Taj GVK, IHCL sign 20-year pact for new five-star hotel in Bengaluru

IHCL will manage Taj GVK's upcoming five-star property in Yelahanka, Bengaluru, under a 20-year agreement as part of its ongoing expansion through management contracts

Taj GVK Hotels and Resorts, a joint venture between Hyderabad-based GVK Group and the Indian Hotels Company (IHCL), on Monday announced that it had signed a hotel management agreement with IHCL, for an undisclosed amount, for an upcoming five-star hotel at Yelahanka, Bengaluru, according to its stock exchange filing.

 

Under the agreement, IHCL will manage the upcoming hotel property for a period of 20 years from the date of its opening, Taj GVK said in a statement.

 

Taj GVK portfolio includes iconic city hotels

 

Taj GVK, which was formed in 1999, currently has a portfolio of five hotels, including Taj Krishna, Hyderabad; Taj Deccan, Hyderabad; Taj Club House, Chennai; Taj Chandigarh; and Vivanta Hyderabad, Begumpet. Apart from this, Taj GVK also co-owns Taj Santacruz, Mumbai, through another joint venture, Green Woods Palaces and Resorts.

   

The company’s shares closed at Rs 418.65, up 1.17 per cent on the Bombay Stock Exchange (BSE). For the April–June quarter, Taj GVK reported a profit of Rs 36.22 crore compared with Rs 12.71 crore in the same quarter last year. 

 

IHCL focuses on asset-light growth and diverse customer segments

 

Meanwhile, IHCL is focusing on expanding its presence in India at the right price points for different customer segments, with hotels offering varied room capacities, according to its annual general meeting (AGM).

 

This follows comments from N Chandrasekaran, non-executive director and chairman of IHCL, who said during the AGM that having a heavy presence of company-owned properties would limit expansion. While IHCL will continue to build iconic properties, 60–65 per cent of its hotels over the next five to ten years will operate under management contracts. The remaining 35–40 per cent of hotels will continue to be owned by the company.

 

IHCL expands portfolio under management model

 

As of June, IHCL had a portfolio of 108 operational owned hotel properties (directly owned or through subsidiaries) and 25 operational hotels through joint ventures or associates across various brands, according to its investor presentation.

 

In addition, IHCL has 33 owned hotels under the signed pipeline, with 110 hotels under management in the pipeline as of June, highlighting its growing preference for an asset-light model.