ITC Restructures, Reduces Owned Hotels to Focus on Managed Assets

By siliconindia  |  Tuesday, 08 September 2020, 11:15:17 AM IST

ITC Restructures, Reduces Owned Hotels to Focus on Managed Assets
ITC, a diversified conglomerate is adopting a multi-pronged strategy that is used to restructuring that includes the reduction of the number of owned hotel properties to 40 percent or even lesser from the current level of 50 percent considering its high capital intensive business. 
Presently, ITC is also looking for other optional structures for its hospitality business. The conglomerate company has already reduced its business size from FMCG to the hotel and then to the tobacco giant. Further, it is expected to reduce the business dimension of its lifestyle retail business. Sanjiv Puri, Managing Director & Chairman of ITC feels that from the new normal, corporates could gear up for the next normal and people have to adjust to it accordingly.
Commenting on the alternative structure for the hotels in an interaction after the company's AGM, Sanjiv stated that the organization has not yet decided anything on this. But, the company would aggressively be pursuing an asset-right strategy for its hospitality business. Furthermore, ITC's hotels business that was heavily titled towards owned assets would now pay more attention to managed assets. 
Nakul Anand, Executive Director, ITC says, "Out of 10,000 keys in ITC hotels, around 5,300 keys fall in the ‘managed’ segment and most of the new additions would be in this category. Going forward, out of 14,000 keys, around 8,600 will be in the ‘managed’ category."
Sanjiv has also confirmed that the company would release the existing assets and focus on the alternative structure for enhanced value creation. While for the lifestyle retail the company would shrink the segment further if it does not have an innovative business plan. 
On the buy-back option, Sanjiv says,  “The board will make a decision in the best interest of the shareholders. Our board has already taken a decision to change the dividend policy to unlock shareholders’ value.” 

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