and there is no plan to sell any stake." Yet, industry watchers are still speculating about the group's future. The most pertinent question is the group's succession plan; essentially who the 81-year old Biki chooses-son Vikram or nephew Arjun-to take up the mantle. However, it's business as usual at the group's 28 odd hotels and three luxury cruisers.

Asset-light model
The company, with its two brands, Oberoi and Trident, is looking at staying asset-light or focusing on management contracts rather than owning and operating luxury properties. So far, Trident Gurgaon was the only managed property in its portfolio. Biki Oberoi recently said that the group will focus on more management contracts, as done by most hotel companies worldwide.
In sync with this vision, the company holds only minority stakes in most of its properties which are coming up. The group will add five properties in the next two years. The Gurgaon property, which Oberois are betting big on, is a management contract. Similarly, the two properties coming up in Hyderabad, with a total investment of Rs 650 crore, are a joint venture with Jubilee Hotels, with Oberoi investing just Rs 44 crore. Both international properties at Dubai and Morocco, are long-term management contracts, with Oberois holding only a minority stake.
The hotel chain's president Liam Lambert says that in the current market, it makes sense not to invest in building hotels. "With management contracts, we can grow faster and at a lower risk, though we are open to joint ventures and even acquisition of properties," he says.
The brand has definitely grown stronger. It is giving tough competition to homegrown ITC Hotels and Taj Group's Indian Hotels, besides MNC hotel giants expanding in the country. "Oberoi hotels is a very strong brand and they train their people really well. We closely follow what they do and learn from them," confesses the India head of a global hotel company expanding in India after opening a few properties.