Taj bags New York luxury hotel contract

The Taj Hotels Resorts and Palaces has entered into a 30-year management contract agreement to operate and manage Pierre, a luxurious hotel on New York's Fifth Avenue. The company will take the management control of the hotel from July 1. The hotel was earlier managed by Four Seasons Hotel.

"Taj Hotels would spend $ 35 million on the renovation of the hotel, which will be completed by the year-end. The group will pay an annual lease of $ 5 million for managing the hotel to 795th Avenue Corporation, the co-operative owners of the property," said Raymond Bickson, managing director & CEO, The Indian Hotels Company Ltd.

Bickson did not comment on the management fees the group would be receiving from the owners. According to leading hotel consultants in Mumbai, the average management fees is about 12-15 per cent of the total annual revenue subject to conditions such as occupancy, and average room rate (ARR).

The Pierre offers 201 guest rooms, including 52 suites. According to Bickson, the hotel has just turned around from a bad patch with nil bad debts.

"The time of contract is good for Taj as Pierre has just entered a turnaround path. The New York market is going strong, commanding an average room rate of $450-500 generally and $650-800 for a deluxe room," said Bickson.

The Pierre has been owned by a co-op since 1959. Thirty of the 76 co-op owners live at the Pierre permanently, their apartments scattered amid the 201 guest rooms.

"Taj brings a wealth of experience in luxury service and maintenance. We anticipate a long productive partnership," said Phyllis Mailman, Chairman, 795 5th Avenue Corporation.

On a global perspective, Taj Hotels is looking towards acquiring two-three major hotels and management contract of four-five hotels in the near future.

"The management contract of five hotels would itself bring to the company a revenue of $ 20 million per year," he said. Taj Hotels is eyeing hotels across North America, Europe, China and South East Asia.

As part of the Tata group, The Taj Hotels Resorts and palaces comprises 56 hotels in 39 locations across India with an additional 5 international hotels in Maldives, Mauritius, Seychelles, UK, US, Bhutan, Sri Lanka, Africa and Middle East.

The current international portfolio includes luxury hotels in Indian ocean, business and resort destinations in the Middle East and Africa, and serviced apartments in the UK.