The closest competitor, and global hospitality major Marriott operates 140 hotels in India. The group plans to expand to at least 10 new cities in the country in the next two years, with over 100 properties, Marriott International CEO Anthony Capuano said while speaking earlier this year. The hotel operator is in 40 cities today and is expected to be in 50 cities or more by 2025.

The company plans to open 250 hotels in India by 2025, including those already open and those in the pipeline. Other global and domestic majors such as Hilton, Accor, Radisson, Wyndham, ITC and others, while on an expansion path, do not match the scale and extent of IHCL yet, all operating between 50 and 100 hotels each currently.

Of course, India continues to be a fairly expensive hospitality market, especially when compared to its top neighbouring tourism destinations such as Thailand, Malaysia, the Indonesian island of Bali, Vietnam and Sri Lanka. While in India, tourism and hospitality contribute about 5 per cent of GDP, in Thailand the proportional figure is more than double. Bangkok alone has more branded hotel rooms than all of India put together, which is at about 1,65,000 rooms, according to Hotelivate.

A number of factors have historically stymied the rapid growth of the sector, from availability of capital and quality infrastructure, inflation, government policies and regulation, lack of brand awareness or brand loyalty, and now a significant staff shortage. Inbound tourism has additionally suffered from aforementioned competition and certain image issues.

Indian Hotels “seem to have grown faster than the others in recent times,” points out Manav Thadani, founder & chairman, Hotelivate, a consulting firm known for tracking Indian hospitality data. “They have pulled ahead of others, particularly in locations where Taj is the only player. Those city performances have increased as the Taj hotels in those cities have done extremely well. It has an impact on the market overall.”

Thadani, bullish on the growth of the Indian market including the hospitality sector, ascribes “a combination of different things working for the sector. As for the overall market, we thought it was revenge travel, but we are seeing a continued growth story in many markets. While occupancies have improved, what we are seeing is rate improvement taking place. From a leisure point of view, Indians are willing to spend a lot more in India. Earlier a lot more people were travelling abroad. There is especially a lot more choice of branded hotels in leisure locations.”

As to what he ascribes this rapid growth at Taj to, Chhatwal elaborates, “It is the purpose and passion that drives performance, along with the fourth key – the people – whose passion, whose purpose helps in delivering the performance. We embarked on this journey in early 2018, when we announced Aspiration 2022. What has helped us beyond the 4Ps is a clear aspiration with a seamless execution. I am always raising the bar. Aspiration 2022 said we would go to 800 basis points more, take the EBIDTA basis points margin from 17 per cent to 25 per cent. And Ahvaan 2025 says we will take 25 per cent to 33 per cent. If you look at the average of the margins, what we did from 2009-10 to 2017 comes to about 14 per cent. If you round it up, it’s almost a 2,000-point margin expansion. It is tripling of the portfolio in this period from 100 plus hotels to almost 300 plus. It is a 300 per cent increase in profitability after tax for the best ever financial year. "

"What we had reported was R1,000 crore last year and while I can’t give a forward-looking statement for the next year, what we are seeing is that if you take 1,000 as the base, in the best years, we used to do 300-330, which it turned out was the highest ever,” he adds.

The hotel and transportation space clocked a second consecutive year of 14 per cent growth, reflective of the continued momentum of recovery in travel, points out Chhatwal. Indeed, even as Indian hospitality, after grievous blows during 2020-22, is now showing great resilience, Taj seems to be outpacing its rivals in the sector. IHCL, already at 270 operating and signed hotels, is looking at 325, but at current rates, could go well beyond in two years.

