‘India needs tourism, India needs jobs’: Puneet Chhatwal

In an address and subsequent media interaction at the launch of Taj Chia Kutir Resorts & Spa, near Darjeeling, Indian Hotels Company Ltd (IHCL) Managing Director and CEO Puneet Chhatwal spoke about the growing potential of eastern India and the northeast as tourism destinations. He highlighted the importance of building profitable and sustainable hospitality businesses, and the need to position tourism as a key driver of India's economy.

Edited excerpts from an interview with THE WEEK:

Q: IHCL has had a long-standing partnership in this region. What has been the journey so far, particularly in eastern India and the Northeast?

The partnership has been mutually beneficial, and one of its biggest success stories financially has been the development of properties in the hills. Despite the challenges posed by COVID-19, the timing of the opening of our first hotel here worked out well. We started with one hotel and subsequently added a speciality restaurant. The property opened in December 2020, and as we approach its sixth anniversary, the initial investment has already been recovered.

That is important because financial returns allow us to reinvest in the business. One of the advantages we had was that our partners had secured several sites at the right time. Today, acquiring land and developing a hotel in these locations can be prohibitively expensive. What might otherwise take six or seven years to recover could take 17, 20 or even 22 years.

The property quickly became one of the most talked-about destinations in the region in 2021-22. It also has a personal connection for me. I celebrated my 60th birthday here. Sometimes, certain properties become part of not just an organisation's journey but also your personal journey.

Q: Developing hospitality infrastructure in the hills and the Northeast comes with considerable challenges. How do you assess the opportunity?

The opportunity is enormous, but so are the challenges. We have developed several properties, including Raj Kutir, Tal Kutir and Buras Kutir. Each of them came with its own set of operational challenges.

At Tal Kutir, for instance, the presence of a lake brought its own challenges, including mosquitoes. At Buras, landslides affected accessibility. A journey that was expected to take three and a half to four hours once stretched to eight hours.

Building in this part of the country requires experience, capital, land access, permissions, the right hospitality partner and a strong brand. Without these elements coming together, it is very difficult to make a project viable.

Q: IHCL has spoken about an ambitious expansion plan in eastern India. How close are you to achieving that vision?

Six years ago, our presence in this region was relatively small. We had perhaps two hotels in Kolkata and one in Guwahati. We committed to building a portfolio of more than 50 hotels, using Kolkata as our launchpad, and we have been working towards that.

Today, if you look at Bengal and the Northeast, we have a portfolio of approximately 42 properties with around 4,000 rooms. This is in addition to our office presence.

Our ambition is to build a strong hospitality network stretching from the easternmost parts of the country to the hills. From Tawang, near the Chinese border, to Gangtok, and from Digha to Darjeeling, there is tremendous potential.

The Alte House in Siliguri is another example of the kind of development that can shape the future of hospitality in this region. It is the beginning of something significant, although such projects can take seven, eight or even 10 years to fully evolve. Nothing happens overnight.

We are keen to explore more opportunities of this nature, particularly properties with 40 to 60 rooms in the Northeast. Such developments can help us expand our footprint exponentially.

What is IHCL's projected pace of expansion in the coming years, and how many new properties do you expect to open annually?

We have a strong pipeline, and the pace of openings will continue to accelerate. This year, we expect to open around 50 properties. Next year, around 60, and the year after that, around 70. These are significant numbers, and the openings will continue year after year. However, it is important to remember that projects in our pipeline typically take around five years to become operational. Our focus is not just on adding hotels but on ensuring sustainable and profitable growth.

Q: IHCL has grown significantly over the past few years. How do you balance expansion with profitability and sustainability?

When I joined the company, we had a portfolio of approximately 120 hotels. Today, we are approaching 700. That represents a six-fold increase.

However, percentage growth becomes more difficult to demonstrate as the base expands. Growing from 120 to 700 is one thing; growing from 700 to 4,000 is quite another.

We are also among the very few hospitality companies in the world, and perhaps the only one, with a pipeline larger than its operational portfolio. We have approximately 34,000 rooms in operation and more than 36,000 rooms in the pipeline. That is a pipeline exceeding 100 per cent of our existing operational inventory.

However, having a large pipeline is only one metric. It typically takes around five years for a project to move from the pipeline to becoming operational. What matters to us is sustainable, profitable and inclusive growth.

We do not want to measure success merely by the number of hotels or rooms. We want to build businesses that are financially viable and contribute meaningfully to the destinations in which they operate.

Q: Why is developing new and relatively unexplored destinations important for IHCL, when established metros may offer more immediate commercial returns?

It is much easier to invest in metros such as Bengaluru, where the business case is relatively straightforward, and the potential for financial returns is more predictable.

But as part of the Tata Group, nation-building has always been important to us. We believe in creating destinations rather than simply entering markets that are already established.

