Asian Hotels to restructure into 3 companies

Sushil Gupta, MD,Asian Hotels said today in an interview to CNBC-TV18, the company was going through a reconstruction and demerger process, will be divided into three entities. “Restructuring is likely to be over by October, 2009, which will be followed by re-listing of all the three entities,” he said.

He further said the hotel industry was fighting for the infrastructure status for the last two decades. "I hope the government listens because the hotels are a part of the infrastructure," he said.

The accompanying video.

Q: Before we talk about the recovery in your sector perhaps you could tell us what kind of corporate restructuring you are planning. There is some talk that the three promoters want to carve up the properties between each other and therefore it may involve some delisting and re-listing – are those reports true?

A: Yes that is right. The company is under going through a reconstruction and demerger process. I think which is expected to be completed by October. So it will be three hotels, three entities.

Q: Could you just give us a little bit more by way of detail, ofcourse you cannot give us ratios but what are the broad contours of this restructuring, which three, what properties will lay in each of the three properties?

A: Delhi is our major property so that will remain. Mumbai, they have a development opportunity and DIAL Delhi (Delhi International Airport Pvt Ltd) and also at Bangalore. The Calcutta entity will have an opportunity to develop a hotel in Bhubaneshwar. There is some investment in Chennai so that is broadly the current situation is.

Q: What is the time line now between when you de-list and will all three companies re-list?

A: Yes. The process is likely to be completed by end October and then in November the re-listing will start and new listing for the two entities which will be Mumbai and Kolkatta. The rest will be again listed back.

Q: Can you confirm what kind of cash on books Asian Hotels has at this point and how that will be split up between the three entities?

A: Can’t be. The scheme is already on the domain of the stock exchange, it is there. So I do not think there is need to give any additional information on that.

Q: So the listed Asian Hotel’s today will have only the Delhi properties you are saying?

A: Yes. I am sure they also have their plans to develop more properties. I am just telling you the current situation. I think all the three groups should do well and with more investments, more diversification. I think it is a win-win situation as far as the shareholders are concerned and all the promoters.

Q: Last couple of days has been a distinct pick up in hotel stocks. The hope is that with expectations of the economy picking up, it would translate into higher occupancies and room rates for you – have you seen any early signs of that all on the ground?

A: The total arrivals in April 2009 are almost equal to April 2008 so there is somewhat a good sign especially with the government very good mandate, so all these are positive signs. I am sure that the economy should do well and if the economy does well the hotels naturally will do well.

As you say that the hotels are indicators of the state of economy, so I see some positive signs but let us wait till September-October and I am sure things will look much better and clearer.

Q: There is also talk that hotels might be shifted under the category of infrastructure which will bring down lending in tax rates for you – is that a recommendation or a request that a hotel industry has put forth to the government?

A: Well industry has been fighting for that status for almost 2 decades. I hope the government listens because the hotels are a part of the infrastructure. Somehow we are not getting our due. I am sure the new government in place will definitely have a positive view on that, I hope so. If that happens that is really a win-win situation for the industry and also tourism as a whole for the country. Tourism is a great employment generator.

Q: The way things are now do you expect that in 2009 hotels will be able to unravel the discounts which the hotels have been giving to many of their most travelers at the higher end that you think you will be able to unwind those discounts?

A: I do not know. It all depends upon traffic. If you look at the total inventory in India, it is not very high. In the organized sector we have hardly 125000 rooms which is nowhere comparable with other countries. So the inventory is not really large but I am sure the land prices have a little bit corrected so that should give some opportunity to develop more properties. I do not see any issue for the hotel industry. I think it has to go up and up.

Source : Moneycontrol.com