12 ITDC hotels on the block

The 12 hotels recommended for outright sale have been registering an average occupancy rate ranging between 12 to 15 per cent and have been given three months time for use either to shore up performance or face the axe.

Of the 33 hotel network, these hotels have registered a 7 to 8 per cent decline in turnover and at least 60 per cent dip in the profits during the current fiscal, sources in the tourism ministry told The Indian Express.

The order came from tourism minister Madan Lal Khurana during a review meeting when it was found that these properties were struggling with an occupancy of a maximum 15 percent.

An upset Khurana is reported to have told the ITDC bosses to either rev up the performance of these units by March 31 or the ministry would recommend that these hotels be placed on the disinvestment rack.

The sources also revealed that all the regional heads were pulled up by the minister during the meeting for the poor performance and lack of crisis management skill which would otherwise had yielded better results.

The sources said till the current month, the hotel division of the public sector undertaking had barely broke even.

The travel division of the ITDC 8211; Ashok Tours and Travels 8211; has also been hurt by the drop in the occupancy rate since major portion of the earnings came from the guests in the hotels.

Even the duty-free shops, once considered the cash cow of the company, has not been doing well and has failed to touch the last years8217; mark. Besides, the company may be out of this remunerative business if the Airport Authority of India succeeds in its attempts to rope in aninternational agency to run the show, the sources said.

Incidentally, the ITDC is already on the government8217;s list for divestment of its equity. The government has 90 per cent stake in the company and the Tata owned Indian Hotels has 10 per cent shares.

It has also been suggested that five-star hotels in metros be placed under a management lease with a leading hotel chain through open bidding route.

The budget hotels would be hived off as independent corporate bodies and shares issued in the name of these companies and other shareholders in exchange of ITDC shares. The entire government stock would then put up for outright sale.

The finance ministry is understood to have appointed a global coordinator from among a clutch of investment bankers, the sources divulged.

The coordinator will be asked to finalise the divestment amount, identify potential buyers and supervise the actual sale transaction.

Since the corporation has already divested a portion of shares some time ago, the company will complywith listing procedures as part of SEBI8217;s guidelines.