Indian Hotel’s Puneet Chhatwal sees multiyear up trend in hotel industry

“We will try to now aim for higher without losing sight and focus on the domestic market. We want the domestic business never to be less than 80% of the total business and of the total revenue as it should be. Today it is more like 83% to 85%. It all depends on the fluctuations in the currencies,” says Puneet Chhatwal, MD & CEO, Indian Hotels

The current quarter is considered to be a slow quarter, Cyclicality kicks in, schools start and this is the quarter just before holiday season. So historically the current quarter is always a weak quarter but the channel checks are indicating that this could be one of the strongest slow quarters you had.
I think it would be fair to say, if I say on behalf of the industry. The industry is performing…

You switch very smartly between your company and industry.
I think the industry is performing at 20% plus pre-Covid on the top line and in the case of Indian Hotels, the top line is a bit more.We are very positive about the outlook, especially this year and the reason I have is a strong belief in the India story. I have a very strong belief in our focus on growing our India footprint to more than 100 locations in India in the last five years. Nobody covers India like we do. If we add homestays to it, it is 125 destinations and with G20 leadership coming to India as of December, for the following 12 months, it will give that additional boost. If anything else was to happen, it will provide a natural hedge. Currently the hospitality industry is well positioned.

You have increased what is called as the moat around your business. You have expanded when everybody was contracting, you were hiring when others were firing, you have incubated new brands while other brands were in a process of either shutting down or they were consolidating. What have you done in the Covid to increase the moat of perhaps the reach of Indian Hotels?
I think some of these ideas were never imagined. They have evolved with time but digitisation is one aspect which has helped us. The second thing that has helped us is being more than a 100-year-old company. We were sitting on a lot of assets. The idea was how to manage the assets in an efficient manner so that they become productive. We were not only able to increase productivity based on our corporate overhead which was reduced by almost 30% adjusted for inflation, but that corporate overhead is today serving a much larger portfolio of hotels and brands.

So the efficiency went up. Also leveraging partnerships, leveraging other Tata Group companies.

When the hotel industry started making a comeback in 2021, the term media used freely was it is a sugar rush, more like a revenge travel by people who were locked up for long and that this is not going to last. However, dipsticks are indicating that prices have not come down. What was called revenge travel, a sugar rush has now become a trend, Is it true?
A lot of new segments have evolved which were not existent in the pre Covid era and I think the first time for anybody who had never driven on holidays themselves was a difficult decision.

Second time it was a less difficult decision. Now for all those who have done it, it is a game. Let us get into the car and take an extra day off or work with a good Wi-fi connection digitally for one day, you put all your meeting and have an extended weekend and that is a no brainer. This was not happening before.

Everyone thought leisure tourism is leading but leisure has truly become the bleisure – business coupled with leisure. A lot of that is happening but also a lot of new destinations have cropped up. We witnessed it in Rishikesh. Then we opened another one near Rishikesh, then we opened in Haridwar. Our Pilibhit House in Haridwar is going at rates which despite my 40 years of experience in hotel business, I never thought it would create that kind of demand.

In Darjeeling, when we opened the hotel – Taj Chia Kutir – it was off to an absolute flying start. So there are a lot of new destinations.

So at a higher level, demand and supply are matching?
Demand and supply-- no, demand is outpacing supply. It is still outpacing as very little happened on the supply side during Covid. So demand will continue to outpace supply. Also at some point, international travelers are going to come back, sometime between October and March.

Plus large MICE, which is meetings, incentives, conference, congresses and events have started happening. We had our very big event Tata Connect in May in Goa and after that, we saw a lot of Tata companies have booked the same venue, the same hall for their annual business conferences. The best in terms of demand is yet to come and supply will remain constrained.

This is a multiyear trend according to you.
This is a multiyear trend.

Indian Hotel is now part of an elite club in terms of the market cap. What are your ambitions for Indian Hotel in the next three to five years. It is no longer a cyclical business, we are seeing structural growth?
We will try to now aim for higher without losing sight and focus on the domestic market. We want the domestic business never to be less than 80% of the total business and of the total revenue as it should be. Today it is more like 83% to 85%. It all depends on the fluctuations in the currencies but if we can keep 80% domestic, 20% international, grow in select markets, keep our Indian ethos the culture of Taj what it stands for trust, awareness and joy, I see no reason why we should not emerge as the top five hotel companies in the world not by scale but because of the culture, value and respect that we have earned from all the stakeholders.