Hotel wars flare up, Tata's demanding an apology

New Delhi, Dec 20: The tussle between the two hospitality majors--Orient Express Hotels (OEH) and Indian Hotels (IH)--is expected to intensify after the Tata's demanding an immediate apology from the luxury hotel chain.

Indian Hotel Vice Chairman R K Krishna Kumar has written to OEH President and CEO Paul White, terming his December 10 letter to the Indian Hotels as 'pejorative, inaccurate and libellous.' ''We ask the OEH to publish a formal apology to Taj using the same channels used to publicise its letter to Taj Hotels, including posting the apology on its website,'' Mr Krishna Kumar said in his letter.

The battle broke out in September after the Indian company bought 10 per cent stake in the overseas chain.

IH had sought a partnership or alliance with Orient Express, which was refused by Orient Express. IH later increased its stake to 11.5 per cent and sought yet another meeting to discuss a partnership.

This time, OEH not only dismissed the offer but also said that it saw no value in joining hands with a predominantly Indian company.

''We do not believe that there is a strategic fit between your predominantly domestic Indian hotel chain and our global portfolio of luxury hotels and unique travel experiences, and we do not wish to be involved in an attempt to improve the performance of your non-Indian properties.''Mr White had said in his letter earlier this month.

The letter added that any association of our luxury brands and properties with your brands and properties would result in a reduction in the value of our brands and of our business and would likely lead to erosion in the RevPar premiums currently achieved by our properties,'' On Wednesday, Mr Krishna Kumar issued a point-by-point rebuttal and slammed OEH's management style and corporate governance practices and said that it has ignored the interests of class A shareholders.

OEH has two classes of shares A and B. The Class B shareholders have more rights and powers than the class A shareholders.

''It is our firm belief that OEH has an entrenched board and management that does not meet the needs of its shareholder base nor respect the most basic tenets of corporate governance .

It is noteworthy that OEH began meaningfully engaging with shareholders only after IHCL acquired a significant stake in the company ,'' Mr Kumar has said.

He also dismissed OEH allegations that Taj was trying to use OEH to improve its international properties and or would drop the OEH name and incorporate the Taj brand name.

UNI