ITC to expand hotels capacity by 50 per cent in the next five years

ITC has set out an ambitious plan to add 6,000 keys to its hotel portfolio and expand capacity by 50 per cent over the next five years, piggybacking on the post-pandemic domestic tourism boom.

The tobacco-to-hospitality major, which is in the process of spinning off the hotel business into a separate company, would target to reach a network of 200 hotels, owned and managed, in that period. The conglomerate now has 12,000 keys divided in 131 properties across 80 destinations.

The road map for expansion, shared on Tuesday with institutional investors and financial analysts by the senior management led by ITC chairman Sanjiv Puri, noted that the company already has a pipeline of 3,211 rooms across 35 hotels going forward, with the midscale ‘Fortune’ brand having the largest pie in it.

ITC is expected to open at least one hotel per month for the next 24 months between January 2024 to December 2025. A presentation, made by Anil Chadha, divisional chief executive of the hotel division, noted that the company has opened 22 hotels in the past two years.

While the majority of the future expansion will be in the managed hotel category, there will be selective growth with the owned hotel portfolio as ITC continues to pursue an ‘asset right’ strategy.

Two owned hotels with 442 keys will be operational in early 2024, including a 352-key property in Colombo, which has been long awaited. Moreover, the company says that it is planning to add another 300 rooms in the greenfield/brownfield category as well.

ITC’s portfolio comprises six brands targeting diverse customer segments. While ITC Hotels and Mementos operate in the luxury category, Welcomhotel and Welcomheritage are in the upper-upscale and heritage bracket. The new Storii brand is positioned as boutique while Fortune is in the midscale segment.

There will be an accelerated growth in the premium category in the future as this segment will constitute 45 per cent of the managed portfolio, up from 30 per cent now. The hotel segment reported revenues of Rs 675 crore and PBT of Rs 132.95 crore in Q2FY24.