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East India Hotels
East India Hotels operates luxury hotels under the Oberoi and Trident brands in India and other countries. It has over 30 hotels, and is also engaged in flight catering, airport restaurants, travel services, and car rentals. The company aims to create value for shareholders and meet guest expectations through excellent service. It faces competition from other hotel chains and seasonal demand fluctuations. Analyst reports predict a strong recovery in hotel demand as the economy improves. EIH has a sound balance sheet and strategic partnership that position it well for future expansion.
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East India Hotels
- 1. EAST INDIA HOTELS Group D10 GabrielaD’cunha – 14052 Genevieve Nora Dias – 14053 Jovita Francy Dcosta – 14056 Manisha Kumari – 14058 Mario Allen Clement – 1
- 2. CONTENT East India Hotels Associatesand Subsidiaries Mission Business Plan External Analysis & Internal Analysis SWOT Analysis SWOT Matrix Porter Five Force Strategies over the Last 5 Years Competitive & Future Positioning Future Predictions – Crisil and Analysis 2
- 3. EAST INDIA HOTELS EIHLimited is a public limited company. Operates hotels and cruisers in five countries. Under the luxury ‘Oberoi’ and five-star ‘Trident’ brands. Also engaged in : Flight catering. Airport restaurants. Travel and tour services. Car rentals. Project management. Corporate air charters. 3
- 4. Business Hotels LeisureHotels Cruises 5 Star Hotels The Oberoi, New Delhi The Oberoi Amarvilas The Oberoi Vrinda Agra The Oberoi Rajvilas Chennai The Oberoi, Mumbai The Oberoi Udaivilas The Oberoi Philae Bhubaneshw ar The Oberoi Vanyavilas Gurgaon The Oberoi, Bangalore Wild Flower Hall, Shimla The Oberoi Zahra Jaipur The Oberoi Cecil, Shimla Mumbai (2) The Oberoi Grand, Kolkata Mena House Oberoi Udaipur The Oberoi Sahl Hasheesh Cochin The Oberoi, The Oberoi, Bali 4
- 5. ASSOCIATES AND SUBSIDIARIES EIH FlightServices Limited EIH Holdings Ltd EIH Flight Catering Services Limited Oberoi Turtle Bay Limited EIHH Corporation Limited, EIH Investments NV, EIH Management Services BV, PT Widja Putra Karya, PT WakaOberoi Indonesia Company Associates : EIH Associated Hotels Limited L&T Bangalore Airport Hotel Limited Golden Jubilee Hotels Limited Oberoi Mauritius Limited. Company Subsidiaries : Mercury Car Rentals Limited Mashobra Resort Limited Oberoi Kerala Hotels and Resorts Limited 5
- 6. MISSION Our Shareholders - Asa result, we will create extraordinary value for our shareholders. Our Distinctiveness - Together, we shall continue the Oberoi tradition of pioneering in the hospitality industry, Striving for unsurpassed excellence in high- potential locations all the way from the Middle East to the Asia-Pacific. Our People - We are committed to the growth, development and welfare of our people upon whom we rely to make this happen. Our Guests - We are committed to meeting and exceeding the expectations of our guests through our unremitting dedication to every aspect of service. 6
- 7. Mahindra Holidays and ResortsIndia 36% East India Hotel 30% ITDC 31% Leela Hotels 3% Share Price 7
- 8. • Trident • Oberoi •Reliance Key activities • Housekeeping & Hospitality • Flight catering • Airport restaurants, Travel & tour services • Car rentals Key partners Cost structure • High fixed costs • High variable costs Key resources • Learning & development • Employee engagement • Training to employees BUSINESS PLAN 8
- 9. Customer segments • Nichesegment • Tourist & Coastal areas Channels • Newspapers • Company Website Revenue streams • Restaurants • Rooms • Halls Value proposition • Unique offering • Customer expectations Customer relationship • Good service • Complimentary services 9
- 10. EXTERNAL ANALYSISOpportunities Increase room occupancy Useof energy efficient equipment’s Smart marketing and sales strategies Opening luxury properties Threats Seasonal Demand Competition Government/Authority INTERNAL ANALYSISStrengths Asset light model Effective communication Innovation Loyal customers Diversified portfolio Strong Weakness High rental cost Over leveraged financial position Little target Poor record keeping Domestic market force Lack of Low cost lifestyle brand 10
- 11. Strengths One of theIndia’s oldest hotel Cost control Tie ups Loyal Customers Dedicated staff Innovation Opportunities: Opening Luxury properties Partnership with Reliance Increase room occupancy Use of energy efficient equipment’s Smart marketing and sales strategies Weakness: Failure in Investing in Real estate. Huge-Debt from building Threat Approval from environment authority Seasonal demand SWOT SWOT ANALYSIS 11
