Indian Hotels Company Doubles Down on Luxury With Claridges Deal

Indian Hotels Company (IHCL) said Thursday it would take over the management of the iconic Claridges Hotel in Delhi in April. Company executives described the move as a way to further increase IHCL’s share in India’s luxury hotel segment.

India’s largest hotel operator, which owns the Taj luxury brand, said it had signed a management deal with Claridges Hotel Private Limited, which is not affiliated with The Claridge’s Hotel in London.

“The Claridges has a strong luxury position,” said IHCL CEO Puneet Chhatwal during an earnings call. “This gives IHCL an opportunity to grow in luxury space with a differentiated offering distinct from the flagship Taj brand.”

The deal begins with IHCL managing the group’s property in Delhi. The hotelier will start running the other properties later.

Claridges Hotel Private Limited will retain the ownership of the properties and the brand names.

This business decision came as IHCL reported quarterly earnings, and said it was witnessing ongoing robust demand in domestic luxury travel.

Chhatwal shared that its key Taj brand achieved a double-digit growth rate in average room rates year-over-year.

IHCL’s “Premium Positioning”

Chhatwal said he expects average room rates to increase in all of the company’s brands. His reasoning: IHCL has the ability to charge more for its rooms due to its brand power, strong loyalty program, and vast network.

The Taj brand helped IHCL command a 66% revenue-per-available-room premium over the industry averages, highlighting how luxury players are better positioned to pass on inflation.

The CEO touted the strength of Taj Hotels: “Nobody covers like Taj does the Indian domestic front… Our ability to charge is higher. Our ability to attract people is higher.”

Chhatwal cited the Taj Mahal Palace and Tower as an example, noting that its year-over-year rate increase was “more than 30%.”

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