Lease up, Tatas have to bid for keeping Taj Mansingh
The 33-year-old iconic property, Taj Mahal Hotel —known as the Taj Mansingh for its location in Mansingh Road in Lutyen’s Delhi — may change hands, if the Tatas fail to outbid others in an auction that NDMC will hold in a few months. HT reports.delhi Updated: Jan 05, 2012 01:54 IST
The 33-year-old iconic property, Taj Mahal Hotel —known as the Taj Mansingh for its location in Mansingh Road in Lutyen’s Delhi — may change hands, if the Tatas fail to outbid others in an auction that NDMC will hold in a few months.
The land lease agreement signed in 1978 between the Tata-owned Indian Hotels Company Ltd (IHCL) — that runs the property —and the New Delhi Municipal Corporation was extended only by a year in October.
Since the agreement did not empower IHCL with the right of first refusal clause, NDMC does not need to secure IHCL’s nod before handing out the 3.78-acre property to another hotel chain.
A senior government official told HT that NDMC had decided to hold an “open auction”, where every bidder will know the other parties’ bid value. “For retaining the property, IHCL will have to emerge the highest bidder. We expect some big industrial houses and some of the world’s leading hotel chains to participate in the bidding.”
NDMC would soon engage Infrastructure Development Finance Company as consultants to begin the roadshows for carrying out an auction for managing the property, said a source who did not wish to be identified.
“The consultants will handhold NDMC in finalising a private sector partner and in getting the optimal revenue,” the source said. While an IDFC spokesman said the company would not like to comment.
Under the original agreement, IHCL paid NDMC a licence fee of 10.5% of its gross revenue, along with R12 lakh a year as house tax and Rs2.29 lakh a year as ground rent.
The revenue share and other terms will change significantly in the new bidding terms, and the prospective bidders will have to agree to share a larger part of their revenues with NDMC.
In an email response to HT’s queries, IHCL confirmed that the lease had been extended by a year, but did not specify the details of investments it had made in maintaining and renovating the property.
But sources said the company had mentioned that it invested about Rs110 crore in the property. NDMC will appoint a banker to ascertain the depreciated value of the investments made in the hotel building.