ITC Considers Restructuring Hotel Business as Industry Rebounds, Demerger Proposal Back in Focus

According to sources, ITC, one of India’s leading conglomerates, is contemplating an “alternative business structure” for its hotel business, as the sector experiences a strong recovery. According to Sanjiv Puri, Chairman of ITC, the proposal to demerge the hotel business is now “back on the table” after being put on hold due to the COVID-19 pandemic.

Puri stated, “In our 2019-20 annual report, we mentioned our intention to create an alternative structure for our hotels business. However, we had to postpone the decision due to the industry’s poor performance amidst the pandemic. As the sector rebounds, we will proceed with our plan in line with the dynamic recovery.”

The hotel business of ITC witnessed an impressive 101% surge in revenues, amounting to ₹782 crore, during the fourth quarter of 2022-23. Additionally, the business reported an EBIDTA of ₹272 crore, in stark contrast to ₹32 crore in the same quarter of the previous year.

Puri highlighted the company’s strategic approach of becoming “asset right” by maintaining an optimal mix of owned and managed hotels. In line with this strategy, ITC has been opening approximately one hotel per month over the past year. Recognizing that owning multiple hotels had impacted capital productivity, the company decided to leverage its market standing by expanding its presence through management contracts.

Furthermore, ITC has achieved significant milestones in sustainability. Puri proudly stated, “ITC’s hotels are the world’s first 12 to achieve net-zero carbon emissions, and the first two to achieve net-zero water consumption.”

As ITC explores restructuring options for its hotel business, the company aims to capitalize on the resurgence of the industry while continuing to prioritize sustainable practices.

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