Hospitality sector should do well in the second quarter of this year, occupancy levels going up month on month: Puneet Chhatwal, MD and CEO, IHCL

Hospitality sector should do well in the second quarter of this year, occupancy levels going up month on month: Puneet Chhatwal, MD and CEO, IHCL

The hospitality industry should do well in the second quarter of this financial year and all in all there is ‘optimism’ especially with the increased air traffic, said Puneet Chhatwal, MD and CEO of Tata Group backed Indian Hotels Company (IHCL) in an interview to ET.

“The business in quarter two should be better than quarter three of the last fiscal for the sector. Domestic tourism has taken a very strong charge. Most of the leisure destinations are outperforming themselves compared to pre covid levels. Our hotels in Theog, Rishikesh, Goa and Rajasthan have done well. Corbett, a small and off beat destination is doing double the pre Covid numbers,” said Chhatwal.

“All in all, there is optimism especially with the increased air traffic. The occupancy levels for the industry are going up month on month, and going forward could more or less double compared to quarter one,” he added.

Chhatwal said the day corporate travel comes back to 80-90% of pre Covid levels in markets such as Delhi, Mumbai and Bangalore, the total revenue of the hospitality industry should exceed pre Covid levels, factoring that the leisure business also stays the same.

Talking of IHCL’s pipeline, he said the chain has added around 70 new contracts to its pipeline in the last three years, out of which which 15 hotels have opened amongst which some were existing properties.

“We still have 55 hotels in the pipeline. As we speak, we are signing and opening more hotels,” he added.

IHCL plans to open 12 hotels in this financial year, of which four have opened. Its new hotels will open in markets such as Dubai, Bhopal, Kolkata, Navi Mumbai and Sikkim besides the Taj Wellington Mews in Chennai.

“We are still following the strategy of opening one hotel a month. We should still have a good year for signings this year too. As per the HVS Anarock report, IHCL has the most number of signings and openings in 2020,” said Chhatwal.

“Today, we have a portfolio of 225 hotels with more than 150 operational hotels in India itself. Our Ginger brand has a portfolio of 80 hotels out of which 55 hotels are in operation and 25 in the pipeline. The home stay brand Ama Stays & Trails has now 51 properties of which 35 are in operations. Taj is also getting close to a 100 hotels portfolio. Taj, Ama and Ginger will each reach the 100 properties milestone ,” he added.

Ama is not included in the number of IHCL hotels as it’s a home stay brand with villas and bungalows. Chhatwal said he sees a lot of growth for brands such as SeleQtions and Vivanta as well.

“The highest number of hotels in the pipeline are under Vivanta. SeleQtions is gaining ground. I’m very positive about the growth strategy for these brands,” he added.

The Directorate General of Civil Aviation (DGCA) has extended the ban for scheduled commercial international passenger services till October 31. On the resumption of commercial international flights and travel, Chhatwal said international travel cannot be solved unilaterally and has to looked at bilaterally.

“Creating vaccine passports as well as common standards for hygiene and protocols is necessary. This will provide assured safety for customers and stakeholders including employees,” he said.

“The domestic air traffic is already at 80% of pre Covid levels as per reports. International travel at the moment is limited and one sees more of Indian diaspora travelling overseas to meet friends or family. Certain international markets like Maldives and Dubai are working very well. I am sure more markets will gradually pick up and we can use this time to become future ready,” he added.

On the chain’s expansion strategy, Chhatwal said if the company has to invest in India, it will be with partners for management contracts or with the help of some vehicle that it will create with select partners. “Out of the 70 contracts that we signed, 67 are asset light (without any investments from us). They are either management contracts or operating leases. We have some investment with the lease of Fateh Prakash Palace, The Connaught and Ginger hotel that we are building in Santa Cruz. We may consider a sale and lease back or a sale and manage back arrangement for this Ginger hotel eventually,” he said.

“We need to build a critical mass for all our brands. We are looking forward to 100 Ginger hotels very soon. We have a lot of discussions regarding expansion with various partners which are ongoing. Lakshadweep and Diu are opening up,” he said. There are a lot of resorts and IHCL is a preferred partner given our history of pioneering. There are multiple opportunities being the largest hospitality company, but it has to be competitive and has to be financially viable. Internationally, we are opening our third property, the Taj Palm in Dubai by January.”

On the government’s measures for the hospitality sector, Chhatwal, who is also the president of Hotel Association of India (HAI), said the positive measures have been around ECLGS, the decision making on moratoriums and giving the travel and tourism sector a patient hearing. “What can follow is some improvements including, most importantly, using the 75 years of independence to provide tourism, aviation and hospitality an infrastructure status at the central level, and the inclusion of the sector in the concurrent list of the constitution. Getting an industry status in all states is also needed. Some have provided that already. This shows the intent and seriousness towards the sector. This would help fuel growth in the industry and create more jobs,” he added.

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