Taj, reimagined

The group’s history may go back for well over a century, till the 1960s, it had one, albeit spectacular, hotel. While former chairman, Ajit Kerkar led the first major phase of expansion, taken further by successive heads such as Raymond Bickson, industry insiders credit Chhatwal, a veteran in the sector with four decades of experience helming hospitality teams in India and abroad, for this turnaround. Indeed, for seven years before he took over in 2017, the group had been posting losses. Early on, he adapted a multi-brand strategy, which saw a ‘reimagination’ of IHCL’s offerings, with a focus on growth in revenue and margins. “It was also the period of reimagination of the existing businesses in their new avatar – Ginger, TajSats, Vivanta as well as the time for new launches such as the upscale SeleQtions, homestays with amã and our QSR and home delivery with Qmin,” he points out. “Vivanta is now a sophisticated urban hotel while Ginger is transitioning from budget to lean luxury.” It was also a period when Taj was rated as the World’s Strongest Hotel Brand in 2021 and 2022 by Brand Finance.

Chhatwal has also been smart in tackling the rather considerable challenges of Indian hospitality, often mired in multiple challenges and cyclical at best, implying lean years fairly regularly. “Some things will always work because you have not just focussed on one. You have diversified the topline completely.” To this end, the group has a new direction, encapsulated as Ahvaan 2025, which has set new targets – zero net debt, 33 per cent EBIDTA margin, 300 plus hotels and a 50:50 portfolio. 

Take note of the last figure. In a market where hotel ownership was the default way to expand, IHCL plans to be asset light (to a point). “We are going for owned and operated,” says Chhatwal. “We have gone for aggressive growth to strive for a balanced portfolio. What is growing in today’s world when you are in three or four quarters into an upswing – as it’s a cyclical business – the owned portfolio giving us the operating leverage. It creates big healthy absolute amounts of profitability while the managed portfolio is giving margin expansion. We are getting the best of both worlds. Maybe when we reach 2025, the guidance may change to 40:60. When we gave this guidance, we thought we have all these crown jewels which we will not sell – these are iconic assets which you should never sell, so mathematically, more than a 50:50 was not possible. Today, we realise that the best business model is a combination of asset heavy with asset light…. Value creation cannot happen if you are totally asset light.”

The portfolio of 271 hotels with 80 under development is a balanced mix with 50:50 owned and leased assets, indicates Suma Venkatesh, executive vice-president, real estate & development, IHCL. Currently 70 per cent of our pipeline is fee based, 7 per cent is owned and the balance 23 per cent is under operating leases for the Ginger brand.

 Capital conundrum  

Chhatwal is more than aware of the challenges the sector faces in India, especially as he dons multiple hats, including those of president, Hotel Association of India (HAI) and chairman, CII National Committee on Tourism & Hospitality. “We still don’t have institutional capital available in India to the extent it is in the West, which makes hotel investment easier. If you are going for 10-15 per cent return you might as well invest your own capital, which will increase your net value of a project. So, just blindly following formulas of the West will not work here. India is a happening place. If you cleverly use your capital, you create a lot more value.”

The constituent brands of IHCL seem to follow varying strategies in pursuit of growth. “Ginger would be more operating leases,” points out Chhatwal. “At that level of revenue, it doesn’t make sense. It is not sensible to go for 7 per cent of a small topline. Management contracts are for more Taj and larger properties and metros. In Ginger we have changed that since last year, unless it’s a large property, such as 150 rooms in Goa, then it makes a healthy top line and a strategic location. In Delhi or in Mumbai, we would do that. Ginger would be in every district capital. The topline would be limited as it would be 80 rooms, 60 rooms. That’s why a rent or lease agreement makes more sense.”

Chhatwal is appreciative of the government’s investment in infrastructure. “As many as 80 new airports, schemes such as UDAAN and PRASAD, the development of 50 new destinations, the renaissance of railway stations – all these will change the way we travel, the way we think. These will create new demand in the Indian hospitality sector, and this is coming, irrespective of whoever is in government. It means a faster growth of Indian hospitality by 3x.”

He does admit that giving the sector full infra status would jell well with the infrastructure investment the government is doing. “This sector is important for the youth of India. India has a demographic dividend and it’s the biggest catalyst to creating jobs indirectly. In the last 12 months, we have opened 16 skilling centres in India, with the aim of training 100,000 by 2030, of which 25 per cent will be women. It’s doable because it’s a relatively low skills area,” Chhatwal adds.

