Indian Hotels trying to dilute volatility by getting into businesses that deliver higher margins: Puneet Chhatwal

“I am anxiously waiting to see the leadership of G20 coming to India as of December and all the plans that are discussed in FICCI or in CII or in various other forums and where we both participate. That will be a big game changer and will help position India in a very different light across the globe,” says Puneet Chhatwal, MD & CEO, IHCL .

Record profits, stock at an all-time high, demand is coming back. This is the best I have seen for India Hotels. But is the best yet to come? One can always build on the best and good can become very good.
Yes, the best is yet to come because Q3 is traditionally the best quarter and it is festive season, it is new year, it is the time of wedding season. A lot of action happens in Q3 and I do not see that changing.

I would definitely like to believe the best is yet to come especially in our new businesses. Taj is almost 120-year old and there is a certain ceiling in terms of driving better margins. But the new businesses will take three to five years before they stabilise and start producing great results. I would like to believe that the best is yet to come.

It is very important for us to increase the margins for a very different reason. Our business is very cyclical. We cannot change the cycles and that means the volatility will stay but what we can do is dilute the volatility by going for businesses which deliver higher margin percentage so that we stay iconic but are also most profitable.

That will ensure that whenever there is a bad time or there is a pandemic or geopolitical tension, when margins drop, we do not have to borrow and become debt-ridden again. That is a challenge the sector has faced and within the sector, we have also faced and hopefully with all the initiatives we have put in place, when the next bad period comes,we are better positioned, better hedged and are able to build enough reserves to face future challenges.

You are trying to migrate a hospitality/a hotel industry to a consumer company by bringing the cyclicality down.
Absolutely, one has to do that. Nothing is cast in stone forever. That does not mean that everything that is coming from the tradition is not relevant for the future. In order to maintain the heritage and maintain the traditions, we have to keep investing and in order to invest, we have to grow the businesses. In order to grow the businesses, we also have to create new businesses. One cannot be fixated or become a mono brand company. Now, that was also in discussion seven-eight years ago whether we should be just Taj. In a heterogeneous country like India, where 87% of our businesses have different needs and wants in different corners, not just our business model, but also with our name, Indian Hotels, it is an obligation for us to address that need.

So the decade belongs to India?
Yes I personally believe also that the most happening place has to be India unless something happens that we do not know of. We have added 110 hotels to our pipeline in the last five years and it took us 115 years to get to the first 110. It is not that we had some secret sauce or formula. It is just because growth is happening and we are well positioned to take advantage of it.

I think this trend is going to continue. Lots need to be done, lots will get done and all the initiatives happening are very interesting. I am anxiously waiting to see the leadership of G20 coming to India as of December and all the plans that are discussed in FICCI or in CII or in various other forums and where we both participate. That will be a big game changer and will help position India in a very different light across the globe.