Chennai: It has been a landmark year for Indian Hotels Co. Ltd (IHCL), which runs the Taj group of hotels. In June, the company won a 33-year lease for The Connaught, which will be opened for renovation next year under the SeleQtions brand.
In September, after years of legal battle, Indian Hotels retained its lease on the iconic Taj Mahal Hotel on Delhi’s Mansingh Road. On Saturday, it re-launched Taj Connemara, south India’s oldest hotel dating back to 1854, after a 22-month-long renovation project that cost ₹ 90 crore.
That’s not all. In December, the company plans to re-launch Ginger, the budget hotel unit of the group, as a “lean luxury brand" with a renewed focus and at a higher price.
“It is always like that. It is something this week and will be something else the week after. You are either an agile company or you will be dead," Puneet Chhatwal, 54, who took charge as chief executive officer and managing director (CEO and MD) of Indian Hotels in November, told journalists in Chennai on Saturday, before the launch of Taj Connemara.
Chhatwal isn’t worried about oversupply, especially in key metros. “All the top five cities can have 20+ and top 10 cities can have 10+ hotels in the next five-seven years. Delhi-NCR already has 15 IHCL hotels, the highest across the country," said Chhatwal. Chennai has seven IHCL hotels now and will have its eighth Taj group hotel by July.
The markets tend to grow, said Chhatwal. He could be right.
Demand for hotel rooms in Delhi grew at 6.8%, outpacing supply which grew at 2.8%, according to a June analysis in Mint.
“So tomorrow, if there is another opportunity to buy a hotel in Lutyens Delhi, we will go for it. We have the highest number of rooms in central Delhi and we want to continue that growth because Delhi, as the capital of the country, will continue to grow," he said.
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The company wants to strike the correct balance between iconic and profitable properties. So, while the group emphasises brands such as Ginger and Vivanta, where there is a potential to grow, it is also focussing singular iconic properties like The Connaught, bringing them under the SeleQtions brand, and renovating heritage properties like Taj Connemara.
“The Taj Group has assumed a multi-pronged approach to their expansion, and refurbishment of existing assets is certainly one of these prongs," said Shobhit Agarwal, MD and CEO, ANAROCK Capital.
“There are various benefits to focusing on refurbishment of existing assets. In the first place, there is much lower turnaround time when it comes to on-ground deployment and also lower expenses. The locations they are looking at are very strategic and have excellent brand recall in their own right," said Agarwal.
With an increase in both domestic and international business travelers in India, it makes sense that “the group is not letting the grass grow under their feet in the highly competitive hospitality business space", said Agarwal.
The biggest challenge in juggling heritage, luxury and modernity is money, according to Chhatwal.
“It is easy to spend another ₹ 100 crore on renovation of a property like the Connemara. But at some point you have to look at your return on investment," he said.
It is for that reason that he wants the IHCL portfolio to become a 50-50 mix of owned or leased and managed hotels from the current mix of 65% and 35%, respectively.