The consulting firm Ernst & Young has advised the New Delhi Municipal Corporation (NDMC), which paid for Indian Hotels Company Limited (IHCL) to build the 294-room Taj Mahal New Delhi more than 30 years ago, to have an open auction to select a company to manage the property on a new 30-year lease. It also recommended that IHCL should have the right to match the highest bid to retain management on a contract that recently expired and has been extended to October 2012, according to The Economics Times report by Ravi Teja Sharma.
The land on which the hotel is situated is owned by the NDMC. It was built by IHCL but the construction was funded by the municipal body. 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. "Accor is aware about NDMC considering auctioning a hotel at Mansingh Road in Central Delhi in the next few months. Since there are very few opportunities left in Central Delhi, if such an opportunity was confirmed we would definitely look at it and put a bid for it," said Jean-Michel Casse, Senior Vice President-India Operations, Accor. Subrata Roy, Chairman, Sahara India Parivar said that the group would bid for the property if there was an auction. "Due to its strategic location and positioning, apart from domestic and international hotel operators, financial investors too will be interested in it," said Akshay Kulkarni, Executive Director, Cushman & Wakefield India. If the Tatas are given the right of first refusal, competing parties would have to submit aggressive revenue-share bids if they want to emerge victorious. As per the report, IHCL on its part, will have to take part in the auction with a clear strategy and a maximum amount in mind beyond which matching the highest bid would not make sense. The manner in which this auction is conducted could set the precedent for other hotels such as Le Meridien, The Lalit, ITC Maurya and Taj Palace, whose leases are due to expire in the coming years.
Source
The land on which the hotel is situated is owned by the NDMC. It was built by IHCL but the construction was funded by the municipal body. 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. "Accor is aware about NDMC considering auctioning a hotel at Mansingh Road in Central Delhi in the next few months. Since there are very few opportunities left in Central Delhi, if such an opportunity was confirmed we would definitely look at it and put a bid for it," said Jean-Michel Casse, Senior Vice President-India Operations, Accor. Subrata Roy, Chairman, Sahara India Parivar said that the group would bid for the property if there was an auction. "Due to its strategic location and positioning, apart from domestic and international hotel operators, financial investors too will be interested in it," said Akshay Kulkarni, Executive Director, Cushman & Wakefield India. If the Tatas are given the right of first refusal, competing parties would have to submit aggressive revenue-share bids if they want to emerge victorious. As per the report, IHCL on its part, will have to take part in the auction with a clear strategy and a maximum amount in mind beyond which matching the highest bid would not make sense. The manner in which this auction is conducted could set the precedent for other hotels such as Le Meridien, The Lalit, ITC Maurya and Taj Palace, whose leases are due to expire in the coming years.
Source