Many miles more 

That said, “It’s just the beginning phase of the journey,” Chhatwal says confidently. “We have less than 200,000 branded rooms (in India). This is less than Singapore or Dubai. This journey of hospitality is going to play a very important role in India’s growth story in the next 25 years. India could soon be the third or fourth largest economy – and it will come with all the benefits and challenges of being number three or four. One of the benefits of number three is that you have longer weekends, more disposable incomes, per capita income will rise by about $2,500 to $5,200 as per experts. More disposable incomes imply buying more luxury, spending more time in hotels and spas.”

Chhatwal expects IHCL, as the largest player in the hospitality ecosystem, to be at the forefront of this growth. “As the portfolio grows, a lot of opportunities will come up – both in organic and inorganic fashion as newer businesses and customers evolve. At the moment, let us just consolidate what we have done last year for at least a few more quarters and then we will take that leap of faith. It’s important to have competition as it keeps you agile, but if we look at what we have been doing in the last three years, we are way ahead in terms of signings and openings of hotels. The quality of our growth has been phenomenal. Soon, people will be talking about Taj Mahal Hotel, Delhi, being the best in town.”

“IHCL executed 11 agreements across all its brands in the first quarter,” points out Suma Venkatesh. “This includes a 400-room hotel in Delhi and a 120-room hotel in Kochi while entering new markets like Raichak in West Bengal and Dhaka in Bangladesh.”

By the end of the first quarter, Ginger reached a portfolio of 86 hotels, with a revenue of R100 crore, a milestone for the brand. Qmin has grown to 40 outlets, while amã Stays & Trails’, a branded offering in the homestay market, grew at a steady pace, and has a portfolio of 125+ bungalows across 50+ holiday destinations.

Of course, IHCL is on the lookout for growth opportunities. While the Tata name is a huge leverage, Chhatwal also points out that “We have possibilities of organic and inorganic growth because of the strength of the cash flows that we have today; so, we will have opportunities. While I cannot reveal details, growth will be more India-centric.”

In a telling statement, Chhatwal adds, “Whatever strategy we have prepared does not include investments outside India.” International expansion, after a spurt in the first decade of the century, also seems to have slowed, notwithstanding the recent announcement on Frankfurt. There are a couple of operating hotels each in the US and the UK, three rather newer hotels in Dubai, a couple in Africa and the rest in South Asia.

Unlike most of his peers though, Chhatwal says staffing is not a challenge. “We treated our people well. We have a bigger challenge. I may have been in the company only for five years, nine months and 20 odd days, but there are people here who are third generation Tata. The group is expanding, and if you are doing well, you can grow well with the group.”

And, as Gaurav Pokhariyal, executive vice-president, human resources, IHCL, explains, “The group continues to invest in building industry-relevant talent pools with an aim to develop and support deserving youth and their families, while contributing to the overall growth of the industry”.  Next time, notice the differently coloured lapel pins on Taj staff and wondered on their significance, well the different hues indicate how long they have spent in the organisation.

The group has also launched an industry-first Leadership Accelerator Programme, offering Master’s Degree (MBA) or equivalent, which attracts talent with a minimum of two years and a maximum of four years of work experience in a service industry, to be groomed over a period of five years to take on general management roles with P&L responsibility. In line with its commitment to promote equal opportunities for women, IHCL has undertaken multiple initiatives.

It has announced its goal to raise women participation in its workforce to 25 per cent by 2025. Furthering its commitment to skilling under-served communities and regions, IHCL recently announced Diversity including Women at IHCL – DiWA. It is a six-month intensive training programme to induct women at its hotels across departments to improve their participation in the workforce.

However, challenges remain, not the least from the competitors, both domestic and global. While Oberoi and Leela, which have in the last decade struggled with financing, are now backed by Reliance and Blackstone respectively, also have the advantage as they only are present in the luxury space and are able to position themselves thus exclusively. Indeed, they argue that their number of keys is about the same as Taj in the luxury space.

