Indian Hotels Expansion Plans: 2 New Brands Launching, 2 Hotels Opening Every Month

09.02.2024 - 15:43 / skift.com / Peden Doma Bhutia / Puneet Chhatwal

Indian Hotels Company (IHCL) looks to open an average of 2 hotels per month or even more in fiscal year 2024-2025, Puneet Chhatwal, managing director and CEO of IHCL, announced during an earnings call on Friday.

The hotel company is gearing up for an accelerated pace of growth in the fiscal year 2024-2025 with 85 hotels in the pipeline.

IHCL is also set to introduce two new brands within the next six months, primarily targeting Tier 2 and Tier 3 cities. Chhatwal emphasized that these new brands and businesses align with IHCL’s asset-light strategy, “contributing to margin expansion and reducing vulnerability to business fluctuation.”

In the current fiscal year, IHCL has already signed 28 hotels with 16 hotels already operational. Chhatwal revealed plans to add four more hotels in February and March.

The company’s asset-light model has resulted in a noteworthy achievement — doubling the management fee income from pre-Covid levels to INR 3.2 billion ($39 million) for the first nine months of the fiscal, the CEO said.

IHCL’s third quarter performance for the period ending December 30, 2023, marked its seventh consecutive quarter of record-breaking results.

Standalone revenue soared by 22% year-on-year, reaching INR 13 billion ($160 million), while earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by 30% to INR 6 billion. The company celebrated a consolidated revenue milestone of INR 50 billion ($600 million) for the first nine months of the fiscal year.

Chhatwal highlighted the success of IHCL’s diversified top line (which includes new and reimagined brands like Ginger, Qmin, ama Stays and Trails, The Chambers and the TajSATS), showcasing a 34% growth in these brands in the last 9 months over the previous year. This growth rate, he said, was twice that of the traditional business, which also saw a 17% increase during the same period.

With the new brands, IHCL looks to accelerate its presence in the non-metro Indian market. Acknowledging the need for a full-service brand in Tier 2 and Tier 3 cities, addressing different market segments, Chhatwal highlighted the need for a multi-brand strategy to address varied consumer preferences.

With a focus on tapping into the mass market of 400-500 million Indians residing outside metro areas, the new brand would be similar to the existing Vivanta brand (a collection of upscale business and leisure hotels), he said.

“India has embarked on a strategic GDP growth, there will be new needs and wants that arise. Now instead of being reactive, we will be proactive,” he said.

While acknowledging the suitability of the Ginger brand for district capitals, Chhatwal recognized its limitations in smaller cities, particularly in hosting events like