Indian Hotels Company (IHCL) is set to achieve a milestone in its portfolio expansion, with plans to reach 300 hotels in the next three to four months, as stated by IHCL MD and CEO Puneet Chhatwal.
“Under our Ahvaan 2025 strategy, we had previously set the target of reaching the 300 hotels mark by 2025-2026. We are signing about 2.5 contracts a month besides opening 2 hotels a month. That is accelerated. In aspiration 2022, we had said we will open 15 hotels a year,” he said.
In January, IHCL stated that its portfolio of 285 hotels includes an additional 85 hotels in the pipeline.
Tata Group backed IHCL has recorded a revenue from operations of INR 1964 crore for the quarter ended December 31, 2023, reflecting an 18% growth compared to the corresponding period in the previous fiscal.
The hospitality chain announced a profit after tax of INR 477 crore, registering an 18% increase compared to the quarter ending December 31, 2022.
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“Our management fee income should close at around INR 450 crore by the end of this fiscal year. It wasn’t even INR 200 crore five to six years ago,” said Chhatwal.
“Between, 2009-2017, the chain clocked an average of 13.6% EBITDA margin, and our guidance now is 33%. That is a big increase. So, the reason is the change in the business model. We’re driving strong operating leverage through asset management in existing hotels and through management contracts, and innovation in new businesses,” he added.
He mentioned that Indian Hotels is a debt-free company with robust cash reserves, strategically positioned for both organic and inorganic expansion.
“The cash flow that we have created was INR 1000 crore last year. Given the trends that are seeing, that should be more this year,” he said.
“Undoubtedly, we will maintain our leadership. We have 85 hotels in the pipeline, so even if we stop signing any new contracts today, we will still end up opening two hotels a month for the next three years,” he added.
The company has inked deals for properties in Ayodhya under its Vivanta, Ginger, and SeleQtions brands. Additionally, Chhatwal mentioned that there are ongoing considerations for a Taj property in the same destination.
“Nobody covers spiritual destinations like we do and our focus will only grow stronger. Out of the 285 hotels in our portfolio, 66 are in spiritual destinations,” he added.
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He stated that India is experiencing economic growth, emphasizing a direct link between the expansion of GDP and various consumer sectors, including hospitality, airlines, and restaurants.
“Venues such as Bharat Mandapam, Yashobhoomi and the Jio World Centre will keep having events The government spends on infrastructure, and schemes such as UDAAN scheme and PRASHAD are also opening up new opportunities,” he said.
“There has also been a change in consumer behaviour since Covid. People are taking off on long weekends and we didn’t have this concept of a drivecation before. We never saw such a strong ability to be able to charge more in the domestic market before Covid. We used to rely on the foreign customers before,” he added.
Chhatwal, who serves as the President of the Hotel Association of India (HAI), anticipates that rates will remain elevated, and hotel occupancies are expected to stabilize at high levels from 2024 to 2035.
“There’ll always be some headwinds, some dips. But the sector is very well positioned to cope up with difficult situations. When you come from zero revenue during the lockdown to this far, it shows the ability of the sector to prove its resilience and resurgence at the same time,” he said.
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