The entry of uber luxe brands such as Aman, Six Senses and soon Anantara is also raising the luxury stakes. Meanwhile global brands, not just Marriott, but also Accor, Hilton, Hyatt, IHG, Radisson, Wyndham and others are also on an expansion spree across categories and locations.

 What’s new

Meanwhile, the number of new or reimagined initiatives also deserve another look. The erstwhile Jiva spa is now J Wellness Circle. “The wellness tourism market has been growing steadily in recent years,” says Prabhat Verma, executive vice-president, operations, IHCL. “Inspired by traditional Indian healing wisdom and based on principles of ayurveda and yoga, J Wellness Circle will offer curated experiences for rejuvenation of mind, body and soul. The group has 50 spa and wellness centres globally, and plans to grow the segment.

Over the decades, Taj has pioneered a number of restaurants that have become brands in themselves – Golden Dragon, Harbour Bar, Shamiana, Sichuan, Thai Pavillion, Southern Spice, Karavalli… Recently, IHCL launched Papermoon and House of Nomad in Goa, as also Seven Rivers in Bengaluru and Goa, in partnership with AB InBev, the world’s largest brewer.

It will soon open in multiple locations across its hotels. The most notable and ambitious opening, of late, has been Loya, which had its first opening in Delhi’s Taj Palace and is slated to travel to Mumbai, Bengaluru and other cities in India and overseas, informs Rohit Khosla, executive vice-president, operations, IHCL.

Another major revamp has been for the inflight kitchens division, TajSATS, a JV between IHCL and SATS of Singapore – started years ago by Kerkar – which is estimated to have about 60 per cent of the domestic market. “The Indian aviation sector is expected to see significant growth in the coming years and TajSATS is evaluating the expansion of its in-flight kitchens network amid surge in international air traffic and rising demand for airline meals, says Manish Gupta, CEO, TajSATS.

It added an in-flight kitchen in Amritsar in January this year, and a new facility at Goa’s Mopa airport, is ready for launch soon. “The expansion plan comes in the backdrop of a record performance in the first quarter of 2023-24. TajSATS clocked a 55 per cent growth in the first quarter with a revenue of Rs205 crore and has 59 per cent market share. While revenue growth was led by increasing share of international flights and upgraded meal offerings; synergies and common contracting with parent IHCL helped save costs and boost margins.”

With sustainability as the buzzword for the corporate sector, the pandemic has increased consumer focus on the need for sustainability and environmental-friendly practices, says Parveen Chander, executive vice-president, sales & marketing, IHCL. “Today, an increasing number of travellers are conscious about their travel footprint and are choosing brands and experiences that employ sustainable measures in their operations. Be it eliminating the use of single-use plastic across hotels or developing properties in cohesion with the local environment, biodiversity and communities, the focus on expanding and developing the travel and tourism sector in a sustainable manner is key for the industry’s future.”

Chhatwal’s optimism about the future of Indian hospitality, especially of the august group he helms, is infectious. The goal is set, the agenda is clear. “If we look at the top 10 listed hotel companies in the world, Taj will stand out as the number 1.” 

Driving change

For Taj, Delhi-born Puneet Chhatwal, 59, has been a much-needed leader who is ensuring that India’s leading hospitality brand is once again a leader in every sense of the word. A hotelier with significant international stints in Radisson, Steigenberger Hotels and Carlson Rezidor, he has helmed IHCL since 2017, and seen it transform and grow at unprecedented levels.

How long have you been a hotelier? Why did you choose to be one and where did you begin your journey?

I have always been a hotelier with close to four decades in India and Europe. My journey began with The Ashok in New Delhi and switched gears when I moved to Europe for advanced management studies followed by my first assignment with Interhotels in Germany. 

What has been your most memorable moment in this journey? What does heading a group such as Indian Hotels, with its storied history, mean to you personally?

I have been fortunate to have had the opportunity to work and lead organisations in varied cultural settings from North America, Europe to Asia enabling me to bring a combination of American marketing, European management and Asian emotional intelligence to each new assignment.  With many highs on my long journey the opportunity to take forward the 120-year-old legacy of Indian Hotels is the most fulfilling.

