Indian Hotels Company, owners of the Taj group of hotels, is planning to open 55-60 smart basics hotels (budget hotels) in the next five years, said Tata group chairman Ratan Tata during the 103rd annual general meeting of Indian Hotels Company. The group launched the first prototype in Bangalore in June under the brand name 'Indione'.
As these hotels will be catering to the economy segment, predominantly focusing on domestic clientele, these will be far less prone to fluctuations than the luxury and upscale segments. In the long run, the group expects that this segment will help in derisking its current revenue stream. The luxury division contributes 49 per cent to the Taj group's revenues.
The company has chalked out a capital expenditure of Rs 167 crore (Rs 1.67 billion) in the current year that includes renovating some of its properties. It will be opening the Taj Wellington Mews, an 80-room luxury service apartment facility, in the last quarter of this year. The company has invested Rs 240 crore (Rs 2.4 billion) for setting up the service apartments.
As part of its growth strategy of following an asset light strategy, the group has secured management contracts for hotels in Mauritius and Kovalam in Kerala.
Tata said, "There has been a recovery in the travel and hospitality industry driven by growth in the economy and the fact that international travel increased by 18 per cent after three years of difficulty."
Foreign tourist arrivals for the financial year 2003-04 increased by 2.9 million, the highest ever recorded for India. Domestic tourism also increased by 15 per cent in the same period.