ITC, Tatas vie for hotel market share

Each to add 40-odd properties in next 4 years, on the back of expanding market, tourism industry.

ITC Hotels and Tatas' Indian Hotels Company will invest strongly over the next few years to add properties in the segment, considered a booming one.

ITC is planning to start at least 40 hotels in the next few years.

Under various stages of development, the additions would take ITC's tally to 150.

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The Tata group-promoted Indian Hotels Company Ltd, which runs hotels under four brands, including Taj, at present has 109 properties in India and abroad; it aims to add 41 in the next four years.

ITC, which has all its hotels in India, already has the biggest domestic tally, of 110.

IHCL has 93 in India and 16 abroad.

ITC is pumping Rs 9,000 crore (Rs 90 billion) over the next few years to double its room inventory to a little over 16,000.

The Kolkata-based company's aim is to spread the expansion across all its brands -- ITC Hotels, WelcomeHotels, Fortune Hotels and WelcomeHeritage.

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Mumbai-based IHCL is also looking to maintain an average rate of opening two new properties every three months, for the next 48 months.

As many as 41 new properties, with 6,500 rooms, would be added to the tally under the brands Taj, Vivanta by Taj, Gateway and Ginger, in India and six other nations.

"In view of the positive long-term outlook for the Indian hotel industry, ITC continues to sustain its aggressive investment-led growth strategy.

"The company is poised to emerge as the largest hotel chain in the country over the next few years," remarked Y C Deveshwar, chairman of ITC, in the company's annual report.

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The onslaught of several foreign hotel brands in India such as from Marriott, Hilton, Hyatt and Starwood, to name a few, has hastened the expansion plans of Indian hotel brands, especially of IHCL and ITC.

Ratan Tata, chairman, IHCL, said at the company's annual general meeting recently, "The average (annual) growth rate in tourism in India over the past five years has been nine per cent.

"The number of foreign tourists that arrived in India last year was 5.6 million. But, last year, China had 55 million tourists and Hong Kong, one city, had 20 million. So, the opportunity for growth in tourism is extremely high in India."

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Despite consolidated debt of Rs 3,250 crore (Rs 32.5 billion), IHCL would be adding 27 new properties, with nearly 3,700 rooms (of the scheduled 41 hotels) in 24 months.

Of these, 18 would be shared between the Vivanta by Taj and Gateway brands; the budget brand, Ginger, would add seven properties.

The company would not be opening any properties under the Taj brand in the domestic market till 2013. Two new Taj properties would open in Morocco.

In IHCL's case, only one of the planned 16 hotels due to come up this year is being funded by the company.

The rest are either under management contract or housed in joint ventures and associate companies. 

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Two ITC luxury hotels to come up soon are a 600-room one in Chennai and a 400-room hotel adjacent to ITC Sonar Bangla in Kolkata.

Nakul Anand, executive director, said: "Goa is one market, for instance, where we would like to have presence. There is certainly room for expansion in Hyderabad.

"We have recently added a hotel in Bengaluru. Through one of our subsidiaries, we are building a resort in Manesar. The group has land parcels in Amritsar, Bhubaneswar and Ahmedabad."

With a current shortage of around 100,000 branded rooms, the Indian market's appetite for quality hotel rooms is only expected to head northward, say experts.

"The long-term outlook for the Indian hotels industry remains positive, given the country's burgeoning middle class and increasing disposable incomes. With continued investments in infrastructure, demand is expected to be robust," says an Icra report.