One-stop solution for all travel needs: ITDC sees growth outside hotels now

Centre plans to divest or transfer management powers of various hotels under ITDC

India Tourism Development Corporation (ITDC) completed its fifty years of managing government hotels and promoting the country’s tourism sector in October 2016. However, the future is uncertain for the state-owned company as the government moves ahead to exit the business of running and managing hotels.

"The hotel portfolio will definitely get compressed over a period of time and focus would be on Delhi-based properties, especially our flagship Hotel The Ashok and Hotel Samrat, which contribute most in terms of the number of rooms as well as turnover," said Piyush Tiwari, chairman and managing director (MD) of ITDC. 

The BSE listed company operated 13 hotels last year — eight owned and five joint ventures — and managed two properties at Bharatpur and Kosi. The total rooms under these were about 1,500.

But that is going to change this year. The government last month decided to transfer Hotel Janpath, a 150 room property, to the Ministry of Urban Development. "The property can be considered for construction of offices and similar purposes, which would save government funds," a government statement said. 

Two other hotels in Bhopal and Guwahati, which ITDC ran until last year, are in the process of being disinvested or transferred to the state governments. Bharatpur property belongs to the Centre and it may be run by a private operator in future.

Once these four properties go out of ITDC’s fold, the company will be left with approximately 1,200 rooms across eleven properties. The list may not end here as the government has stated last month that "running and managing hotels" on professional lines is not the work of the government or its entities. Tiwari said the immediate impact of these four properties would actually be positive on the profitability of the hotels business, which hints that these may have been in the red. "In spite of divestment of stake in some of the hotels, this division would continue to be the highest revenue earning one," he said.

However, ITDC stock has risen 272 per cent to Rs 627 since November last year and the company now commands a market capitalisation of Rs 5,382 crore, which is more than the market cap of Rs 4,761 crore enjoyed by Mahindra Holidays & Resorts.

The company clocked the turnover of Rs 495 crore in the financial year (FY) 2016-17 as against Rs 465 crore in FY16, but profit slipped 46 per cent to Rs 12.05 crore. Hotels, which form more than half of the turnover, saw a marginal slip in profit before tax (PAT) to Rs 31.40 crore because of the loss from travels and tours division, the second biggest segment. The travel business is complex as the industry includes many activities, which together produce the product called travel experience, said Tiwari. 

He, however, said there is "tremendous" scope to grow the market share by improving the online booking portal. "ITDC is a one stop solution for all travel needs from ticket booking to cab bookings, to hotel booking, city tour, entertainment etc. You get everything under one," he said.

The company wants to position ITDC as a brand providing a complete tourism and travel related solutions other than hospitality services. Tiwari said the focus will be on MICE (Meetings, Incentives, Conferences and Exhibitions), destination entertainment, skill development and leisure tourism for the future growth. The company has ventured into duty-free shops at sea ports and aims to cover all such ports to target cruise passengers.