South Asia and Gulf: ITC Hotels Arms for First Expansion Plan After Demerger

ITC plans to expand its hotel business internationally, beginning with neighbouring countries and West Asia, its Chairman and Managing Director Sanjiv Puri said.

The cigarettes-to-consumer goods conglomerate has demerged its hotels division and the new company will list on bourses in the next couple of weeks. The date of ITC Hotels Ltd listing is yet to be announced but Puri said it will happen in "next few weeks".

India's most-valued consumer company selling a wide variety of goods from cigarettes to paper, also operates 140 hotels, almost all of them in India.

ITC's shareholders will own 60 per cent in the new unit, with the parent company retaining the rest.

"So as far as overseas is concerned, we are starting to (expand). We have been India-centric, but we have started to go beyond India. We have a hotel in Colombo. We have one in Nepal. There is one more in Nepal that we have signed up for.

"And over a period of time, we will expand (overseas), primarily more focused on proximal market, West Asia, and over time, we will look at beyond that also. Or, if specific interesting opportunities come out, we will explore those as well," Puri told PTI in an interview.

ITC is targeting to grow its portfolio from 140 to over 200 hotels across India. Previously operating as a division of the larger ITC conglomerate, the hotel business will now gain operational autonomy after the demerger.

ITC Hotels currently boasts 140 properties with 13,000 rooms, of which 45 per cent are owned and 55 per cent are operated through management contracts. The company is shifting further towards an asset-light growth model, focusing on management agreements to increase its market presence.

Puri said the overseas expansion will be managed and franchisee model.

Asked how ITC plans to counter competition from well-entrenched foreign players, he said the group brings a unique proposition to the table -- its hotels being a favourite of foreign dignitaries visiting India.

"We have iconic cuisine that is acknowledged globally," he said. "I am told, a lot of foreigners who come to India first book a table at Bukhara (restaurant at ITC Maurya in New Delhi). So we have iconic cuisine, we have iconic service standards. I think we're well known for that."

Also, ITC hotel chain stands out for its green credentials with all its properties having emissions that are below the Paris 2030 agreement targets.

Besides, the world's first 12 LEED certified net-zero carbon hotels are all ITC hotels. The world's first five net zero water hotels are also ITC hotels.

"Consumers want to opt for companies and products that are greener and I think these are some of the things that we bring onto the table, and these differentiators will help us compete successfully," he said.

Operating under six distinct brands -- ITC Hotels, Fortune, Mementos, Storii, WelcomHeritage, and Welcomhotel -- the group in April last year opened its first hotel in Sri Lanka.

Asked about the valuations that the demerged entity may command, Puri said the role of management is to run the business well, make the businesses contemporary and future-ready, create value, and let the market determine the valuation. "So I will not get into valuations per se".

"Our role is to create value, to make the businesses competitive. That's our role. And when will it be listed? I think it should list in the near future. I think my say within the next few weeks, latest, within three, four weeks, it should list," he said.

On India expansion, he said a few years back, ITC had restated its strategy for hotels, moving to a more asset-right strategy. "Earlier we were, I think, relatively more asset-heavy strategy. So we moved into an asset right strategy, and with that strategy we are building our hotel expansion."

ITC, he said, has beefed up its portfolio, adding two new brands -- Mementos by ITC and Storii.

"So today we have, at the luxury end, ITC Hotels and Mementos by ITC hotels, Mementos is a leisure destination, leisure resort. And in the five star, we have Welcomhotel. And then we have boutique properties which are again leisure, which are like Storii, business hotels under Fortune, and then we have heritage properties WelcomeHeritage," he said.

Stating that the company will grow across the portfolio, he said the portfolio, from a profile perspective, over a period of time, will be richer than what it is today.

"You will have a greater percentage of rooms in upper, upscale. That's the idea. And I think we are getting very good traction," he said. “In the last 24 months, we have opened 26 hotels. So we have a target of 200. I have said to the team that it has to read at least 200.”