industry

Taj Hotels was, is and will be India’s largest hospitality company for a long time: Puneet Chhatwal


Even as the battle for Delhi’s iconic Taj Mansingh hotel has kept Indian Hotels Company (IHCL) on tenterhooks for years, new CEO Puneet Chhatwal has been on a quiet signing spree, bagging 12 new hotels in the last six months, doing away with the mono brand Taj strategy of his predecessor, signing on new hotels in global hubs like London and Dubai and drafting an ambitious Aspiration 2022 strategy for the company to improve its EBITDA margins from 17% to 25% by 2022 .

As the auction for the prized Mansingh hotel enters the final stages this week after years of litigation, Chhatwal who will personally supervise the bidding on Friday between IHCL and rival ITC Hotels said the Mansingh and Taj are the right fit.

“The right name on Mansingh is Taj. That is the general opinion of most people and that should be the case for the next three decades too. We invested in the hotel at times when the country needed that hotel. I am hopeful that in the end business sense will prevail and parties will bid on what makes business sense and not any other factor. The only case where continuation of business is assured is with us,” said Chhatwal speaking to ET in an exclusive interview.

IHCL reported a profit after tax of Rs 101 crore and consolidated revenues of Rs 4,165 crore for financial year 2017-18, turning profitable for the first time in six years. It announced signing of new hotels in markets like Makkah, Kathmandu, Dubai and London this year besides launching the first luxury resort in Andamans and new signings for Indian cities like Katra, Jhansi and Vishakhapatnam across its brands. The world’s biggest hotel chain Marriott may have opened its 100th hotel in India this year, but IHCL looks ready to take all competition head on.

“In terms of number of hotels, we have 145 hotels and we are the largest. We are the hospitality company with the highest market cap; we have the highest number of business hotels, management contracts, palaces, safaris, lean luxury properties etc.. If I total all these metrics, we come on tops in 9 out of 10 metrics. Taj Hotels was, is and will be India’s largest hospitality company for a long time,” said Chhatwal.

“Please remember the EBIDTA of just the Taj Mahal Palace & Tower is higher than the management fee income of many other leading chains in India put together,” he added.

Chhatwal said the company has reduced the debt levels significantly to half with their rights issue. “We have no proposal to raise any more debt at this point of time. Now our focus is on monetisation of some assets, largely in secondary and tertiary markets, and the land banks that we own,” he said. IHCL’s board had approved a rights issue in August last year for raising capital around Rs 1500 crore.

On the company’s international strategy Chhatwal said: “We have signed London (Heathrow), Makkah, Kathmandu, and another hotel in Dubai. San Francisco has become profitable. London is profitable. In Pierre, we will try to reduce our suffering but it’s an iconic hotel to have on your portfolio,” he added.

Under Chhatwal the company has changed its brand architecture across brands, turning Vivanta into an upscale brand from a higher positioning and rebranding its budget brand Ginger.

Chhatwal said it is important to have brand clarity to set targets for growth and to address different segments of the market.

“There was some idea of going into the mono brand strategy for making Taj out of everything. That doesn’t work, you can’t make a Gateway hotel Taj in Hinjewadi and in Chikmaglur and so on. That clarity was important. Secondly, a lot of Vivantas were cannibalising the Taj in the same city… We redefined Vivanta, we took it a little down from upper upscale to just upscale,” he said.

IHCL’s 12 new signings include five Ginger hotels, two Vivanta properties, four Taj hotels and one SeleQtion hotel which will be rebranding of Hotel Connaught in Delhi. Under its Aspiration 2022 strategy IHCL is also looking to be less ownership driven.

“Our current portfolio is 65% owned or leased and only 35% managed so it’s a reversal, so you get to a healthy balance. We also communicated to the market our aspiration of having 50% managed or fee based business and 50% owned…We have 8.5% growth in new number of rooms added to the existing hotels in operation in six months time. That means that our plan to grow 15% year on year, what we want to be measured on, is on track.”





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