Cos vie for hospitality sector pie in UP

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Lucknow, Sep 9 : There is a sudden buoyancy in the state-run tourism and hospitality sector in Uttar Pradesh.

While earlier, the government had failed to attract any bids for an advisor for the disinvestment process of the 47 ailing units of the tourism department despite having extended the date three times, the moment it decided to put the 30 profit-making hotels of the Uttar Pradesh Tourism Corporation up for disinvestment along with the 47 ailing ones, a string of companies have shown interest in acting as advisors to the state government in the process.

As many as five reputed consultancy firms came forward to submit their bids on Monday, which included Ernst & Young, IFCI Ltd, Yes Bank, Techmach and Dhir & Dhir. While the bids of Yes Bank, Techmach and Dhir & Dhir got rejected on technical grounds, the bids of IFCI and Ernst & Young reached the financial bidding round.

According to informed sources, as per available indications, IFCI is likely to be handed over the job of acting as an advisor out of the two companies. Apart from the fact that IFCI has a larger network of officers and is a more experienced company, as compared to Ernst & Young, the other major reason that would tilt the scales in favour of IFCI is that they have bid with a lower consultancy fee than E&Y.

Speaking to FE, an official of the department said, “The tourism sector seems to have injected a sense of confidence among the private sector. This can be ascertained by the fact that there are so many companies who think that they can make the process a viable one and get us a good buyer.”

Another reason for the buoyant response from companies willing to act as advisor to the process seems to be that the sector is far less hassle-prone as is the sugar sector, which is fraught with many side-effects, including its political ramifications.

However, though the process of divesting hotels and tourist guest houses has been set off, one issue that may plague the future course of the project is the government’s decision not to disturb the serving condition of the employees, who will be passed on as they are to whosoever the buyer may finally be.