The hospitality industry in India is making a fine progress and emerging as one of the fastest growing markets in the world. With the entry of the international players the domestic players are forced to ensure better service quality.

The World Travel and Tourism Council, in the "2006 Travel and Tourism Economic Research", is of the opinion that India will be a much sought after destination. The Travel and Tourism industry is to contribute 2.1% to the GDP and is expected to grow up to 2.4% to the total employment in the country.

The Government also has taken lot of positive initiatives like the privatization of the Mumbai airports, and is likely to build a new one in the Hyderabad is likely to improve the link to the hotels. To that extent the Hotel industry need to be recognized to improve the infrastructure of the country.

These favorable factors enabled the company’s income from the hotel accommodation to increase by about 31% to Rs 65.77 crore in FY 2006. In the process, the company turned around and reported profit of Rs 2.90 crore during this period, after reporting losses (after EO) in the previous 4 years.

In the June 2006 quarter the occupancy rate has gone up by 33% and the total revenue of the company has risen by 49% to Rs 30.91 crore. The operating profit has improved by 115% to Rs 3.36 crore in the quarter. As a result, the loss for the quarter came down by 8% to Rs 0.45 crore during this period. The company is hopeful of reporting better profit in the current year, over the previous year, barring unforeseen circumstances.

Moreover the hospitality industry is based on the season in the cities. To that extent the company is expanding to acquire various other hotels in various cities in the country, thereby creating a balance and diversification. The company has proposed a merger with the Indus Hotels Corporation, which owns four hotels namely, Trident Hilton located at Agra, Jaipur, Udaipur, and Cochin. Two more hotels namely Trident Hilton, Bhubaneshwar and The Oberoi Cecil, Shimla are in the process to be acquired and are in the high court for approval, thereby increasing the number of hotels to 8 from 2. The company is to share the skilled labor and the geographical spread to immunize the losses faced. Of the 8 hotels 7 are to be directly owned and the remaining 1 is to be indirectly held by the company. As a result the company has to increase its borrowing power to Rs 300 crore from the current borrowing power of Rs 125 crore.

On addressing to the queries P.R.S. Oberoi informed the shareholders that the increase in the director’s fee had been due to the extra meetings held than usual for discussing the merger proposal.

If crude prices continue to surge then it can affect the hospitality industry due to the subsequent increase in the fare of the airline tickets. As a result, the possibility of reduction in the number of visitors is not ruled out.

On the positive front, the company’s occupancy rates are rising, which can continue, barring unforeseen circumstances. Coupled with various initiatives like merger of hotels in other cities together can facilitate it to report better profit in the current year, over the previous year.