Indian Hotels to build 33 new properties

To spend Rs 450 cr to add 3,700 rooms across Taj, Vivanta by Taj, Gateway and Ginger brands

The Indian Hotels Company (IHCL), the country’s biggest hotel chain, will augment capacity by 26 per cent in the coming years. The Mumbai-based hotel chain, which currently has 125 hotels, will add 33 new hotels across its four brands - Taj, Vivanta by Taj, Gateway, and Ginger. These 33 hotels together will have 3,700 rooms, which will take IHCL’s total number of rooms to about 20,000.

A capital expenditure outlay of Rs 450 crore has been earmarked for the coming years, although IHCL has already outlined its intention to become asset-light with minimal spending plans.

Cyrus Mistry, chairman of IHCL, said: “The hospitality sector continued to face a very challenging environment (in the previous year). Additionally, significant increases in new domestic supply has put immense pressure on all hotels.”  

Mistry was addressing shareholders at the company’s 113th annual general meeting held here on Wednesday.

“There will be improved political and economic environment and the sentiment in the hospitality sector will improve. The company is committed to expanding its portfolio to maintain market leadership and position itself strongly for the time the markets are expected to turn around,” Mistry added.

IHCL reported a loss of Rs 35 crore in the first quarter of FY15 on a consolidated basis on a revenue of Rs 955 crore. On a standalone basis, the loss reported was Rs 7 crore for the same quarter on a revenue of Rs 410 crore.

The company saw its rights issue, which was recently issued, getting subscribed 1.6 times. Mistry said the proceeds of this issue would be used in bringing down the debt equity ratio to 0.97 from 1.72 at present.

Two years after buying the sea-facing Sea Rock hotel at suburban Bandra in Mumbai, IHCL’s plan of building a hotel and a convention centre in its place remains largely on paper.

Mistry clarified that approval from the Brihanmumbai Municipal Corporation (BMC) regarding the floor space index for this new hotel is pending. The old Sea Rock hotel, which stood at a stone’s throw away from the Taj Lands End, was razed to the ground more than a year ago.

The company would not be following the idea of its outgoing managing director Raymond Bickson of creating a new brand in the mid-market space. Bickson had stated earlier that IHCL was exploring a new brand positioned between its low-cost brand Ginger and upscale brand Gateway.

“The company continues to look at its brand architecture, but there is no thought process for now for a new brand,” Mistry added.

Shareholders also pointed out Mahindra Group’s success in the time-share category with Mahindra Holidays. Shareholders wanted to know if IHCL will explore that space in future. To which, Mistry said: “The concept of time share is interesting and the company will explore that concept.”

MORE ROOM FOR EXPANSION

• 20,000 rooms Target set by Indian Hotels Company
   
• 33 Number of hotels IHCL plans to add across its four brands — Taj, Vivanta, Gateway and Ginger
   
• 3,700 rooms The number of rooms that the new hotels will add
   
• Rs 450 cr Capital expenditure outlay for the same
   
• Rs 35 cr Loss reported by the company in the first quarter ended June 30
   
• 1.6 times Subscription of its rights issue