ITC Boosts Hotel Division with INR 1,500 Crore Infusion and Ambitious Expansion Plans

ITC is transferring ?1,500 crore in cash and cash equivalents to ITC Hotels to support its demerged hotel business entity's growth and contingency needs. The company plans to allocate 8-10% of its revenue to capital investments for renovations and ongoing projects.

Trademarks and Licensing Arrangements

ITC will retain trademarks for its iconic restaurants like Bukhara, Dum Pukht, and Dakshin, as well as its corporate logo. These trademarks will be licensed to ITC Hotels under a trademark license agreement.

Demerger Details and Shareholding Structure

The hotel business demerger becomes effective on January 1, with January 6 as the record date for determining ITC shareholders eligible for ITC Hotels shares. ITC Hotels shares are set to be listed within 60 days post-NCLT approval received on December 16. ITC shareholders will directly hold 60% stake in ITC Hotels, with ITC retaining the remaining 40% stake, ensuring existing shareholders collectively hold 100% ownership.

Operational Plans and Asset Transfers

An operating service agreement will allow ITC Hotels to manage ITC Grand Central, Mumbai, alongside other identified hotel-related assets, including offices and staff housing. The demerged entity will maintain a zero-debt balance sheet, ensuring strong cash flows for organic and inorganic growth opportunities. ITC Hotels plans to add over 300 rooms through owned properties, with projects like a greenfield development in Puri and expansions in Bhubaneswar.

Pipeline and Long-Term Goals

ITC Hotels has a robust pipeline of 45 managed hotels comprising approximately 4,000 rooms. Over the past two years, the company opened 28 managed hotels and plans to launch one hotel every month over the next two years. By FY30, ITC Hotels expects 2.5x growth in management fees and aims to have a portfolio exceeding 200 hotels with 18,000 keys, focusing on a two-thirds managed portfolio.

Key Facts and Figures

• Financial Infusion: ?1,500 crore.
• Capital Investments: 8-10% of revenue.
• Trademark License: Bukhara, Dum Pukht, Dakshin, ITC logo.
• Demerger Effective Date: January 1;
• Record Date: January 6.
• Shareholding Structure: 60% direct (shareholders), 40% via ITC.
• Expansion Goals: 300+ rooms, greenfield project in Puri, Bhubaneswar expansion.
• Managed Hotels Pipeline: 45 hotels, 4,000 rooms.
• Hotels Opened in Two Years: 28.
• Portfolio Target: 200+ hotels, 18,000 keys by FY30.
• Growth in Management Fees: 2.5x by FY30.