Low demand hits room rates, profit: Hotel Leela's Nair

Economy slowdown and terrorist attacks have not only affected the Hotel Leela Venture's room rates and profits, but have also impacted its future growth plans, CP Krishnan Nair, Chairman Emeritus and Founder, The Leela Palaces, Hotels and Resorts told CNBC-TV18 today.

"We are unable to meet the commitments of developments, commitments of moving forward and the plans we had set were put in cold storage," Nair said.
The debt-laden hospitality company has however now pulled up its sleeves to chart a strategy for turnaround. To pare a debt of around Rs 4750 crore in its book the company plans to sell many of its non-core assets and individual luxury projects.
Nair said although the company was not planning to sell any hotel at this moment it is ready to sell a part stake and also to undertake management contracts. Below is the verbatim transcript of the interview Q: The terrorist problems and the slowdown in the general environment led to a situation of supply exceeding demand in the hotel industry. When do you think this imbalance will be corrected?
A: I agree with you there was a terrorist problem and also the slowing down of the economy. However, it is a passing phase. It is a cyclical. So, I am not losing confidence in the ability to resurface again in our industry. However, one has to be very patient. The slowing down of the economy and the terrorist attack brought down our rates low and our profits down and we are unable to meet the commitments of developments, commitments of moving forward and the plans we had set were put in cold storage. However, it is now reviving. Q: If that is the case can you give us an idea of how much room rents have risen or how much occupancies are at in your marquee properties?
A: Our Mumbai hotel has 100 percent occupancy. Almost out of seven days, five day we have 100 percent occupancy. Then of course something less during Friday, Saturday and Sunday but again they come up, that is the scenario. Whereas resorts are concerned we are having 100 percent occupancy almost all the time. Q: In the past few years your finances have weakened considerably, are you open to selling any of your properties?
A: We have not considered selling any hotel. However, if proposal from interested parties to have sharing of 74 percent and 26 percent, we are up for it. Also, a management contract for 30 years minimum. We are not in a hurry, there are many options.