What IHCL’s latest investment says about moving into airport hotels

Skift Take

It is no surprise that IHCL is expanding its portfolio of airport hotels. These hotels are becoming increasingly popular, especially among business travelers. Since traffic jams often turn into a crawl, imagine the time saved: you land, grab your bag, and within minutes you’re at your hotel. Who wouldn’t want that?

Peden Doma Bhutia

The Indian Hotels Company Limited (IHCL), the parent brand of Taj Hotels, sees airport real estate as an important growth area. In its latest move, IHCL has invested INR 500 million ($6 million) in its subsidiary Zarrenstar Hospitality through a rights issue.

In March, IHCL invested INR 350 million ($4.2 million) in Zarrenstar Hospitality.

However, IHCL will retain full ownership of Zarrenstar. “The funds will be used to construct a hotel near the Cochin International Airport,” IHCL said in a stock exchange filing.

The 112-room Taj-branded property, scheduled to open in November, represents an investment of approximately INR 1 billion ($12 million) to tap into the high-traffic airport market.

“We are opening the Taj at Cochin International Airport in November this year,” Puneet Chhatwal, managing director and CEO of IHCL, said during an earnings call in July.

Zarrenstar had a turnover of INR 5.5 million ($65,416) as of March 31, 2024, according to IHCL stock exchange data.

IHCL’s growing portfolio of airport properties

In an earlier earnings call, Giridhar Sanjeevi, then chief financial officer of IHCL, had called airport properties a strong proposition, adding that the company’s plans for Cochin, Mumbai airports and other properties would continue.

Apart from the Taj Cochin facility, IHCL has a combined Vivanta and Ginger complex with a total of 750 rooms at Bengaluru Airport and has also signed and announced the 300-room Ginger Mopa Airport in Goa. In August, IHCL also unveiled its latest addition, Ginger Airport Coimbatore.

In November last year, IHCL opened the 371-Key Ginger Mumbai Airport Hotel.

“Ginger grew 45% year-on-year, driven by stellar performance from its flagship Ginger Mumbai Airport Hotel,” Chhatwal said while announcing the first quarter results for the period ending June 30, 2024.

London-based hotel group Yotel also said it plans to enter the Indian market by locating hotels near some of India’s busiest airports, the CEO said. Hubert Viriot told the Times of India earlier this year.

How IHCL is expanding its portfolio and market presence

IHCL has expanded its presence through a number of strategic expansions and Zarrenstar Hospitality complements this expanding portfolio. In the first quarter of FY2025, IHCL signed 16 hotels and opened six new properties. Thus, the hotel company has surpassed the mark of more than 325 hotels in its portfolio.

The group is also preparing to launch renamed gateway as a full-service hotel in the upscale and upscale segment. IHCL has set an ambitious target of opening 15 Gateway Hotels by 2030.

On Monday, IHCL also announced the opening of the 83-key fair Yarkai, Thimphu – IHCL SeleQtions in Bhutan.

Chhatwal said the Bhutan opening is to cater to the growing demand for experiential travel: “This opening is in line with our vision to expand our presence in renowned tourism destinations, enabling tourism destinations in the region to attract travelers from all over the world.”

Not only hotels

Apart from hotels, IHCL also announced its entry into the branded residences market with First Taj branded residences to open in Chennai.

“This is a highly lucrative market segment in India, with a market value today exceeding INR 220 billion (USD 2.6 billion) and experiencing double-digit year-on-year growth. This helps IHCL diversify its revenue streams and leverage the strong Taj brand,” Chhatwal said at the latest earnings call.

IHCL’s growth strategy based on all these smart acquisitions and diversification seems to be paying off. In the first quarter of fiscal 2025, the company recorded its ninth consecutive quarter of record performance, with enterprise revenue exceeding INR 30 billion (USD 360 million), up 7% year-on-year.