The Indian Hotels Company Limited (IHCL), which runs the Taj group of hotels, was founded in 1902 by Jamsetji Tata and is headquartered in Mumbai where its flagship hotel Taj Mahal Palace Hotel is located. Taj has been ranked as the "World's Strongest Hotel Brand and 'India's Strongest Brand' across sectors by Brand Finance
Puneet Chhatwal, MD & CEO of IHCL, in a conversation with Business Today’s Sourav Majumdar and Krishna Gopalan, explained why it is important for hotels to be present across segments in India, his company's plans and more. "Taj is not just our brand, but the crown jewel of this nation. This is everybody’s Taj. It is very special," he said
Talking about IHCL's resilience amid the Covid-19 pandemic, Puneet Chhatwal highlighted that there is a fundamental human need for business and leisure which cannot take that away, and this is a huge plus that is working in IHCL's favour
According to Chhatwal, the landscape in India is not easy since connectivity is a challenge. However, he believes that over time, good infrastructure will assist IHCL's business and bring in scale. "We are present in 125 destinations across the world and good connectivity in India augurs well for our business," he said
Talking about IHCL's scale and challenges, Chhatwal told Business Today that their corporate overhead as a percentage of sales has steadily been going down. "There is still pressure on costs and now with business coming back, the cost of hiring too has gone up. We suffered a lot less, but the fact is that salary costs are higher," he said
Explaining IHCL's business model, Puneet Chhatwal said that as opposed to the traditional model of owning 77% property, they are at 56% today, while the other 44% is fee-based, and that they are on course to achieve the 50:50 split target. "Having said that, only going asset-light is not the right structure since it’s a lot of work for very little value creation," he said
According to Puneet Chhatwal, pre-Covid, 50% of the IHCL business came from Taj properties. Now, it is at 70%. The overall revenue has grown and so has the market share. In 2016-17, Taj had 41 hotels, and today, that number is at 81. "Our ambition is to have 30-40% of the business from Taj. We are doing well since we are benefitting from the operating leverage in the old hotels and also through the asset-light fee that we are getting," he said
Talking about whether IHCL has plans to hive away any of its brands as a separate entity, Puneet Chhatwal said, "No, we will keep all of them. We are expanding our hospitality ecosystem in which many brands that existed are being treated as standalone businesses."
Elaborating on IHCL's plan on the overseas front, Puneet Chhatwal said that they have to grow internationally with the Taj. "We need to add hotels in Europe and wherever Air India is flying or for that matter, wherever there is a significant Indian diaspora. We want to benefit from that and are already working on leads," he said
In 2025, ICHL will be at more than 300 hotels across the globe. The company needs a presence in Bangkok and Singapore, said Puneet Chhatwal, adding, "Success in this business is not just adding dots on the map but creating sustainable value. From where we are placed, we can dominate the subcontinent and Dubai before starting to look around."
Talking about striking a balance between allocation of capital and margins, Puneet Chhatwal said, "Development is an art and a science. Hence, we need a balanced portfolio and that’s why we have the focus on different formats. Ginger is quickly scaling up, while Taj is making the big investments. We can easily adopt an asset-light model and to scale up, we need to do it with Ginger, Vivanta, amã, Qmin."
According to Puneet Chhatwal, AI will not replace the services. "You don’t want to go to a palace hotel and use a mobile phone to open the door. It is a very intimate, personal experience. That said, we have been using the enablers very effectively, but I think we will always be a service-driven business and that part is in need of the human touch," he said
Talking about disruptions in the hospitality industry, Punnet Chhatwal mentioned that they are blessed since it is difficult to disrupt assets like the ones they have. "To me, the disruption can be converted into an opportunity. It really comes down to the market opening up and that is good for us," he said