The Tatas will retain control of Taj Mansingh, the iconic hotel on Man Singh Road in Lutyens’ Delhi.

In an auction held on Friday, Indian Hotels Company Ltd (IHCL) fought off the challenge from ITC to hold on to the property that had been leased out to them for 33 years by the New Delhi Municipal Council (NDMC) in 1978.

The Tata-owned IHCL has now agreed to pay Rs 7.03 crore per month, or 32.5 per cent of the gross turnover of the property, to NDMC as licence fee, 78 per cent more than the Rs 3.94 crore it was paying earlier.

The group will retain the 292-room hotel for another 33 years. After the initial lease expired in 2011, the Tatas had been granted nine temporary extensions to run the hotel.

The winning bid is a windfall for NDMC as it was seeking a minimum revenue share of 17.25 per cent and a minimum guarantee fee of Rs 2.96 crore per month, with a clause for escalation.

“We are delighted that the iconic Taj Mansingh, New Delhi, which has been an important part of the cultural and historic fabric of the national capital, will continue to remain a part of the IHCL family,” Puneet Chhatwal, managing director and chief executive officer of IHCL, said.

The hotel is one of the four luxury properties run by IHCL in New Delhi.

The plan for the Taj Mansingh hotel was conceived in 1976 — to set up a 300-room five-star hotel ahead of a conference of the Pacific Asia Travel Association in Delhi in 1978.

Telegraph picture

Under the terms of the agreement that the NDMC had signed with the Tatas, the municipal council would bear the cost of building the hotel, which worked out to Rs 6.26 crore.

Commercial operations of the hotel began on October 10, 1978. The Tatas were supposed to pay a licence fee to NDMC and eventually paid Rs 247.25 crore during the initial term of the licence up to October 10, 2011 against NDMC’s investment of Rs 6.26 crore.

The Tatas had claimed that they incurred a capital expenditure of more than Rs 129 crore during the initial term of the licence.

Taj Mansingh sits on an area of 3.78 acres with a total built-up area of 2.45 lakh square feet, including terrace and basement. It has 292 rooms, seven food and beverage outlets and six meeting rooms with flexible capacity.

Though a prime property, the hotel generated very little interest among bidders when it was put up for auction. Part of this can be attributed to the stringent conditions laid down by the NDMC.

Also, the property is over four decades old and offers little scope for structural modification necessary to suit modern preferences.

Failing to auction the luxury hotel in two attempts, the NDMC last month decided to relax the eligibility criteria

for bidders and reduce the minimum number of bids required.

The auction had to be put off twice as it got less than the required number of bids for a five-star property to go under the hammer.