Skift Take
Know where the growth in India is? In its Tier 2 and Tier 3 cities. IHCL definitely seems to know that.
Indian Hotels Company (IHCL) is bringing back its Gateway brand from “cold storage,” but it will be a reimagined version: A full-service hotel offering in the upscale segment.
Puneet Chhatwal, managing director and CEO of IHCL, called the brand an ideal fit to capture growth opportunities in emerging markets in metros and Tier 2 and Tier 3 cities. He said the rollout will commence with 15 hotels in Bekal and Nashik this quarter followed by destinations like Bengaluru, Thane and Jaipur.
The brand will further scale to 100 hotels by 2030, Chhatwal said during an earnings call on Wednesday. “This will be a similar story like the Ginger, which was reimagined in the years 2018 and 2019,” Chhatwal said.
IHCL had reintroduced its midscale brand Ginger in 2018 after “an intensive repositioning exercise.”
In 2018, reports had said that IHCL would be phasing out the Gateway brand and upgrading them to a more upscale Vivanta brand
“We will keep the Gateway brand in our drawer and take it out as and when it becomes relevant,” Chhatwal had said then.
Why Bring Back Gateway?
The need to bring back Gateway stems from several strategic considerations and market dynamics.
Taj has traditionally been positioned as a luxury brand. However, over time, this luxury positioning was diluted when Taj was extended to include Vivanta and Gateway properties, Chhatwal said.
Recognizing the potential in Tier 2 and Tier 3 cities where the cost to build and operate a full-fledged Taj property may not be justified by market demand and pricing, Chhatwal said creating a new, more regionally-focused brand allows IHCL to enter these markets with a tailored offering that is more affordable and aligned with local market dynamics.
The new brand will reflect the unique characteristics and ethos of the city that it enters. This localized approach aims to resonate more deeply with guests in these locations helping to differentiate the brand from generic, mass-market offerings.
Complement Taj and Ginger
With over 110 Taj-branded properties and nearing 100 Ginger properties, IHCL has achieved a critical mass in its portfolio.
This scale allows for the introduction of a new brand that can complement the existing Taj and Ginger offerings, further diversifying the group’s presence and appealing to a broader range of guests.
By positioning the new brand as upscale full-service, Taj aims to fill a gap between luxury Taj properties and more budget-oriented Ginger properties. This niche caters to guests seeking a premium experience without the high price tag associated with luxury hotels.
“We are also launching it because we are very confident of getting quickly to a critical mass of 50 hotels in operation and a portfolio of 100 very soon, and we start with 15. We already start with double digit. We’re not starting with something we build one hotel at a time and it takes another 20 years to get to the next 20, 30, 40 or 50 hotels.”
IHCL reported its best-ever fourth quarter and its best-ever full year financial performance for the quarter ending March 31, 2024, making this the eighth consecutive quarter of best-ever performance.
The consolidated revenue grew 17% year-on-year to INR 69.5 billion ($834 million). EBITDA grew 20% year-on-year to INR 23.4 billion ($280 million).
As of March 31, IHCL has achieved a portfolio of 310 hotels, including 19 in the pipeline. The company targets to open 25 hotels in fiscal 2025.
