Indian Hotels Company Ltd (IHCL) that owns & operates Taj Group of hotels has unveiled a five-year growth strategy focusing on profitability as well as retaining its iconic status.
The company with $1.2 billion in revenue, has announced plans to improve its EBITDA margin to 25% by 2022 from 17% now by increasing revenue and keeping tight control on costs.
“Our strategy is three-pronged. Restructure, Reengineer and Reimagine our portfolio to achieve 8% point EBITDA margin improvement. This will be driven by service excellence and implementation of revenue and profit driving initiatives,” Puneet Chhatwal, managing director, & CEO, IHCL said while unveiling the new business strategy. He declined to reveal the exact financial numbers citing regulative restrictions.
He said while 3 to 4% margin improvement would come from revenue enhancement another 3 to 5% will be generated from cost efficiency measures. As part of this plan the company has decided to monetize its non-core assets, which include 100 residential apartments in Mumbai and elsewhere as well its land bank.
Though the company is yet to fix any target, residential flats occupied by employees are expected to be sold out while the company will make best use of its land bank which is lying idle in Mumbai and Goa to name a few. These could be developed as new hotel properties with partners, Mr Chhatwal said.
Major change in brand architecture
In a major change in its brand architecture which was tuned towards a single Taj brand by previous managing director & CEO Rakesh Sarna, the company has decided for a multi-brand strategy in line with the one which was unveiled by former MD Raymond Bickson and Vice Chairman RK Krishnakumar nearly a decade ago.
It has decided to scale up its operations in three brands which include Taj, Vivanta and Ginger. Decision on its other brands such as Gateway by Taj, Ambassador in Delhi will be taken in the next three to six months.
By 2022, the company has set a target to increase its room inventory by 50% to over 23,000 rooms in all categories and enhance its geographical footprint in India and abroad.
For a better customer experience
Under this new business strategy, the company said it would work towards improving customers’ experience and strengthening market leadership in each of the segments it operates. It has decided to simplify its holding structure, to embrace technology to find new ways to improve margins. It has also decided to focus on the high growth segments of business, upscale and economy segments to tap the potential.