Mumbai-based Indian Hotels Company (IHCL) subsidiary Samsara Properties has sold a 1.24-percent stake in Belmond (formerly Orient Express Hotels) for $11.96 million (Rs 81.32 crore). IHCL, which owns and operates hotels and resort properties under Taj, Vivanta by Taj and Gateway in India and overseas, had reportedly been looking to exit Belmond for some time.
According to the Business Standard, the sale price is "substantially lower" than what IHCL paid for acquiring shares between 2008 and 2010, when the price of Belmond shares were around $35 per share, an all-time high. Today, the average price is $9.4 per share, a significant drop not just from the high, but from the $12.63 per share offered by IHCL to buy Belmond in 2012. IHCL has collectively paid over Rs 1,000 crore for the Belmond shares over the years.
Post sale, Samsara Properties continues to hold 5.73 percent of the Class 'A' Common Shares of Belmond. The company reportedly intends to exit Belmond completely.
IHCL exited management contracts in Dubai and Morocco and sold a property in Australia in 2014. It also exited management contracts in Jodhpur and Ahmedabad in 2015. The company has posted loses for three consecutive years ending March 31, 2015. During the last three quarters of 2015, the company posted a loss of Rs 8.81 crore as high finance costs continued to erode margins.
The Business Standard noted that following last year's Marriott-Starwood merger deal created the largest hotel chain in India in terms of inventory, IHCL dropped to second place. Every small and major foreign hotel brand are forging new partnerships for expanding in India putting pressure on players like Taj.