Rs 1 lakh crore market capitalization for Indian Hotels? Do you count the zeros?
Puneet Chhatwal: Actually, I do not know how to count them. But yes, indeed a very proud moment for the sector, not just for the group. I think this sector was not known for value creation as much as it was for the glory part of it. And I think finding that sweet spot and the right balance has been very well driven in the entire sector globally, post-COVID.
IHCL has been a turnaround story, how much of that is largely because of the sector, which is now enjoying a tailwind? How much is this because of the Taj brand and the Tata culture? And how much is this because of Puneet Chhatwal?
Puneet Chhatwal: The last is because sometimes you end up being in the right place at the right time. I would say the Tata Group, firstly, has done extremely well and we are very blessed to have the leadership and the guidance of the board that we have, especially driven by the group chairman.
The second is finding the right strategy. And our strategy has not been on any extreme. It was neither asset heavy, nor asset light, nor only focused on one brand. So, the entire journey, which we commenced in 17-18 with Aspiration 2022 and post COVID with Ahvaan 2025 was trying to be a very strong player in terms of diversifying our businesses to new and the traditional one. The new ones driven mainly by digital, the traditional driven through operating leverage which has obviously helped a lot post COVID when the demand became more favourable to supply.
We should not forget our not like-for-like growth. We have more than doubled the size of the portfolio in the last six years and currently we are opening more than one hotel a month. And we still have more than 110 hotels in the pipeline. 90% of that pipeline is domestic and more than 90% of that 90% is based on a capital light model which means we are investing in another 10-12 assets but the rest of it is capital light whether it is management contracts or driven through operating leases especially for Ginger.
How many of your brands today have reached the pinnacle and how many of your brands are midway where you can expand them? For example, you have been telling us to watch out for Ginger Mumbai and it has just been a fantastic success. How many of these other brands apart from Taj are going to be taking off now?
Puneet Chhatwal: Taj is something so special, It is such an emotion and we have been living and breathing Taj for 120 years. So, we have to always say Taj and non-Taj. Taj is obviously the world’s strongest hotel brand, India’s strongest brand across sectors, now consistently rated that way by Brand Finance for last five years. Among the emerging players, Ginger is getting there very fast. It is going to be a portfolio of hundred hotels in the next weeks or months and the success of Ginger Santacruz has been phenomenal. It is in its first year of operation and in the very first year we remain confident that it will finish at more than 85% occupancy with a rate which is north of Rs 6,500. So, I think for a first year of operation for a brand like Ginger, that is phenomenal performance and definitely an EBITDA that is north of 55%. Ginger is the brand that will be making waves after Taj and obviously very closely followed by Vivanta, Gateway, SeleQtions, Homestays with Ama, etc, etc. Today we endeavor to keep growing these brands very strongly and when we talk about the future, we hope that 25% to 35% of our top line will come from the non-Taj businesses, and Taj which used to be 90 will be 65 at a much higher absolute amount. So, the revenues in Taj in the last five-six years have doubled. The portfolio has more than doubled. So, Taj is also more than hundred hotels. It is phenomenal for a luxury brand to have hundred hotels plus spread across the globe. I remain not only optimistic, but also extremely confident that our new businesses will thrive and the guidance that we have given that they will be more than 35% CAGR going forward is not only achievable, we are optimistic that we will beat that performance also.
I am going to pinch myself because when I was covering Indian Hotel and the journey in Covis, it almost looked impossible that we would anywhere be close to Rs 50,000 crore, forget about Rs 1 lakh crore. So, magic happens and when culture, service, brand, good management team, macro tailwind come together, market caps get created. Now that you are in the Rs 1-lakh-crore m-cap league, how would you do manage expectations?
Puneet Chhatwal: See, expectations is one thing but we promise and we deliver. We will deliver a bit more than we have promised, that has been the story of the last five-six years. I see no reason why that would change. We do not belong in that box of under promise, over deliver. We promise what we think is right and then we will deliver and I think the last nine quarters have been consecutive historic quarters and I see no reason of anything changing in the next few quarters to come.