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Indian Hotels in expansion mode, achieves 50% of Aspiration 2022

Indian Hotels in expansion mode, achieves 50% of Aspiration 2022

Indian Hotels in expansion mode, achieves 50% of Aspiration 2022
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By Priya Sheth  Feb 26, 2020 9:07:38 AM IST (Updated)

The year 2019 witnessed challenging macro conditions and saw an overall slowdown playing out. Despite this, Indian Hotels – which runs the Taj chain of hotels – opened one hotel a month in FY2019-20.

The year 2019 witnessed challenging macro conditions and saw an overall slowdown playing out. Despite this, Indian Hotels – which runs the Taj chain of hotels – opened one hotel a month in FY2019-20.

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Hitting a milestone of 200 hotels on a pan-India basis, Indian Hotels expects to maintain this momentum on expansion. “Occupancy has been quite resilient for Indian Hotels. On an overall basis, we have achieved about 50 percent of the Aspiration 2022 guidance,” said Puneet Chhatwal, MD and CEO, Indian Hotels. The company had announced a five-year business strategy of restructuring, re-engineering and re-imagining its portfolio by 2022.
Headwinds like the coronavirus issue could be a short-term blip in terms of bookings for the industry. However, the exact impact can only be ascertained over the next month. “Will have exact details on the hit due to coronavirus at the end of March. Don't see much of an impact on the domestic front, certain areas are impacted more than others… There might be a bigger hit in Q1 of next fiscal due to the outbreak,” said Chhatwal.
The immediate focus for the company has been on margin expansion and improving overall profitability. The company has also adopted an asset-light model to reduce its debt. The increase in the share of business coming via management contracts has also helped kick in more efficiencies. About 43 percent of its portfolio is under management contracts at present. The aim is to get a 50-50 mix of properties under the owned and management contract model.
Indian Hotels is also in the last phase of contract negotiations for its first deal under the GIC platform. In May 2019, IHCL and Singapore’s sovereign wealth fund GIC decided to set up a three-year, Rs 4,000-crore investment platform to acquire hotels in the luxury, upper-upscale and upscale segments
On the debt front, the current net debt to EBITDA ratio is 1.76, down from 2.11 in FY 2018-19.
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