Business Insights:

Indian Hotel Company (IHIN) is the second largest hotel chain operator in India, with presence across the pricing spectrum through its four brands – Taj, Vivanta, Seleqtions and Ginger.

It manages 17,145 rooms across India (85%) and international locations (15%). Domestic business remains the key driver, contributing around 78% of its consolidated revenue

Indian hospitality industry is set to enter into an upcycle, led by favourable demand-supply dynamics. Industry occupancy (67%) has already breached the optimum level, allowing players to exercise pricing power.

Given strong presence in high-demand, high-occupancy micro markets, Indian Hotel is strategically well placed to capitalize on the growth opportunities. IHIN also has an invaluable asset in the form of a strong brand name.

IHIN appears set to benefit from operating leverage in the impending upcycle, led by its higher fixed-cost proportion and efforts to rationalize expenses. Notably, IHIN engages in management contracts, which helps in fast expansion via asset-light business model.

Strategic initiatives such as (i) selling off of loss-making hotels, (ii) focus on technology to reduce distribution cost, (iii) cost-rationalization, (iv) increase in ARR of corporate clients, (v) higher room addition under management contracts and (vi) deleveraging of balance sheet are expected to drive earnings, going forward. Also, with demand likely to outpace supply over the coming few years, pan-India ARR is likely to improve in both the corporate and FIT segments.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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