NDMC reworks tender for Taj Mahal hotel on Mansingh road

The New Delhi Municipal Council has come up with a reworked tender for the Taj Mahal hotel on the capital’s Mansingh Road, but industry experts and hoteliers said it was unlikely to change much in terms of expressions of interest because most conditions remained the same.

The proposed auction has also landed in a legal tussle yet again with the Tata Group-owned Indian Hotels CompanyNSE 2.23 % Ltd (IHCL) moving the Delhi High Court on the reworked tender for the hotel that it currently operates.

On Thursday, IHCL argued in the court that the reworked tender had failed to take into account IHCL’s “blemish-free record” as observed by the Supreme Court (while ruling in April last year that it could go ahead with the auction of the hotel, the top court had said the NDMC should take into account the blemish-free record of the Taj while deciding the party to whom the operating licence will be given). The high court has reserved its order on the plea.

The auction still rules out foreign entities from participating and commercial terms are still pretty severe even for domestic hoteliers, industry experts said. “It appears that the bidding conditions continue to be complicated and have not been simplified for motivating hotel investors. The expectation of a minimum guarantee fee of Rs 3 crore per month continues to be an economically unattractive proposition but we will evaluate this in greater detail and take a decision,” said Ashish Jakhanwala, the chief executive of hotel development firm SAMHI Hotels, which is part owned by Goldman Sachs.

Mandeep Lamba, the managing director of the hotels and hospitality group at JLL India, said not much has changed in the new tender.

“In terms of the qualifications for bidders, not much has changed. Conditions like the net worth (the bidder should have an average turnover of Rs 400 crore or more in the past three financial years from hotel or resort operations) still remain the same. If you are a foreign entity and you do not have a presence here, then you cannot bid. The Indian entities could be slightly better off. But the whole idea of trying to get cross-border capital is not likely to happen,” he said.

As reported by ET previously, the reworked tender, which has set June 19 as the date of the e-auction, has allowed for cross holding in hotel chains of up to 20% compared with 5% earlier, which could ease out the process for chains like ITC which has a cross holding of 14.98% in its rival EIH (the Oberoi Group). The lease period of 33 years and the minimum revenue share arrangement of 17.25% stay the same.

Sources said Accor might be the only foreign entity eligible to bid since it has a joint venture in India with InterGlobe, and that the chain may be considering it. Accor did not respond to an email seeking comment till press time Friday.

Source:-https://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/ndmc-reworks-tender-for-taj-mahal-hotel-on-mansingh-road/articleshow/64036727.cms?from=mdr