Orient Express Hotels of Britain battles largest shareholder
By Heather Timmons
Thursday, December 20, 2007
NEW DELHI: A war of words is heating up between a British-run hotel company and its largest shareholder, Indian Hotels.
Orient Express Hotels of Britain, parent company of the 21 Club in New York and Venice's Hotel Cipriani, has been ignoring overtures by Indian Hotels for cooperation since it acquired a 10 percent stake in September.
Politicians and the media in India say that racism and old-fashioned thinking are behind the short shrift.
In the latest salvo, the Indian Hotels vice chairman, R.K. Krishna Kumar, sent a letter to the Orient Express chief executive, Paul White, dated Dec. 19 and distributed to the media on Thursday. It charged that the British hotel operator "has an entrenched board and management that does not meet the needs of its shareholder base, nor respect the most basic tenants of corporate governance."
Indian Hotels and Dubai Holdings, the two largest shareholders of Orient Express, have been "unable to enter into any meaningful dialogue" with the Orient Express board, Kumar wrote.
Indian Hotels is owner of the Taj hotel properties and the Pierre hotel in New York, among others, and is part of the Tata Group of companies.
It increased its stake in Orient Express to 11.5 percent last month, but Orient Express has resisted any suggestions that the two chains work together, citing Indian Hotels' provenance.
As developing nations like India enjoy unprecedented economic growth, uneasy cross-border relations and rebuffed overtures will be common, analysts and economists predict.
In November, Indian Hotels suggested that the two chains partner in marketing and purchasing, take minority stakes in each other and that Orient Express manage Indian Hotels properties outside India. In a Dec. 10 letter that is being widely criticized in India, White, of Orient Express, responded that his company did "not wish to be involved in an attempt to improve the performance" of Indian Hotels properties outside India, and that "any association of our luxury brands and properties with your brands and properties would result in a reduction of the value of our brands and our business."
White's letter, which was posted on Orient Express's Web site, drew sharp comments from Indian government officials and media. Kamal Nath, India's minister of trade and industry, called the comments "a mind-set of the past," while some Indian papers accused White of racism. Orient Express's response was "quasi-racism, barely camouflaged in the language of branding," the Times of India said in an editorial.
According to an oft-repeated tale in India, the Taj brand of hotels landmark Taj Palace Hotel in Mumbai was built in 1903 by Jamsetji Tata after he was denied entry to a British-owned hotel in the city because he was Indian. (An Indian Hotels spokeswoman said she believed the story to be true, though she added it was difficult to prove now that the elder Tata is no longer alive.)
In the letter circulated Wednesday, Kumar noted that Orient Express's average room rates in North America are actually significantly lower than Indian Hotels' rates, at $302 versus $383, and that occupancy at Indian Hotels is higher.
Calls to Orient Express were not returned.
"Indian companies will continue to play a role in the ongoing global economic integration," Kumar's letter said. "Those with a fossilized frame of mind risk being marginalized," it said.
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