IBEF: February 03, 2020
Indian Hotels Company (IHCL), a Tata group hospitality arm, expanded its portfolio by adding a significant number of properties through management contracts this financial year and plans to continue to add more larger properties, including iconic assets going ahead, said a top company official.
According to Mr Puneet Chhatwal, IHCL managing director and CEO, "So far in the current fiscal, we have signed 24 hotels with an inventory of over 2,800 keys. We will be signing a few more this quarter taking the total to more than last year's numbers. We feel we are ahead of the game and so we have to focus on absorbing this growth".
The list of these 24 properties consist of four Taj hotels, two SeleQtions hotels, nine Vivanta hotels and nine Ginger hotels.
He added, "We are looking at existing brownfield assets which we can add to our portfolio without waiting for 4-5 years for them to start generating income".
A brownfield asset is a developed asset, though, it may require an ongoing capital expenditure and expansion.
Mr Chhatwal further said that the company plans to expand through big-box or larger properties under the Ginger brand as well as under other brands.
The company has already adopted the 'Aspiration 2022' strategy under which it is intending to improve margins, reducing ownership of properties to 50 per cent and monetising non-core assets.
He further added, "As a part of our strategy to become asset light, we are going to sell some of our hotels under the Ginger brand and take them back on rent so the current management stays in place. This will also be true with other hotels that are a part of joint ventures or under associate companies".
The company reduced its debt to Rs 1,900 crore (US$ 271.86 million) at present, from Rs 3,100 crore (US$ 443.55 million) in 2017 by focusing on becoming asset-light and monetisation of non-core assets.
He also said, "From the net debt to EBITDA ratio of 6.4 some years back, we have managed to bring it down to 2.11 as of FY2019 and to a further 1.76 as of December 31, 2019. We do not intend to increase the debt levels from here on".
However, no further elaboration on company's asset monetisation plans was given by Mr Chhatwal.
IHCL has reported a 25.37 per cent rise in consolidated PAT for December 31, 2019 quarter at Rs 213.17 crore (US$ 30.50 million) as against Rs 170.03 crore (US$ 24.33 million) for the corresponding period of the previous fiscal.
The consolidated total income increased to Rs 1,408.91 crore (US$ 201.59 million) for the quarter under consideration as against Rs 1,337.97 crore (US$ 191.44 million) a year-ago.
"This growth is mainly the result of our strategy to be asset light and efforts taken to improve margins," he added.
Mr Chhatwal said, "we have already signed six bungalows under Ama Stays & Trails during the current fiscal, taking the portfolio to 19 bungalows. We continue to evaluate properties and by December end of 2020, we hope to take this portfolio to 50 bungalows."
In Bombay in 1903, the company opened its first hotel, under The Taj Mahal Palace, incorporated by the founder of the Tata group, Jamsetji Tata. Currently, IHCL has a portfolio of 197 hotels, including 40 under development globally across 4 continents, 12 countries and in over 100 locations.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.