Taj Hotels to sell Taj Boston
The 114-year-old company is planning to sell the Taj Boston, one of its three US-based properties, for $125 million. This will be the seventh exit (international and domestic), including exit from management of hotels, in the past two years. Two years ago, IHCL had sold the loss-making Blue Sydney in Australia for Rs 180 crore.
Acquired 10 years ago, Taj Boston remained a loss-making property for the third consecutive year last year, forcing IHCL to explore liquidating options. The company has been struggling to bring down its debt, which stands at Rs 5,000 crore.
IHCL has been under financial duress for the past three years. High finance costs have eroded margins, even as the company struggled to erect new properties under the luxury Taj banner and rescued stuck old projects such as the Sea Rock project in Bandra, Mumbai.
While the new Taj hotel opened outside the domestic airport terminal in Mumbai a few months ago was the first Taj property opened in five years, the Sea Rock project is stuck because of failure to secure environmental clearance.
IHCL’s new CEO Rakesh Sarna had indicated last year the company wouldn’t shy away from exiting ventures which are a drag on its balance sheet. In February this year, IHCL partly divested stake in Bermuda-based Belmond (formerly Orient Express Hotels) at a loss for Rs 81 crore after years of overtures for a buy-out remained fruitless. The company has, however, expressed its willingness to continue to manage the Boston property after its sale. “The company intends to negotiate a divestment whilst retaining the brand presence on the hotel on terms to be agreed,” the statement added.
The Mumbai-based company, which has brands like Taj, Vivanta by Taj, Gateway and Ginger, recorded its fourth consecutive consolidated yearly loss for the year ended March 31.