Taj Mansingh auction may be deferred again as NDMC gets only two bids

NEW DELHI: The hugely-delayed auction of Taj Mansingh is likely to be postponed yet again as

NDMC

got less then the required number of bids for the iconic property to go under the hammer. While

Taj Hotels

bid to retain the hotel, ITC is learnt to be the only other player to show interest in the prime Lutyens’ Delhi hotel. The auction was to be held on July 18 had NDMC got at least three eligible bids by deadline of Monday evening.


“The issue will be taken up in a meeting of the council where a decision will be taken,” said a senior official of NDMC. Taj Hotels did not comment on the issue.

The Mansingh Road property was given to Tata Group’s Taj Hotels on a lease for 33 years, which ended in 2011. NDMC has already tried thrice to auction the hotel this year, with little success.

The auction was first supposed to take place on January 30. But strict eligibility norms meant only groups already running five star hotels in India could have bid for Taj Mansingh. The conditions were slightly tweaked to let more players bid for it. But that has not worked.
The e-auction was then scheduled for June 19, but only one eligible bid was received from Tata Group’s

Indian Hotels Company Ltd

(IHCL) by the the deadline of June 7, with ITC’s bid not being accepted due to technical reasons. The third date was July 18 but now even this may be postponed.

Onerous bidding norms have kept Indian and international hospitality sector biggies away from auction of the prime hotel.

“The 33-year period for which it is being offered is too less. If someone else gets the property, Taj will strip the hotel bare and take out everything like elevators and electric fittings. Refurbishing a hotel of this size will take at least two years and then making it fully operational will take another year. NDMC has to be given a minimum of about Rs 3 crore in the first year by the new operator, an amount that rises by 4% every year. So in the first three years itself, the new guy will pay over Rs 100 crore as minimum due to NDMC. Adding the investment made, it gives him less than three decades to recover the investment which is a too little,” said a hospitality sector insider who did not wish to be named.

In an “asset light” environment, this kind of investment is unlikely to be made directly by big hotel chains. Instead there will be investors like Saraf Group or Rahejas who will put in the money and get the big names to run them. However, NDMC bidding conditions do not allow that.

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