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Chandigarh | Administration revives plan to privatise CITCO hotels
Chandigarh administration officials have been told to come up with a model for privatisation of CITCO hotels– be it leasing these out, handing over operations and management functions to a private entity or even outright sale.
The UT administration has made a fresh move to initiate privatisation of hotels run by the Chandigarh Industrial and Tourism Development Corporation (CITCO).
Chandigarh administration officials have been told to come up with a model for privatisation – be it leasing out the hotels, handing over operation and management functions to a private entity or even outright sale.
UT adviser Dharam Pal, said, “I have told them (officials concerned) to examine the privatisation models. They would have to come up with the request for proposal. There are laid-down instructions from the Government of India as to how to go about it. For long-term planning of assets, we have to see whether to wholly privatise it, opt for a long-term leasing out plan or explore another option.”
The move to revive privatisation of CITCO hotels comes nearly two years after it was first proposed.
In June 2019, the administration had mooted the idea to privatise three major public-sector hotels — Mountview (Sector 10), Shivalikview (Sector 17) and Parkview (Sector 24) — being run by CITCO.
In 2019, UT had written to the Centre expressing its intent to “monetise” Mountview in Sector 10, Shivalikview in Sector 17 and Parkview in Sector 24.
Initially, the plan was to lease out or outsource the management of the three hotels. Outright selling of the properties was not on the table. The aim was to run these on professional lines and generate sizable revenue.
But after Covid-19 outbreak, the administration in October 2020, put the plan on the back-burner, resolving to take it up at a “more-appropriate” time. With the hospitality industry in dire straits at the time due to repeated pandemic-induced lockdowns, the administration didn’t expect any takers for its hotels.
Notably, the administration is in the final stages of privatising the UT electricity department. The move to privatise electricity transmission elicited strong opposition from employees, residents and political parties. Employees have challenged the plan in the high court.
Financial sustainability in question
The management of Hotel Mountview and Hotel Parkview (then Chandigarh Yatri Niwas) was transferred to CITCO in 1982. Initially, Mountview was run by a private group and after the company’s lease ended, the administration decided to take over the hotel. In 1988, Hotel Shivalikview (then Janta Hotel) was transferred to CITCO and put in commercial use on January 1, 1990.
All the three hotels are located in prime locations with well-developed infrastructure but still, the government is finding it difficult to make these hotels relevant in the highly competitive hospitality industry.
The under-utilised infrastructure, old structures of the property compared to competitors, heavy expenses on renovation, untrained staff, small indoor space for events and parties has just added to the misery. But the moot point is failure of a bureaucratic CITCO to make these hotels financially robust.
CITCO has over 1,000 employees -- 700 permanent and 300 on contract. Nearly 52% of the revenue goes into paying the salary of employees.
The unhealthy financial relationship between CITCO and administration also negatively impacts the running of these hotels. The administration owes CITCO crores with regards to the services used by it.
