The iconic 294-room The Taj Mahal Hotel, located in New Delhi, could be up for grabs.
The Economic Times in India reported on Tuesday that consulting firm Ernst & Young has advised the New Delhi Municipal Corp., which paid for Indian Hotels Co. to build the property more than 30 years ago, to have an open auction to select a company to manage the property on a new 30-year lease. It also recommended that Indian Hotels should have the right to match the highest bid to retain management on a contract that recently expired and has been extended to October.
Names mentioned in the story as interested in competing for the new lease include Accor, Courcouronnes, France, and Subrata Roy’s Sahara India Pariwar, Lucknow, India. However, an individual in privy to the contents of the E&Y report said the municipality might have to extend the lease again since the auction is unlikely to be concluded by October.
Indian Hotels reportedly pays the municipal body 10.5% of its gross revenue annually and the proposed auction is speculated to result in a substantial increase.
The Economic Times further reported that before the original lease ended, the municipality reportedly offered Indian Hotels a new formula for extending the lease whereby it would have to pay the civic body 17.5% of the hotel’s gross turnover for the first 10 years, 18.5% for the next 10 and 19.5% for the last 10 years.
The manner in which this auction is conducted could set the precedent for other hotels such as Le Méridien, The Lalit, ITC Maurya and Taj Palace, whose leases are due to expire in the coming years.