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BL Research Bureau

EIH has terminated its co-branding and marketing alliance with Hilton International Co for the Trident Hilton brand in India, but this may not have any immediate implications for the former’s earnings.

EIH operates eight Trident Hilton properties in India, which are positioned at the five-star segment and cater to business and leisure travellers.

EIH has decided to pursue the development of its Trident brand independently and has hence terminated its agreement with Hilton. The latter has itself been on an expansion drive in India, tying up with real estate developers such as DLF for the development of hotel properties.

The Trident Hilton properties, which account for about 45 per cent of the total rooms operated by EIH, will be renamed as Trident with effect from April 1, 2008.

While EIH manages all the Trident Hilton properties, the ownership of six lies with its 36 per cent subsidiary EIH Associated.

With the termination of the alliance with Hilton, will there be a significant impact on the occupancies of Trident Hilton properties? According to the company’s presentation, in the first nine months of FY 07, Trident Hilton properties, excluding the ones at Mumbai and Gurgaon, had an average occupancy rate of 50-60 per cent and average room rate in the Rs 2,000-3,000 range.

The occupancies do not appear to have significantly improved since the alliance with Hilton.

This seems to suggest that there may not be a significant impact on operating performance.

However, this could also be because of a higher proportion of leisure destinations under the Trident Hilton fold. EIH does have plans to open Trident Hotels in cities such as Hyderabad and Bangalore, which are big business traveller destinations.

With significant room supply expected to come in over the next two years in these cities and the growing presence of international chains, an association with a reputed brand such as the “Hilton” would have lent it an edge.

While the Oberoi brand is well established, EIH would have to step up investments in building the Trident brand.

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