Hospitality major Indian Hotels (IHCL) will pump nearly Rs 6,000 crore over five years into expansion activities, including a potential acquisition of a chain of boutique hotels.
Speaking to shareholders virtually at the 124th annual general meeting (AGM), N Chandrasekaran, chairman, IHCL, said: “Considering a capital expenditure of Rs 1,200 crore every year, we are looking at almost $1 billion for the next five years.”
From a portfolio of 350 hotels, including more than 232 operational properties across multiple brands, the Mumbai-based company aims to have 700 hotels, including 500 operational hotels by the end of FY30.
The addition to the inventory will see the number of rooms jump to 70,000 by FY30 from over 42,500 presently. While IHCL’s expansion plans will be spread across its brands such as Taj, Vivanta, Gateway, Seleqtions and Ginger, the company is also preparing to add new brands to the basket.
“We cannot expand faster, so, there is an opportunity for a chain of boutique hotels like the Tree of Life. We are looking at acquiring such chains,” Chandrasekaran added.
In 2024, IHCL forged a strategic alliance with the Tree of Life Resorts & Hotels, part of Kolkata-based Ambuja Neotia Group. The chain comprises 16 properties, many of which are located at hilly locations like Dharamshala, Manali, Kumaon and Mussoorie.
IHCL’s expansion coincides with growth plans of its rivals like Marriot, which has built a pipeline of 112 properties across 17 brands taking its total to 158 hotels and a pipeline to hit 270 hotels. From 30,000 rooms, Marriott will have 50,000 rooms by the end of FY30, making India its third-biggest market globally behind the US and China.
Chandrasekaran also said that though investments would be made for expansion, the share of properties owned by someone else but managed by IHCL within its portfolio will rise.
“Some 7-8 years ago, we used to have 5% management contracts and rest owned. We cannot expand like that,” he said.
“We are going to have a composition of 50% owned and 50% management contracts. And eventually, over the next 5-10 years we will settle at 35-40% owned hotels and the rest being management contracts,” Chandrasekaran added.
IHCL is developing a luxury property in Mumbai next to the Taj Land’s End, which will see an investment of Rs 2,500 crore. This 250-key property will be owned by IHCL.
“While we continue to build iconic properties. If we get an iconic location, we will build it ourselves otherwise we will go for management contracts,” he said.