As Indian Hotels Company Limited (IHCL) wraps up fiscal year 2025 with an impressive 52% net growth and a 25% rise in net profit for the fourth quarter, CEO and Managing Director Puneet Chhatwal shares insights on the brand’s exceptional performance and future growth aspirations. In an exclusive conversation with Ivinder Gill, Chhatwal highlights the company’s strategic direction and its focus on expanding into new destinations.

Striking a Balance Between Capital Approaches

When asked about achieving a balance between capital-intensive and capital-light strategies, Chhatwal acknowledges the need for improvement. He aims for an ideal mix of 25% capital-heavy and 75% capital-light investments. Currently, IHCL operates with a 40% heavy to 60% light ratio, a notable shift from the 77% heavy assets recorded seven years prior. In FY25 alone, the company signed 75 new hotel agreements and opened 26 properties, with over 95% of these developments being capital-light.

Ambitious Growth Plans for the Next Five Years

Looking ahead, IHCL plans to nearly double its portfolio to 700 properties within the next five years. This ambitious growth will be fueled by various strategies:

• 25% growth through conversions and acquisitions, such as the integration of Tree of Life and Claridges.
• 50% expansion in new destinations, closely tied to the increasing number of airports, which will require hotels and flight kitchens nearby.
• 25% growth in the top ten markets, which continue to show promise.

Investment Strategy and Financial Projections

Chhatwal confirms that the company will predominantly follow a capital-light approach, with strategic investments earmarked for key projects. Over the next five years, IHCL plans to allocate up to ₹5,000 crore for capital investments, aiming to double its consolidated revenue while achieving a 20% return on capital employed. Shareholders can also expect a 20% dividend based on profit after tax.

In FY26, IHCL intends to invest about ₹1,200 crore into asset management, with plans to maintain double-digit growth and open 30 new hotels.

Ginger’s Role in Revenue Growth

Currently, the Ginger brand contributes around 8-9% to the company’s revenue, but Chhatwal anticipates this figure will rise to 10% by the end of the fiscal year.

Profitability in Emerging Locations

Discussing the profitability of expanding into unconventional locations, Chhatwal likens the hospitality industry to cricket—where not every endeavor yields a home run. While some hotels may not generate substantial revenue, IHCL is committed to nation-building by exploring regions like the Northeast, Daman, Diu, and Lakshadweep. Although these areas currently lack sufficient supply, Chhatwal believes they will become lucrative over time, especially given the Tata Group’s strong presence, which facilitates development.

Trends in Mid-Level Hospitality

The landscape of mid-level hospitality is changing drastically, with a noticeable shift in consumer behavior. Today’s travelers are willing to indulge rather than save, reflecting a Westernized mindset focused on enjoying the moment. This trend presents a significant opportunity for IHCL, particularly in expanding properties like Ginger and Gateway as demand grows in burgeoning satellite cities.

Future Aspirations with Bandstand

Chhatwal expresses excitement about Bandstand, which he envisions as a flagship property rivaling global icons like Marina Bay Sands and the Burj Al Arab. He predicts that upon opening, it could generate a topline revenue of ₹1,000 crore. The final costs will depend on construction expenses and completion timelines, but renovations of similar prestige properties are expected to be equally substantial.

International Expansion Plans

On the international front, IHCL is set to launch its second property in Europe this year, focusing on the prestigious Taj brand in key global gateway cities. Currently, the company boasts an international portfolio of 28 hotels, with 10 more planned across strategic markets, including Makkah, Riyadh, Bahrain, Frankfurt, and Dhaka.

This forward-thinking strategy positions IHCL for continued success and growth in both domestic and international markets, ensuring a vibrant future for the brand.