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ITC might have entered the luxury hotel segment in Goa with its purchase of the 250-room Park Hyatt, but the shadow of a legal battle looms ahead.
Emerging as the highest bidder, the ITC had bought the property early this month from the IFCI Limited for Rs 515 crore. It immediately made a payment of Rs 129 crore to the government-owned lenders of Blue Coast Hotels, the original owner of the property.
The balance was to be paid within 15 days. An IFCI source confirmed that ITC paid the balance and took possession of the hotel. “It is preparing for a smooth transition,” said the source.
The takeover, however, isn’t going to be a cakewalk: Blue Coast Hotels has moved the Bombay High Court challenging the possession notice issued by the district magistrate concerned, and got a status quo order from the division bench.
Representatives of Delhi-based Blue Coast Hotels said the Goa property was kept as a collateral against a loan. However, the development bank had put it on the block without mutual consent, and sold it for less than the half its value of Rs 1,250 crore, they added.
The loan amount from IFCI was invested in the 450-room MGM Grand luxury hotel in New Delhi. Its construction has already begun and is slated to be completed by 2018.
IFCI had decided to sell Blue Coast’s Park Hyatt in October last year under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
Blue Coast says the loan amount was recalled prematurely, in violation of the provision of the agreement. Besides, IFCI did not submit a copy of the hotel’s valuation report.
When contacted, an IFCI official said status-quo means ITC would continue to have possession of the property.
Only a 15-minute drive away from the Dabolim airport in Goa, the beach property is spread over 45 acres. It was the winner of the Favourite Leisure Hotel in India at the Conde Nast Traveller India Readers’ Travel Awards, 2014.
US-based Hyatt Hotels, which took over the management of the property in 2003 making it the first Park Hyatt hotel in India, is reported to have a further nine-year contract to run it.
The purchase is significant for ITC, too, because it did not have any property in Goa under its luxury brand. It has two Fortune-brand properties, which are managed by ITC.
While ITC is expected to manage the newly-acquired property, a formal decision is yet to be made. None from the company was willing to comment on it.
No comment was forthcoming from Hyatt Hotels India either. A source said: “ITC has indicated to the hotel staff that it wants to absorb them.”
The loan received from IFCI was used to build a 450 room MGM Grand luxury hotel in New Delhi, the construction of which has already begun and expected to be completed by April 2018. IFCI, in October, decided to sell the Blue Coast's Park Hyatt under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SRFA & ESI).
Blue Coast, however, alleged that the loan amount was recalled prematurely by IFCI and is against the loan agreement signed between the two parties. Blue Coast has also alleged that IFCI did not submit a copy of the valuation report of the Goa property.
The Hyatt property, which is just 15 minutes drive from the Dabolim airport, is a beach property spread over an area of 45 acres. The luxury hotel which has 250 rooms was the winner of Conde Nast Traveller India Readers' Travel Awards (2014) - Favourite Leisure Hotel in India.
