‘Travel and tourism sector poised for continued growth’

April 29, 2023 07:49 pm | Updated 09:34 pm IST

Puneet Chhatwal

Puneet Chhatwal | Photo Credit: By arrangement

In FY23, Indian Hotels Company Ltd. (IHCL), the hospitality company of the Tata Group, owning and operating Taj, Vivanta and Ginger hotels, reported a net profit of 1,003 crore against a loss of 265 crore a year earlier, thus offsetting the compound losses incurred during the COVID years. Now, with multiple businesses set to yield better results, the company is on a high growth path, said MD & CEO Puneet Chhatwal. Edited excerpts:

What has led to this growth despite global economy not doing well?

India’s self-confidence is beginning to get started and its third largest economy ambition is playing out. We are already the fifth largest economy and then our GDP is on a growth path. We have a diversified brand scape. India’s domestic growth is extremely strong and our growth is being led by the domestic tourism at the moment, be it for business or leisure.  We have the highest market share. We are present in many spiritual destinations. We are also present in many resorts, which gives us a better hedged portfolio. We do make sure and address all segments of the market, which also gives us a good hedging. Everything that we said and the guidance we gave under Ahvaan 2025 or previously under Aspiration 2022, we have walked that talk. We witnessed consecutive four quarters of sustained high demand resulting in an all-time high full year consolidated revenue of ₹5,949 crore and the highest ever EBITDA margin of 32.7% and PAT of ₹1,003 crore.

Can this growth rate be continued?    The travel tourism sector is poised for continued growth. Despite the challenges posed by the COVID-19 pandemic, the sector has demonstrated remarkable resilience and adaptability, and we have seen strong demand for travel and tourism across the country.  Demand will continue to outstrip supply, as travel is still on the cards for people. We expect this trend will continue driven by a number of factors which includes India’s strong GDP growth, upcoming national and international events like the World Cup and G20 Summit, recovery in foreign tourist arrivals and continued domestic demand. In light of our recent record-breaking profit in the last quarter, it is clear that we have been doing exceptionally well. Ginger, the erstwhile budget hotel brand has been repositioned and integrated into IHCL. What is Ginger’s contribution to growth? Ginger has a revenue of ₹307 crore, EBITDA margin of 39%, an increase in 12 percentage point and another 12 percentage you can factor going forward. This brand should definitely, in the next 2 years, deliver every quarter, more than 50% margin. It should be the best in that value segment and it has the potential to be not only in every state and commercial capital, but also in every district capital. And for that we need to scale it up very fast, as it’s a great brand for the country. Recently the Taj achieved the 100-hotel portfolio mark. What is the current total portfolio and what is in the pipeline? Starting its journey in 1903 with the flagship The Taj Mahal Palace, Mumbai, Taj has more than doubled its inventory in the last five years. IHCL has a total of 263 in the portfolio out of which 75 hotels are in the pipeline and 188 being in operation. We have now around 22,000 operational rooms and another 10,000 under development.  We are 50% asset-light and 50% where we own or lease the asset. It is this combination which is one of the key reasons for the performance as well. How have the new businesses performed?    Under the new businesses, Qmin has now grown to 34 outlets with a presence across 24 cities and amã Stays & Trails has witnessed a 42% growth in portfolio this fiscal reaching 114 bungalows across 50+ locations. In line with our strategy of Ahvaan 2025 Vivanta and SeleQtions have already exceeded their targeted portfolio of 75 hotels. Tatas have invested heavily in the airlines business now and currently they have 4 airlines. How has that helped TajSATS?   TajSATS is an industry leader in airline catering with a market share of 58% in FY 2022-23. It clocked a revenue of ₹641 crore which is enabled by the growth in productivity. Meal production went up by 69% compared to pre-COVID levels. The company added new capacity with new kitchens in Amritsar and new airport at Mopa, Goa. Through higher volumes and better yields the company also achieved its highest annual EBITDA margin of 19.7%.   What is IHCL’s overseas expansion plan? IHCL is the only Indian hospitality firm having flagship hotels in important global locations such as London and New York, as well as Sri Lanka, Dubai, the Maldives, and South Africa. This will be the right time to expand globally, but we will be very careful in where we grow and how.  However, we will remain focused on the markets we are present in – London, New York, Dubai, South and South East Asia, where the Indian diaspora is present. Where are room tariffs headed at? I never see price go down unless there is a crisis. Otherwise, everything becomes more expensive, whether it is an Apple product or anything else. Nothing becomes cheaper, unless maybe it was an electronic good like computer. I think the demand and supply decide the prices and supply is constrained, and if demand remains the way it is, room rates will only go up. What has been the experience with Tata Group’s Super aap TATA Neu?  We are the founding members of Tata Neu and we are very happy with the initiative and our loyalty membership doubled just in one year. It took us so long to get 2 million members and now we are at getting close to 4.5 million in just one year. So we are very happy with it and TATA Neu itself will keep growing by leaps and bounds. I think in the next 3 to 5 years you will see what difference it makes for people to recognise that. We are very positive and very happy.

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