IHCL surpasses growth targets, on track to set up 300 hotels by 2026

The Indian Hotels Company Limited (IHCL) is expected to surpass its initial objective of 2025–2026 and reach its goal of having 300 hotels in its portfolio in the next three to four months. Puneet Chhatwal, the MD and CEO, disclosed that they are opening two hotels each month in addition to signing over 2.5 contracts per month. According to the January release, there are 85 hotels in the pipeline in addition to the 285 hotels in IHCL's portfolio. For the quarter ending December 31, 2023, the company announced strong financial performance. Its operating revenue of INR 1,964 crores represented an 18% rise over the previous fiscal year. With INR 477 crores in profit after taxes, it was up 18% over the same quarter in 2022.
Chhatwal highlighted excellent operating leverage through asset management in existing hotels, management contracts, and innovation in new businesses, attributing the company's success to the shift in the business model. He emphasised IHCL's transition from an average 13.6% EBITDA margin in 2009 to the projected 33% margin in 2017. With 85 hotels under development and two hotel openings every month for the next three years, the firm hopes to keep its top spot in the market.
With strong cash reserves and no debt, IHCL, supported by the Tata Group, is positioned for both organic and inorganic expansion. According to Chhatwal, the company produced cash flow of INR 1,000 crores the previous year, and this year is expected to surpass that number. He said he was confident in IHCL's ability to continue as its leader and that the firm would continue to open two hotels a month for the next three years even if no new contracts were signed today.
In terms of future developments, IHCL has signed properties in Ayodhya for its Vivanta, Ginger, and SeleQtions brands. Chhatwal indicated a focus on spiritual destinations, with 66 out of the current 285 hotels located in such areas. He noted the growing interest in domestic tourism, particularly since the COVID-19 pandemic, with people taking off on long weekends and embracing the concept of "drivecations." Chhatwal acknowledged the changing consumer behaviour and the increasing emphasis on the domestic market compared to the previous reliance on foreign customers.
Investors responded positively to IHCL's strong Q3FY24 results, leading to a surge in the company's stock price to a 52-week high. The management's guidance for double-digit revenue growth in FY25, driven by portfolio expansion, new brands, and businesses, further contributed to the optimistic market sentiment. IHCL's strategic focus on management contracts, which account for 42% of operational inventory and 76% of the pipeline, is expected to support its growth.

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IHCL surpasses growth targets, on track to set up 300 hotels by 2026

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