Sources familiar with the development told TOI that the plan, which is expected to be cleared by the cabinet soon, envisages offering two land parcels on a longer license period of up to 90 years. Though the government is trying to complete the process at the earliest, the entire transaction is unlikely to be completed in the current financial year.
The land parcel comprises a plot of 6.3 acres, classified as additional land, which can be used for the development of serviced apartments or hotels. The front side of the building is proposed British High Commission, Another 1.8-acre plot, on the same side, with a higher floor area ratio (FAR) is being offered for commercial development.
The remaining land in the complex is proposed to be offered to potential bidders, which could be part of the main hotel complex to create a potential upside for the entity winning the deal. It will also help in improving the realizations from the project, a source said. Like other PPP projects, the land will return to the government once the license expires.
The winning bidder for the hotel could renovate it completely, but would not be allowed to alter the property’s exterior that came with a large convention center set up by the United Nations in 1956 to host a convention.
An analysis by the Ministry of Tourism, which is piloting the proposal, suggested that there is huge commercial and revenue potential that has not been tapped. Against the permissible FAR of 3.25, only 1.3 has been used. Similarly, only 23% of the permitted 40% ground coverage has been utilised, a source said.
In addition, there are non-revenue aspects, such as use of large parcels for general utilities, electricity sub-stations (for Hotel Ashoka and Samrat) as well as staff quarters that are proposed. Samrat Hotel has been kept out for security reasons.
The hotel with over 500 rooms was included in the ambitious asset monetization program as its performance is at par with other five-star properties in Lutyens’ Delhi. Replacing dilapidated rugs and poorly maintained furniture with renovations could cost Rs 400-500 crore, according to conservative government estimates. In any case, the government believes it should not be in the business of running hotels, a sector where the private sector is much more efficient.
The hotel will be offered under an operate-maintain-develop model. Sources said land parcels used for development of commercial or office complexes and hotels or serviced apartments are proposed to be given through the design-build-finance-operate-transfer route.
“A single bidder will have the option to take up the entire project or there may be multiple players.
Apart from the upfront payment, the government is also looking at annual revenue sharing. A portion of the advance payment will be used for voluntary retirement scheme and payment of dues.
There have been several attempts in the past to sell the iconic hotel in the heart of the capital’s diplomatic zone, run by ITDC, but the plans had to be abandoned due to a number of factors, including labor issues, dues and previous contracts. was signed. In Atal Bihari Vajpayee The government, the Department of Disinvestment under the then minister Arun Shourie, had tried to sell the property as part of its overarching policy to exit the hospitality business. After that, NITI Aayog A new model was suggested but it did not happen.
,