During the year, we registered strong profitability even as revenues grew at a moderate pace. Our continued efforts to drive cost efficiencies and strengthen our balance sheet have already started yielding results.
At IHCL, we have always set benchmarks in service quality and our global portfolio demands that we continuously reinvent ourselves for the future to check in. We are driving this transformation with a five-year growth map – Aspiration 2022 – that provides a template for us to grow profitably and sustainably.
Aspiration 2022 will lead us to re-structure our operations and re-engineer processes in a larger effort to re-imagine our engagement with all stakeholders. Re-structuring entails a continuous and careful re-examination of your Company’s existing portfolio to unlock value from efficiencies in scale and simplify the holding structure for greater profitability and a growth in EBITDA margins.
Your Company is re-imagining itself by leveraging its strong brand equity to multiply its portfolio while aligning to high-growth segments. This includes manoeuvring excellence and reinvigorating the portfolio across all brands. While the iconic Taj and Vivanta will be retained as the dominant brands in the luxury, upper upscale and upscale segments, Ginger will have a significant presence in the IHCL brandscape. It will address your Company’s drive to be present in the fastest growing segment. The brand will take on a fresh avatar to address the needs and aspirations of the new and younger customer segments.
IHCL is a multi-faceted global Company. Our strategy for the future hinges on diversifying our revenue streams and utilising our products and service brands more effectively, which is why we are reimagining IHCL’s own brand positioning. One that emphasises it is the largest hospitality Company in the subcontinent with true Indian origins and that allows it to go beyond the current offerings, ranging from luxury palaces to budget hotels and other B2B verticals like TajSATS. Based on the philosophy of Power of One, your Company has launched ‘One IHCL’ to create an identity that unites its brands and businesses. This new identity will help unlock the equity of ‘nestled’ brands such as Khazana, Jiva and F&B brands, among others. Moreover, your Company can create new business drivers such as shared economy models to transcend traditional businesses. This will fuel growth by attracting partners and talent for IHCL as a group rather than as Taj alone.
Our pivotal programme, Aspiration 2022, is based on the three-pronged strategy of re-structuring, re-engineering and re-imagining the Company’s portfolio. The strategy is aimed at margin enhancement and growth to fulfill our aspiration of becoming the most iconic and profitable hospitality company in South Asia. Therefore, it will focus on exploring new markets, expanding existing properties, monetising non-core assets, optimising costs and simplifying the group structure to grow the bottom line. The five-year programme will also include leveraging the digital channel to strengthen the brand and generate more revenue.
The need to re-structure our operations is bigger than ever today. We have identified a 3S approach of Scale, Simplify and Sell to unlock value from our existing efficiencies and build a portfolio that addresses the fast-changing needs of the global traveller.
Our plan for the next five years is to grow inventory across multi-product, multi-segment categories to meet the growing demands of the discerning traveller. Our marketing strategy will involve selection of strategic locations for developing establishments, including central business districts, airports and leisure and luxury places to help upgrade our value proposition. We will also invest in expanding our land area across geographies and explore strategic merger-and acquisition opportunities without indulging in non-source international markets.
We believe in simplifying processes for seamless and integrated business functioning. We will continue to make things simpler by restructuring the Group’s holding structure to create a consolidated turnover and for balance sheet optimisation. By implementing the restructuring process, the redundant organisational layers and duplicated activities would be removed, decision making would be streamlined and performance management would be redesigned.
We will undertake periodic reviews to extend the tenure of good-performing hotels and exit those that are suffering losses and are not showing any future potential. Disposing assets that are no longer useful to our operations will, thus, help us in building a profitable business.
While IHCL is a market leader in the luxury and palaces segment, the focus ahead will be to align brands to dominate high-growth segments. The plan is to reduce dependency on ownership and expand across the business.
Over the next five years, we will optimise revenues and stay commercially focussed. To do this, we have to re-imagine our strengths and brand equity to grow our portfolio, while staying relevant in the high-growth segments. We will expand our presence across the growing midscale and economy categories, reaching out to guests of every profile. To deploy the third strategy of Aspiration 2022, we have devised a 3M approach – Manoeuvre, Manage and Multiply.
International tourism and travel increased by a remarkable 7% to reach a total of 1322 million in 2017.
Company incurred capex of 311 crores, majority of which was towards Taj Exotica Resort, Andamans and renovations and refurbishments of hotels.
Occupancy rates in prominent Indian cities have improved in the last year and companies with Pan-India presence are well poised to benefit from this trend, going forward.