Suri ropes in Inter-Continental

However, government sources said Bharat Hotels has put in an application with the industry ministry seeking approval to enter into a marketing agreement with Inter-Continental.

Sources said that Bharat Hotels will retain management control of the five-star hotel, unlike its agreement with Hilton. Bharat Hotels tie-up with Hilton International lasted over two years against the original 25-year term.

Bharat Hotels’ agreement with Inter-Continental will be for a period of 10 years.

Sources said as per the agreement, Intercontinental will collect 1.5 per cent of revenue earned per room.

Interestingly, Inter-Continentalwill be the third international chain to have entered into an agreement with Bharat Hotels in the past three years. Bharat Hotels had entered into the agreement with Hilton in 1995, after severing ties with Holiday Inn Crowne Plaza. For Inter-Continental too, this would be the third Indian partner. The hotel chain had earlier entered into agreements with the Oberoi and Taj group of hotels which were not renewed after expiry of their term. Inter-Continental had also entered into an agreement with M S Shoes East for a five-star hotel.

However, Inter-Continental terminated the agreement after the allotment of hotel site was cancelled by Housing & Urban Development Corporation UK-based Bass PLC which owns the Holiday group had recently acquired the entire business of Intercontinental, including its hotel brands Intercontinental and Forum and its hotel assets.

Company sources ascribed the break-off with Hilton to management control not being up to the promoter’s expectations, including a shortfall in thebudgeted earnings. Company sources said there was a shortfall of over Rs 12 crore in operating profits in financial year 1996-97 which was likely to touch Rs 40 crore for the current fiscal. As per the unaudited financial results of the company for the six month period ending September 30, the net profit had dipped to about Rs 13.5 crore from Rs 18.3 crore in the corresponding period of last year.