The Tata Group’s digital push through its super app Tata Neu is being increasingly leveraged by group companies, and the Indian Hotels Company expects the app to contribute nearly a third of its enterprise revenue.

Taj InnerCircle, Indian Hotels’ global loyalty program, has already migrated to NeuPass. It received nearly 12 per cent of its enterprise revenue through the loyalty program- which is seen rising to 30 per cent with NeuPass.

In an interaction at the Jefferies India Forum 2023, the management of Indian Hotels indicated that it was actively leveraging the Tata ecosystem to cross-sell and expand its brand coverage, and this includes Tata Neu. Earlier, the company said it would be expanding its hotel portfolio to destinations covered by Air India, Vistara and places where there is a higher concentration of the Indian diaspora.

Its focus, especially in its international expansion, is on an asset-light strategy and currently, about half of its portfolio in volume terms is through management contracts. In the next two-three years, it expects a 50 per cent mix in management contracts on an operating basis as well.

Positive outlook

As part of its focus on an asset-light model, the company plans to keep its balance sheet relatively leverage-light as well, spending selectively on greenfield projects. It is maintaining strategic reserves of ₹750 crore for contingencies. The company spent close to ₹430 crore in FY23 and capex in FY24 is estimated at ₹550 crore and remain at that level over the next two years.

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While the Taj brand is its flagship brand, its budget range Ginger is rapidly scaling up. Its operating margins are expected to top 50 per cent over the next three years.

Indian Hotels’ average room rates crashed over 50 per cent cumulatively during the pandemic years but it recouped in FY22 and last year it rose 56 per cent on a low base, while in the current year, rates are seen rising more modestly at 10 per cent.

The company operates over 260 hotels in 12 countries and 100 locations. In FY23, it reported a net profit of ₹1,000 crore on revenue of ₹5,810 crore.

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