Indian Hotels Company (IHCL) has allocated a capital expenditure (capex) of Rs 750-800 crore for FY25, a substantial increase compared to its usual yearly expenditure. This decision is driven by its intention to invest in greenfield properties.
Giridhar Sanjeevi, Executive Vice President and CFO, IHCL, said in a post earning call, “For capex for the next year, our guiding principle is that as far as renovation is concerned, we will be in line with our requisition numbers and our greenfields on top. Between the two, it will probably be in the range of around Rs 750 to Rs 800 crore.”
The company’s new greenfield properties are set to emerge in Lakshadweep and Ekta Nagar, Gujarat (near the Statue of Unity). Additionally, IHCL is relaunching Taj Malabar in Cochin and unveiling Taj Cochin International Airport. While historically, the Tata group company has typically allocated capex spends equivalent to 4% to 5% of its annual revenue (FY23 revenue totaled Rs 5,809 crore), its capex for FY23 increased to Rs 471 crore. Throughout the initial nine months of the year, IHCL expended Rs 470 crore on capex. The company, which has the Taj, Seleqtions, Vivanta and Ginger brands under it, had 200 operational properties and 85 under-development by the end of December. The company said it is on track to have 20 property openings in FY24.
Some of the key renovations the company carried out this year were those of Taj Mahal, New Delhi, Taj Lands End, Mumbai, Usha Kiran Palace, Gwalior and Tajview, Agra. Of the 85 properties that it has in the pipeline, 76% are under management contracts and the rest are owned or leased.
One of the biggest corporate decisions made by IHCL in recent months has been about its plans to introduce yet another hotel brand. The company is looking to have new, full-service hotel brands that will cater to the tier-2 and tier 3 markets. This decision comes six years after the company announced the phasing out of the Vivanta and Gateway brands. Vivanta, however, was reintroduced as ‘Vivanta by Taj’.
Puneet Chhatwal, Managing Director and CEO, IHCL, said, “The price point (of the new hotel brands) will be somewhere close to Vivanta. We’re looking at more like Rs 8,000-9,000 average rate positioning. So, higher than Ginger but lower than Taj, somewhere in between, but a full-service brand.” While Vivanta is positioned as an upscale brand, IHCL has envisaged the new brands to be stylish, vibrant but not a mass market offering. “We need a brand alongside Vivanta, which will help us cater to the mass market of 400 to 500 million Indians who are not in metros but in tier-2 and tier-3 cities,” Chhatwal said.