Best yet to come for hospitality sector: IHCL CEO Puneet Chhatwal

The hospitality sector, and the Indian Hotels Company (IHCL) in particular, has surpassed the pre-Covid level in terms of room occupancy and average rates of 2019-20, but the “best is yet to come and there is room for further growth,” Puneet Chhatwal, chief executive and managing director, IHCL told Business Standard.
 

The Tata Group’s hospitality arm reported a record quarterly performance for the June quarter as all-round growth helped the firm surpass the 2019-20 operational performance in terms of occupancy and average daily rates.
 

It turned in a consolidated profit after tax (PAT) of Rs 170 crore for the quarter against a loss of Rs 277 crore for the corresponding period in the previous financial year, IHCL said in a statement.
 

The company’s revenue surged by 249.45 per cent to Rs 1,293 crore during the quarter under review, compared to Rs 370 crore in the year-ago period.
 

All segments have seen strong demand, whether it’s conference, business or leisure. The operational performance has been particularly boosted by the hotels in Mumbai, New Delhi and Bengaluru. Leisure destinations like Goa and Rajasthan were anyway doing well, Chhatwal said. This resulted in an Ebitda margin of 31.3 per cent, which is an improvement of 1,140 basis points over Q1 FY20.
 

Thanks to the Indian Premier League matches that were held in Mumbai and Pune, and big-ticket events like the Africa Summit in New Delhi, the business hotels have contributed equally well, he added.  
 

“I see no change in demand and it will continue to outpace supply.  It would be stronger than the pre-Covid year of FY20. Unless there are some black swan events like Covid or geopolitical disturbance, like the one in Sri Lanka, which is beyond anybody’s control, we will go strong with whatever we have put in place,” said Chhatwal.
 

He conceded that trends like revenge travel may not last forever. But when it tapers off, the other lever of international travel, which is a big draw for hotels and is yet to kick in, will come into play. Starting from October to March, the influx of international travellers is likely to begin. By then the visa issues are also likely to get sorted.
 

Additionally, the last four months will see an impact of the 2023 G20 Summit to be held in India, where representatives from other nations also come in addition to participating nations. This too shall give a boost, he stated.
 

On whether the recent rate hikes by the Reserve Bank of India and the inflationary trend will have an impact, he said, “I don’t see that having an impact. It’s a healthy correction and should have happened a long time ago. In India people are used to 5-7 per cent inflation. The problem is in Germany or France where you have 1 or 2 per cent inflation.”
 

IHCL doesn’t have a presence there. Its property in London has seen very strong bookings and July has been the best month in the company's history. The occupancy and rates have been very strong in the sector.
 

From a portfolio of 89 hotels, Taj will soon reach the 100-hotel mark — one of the very few luxury brands to hold such a large portfolio, he said.