New Delhi: The Taj Mansingh hotel, an iconic building of India's capital, will continue to be operated by Tata Group's Indian Hotels Company (IHC) for at least another year, said informed sources.
According to the sources, the New Delhi Municipal Council, which owns the property, Thursday decided to extend the lease of Taj Mansingh hotel with IHC by one more year.
The hotel is being run by IHC on a 33-year lease, which expired last year and was extended till October 2012.
The source confirmed that Indian Hotels, which paid the NDMC 10.5 percent of its gross revenue annually as rent, will now be required to pay 17.5 percent of annual revenue for the extended period.
The civic body will decide whether the Taj Group will continue to run the property on re-negotiated financial terms or if the property will be auctioned, inviting bids from other parties.
Additional Solicitor General of India, R.K. Khanna, in his legal opinion to the NDMC, has advocated the public auction.
The legal opinion was sought following the suggestions of Ernst & Young, the consultants to NDMC's that the civic body may choose the auction option, but also opined that from a risk management and commercial perspective, NDMC stands to benefit the most if the existing contract is renegotiated and extended.