Indian Hotels Company (IHCL) will invest `500 crore every year for expansion of hotel chains and set up three hotels every two months, even as it is on track to reach a total of 300 hotels by 2025. The country’s largest hospitality chain posted a 403% surge in consolidated net profit for the December quarter, its highest-ever for a three-month period.
“We are investing about `500 crore per annum in our assets to renovate, expand or build new properties. This is our own money. Further, the owners who work with us on a management contract, will be also investing, which will much more. We are also in line with our guidance to achieve the 300-hotel portfolio as we are looking to open 18 hotels a year, which would be about three hotels every two months,” MD and CEO Puneet Chhatwal said.
“India is growing faster than other countries, and there is a demand from second- and third-tier cities. The country is also hosting a lot of sporting events and travel has also been on the rise post Covid. So that’s really where demand is coming from,” he said, adding that expansion plans would be across the length and breadth of the country.
The company would also look at opening hotels in West Asia, Europe and other places globally identified as gateway destinations.
The Tata group company, which had acquired the Sea Rock Hotel in suburban Mumbai’s Bandra area in mid-2009, is inching close to opening it up as discussions with the government were “positive”. IHCL expects to get permission to build the hotel, which had run into regulatory hurdles, by December 31.
In May last year, IHCL announced plans to expand its portfolio of hotels to 300, achieve Ebitda margins of 33% and get a 35% Ebitda share contribution from new businesses and management fees by FY 2025-26. Further, the company would increase the number of its Ginger hotels to 125.
The guidance was under ‘Ahvaan 2025’, IHLC’s growth strategy, under which the company intended to restructure its portfolio.
“On Ginger, we have reached a milestone of 85 hotels, and are well-placed to meet the targets”.
IHCL, the company that runs brands such as the Taj, Vivanta, SeleQtions and Ginger, and quick services restaurant concept Qmin, recorded a consolidated net profit of `383 crore for the December quarter, which is a 5x jump from `76 crore in the year-ago period, and was higher than any full-year net profit.
The company’s consolidated revenue rose 54% to `1,744 crore from `1,134 crore recorded during the year-ago period. The company’s Ebitda stood at `655 crore, a 90% rise from the year-ago quarter.
The growth drivers included a strong demand in the third quarter, with both leisure and business hotels in key domestic markets reporting occupancy of over 70% and a rate growth of 27% as compared to pre-Covid levels.
Its iconic brand Taj reached a portfolio of 95 hotels and more than doubled its room inventory over the past five years, while the company has also increased average room rates (ARR) by 27% compared with pre-Covid levels, he added.
A consensus estimate of Bloomberg analysts was expecting the firm to post a consolidated net profit of `280.30 crore (7 brokers) on consolidated revenues of `1,561.10 crore (9 brokers).