Tata Group-backed Indian Hotels Company (IHCL) is investing heavily in its new ventures, expecting annual growth of 35-50%. The company is also exploring an ambitious expansion for its reimagined Ginger brand as part of its strategy to accelerate growth.

Diversification and New Revenue Streams:

The strategic rationale behind new businesses is to cater to India’s diverse market while diversifying IHCL’s revenue streams. This includes focusing on non-linear revenue growth, capital-light ventures, and high-margin businesses, according to Puneet Chhatwal, Managing Director and Chief Executive.

IHCL’s new businesses include the reimagined Ginger, Qmin, ama Stays & Trails, and the Tree of Life brand.

“We are tapping into new segments, such as homestays, which were previously less popular. We are catering to young, hassle-free travellers who prefer simple, clean rooms without the extra cost of amenities like swimming pools or spas,” he said. “The potential for Ginger in India ranges from 500 to 1,000 hotels over the next 10 to 15 years. It’s a high-margin business due to its variable cost model, which makes it more resilient in times of crisis. Investments can be made through revenue sharing or leasing, avoiding the need to lock capital in a single large asset,” he added.

Strong Performance of New Ventures:

IHCL’s new businesses grew by 37% in the June quarter, surpassing the 5-6% increase in the core enterprise. These ventures accounted for 12% of IHCL’s consolidated domestic hotel revenue.

As of the end of July, the company’s portfolio includes 225 operational hotels and 109 more in the pipeline. The Taj brand features 119 hotels, while SeleQtions, Tree of Life, Vivanta, Gateway, and Ginger have 38, 17, 51, 17, and 92 hotels, respectively, in operation and under development. IHCL plans to open 25 new hotels this year, including the reimagined Gateway brand. The company aims to expand into tier II and III cities with its Gateway and Ginger brands.

Last month, IHCL signed two hotel agreements in Bahrain and may add a hotel in Southeast Asia within the next two to three years, according to Chhatwal.

“Southeast Asia is highly relevant for outbound Indians, and we currently lack a presence there. We are also considering adding a hotel in another Western location, in addition to the Frankfurt property opening in September. Potential options include Switzerland or another Western European site to complement our presence in the UK. However, any international expansion will be through iconic Taj properties,” he added.

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Opportunities in Spiritual Tourism:

Domestically, spiritual tourism represents a significant opportunity, said Chhatwal. “We are consistently focusing on spiritual tourism because it is highly crisis-resistant, especially in the current climate. We have 70 properties in spiritual and religious destinations across more than 55 locations,” he added.

Chhatwal noted that the biggest shift in moving from Taj to the Tata Group founder’s philosophy for Indian Hotels has been the creation of a house of brands catering to various locations and states.

“We aim to offer something for every state, city, and district, ensuring we are in the right location with the right brands,” he said. “Despite a challenging first quarter, we expect double-digit top-line growth for this financial year, with July showing over 20% growth.” Chhatwal added that investing in promoting India and reviving campaigns like ‘Incredible India’ or ‘God’s Own Country’ for Kerala can significantly enhance India’s global image, not only as an economic powerhouse but also as a cultural unifier in times of geopolitical uncertainty.

He stated that the hospitality industry has been advocating for infrastructure status, aligning with the government’s emphasis on infrastructure development.

“It would be beneficial if the development of six-lane highways, the revitalisation of train stations, and the UDAN scheme were integrated with the needs of the hospitality sector. This alignment doesn’t need to wait for budgetary announcements; it can happen at any time,” he added.

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