IHCL's Ginger brand continues expansion, on track to scale up to 125 hotels

Ginger, the value brand of hotels that is part of the Indian Hotels Corporation (IHCL, or Taj Group of Hotels), has reported getting back to profitability for the last three months and its officials say the brand is on target with plans to scale up.

It had 45 operational hotels three years ago and that has grown to 57 now. There are another 30 locations in the pipeline for the near future.

Puneet Chhatwal, managing director and chief executive officer, IHCL, said: “The re-imagined Ginger is defining the new customer value proposition by providing a lean luxe experience. As a growth vehicle for IHCL, it will soon scale up to 125 hotels across India.”

The target of 125 hotels is expected to be achieved by 2025. 

Of the 18 launches IHCL is looking at in 2022, the majority would be under the Ginger brand.

IHCL has traditional hotel brands like Taj, Vivanta, SeleQtions, and new-age ones like Ginger and Ama.

New hotels include properties in Ahmedabad, Goa, and Bhubaneswar, and the keys or rooms equal about 5,000 operational units and another 4,000 under development, making Ginger a strong growth engine for the hotel chain and accounting for around 50 per cent of its pipeline.

Chhatwal had earlier talked about how it was imperative to get the positioning right before scaling up to 100 locations. The other significant shift in the business model has been to enhance the F&B offering, which now contributes almost a fourth of revenue, and that is likely to increase.

“Qmin is joining us in this journey, which will first be in Goa and then in Mumbai,” said Deepika Rao, chairperson of Roots Corporation, the entity that Ginger is housed in. (Roots is owned by IHCL.) Qmin is a concept that enabled food delivery from IHCL hotels to consumers and was born during the pandemic.

The portfolio for Ginger is typically small-box hotels with fewer than 200 rooms but there are some exceptions, said Rao. Among the prime assets that are part of the expansion is Mumbai airport Ginger in Santa Cruz, which is a six-storey building that will be larger than other Gingers and have around 370 keys.

According to a market report by JP Morgan, IHCL is the largest player in the hospitality sector in India, with an inventory of 20,000 rooms and a pipeline of 7,500 rooms. New inventory addition is largely asset-light. The report adds IHCL has signed about 100 new hotels in the past five years with 40/35/25 hotels under the Ginger, Vivanta, and Taj brands. Additionally, the management contracts which are asset-light have grown from 32 per cent to 46 per cent. Ginger’s FY22 revenue was Rs 180 crore and rebounded better than most.

Rao said: “Ginger across all the other listed companies had one of the best recoveries over pre-Covid levels, like we did close to about 85 per cent in FY22, we recovered to 85 per cent of FY20 revenues. For rates compared to pre-Covid, we are almost 30 per cent up, and have reached, at a portfolio level, Rs 3,000+ARR (average room rate). Over the last two or three years, Ginger has been described as a ‘Lean luxe brand’ as opposed to a budget offer. The difference is that the former offers more than just basic lodging and food. The hotels in the recent past underwent physical makeovers.”

Those included a new vibrant logo, modern air conditioners (window air conditioners were used earlier), full-service bars in cities such as Goa, Jaipur, and Mumbai, a lobby lounge with a jukebox, iPads in the lobby for orders, and menus with in-house catering.

While IHCL officials declined to comment about the prospects of carving out the Ginger brand and list it as a public entity, Tata’s leadership has discussed this in the past.