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ITC: Enduring Value

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ITC eyes Southeast Asia for its hotel expansion 15 Sep 2012

Financial chronicle

Firm has projects totalling 5,000 keys in pipeline.

Tobacco to hospitality major ITC is expanding its network of hotels in the Southeast Asian region. At present, the company has projects totalling 5,000 keys in pipeline across India and abroad.

ITC has bought land in Sri Lanka for a luxury hotel in Colombo. It is also looking at setting up a greenfield project in Nepal. According to Y C Deveshwar, chairman ITC, the company will look out for more opportunities in the region. He believes that the neighbouring countries have a market to afford a few luxury hotels.

The Sri Lankan project, which will cost Rs 500 crore, excluding the land value, will be commenced next year and is expected to get completed in three years. ITC has acquired a five-acre land in Colombo and is seeking necessary clearances.

“We have a total of 8000 rooms in our existing hotels and 5000 more are in the pipeline. The new projects are coming up in the metro cities as well as tier II cities like Coimbatore and Ahmedabad. The company had allotted $2 billion for the hotel projects three years back and we have already utilised around 30 per cent of it. A premium luxury hotel room costs around Rs 1.5 crore, luxury Rs one crore and four and five star Rs 50 to 70 lakh per room. Most of the projects will be green field as altering a brownfield or an existing hotel as per our requirements will cost us higher. The investments will be made through internal accruals,” said Nakul Anand, chief executive, hotel division, ITC.

Asked about the feasibility of luxury hotels in the changing political and economic scenario, Deveshwar said: “Hospitality industry is the first to get impacted by macro-economic factors and geo-political tensions. But our group is not solely dependent on hotels. During times of buoyancy, hotels contribute well to our revenues and during adversities other businesses take care of it.”

The company also opened in Chennai its biggest property with 1.5 million sq ft built-up area. The premium luxury hotel, ITC Grand Chola, has cost the company Rs 1200 crore. It has one lakh sq ft banquet area and 30,000 sq ft column-less space to entertain meetings, incentives, conferences and exhibition (MICE) activities.

Providing huge space for banqueting and exhibitions, the company hopes to make Chennai a hub for MICE activities. “We have to market Chennai as a city for MICE. Once there is enough space available for such events, large trade shows and exhibitions will come to the city,” said Deveshwar.

© ITC Limited