Our experience in the Andamans is an example. The project took nearly 10 years to materialise. Today, the property is considered among the best in its destination. Similarly, developing island destinations such as Bangaram in Lakshadweep, Suheli and other remote locations comes with enormous logistical and financial challenges.

Connectivity is limited, supplies have to be transported by sea, and operational windows can be restricted to around eight months. These projects are expensive and complex.

But this is what has historically differentiated the Taj brand. We have played a role in putting destinations on India's tourism map. In the 1970s, it was Goa. Towards the end of the 1980s, it was Kerala, and more recently, we have seen the development of destinations such as the Andamans and Lakshadweep.

We believe eastern India and the Northeast can emerge as equally strong tourism destinations.

Q: What role can tourism play in India's economic growth and employment generation?

India needs tourism, and India needs jobs. Tourism has a multiplier effect on the economy. Every job created in the sector can generate eight to 10 additional jobs in allied industries. Similarly, every rupee invested in tourism can generate approximately Rs 3.30 in economic value.

Think about the ecosystem that a hotel supports. There are vegetable suppliers, milk suppliers, transport operators, limousine drivers, airport representatives, construction workers and several other businesses. The impact extends far beyond the hotel itself.

As India's middle class expands and disposable incomes rise, tourism will become an increasingly important part of the economy. We are approaching a stage where domestic travel, leisure and experiential tourism will play a much larger role in people's lives.

Tourism is not merely about holidays. It is an economic engine that can create employment, support local businesses and bring development to destinations that might otherwise remain outside the mainstream economic narrative.

Q: The hospitality industry has long sought greater policy recognition for tourism. What changes are necessary to unlock its potential?

Tourism needs to become a more integral part of India's infrastructure and economic planning. One important demand from the industry has been to give tourism greater policy recognition, including consideration of bringing it into the Concurrent List of the Constitution.

We have been advocating this for six or seven years. Discussions are underway in this direction, although it would require a constitutional amendment.

At the state level, granting industry status to tourism is also important. This can help improve access to financing, infrastructure and other incentives required to develop hospitality projects.

For a country of India's size and diversity, tourism has enormous potential. We need an enabling policy environment that recognises the sector not just as a leisure industry but as a major contributor to economic growth and employment.

Q: You recently announced that India will host the World Travel & Tourism Council's global annual summit next year. What could this mean for the country's tourism sector?

Winning the bid to host the World Travel & Tourism Council's global annual summit in India next year is a significant opportunity. The event is expected to bring around 1,000 influential international participants, including some of the most important people in the global tourism industry. The dates, likely in October or November, are yet to be finalised.

These are people who influence tourism investments, business partnerships and travel decisions across the world. Hosting the summit will give India an opportunity to showcase its destinations, hospitality infrastructure and tourism potential to a global audience.

In many ways, it is comparable to hosting a G20 summit for the tourism industry. It can help attract international attention and strengthen India's position as a global tourism destination.

Q: What is the philosophy that guides IHCL's approach to developing destinations and working with local communities?

One of the most important principles of the Tata Group comes from its founder, Jamsetji Tata. He believed that the community is not merely another stakeholder in a business; it is the very purpose of its existence.

That philosophy is reflected across Tata companies and is something we take seriously. Our responsibility goes beyond operating hotels and generating financial returns. We must contribute to the communities and destinations in which we operate.

Having lived outside India for 30 years, I have often reflected on this philosophy. I once made a presentation at the International Hotel Congress in Berlin comparing Jamsetji Tata with Robert Bosch. They belonged to broadly similar periods and shared comparable values, particularly in the way wealth and business success were channelled back into society. The Tata Trusts, in particular, represent this commitment.

For us, inclusive growth means ensuring that the benefits of tourism reach the larger ecosystem and the communities around our hotels.

Q: Are there plans to take the wellness and spa experience at Taj properties in the hills to the next level?

We have been discussing the possibility of creating a state-of-the-art spa at this property and potentially at our Darjeeling property as well. We want to introduce experiences that India has not seen on this scale before.

We are even considering a visit to Europe to work with specialised consultants and understand the possibilities. Wellness today goes well beyond conventional steam rooms and saunas. There are different types of saunas, including crystal saunas, Japanese saunas and other specialised experiences.

A destination spa can offer an entire day dedicated to health, wellness and fitness, incorporating infrared therapies, oxygen-based experiences and different forms of relaxation and recovery.

At the same time, sustainability will remain central to our planning. For instance, instead of building very large swimming pools, which consume substantial amounts of water, we are considering smaller pools with counter-current swimming systems. This allows guests to swim without a conventional 25-metre pool.

The more successful we are financially, the ability to reinvest in the business and introduce new concepts and experiences increase. That is how we can continue to push the boundaries of Indian hospitality.