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Ginger Hotels to spearhead IHCL’s aggressive expansion plan, anticipates surge in new business revenue

Ginger Hotels, the value brand of Indian Hotel Company (IHCL), will lead the growth of new businesses as it embarks on an aggressive expansion plan, including establishing a presence in all the 800-odd district headquarters in the country, a top executive said.

Deepika Rao, Executive Vice President for New Businesses and Hotel Openings at IHCL, anticipates substantial growth for TajSATS, its airline catering business. This growth is projected to contribute significantly, causing the share of new businesses in IHCL’s top line to more than double to 25% over the next few years from the current 11% in the December quarter.

“These two will lead the growth momentum both in terms of revenue and profitability,” she stated.

Continue Exploring: IHCL’s Ginger brand expands portfolio with larger hotels as demand grows

Other new ventures of IHCL include the food delivery service Qmin, the membership-based business club Chambers, and Ama Stays & Trails, a collection of cottages, bungalows, and villas.

Taj SATS is projected to achieve a revenue of INR 1,000 crore in FY25, compared to INR 650 crore in the 12 months ending January. While airlines will remain the primary focus, Qmin has the potential to serve as a brand for TajSATS’ institutional catering, she noted.

Over the last four to five years, TajSATS has branched out into non-airline ventures, entering the quick service restaurant arena with Starbucks and Chayos as its patrons.

Rao mentioned that with Starbucks nearing 1,000 outlets nationwide, TajSATS will likewise expand its operations as the coffee giant continues to grow.

Regarding Ginger Hotels’ expansion strategy, she stated that the chain currently operates 63 hotels with an additional 27 in development. Under the company’s strategic vision, Ahvaan, Ginger aims to achieve a portfolio of 125 hotels by FY26. This expansion follows an asset-light model, where larger projects with over 300 rooms typically operate under management contracts, while smaller ones with up to 80 rooms are leased for up to 30 years. Approximately 30% of Ginger hotels are managed, while the remaining properties are either owned or leased.

“If there’s one brand in the IHCL portfolio that can travel across the length and breadth of the country with the right size, it’s Ginger,” Rao said.

Competing with InterContinental Hotel Group’s Holiday Inn Express and Accor Group’s Ibis, the hotel brand owned by IHCL subsidiary Roots Corp maintains an average daily room rate of INR 6,500.

The number of rooms in Ginger hotels varies from 80 to over 300, depending on the specific micro-market where they are located.

Continue Exploring: IHCL accelerates portfolio expansion, aims for 300 hotels in the next 3-4 months

In early 2019, Roots Corp repositioned Ginger as a ‘lean luxe’ brand, transitioning it from an economy-oriented identity to a lifestyle-focused one.

The move has paid off.

Ginger Hotels’ revenue surged to INR 336 crore in the nine months of FY24 ending in December, up from INR 238 crore for the entire FY20. Similarly, earnings before interest, taxes, depreciation, and amortization (EBITDA) increased to INR 123 crore from INR 55 crore during the corresponding period.

Rao conveyed confidence in the hotel chain’s ability to sustain its 30% revenue growth rate. She noted that nearly two-thirds of the portfolio has already transitioned into lean luxe, with the remainder expected to be completed by the end of the next fiscal year.

“Whenever we have converted from the old avatar to the new re-imagined one, we have seen an uplift in the rate by at least 30%.”

The in-sourcing of food and beverage (F&B) has also contributed to revenue growth and improved the customer experience. The all-day dining restaurants in Ginger have been rebranded as Qmin.

“The new business has started stitching together,” Rao said. “Almost 50-55% of the Rs 100-crore of GMV (gross merchandise value) which Qmin is expected to have by end of the year, will now come from Ginger Hotels.”

She added that as Ginger expands, Qmin will also reap the benefits, with an anticipated growth of at least 20%.

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