ITC Hotels recently announced its split from its parent company. The National Company Law Tribunal approved the demerger in December, and the shares of ITC Hotels are expected to be listed by February 2025. ITC will retain a 40% stake in its hotel business, while the remaining 60% shares will be allocated to existing shareholders. The demerger will also provide INR 15 billion for planned growth and contingency requirements.
As a standalone entity, ITC Hotels will now compete with other major players in the industry such as Tata’s Indian Hotels Company, the Oberoi Group, and The Leela group. The company has made significant investments in renovations, ongoing projects, and new greenfields to expand its hotel division. Additionally, ITC is looking to leverage mergers and acquisitions as well as alliances for further growth opportunities.
ITC has also made strategic investments in other hotel companies, acquiring a stake in Oberoi-parent East India Hotels and increasing its stake in Hotel Leela Venture. However, its financial investments in these companies will not be transferred to the hotel arm during the demerger process. ITC Hotels currently has more than 140 operational hotels with over 12,000 keys in its portfolio, and plans to add 300 rooms by fiscal 2028.
Looking ahead, ITC Hotels aims to achieve a 2.5 times growth in management fees by the 2029-30 financial year. The company has a pipeline of 45 managed hotels with around 4,000 keys and plans to have over 200 hotels with more than 18,000 keys in the next five years. Expansion plans include properties like ITC Narmada in Ahmedabad, ITC Royal Bengal in Kolkata, and Welcomhotel Bhubaneswar.
The demerger of ITC Hotels comes at a time of positive investor sentiment towards the travel industry. Investment banking company Jeffries noted that the public listing landscape for hotels in India is expected to expand, driven by a strong outlook for the industry. The travel demand in India has remained robust post-Covid, leading to an increase in average room rates (ARRs) for hotels. Several companies are now entering the stock market, collectively raising significant amounts of capital.
Recent IPOs by companies like Samhi Hotels, Apeejay Surrendra Park Hotels, and Juniper Hotels have collectively raised INR 40 billion. Additionally, ITC Hotels, the parent company of The Leela hotels Schloss Bangalore, Brigade Hotel Ventures, and Ventive Hospitality are also set to enter the stock market, collectively looking to raise INR 80 billion. This trend reflects the growing interest and investment opportunities in the lucrative hotels industry in India.
