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ITC keen to bid for Taj Mahal Hotel in Lutyens' Delhi

NEW DELHI/KOLKATA: ITC Hotels, the country's second-largest hospitality chain, is keen to bid for the property that houses the iconic Taj Mahal Hotel in Lutyens' Delhi if it is auctioned. This will pit ITC against Tata Group's Indian Hotels Company as well as other domestic and overseas companies in a high-stakes auction.

A person familiar with ITC Hotels' plan said the company would explore the opportunity to participate in an auction if the reserve price made sense. "The property is at a flagship location and even though ITC has an existing property nearby, it can be an exciting opportunity. But all would depend on the reserve price and whether it would create value for the company's shareholders," he said.

An ITC spokesman declined comment. But another person close to the group said that while the cigarettes-to-hotels conglomerate had good properties all over India, it lacked one in the heart of Delhi. ITC Hotels runs two five-star hotels in the Capital: ITC Maurya, and Sheraton New Delhi.

Accor, the international hospitality group that owns hotel brands such as Ibis and Novotel, as well as the Sahara Group have earlier told ET they would be interested in bidding for the prized property.

The land on which the hotel, popularly called Taj Mansingh, is located is owned by the New Delhi Municipal Corporation.

The hotel was built by Indian Hotels, but the construction was funded by the municipal body. The Tata Group company operated it on a 33-year lease, which expired last year but was extended till October 2012.

Consulting firm Ernst & Young, which is assisting NDMC in finalising a private sector partner, has recently recommended an open auction to select the operator who would run the property on a 30-year lease. The report has also suggested that Indian Hotels should be given the right to match the highest bid.

If the Tatas are given the right of first refusal, competing parties would have to submit aggressive revenue-share bids to emerge victorious. The Tatas, on their part, will have to take part in the auctions with a clear strategy and a maximum amount in mind beyond which matching the highest bid would not make sense.

At present, Indian Hotels pays 10.5 per cent of gross revenues, or around 20 crore, as annual lease rental to NDMC. This figure is expected to go up significantly. "Since it is a fully functional hotel and no upfront capital expenditure is required barring marginal renovation cost, even committing to a high revenue share would make a viable business model," said the CEO of a homegrown hotel chain.

The hotel business in India is in the midst of a downturn with both business and leisure travel declining. But experts believe the downturn is temporary. "India gets 6 million tourists every year, which is expected to rise to 11 million by 2015, accounting for 1 per cent of the global tourist traffic.

To meet that demand, the country would need 2 lakh hotel rooms by then. India currently has around 1.63 lakh rooms. So, the current downturn in the hospitality industry is a temporary phenomenon," said the CEO of a leading hotel company. In addition to being the second-largest hotel chain in the country, ITC owns 14.98 per cent stake in the Oberoi-group owned EIH and 13.98 per cent stake in Hotel Leelaventure Ltd.

There has been speculation in the past that the conglomerate had accumulated these stakes with the objective of eventually mounting takeover bids for these companies. But ITC Chairman YC Deveshwar has said shares in these hotel chains were bought as part of treasury operations and the company had no plans of acquiring them.

Fordi vi gjør direkteavtale med en rekke hoteller i London sentrum kan vi også tilby en pris som ligger langt under det andre kan tilby, også lavere en det hotellene selv tilbyr på sine nettsider.

Comments (0) 09.09.2012. 15:59

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Taj Group to stop managing Gateway Hotel in Jodhpur

Tata Group hospitality major Indian Hotels Company (IHCL), which runs the Taj brand of hotels and resorts, on Saturday said it has decided to discontinue its management contract for The Gateway Hotel in Jodhpur and Ahmedabad. Taj Hotels, Resorts and Palaces will continue managing the hotels as per the previously agreed contractual terms until May 9, 2016, IHCL said in a release here. "The Taj remains fully committed to honouring all its contractual obligations to our stakeholders during this period," Taj Hotels, Resorts and Palaces Associate V-P (PR) Rakhee Lalvani said. Taj Hotels is one of Asia's largest group of hotels with 96 properties at 61 locations across the globe, including presence in India, North America, the United Kingdom, Africa, the Middle-East, Malaysia, Sri Lanka, Maldives and Bhutan.

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