Cabinet kicks off ITDC divestment; ‘running hotels not govt business’

The Government on Wednesday approved the initiation of the process of disinvestment of hotels and properties of India Tourism Development Corporation (ITDC) at three locations — Bhopal, Guwahati and Bharatpur. The decision was taken at a meeting of the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi. “The decision on disinvestment has been made, keeping in view that running and managing hotels on professional lines is not the work of the government or its entities,” an official statement said. It further reasoned that there has been considerable development in the hospitality sector in the past few years, with world class hotels and all leading international chains of hotels providing services and facilities of highest standards in the country.

As part of the disinvestment policy, it has been decided to lease and sub-lease the hotels and properties jointly with the concerned states or return the properties to the states, after fair valuation. The states would then have the option of upgrading and operating the hotels by involving the private sector or of utilising the properties as per their requirements. States have exercised their options accordingly, in each case going forward with the option best suited to their needs, in line with the overarching principle that it is not the business of the government to run or manage hotels.

In the first stage of the process, the three hotels that have been taken up are: Hotel Lake View Ashok, Bhopal, Hotel Brahmaputra Ashok, Guwahati and Hotel Bharatpur Ashok, Bharatpur.

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In all three cases, the hotels/properties are being given back to the concerned states. In the case of Bhopal and Guwahati, ITDC is divesting its share of 51 per cent in the joint venture company formed for operation of the hotels whereas in the case of Bharatpur, the unit which was only managed by ITDC is being returned to the state government. Briefing reporters after the Cabinet meeting, finance minister Arun Jaitley said the Assam government may develop Ashok Brahmputra as a guest house as there are many private hotels in the state capital.

In case of Ashok Bharatpur, ITDC, which is managing the hotel, will hand over the management control to the Rajasthan government. Shares of ITDC closed at Rs 690.10 apiece on BSE, up 2.4 per cent.