Tata Sons has taken a significant step to support the growth of Indian Hotels Company (IHCL) through a new hospitality asset platform. This strategic move will allow IHCL, which operates the Taj, Vivanta, SeleQtions and Ginger brands, to run hotels on properties directly acquired by Tata Sons, a first-of-its-kind structure within the group’s hospitality history.
Debut project: Ginger Hotel
The platform’s debut project is a 195-room Ginger hotel currently under construction near the Kolkata airport. Tata Sons recently purchased the asset, and once completed, it will be operated by IHCL under a revenue-sharing lease agreement. This marks the first instance of a non-hospitality Tata group entity directly acquiring a hotel asset to be managed by IHCL.
Traditionally, IHCL has followed several models to expand its portfolio, including owning hotel assets, building properties on leased land, entering management contracts, or offering franchises. This new arrangement signals a shift toward a more flexible and capital-efficient strategy.
Explaining the rationale behind the move at a recent, post-earning call, IHCL’s managing director and CEO Puneet Chhatwal said, “Over time, this could potentially lead to the creation of an asset platform, which could become a big strategic enabler for IHCL”.
Capital-Light expansion strategy
The structure benefits both Tata Sons and IHCL. Tata Sons will hold the asset on its books while IHCL will operate the hotel without having to invest capital or assume development risks. “Instead of going with the third-party investors, if the deals have good fundamentals, why not keep it within the group,” Chhatwal added.
IHCL continues to remain conservative with its capital deployment despite ending the April-June quarter with cash reserves of Rs 3,050 crore. It has earmarked an annual capital expenditure of Rs 1,000 to Rs 1,500 crore over the next 2-3 years. This will support the development of new properties, renovation of existing ones, and its ongoing digital transformation efforts.
Among its key projects is the upcoming Rs 2,500 crore Taj Bandstand, a luxury hotel adjacent to Taj Lands End in Bandra, Mumbai, which will offer panoramic views of the Arabian Sea. In addition, two Taj-branded resorts are being developed in the Lakshadweep islands of Suheli and Kadmat, underlining IHCL’s focus on unique leisure destinations.
Commenting on the potential of this internal platform, Chhatwal said, “It is the beginning of a nice journey where Tata Sons would gain from an asset platform, and we gain in doing a revenue share, and we will stay capital-light, but benefit fully without having the other impacts of any kind of development risk, construction risk, delays, depreciations, investments going forward”.
Previously, IHCL had partnered with Singapore’s GIC in 2019 to create a Rs 4,000 crore platform for asset acquisition. That venture was extended by two years after initially failing to close any deals.
With 143 hotels in the pipeline and an ambitious plan to add 30-40 hotels annually, IHCL expects to touch a 400-hotel portfolio by the end of July. It aims to expand to 700 hotels by 2030.
