The agency has upgraded the company’s short-term rating to ‘ICRA] A1+’ from ‘ICRA] A1’.
ICRA stated the upgrade in the ratings of Oriental Hotels (OHL) factors in the improvement in the credit profile of The Indian Hotels Company Limited (IHCL), and OHL’s operational performance with higher accruals from the company’s recently renovated and upgraded properties, and anticipated sustenance of the same, given a steady demand outlook for the Indian hospitality industry.
The ratings continue to factor in OHL’s strong parentage with IHCL holding a 28.5% stake in it, as of 31 December 2025.
OHL has strong operational and financial linkages with IHCL and enjoys financial flexibility and lender comfort owing to its parentage. Further, IHCL is expected to extend timely and adequate financial support to OHL, in case of any requirement.
The ratings also factor in the well-established market position of OHL’s properties, especially the flagship ones, in their respective cities, although the revenues remain concentrated in the Chennai market.
The ratings remain constrained by OHL’s moderate scale of operations and coverage metrics, despite improvement in the recent years.
The favourable demand outlook for the hospitality industry, stemming from stable demand across segments as well as the demand-supply gap in terms of capacities across major cities would continue to augur well for the company.
However, like other players in the industry, OHL’s revenues would remain exposed to industry cyclicality and seasonality, macro-economic downturns, and other exogenous factors.
Considering ongoing sizeable debt repayments, ICRA expects the coverage metrics to remain moderate in the near term, although they are likely to improve gradually over the next couple of years with scheduled repayments and pre-payments based on cash accruals.
Oriental Hotels is an associate of The Indian Hotels Company, and operates seven hotels in South India, with an aggregate inventory of 825 rooms as on date. The hotels are operated under the IHCL brands viz., 'Taj’, 'Seleqtions’, 'Vivanta’ and 'Gateway’.
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