Royal Orchid to raise room tariff, expand

Royal Orchid to raise room tariff, expand

Mumbai: Royal Orchid Hotels Ltd plans to raise room rentals by 10-15% across its 14 properties in India as demand for business travel rises, a top official said on Tuesday, boosting its shares bucking the broader trend on the BSE.

“We are planning to raise rates from October. We are looking at a 10-15 percent rate hike across the board," president Keshav Baljee told Reuters in an interview.

Shares in the firm added gains to jump to 5.8% before easing to Rs82.25 , still up 4.25% at 2:14 p.m.

The Bangalore-based Royal Orchid, which operates four and five star hotels, currently charges an average of Rs4,000 to 4,200 for its rooms.

“Of course, on a case-to-case and hotel-to-hotel basis it (the increase) will differ. But overall we will have at least a 10-15% hike," Baljee said.

Hotels in India have seen a bounceback in occupancies after a near two-year economic slow-down that hit business and luxury tourism in the country.

“We expect business to be fairly strong this year. It’s been a better year than last. Things are picking up and the season looks good."

The firm, which runs business hotels, had said earlier in the month it had plans to raiseRs150 crore through a share sale to institutions and non-convertible debentures.

The timeframe for the share sale had not yet been decided, he said.

“We have about 1,200 keys under development. The funds will be used for completing the projects for which we have not yet got financial closure," Baljee said, adding he expected total room capacity to double to 2,400 over the next two years.

“Most of the rooms will be added in the next 12-18 months or so".

The firm which has properties in Bangalore, Jaipur, Mysore, Pune, Goa, Ahmedabad and Navi Mumbai is looking to expand in Tier 1 cities as well as smaller towns.

“We are looking at Tier 1 , 2 and 3. We are not such a large company that we can decide to be in every city where we want to be. We have to see where we get the opportunities."

Its website said it had plans to set up new properties in New Delhi, Mumbai, Hyderabad and Shimla.

Indian hotel chains are facing stiff competition from well-known global chains that are aggressively making inroads into the widening domestic market, where demand for rooms far outstrips supply.