IHCL | IHCL Share Price: Indian Hotels always deliver a little more than promised; that is the story of the last 5-6 years: Puneet Chhatwal

1 lakh crore rupees market capitalization for Hotels in IndiaDo you count the zeros?
The Puneet cult: I don’t really know how to count them, but yes, it was a very proud moment for the industry, not just for the group. I think this industry was not known for value creation, but for the glory that comes with it. And I think finding that sweet spot and the right balance has been a big boost across the industry globally, post-COVID-19.

IHCL has been a turnaround story, how much of that is largely due to the sector, which is now enjoying a tailwind? How much of it is due to the taj brand What about Tata culture? And to what extent is this due to Puneet Chhatwal?
Puneet Pageant: The last one is that sometimes you just end up being in the right place at the right time. I would say first of all that the Tata Group has performed excellently and we are fortunate to have the leadership and guidance of the board, especially driven by the group chairman.

The second is finding the right strategy. And our strategy has not been at any extreme. It has not been too active or too weak in assets, nor has it been solely focused on one brand. So the whole process, which we started in 2017-2018 with Aspiration 2022 and post-COVID with Ahvaan 2025, was to try to be a very strong player in terms of diversifying our businesses into new and traditional businesses. New businesses have been driven mainly by digital, traditional businesses have been driven through operational leverage, which has obviously helped a lot post-COVID when demand became more supply-friendly.

We must not forget our uneven growth. We have more than doubled the size of the portfolio in the last six years and we are currently opening more than one hotel a month. And we still have over 110 hotels in the pipeline. 90% of that portfolio is domestic and over 90% of that 90% is based on a capital-light model, meaning we are investing in another 10-12 assets, but the rest is capital-light, either through management contracts or through operating leases, especially for Ginger.

How many of your brands have reached the top today and how many are halfway to expanding? For example, you have been telling us to keep an eye on Ginger Mumbai and it has been a fantastic success. How many of these other brands apart from Taj are going to take off now?
Puneet Pageant: Taj is something very special, it is a very big emotion and we have been living and breathing Taj for 120 years. So we always have to say Taj and not Taj. Taj is obviously the strongest hotel brand in the world, the strongest brand in India across all sectors and it has been rated that consistently by Brand Finance for the last five years. Among the emerging players, Ginger is getting there very fast. It is going to be a hundred hotel portfolio in the next few weeks or months and the success of Ginger Santacruz has been phenomenal. It is in its first year of operations and in the first year, we remain confident that it will end up with over 85% occupancy with a rate in excess of Rs 6,500 crore. So, I think for a first year of operations for a brand like Ginger, that is a phenomenal performance and definitely an EBITDA in excess of 55%. Ginger is the brand that is going to be the trend-setter after Taj, closely followed by Vivanta, Gateway, SeleQtions, Homestays with Ama, etc. Today, we are striving to continue to grow these brands very strongly and when we talk about the future, we expect 25-35% of our revenue to come from non-Taj businesses and Taj, which used to be 90%, will be 65% on a much larger absolute basis. So, Taj’s revenue in the last five-six years has doubled. The portfolio has more than doubled. So, Taj also has over a hundred hotels. It is phenomenal for a luxury brand to have over a hundred hotels spread across the world. I am not only optimistic but I am also very confident that our new businesses will thrive and the guidance that we have given that they will have a compound annual growth rate (CAGR) of over 35% going forward is not only achievable but we are optimistic that we will also outperform that.

I am going to pinch myself because when I covered the Indian hotel and Covis journey, it seemed almost impossible for us to be anywhere near Rs 50,000 crore, let alone Rs 100,000 crore. Then, magic happens and when culture, service, brand, good management team and macroeconomic tailwind come together, market caps are created. Now that you are in the Rs 100,000 crore market cap league, how would you manage expectations?

Puneet Pageant: You see, expectations are one thing, but we promise and we deliver. We will deliver a little bit more than we have promised, that has been the story for the last five or six years. I don’t see any reason for that to change. We don’t fall into that category of under-promising and over-delivering. We promise what we think is right and then we deliver, and I think the last nine quarters have been consecutive historic quarters and I don’t see any reason for anything to change in the next few quarters.