Indian Hotels Company Limited (IHCL), the country’ largest hotel chain and owners of Taj, is “poised” for growth, in the backdrop of infrastructure development in India, said Puneet Chhatwal, MD and CEO, of the Tata-owned hospitality arm. His confidence is backed by the increase in average room rates, a diversified portfolio, developing infrastructure within the country as well as deeper integration with other Tata Group companies. On the international front, however, the company sees a scope for recovery.
IHCL, posted a 30 per cent jump in net profit in Q1FY24; with key metrics witnessing a significant uptick.
Speaking to businessline,Chhatwal said, “We are seeing an increase in (average room) rate. It was believed that after last year’s pent up (in room rates), the increase in the ARRs would stop. However, if you look at the domestic segment, the average rates for IHCL’s brands are at ₹9,400. For Taj, (ARRs) being way higher than (Rs 9400). Occupancies are at 70 per cent and RevPar ( revenue generated per available room) is at ₹6,500.”
In Q1FY23, IHCL’s ARR was Rs 6800; while occupancy was 62 per cent. RevPar was Rs 4200 per night.
He added that growth was driven by the Group’s diversified hotels portfolio, among other things.
“Our wide footprint helps us to diversify. For example, the flash floods in North India has impacted that segment but we have saw an uptick in other segments. So the outlook remains positive,” Chhatwal said.
In this quarter, IHCL’s guest portfolio was divided between 80 per cent domestic and 20 per cent international.
‘Well positioned’
IHCL’s international operations include 17 hotels and Chhatwal says there is scope of recovery there.
Places like Sri Lanka saw a recovery of up to 50 per cent of pre-Covid levels, “but it is still not where it use to be”. Similarly, San Francisco is facing a city-level crisis, which is impacting numbers.
“The positive side is we see some uptick for travel to places like New York. (And) at some point, they will go back to pre Covid levels, just like others,” he added.
The July - September period is usually a lean period for the hospitality segment. However, over the past two months, players have witnessed some surge in bookings because of pent-up demand and deal-hunters looking to plan off-season travel.
“However, we are very well positioned in terms of brands, portfolio location and pricing which meet all customer prices point and needs. From luxury to homestay to palaces to Ginger to Vivanta, we are very well positioned,” Chhatwal said without giving guidance for the ongoing Q2.
Events, a major boost
According to the company’s annual report for FY23, the hospitality major saw a big “boost” due to the national and international level events happening within the country.
Building the infrastructure capabilities to host large events provide an immediate boost “to the room demand growth”, Chhatwal explained adding that: “These events also host international delegates, which is an additional boost to our forex.”
During a previous interaction the MD and CEO had guided that post the completion of the ECGLS scheme, IHCL may see a few properties on the block for sale. When asked for an update, Chhatwal said: “There are always opportunities. Sometimes it could be a very long journey because they are in the NCLT or other processes around it. We are always looking at synergies with group companies.” But, he didn’t give a timeline on the same.
In May 2019, IHCL, along with GIC, set up a ₹4,000-crore investment platform, with the aim of acquiring fully operational hotels in the luxury and upscale segments in India. The equity contribution from IHCL was set to be at 30 per cent, and the balance would be contributed by GIC.