There is more confusion than clarity on the auction of Delhi’s iconic Taj Mansingh hotel. MSTC, the agency hired for the e-auction, continued to flash February 21 as the date of auction on its website on Wednesday. However, the day passed without any auction taking place.
Earlier this month, the New Delhi Municipal Council (NDMC), which owns the property, had revised the auction date for the second time to February 21. The first revision had rescheduled it for February 7. The date has now been extended for the third time to March 7 — five weeks after the first date of January 30.
An executive at Indian Hotels Company, which operates the hotel currently, said on Wednesday he was not aware of the new auction date. Executives at a couple of hospitality chains, that had purchased the bid documents, were also clueless.
According to an official at NDMC, apart from Taj Mansingh, two other Delhi hotels — Hotel Connaught and Asian Hotel — will also be auctioned on March 7. He, however, did not comment on any revisions in the bid conditions. An executive from SBI Caps, the transaction advisor for this auction, declined to talk on the subject.
“It has been preparing for this auction for years,” an executive with a leading hospitality group said, and added that the NDMC could have handled the whole process much better.
The delay in the auction could be due to conditions in the bid document that a number of prospective buyers found restrictive. Those in the race have raised several questions, but the NDMC has not been able to come up with satisfactory responses.
One of the issues before the NDMC is regarding a condition that restricts the winner from making any structural changes or damages to the property. This clause, it is learnt, may make securing fire and safety approvals tricky for a new operator. These approvals are outside the purview of the NDMC.
Interested players also have an issue with the restrictive nature of the process, which insists that bidders must have a five-star hotel brand as well as at least 500 rooms across three properties. Some of the leading global hotel brands and asset firms present in the country could not participate due to this.
Also, according to the set conditions, two bidders cannot have a cross-holding of 5 per cent and beyond between them. ITC Hotels owns 14.98 per cent in EIH (Oberoi Hotels) and, as a result, only one of the two could be eligible. But both were keen to bid for the 294-room hotel in Lutyens’ Delhi.
Samhi, a hotel asset company backed by Goldman Sachs, was also keen, but could not participate due to non-ownership of a luxury hotel brand.
Industry players had argued that these restrictions would impact the value for NDMC.
Indian Hotels had signed a lease agreement with the NDMC for Taj Mansingh in 1976 and the hotel was inaugurated two years later. In 2011, the 33-year-old lease ended, starting a court battle.
Four years ago, the NDMC decided to auction the property, while the Tata group challenged the decision in the Delhi High Court. After much back and forth and several lease extensions, the Supreme Court gave approved the auction in April last year.