TravTalk India Online Magazine
IHCL’s ‘Accelerate 2030’ strategy will be to expand its brandscape with new brands and new segments, build on its legacy of globally acclaimed service excellence, focus on doubling growth in consolidated revenue to Rs.15,000 crore and doubling its portfolio with over 700 hotels – all while staying net cash positive.
Hazel Jain
Announcing IHCL’s comprehensive strategy for 2030, Puneet Chhatwal, Managing Director and Chief Executive Officer, IHCL, revealed that the group will expand its brandscape, double its consolidated revenue with a 20 per cent return on capital employed, and grow its portfolio to over 700 hotels. It will also double its consolidated revenue to Rs. 15,000 crore, scaling new and re-imagined businesses to over 25 per cent share of revenue.
After the COVID-19 pandemic, IHCL recovered from the losses to make `1,450 crore profit, with 10 consecutive quarters of record-breaking results. What was a `4,000-crore topline consolidated revenue company turned to `7,000, crore, with doubling of EBITDA. “We went from a `3,000-crore debt to being net cash. We are actually debt-free with the exception of a small debt in our London property,” said Chhatwal.
He added that the group tried to unleash the potential of Indian Hotels Company with Taj being the backbone, continues to be the backbone and will continue to be the most important brand, both within Indian Hotels, as well as the most important brand within the Tata Group. “We have grown our portfolio from 155 to 350 hotels, from operational hotels of 142 in February 2018 to 232 today,” he said.
The future IHCL espies
Speaking about the hospitality sector at large, Chhatwal said, “There are long-term structural tailwinds that have started pushing the sector. If you look at the Quarter 2 results of most of the consumer-based companies, it’s only the hospitality sector that has really shown strong topline growth. This means the sector is beginning to change. It’s not just Indian Hotels. And that is evident because of the size of the economy and GDP growth, which is also leading to strong demand growth. We are yet to witness the increase in foreign tourist arrivals. All this is going to create a strong demand base while the supply remains constrained. It’s not easy to build hotels; it is very complex in nature.”
He explained: “If you look at the number of branded room supply in other G20 countries versus India, we have a very, very long way to go. If supply remains at six to eight per cent and demand is almost double digit, then the fundamentals of the business will be very strong in terms of the topline growth, and the bottom line growth and infrastructure improvement.”
A differentiated strategy
IHCL puts the money where its mouth is. Chhatwal said, “For any flagship location, for any brand enhancing project, we will use our own capital. It’s the right thing to do, especially if you can hedge your portfolio to majority of your business in asset light model, but at the same create value by driving operating leverage in good times when demand continues to outpace supply.”
International growth
He said, “We will only grow with the Taj brand in international gateway locations with the exception of anything which is within two to three hours of flying distance from India.” He added, “Other brands may be relevant; I will not take Ginger to Europe or Switzerland. This is not a part of our strategy. But we will take a Taj to Europe. In fact, we are opening a Taj in Frankfurt in less than 10 months from now.
