BackIn a change of strategy, Indian Hotels to retain Vivanta
Indian Hotels says it will retain its old structure and push for growth across segments, including mid-scale and economy hotels, reversing an earlier decision to club all premium properties under the Taj luxury brand
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Indian Hotels Co. Ltd (IHCL) on Friday said it would retain its old structure and push for growth across segments, including mid-scale and economy hotels, reversing an earlier decision to club all premium properties under the Taj luxury brand and exit sub-brands such as Vivanta.
“India is not a country where one size fits all... We cannot say we want to grow our margin and profit, and focus on just one brand," said Puneet Chhatwal, managing director and chief executive of IHCL, at a media briefing.
“The majority of the growth in the last 10 years and going forward in the domestic market is coming from midscale, upscale and the economy segment. So, we cannot be playing in isolation," he said .
Chhatwal said the while company will focus on three brands -- Taj, Vivanta and Ginger -- it is still considering exiting some others such as Gateway and President.
IHCL’s previous CEO Rakesh Sarna had announced a new brand architecture for the company, seeking to club all premium brands, including Vivanta and Gateway under the Taj brand.
Both these brands have existed for almost a decade. Under the proposed initiative, Indian Hotels was looking to upgrade all 53 premium hotels of Vivanta and Gateway in India and abroad and migrating them into the Taj brand.
Chhatwal, who took over from Sarna in September 2017, said IHCL’s board members and management team had unanimously agreed to implement the new brand strategy.
“We must address diverse customer segments and price points... Just being in luxury and not segmented is not going to last. We want to also align our brandscape to dominate in high growth segments as well," he said.
Chhatwal has chalked out a five-year plan which includes scaling up inventory by more than 50% and monetizing non-core assets to improve profitability margin by another 8 percentage points.
At present, the company has an EBIDTA (Earnings before interest, tax, depreciation and amortization) margin of 17% and expects to achieve 25% by 2022.
Chhatwal said IHCL plans to scale up its room inventory to around 23,000 rooms by 2022, mostly through management contracts or an asset light model.
At present, the company operates around 16,992 rooms across the world. It would be open to building alliances with the other companies in “relevant segments" to increase revenues.
“We think, in a global world, we will not be able to do everything on our own. We will be building alliances... may be with a rental rental (company) or shopping company or within the Taj group...that’s like building alliances both internally as well as external partners to leverage each other," he said.
Chhatwal added that IHCL plans to monetise some of its real estate assets including land banks, apartments owned by the company and other non performing assets.
“We have a lot of land banks... and many such opportunities where we can monetise and develop them. We will unlock some of them through partnerships with capital investors, private equity companies, insurance or our own internal Tata sources," he said.
“Its important to spread themselves (IHCL) in different basket. While you create new brands, you cannot remove time tested brands and historically proven brands. One has to be present across the spectrum. In the last few years, most of the new assets are in the Vivanta and Gateway. So it’s equally important to make entry and creating presence felt in mid end and lower end of the market and at the same time high-end brands has to remain," said Gulam Zia, executive director (advisory, retail and hospitality) , Knight Frank India, a property advisory firm.
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