Indian Hotels Company (IHCL) is embarking on a major expansion drive to build a portfolio of 300 hotels. With the worst of the pandemic behind it, Tata group hospitality arm clocks 33 per cent EBITDA margin with 35 per cent EBITDA share contribution from new businesses and management fees by FY 2025-26.

Speaking at the IHCL Capital Market Day 2022 on Monday, Puneet Chhatwal, Managing Director and Chief Executive Officer, IHCL said that during the pandemic, IHCL had to re-imagine its growth strategy. “People often say, ‘don’t waste the crisis,’ we didn’t. We used this time to not only face it, but to reimagine our existing plans and restructure our portfolio. We also created a platform for growth while scaling up of all possible businesses new and traditional businesses.”

Chhatwal said the company has a roadmap with Ahvaan 2025 wherein the company plans to add 300 hotels by 2025-2026. Of these, “Taj is slated to grow to 100 hotels across the globe, while Vivanta and SeleQtions will scale to a portfolio of 75 hotels and Ginger will scale to 125 hotels.” 

IHCL has a portfolio of 236 hotels including 60 under development globally across 4 continents, 11 countries and in over 100 locations. It signed over 100 hotels and opened over 40 hotels in the past five years.

Along with this, the company’s homestay brand will scale up to 500 homestays and IHCL’s culinary and home delivery platform Qmin will expand to 25 plus cities. 

Speaking about the current scenario, Chhatwal said the last month of FY22 did very well, and so have the past few weeks. “With the pandemic out of the way, along with geopolitical issues, the outlook is positive.”

Shedding light on the average room rates and occupancy trends, Chhatwal said that “due to a demand-supply mismatch, I see a scope of increase in occupancies and ARRs across the industry. We too have corrected room rates in the past few months.”

Hospitality companies have traditionally been asset-heavy. In the past few years, they have started moving towards an asset-light model. Speaking about the company’s plans for its portfolio, Chhatwal said IHCL’s goal is to maintain a 50-50 portfolio of owned hotels versus management contract hotels. Currently, 46 per cent of its hotels are management contract hotels while 54 per cent of the hotels are owned. 

IHCL’s chief also said the hotel has an emphasis on sustained revenue growth, cost optimisation and operational excellence. 

Deep-diving into it, Chhatwal explained that IHCL will further strengthen the balance sheet with a focus on free cash flows and be a zero-net debt company. It will also improve its EBITDA margin to 33 per cent. “Of the 33 per cent, 35 per cent EBITDA share contribution will be from new businesses and management fees by FY 2025-26,” he explained. 

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