Tata Group hospitality firm Indian Hotels Company Limited (IHCL) sees the target of building 300 hotels and 500 homestays as achievable while it expects to open 12 more hotels this year, Managing Director and Chief Executive Officer Puneet Chhatwal said on Monday.
“In the past five years, we have added almost 120 hotels to the pipeline, many of which have opened. Currently, our pipeline is north of 65 hotels with 180 in operation. And that's why the target of 300 hotels or 500 homestays is very much realistic over the next four years,” he told CNBC-TV18.
Of these hotels, 50 were signed in the last 24 months, and Indian Hotels' opened six hotels this year. It, however, expects to open to sell more in the last six months because that's the right time to open hotels, and also because of certain delays from the COVID.
“Therefore, we would have opened 18 hotels, which means 1.5 hotels a month, and that is something which we were really looking forward to in accelerating our growth,” he said.
Indian Hotels group covers 100 plus destinations in India, if it adds homestays, it will total to 125 destinations across the country, he said, adding, "This journey of our focus on creating new destinations like the group has done in the past three, four decades is going to be a very good story for the sector in India."
Chhatwal, however, expects rates to continue to rise amid limited supply while average room rates are holding up as well.
“Across the globe, there's an increase in rates, and they may correct a bit towards plus 10 percent or minus 10 percent. But nothing else is going to change because the supply is going to remain constrained. Not many hotels have got built in the last two years, and when the demand begins to come back, it will continue to outpace supply in the market,” he told CNBC-TV18.
Chhatwal also noted that Indian Hotels wants to benchmark its hotel rates to global levels. "We have to benchmark rates of trophy assets in comparison to those in the West," he said.
He further explained that to get that kind of quality, location, and of views, India must have the ability to charge higher rates, and the industry needs to think about it collectively as a fraternity.
Chhatwal has a positive outlook for the second half of the fiscal as international travel is expected to resume from October to March. He also noted that the meeting, incentives, conferences and exhibitions (MICE) segment continues to see high demand.
The July to September quarter, meanwhile, saw occupancies close to the first three months of the fiscal, despite the second quarter being a seasonally weak one. According to him, the industry is currently 20 percent higher compared to the pre-pandemic times.
Last month, the Indian Hotels MD said, "IHCL is well-poised to meet the goal of a 300-hotel portfolio by 2025, driven by an asset-light model to achieve profitable growth." As part of the expansion, the company's flagship Taj will have 100 hotels by 2025, up from the current 89, he had said.
Chhatwal also said that his company is well positioned to undertake any merger and acquisition (M&A) opportunity as there’s always scope for consolidation in the hotel sector.
He highlighted Ginger as the hospitality firm’s fastest-growing brand. "It has a great future for the Indian market. Because of how the district capitals, state capitals and commercial capitals work, the market size is very large and underrepresented by brands. Therefore, Ginger becomes a great opportunity over the next 5-10 years in that positioning," he said.
Watch more in the accompanying video