ITC scouting Dubai, Far East and Europe for hotels

With its first overseas hotel set to open in Sri Lanka in 2018, tobacco-to-hotels major ITC is looking to enhance presence in the global hospitality market.

ITC Hotels has identified a few markets like the Middle East and Europe and is waiting for the right opportunity.

Speaking on the sidelines of a CII conference, Ranveer Bhandari, chief operating officer, ITC Hotels, said, "We are looking at Dubai, Far East and even Europe, and just waiting for the right one to come along. Because it is a very important decision for us to ensure that there is enhancement of image and brand."

There seems to be a slight shift in ITC's international expansion strategy as in an earlier interaction with dna in 2012, Nakul Anand, executive director, ITC, had said that international presence was mainly driven by a pre-condition – countries or destinations in close proximity to India and regularly frequented by Indian outbound travellers.

"So places like Singapore, Hong Kong, Malaysia, Thailand, etc would make for a strategic fit else why should I have a hotel in the middle of nowhere. At the end of the day my bread and butter is here in India and the whole world is coming to India to set up hotels and there has to be a very compelling reason for me to set up hotels in international markets," Anand had said then.

ITC's current hotel protfolio comprises owned and managed hotels located within the country. In 2013, ITC Hotels had tied up with Bahrain-based India-born billionaire Ravi Pillai to manage five of its hotels under the WelcomHotel Raviz and Fortune Raviz brands in India and Dubai, respectively.

The company's first international property, ITC Colombo One Hotel and Residences, located on the Colombo coast, is a new luxury development in the heart of the Sri Lankan capital. As per the agreement signed by ITC with the Board of Investment in 2012, the mixed development is expected to commence commercial operations in August 2017. ITC has already paid the treasury $73.5 million as lease premium, which forms a part of the $140 million it would invest in Sri Lanka.

On the domestic front, the current slowdown in the hospitality sector hasn't slowed down ITC's domestic expansion plans. It has five luxury properties under various stages of development.

"We are building large luxury hotels in Srinagar, Ahmedabad, Bhubaneshwar and Kolkata. The upcoming hotel in Hyderabad will be christened ITC Kohinoor," said Bhandari, adding that smaller hotel projects are also being pursued in cities like Pahalgam, Lucknow and Amritsar.

Taking an average size of 300 rooms, ITC's hotel division would have 1,500 rooms under the ITC suffix. The Welcome and MyFortune branded properties have 150 rooms on an average, most of which are coming up in smaller cities.

"In 2017, we will have Kolkata, Hyderabad and Srinagar properties ready followed by Sri Lanka in 2018. A lot of our hotels would be coming in the next five years. We are moving fairly rapidly for all our projects," the COO of ITC's hotel arm said.

As for business performance is concerned, last month ITC reported just 4% revenue growth for its hotel division citing weak pricing scenario on the backdrop of excessive room inventory in key domestic markets. The sluggish macroeconomic environment, disruption due to heavy rains in Chennai as well as gestation costs of recently commissioned ITC Grand Bharat added to the pressure on business. However, while not sharing specifics, the company said there was improvement in room occupancy and good growth in food and beverage segment.