Puneet Chhatwal is these days called the man of the moment. The managing director and CEO of the Indian Hotels Company Limited (IHCL) deserves every bit of the attention for the company’s historic performance last year. When Chhatwal joined IHCL in November 2017, the group had been making losses for the previous seven years—Rs1,740 crore cumulative. He turned it around in a year, reporting a profit of Rs101 crore in 2017-18. This shot up to Rs287 crore the following year and Rs354 crore in the next. Then the pandemic hit and the hospitality sector was badly affected. IHCL registered a loss of Rs720 crore in the first year of the pandemic, followed by a loss of Rs248 crore in the next.But, as restrictions eased and travel resumed, it was game time again for the hospitality industry. And for IHCL, it was momentous. It recorded its highest ever profit of Rs1,003 crore in 2022-23, wiping out the losses of the pandemic.What did Chhatwal and team do differently? The key change was to target India’s heterogenous market to capture different segments. Prior to that the focus was only on the ‘Taj’ brand. He reimagined the brandscape to create a holistic hospitality eco-system with new brands like SeleQtions, and transforming the Vivanta and Ginger brands. He further bolstered the Taj brand to reach a milestone 100 hotel portfolio and being recognised as the World’s Strongest Hotel Brand. Another key step was making IHCL asset light. Before Chhatwal, it owned or leased 64 per cent of its properties. In a short span, he increased the 36 per cent managed portfolio to 50 per cent. Chhatwal’s current strategy, AHVAAN 2025, which in Hindi means a call to action, is to keep IHCL profitable while being iconic. It has four goals—300 hotels by 2025-26; a 50:50 distribution between owned/leased and asset light properties; 33 per cent EBITDA margin; and zero debt. He has already achieved goals 2, 3 and 4.
Excerpts from an exclusive interview:
Q/ How did you achieve these fantastic results?
A/ Nothing is achieved overnight. We embarked on this journey of aspiration with seamless execution in December 2017, which we communicated to the market in February 2018, calling it Aspiration 2022. We had six consecutive quarters of profitable growth. And then Covid hit. Everything went for a toss. But even during Covid, we did not stop; we continued our journey, and Aspiration became AHVAAN 2025, post Covid. But during Covid, we created a RESET, where ‘R’ stood for revenue growth when there is no revenue to grow. So how would you grow revenues? ‘E’ excellence in whatever we do, keeping people safe. ‘S’ being spent optimisation on whatever the money that was being spent. It was time to create effective asset management; that is the second ‘E’, and then T being thrift.
RESET 2020, in hindsight, accelerated the speed of change, which was required to accomplish Aspiration 2022, to a different level. So that the base became so strong, the speed of change was so strong, that we were able to communicate far bigger bets on 2025 than we were undertaking for 2022. So even going from one of the best years, 2017-18 of 17 per cent margin, to 25, and 25 to 33, in a capital intensive industry, especially with our international presence, which gets consolidated reserves, is a very difficult number to achieve. We got there, not by default, but by aspiration, which was big, with seamless execution from the management team. The positive guidance from the board, in good and in bad times, led to this superlative performance.
Q/ IHCL had around 64 per cent of properties owned/leased compared to 50 now. That was part of your plan for 2025 and you have already achieved that. Do you think that’s something you will continue with?
A/ We feel very strongly that we are blessed to own or have the ownership of the business via lease in some of the most iconic assets in the world. So if you own the Taj Mahal Palace on a lease, or a freehold of the Taj Lands End, or on lease the Lake Palace in Udaipur, or on lease The Pierre in New York, or the ownership of the asset in London. It is very important as the ultimate objective of the strategy was to be not only iconic, but also the most profitable hospitality ecosystem from South Asia. We wanted both. And to get both, you need to find the right balance between asset heavy and asset light. When we embarked on this journey, we were very mindful of this.
It is also opportunity driven. And it is also very much driven by the spirit of the founder of that community; is not just another stakeholder, rather the purpose of the existence of the business. So community in our case means also creating new destinations, like we did with Goa, we did with Kerala, and we did with the Andamans. We are on the drawing board of the Lakshadweep, the northeast, with a lot of properties. We will not shy away from putting money in these projects. The northeast is a great opportunity.
