India’s leading hospitality chains Indian Hotels Company and ITC Hotels will face off today in a bidding war to grab the rights to run Delhi’s Taj Mansingh.
The 292-room luxury property, located in the heart of Delhi, has seen interest from only two players despite several rounds of e-auctioning held by the New Delhi Municipal Council (NDMC) to find a new suitor.
September 20 was the last date for submission of the bids invited by NDMC. The winning bidder will be able to run the hotel for 33 years.
Tata Sons-led Indian Hotels Company (IHCL) which manages over 100 hotels, many under Taj brand, is the current operator of the hotel. The Mumbai-based company has run the Taj Mansingh uninterruptedly since 1976. The property is one of four luxury properties run by IHCL in the national capital.
Rival ITC Hotels too has four properties in New Delhi under four brands – ITC, Sheraton, Welcome and Fortune. Both companies are keen on acquiring the Taj Mansingh as readymade properties especially in a city like Delhi are not easily available.
At nearly 16,000 rooms Delhi has the largest supply of branded hotel rooms in India followed by Bengaluru and Mumbai, according to a report by HVS.
ITC’s bid was rejected in June as the company failed to submit it through the online medium leaving only IHCL in the fray. This forced NDMC to abort the auction. ITC has only two properties under the luxury category in Delhi, lower than at least four run by its competitor.
Marriott-Starwood, for instance, has more than five properties while Intercontinental Hotels Group has eight properties in Delhi. ITC Maurya and Welcome Hotel Dwarka are the properties run by ITC under its own brand.
Taj Mansingh sits on a plot area of 3.78 acres with a total built-up area of 2.45 lakh sq feet, including terrace and basement. It has 292 rooms, seven food and beverage outlets and six meeting rooms with flexible capacity.
Despite being a prime property the bid has generated very low interest so far. Part of this was to be blamed on the terms, riders and lease conditions laid down by NDMC as per which more than 17.25 percent share of the revenue will have to be shared with the municipal council.
In addition, the property is over four decades old and has previous generation design and architecture, offering little scope for structural modification necessary to suit the preferences of luxury brands of today.
IHCL has kick started an aggressive cost cutting drive under its new managing director Puneet Chatwal. The company has taken efforts to reduce debt by selling unprofitable properties and exiting loss-making contracts. IHCL has shown keen interest in retaining the Mansingh property under the Taj brand.
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