ITC looking to expand international hotels business, says CMD Puri
Informist, Thursday, Dec 7, 2023
By Avishek Rakshit
NEW DELHI – ITC Ltd is looking at expanding its global hotel footprint from just one in Sri Lanka, Sanjiv Puri, chairman and managing director of the cigarettes-to-hotels major, which is in the process of demerging its hotels business, said today.
"The hotel's board individually will take a call on this, and we are looking at proximal locations to expand the international footprint," Puri told Informist on the sidelines of the Global Economic Policy Forum organised by the Confederation of Indian Industry.
As part of the planned demerger, ITC will hold 40% stake in ITC Hotels, which will be listed on bourses. This will make ITC the largest shareholder in the upcoming demerged hotels business.
The planned international hotels would be in line with ITC's "asset-right strategy", Puri said. After announcing its demerger plans, the company has already clarified that most of the expansion in the hospitality business will be based on managerial contracts, under which ITC will only manage the hotels under its brand, not own them.
The strategy comprises deriving the maximum value from the existing 120 hotels, encompassing 11,600 rooms, and creating additional revenue streams from them. To this effect, ITC has already launched a sleep boutique that offers linen and bedding products for purchase from its hotels.
Around 55% of the total hotel rooms are under managerial contracts.
Puri did not clarify the brands under which the offshore hotels will come up.
Currently, ITC has only one offshore hotel, in Sri Lanka, which is owned by its wholly-owned subsidiary, WelcomHotels Lanka (Pvt) Ltd. It also owns luxury apartments in Colombo called The Sapphire Residences. As on Mar 31, ITC had invested 27.8 bln rupees on this subsidiary.
The construction of the hotel in Colombo was impacted on account of disruptions in the aftermath of the terrorist attacks there in 2019, recurrent waves of the COVID-19 pandemic, and the challenging socio-economic conditions prevailing in the country since then.
Sales of The Sapphire Residences also suffered on account of the economic conditions.
ITC's decision to expand its hotels footprint globally comes at a time when peers like Indian Hotels International Ltd, and EIH Ltd are eyeing managerial contracts in international locations.
At 1321 IST, shares of ITC were down 1% at 458.80 rupees on the National Stock Exchange. End
