Reforms Back on This Hotel Menu

With occupancy rates hitting rock-bottom, facilities crumbling and even the renowned Great Eastern bakery8217;s sales dipping every month, ...

For about a decade now, time seems to have stood still at the Great Eastern Hotel, at least as far as its disinvestment is concerned. Flashback to 1993, when the West Bengal Government first proposed the move at a time when privatisation was a dirty word. Then cut to the present, when economic compulsions have made privatisation a buzzword, even among the Left. Nothing has changed. The 160-year-old heritage hotel is yet to find a buyer. So what does the State Government do? It starts from scratch, as if the last 10 years just didn8217;t exist.

With the prospects of the hotel8217;s sale declining with each passing day, the state government8217;s latest move of inviting 8216;8216;expression of interest for its renovation and management8217;8217; through newspaper advertisements has evoked serious reservations among senior government officials. 8216;8216;It is like starting from step one all over again and going through the motions that it went through in the past ten years,8217;8217; says a senior official. The Great Eastern story now looks like one that will go down as one of the lengthiest disinvestment bids by a state government.

The adverse impacts of the delay are too apparent to be ignored. Although the hotel was running at a loss ever since its 8216;8216;nationalisation8217;8217; in 1980, for the first time, salaries of employees were delayed last month. The government had to bail out the hotel with an emergency release of funds.

With occupancy rates hitting rock-bottom, facilities crumbling and even the renowned Great Eastern bakery8217;s sales dipping every month, a cloud of doubt and uncertainty shrouds the payment of salaries in the months ahead. Officials observe that future payments can be only made with 8216;8216;regular doses of government grants8217;8217;. But the cash-strapped government can hardly afford that for long.

The latest privatisation initiative has reportedly been taken at the prodding of Chief Minister Buddhadeb Bhattacharya, who feels that the hotel is a drain on the government8217;s resources and should be in private hands.

Accordingly, the state tourism ministry which runs the hotel, prepared a strategy paper. But instead of throwing up solutions, the paper lists measures which have already been tried and proved futile as 8216;8216;viable options8217;8217;. Some of these are:

8226; Since the government has failed to realise the statutory objective of turning Great Eastern Hotel into a five-star facility even 21 years after its takeover, it may be returned to old owners. 8216;8216;But this will be a clear admission of the government8217;s inability and should be avoided,8217;8217; it adds.

8226; Sell the hotel with all its liabilities including tenants. Investors/ purchasers will have to resolve the problems of tenants and staff retention. But the strategy paper mentions that 8216;8216;outright sale may involve litigation and may not be a very practical solution8217;8217;.

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8226; Early disposal of eviction cases and finalisation of attractive VRS package for employees. Then look for fresh investors and turn GEH into a five-star facility. However, independent queries by The Sunday Express revealed that a section of tenants in the hotel premises 34 in total have already won a case against government eviction. They are now a permanent liability for any buyer.

8226; Allow GEH authority to continue with the existing employees but under 8216;8216;management contract8217;8217;. The paper observes 8216;8216;this option may be difficult to implement because of involvement of heavy staff costs at government rates8217;8217;, in other words, heavy subsidy.

As matters stand now, the roadmap for the privatisation of the Great Eastern Hotel seems to be pointed towards a dead end.