Disinvestment of ITDC Hotels

Disinvestment of ITDC Hotels
Case Code: BSTR480
Case Length: 14 Pages
Period: 1997-2015
Pub Date: 2015
Teaching Note: Available
Price: Rs.500
Organization: India Tourism Development Corporation (ITDC)
Industry: Tourism
Countries: India
Themes: Tourism Marketing, Crisis Management, Strategic Planning
Disinvestment of ITDC Hotels
Abstract Case Intro 1 Case Intro 2 Excerpts

Background Note

After the Non–Aligned Movement conference in 1956, tourism was recognized as a viable source for the economic growth of India by the first prime mister of independent India, Pandit Jawaharlal Nehru. He wanted to set up big and luxurious hotels to cater to the needs of foreign dignitaries visiting India. In 1964, the government set up three firms, India Tourism and Hotel Corporation; India Tourism Corporation Ltd., and India Tourism & Transport Corporation. In 1966, ITDC was formed through the merger of Janpath Hotel India Ltd. and India Tourism Transport Undertaking Ltd. It was incorporated with the objective of developing and expanding tourism infrastructure in the country and thereby promoting India as a tourist destination. ITDC was started with an initial capital of Rs50 million, which was later increased to Rs350 million and Rs600 million in 1973-74 and 1981-82 respectively.

During the 1960s and 1970s, the hotel industry in India became a lucrative option as it had prospects of earning a high level of foreign exchange and of serving as a direct and indirect source of employment. Moreover, with the entry of private players such as the Taj Group of Hotels, Oberoi Hotels & Resorts, and the ITC, competition intensified. Attracted by the lucrative hospitality business, ITDC stepped into the hotel business with the purchase of Hotel Chola in Chennai in 1975.....

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