That is what has defined the group. We say very proudly that the ethos is intact; which means you can keep changing business strategy but you don’t change the core values. This is very important to us.
Q/ You position the Taj as the main brand. And then you’ve got SeleQtion, which you have introduced; Vivanta is below that. Then you have got Ginger. You have presented yourself that you are there in every segment.
A/ It would be fair to say that we have actually introduced the new brand architecture, even though we have used some of the old names because they were very good. The thought process behind those brands was absolutely right and may have got derailed through macroeconomic situations that were beyond our control.
So, we have reimagined Ginger and Vivanta. The only brand we have not reimagined is Taj. We introduced SeleQtions, amã Stays & Trails and Qmin. We also reimagined Taj Sats. That was our RRR strategy even before the movie RRR came—reimagining our brands, restructuring our portfolio and reengineering our margins. Why change something when it has been well thought through? And what is not working within that you just need to make sure the model works. And today it is proven that our model of Ginger and Vivanta works.
Nature’s gift: Taj Wayanad in Kerala.
Q/ Which are the key hotels that are coming up in the next financial year?
A/ We will be opening at least 20 hotels including one in Mumbai, a Taj at The Trees at Godrej Properties in Vikhroli. Ginger will open in Santa Cruz; we are very excited about it. We are opening Vivanta in Tawang, which is almost on the border with China. We are opening another Ginger in Kochi. And another Taj in Kolkata, called Taal Kutir. We will have a second one in Tirupati. We will be also going to some state capitals, where we are not present.
Q/ Is MICE (meetings, incentives, conferences and exhibitions) tourism something IHCL will be looking at in a big way? A lot of hotels now entering India are trying to concentrate on MICE tourism. You are doing it in Rajasthan and Goa. Do you have other markets that you will consider for MICE tourism?
A/ Kerala is there, a very important one. All the main cities, the top 20 cities in India, we should be the market leader. Taj Malabar will be fully renovated in a year from now. We will also evaluate the development of the island opposite Malabar. We are also opening our 100th Taj near the Cochin International Airport.
Q/ How about business travel?
A/ In India, it is back; internationally, there is still room for improvement. London, New York, San Francisco, Cape Town, still at around 90 per cent of the pre-Covid levels. And maybe within that 90 per cent of pre-Covid is the revenue level, but the business segment is still maybe around 80. But that drives optimism. Because at some point it will come back and it will exceed 100.
Q/ Is there an internal strategy for airport hotels. There is a Taj in Santa Cruz and a Ginger is coming up there. Then you have the Kempegowda in Bengaluru. Then the Kochi CIAL.
A/ Airport hotels give you a lot of visibility. I would say what is close to my heart is a 360-degree growth proposition. And growth is not just growth in number of dots on the map, rather growth of top line, growth of margins, growth of people. Most important, people, because if you are able to help your people grow, they will do the rest. Without losing your core values, of course.
Q/ Among your international properties, you mentioned Maldives and Dubai are back on track.
A/ Maldives and Dubai did very well during the pandemic. They were the best performers, followed by Goa and Rajasthan. These and Uttarakhand were the top five markets for us.
Now Sri Lanka is slowly but surely coming back. London is behind. The US has some way to go and Cape Town also. We own Cape Town 100 per cent, we own San Francisco 100 per cent, and London also. We own the leasehold of The Pierre. We are blessed to have these properties. Because two of the three largest lodging markets in the world are New York and London. We are present in two. These are the kind of assets that put you on the map to become the world’s strongest hotel brand. You cannot be the world’s strongest hotel brand if you are only India-centric. We have the obligation to grow our footprint internationally. We recently announced a Taj and a Vivanta in Dhaka. But why not one more hotel in London? Why not a bit more in the UK where there is a strong Indian diaspora. Why not a hotel on the European continent? Why not Singapore? Why not Bangkok? Why not Bali? So the strategy of acquiring single assets, as they say, is a thing of the past.
We will address each opportunity through the lens of asset light model.