Expansion plans of Indian Hotels on track despite covid blues1 min read . Updated: 05 Aug 2020, 10:42 PM IST
It makes sense for hotel firms to expand as there will be a pent-up demand due to the lockdown, say experts
The Indian Hotels Co. Ltd (IHCL), promoters of the Taj group of hotels, said its expansion plans remain intact despite the covid-19 pandemic.
The hospitality industry has been reeling under the impact of the coronavirus outbreak, and is staring at a revenue loss of ₹90,000 crore in 2020, said the Hotel Association of India (HAI), which represents 300 hotels across categories.
The current debt levels in the organized hospitality sector, which is barely 10% of the total industry, stands at ₹45,000 crore, HAI added.
The hotel business has a negative outlook for the year with little hope of a revival, said Madan Sabnavis, chief economist, Care Ratings Ltd. Any company looking at expansion is operating on a medium- to long-term strategy, he added.
“Given that the country has been under lockdown for almost a year, there will be a pent-up demand. Therefore, it makes sense for hotel firms to expand. A large part of the hotel business comes from business travellers and this might not resume immediately. However, leisure travel has immense scope given that there is pent up demand and hotels will make the most of it by offering attractive packages. The same holds true for restaurants in these hotels," Sabnavis said.
Lockdowns put in place to contain the spread of coronavirus have delayed the completion and construction of certain properties, said Puneet Chhatwal, managing director and chief executive, IHCL.
The company has signed contracts for 29 new hotels, including 12 Ginger branded properties last year, and might end up unveiling 3-4 hotels a month this year, once the state lockdowns are lifted, he added. Multiple properties are near completion across locations such as Lucknow, Delhi, Thiruvananthapuram, Darjeeling, Shillong, Gangtok, Ahmedabad, Navi Mumba and Kalinganagar.
“Across segments, we were the leading hospitality company in India in terms of increasing the size of our pipeline. We opened more than one hotel per month in FY19-20. We should continue this momentum. If the lockdown opens up fully, then we might end up opening more than 3-4 hotels a month in the remaining part of the year, thereby averaging one hotel a month," Chhatwal said.
IHCL’s portfolio comprises 200 hotels under the Taj, SeleQtions, Vivanta, and Ginger brands. It also plans to launch a new brand in the extended-stay category under Taj Wellington Mews in Mumbai, and launch five such properties in the coming years.