Indian Hotels will open many hotels in the coming months: Puneet Chhatwal, MD & CEO

Puneet Chhatwal, MD & CEO, Indian Hotels Company Limited (IHCL), spoke about the business of the company, expansion plans and delays in it as well as cost-cutting measures among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: The entire sector has been through a difficult phase and it is simply visible in the numbers as well. But do you think that the worst is behind, now, as the problems or concerns have been factored and good days are visible from here onwards or period of uncertainty is existing till date?

A: First of all I want to start with the good news that the Maharashtra government has announced that it will grant industry status to the hospitality sector from April 2021. From that, we will get many benefits like the rest of the industries. And, we have had requested a lot from centre to state level in every state and Maharashtra has taken the first step in this direction. Of course, Taj Group’s foundation was put in Maharashtra at Mumbai, so for us, it is like Home Run news after seven months and we say we are starting the morning on a good note. Secondly, what has happened with our industry was out of our control because if your hotels are shut down due to the lockdown or your business is closed then your revenue levels goes down. So, as they started opening things gradually than its impact was seen in the second quarter and our revenue increased by 85% when compared with the first quarter and our losses have narrowed. We have kept our cost control at 50%. Besides, the new businesses that we started during this period have contributed 30% to our revenue. As you have asked, the future looks promising because the festivals season is approaching in India. At the same time, we have seen one thing that people are fed up sitting at home due to which a lot of people have started going on Drivecation, Staycation in which they opt to check-in in the same city, going on leisure destinations. So, short-trips, extended weekends, combining business and leisure are good trends and booking rate, month-on-month, has improved a lot. Here are the figures, the occupancy level fell from 70% to 7% in April because of the lockdown and ultimately it has come to in a brand like Ginger up to 50% and in other brands it at an average it is close to 40%. And, we expect that in November and December in all brands, we will go beyond 50%, which is low when compared to the same period of the last year but is much better than the situation where we reached in the lockdown to 7%, 10%, 15% to 20% of occupancy, where we were hosting just to medical staffs or quarantine guests and that time is definitely behind us. So, as you asked, yes, the worst is behind us. But just there is one risk that occurred in Europe in which the second wave of COVID doesn’t come again, however, no one has made such forecasts especially for India. So, we think, going forward we will see continuous improvement month-on-month. 

Q: Let us know about the expansion plans that you had and the delays due to the situation that existed in the last six months? Also, update us about the new properties that you are opening and the properties that you will open by the end of this year?

A: Definitely, very good question. It also has a link with the lockdown as well as the workforce who have returned to their respective villages due to which some delays have occurred. However, we have provided our guidance to the market of opening a hotel a month, i.e. we were supposed to open 12 hotels this year. Possibly 14 hotels likely to be opened instead of 12 and the process will start this month itself with Taj Skyline in Ahmedabad. Connaught in Delhi and a Hotel in Haridwar, two more Gingers will be opened. We are very excited that Connaught is first of its kind of hotel that will be a reflection of the real brand of 'SeleQtions'. Along with that, new renovation work is going on in President, Mumbai, which is part of SeleQtions and Ambassador. Then Taj Wellington Mews will be opened in January in Chennai. It is the second Tej Wellington Mews after Mumbai. This hotel is going to be the first hotel that will be run only by ladies. So, from general manager to engineers to chef to housekeepers will be 100% ladies-run property, which I think is a big step for our country. Besides, we will open five Vivanta Hotels in Trivandrum, Katra-Jammu, Goa, Bhubaneshwar and Shillong. So many of our openings are lined-up, of course, it has been delayed because you can’t open hotel/s during the lockdown. But now everything is beginning to open and on the same line, the hotels are also being opened. Especially the festive season doesn’t mean Diwali and other festivals but also the wedding season is very important, so we are very excited that after a long-long time, almost after 6-7 months, a situation where your morale goes down, and suddenly from the news of industry status in Maharashtra took pick-up in the bookings, we are feeling good, even though the normal rates and occupancy will take few more months to come. 

Q: You have always been financially prudent. So, let us know about the cost-cutting measures that have been implemented and are there any scope for improvement in the same? Going forward, what is your outlook on margins?

A: I think the crisis has been an eye-opener for our industry and it has provided an opportunity – although there have been losses due to the absence of revenues – to readjust or reset our cost base. So, we have brought down our cost by 51% as compared to last year cost. Our variable cost has gone down earlier because the business went down, due to which the cost of raw material, electricity and other things has come down because there is no occupancy and the fixed cost’s portion almost one-third coming to fixed cost and two-third from the variable. As the business is growing, our fixed cost reduction is also increasing. How it is increasing then we have got an opportunity to redeploy the staffs in the new hotels that will be opened, so we do not need the same level of staffing if your occupancy goes down from 70% to 35% to 40%. So, very cleverly, we have redeployed our staffs and introduced several structural changes in the corporate overhead. In corporate overhead, when we announced our results then we have reduced Rs 43 crore in the first six months as compared to last year. So, it will continue to happen in the future as well as any other crisis. 

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