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New financial year to be year of new openings and new signings: Puneet Chatwal, MD, IHCL

IHCL to undertake strategic change in biz models; to simplify holding structure

Tuesday, February 19, 2019, 19:44 Hrs  [IST]
HBI Staff|Mumbai

Riding on the strong PAT for Q3 during the current fiscal along with the improvement in the hospitality environment in the past 20 months, the Indian Hotels Company Limited (IHCL) is hopeful of opening one hotel per month in the next fiscal. 

Talking to the media, Puneet Chatwal, MD & CEO, IHCL, said, "We have signed 20 hotels in the current financial year. The financial year 2020 will be about new hotel signings and openings. We will be opening a minimum of one hotel per month. Something dramatically has to go wrong if we can't reach this target." Except one, the remaining 19 hotels recently signed are management agreements. 

As part of its Aspiration 2022 five-year business strategy, IHCL is looking at becoming the most iconic and profitable hospitality company. "We have set a target to increase our EBITDA margins by 8% which is a growth from 17% in 2017/18 to 25% in 2022-23.... The strategy is about scaling up inventory, sell non-core assets and simplify holding structure. We are still in the process of deciding on the simplification of holding structure considering the number of listed hotel companies we have. It is a complex procedure. As far as the non-listed companies are concerned, in the first phase, there will be amalgamation, buyout as well as offloading of entities in the coming months. The capital will be used for further expansion as well as reduce debt depending on the feasibility." 

Talking about hotel brands, Chatwal said that they see significant potential in the Ginger business. "Ginger is a perfect fit for a primary market as well as a secondary or tertiary market. About 5% of the consolidated revenue currently comes from the Ginger brand. With the brand restructuring, we are looking at Ginger and Taj brands to drive our growth strategy. Each of our brands are independent entities and have to emerge profitable entities." 

Chatwal spoke about the importance they are according to the Taj and Ginger brands. "77% of our hotels transitions in our portfolio which are currently underway will be to the Taj or Ginger brands. We detach anything or everything that dilutes the Taj brand." 

According to him, the change in business model allowing a good ratio of owned properties and management contracts is necessary for growth. "It is important to have a hedged portfolio allowing infusion of capital for investment and improving margins."

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