Previously, the company allocated around 4% to 5% of its annual revenue for capex, which amounted to Rs 471 crore in FY23 (with annual revenue at Rs 5809 crore).
Indian Hotels Company (IHCL), one of India’s largest hotel operators, has earmarked a capital expenditure (capex) of Rs 750-800 crore for FY25, significantly higher than its typical annual spend, as it looks to spend on greenfield properties.
Giridhar Sanjeevi, executive vice president and CFO, IHCL, said in a post earning call, “For capex for the next year, our guiding principle is that as far as renovation is concerned, we will be in line with our requisition numbers and our greenfields on top. Between the two, it will probably be in the range of around Rs 750 to Rs 800 crore.”
New greenfield properties of the company are coming up at Lakshadweep and Ekta Nagar, Gujarat (near the Statue of Unity). Besides, it is relaunching Taj Malabar, Cochin and also opening the Taj Cochin International Airport.
While the Tata group company historically incurred capex spends between 4% to 5% of its annual revenue (FY23 revenue stood at Rs 5809 crore), its FY23 capex went up to Rs 471 crore. During the first nine months of the year, IHCL incurred a capex spend of Rs 470 crore.
The company, which has the Taj, Seleqtions, Vivanta and Ginger brands under it, had 200 operational properties and 85 under-development by the end of December. The company said it is on track to have 20 property openings in FY24.
Some of the key renovations the company carried out this year were those of Taj Mahal, New Delhi, Taj Lands End, Mumbai, Usha Kiran Palace, Gwalior and Tajview, Agra. Of the 85 properties that it has in the pipeline, 76% are under management contracts and the rest are owned or leased.
One of the biggest corporate decisions made by IHCL in recent months has been about its plans to introduce yet another hotel brand. The company is looking to have new, full-service hotel brands that will cater to the tier-2 and tier 3 markets. This decision comes six years after the company announced the phasing out of the Vivanta and Gateway brands. Vivanta, however, was reintroduced as ‘Vivanta by Taj’.
Puneet Chhatwal, managing director and CEO, IHCL, said, “The price point (of the new hotel brands) will be somewhere close to Vivanta. We’re looking at more like Rs 8,000-9,000 average rate positioning. So, higher than Ginger but lower than Taj, somewhere in between, but a full-service brand.”
While Vivanta is positioned as an upscale brand, IHCL has envisaged the new brands to be stylish, vibrant but not a mass market offering. “We need a brand alongside Vivanta, which will help us cater to the mass market of 400 to 500 million Indians who are not in metros but in tier-2 and tier-3 cities,” he said.
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