The stand-off between Indian Hotels Company, which operates the Taj group of hotels, and the New Delhi Municipal Council (NDMC) over the prestigious Taj Mansingh Hotel in the Capital, is headed for an amicable resolution.
That means Indian Hotels will retain hold of the flagship premium property, bringing the uncertainty over ownership to an end. Indian Hotels had secured a year’s lease extension last year from NDMC, the co-owner of the property.
The hotel, operating out of a building and land on Mansingh Road owned by NDMC, is managed by the Tata-owned Indian Hotels.
A top executive of Indian Hotels said he saw no problem even after the extended lease expired in October.
“We had the arrangement with NDMC all the time and I believe between now and September we should have it signed up. We don't think it will go for (open) bidding,” the executive said. The hotel company has been in dialogue with NDMC for a few months for formal renewal of the contract.
Talk of the civic body exploring options such as inviting fresh bids for the property was doing the rounds when the urban development ministry made such a suggestion earlier this year. Indian Hotels had entered into an official 33-year lease agreement for using the property in 1978, which ended October last year.
“We have been partners with the government. We are investors in the property and then we had an arm’s length hotel management contract (with them). We are the co-owners of the property. The government was not able to finish the hotel, so they came to us (and) we invested and we are their partners. So we have been investors in the property,” added the executive.
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The executive said there was very little risk of the relationship getting impaired.
An open bid involving several hotel companies would have increased the value of the 294-room premium property, comprising the Taj Club, executive suites, luxury suites and the grand presidential suite.
Indian Hotels holds a significant stake in the property, thereby enabling it to enjoy the right of first refusal if NMDC decided to go for a new partner. Though the management contract lasted 33 years, Indian Hotels has increased its stake over the years after several rounds of investment on refurbishment.
Indian Hotels believes it has the required documentation that gives it the option and NDMC the flexibility to have an open dialogue. The hotel company has also agreed to pay the negotiated compensation in arrears from October last year once the renewal is made.