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Indian Hotels Vice-Chairman Seeks Apology from Orient Express
Hotel's CEO Paul White For Putting Taj Hotel's
Business in Poor Light
The Economic Times, IndiaMcClatchy-Tribune Regional News 

NEW YORK: 20 Dec, 2007 - Tatas have sought an apology from Orient-Express Hotels for its "libellous" remark that sought to show the Indian conglomerate's hospitality business in poor light. 

In a strongly worded letter to OEH's CEO Paul White, Indian Hotels Vice-Chairman R K Krishna Kumar said that "the purpose of this letter is not to pursue a dialogue directly with you but instead to set the record straight on our intentions in approaching your company." 

The Indian Hotels executive added that given Taj Hotels' reputation as one of the world's most trusted brands in hospitality, he felt compelled to correct the misinformation that has been circulating in the news media as a result of the letter written by White. 

White in a letter to Indian Hotels had said that tying up with the "predominantly Indian" hospitality firm will erode the US hospitality chain's brand image. 

"We ask that OEH publish a formal apology to Taj Hotels using the same channels that OEH used to publicise its letter to Taj Hotels, including posting the apology on its global web site," Kumar said. 

"Taj Hotels is a proud Indian company, and it will persevere with its global expansion strategy. Indian companies will continue to play a meaningful role in the ongoing global economic integration... Enterprises and individuals must... adapt to these fundamental economic changes... those with a fossilised frame of mind risk being marginalised." 

Queries sent to White's office remained unanswered and officials at his London office said he had gone on leave and would not return until January 2. White's letter had triggered strong reactions from the Indian industry and government officials, who cautioned against any move to sabotage Indian companies' global expansion plans. 

Kumar's letter, dated December 19 and a copy of which was filed with the market regulator Securities Exchange Commission in the US where OEH is listed, came in response to a letter written by White on December 10, in which he had rejected an alliance proposal from Tatas. 

"Having received and carefully read your letter dated December 10, my initial reaction was one of surprise. I could only infer from the language and tone of the letter, which was highly misinformed and unduly aggressive, that it could not have been written by a senior member of OEH's management team and supported by the company's Board," Kumar said. 

Kumar wrote further, "I thought perhaps it was written on your behalf by an over-zealous adviser and released before it was properly vetted by your office. However, as time passed and your team commented publicly about the letter and its contents, it became clear to me that this letter was indeed written with your full consent." 

"This was extremely distressing to me, as Indian Hotels found the letter to be pejorative, inaccurate and libellous," he noted. 

Kumar said that he had proposed a meeting only to explore the identified opportunities for working together and any "responsible company would have engaged in a conversation with its single largest shareholder, which we are." 

Taj Hotels acquired a 10 per cent stake in OEH in September and subsequently increased it to 11.5 per cent. 

"Taj Hotels invested a considerable amount of time and resources based upon our belief that working together would yield better value for both organisations. We acted in the mistaken belief that your Board recognised its fiduciary duties and would act in a responsible manner to begin a dialogue with us," Kumar said. 

He clarified that Taj Hotels has never suggested a merger and also rebuffed Orient's claims that Taj Hotels was interested in an alliance for improving the performance of its own non-Indian properties. 

A review of publicly available data for respective North American properties shows that OEH's average room rates are meaningfully below those of Taj Hotels properties, Indian Hotels said. 

"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. As an example Taj Hotels and Dubai Holdings, the two largest public shareholders of OEH, have been unable to enter into any meaningful dialogue with the OEH Board."
    Ref: PMW\zy
    Please reply to:
    20 Upper Ground
    London SE1 9PF
    Tel: 0207 921 4023
    Fax: 0207 921 4723
    Mr R K Krishna Kumar
    Vice Chairman
    The Indian Hotels Company Limited
    The Taj Mahal Palace & Tower
    Apollo Bunder
    Mumbai 400 001
    December 10th, 2007
    Dear Mr Kumar,
    As President and CEO of Orient-Express Hotels Ltd., I wish to
    acknowledge your recent filing of Amendment No. 1 to Schedule
    130 stating that you and your affiliates are the beneficial
    owners of 11.5% of Orient-Express' Class A Common Shares.
    As you are fully aware, we have previously advised you that
    Orient-Express has no interest in pursuing the proposals
    described in your letter of November 14, 2007. We felt that
    our prior correspondence with you was sufficiently clear in
    communicating our position on this matter, but because you
    have again expressed an interest in a transaction with Orient Express,
    we feel it is appropriate to outline some of the
    reasons why we do not wish to pursue your proposals.
    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. We believe 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
    Further, your approach to branding, whereby longstanding
    individual hotel brands are replaced with the "Taj" brand is
    contrary to our approach, whereby we develop and enhance
    individual hotel brands and ultimately extend these hotel
    brands to additional properties. Accordingly, it remains the
    opinion of our Board of Directors that your proposal is
    inconsistent with our business strategy and is not in the best
    long-term interests of Orient-Express and its shareholders.
    Paul M White
    President & CEO
    Orient-Express Hotels, Trains & Cruises
    Cc J B Hurlock
    Orient-Express Hotels


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