Ginger Hotels' portfolio to turn asset-light by FY18

Ginger has 37 operational hotels with a capacity of 3,500 rooms but majority of these are owned

Tata Sons’ Ginger Hotels, a hospitality company catering to budget travellers, plans to have more managed or leased properties than those owned at the end of the next financial year.

Ginger has 37 operational hotels with 3,500 rooms but a majority of them are owned. Another 13 hotels with approximately 1,300 rooms will be added to the portfolio by the end of 2017-18. 

“Most of these 13 will be managed or under lease. So, there is less ownership now. A majority would become leases and managed versus the majority being ownership now,” Rahul Pandit, managing director and chief executive officer at Ginger Hotels, told Business Standard.

Pandit said Ginger started with an ownership model 13 years ago since the brand had to demonstrate the returns it could generate. Now that the brand is established, the chain is keen to ramp up its presence. “We will still keep looking at owned greenfield hotels in dense locations. In other markets, we want to get our flags up. The market is on the upswing and if I keep waiting I will let assets go to others,” he added.

Unlike a greenfield, where the property gets ready in three-four years, management contracts or leases allow a hospitality company to be up and running in a short time. Moreover, one does not need to make large investments. Pandit said the hospitality industry was at the beginning of an uptrend, which could last for at least four years. 

“We want to make Ginger dominant in terms of size and customer base. This is a brilliant phase of new customers getting into the system,” he said. 

Ginger, part of BSE-listed Indian Hotels Company, also wants to expand the focus on leisure travellers. It is looking at properties in leisure destinations such as Goa, Kerala and hill stations in North India.

“Business travel is currently the bulk of our business but we are hugely focusing on leisure, which is seeing threefold growth on a small base. You get the full share of a customer’s wallet when you operate in both business and leisure. Moreover, margins in leisure are better since bookings come from proprietary channels,” said Pandit.

Roots Corporation, which owns the Ginger brand, posted a loss of Rs 11 crore in FY16 on revenues of Rs 143 crore. 

Pandit said the business was profitable at the EBIDTA (earnings before interest, depreciation, taxation and amortisation) level and the loss was due to exceptional project-related issues. The numbers for the current financial year are not available.