Completing its portfolio with a four-star offering for tier-2 and 3 cities, Indian Hotels Company on Thursday re-launched its Gateway brand of hotels in a new avatar. In an interaction with FE, managing director and chief executive officer (CEO) Puneet Chhatwal said “with Gateway we have completed our portfolio”.
Upscale, full-service hotels, Gateway launched in five locations simultaneously – Bekal, Nashik, Conoor, Madurai and Chikmagalur. From 17 hotels in the next 24 months to 100 properties with over 2,000 rooms by 2030, Chhatwal said the process will be a combination of capital-light and capital-heavy strategy with an allocation of about Rs 500 crore in five years for the brand.
Chhatwal said all this will come from internal accruals and not debt. “From Rs 3,600 crore in debt, we are today in a position when we are not only debt-free, but also sitting on similar proportions of cash. However, we don’t want to blow up this cash, and will have a prudent strategy for each property, be it revenue sharing or managing it.”
Already making inroads into tier-2, 3 cities with its lean-luxe Ginger brand, which has 95 properties till date, IHCL is following it up with a more premium offering in Gateway. The company operates luxury hotels under the Taj brand, and boutique offerings under the SeleQtions brand. Initial destinations for Gateway include Aurangabad, Sarnath, Thane, Barnala, Calicut, Varkala and Gandhidham.
“These are all upcoming areas of the country, where people have high aspirations and money too. They want quality and branding when they look for options for weddings, banquets, etc. The success of Ginger and Vivanta brands has given us courage to bring Gateway out of the drawer and launch it in a re-imagined avatar,” he said, adding, “We will offer the brand in metros too. Goa, Rajasthan, Delhi and Mumbai will also happen soon. The brand cannot be built without these cities.”
So does this mean that the luxury segment is saturated in terms of more openings, as all hospitality brands have extensively penetrated every city having the potential for luxury accommodation? “Yes and no,” said Chhatwal. “Thirty years back Mumbai had only about 3-4 luxury hotels. Today, IHCL alone has more in the city. As the Indian economy rises, places that were not considered destinations for luxury are now not only demanding it, but affording it too. Sales will keep growing as infrastructure and cities grow,” he said.
Growth in hotel rooms in the first quarter of this fiscal has mainly come from smaller cities, with only 0.6% share coming from top eight cities. And, India is seeing more demand for hotel rooms than there is supply. The compound annual growth rate for hotel rooms is 8%, lower than the actual demand that is expected to grow at a CAGR of 10% till FY27.
Commenting on the company’s focus on smaller cities, Chhatwal said: “Pre-pandemic we went international shopping. It was more exciting to talk of a Pierre in New York than a Ginger in Agartala. Some great ideas for domestic growth got left behind. But post-Covid, is a different story.”
At the same time, the company is expanding globally too, with a Taj property set to open in Frankfurt in 2025. “We are looking at perhaps another hotel in UK, and one in Switzerland. In south-east Asia, Singapore is an important market. Bali as a destination is also attractive,” said Chhatwal, adding that expansion is happening in the sub-continent too, with upcoming properties in Bhutan, Dhaka and Sri Lanka.