Indian Hotels plans ₹1,200 crore investment for FY26, eyes sustained growth

Indian Hotels Co. Ltd (IHCL) has outlined plans to invest over ₹1,200 crore in FY26, focusing on asset management, upgrades, and new projects, particularly enhancing its Taj Hotels brand, the company said in a filing to the BSE on Monday. In FY25, the company said it spent ₹1,000 crore. The company expects growth, driven by strong domestic and international demand, the recovery of foreign tourist arrivals, and momentum in the leisure, social, and meetings and incentives segments, too.

It also anticipates growth in both same-store performance and new business initiatives, with 30 new hotels set to open in the year, it added. For FY25, it posted a 53% jump in net profit, which reached ₹2,038 crore, up from ₹1,330.2 crore in the previous year. Revenue from operations rose by 23.1%, reaching ₹8,334.5 crore compared to ₹6,768.7 crore in FY24.

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The company’s consolidated financial results included data from 24 subsidiaries, including international properties, which reported total assets of ₹2,854.4 crore, revenue of ₹385.8 crore, net profit of ₹34.42 crore, and cash outflows of ₹163.31 crore for FY25. Its air and catering arm, TajSATS, now a wholly-owned subsidiary, contributed ₹716.4 crore in revenue during the year, accounting for roughly 10% of the company’s total revenue.

Exceptional items for FY25 included a loss of ₹12.87 crore for the quarter and ₹16.24 crore for the full year due to impairment of investments in a loss-making subsidiary. The previous year saw a gain of ₹10.84 crore from reversing a loss on an investment in a joint venture, though it did not state which joint venture this was. The company signed 74 hotels and opened 26 properties, with over 95% of the signings following an asset-light model, and focused on managing or franchising properties instead of owning them.

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In the year gone by, its domestic hotels, on a "same-store" basis, reported a 12% growth in consolidated RevPAR (revenue per available room). This is a key metric used by hoteliers to measure the revenue generated per room throughout the year. "Same-store" refers to hotels that have been in operation for at least a year, allowing performance comparison without factoring in new openings or closures. 

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RevPAR increased 7% in its international hotel portfolio. Additionally, its management fee income grew by 20% to ₹562 crore, driven by new businesses.

Last week, Mint reported that India is poised for a hotel boom, driven by the entry of major players like the Adani group into the hospitality sector and increased investments from established companies, spurred by rising prosperity and growing demand for travel. 

According to HVS Anarock's "India Hospitality Industry Overview 2024" report, 2025 is expected to be a strong year, with public listings, room rates surpassing ₹10,000, and deal activity reaching ₹4,200 crore. The sector's occupancy rates are expected to rise to 70% by 2026, up from 63-65% last year, while average room rates could increase by nearly a third from ₹7,800-8,000 per night. Currently, India boasts around 200,000 branded hotel rooms.

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