The monetisation of The Ashok and two vacant land parcels that the India Tourism Development Corporation (ITDC) hotel has in the heart of Lutyens’ Delhi will likely be structured as a single deal.
“The earlier proposal was to go for three split transactions, with the hotel to be leased out in one of them. Now, it will be an integrated offer to the bidders,” an official said.
The move follows investors demanding a composite transaction, including the hotel property, in the roadshows conducted, the official added.
ITDC’s share price surged to a 52-week high of `839.95 on Friday, a day after the interim Union Budget was presented on February 1. The Centre owns 87.03% of ITDC, while Tata Group’s Indian Hotels Company holds a 7.87% stake.
The ministry of tourism is working out details of the transaction, being structured as a public-private partnership (PPP), under which the hotel and land parcels will likely be leased out for the long term. The expression of interest in this regard may be floated soon, sources said.
The redevelopment of The Ashok, which has been pending for the last couple of years, is part of the `6 trillion National Monetisation Pipeline in the four years through FY25.
The hotel and its vacant plots were estimated to have the potential to raise about `7,500 crore, consisting of capital expenditure by the PPP concessionaire and upfront lease revenues to ITDC.
Transaction adviser Feedback Infra had earlier suggested three modules for monetisation. These included leasing out The Ashok, built on 11.42 acres, for 60 years to private parties under an operation, management and development model. The Ashok has an inventory of 550 rooms, including 160 suites, barely a few hundred metres from the Prime Minister’s residence and the embassies. The winning bidder was to invest about `450 crore to refurbish the hotel on the lines of global iconic hotels like the Ritz (Paris), the Savoy (London) and the Taj Mahal Palace (Mumbai).
A land parcel of 1.83 acres was to be offered in the design-build-finance-operate-transfer (DBFOT) model on a 90-99 year lease to develop retail-cum-office space (mall) with a built-up area of 175,000 sq ft in an integrated building of five or six floors.
Another plot of 6.3 acres was to be offered on a 90-99 year lease to build serviced apartments with a built-up area of 1.1 million sq ft, having 600-700 units under the DBFOT model.
Feedback Infra held a roadshow in August 2022 to obtain the views of potential bidders on the models suggested in its feasibility report.
Twenty-nine reputed global and domestic players from the hospitality, real estate development and investment spheres had participated in the roadshow. Participants included Taj, Leela, Hilton, Andaaz, JLL and DLF.