ITC will pursue an asset-light strategy in the hotel business to reach the milestone of 30:70 ratio between owned and managed hotel properties, as it seeks to scale up the room capacity on a faster pace. The mix presently stands at 40:60.
Between the four brands- ITC Hotels, Welcome Hotels, fortune and Welcome Heritage the company operates 107 hotels with a combined capacity of 9500 rooms, while the ongoing project will take the total strength to approximately 12000 rooms.
Why is this important
Hotels forms one of the four core business segments of the company and will take a major chunk of the planned Rs. 250 bn capex. With the focus in the hotel segment now shifting towards an asset-light model, the company will be able to re-allocate the planned capex towards other segments.
Stock to be impacted
The planned strategy to pursue an asset-light model in the hotel segment will not only enable the company to increase capex towards other segments but will also enable the company to improve its return ratios.
ITC (CMP: Rs 262, MCap: Rs 299,566 crs, 22.5x FY2020E PE)