The Delhi High Court said the NDMC could go ahead with its plan to auction the property , dismissing opposition from the Tata Group company that has been operating the Taj Mansingh Hotel since 1978.
NEW DELHI: A number of hotel operators and investors are keen to grab Taj Mansingh Hotel, the landmark hotel property on Delhi’s Mansingh Road managed currently by Indian Hotels Co, if the New Delhi Municipal Council puts it up for auction, consultants and industry insiders said. An auction could see fierce bidding from the likes of hotel development and investment firm SAMHI Hotels, Lemon Tree Hotels, and many other foreign institutional investors, hotel companies as well as private equity funds.
On Monday , the Delhi High Court said the NDMC could go ahead with its plan to auction the property , dismissing opposition from the Tata Group company that has been operating the Taj Mansingh Hotel since 1978.
The company , whose licence to manage the hotel has expired, on Tuesday challenged the order before a division bench of the same court and an auction is likely to be subject to the outcome of the legal proceedings. An Indian Hotels spokesperson said it will protect its interests and pursue all legal options.
“At a broad level, yes, we would be interested in bidding for the property ,” said SAMHI chief executive Ashish Jakhanwala. But a number of issues needed to be clarified before that, like the tenure of the lease and whether it is fixed or variable, he said. “We are always keen for good quality assets, but we are not into the trophy asset business. So, if it’s a 30-year lease, unlikely. If it’s longer, we will be interested.”
Patu Keswani, chairman of Lemon Tree Hotels, said if it is an open auction and there is no right of first refusal, then like most others international and domestic hotel companies, the company too would like to bid.
Dilip Puri, Starwood’s managing director for India, said while Starwood will not bid for the property as it does not invest in real estate, if some investors bid for it and get it, the compa ny will like to manage it.
The hotel is one of the most iconic in the capital city. Indian Hotels’ lease for the property ended in October 2011, but it has got several extensions since then. The urban development ministry in 2011 decided the NDMC should invite open bids to manage the hotel and provide the first right of refusal to Indian Hotels, allowing it to match the highest bid. The home ministry later said such an arrangement would lower revenue in the auction. The company in April 2013 filed a civil suit against NDMC in the Delhi High Court after the council decided to auction the property .As part of the original 33-year lease, Indian Hotels originally paid 10.5% of the gross turnover of the property to NDMC. It currently pays 17.5%, but this could go up significantly if the property is auctioned.
In the past, the likes of Accor Hotels, Oberoi Group, ITC and the Sahara Group had expressed interest in bidding for the property.
PRS Oberoi, the chairman of EIH, which owns the Oberoi Group of hotels, had told ET in 2012 that he would be interested if the price was in range. Vikram Oberoi, the current EIH managing director, declined to comment.
Compared with the 2012 levels, when the property was first expected to be auctioned, there should be a 20-22% higher net realisation for NDMC now based on long-term demand forecasts, said Siddharth Thaker, managing partner at Prognosis Global Consulting. The improved economic growth story of India is likely to attract global brands to the asset.
HC Admits Indian Hotels Appeal against Auction
New Delhi: A division bench of the Delhi High Court has admitted Indian Hotels Co’s appeal against a single-judge bench’s order, allowing the New Delhi Municipal Council to auction the Taj Mansingh hotel, reports Ravi Teja Sharma. The division bench will hear the case on September 15, Rishi Agrawala, the counsel for Tata Group-owned Indian Hotels, told ET. The single-judge bench had ruled in favour of NDMC on Monday, dismissing the plea by the company which has been operating the hotel since 1978.
Indian Hotels had asked the council to renew the hotel’s licence as it held that it was a partner in the property. “Indian Hotels Company will vigorously protect its interests in the Taj Mahal Hotel, New Delhi and will pursue all legal options,” a spokesperson for the hotel company said.