Indian Hotels Co. Ltd, which runs Taj hotels, plans to monetize around 10 properties in the next three years as part of a larger plan to bring down its debt and fund its future growth, said a top executive. The Tata Group firm aims to reduce its consolidated debt by 30% in the next 18 months, mainly through asset monetization, Puneet Chhatwal, managing director and chief executive officer said in an interview.
As of 30 September, Indian Hotels’s net debt stood at ₹2,082 crore.
In the second quarter ended 30 September, the company’s net loss significantly narrowed to ₹5 crore from ₹59.95 crore in the year-ago period.
Its total income saw a 13.5% growth to ₹981 crore from ₹864.18 crore in the corresponding quarter previous fiscal.
Chhatwal attributed the growth to its focus on asset management and cost optimization.
“At the moment, we are looking at monetizing around 10 properties. If we can do two-three per annum, then we are on a good track,” Chhatwal said, adding that Indian Hotels would aim to retain a few of these properties through management contracts.
The properties for sale would span across all brands, including The Gateway, Vivanta and Ginger located primarily in the secondary and tertiary markets. In October, Oriental Hotels, an associate of Indian Hotels, sold Gateway Hotel Beach at Visakhapatnam to Varun Group, a diversified business enterprise, for an undisclosed sum. However, Indian Hotels retained management of the hotel.
Chhatwal said the asset sale is also part of the company’s strategy to own 50% of properties while retaining the rest through management contracts with the property owners. At present, Indian Hotels owns around 70% of the hotel assets it operates in India and abroad.
“We just don’t want to sell (the hotel assets) at any price. Not just in terms of the amount you get for the property but also the contract you get in return. It should be a long-term contract with the right partner,” he said.
The company plans to increase its portfolio of management contract, but would continue to look at opportunities to invest at the right property. For instance, Indian Hotels is investing around ₹80 crore to renovate The Connaught hotel, an 85-room, four-star hotel property on Janpath Lane in central Delhi.
The property would be introduced as part of its yet to be launched boutique hotel brand Seleqtion. In September, Indian Hotels finally retained The Taj Mahal Hotel on Mansingh Road in New Delhi after years of court battle with the New Delhi Municipal Council, the owner of the asset.
In line with its five-year strategy, Aspiration 2022, IHCL signed 15 new hotels across brands in the last one year in both domestic and international business.
Chhatwal said it will continue to look for opportunities to expand its business in key international markets such as the US and the UK.
Source: Mint