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EIH chairman PRS Oberoi is confident his hotels will survive the downturn

Growth plans making steady progress, current business trends challenging, recovery in the hospitality industry expected in 2010-2011 at the earliest

Addressing the Fifty-ninth Annual General Meeting of EIH Limited (the flagship Company of The Oberoi Group) held in Kolkata today, Mr. P.R.S. Oberoi, Chairman said, “The global financial crisis and the terror attacks on India’s financial capital Mumbai, last November, have resulted in a sharp drop in foreign visitors to India. Several countries issued travel advisories and most companies have curtailed travel. Consequently, the tourism industry is witnessing an unprecedented downturn. Hotel occupancies and revenues have been significantly affected and the Travel and Tourism Industry is experiencing challenging times. The recent H1N1 pandemic could further restrict global travel”.

The Annual General Meeting commenced with Mr. Oberoi paying tribute to the brave members of the Company’s staff who worked tirelessly to save many lives during the terrorist attack on the Company’s hotels in November, last year. He paid homage to staff members, hotel guests and others who made the supreme sacrifice during this tragedy.

Referring to the economic scenario, Mr. Oberoi further pointed out that current business trends were not encouraging. Occupancies, average room rates and revenues continued to fall resulting in lower profitability.

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Consequently, the Company’s performance during the financial year 2008-2009 had not been as good as in the previous year. The Total Revenue was Rs. 1073.06 crores as compared to Rs. 1155.11 crores in the previous year. The Profit before Tax was Rs. 273.26 crores as compared to Rs. 349.84 crores in the previous year. The Profit after Tax was Rs. 170.44 crores as compared to Rs. 217.23 crores in the previous year.

The Company had declared a Dividend of Rs. 1.20 per share.

The results of the first quarter of this year, too, were reflective of the difficult business environment. The Total Income for the first quarter was Rs. 218.10 crores as compared to Rs. 253.12 crores in the previous year. The Profit after Tax was Rs. 19.05 crores as compared to Rs. 38.01 crores in the previous year.

Mr. Oberoi felt that business conditions during the balance period of the current year would continue to be difficult for the hospitality industry.

He expected a revival in the financial year 2010-2011 at the earliest.

Mr. Oberoi further stated although the future outlook looked grim, there are some positive signs. India now had a stable government. He hoped that political compulsions would not stand in the way of more economic reforms. He expected India and China to lead the global economic recovery. He stated that India was seeing some key signs of recovery as the government, despite an erratic monsoon, was projecting an about 7% GDP growth in the current year.

Mr. Oberoi stated that the Tourism Ministry had been proactive and had offered several incentives to foreign travellers. The Ministry had declared 2009 as the “Visit India” year. However, the Government needed to do more as the employment and foreign exchange potential of the Travel and Tourism Industry can help to create economic activity. It was unfortunate that the hotel industry had not been included in the infrastructure sector in the recent Budget.

Mr. Oberoi said The Oberoi, Mumbai was severely damaged by terrorists on 26 November 2008. The restoration of the hotel is making steady progress and we expect to reopen the hotel in the first quarter of 2010.

As the hotel is more than 20 years old, we took a decision to renovate the entire hotel and thus give it a new look. Technology has also changed since the hotel was built in 1986. It is our endeavour to advance this hotel’s technology to make it more contemporary.