A quiet yet significant transformation is taking place within Indian Hotels Co. Ltd (IHCL), the Tata group-owned hospitality giant. Under the leadership of Managing Director and CEO Puneet Chhatwal, the company is aggressively redefining its strategy and goals.
At the Capital Markets Day event in Mumbai, Chhatwal outlined his vision for India’s largest hotel group, emphasizing the aim to double revenue and the number of hotels by 2030, alongside increasing return on capital employed (ROCE) to over 20%.
Balancing Growth and Quality
Industry experts are watching IHCL’s expansion with both admiration and skepticism. While the group has achieved remarkable growth in recent years, some question the sustainability of its aggressive strategy. Critics point out that rapid scaling may compromise the brand’s reputation for quality, particularly in properties it does not directly manage.
“The challenge lies in maintaining consistent quality across a growing portfolio,” said Manav Thadani, founder-chairman of Hotelivate, a hospitality consultancy. “While signing new hotels is relatively straightforward, ensuring high standards across all properties is where the real difficulty lies.”
Rapid Expansion and Financial Recovery
Since taking the reins in 2017, Chhatwal has spearheaded IHCL’s ambitious expansion. The group grew its property count from 155 in 2017 to 350 by 2024, achieving this milestone six months ahead of schedule. Its portfolio now spans budget to luxury segments, including homestays and new revenue streams like food delivery and club memberships.
The financial turnaround has been impressive. Revenue, which plummeted during the COVID-19 pandemic, recovered strongly, reaching ₹6,768.70 crore in FY24, with net profits bouncing back from a ₹1,795.6 crore loss in FY21 to ₹1,330.4 crore in FY24.
Market Leadership and Competitive Edge
IHCL’s stock performance has been stellar, delivering over 400% returns in the past five years—outpacing the Nifty 50 index. The company’s market capitalization has grown to ₹1 trillion, dwarfing competitors like EIH (Oberoi Hotels) and Chalet Hotels.
However, the competition remains fierce. Rivals like Marriott International, which operates on an asset-light model, have a larger room inventory in India despite fewer hotels. IHCL, in contrast, relies on a mix of owned, leased, and managed properties.
Challenges on the Horizon
Despite its success, IHCL faces challenges in maintaining its premium appeal while expanding. The hospitality industry’s shift toward asset-light models and increasing outbound travel by Indian consumers could pose hurdles.
IHCL’s strategy to selectively invest in flagship locations, such as the Ginger hotel near Mumbai airport and developments in Lakshadweep, reflects its focus on balancing growth with brand integrity. Internationally, the company has adopted a leaner approach by managing and leasing properties rather than owning them outright.
As IHCL strives to achieve its 2030 goals, the question remains: can it sustain its growth without compromising the heritage and quality synonymous with the Taj brand?
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