1 lakh crore market cap for Indian Hotels? Did you count zero?
Puneet Chhatwal: Actually, I don’t know how to count. But yes, it’s a very proud moment for the sector, not just for the group. I think this sector is not known for creating value as much as for the glory part of it. And I think that finding the sweet spot and the right balance has been driven very well across all sectors globally, post-COVID.
IHCL has a turnaround story, how much is generally due to the sector, which now enjoys a tailwind? How much of this is due to the Taj brand and the Tata culture? And how much of this is due to Puneet Chhatwal?
Puneet Chhatwal: The latter is because sometimes you will be in the right place at the right time. I would say Tata Group, first of all, has done very well and we are very blessed to have leadership and guidance from the Board that we have, especially led by the chairman of the group.
The second is finding the right strategy. And our strategy has not been extreme. It’s not asset heavy, or asset light, or just focusing on one brand. So, the whole journey, which started in 17-18 with Aspiration 2022 and sent the COVID with Ahvaan 2025 trying to be a very strong player in various new and traditional businesses. The new one is driven mainly by digital, the traditional one is driven through the impact of operations which clearly helps many of the COVID shipments when the demand becomes more favorable.
We must not forget that our growth is not rich-for-rich. We have more than doubled the size of our portfolio in the last six years and are now opening more than one hotel per month. And we still have more than 110 hotels in the pipeline. 90% of the pipeline is domestic and more than 90% of that 90% is based on the capital lamp model which means we invest in 10-12 other assets but the rest is capital lamp whether management contract or driven through. the operating lease is primarily for Ginger.
How many of your brands have now reached their peak and how many of your brands are in the middle of it and can you expand? For example, you have told us to watch Ginger Mumbai and it has been a huge success. How many of these other brands apart from Taj will be launched now?
Puneet Chhatwal: The Taj is something special, It is such an emotion and we have lived and breathed the Taj for 120 years. So, we should always say Taj and non-Taj. Taj is obviously the strongest hotel brand in the world, the strongest brand in India across all sectors, now consistently rated by Brand Finance for the last five years. Among the emerging players, Ginger has come a long way. It will be a portfolio of hundreds of hotels in the next week or month and Ginger Santacruz’s success is incredible. In the first year of operations and in the first year, we remain confident that we will finish at more than 85% occupancy with fares north of Rs 6,500. So, I think for the first year of operations for a brand like Ginger, it’s a phenomenal performance and certainly an EBITDA that’s north of 55%. Jahe is the brand that will make waves after Taj and is clearly followed by Vivanta, Gateway, SeleQtions, Homestay with Ama, etc, etc. hope that 25% to 35% of our top line will come from non-Taj businesses, and Taj which used to be 90 will be 65 in absolute numbers more. So, the profits at Taj in the last five-six years have doubled. The portfolio has more than doubled. So, the Taj is also more than a hundred hotels. It’s great that a luxury brand has hundreds of hotels and spreads all over the world. I am not only optimistic, but also confident that the new business will move forward and the guidance provided will be more than 35% CAGR moving forward not only is it achievable, we are optimistic that we will beat that performance as well.
I’m going to pinch myself because when I covered the Indian Hotel and the Covis journey, it almost seemed impossible that we would get anywhere near Rs 50,000 crore, forget about Rs 1 lakh crore. So, magic happens and when culture, service, brand, good management team, macro tailwinds come together, market caps are created. Now that you are in the Rs 1-lakh-crore m-cap league, how do you manage expectations?
Puneet Chhatwal: Look, expectations are one thing, but we promise and we deliver. We’re going to deliver more than we’ve promised, which has been the story for the last five or six years. I don’t see any reason to change that. We do not include in the box in the promise, through sending. We promise what we think is right and then we will deliver and I think the last nine quarters have been consecutive historical quarters and I don’t see any reason to change in the next few quarters to come.
