The hospitality sector was hit hard by the Covid-19 pandemic. While foreign tourist arrivals still remain below pre-pandemic levels, a strong domestic demand has given the sector a big boost in the last few years. Buoyed by this strong demand, Tata Group-owned Indian Hotels Company (IHCL) is eying a big expansion in the country, while only selectively looking at overseas opportunities. Under the new 'Accelerate 2030' strategy, the luxury hotel chain is looking to double its consolidated revenue by 2030 as well as its portfolio.
The company, which operates Taj and Gateway branded hotels, had reported a strong second quarter with net profit more than tripling year-on-year to Rs 555 crore and revenue rising 28 per cent to Rs 1,890 crore. The jump in profit was aided by strong demand as well as an exceptional gain on the consolidation of TajSATS.
IHCL now hopes to accelerate revenue to Rs 15,000 crore by 2030. In the year that ended March 2024, the company had reported a consolidated total income of Rs 6,952 crore. The company has a portfolio of 350 hotels, of which 232 are operational and 118 are in the pipeline. By 2030, it hopes to scale up its portfolio to more than 700 hotels. It envisages an investment of Rs 5,000 crore over five years as it scales up.
The company is focusing in a big way on expanding in India. IHCL, for instance, is opening two hotels —a Vivanta and Ginger—in Ektanagar, Kewadia in Gujarat. A Taj at Kochi International Airport is also coming up. It has also announced plans to open two Taj-branded resorts in the islands of Lakshadweep.
"The action is here in India. Even the FIIs (foreign investors) are coming and investing in India," pointed out Puneet Chhatwal, managing director and chief executive of IHCL.
"India's economic growth has a direct correlation with certain sectors of which hospitality is definitely one of those. The disposable income increase, the per capita income increase, the GDP growth is also leading to very strong demand growth," he said.
The company operates across various brands and segments. While Taj plays in the luxury space, Vivanta caters to the upscale category, while Ginger is more budget-friendly. In the last few years, it has also forayed into homestays with the brand ama. This gives it an advantage to expand into even smaller markets. For instance, there are over 700 district headquarters relevant to Ginger, noted Chhatwal.
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IHCL will also continue to selectively open properties in the international markets. Earlier this year, IHCL opened a new property in Thimphu, Bhutan, and two more hotels will open in the Himalayan kingdom over the next one year. It also has hotels under development in Bahrain, Saudi Arabia and Bangladesh. A new Taj hotel will also open in Frankfurt, Germany. The company will also look at Southeast Asian destinations like Singapore and Thailand, which are popular among Indian tourists.
"We will always look at any opportunities besides places, which are very strong tourism hotspots for people travelling from India or the Indian diaspora settled there," said Chhatwal.
But, "our portfolio as it stands today and as it will be tomorrow, will be 87-90 per cent centered around the Indian subcontinent. The rest will be outside."
He also made it clear the international expansion will be only under the Taj brand.
"We will only go with Taj brand in top international gateway locations with the exception of anything which is within two to three hours of flying distance from India or is within the Indian subcontinent. There some of the other brands may be more relevant but we are not going to take Ginger to Europe or to Switzerland or to Scandinavia or to the US, this is not a part of our strategy," stated Chhatwal.
For some time now, the company has looked at an asset-light model to drive growth and margins. But, being purely asset-light will not work, he said, adding the company will invest its capital for any flagship location or brand-enhancing project, like the Ginger hotel it has opened near Mumbai's airport.
The company also remains open to acquisitions and while the company will be "prudent" on raising debt, it may look at it should there be any compelling opportunity.
Earlier this November, IHCL signed a deal to run the historic Claridges Hotel in New Delhi under a 25-year management contract starting April. The Claridges is an iconic property in Lutyens Delhi and will help the company up its brand presence in the national capital. IHCL has also acquired a majority stake in Rajscape Hotels Private Limited, which owns the brand Tree of Life Resorts and Hotels. Tree of Life had 19 properties across 16 locations in the country, with a revenue of Rs 23 crore last year.
Enthused by the company's strong performance, IHCL's shares have been lapped up by investors this year. On Tuesday, the stock hit a record high of Rs 760.75 in intra-day trading on the BSE, before closing at Rs 753.40, up 2.2 per cent from the previous close. So far in 2024, IHCL shares have surged 72 per cent.