- 12. SWOT MATRIX STRENGTHS Costadvantage Asset light model Loyal customers Diversified portfolio WEAKNESS Lack of Low cost lifestyle brand High rental cost Little target Poor record keeping OPPORTUNITIES Growth in tourism Occupancy rate is growing Higher collaboration Entry into new markets SO Strategy High-expected growth rate is a good opportunity to open new hotels in the luxury sector for foreigners. WO Strategy Opening lower budgets hotels in tier 2 and tier 3 cities which can also help focus on middle class segments, also acquiring low budget hotels as collaboration opportunity is high. THREATS Higher training cost Increasing competition Political Turbulence Supplier switching cost ST Strategy Can utilize the strength of having loyal customers by delighting them with good offers which will increase their customer satisfaction WT Strategy The quality and availability of supplier services and equipment is essential to the hotel, the hotel is also labor intensive. Staff are strongly influenced by the quality of the service provided. Hence 12
- 13. PORTER FIVE FORCE NewEntries-Moderate Low cost switching Industry is capital intensive Legal and financial complexities Power of supplier-Moderate There are no substitutes. Customers are fragmented Quality of the service provided Power of buyers- High Low cost switching Price-sensitive Offering discounts Threat of Substitutes- Moderate Brand loyalty of customers Rivalry-High Offer same service at cheaper rates Intense competition 13
- 14. STRATEGIES IN DEPTH Faces adirect completion form its competitors Taj hotel Hyatt Grand LeMeridien Raddisson Hotel Marriott Hotel Marketing strategy's - is to communicate the unique set of services Direct the focus of their guests to the issues Quality Value for the money 14
- 15. 4 P’S OFMARKETING Product/Service High-quality facilities Exemplary personal service Differentiated from competition Personalized service for corporate traveler Price Pricing strategy has been consistent To provide added value Reasonable rate Against devaluing their servicesPlace Service information is provided to the guest: Personal selling Direct marketing Advertising and the Internet. Delivery channels include: Travel agents International reservations Promotion Focus on mass communication Via print ads: Trade publications The Internet Direct mail campaigns Personal selling 15
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- 17. FUTURE PREDICTIONS Expect strong recoveryin demand with rebound in economy Business segment contributes larger proportion of total revenue Around 60% of rooms directly 44% of rooms are located in business destinations Sound balance sheet remains key positive for future expansion reduced its debt drastically through asset sale The company also has a strategic partner, Reliance Industries Capturing long term potential; maintain BUY 17
- 18. Profit and lossstatement Rs. Crore (Year-end March) FY 14 FY15 FY 16E FY 17E Total operating income 1539.1 1623.7 1737.4 1888.5 Raw material Expenses 218 227 227 246 Employee expenses 410 422 434 472 Other Exp 585 633 678 737 Total operating expenditure 1213.1 1282.7 1338.6 1455.0 EBITDA 326.0 341.0 398.8 433.5 Depreciation 134.9 134.5 141.6 152.2 Interest 52.7 50.4 43.9 36.3 Other income 38.7 39.1 40.3 41.6 PBT 177.1 195.2 253.6 286.6 Others (8.0) 5.6 4.9 15.3 ICICI ANALYSIS OF EIH 18
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- 20. 20 CRISIL OPINION AggregateRevPARs across 12 Indian destinations increased. Room demand is estimated to have grown by 10 per cent. Foreign tourist arrivals increased by 7 %to 7.5 million in 2014 North American and Western European countries. Room additions increased by 8 per cent y-o-y in 2014-15. Demand in both business and leisure destinations (2014-2015)
- 21. CHARACTERISTICS OF THE INDUSTRY 21 66 76 66 6260 56 57 56 57 60 74 70 80 85 77 59 54 52 50 55 50 67 76 75 Jan feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec %Demand Seasonal Demand (2014) Business Destination Leisure Destination
- 22. HOTEL PERFORMANCES The foreigntourist arrivals (FTAs) grew by 9.2 % (y-o-y) “Electronic Travel Authorization” enabled “Travel visa- on-arrival”. 44 countries as against earlier TVoA scheme for 12 countries. Premium segment hotels located across 12 key destinations in India. 22 0% 20% 40% 60% 80% Occupancy Rate 0 2000 4000 6000 8000 10000 Average Rooms Rented/Per Day (Rs) 2014/2015
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