Taj Hotels, one among India’s biggest hotel chains, is getting to expand its portfolio of properties by 36 percent to 300 within the next 3-5 years, a serious chunk of which can come up under its asset-light strategy.
This expansion will add about 80 properties for the Tata Group-controlled Indian Hotels Company (IHCL) that currently has a listing of 221 properties including 150 operational ones in India, 21 abroad and 50 within the pipeline.
Puneet Chhatwal, director and CEO, IHCL said, “If we could add 70 contracts during and pre-pandemic in three and half years, there’s no reason why we can’t add another 80 within the next 3-5 years. So, our portfolio then becomes a portfolio of 300 hotels.” Chhatwal told inventors and analysts at the Investor Meet 2021 held a couple of days ago.
About 94 percent of IHCL’s properties within the pipeline are under the asset-light category, during which a corporation doesn’t purchase land or the building but takes it on management contract and runs the hotel in exchange of management fees. Thus, the asset and its liabilities are on the books of the asset investor.
By the top of next 3-5 years IHCL will have 46 percent of its properties under management contract, 36 percent held by group companies and 18 percent under company , consistent with a presentation made by IHCL.
The 6 percent (of the pipeline) represents only a few properties, just like the under construction Santacruz property which isn’t on the sunshine model. we’ve a couple of of these exceptions and that they are good to possess because they’re to create our brands for the longer term . they’re those which are getting to drive these brands and help within the repositioning of those brands going forward,” Chhatwal added.
From Rs 190 crore in management fees clocked in FY17, IHCL improved it to Rs 219 crore in FY20. In FY21 the fees collapsed to only Rs 89 crore thanks to the pandemic. However, IHCL has forecasted that fees would rise to Rs 350 crore within the next 3-5 years.
Ginger, the foremost affordable of the four main hotel brands of IHCL, could get the utmost chunk of the longer term pipeline of properties. From 78 properties presently IHCL targets to possess 100-150 properties under the Ginger brand. Ginger has undergone a repositioning and is now categorised as ‘lean luxe’ instead of ‘budget’.
Currently, the Taj brand has the utmost share of IHCL’s operational hotel portfolio in India with 63 properties and a share of 42 percent. But after the addition of fifty new properties from the pipeline Ginger will emerge because the largest brand with 78 properties and a share of 39 percent.
