New Delhi: As part of the central ambitious asset monetization program, the government is ready to transfer Iconic Ashok hotels in the capital to the private sector on a 60-year contract.
It will also offer land parcels in the 21.5 hectare complex for hotel or apartment settings served and other development jobs.
The plan is that it is expected to be cleaned by the cabinet immediately, imagining two areas of land to be offered at a long-term run period of up to 90 years, sources that are familiar with these developments to TOI.
Although the government tries to complete the earliest process, all transactions cannot be resolved in the current financial year.
Land parcels include a plot of 6.3 hectares, classified as backup land, which can be used for the development of service or hotel apartments.
The construction was proposed in addition to the UK High Commission faced.
Other plots of 1.8 acre, one side the same, offered for commercial development with a higher floor area ratio (far).
The remaining land in the complex is proposed to be offered to potential bidders, which can be part of the main hotel complex so there is a reverse possibility for entities that collect agreements.
It will also help increase the realization of the project, the source described.
Like other PPP projects, the land will return to the government at the end of the license.
The winning bidder for the hotel can fully enlarge it but it will not be allowed to make changes to the exterior of the property that appeared in 1956 along with a large convention center to host the conference by the United Nations.
Analysis by the Ministry of Tourism, which tested the proposal, has suggested that there are commercial potential and broad income which remained untapped.
Against the permitted length of 3.25, only 1.3 has been utilized.
Likewise, only 23% of land coverage permitted 40% has been used, said source.
In addition, there are non-income aspects, such as general utilities, sub-station power (for Ashok and Samrat hotels) and large packages used for the proposed quarter staff to offer.
Samrat Hotel has been held due to security considerations.
Hotels, with more than 500 rooms, are included in an ambitious asset monetization program because the performance remains below par compared to the other five-star nature in Lutyens’ Delhi.
Replacing obsolete carpets and un-maintained furniture, along with renovation, can cost Rs 400-500 Crore by conservative government estimates.
However, the government believes it should not be in the business running a hotel, the area where the private sector is far more efficient.
Hotels will be offered under the operating-maintenance-development model.
Land memories that will be used for the development of commercial or office complexes and hotel apartments or services are proposed to be provided through the transfer-build-build-finance-transfer route, said source.
“There will be an option for one bidder to take over the entire project or some players can enter,” said an official.
Apart from the upfront payment, the government is looking at the share of annual income.
Part of the upfront payment will be used to offer voluntary pension schemes and clear contributions.
Some efforts have been made in the past to sell iconic hotels in the heart of the capital’s diplomatic area, run by ITDC, but the plan must be abandoned because of a series of factors, including labor problems, contributions and past contracts that have signed.
In the Government Atal Bihari Vajpayee, the Disinvestment Department under Minister of Arun Shourie has tried to sell property as part of its broader policy to get out of the hospitality business.
Furthermore, Niti Aayog has suggested a new model but not through.