India Tourism Development Corporation (ITDC)’s iconic hotel The Ashok at the national capital may be offered on long-term lease to private parties without any further delay, as part of the government’s effort to gather revenues through asset monetisation.
The move will not only facilitate development of the under-utilised property in the heart of Lutyens’ Delhi through private investments but also enable both the investors and the government — the owner of the property — to derive maximum commercial value out of the asset.
The monetisation value, estimated at Rs 8,000 crore, will accrue to ITDC as upfront revenue.
“The ministry of tourism has been asked to initiate steps to invite expressions of interest for the property without further delay,” an official aware of the inter-ministerial consultations on the matter told FE. The ministry has reportedly been pulled up for the delay in initiating the process.
The property could be leased out for 60 years to private parties on Operation, Management and Development (OMD) model. The Ashok has a total inventory of 550 rooms, including 160 ‘Suites’, barely a few hundred metres from the Prime Minister’s residence.
Of the 25-acre land that The Ashok owns, Samrat Hotel is built over a 4.73 acre, which will not form part of the proposed transaction. The Ashok hotel occupies 11.5 acre. About 1.83 acre could be offered for commercial development while another 6.3 acre could be for hotel/serviced apartments development.
The Ashok was merged with ITDC in 1970 to further boost tourist infrastructure in the country. Currently, the Centre owns 87.03% in ITDC, Tata Group’s Indian Hotels Company (IHCL) holds 7.87% stake, while 5.1% is held by others, including retail investors.
IHCL is currently operating the premium Hotel Taj Mansingh in Lutyens’ Delhi on lease from the New Delhi Municipal Council (NDMC).
The government has been pushing for commercial exploitation of under-utilised assets of the ITDC chain of hotels, which have about 125 acres of land parcels spanning across major cities across the country. The Atal Bihari Vajpayee government tried to disinvest The Ashok in 2000-01, but did not succeed.
Even though no monetary value has been assigned for monetisation of urban real estate, the redevelopment of The Ashok will contribute to the National Monetisation Pipeline (NMP), which seeks to generate upfront revenues/investments of Rs 6 trillion in four years starting FY22. This assumes importance as railways and telecom ministries, which form a substantial chunk of NMP, are likely to see a huge shortfall in their achievement against the target.