Friday, November 8, 2013

India's Tata Group Ends Orient-Express Bid

India's Tata Group Ends Orient-Express Bid

Tata Group, an Indian company, has stopped bidding the ownership of Orient-Express Hotel Ltd. Orient-Express Hotel is a luxury brand in hotel industry. If the purchase could be success, Tata Group will get 45 luxury hotels in 22 countries.

However, Tata Group terminates this transaction. One reason is that the premium is as high as 40%, which they believe is far more than their expectation. The second is the global luxury travel environment.

A company, with business in more than 20 countries, should be organized very well and doing a lot of marketing to support their oversea operation. Nowadays, the global economy is getting worse, especially in Europe where most of luxury travels happen. So it is obvious that the global demand for luxury travel is slowdown. Although the demands will be recovery some day later, it is too risky for Tata Group to purchase a company with 40% premium price but no immediate profit.

The company announced to the public that the reason why they stop this bidding is “deeply unattractive”. We can feel the negative emotion of Tata Group to the high asking price. On the other hand, Tata Group’s executives are clear that under the current environment, they can hardly doing this as a profitable business. 

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