Last September, ITC Chairman Sanjiv Puri told TOI in San Francisco that alternative structures for ITC Hotels were being explored “in line with (the strong) recovery dynamics of the industry.” On Monday, after the spin-off was approved, Puri said: “The proposed spin-off of the hotel business is testament to the company’s commitment to creating sustained value for stakeholders. Creating a hospitality focused entity will generate the next horizon of growth and value creation by seizing the exciting opportunities in the Indian hospitality industry. In the proposed reorganization, both ITC and the new entity will continue to benefit from institutional synergies.”
Details of the proposed reorganization, including the outline of the arrangement, will be submitted for board approval on August 14, 2023. Over the past two decades, ITC’s hotel business has expanded significantly in terms of room inventory, revenue and profit. It currently has more than 120 hotels and 11,600 keys in more than 70 locations. The group’s hotel brands include “ITC Hotels” in the luxury segment; “Welcomhotel” in the premium segment; “Fortune” in the mid to upper market and “WelcomHeritage” in the leisure and heritage segment. Two new brands were recently launched, “Mementos” in the luxury lifestyle and “Storii” in the premium segment.
“The proposed reorganization would ensure the company’s continued interest in the hospitality business, provide long-term stability and strategic support to the new entity in its quest to accelerate growth and sustained value creation, and also allow for cross-synergies between the company and the new entity to be leveraged. The spin-off will help the new entity to attract appropriate investors and strategic partners/collaborations whose investment strategies and risk profiles are more aligned with the hotel industry,” ITC said in a statement. The spin-off “will unlock the value of the hotel business for the company’s shareholders by providing them with a direct stake in the new entity together with an independent market-driven valuation of the same. This move also reinforces the more precise capital allocation strategy implemented in recent years, which is manifested in the turn towards the ‘asset entitlement’ strategy in the hotel business,” the statement added.