HBI Staff | Hyderabad 
Reports suggest that ITC is poised to announce the demerger of its hotel business as early as next month, a move aimed at unlocking value for the company. According to a report on CNBC-TV18, the process for the demerger is already underway, and ITC is exploring alternate structures for its hotel business in line with industry dynamics.
ITC Chairman and Managing Director, Sanjiv Puri, confirmed that the demerger of the conglomerate’s hotel business is actively being considered after a remarkable recovery in the hotel industry post-Covid-19.
The company is contemplating an “alternative business structure” for its hotel business, with the possibility of a separate listing for the hotel section being seriously considered. This strategic move comes after ITC experienced a surge in shares, reaching a record high of Rs 475, representing a 1.85 percent increase.
Notably, ITC’s hotel business demonstrated impressive performance, recording a remarkable 101 percent increase in revenues (Rs 782 crore) in the fourth quarter of 2022-23. The business’ EBIDTA also saw significant growth, standing at Rs 272 crore compared to Rs 32 crore in the corresponding quarter of the previous year.
As part of its “asset right” strategy, ITC has a well-balanced mix of owned and managed hotels. The company had previously built many own hotels, impacting capital productivity. Consequently, ITC decided to focus on hotels through management contracts, considering its strong market standing.
The decision to demerge the hotel business aligns with ITC’s commitment to create an alternative structure for the hotels business, which was previously put on hold due to the pandemic’s adverse impact on the industry. With the industry dynamics recovering, ITC is now determined to take this plan forward.
