Indian Hotels aims to scale up margins and become asset-light

Indian Hotels Company has revealed a strategy to improve its EBIDTA margin from 17 per cent now to 25 per cent by 2022. The company plans to increase its margin through; procurements - reduce imports and carbon footprint, energy costs - renewal/ solar power initiatives, payroll costs - optimized organization structure and shared services and admin and general expenses - reduce commissions.

Also, the company plans to monetise its non-core assets. It aims to go in the direction of asset-light model and hold less ownership (60 per cent of its assets will not be owned by the company by 2022), reducing its dependence on the luxury segment and moving the hotels portfolio of some of the group companies to the holding company. Divestment of its non-core assets includes residential apartments in Mumbai and other land banks and imitating new external and internal alliances with other Tata Group companies. It also plans to expand its existing properties to leverage / develop over 1 million square feet of unutilized FSI.

Company’s four focus area includes a top-line increase, margin enhancement, guest satisfaction and employee engagement. Further, to improve top-line company would rely on support and partnership from Tata companies' legacy of strong relationships with corporates, travel trade, diplomatic missions, enhance spa revenues leveraging the Jiva brand etc.

We believe Indian Hotel’s thrust to become an asset-light business and deleveraging of the balance sheet would drive overall performance in the coming fiscals. Indian Hotels owns 123 domestic and 16 international hotels with a total inventory of 16,992 under brands like Taj, Vivanta, Ginger etc.