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ITC planning to invest Rs 9,000 crore to expand its hotel portfolio

The Economic Times:  November 28, 2014

New Delhi: ITC plans to invest about Rs 9,000 crore in the next three to four years to expand its hotel portfolio to 150 hotels, said Nakul Anand, executive director at the tobacco-to-hospitality conglomerate. ITC Hotels, one of the largest hotel chains in the country, currently operates 102 hotels.

As part of its ambitious expansion plan, on Thursday it opened the 104-suite resort ITC Grand Bharat near Delhi where it spentRs 2-2.5 crore per room.

"We will have a total of 150 hotels in the next three to four years, of which 33 hotels will be under the managed Fortune hotels brand," Anand said. "The My Fortune brand will have six fully-owned hotels across Coimbatore, Guntur (a major tobacco district), Bhubaneswar, Srinagar, Kathmandu and another undecided location."

He said ITC will launch five other hotels - in Mahabalipuram, Kolkata, Ahmedabad, Hyderabad and Colombo - by 2018.

"Last week, we also did the ground breaking for our Colombo One hotel that will cost $300 million (Rs 1,855 crore) and will be ready by 2018," Anand said.

ITC's aggressive investment plan -which will be funded internally - comes despite slow profit growth in the business.

ITC's hospitality subsidiary reported a 5.44% increase in its net profits for the year ended March at Rs 139.7 crore.

ITC has reported a loss from hotels in the second quarter ended September at about Rs 9.6 crore, after absorbing a charge of Rs 13.4 crore towards additional depreciation.
"Indian hospitality has been in a bad shape and it's not just us. Having said that, I think the worst is over and there are good times ahead," Anand told ET.

"If (Prime Minister Narendra) Modi is a magnet, then it means there could be more FDIs and with that will be more business travel, which will have a three times multiplier effect," he said. ITC gets close to 50% of its revenues come from non-cigarette businesses.

The hotel industry continues to be impacted by a weak pricing scenario in the backdrop of sluggish economic conditions and the overhang of excessive room inventory in key domestic markets.

According to hospitality consultancy HVS, India has over one lakh branded hotel rooms and another 55,000 in the pipeline.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.