New Delhi Municipal Council’s (NDMC) consultant Ernst & Young, which is advising the civic body on the Taj Mahal Hotel property at Mansingh Road has recommended that Tatas should have the right to match the highest bid in an open auction, possibly setting the stage for an intriguing bidding drama and paving the way for auctions of other hotel properties.
Looking at the development, two of the biggest hospitality players in the country Accor and Sahara may bid for the property if it goes up for auction.
A person privy to the contents of the interim report submitted by Ernst & Young to NDMC, said the consulting firm has proposed an open auction to select the operator, who would run the property on a 30-year lease. The report has recommended that the Tata-owned Indian Hotels Company (IHCL), which currently operates the property, should be given the right of first refusal or the option of matching the highest bid.
NDMC Chairman Archana Arora said Ernst & Young had submitted the report, but declined to divulge details. An Ernst & Young spokeswoman declined comment on the matter.
The land on which the hotel, popularly called Taj Mansingh, is situated is owned by the NDMC. It was built by Indian Hotels but the construction was funded by the municipal body. The Tata Group company has operated it on a 33-year lease, which expired last year, and was extended till October 2012. The hotel company pays the municipal body 10.5 per cent of its gross revenue annually and the proposed auction could result in a substantial increase in this revenue share figure.
Source