Abstract

This case is about the disinvestment of Indian Tourism Development Corporation (ITDC)-owned hotels and the reasons behind the move. Founded in 1966, ITDC is involved in the development, promotion, and expansion of tourism in the country. However, ITDC ran into losses between 1997 and 2001. The case describes the problems faced by the ITDC run hotels and the factors which led to their disinvestment. Lack of leadership, heavy employment costs, rise in availability of overall room supply compared to demand, and a weak global economy were some of the reasons to which the downfall of the group can be attributed. The case also discusses the post disinvestment issues such as resistance from employees, litigation issues, and lack of consensus among officials over disinvestment. The case concludes with a discussion on the future challenges and prospects of the hotel group and the possibility of divestment of the remaining ITDC hotels if efforts to revive them prove futile.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the problems associated with disinvestment of PSUs
• Understand the role of macro-environmental factors in an organization.
• Study the problems faced by ITDC-owned hotels.
• Understand the need to privatise loss-making PSUs.
• Understand issues relating to the disinvestment of ITDC-owned hotels

Keywords

Tourism Marketing, Crisis Management, Disinvestment, India Tourism Development Corporation (ITDC), Tourism Industry, ITDC Hotels, Disinvestment Policy, Privatization, Public Sector Units, Strategic planning