Chillin' out till it needs to be funded
This is the third attempt in the last 15 years that the ITC Hotels Franchise is launching an expansion plan in either the superluxury or as in these five years, the Budget and the Mid-Tier hotels. Fortune properties previously purchased across pilgrimage towns and other Tier II towns did spark interest but the consolidation is still only half complete and the business model has many doubting thomases. Nevertheless ITC cannot afford to miss the bus and thence 14 new heritage hotels and a few Fortune properties will come up.
One quick word on operational and business model challenges :
ITC has found historically that moving towards mid tier and Budget properties actually does not bring costs down as much ( Investments in land are not that disparate as one might naively believe) while revenues on the heritage properties are seasonal and at the Fortune and heritage properties are much lower with the F&B component falling further in disproportion and discounts in that tier being much more in vogue because of local competition. However, a little bird did tell me once that properties named Fortune in Gurgaon command up to $400 per night for rooms.
Revenues at this tier are unlikely to exceed $65 per average night for boarding and less than 20% in F&B with Capacity utilization unlikely to cross 65% even at tourist growth rates exceeding 10% per annum