Kick-starting a long-delayed process, India Tourism Development Corporation (ITDC) will hold a road-show on August 22 to seek investor feedback on the monetisation of the iconic hotel, the Ashok, in the heart of Delhi, along with its vacant land, for the development of a commercial block and serviced apartments.
Following the announcement, ITDC’s share price moved up and closed at 400.90 on Wednesday, up 17.05% from the previous closing price on the BSE.
Transaction adviser Feedback Infra has suggested three modules for monetisation: Leasing out the Ashok Hotel built on 11.62 acres for 60 years to private parties under an 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 and the embassies. The winning bidder may have to invest about Rs 450 crore to refurbish the hotel on the lines of global iconic hotels like the Ritz (Paris), the Savoy (London) and the Taj Mahal (Mumbai), according to the presentations prepared for the road-show notified on the BSE on Wednesday.
A second land parcel of 1.83 acres will be offered in the design-build-finance-operate-transfer (DBFOT) model on a 90-99 year lease to develop retail-cum-office space with a built-up area of 175,000 sq ft in an integrated building of 5/6 floors.
The third plot of 6.3 acres will 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.
A fourth plot where the Samrat Hotel is built, over a 4.73-acre land, will not form part of the proposed transaction.
The monetisation value of the project is estimated at about `8,000 crore, consisting of capital expenditure by the public-private partnership (PPP) concessionaire and upfront lease revenues to ITDC, an official had told FE earlier.
The move will not only facilitate the 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 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 a 7.87% stake, while 5.1% is held by others, including retail investors.
Even though no monetary value has been assigned for the 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 `6 trillion in four years starting FY22.