Tata Sons, the holding company for conglomerate Tata Group, has founded a hotel-ownership platform to spur growth in Tata Group's subsidiary Indian Hotels Company Limited.
The Financial Express reports the platform will allow Indian Hotels Company to be asset-light and to expand its global hotel portfolio more rapidly. Tata Sons will acquire hotels via a revenue-sharing business model, and they will be operated by IHCL, whose principal brand is Taj Hotels, Resorts and Palaces.
Earlier this month, Indian Hotels Company Managing Director and CEO Puneet Chhatwal hinted his company was exploring the possibility of a hotel ownership platform.
During IHCL's first-quarter earnings conference call, Chhatwal said a recently signed hotel “has been purchased by the Tata Group and on completion will be operated as a revenue-based lease under the Ginger brand. Over time, this could potentially lead to the creation of an asset platform, which could become a big strategic enabler for IHCL.”
That first Tata Sons-owned property is a 195-room hotel currently in construction at Netaji Subhas Chandra Bose International Airport, Kolkata’s principal airport, Chhatwal said.
He added executives at Indian Hotels Company and Tata Sons have discussed the idea of a hotel ownership platform before.
“These things we started many, many years ago, they just don’t happen overnight. That if we could have a platform as we would not like to invest in everything ourselves. So instead of going with the third-party investors, if the deals have good fundamentals, why not keep it within the group?” Chhatwal said.
IHCL historically has operated several different business models, including developing on leased sites, franchising, hotel management agreements and full owner-operator models. But more recently, company executives have preferred an asset-light strategy.
In a January interview with CoStar News Hotels, Chhatwal outlined his vision for IHCL.
“Growth has been primarily through the capital-light route, with the share of the managed inventory increasing from 26% in full-year 2017 to 43% in full-year 2024. For brands with smaller inventory like Tree of Life and our midscale brand Ginger, the route to growth will primarily be through fully fitted operating leases and select management contracts,” he said.
IHCL has a portfolio goal of 700 hotels globally before 2030, with a big push in its Ginger brand across India. The company also acquired the Tree of Life Resorts & Hotels brand from developer Ambuja Neotia. Year to date, IHCL has signed 74 hotels and opened 26. Overall, it has in 381 hotels in operation and 134 in the pipeline.
Multiple companies under the Tata Group umbrella are listed on India’s Bombay and National Stock exchange indices, but Tata Sons is privately owned.
In its full-year 2024/2025 earnings numbers released on May 15, Indian Hotels Company reported 27% revenue growth to approximately 24.8 billion Indian rupees ($287 million). Its earnings before interest, taxes, depreciation and amortization during the period rose 30% to approximately 9.2 billion Indian rupees.