For someone considering a career in hoteliering, what would be your advice?

It’s a people-first business, which provides one opportunity to interact with people from different cultures, languages, and backgrounds – broadening one’s horizons leading to personal growth and development.

I would advise those starting their careers to gain a deep business understanding by exposing themselves in multiple functions, across segments and brands, different geographies and business models. This enables a broad-based understanding of the sector and that’s what accelerates growth.

Reinventing the icon  

Take a stab at naming Delhi’s newest luxury hotel. Well, one of the oldest and most iconic of Taj hotels – the Taj Mahal, New Delhi (colloquially Taj Mansingh) has undergone an extensive multi-year renovation, leading Chhatwal to say, “It is the best hotel in town”. That’s hard to question as over the past four odd years, every part of the hotel has been renovated – to stupendous effect.

Can a luxury hotel be renovated entirely without closing it down? Well, the Rs200 crore renovation for the 45-year-old hotel has been extensive and the results are nothing short of spectacular. “This hotel is an icon, has a soul of its own,” points out Satyajeet Krishnan, area director, New Delhi & general manager, Taj Mahal, New Delhi. “The idea was to renovate, upgrade, make larger guest accommodations and give guests a sense of space.”  Krishnan, who not just grew up in the vicinity, but also started his career there, has helmed the hotel for a decade now, including the extended period when the hotel lease came up for renewal. A protracted, tough negotiation behind the hotel now, the renovation began in earnest in 2019.

The hotel has the highest loyalty or repeat guest ratio for the group, points out Krishnan. “The guest was coming back for the service, the warmth, the location, brand assurance, but what was lacking was the product, which had got tired. That was critical and, now that it’s done, this hotel is better equipped to make use of its renovation.”  He says the ambitious renovation has shown that not “that not only does Taj have the guts to take the bold decision of renovating during the pandemic, it won the auction, did the renovation and made it profitable”.

Hotel regulars, which the city is teeming with, will appreciate the new look of sophistication and contemporary flair, while still recognisably being the hotel that has been a ‘second home’ for many. From old timers marking special occasions at House of Ming or the city’s chic citizens dropping in for leisurely afternoons of coffee, the hotel has been a fixture in many Delhi-ite lives. Being next door, literally, to the corridors of power – it is also easy to spot ministers, secretaries and corporate leaders any day.

Amongst the most visible changes are to rooms, whose number has gone down (yes, down) from 291 to 213! “We are earning more revenues,” says Krishnan. “In terms of topline, with fewer rooms, we are making more revenues.”  The hotel now offers two exclusive floors of 27 Luxury Residences. The newly designed accommodations take inspiration from New Delhi’s rich heritage, Sir Edwin Lutyens’ architectural influences and the natural beauty of the hotel’s surroundings.

The accent seems to be on luxury and the bespoke selection of Signature Suites includes the Raisina, The Grand Presidential, Rambagh, Presidential, Versailles and Tanjore, besides the unique and unparalleled Grand Luxury Suites, Luxury Residences, Taj Club Balcony Suites, Taj Club Suites and Taj Club Premium Rooms.

Chambers now is a two-floor affair, while the spa, pool, banqueting areas are all more enticing, many a contemporary feature added. Technology has played a huge role in the upgrade – note the new lighting, fire retardant walls, increased digitisation, improved air quality, more sustainable features. “The lobby is not retouched – for a reason,” says Krishnan. “That is something which the city is used to and it showcases the grandeur of Indian architectural traditions, interiors and yet make the hotel contemporary.”

The restaurants, some of which are brands on their own, of course, are where most of the public attention goes. “We did not want to change concepts but reimagined the value proposition completely not only with the food but also the service standard,” says Krishnan. Starting with Machan, the restaurants have all undergone extensive upgrades to keep pace with changing guest expectations.

The recent opening of the new wine bar, Captain’s Cellar, the first of its kind in the city, has rounded off the renovations, and the city’s ‘newest’ hotel is again putting its best foot forward again!