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ITC Welcomegroup and Sheraton Hotels & Resorts
 May Part Ways After 30 Years
By Sudipto Dey, The Economic Times, India
Knight Ridder/Tribune Business News

Jan. 6, 2006 - NEW DELHI -- The 30-year-old marriage seems to be on the rocks. ITC Hotels and Starwood Hotels & Resorts, the holder of Sheraton brand, after one of the longest associations in the hospitality sector have not yet extended the current contract which expired on December 31.

ITC Welcomegroup and Sheraton Hotels & Resorts jointly manage 10 properties in the country, the latest being the ITC Grand Central Sheraton & Towers at Mumbai. The alliance kicked off in 1975 with ITC-Welcomegroup Chola Sheraton in Chennai.

All that senior executives from ITC Hotel are willing to concede is that the relationship is being re-assessed and negotiations in this respect are currently on. They, however, refused to give a time-frame by when the contract could be renewed. Industry sources indicated that both parties have over the last few months are exploring possibility of entering into alliances with other hospitality groups.

However, analysts point out the outcome of the "re-assessment" process will depend on how they visualise their future. "I would be very surprised if they break-off completely," said a Mumbai-based analyst who tracks the hotel sector.

Interestingly, the re-assessment of relationship between the groups comes at a time when both are in an aggressive expansion mode -- ITC Hotels within the country and overseas, and the US-based Starwood group within Asia.

ITC Hotels have earmarked around Rs 6,000 crore towards the expansion of hospitality division over the next five years, with plans to invest in the hotel sector in Britain. ITC has already announced plans of opening two super-luxury hotels in Chennai and Bangalore with an investment of Rs 1,000 crore over the next one year.

Meanwhile, the US-based hospitality major has already made a solo foray by bringing to India its Westin brand in association with the Vatika group at Gurgaon. Scheduled to open in '07, the five-star deluxe hotel with 300 rooms, five dining outlets, retail outlets, health and spa center, involves a project cost of around Rs 350 crore. This will be the first brand from Starwood Hotels in India under management contract. Industry sources said that Starwood group is also in talks with other hotel groups in India.

Other brands in its portfolio includes St Regis and Four points by Sheraton. In the last year Starwood Hotels expanded its portfolio in Asia by opening five new properties, with plans to add 23 more over the next four years. The group manages over 750 properties across 80 countries around the world, which includes over 3.3 lakh rooms.

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To see more of The Economic Times, or to subscribe to the newspaper, go to http://economictimes.indiatimes.com

Copyright (c) 2006, The Economic Times, India

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