Yet again, the future of Delhi’s iconic hotel, The Taj Mansingh, lurks under the shadow of uncertainty. Following two unsuccessful attempts at auctioning the luxurious hotel, the capital’s civic body NDMC has decided to, once again, invite bids with a partly relaxed criterion.
The previous two tenders had received lukewarm response. This time around, the council has brought down the minimum number of qualified technical bidders to two. Earlier, they had asked for three. The council has also relaxed some of the financial conditions of eligibility.
The date decided for the auction is September 28, 2018. This is as per an advertisement that was floated September 1, 2018. Prospective bidders can do a site visit of the hotel from September 3rd to 6th. A pre-bid meeting will be conducted on September 7th. The last date for submission of bids is September 20th.
In the previous two bids, the minimum number required for the bid to go through, hadn’t been achieved. In the first round, NDMC had received just a single bid from the current operator, Indian Hotels Company. In the second round, they had received two bids — one from Indian Hotels and the second from ITC. This was less than the minimum of three that was required.
According to the clause of these two tenders, the auction could have been held only in case of minimum three qualified bids for the asset. Besides this, the average revenue requirement from prospective bidders has been brought down too. The three-year average revenue required now is Rs 3.5 billion as compared to Rs 4 billion earlier. Bidders can include financials of FY18 as well.
The lease period, which was 33 years in the first two tenders, has not been changed. The bid security amount of Rs 250 million also remains the same. NDMC has retained most of the financial expectations from the property. The next operator will have to assure a minimum revenue share of 17.25 per cent and a minimum guarantee fee of Rs 29.64 million per month, with a clause for escalation. There is also an upfront non-refundable fee of Rs 533 million. NDMC seeks a performance security of Rs 355 million as well. None of these has been changed.
The previous bid opportunities had, unexpectedly, received, a cold response from the hotel industry. Industry experts feel that the proposition in the bid isn’t the best. Any new player could find it difficult to turn a 40-year-old property into a profiteering business from the word go.
Sources feel that getting a third bidder in the fray is an unlikely situation. It could majorly be a fight between Indian Hotels and ITC.