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IHCL outlines profitable growth strategy for next three years

The Financial Express logo The Financial Express 23-05-2022 Anish Mondal
Having adopted an asset-light model, the company will look at developing its own hotels only in select locations. © Provided by The Financial Express Having adopted an asset-light model, the company will look at developing its own hotels only in select locations.

After being battered by the pandemic for two years, the hospitality industry is drawing up ambitious plans for the future. Indian Hotels Company (IHCL), the country’s largest hospitality company that operates the Taj Hotels among other brands, has announced its roadmap to pursue profitable growth over the next three years.

The plan, Ahvaan 2025, includes food and beverage innovations across hotel brands, luxury home stays, club memberships and home delivery of gourmet food. IHCL aims to build a portfolio of 300 hotels, clock earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 33%, and a 35% Ebitda contribution from new businesses and management fees by FY26. Having adopted an asset-light model, the company will look at developing its own hotels only in select locations.

Puneet Chhatwal, managing director and chief executive officer, IHCL, said, “Continuing its growth momentum, IHCL signed over 100 hotels and opened over 40 hotels in the past five years, making it the fastest growing hospitality company in India. Ahvaan 2025 will further accelerate IHCL’s profitable growth by scaling its diversified brand portfolio across its traditional and new businesses. Its iconic and strongest brand Taj, Paathya, an industry leading ESG+ framework, and a strong focus on digital will be the key enablers on this journey.”

The company will not enter any business which offers margins lower than 35%. The emphasis will be on sustained revenue growth, cost optimisation and operational excellence. It will further strengthen the balance sheet with a focus on free cash-flows and being a zero-net-debt company.

Ginger will be an important growth vehicle and will scale to 125 hotels, ‘amã Stays & Trails’, a branded offering in the homestay market, will be a portfolio of 500, and Qmin, IHCL’s culinary and home delivery platform, will expand to 25-plus cities.

Launched in 2020, Qmin is IHCL’s platform for the delivery of signature dishes from its restaurants. The company executes orders from its own app using its own logistics.

Among the new developments, Ginger Santacruz is a prime property that the company is looking to launch by April next year. It is targeting an operating margin of 50%, as the land belongs to the company and development is under way.

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