Indian hospitality companies are trying out various ways to pare debt, mostly holding up expansion plans this year, after some firms had to restructure loans. In the past year, a slew of firms such as Royal Orchid Hotels Ltd,Hotel Leela Venture Ltd, Kamat Hotels India Ltd and Neesa Leisure Ltd opted for corporate debt restructuring (CDR).

Bangalore-based Royal Orchid Hotels is the latest to have applied for CDR after its board of directors in January agreed to a debt restructuring. The company is also planning to divest a hotel to reduce debt this year, which stands at Rs.150 crore, chairman and managing director Chander Baljee said.

“In 2013-14, we are looking at consolidation, and expansion would only be in the form of taking up new hotels on management contracts, in which there is zero capital required,” Baljee said in an interview.“Once the scheme is approved, you get a breather, and the debt repayment schedule gets an extension.”

Last September, Kamat Hotels was admitted under the CDR mechanism and this January, the salient feature of the final CDR package was discussed, where the mandates from a few lenders were received and other lenders were asked to submit their mandates soon.

Even when the hospitality industry underwent a slowdown in the past two years, many hospitality firms went for expansions. Project costs overran, primarily due to delays, but hotel companies still invested in opening new properties, causing a setback for many due to lower demand as per a Mint Report.

(You need to login first to read complete news).
New User? Register for FREE!
» Back to Travel News