All you need to know about ITC Hotels demerger

ITC launched its hotels business way back in 1975 with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola' (now Welcomhotel) to earn high levels of foreign exchange, create tourism infrastructure and generate employment. Over the years, it has emerged as second biggest player in the hotel space after Tata group-owned Indian Hotels. Last year, the conglomerate decided to demerge hotel business and list it as a separate entity to allow the hospitality business to focus on growth and maximise shareholder returns.

Under the scheme of demerger, ITC shareholders received one ITC Hotels share for every 10 shares they own in the company, with the cigarettes-to-FMCG-to-hotels conglomerate retaining a 40% stake in the demerged entity. British American Tobacco (BAT), which owns 25% stake in ITC, got 15% stake in the hotel business, while the balance shareholding were distributed among existing shareholders in proportion to their holdings in the company.

With a strong debt-free balance sheet and ₹11,000 crore of total assets (including ₹1,000-1,500 crore of cash and cash equivalents), ITC Group today operates a bouquet of 6 brands – ITC Hotels, Storii, Mementos, Welcomhotel, Fortune, and WelcomHeritage - distributed across segments. ITC Hotels and Storii cater to luxury segment, WelcomeHotel in upper upscale, and Fortune in mid to upscale space. Storii is a boutique hotel and WelcomHeritage is a heritage property. Its current portfolio includes 140 properties with 13,000 rooms, out of which 45% are owned, and 55% are under management contracts. Around 80% of the owned room inventory is in metros (distributed evenly in top 6 cities).

Going ahead, the group aims to increase inventory to 18,000 rooms in the next 4-5 years, and 200 hotels from 140 currently. In the past 2 years, the company has managed to achieve its target of opening 1 hotel per month and expects similar trajectory in next 24 months.

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