Diversified conglomerate ITC Ltd., which is in the process of demerging its hotels business into a separate listed identity, is planning to ramp up its hotel room inventory by 33% to a total of 17,265 rooms in the next four years. In a the presentation on the Company’s Hotels Business to stock exchanges, ITC said it is also looking at increasing its count of hotels to 186 from the current 140.
ITC added the major ramp-up will happen at its upscale Welcomhotel and Fortune brands of hotels. Welcomhotels will add a total of 1,796 rooms across 13 new properties, and Fortune hotels will add 1,439 rooms across 18 properties. The flagship brand, ITC Hotels, will not open any new property but will increase the room count in existing ones by 102.
Storii will add 578 rooms in 10 new properties, and Welcom Heritage will open four new properties with 162 rooms. Mementos will open one new property in the next four years, with a total of 223 rooms.
Under its asset-right strategy, ITC will continue to own large luxury properties. New launches will comprise mainly of properties under management contract. The strategy incorporates renovating rooms in hotels that are owned directly by ITC, and the growth pipeline led by management contracts. Under the management contract model, a real estate developer continues to own the property, and ITC undertakes the necessary renovation and management of the hotel.
Usually, hotel groups earn a higher margin from owned properties, but owning properties leads to heavy investments and higher amortisation costs. Under the management contract, however, the hotelier need not invest a heavy amount of money as the asset is owned by a different entity.
ITC is also looking at increasing the count of premium hotels under management contract to drive its future growth. In the next five years, premium hotel rooms would constitute 42% of the total managed portfolio, up from 30% currently, ITC said in the presentation.
For the next 24 months, ITC will target opening at least one hotel every month, the company said, adding that it has opened 28 new managed properties from November 2022 to October.
(With inputs from Informist)